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Exhibit 10.3
ANNEX I
Supplemental Terms and Conditions
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ANNEX I
SUPPLEMENTAL TERMS AND CONDITIONS
The Master Repurchase Agreement between Impac Warehouse Lending Group
("Buyer") and MONUMENT MORTGAGE, INC., ("Seller"), dated as of SEPTEMBER 17,
2001 is amended and supplemented as set forth below. All capitalized terms used
herein that are defined in the Master Repurchase Agreement are used herein as
defined therein except to the extent such terms are amended or supplemented
herein.
1. Paragraph 1 of the Master Repurchase Agreement is amended by adding the
following after the word "instruments" and before the parenthetical
"("Securities")" in the second line thereof:
4"or whole mortgage loans or any interests in any whole mortgage loans,
including, without limitation, mortgage participation certificates and mortgage
pass-through certificates".
2. Subparagraph 2(a) of the Master Repurchase Agreement is amended by
adding the following after the word "any" and before the word "bankruptcy" in
the second line thereof:
"conservatorship or receivership (within the meaning of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989),".
3. Subparagraph 2(a) of the Master Repurchase Agreement is further amended
by adding the following after the word "a" and before the word "receiver" in the
third line thereof:
"conservator,".
4. Subparagraph 2(h) of the Master Repurchase Agreement is amended by
deleting the defined term "Market Value" and replacing it with the defined term
"Assumed Repurchase Value", and the term Market Value throughout the Master
Repurchase Agreement shall be deemed to denote the Assumed Repurchase Value.
5. Subparagraph 2(h) of the Master Repurchase Agreement is amended by
adding at the end thereof:
"except that the Assumed Repurchase Value of any Securities that are loans
secured by mortgages or deeds of trust on residential dwellings (such loans,
"Mortgage Loans") as of any date shall be the dollar amount ascribed to such
Mortgage Loans on that date by Buyer in its reasonable and sole discretion, and
shall not include any Income on such Mortgage Loans paid to and held by Seller
pursuant to Paragraph 5 hereof, and the Assumed Repurchase Value of any
Additional Purchased Securities shall be the fair market value thereof as
determined by Buyer in its reasonable and sole discretion"
6. Subparagraph 3(b) of the Master Repurchase Agreement is amended by
adding at the end of the first sentence of Paragraph 3(b):
"In the case of Transactions involving Securities that are Mortgage Loans,
(a) the Purchased Securities shall be identified on a detailed listing to be
provided by Seller to Buyer (a "Mortgage Loan Schedule") attached to a
Certificate of Seller in the form attached hereto, (b) the Confirmation shall be
sent by Seller to Buyer, (c) the documents contained in the Mortgage File (as
defined in Paragraph 7) shall be delivered at the option of the Buyer to the
Buyer, or the Custodian, and held by the Custodian pursuant to the terms of a
Custody Agreement, dated of even date herewith (the "Custody Agreement"), among
Seller, Buyer and Custodian pursuant to which Custodian shall, among other
things, issue Trust Receipts, as defined therein (the "Trust Receipts"), and
(d) the Mortgage Loans shall be serviced for Buyer by Seller pursuant to the
Servicing Agreement, dated of even date herewith (the "Servicing Agreement"),
between Seller and Buyer."
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7. Paragraph 3(b) of the Master Repurchase Agreement is further amended by
deleting the last sentence and replacing it with the following:
"In the event of any conflict between the terms of such Confirmation and
this Agreement, the terms of such Confirmation shall prevail."
8. Subparagraph 3(c) of the Master Repurchase Agreement is amended by
adding at the end of the first sentence of Paragraph 3(c);
"In the case of Transactions involving Securities that are Mortgage Loans,
(i) which meet the requirements of the Seller's Warranties Agreement, such
demand by Buyer may not be made prior to 30 days following the date of the
Transaction in which the Securities were originally conveyed to Buyer provided
no event of default has occurred; (ii) which do not meet the requirements of the
Seller's Warranties Agreement in all material respects, such demand by Buyer may
be made at any time; or (iii) Seller may repurchase at any time, irrespective of
whether the particular Mortgage Loans(s) meets the requirements of the Seller's
Warranties Agreement. In any case, such demand either by Buyer or by Seller
shall be for a repurchase of all Purchased Securities subject to the related
Transaction and such demand shall be made no later than 5:00 p.m. New York City
time on the business day preceding the day on which such termination will be
effective, which termination shall also be on a business day. Upon receipt of
the Repurchase Price in immediately available funds, Buyer shall deliver the
Trust Receipt for such Transaction to Custodian for further disposition in
accordance with the terms of the Custody Agreement."
9. Paragraph 4 of the Master Repurchase Agreement is amended by adding a
new subparagraph (f) as follows:
"(f) In the case of Transactions involving Securities that are Mortgage
Loans, (i) the percentage used in calculating Buyer's Margin Amount for such
Transaction shall be the percentage specified in the Confirmation and
(ii) Additional Purchased Securities shall be limited to obligations issued by
the United States government or mortgaged-backed securities issued by the
Federal National Mortgage Association ("FNMA") or guaranteed by the Government
National Mortgage Association ("GNMA") and otherwise acceptable to Buyer in its
sole discretion, (iii) the provisions of subparagraphs (b), (d) and (e) of this
Paragraph shall not apply".
10. Paragraph 5 of the Master Repurchase Agreement is amended by adding the
following at the end of the last sentence of Paragraph 5:
"Notwithstanding the foregoing and except as provided in Paragraph 11 of
this Agreement, in the case of Transactions involving Securities that are
Mortgage Loans, Seller shall be deemed to hold for the benefit of, and in trust
for, Buyer all Income, including without limitation all scheduled and
unscheduled principal and interest payments, received by Seller with respect to
such Mortgage Loans. Seller shall service the Mortgage Loans, or supervise the
servicing of the Mortgage Loans, for the benefit of Buyer in accordance with the
terms of the Servicing Agreement. On the 10th day of each month, Seller will
provide Buyer with reports substantially identical in form to FNMA's form 2010
remittance report with respect to all Mortgage Loans then involved in any
Transaction hereunder. Within three business days of its receipt of each such
report, Buyer either (i) shall determine that a Margin Deficit has occurred and
direct Seller to pay to Buyer all Income received in the period covered by such
report to the extent of such Margin Deficit, in which case Buyer shall be deemed
to have released any excess Income to Seller, or (ii) shall determine that a
Margin Deficit has not occurred, in which case Buyer shall be deemed to have
released all such Income to Seller."
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11. Paragraph 6 of the Master Repurchase Agreement is amended by adding the
following after the word "the" and before the words "Purchased Securities" in
the fourth line thereof:
"Seller's right (including the power to convey title thereto), title and
interest in and to the".
12. Paragraph 6 of the Master Repurchase Agreement is amended by adding the
following after the words "Purchased Securities" and before the word "with" in
the fourth line thereof:
", the contractual right to receive payments, including the right to
payments of principal and interest and the right to enforce such payments,
arising from or under any of the Purchased Securities, the contractual right to
service each Mortgage Loan, any sub-servicing agreements with respect to each
Mortgage Loan, and all documents in each Mortgage File,".
13. Paragraph 6 of the Master Repurchase Agreement is amended by adding the
following after the word "all" and before the word "proceeds" in the fifth line
thereof:
"income, payments, products and".
14. Paragraph 6 of the Master Repurchase Agreement is amended by adding the
following after the word "thereof" and before the period in the fifth line
thereof:
"(the "Collateral")".
15. Paragraph 6 of the Master Repurchase Agreement is amended by adding the
following at the end of the last sentence of Paragraph 6:
"In such event, the parties hereto intend to create for the benefit of
Buyer, as secured party, a legally valid and enforceable first priority
perfected security interest in the Collateral. On or prior to each Purchase
Date, Seller shall cause to be filed in the appropriate filing offices of the
jurisdiction in which Seller maintains its place of business, or its chief
executive office if Seller has more than one place of business, in accordance
with applicable law, Uniform Commercial Code financing statements naming Seller
as debtor, Buyer as secured party, and the Collateral as collateral."
16. Paragraph 7 of the Master Repurchase Agreement is amended by adding the
following at the end of the last sentence of Paragraph 7:
"In the case of Transactions involving Securities that are Mortgage Loans,
the transfer of such Mortgage Loans for the purposes of this Paragraph 7 shall
include the delivery to the Buyer or Custodian, as directed by the Buyer, the
following documents (the "Mortgage File") with respect to each Mortgage Loan, as
set forth in the Custody Agreement: subject, however, to the paragraph
immediately following clause (xii) below;"
(i) the original note or other evidence of indebtedness (the "Mortgage
Note") of the obligor thereon (each such obligor, a "Mortgagor"), endorsed to
the order of or assigned to Seller by the holder/payee thereof, without
recourse, and endorsed by Seller, without recourse, in blank;
(ii) the original mortgage, deed of trust or other instrument (the
"Mortgage") creating a first lien on the underlying property securing the
Mortgage Loan (the "Mortgaged Property"), naming Seller as the "mortgagee" or
"beneficiary" thereof, and bearing on the face thereof the address of Seller as
provided in Paragraph 13 of this Agreement, or, if the Mortgage does not name
Seller as the mortgagee/beneficiary, the Mortgage, together with an instrument
of assignment assigning the Mortgage, individually or together with other
Mortgages, to Seller and bearing on the face thereof the address of Seller as
provided in Paragraph 13 of this Agreement, and, in either case, bearing
evidence that such instruments have been recorded in the appropriate
jurisdiction where the Mortgaged Property is located (or, in lieu of the
original of the Mortgage or the assignment thereof, a duplicate or conformed
copy of the Mortgage or the instrument of assignment, if any,
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together with a certificate of either the closing attorney or an officer of the
title insurer that issued the related title insurance policy, or a certificate
of receipt from the recording office, certifying that such copy or copies
represent true and correct copy(ies) of the original(s) and that such
original(s) have been or are currently submitted to be recorded in the
appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located);
(iii) an original assignment of Mortgage, in blank, which assignment shall
be in form and substance acceptable for recording and, in the event that the
Seller acquired the Mortgage Loan in a merger, the assignment must be by
"[Seller], successor by merger to [name of predecessor]";
(iv) any intervening assignment of the Mortgage not included in (ii) above,
including any warehousing assignment;
(v) any assumption, modification, extension or guaranty agreement;
(vi) the Lender's title insurance policy, or, if such policy has not been
issued, a written commitment or interim binder issued by the title insurance
company evidencing that the required title insurance coverage is in effect and
unconditionally guaranteeing the holder of the Mortgage Loan that the lender's
title insurance policy will be issued;
(vii) if applicable, any policy or certificate of primary mortgage guaranty
insurance;
(viii) if the Mortgage Note or Mortgage or any other material document or
instrument relating to the Mortgage Loan has been signed by a person on behalf
of the Mortgagor, the power of attorney or other instrument that authorized and
empowered such person to sign with recording information thereon;
(ix) with respect to FHA insured Mortgage Loans, the original FHA Insurance
Contract, together with a completed HUD Form 92080 "Mortgagee Record Change"
with the Purchasing Mortgagees name left blank;
(x) with respect to VA guaranteed Mortgage Loans, the original VA Loan
Guaranty Certificate;
(xi) with respect to each Mortgage Loan which is subject to the provisions
of the Homeownership and Equity Protection Act of 1994, a copy of a notice to
each entity which was a purchaser or assignee of the Mortgage Loan, satisfying
the provisions of such Act and the regulations issued thereunder, to the effect
that the Mortgage Loan is subject to special truth in lending rules; and
(xii) any other document as may be requested by Buyer.
"Notwithstanding the above, Seller shall, at least one Business Day prior to
the related Purchase Date, deliver to or cause to be delivered to Buyer or
Custodian, as directed by Buyer, originals or true copies of such documents
contained in the Mortgage File; and within forty eight (48) hours after such
purchase date Seller shall deliver or cause to be delivered to Buyer or
Custodian, as directed by Buyer, the originals (to the extent not previously
delivered) of all such documents in the Mortgage File. Failure by Seller to
deliver or cause to be delivered such documents within such time periods
specified in the immediately preceding sentence shall constitute an Event of
Default under the Master Repurchase Agreement. Seller shall cause each closing
agent to hold any originals of such documents in the Mortgage File held by such
closing agent prior to delivery thereof to Buyer or Custodian, as directed by
Buyer, in trust and as bailee for Buyer.
In addition to the documents contained in the Mortgage File, Seller shall
deliver to buyer on or prior to the Purchase Date for such Transaction a
security release certification acceptable to Buyer, certifying the release of
any security interest of a third party which may have existed with
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respect to any of the Mortgage Loans subject to such Transaction during the
45-day period prior to the related Purchase Date.
Seller shall include on each Mortgage Loan Schedule a code indicating
whether the Mortgage Loan is subject to the Homeownership and Equity Protection
Act of 1994."
Seller shall cause to be maintained a servicing file ("Servicing File") with
respect to each Mortgage Loan that shall contain the following documents:
(a) copies of all the documents contained in the Mortgage File;
(b) any instrument necessary to complete identification of any exception set
forth in the exception schedule in the title insurance policy (e.g., map or
plat, restrictions, easements, sewer agreements, home association declarations,
etc.);
(c) a survey of the Mortgaged Property;
(d) any hazard insurance policy or flood insurance policy, with extended
coverage of the hazard insurance policy;
(e) the Mortgage Loan closing statement (Form HUD-1) and any other
truth-in-lending, real estate settlement procedure forms or other disclosure
statements required by law;
(f) the residential loan application, if applicable;
(g) any verification of employment and income;
(h) if applicable, any verification of acceptable evidence of source and
amount of downpayment;
(i) any credit report on the borrower under the Mortgage Loan;
(j) each residential appraisal report;
(k) a photograph of the Mortgaged Property;
(l) any tax receipts, insurance premiums, ledger sheets, payment records,
insurance claim files and correspondence, current and historical computerized
data files, underwriting standards used for origination and all other papers and
records developed or originated by the Seller, any servicer or others, required
to document the Mortgage Loan or to service the Mortgage Loan; and
(m) any other document as may be requested by Buyer.
Seller shall cause to be delivered to Buyer each Servicing File upon Event
of Default by Seller under the Master Repurchase Agreement.
17. Paragraph 8 of the Master Repurchase Agreement is amended by deleting
the last sentence of Paragraph 8 and substituting the following:
"Title to all Purchased Securities (except for Securities that are Mortgage
Loans) shall pass to Buyer. In the case of Purchased Securities that are
Mortgage Loans, upon transfer of the Mortgage Loans to Buyer as set forth in
Paragraph 3(a) of this Agreement and until termination of any Transactions as
set forth in Paragraphs 3(c) or 11 of this Agreement, ownership of each Mortgage
Loan, including each document in the related Mortgage File, is vested in Buyer.
Upon transfer of the Mortgage Loans to Buyer as set forth in Paragraph 3(a) of
this Agreement and until termination of any Transactions as set forth in
Paragraphs 3(c) or 11 of this Agreement, record title in the name of Seller to
each Mortgage shall be retained by Seller in trust, for the benefit of Buyer,
for the sole purpose of facilitating the servicing and the supervision of the
servicing of the Mortgage Loans pursuant to the Servicing Agreement. Unless
otherwise agreed by Buyer and Seller, nothing in this Agreement shall preclude
Buyer from engaging in repurchase
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transactions with the Purchased Securities or otherwise pledging or
hypothecating the Purchased Securities, but no such transaction shall relieve
Buyer of its obligations to transfer Purchased Securities (and, with respect to
the Mortgage Loans, not substitutes therefor) to Seller pursuant to Paragraphs
3, 4 or 11 hereof. Upon termination of any Transactions as set forth in
Paragraph 3(c) of this Agreement, Buyer agrees to execute promptly endorsements
of the Mortgage Notes, assignments of the Mortgages and UCC-3 assignments, to
the extent that such documents are prepared by Seller for Buyer's execution, are
delivered to Buyer by Seller and are necessary to reconvey, without recourse, to
Seller and perfect title of like tenor to that conveyed to Buyer to the related
Mortgage Loans. Buyer agrees to cooperate with Seller to identify documents that
may be required to effect such reconveyance and perfection of title to Seller."
18. Subparagraph 9(b) of the Master Repurchase Agreement is amended by
adding the following after the word "substituted" and before the period in the
fifth line thereof:
"; provided, further, that, in the case of Transactions involving Securities
that are Mortgage Loans, the retention by Seller of custody of any document in
any Mortgage File or otherwise shall be held by Seller in trust Buyer for
purposes of servicing or supervising the servicing of the related Mortgage Loan
and shall not be deemed to constitute Seller's retention of custody of the
Purchased Securities for purposes of this subparagraph".
19. Paragraph 10 of the Master Repurchase Agreement is amended by adding the
following clauses at the end of the first sentence of Paragraph 10 after the
word "affected" and before the period:
", (vi) Seller and Buyer have entered into the Transaction described in each
Confirmation contemporaneously with the sale of the Purchased Securities by
Seller to Buyer and the transfer of the Purchase Price by Buyer to Seller, or,
in the event that the Transaction is deemed to constitute a loan,
contemporaneously with the grant of the security interest in the Collateral by
Seller to Buyer pursuant to Paragraph 6 hereof and the transfer of the
consideration therefor, consisting of the extension of the Purchase Price, which
represents the loan proceeds, by Buyer to Seller, (vii) the board of directors
of Seller has approved the form of Confirmation and the Master Repurchase
Agreement, and such approval is reflected in the minutes of said board, and
(viii) each Confirmation, the Master Repurchase Agreement, the Custody Agreement
and the Servicing Agreement have been and shall be, continuously, from the time
of their execution, a corporate record of Seller."
20. Paragraph 11 is amended by inserting the words ", other than any
representation made by Seller as to a particular Mortgage Loan," after the words
"made by Seller or Buyer" on the fourth line thereof.
21. Paragraph 11 is further amended by deleting the word "or" immediately
preceding clause (vi) and by adding at the end of such clause, immediately
preceding the parenthesis, the following:
(vii) Buyer shall have reasonably determined that Seller is or will be
unable to meet its commitments under this Agreement, the Custody Agreement, the
Guaranty, the Sellers Warranties Agreement, the Servicing Agreement and any
other related agreement (such agreements, the "Transaction Documents") and shall
have notified Seller of such determination and such other party shall not have
responded with appropriate information to the contrary to the satisfaction of
the notifying party within 24 hours;
(viii)The Master Repurchase Agreement shall for any reason cease to create a
valid, first priority security interest in any of the Purchased Securities
purported to be covered thereby;
(ix) A final judgment by any competent court in the United States of America
for the payment of money in an amount of at least $100,000 is rendered against
Seller, and the same
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remains undischarged for a period of 30 days during which execution of such
judgment is not effectively stayed;
(x) Seller shall fail to observe or perform any of the covenants or
agreements under any Transaction Document, which failure materially and
adversely affects the rights of the Buyer;
(xi) Any event of default or any event which with notice, the passage of
time or both shall constitute an event of default shall occur and be continuing
under any repurchase or other financing agreement for borrowed funds or
indenture for borrowed funds by which Seller is bound or affected shall occur
and be continuing;
(xii) In the good faith judgment of Buyer, a material adverse change shall
have occurred in the business, operations, properties, prospects or condition
(financial or otherwise) of Seller;
(xiii)Seller shall request written assurances as to the financial well-being
of Buyer and such assurances shall not have been provided within 24 hours of
such request;
(xiv) Seller shall be in default with respect to any normal and customary
covenants under any debt contract or agreement, any servicing agreement or any
lease to which it is a party, which default could materially and adversely
affect the financial condition of Seller (which covenants include, but are not
limited to, an Act of Insolvency of Seller or the failure of Seller to make
required payments under such contract or agreement as they become due).
(xv) Any representation or warranty made by Seller in any Transaction
Document shall have been incorrect or untrue in any material respect (to the
extent that such representation or warranty does not incorporate a materiality
limitation in its terms) when made or repeated or when deemed to have been made
or repeated;
(xvi) Seller shall fail to promptly notify Buyer of (i) the acceleration of
any debt obligation or the termination of any credit facility of Seller,
respectively; (ii) the amount and maturity of any such debt assumed after the
date hereof; (iii) any adverse developments with respect to pending or future
litigation involving Seller, respectively; and (iv) any other developments which
might materially and adversely affect the financial condition of Seller;
(xvii) Seller's audited annual financial statements or the notes thereto or
other opinions or conclusions stated therein shall be qualified or limited by
reference to Seller's status as a "going concern";
(xviii) Seller shall fail to maintain a tangible net worth of no less than $
5,000,000. The term "tangible net worth" shall mean the excess of all of the
Seller's assets (excluding any value for goodwill, trademarks, patents,
copyrights, organization expense and other similar intangible items) over all
its liabilities as completed and determined in accordance with generally
accepted accounting principles consistently applied.
(xx) Seller shall fail to deliver to Buyer or Custodian as directed by Buyer
the documents in the Mortgage File within the time period specified in 1
Paragraph 7 of the Master Repurchase Agreement.
22. Subparagraph 11(d) of the Master Repurchase Agreement is amended by
deleting the words that precede Subparagraph 11(d)(i) and replacing them with
the words "The non-defaulting party may with concurrent notice to the defaulting
party:".
23. Subparagraph 11(d)(i) of the Master Repurchase Agreement is amended by
inserting the words "or in any other commercially reasonable manner" after the
word "market" and before the word "at", on the second line thereof.
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24. Subparagraph 11(d)(i) of the Master Repurchase Agreement is amended by
adding the following after the word "hereunder" and before the semi-colon:
"and in either case upon the determination and receipt by Buyer, in a manner
deemed final and complete by Buyer in its sole discretion, of the aggregate
unpaid Repurchase Prices and any other amounts owing by the defaulting party,
including, without limitation, any unpaid fees, expenses or other amounts owing
to the Custodian under the Custody Agreement, or to which Buyer is otherwise
entitled hereunder, Buyer shall transfer the portion of the Purchased Securities
and proceeds thereof, including without limitation, any proceeds of a sale of
the servicing rights to the Mortgage Loans, held by Buyer following such receipt
to either (i) Seller, if in Buyer's sole discretion Seller is legally entitled
thereto, (ii) such other party or person as is in Buyer's reasonable judgment is
legally entitled thereto, or (iii) if Buyer cannot determine in its reasonable
judgment the person or party entitled thereto, a court of competent
jurisdiction."
25. Paragraph 11 of the Master Repurchase Agreement is amended by adding a
new Subparagraph (j) as follows:
"(j) Seller acknowledges that any delay in the ability of Buyer to exercise
its remedies pursuant to Paragraph 11 hereof shall result in irreparable injury
to Buyer."
26. Paragraph 13 of the Master Repurchase Agreement is amended by deleting
the text thereof and replacing it with the following:
"Any notice or communication in respect of this Agreement will be
sufficiently given to a party if in writing and delivered in person, sent by
certified or registered mail, return receipt requested, or by overnight courier
or given by facsimile transfer at the following address or facsimile number:
If to [BUYER]:
Impac Warehouse Lending Group
1401 Dove Street
Newport Beach, CA 92660
Attention: Gretchen Verdugo
Facsimile No.: (949) 475-3950
If to [SELLER]:
MONUMENT MORTGAGE, INC.,
2527 CAMINO RAMON, SUITE 200
SAN RAMON, CA 94583
Attention: Matt Soto, Sr. (Official)
Facsimile Number: (925) 242-5990 or
Eva Noack (Operational)
Facsimile Number: (925) 242-5880
A notice or communication will be effective:
(i)if delivered by hand or sent by overnight courier, on the day and time it is
delivered;
(ii)If sent by facsimile transfer, on the day it is sent; or
(iii)if sent by certified or registered mail, return receipt requested, three
days after dispatch.
Either party may by notice to the other change the address or facsimile number
at which notices or communications are to be given to it."
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27. Paragraph 14 of the Master Repurchase Agreement is amended by inserting
the words "with respect to Securities that consist of mortgage loans" after the
word "transactions" and before the period on the second line thereof.
28. Intentionally Omitted
29. Intentionally Omitted
30. Subparagraph 20(c) is amended by deleting the words "the Federal Savings
and Loan Insurance Corporation" in the third line thereof and substituting
therefor the following:
"through either the Bank Insurance Fund or the Savings Association Insurance
Fund,".
31. This Annex I is executed and shall be construed as an agreement
supplemental to the Master Repurchase Agreement and, as provided in the Master
Repurchase Agreement, this Annex I forms a part thereof.
32. All of the covenants, stipulations, promises and agreements in this
Annex I shall bind the successors and assigns of the parties hereto, whether
expressed or not.
33. This Annex I may be executed in any number of counterparts, each of
which shall be an original but such counterparts shall together constitute but
one and the same instrument.
34. Seller shall promptly provide such further assurances or agreements as
Buyer may request in order to effect the purposes of this Master Repurchase
Agreement, including without limitation, the delivery of any further documents
to ensure that Buyer maintains a first priority perfected security interest in
the Collateral pursuant to Paragraph 6 hereof and to carry into effect the
purpose, of the Transaction Documents.
35. Buyer is hereby appointed the attorney-in-fact of Seller for the purpose
of carrying out the provisions of this Agreement and taking any action and
executing or endorsing any instruments that Buyer may deem necessary or
advisable to accomplish the purposes hereof, including, without limitation,
completing or correcting any endorsement of a Mortgage Note or assignment of a
Mortgage, which appointment as attorney-in-fact is irrevocable and coupled with
an interest. Without limiting the generality of the foregoing, Buyer shall have
the right and power during the occurrence and continuation of any Event of
Default to receive, endorse and collect all checks made payable to the order of
Seller representing any payment on account of the principal of or interest on
any of the Collateral and to give full discharge for the same.
36. Seller shall promptly pay as and when payment is due all, and Buyer
shall not be liable for any, expenses, fees and charges incurred by Buyer or
Seller (other than the salaries and overhead of Buyer and its affiliates)
arising out of or related in any way, to the administration and enforcement of
this Agreement or the Custody Agreement ("Costs"), including, without
limitation, legal expenses, the fees and expenses of the Custodian, recording
and filing fees and any costs associated with reconveyance of the Purchased
Securities and, in the event that any Costs are incurred by Buyer, Seller shall
reimburse Buyer on demand of Buyer accompanied by a statement describing the
circumstances and the nature of the Cost, by wire transfer of immediately
available federal funds.
37. Seller and Buyer contemplate that all Mortgage Loans purchased by Buyer
and subject to repurchase pursuant to this Master Repurchase Agreement shall
have an average daily balance (in principal amount) of $ 5,000,000 (the "Minimum
Usage Amount"). If, within forty-five (45) days of the date hereof, Seller shall
not have sold any Mortgage Loans to Buyer pursuant to this Master Repurchase
Agreement, Seller shall promptly pay Buyer $1,500. If at any time after
forty-five (45) days after the Seller shall have commenced selling Mortgage
Loans to Buyer, pursuant to this Master Repurchase Agreement but the average
daily balance (in principal amount) of all Mortgage Loans held by Buyer is less
than the Minimum Usage Amount, Seller shall pay Buyer a fee to be determined by
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Buyer in its sole discretion, provided, however such fee shall not exceed $1,500
during any thirty (30) day period.
38. This Annex I shall supersede any existing annex to or modification of
the Master Repurchase Agreement.
[BUYER]
[SELLER]
WAREHOUSE LENDING GROUP
MONUMENT MORTGAGE, INC.,
By:
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By:
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Name:
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Name:
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Title:
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Title:
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Date:
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Date:
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CERTIFICATE OF SELLER
I, ______________, hereby certify that I am the duly appointed
______________ of __________________ _, a _____________________ (the "Seller").
The undersigned hereby represents, warrants and covenants on behalf of the
Seller as follows:
1. Pursuant to the sale of the mortgage loans set forth on Annex 1 hereto
(the "Mortgage Loans") by the Seller to Impac Warehouse Lending Group ("Impac")
pursuant to a Master Repurchase Agreement, dated as of SEPTEMBER 17, 2001
between the Company and Impac, the Company hereby sells, transfers, assigns,
sets over and otherwise conveys to Impac all of its right (including the power
to convey title thereto), title and interest in and to each document, including,
without limitation, those documents set forth on Exhibit A hereto, held by or on
behalf of the Company with respect to each Mortgage Loan.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
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By:
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Name:
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Title:
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QuickLinks
ANNEX I
SUPPLEMENTAL TERMS AND CONDITIONS
CERTIFICATE OF SELLER
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Exhibit 10.1
1997 INCENTIVE PLAN
of
BRIGHAM EXPLORATION COMPANY
(As Amended through March 6, 2001)
1. Plan. This 1997 Incentive Plan of Brigham Exploration Company (the
"Plan") was adopted by the Board of Directors of Brigham Exploration Company
(the "Company") to reward certain key employees of the Company and its
consolidated subsidiaries by enabling them to acquire shares of Common Stock,
par value $.01 per share, of the Company and/or to be compensated for individual
performances.
2. Objectives. The Plan is designed to attract and retain key employees of
the Company and its Subsidiaries (as hereinafter defined), to encourage the
sense of proprietorship of such employees and to stimulate the active interest
of such persons in the development and financial success of the Company and its
Subsidiaries. These objectives are to be accomplished by making Awards (as
hereinafter defined) under this Plan and thereby providing Participants (as
hereinafter defined) with a proprietary interest in the growth and performance
of the Company and its Subsidiaries.
3. Definitions. As used herein, the terms set forth below shall have the
following respective meanings:
"Authorized Officer" means the Chairman of the Board or the Chief Executive
Officer of the Company (or any other senior officer of the Company to whom
either of them shall delegate the authority to execute any Award Agreement).
"Award" means the grant of any Option, SAR, Stock Award, Cash Award or
Performance Award, whether granted singly, in combination or in tandem, to a
Participant pursuant to such applicable terms, conditions and limitations as the
Committee may establish in order to fulfill the objectives of the Plan.
"Award Agreement" means a written agreement between the Company and a
Participant setting forth the terms, conditions and limitations applicable to an
Award.
"Board" means the Board of Directors of the Company.
"Cash Award" means an award denominated in cash.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means such committee of the Board as is designated by the Board
to administer the Plan.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company.
"Company" means Brigham Exploration Company, a Delaware corporation.
"Dividend Equivalents" means, with respect to shares of Restricted Stock
that are to be issued at the end of the Restriction Period, an amount equal to
all dividends and other distributions (or the economic equivalent thereof) that
are payable to stockholders of record during the Restriction Period on a like
number of shares of Common Stock.
"Effective Date" has the meaning set forth in paragraph 18 hereof.
"Employee" means an employee of the Company or any of its Subsidiaries.
"Fair Market Value" of a share of Common Stock means, as of a particular
date, (i) if shares of Common Stock are listed on a national securities
exchange, the mean between the highest and lowest sales price per share of
Common Stock on the consolidated transaction reporting system for the
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principal national securities exchange on which shares of Common Stock are
listed on that date, or, if there shall have been no such sale so reported on
that date, on the last preceding date on which such a sale was so reported,
(ii) if shares of Common Stock are not so listed but are quoted on the Nasdaq
National Market, the mean between the highest and lowest sales price per share
of Common Stock reported by the Nasdaq National Market on that date, or, if
there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported, (iii) if the Common Stock
is not so listed or quoted, the mean between the closing bid and asked price on
that date, or, if there are no quotations available for such date, on the last
preceding date on which such quotations shall be available, as reported by the
Nasdaq National Market, or, if not reported by the Nasdaq National Market, by
the National Quotation Bureau Incorporated or (iv) if shares of Common Stock are
not publicly traded, the most recent value determined in good faith by the
Committee for such purpose.
"Incentive Option" means an Option that is intended to comply with the
requirements set forth in Section 422 of the Code.
"Nonqualified Stock Option" means an Option that is not an Incentive Option.
"Option" means a right to purchase a specified number of shares of Common
Stock at a specified price.
"Participant" means an Employee to whom an Award has been made under this
Plan.
"Performance Award" means an award made pursuant to this Plan to a
Participant that is subject to the attainment of one or more Performance Goals.
"Performance Goal" means a standard established by the Committee to
determine in whole or in part whether a Performance Award shall be earned.
"Restricted Stock" means any Common Stock that is restricted or subject to
forfeiture provisions.
"Restriction Period" means a period of time beginning as of the date upon
which an Award of Restricted Stock is made pursuant to this Plan and ending as
of the date upon which the Common Stock subject to such Award is no longer
restricted or subject to forfeiture provisions.
"SAR" means a right to receive a payment, in cash or Common Stock, equal to
the excess of the Fair Market Value or other specified valuation of a specified
number of shares of Common Stock on the date the right is exercised over a
specified strike price, in each case, as determined by the Committee.
"Stock Award" means an award in the form of shares of Common Stock or units
denominated in shares of Common Stock.
"Subsidiary" means (i) in the case of a corporation, any corporation in
which the Company directly or indirectly owns shares representing more than 50%
of the combined voting power of the shares of all classes or series of capital
stock of such corporation which have the right to vote generally on matters
submitted to a vote of the stockholders of such corporation and (ii) in the case
of a partnership or other business entity not organized as a corporation, any
such business entity of which the Company directly or indirectly owns more than
50% of the voting, capital or profits interests (whether in the form of
partnership interests, membership interests or otherwise).
4. Eligibility. Key Employees eligible for Awards under this Plan are
those who hold positions of responsibility and whose performance, in the
judgment of the Committee, can have a significant effect on the success of the
Company and its Subsidiaries.
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5. Common Stock Available for Awards. Subject to the provisions of
paragraph 14 hereof, there shall be available for Awards under this Plan granted
wholly or partly in Common Stock (including rights or options that may be
exercised for or settled in Common Stock) an aggregate number of shares of
Common Stock equal to (a) thirteen percent of the total number of shares of
Common Stock outstanding from time to time, minus (b) the total number of shares
of Common Stock subject to outstanding Awards previously granted to employees of
the Company under the Plan. The preceding sentence to the contrary
notwithstanding, subject to the provisions of paragraph 14 hereof, the maximum
number of shares of Common Stock available for grant pursuant to Incentive
Options under this Plan shall not exceed the lesser of the amount determined in
accordance with the preceding sentence or 2,077,335. The number of shares of
Common Stock that are the subject of Awards under this Plan, that are forfeited
or terminated, expire unexercised, are settled in cash in lieu of Common Stock
or in a manner such that all or some of the shares covered by an Award are not
issued to a Participant or are exchanged for Awards that do not involve Common
Stock, shall again immediately become available for Awards hereunder. The
Committee may from time to time adopt and observe such procedures concerning the
counting of shares against the Plan maximum as it may deem appropriate. The
Board and the appropriate officers of the Company shall from time to time take
whatever actions are necessary to file any required documents with governmental
authorities, stock exchanges and transaction reporting systems to ensure that
shares of Common Stock are available for issuance pursuant to Awards.
6. Administration.
(a) This Plan shall be administered by the Committee.
(b) Subject to the provisions hereof, the Committee shall have full and
exclusive power and authority to administer this Plan and to take all actions
that are specifically contemplated hereby or are necessary or appropriate in
connection with the administration hereof. The Committee shall also have full
and exclusive power to interpret this Plan and to adopt such rules, regulations
and guidelines for carrying out this Plan as it may deem necessary or proper,
all of which powers shall be exercised in the best interests of the Company and
in keeping with the objectives of this Plan. The Committee may, in its
discretion, provide for the extension of the exercisability of an Award,
accelerate the vesting or exercisability of an Award, eliminate or make less
restrictive any restrictions contained in an Award, waive any restrictions or
other provision of this Plan or an Award or otherwise amend or modify an Award
in any manner that is either (i) not adverse to the Participant to whom such
Award was granted or (ii) consented to by such Participant. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in this
Plan or in any Award in the manner and to the extent the Committee deems
necessary or desirable to further the Plan purposes. Any decision of the
Committee in the interpretation and administration of this Plan shall lie within
its sole and absolute discretion and shall be final, conclusive and binding on
all parties concerned.
(c) No member of the Committee or officer of the Company shall be liable for
anything done by him or her, by any member of the Committee or by any officer of
the Company in connection with the performance of any duties under this Plan,
except for his or her own willful misconduct or as expressly provided by
statute.
7. Delegation of Authority. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish.
8. Awards. The Committee shall determine the type or types of Awards to be
made under this Plan and shall designate from time to time the Employees who are
to be the recipients of such Awards. The Committee shall review and consider the
recommendations of the President of the Company as to such Awards. Awards shall
become effective only upon and after approval by the Committee. Each
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Award may be embodied in an Award Agreement, which shall contain such terms,
conditions and limitations as shall be determined by the Committee in its sole
discretion and shall be signed by the Participant to whom the Award is made and
by an Authorized Officer for and on behalf of the Company. Awards may consist of
those listed in this paragraph 8 hereof and may be granted singly, in
combination or in tandem. Awards may also be made in combination or in tandem
with, in replacement of, or as alternatives to, grants or rights under this Plan
or any other employee plan of the Company or any of its Subsidiaries, including
the plan of any acquired entity. Any provision of this Plan to the contrary
notwithstanding, the maximum number of shares of Common Stock for which Options
and SARs may be granted under the Plan to any one Employee during a calendar
year is 500,000. An Award may provide for the grant or issuance of additional,
replacement or alternative Awards upon the occurrence of specified events,
including the exercise of the original Award granted to a Participant. All or
part of an Award may be subject to conditions established by the Committee,
which may include, but are not limited to, continuous service with the Company
and its Subsidiaries, achievement of specific business objectives, increases in
specified indices, attainment of specified growth rates and other comparable
measurements of performance. Upon the termination of employment by a
Participant, any unexercised, deferred, unvested or unpaid Awards shall be
treated as set forth in the applicable Award Agreement.
(a) Stock Option. An Award may be in the form of an Option. An Option
awarded pursuant to this Plan may consist of an Incentive Option or a
Nonqualified Option. The price at which shares of Common Stock may be purchased
upon the exercise of any Incentive Option shall be not less than the Fair Market
Value of the Common Stock on the date of grant, except that with respect to
Incentive Options granted to any Participant who at the time of such grant owns
stock possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company, the exercise price shall be not less than 110
percent of the Fair Market Value of the Common Stock on the date of grant and
such Incentive Option must not be exercisable after the expiration of five years
from the date such option is granted. The price at which shares of Common Stock
may be purchased upon the exercise of a Nonqualified Option shall be such amount
as shall be determined by the Committee, but not less than the par value of the
Common Stock on the date of grant. The maximum number of shares of Common Stock
with respect to which any Option may be granted to an Employee hereunder is the
number of shares available for Awards, pursuant to paragraph 5 hereof, at the
time such Option is granted. Subject to the foregoing provisions, the terms,
conditions and limitations applicable to any Options awarded pursuant to this
Plan, including the term of any Options and the date or dates upon which they
become exercisable, shall be determined by the Committee.
(b) Stock Appreciation Right. An Award may be in the form of an SAR. The
terms, conditions and limitations applicable to any SARs awarded pursuant to
this Plan, including the term of any SARs and the date or dates upon which they
become exercisable, shall be determined by the Committee.
(c) Stock Award. An Award may be in the form of a Stock Award. The terms,
conditions and limitations applicable to any Stock Awards granted pursuant to
this Plan shall be determined by the Committee.
(d) Cash Award. An Award may be in the form of a Cash Award. The terms,
conditions and limitations applicable to any Cash Awards granted pursuant to
this Plan shall be determined by the Committee.
(e) Performance Award. Without limiting the type or number of Awards that
may be made under the other provisions of this Plan, an Award may be in the form
of a Performance Award. A Performance Award shall be paid, vested or otherwise
deliverable solely on account of the
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attainment of one or more pre-established, objective Performance Goals
established by the Committee.
9. Payment of Awards.
(a) General. Payment of Awards may be made in the form of cash or Common
Stock, or a combination thereof, and may include such restrictions as the
Committee shall determine, including, in the case of Common Stock, restrictions
on transfer and forfeiture provisions. If payment of an Award is made in the
form of Restricted Stock, the Award Agreement relating to such shares shall
specify whether they are to be issued at the beginning or end of the Restriction
Period. In the event that shares of Restricted Stock are to be issued at the
beginning of the Restriction Period, the certificates evidencing such shares (to
the extent that such shares are so evidenced) shall contain appropriate legends
and restrictions that describe the terms and conditions of the restrictions
applicable thereto. In the event that shares of Restricted Stock are to be
issued at the end of the Restriction Period, the right to receive such shares
shall be evidenced by book entry registration or in such other manner as the
Committee may determine.
(b) Dividends and Interest. Rights to dividends or Dividend Equivalents may
be extended to and made part of any Award consisting of shares of Common Stock
or units denominated in shares of Common Stock, subject to such terms,
conditions and restrictions as the Committee may establish. The Committee may
also establish rules and procedures for the crediting of interest on deferred
cash payments and Dividend Equivalents for Awards consisting of shares of Common
Stock or units denominated in shares of Common Stock.
(c) Substitution of Awards. At the discretion of the Committee, a
Participant may be offered an election to substitute an Award for another Award
or Awards of the same or different type.
10. Stock Option Exercise. The price at which shares of Common Stock may
be purchased under an Option shall be paid in full at the time of exercise in
cash or, if elected by the optionee and to the extent permitted by the
optionee's Award Agreement, the optionee may purchase such shares by means of
tendering Common Stock or surrendering another Award, including Restricted
Stock, valued at Fair Market Value on the date of exercise, or any combination
thereof. The Committee shall determine acceptable methods for Participants to
tender Common Stock or other Awards. The Committee may provide for procedures to
permit the exercise or purchase of such Awards by use of the proceeds to be
received from the sale of Common Stock issuable pursuant to an Award. Unless
otherwise provided in the applicable Award Agreement, in the event shares of
Restricted Stock are tendered as consideration for the exercise of an Option, a
number of the shares issued upon the exercise of the Option, equal to the number
of shares of Restricted Stock used as consideration therefor, shall be subject
to the same restrictions as the Restricted Stock so submitted as well as any
additional restrictions that may be imposed by the Committee. In addition, the
Committee, at its sole discretion, may provide for loans, on either a short-term
or demand basis, from the Company to a Participant to permit the payment of the
exercise price of an Option.
11. Tax Withholding. The Company shall have the right to deduct applicable
taxes from any Award payment and withhold, at the time of delivery or vesting of
cash or shares of Common Stock under this Plan, an appropriate amount of cash or
number of shares of Common Stock or a combination thereof for payment of taxes
required by law or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such taxes,
including, withholding from other amounts payable to or with respect to the
Participant by the Company. The Committee may also permit withholding to be
satisfied by the transfer to the Company of shares of Common Stock theretofore
owned by the holder of the Award with respect to which withholding is required.
If shares of Common Stock are used to satisfy tax withholding, such shares shall
be valued based on the Fair Market Value when the tax withholding is required to
be made. The
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Committee may provide for loans, on either a short-term or demand basis, from
the Company to a Participant to permit the payment of taxes required by law.
12. Amendment, Modification, Suspension or Termination. The Board may
amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law, except that no amendment or alteration that would adversely affect the
rights of any Participant under any Award previously granted to such Participant
shall be made without the consent of such Participant.
13. Assignability. The Committee may prescribe and include in applicable
Award Agreements restrictions on transfer. Any attempted assignment of an Award
or any other benefit under this Plan in violation of the terms in an Award
Agreement pursuant to this paragraph 13 shall be null and void.
14. Adjustments.
(a) The existence of outstanding Awards shall not affect in any manner the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
capital stock of the Company or its business or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock (whether or not such issue is prior to, on a parity with or junior to the
Common Stock) or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding of any kind, whether or not of a character similar to that of
the acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding shares
of Common Stock, declaration of a dividend payable in shares of Common Stock or
other stock split, then (i) the number of shares of Common Stock reserved under
this Plan, (ii) the number of shares of Common Stock covered by outstanding
Awards in the form of Common Stock or units denominated in Common Stock, (iii)
the exercise or other price in respect of such Awards and (iv) the appropriate
Fair Market Value and other price determinations for such Awards shall each be
proportionately and equitably adjusted by the Board to reflect such transaction.
In the event of any other recapitalization or capital reorganization of the
Company, any consolidation or merger of the Company with another corporation or
entity, the adoption by the Company of any plan of exchange affecting the Common
Stock or any distribution to holders of Common Stock of securities or property
(other than normal cash dividends or dividends payable in Common Stock), the
Board shall make appropriate and equatable adjustments to (i) the number of
shares of Common Stock covered by Awards in the form of Common Stock or units
denominated in Common Stock, (ii) the exercise or other price in respect of such
Awards and (iii) the appropriate Fair Market Value and other price
determinations for such Awards, to give effect to such transaction; provided
that such adjustments shall only be such as are necessary to maintain the
proportionate interest of the holders of the Awards and preserve, without
exceeding, the value of such Awards. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to issue or assume Awards by means of
substitution of new Awards, as appropriate, for previously issued Awards or to
assume previously issued Awards as part of such adjustment.
15. Restrictions. No Common Stock or other form of payment shall be issued
with respect to any Award unless the Company shall be satisfied based on the
advice of its counsel that such issuance will be in compliance with applicable
federal and state securities laws. Certificates evidencing shares of Common
Stock delivered under this Plan (to the extent that such shares are so
evidenced) may be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any securities exchange
or transaction reporting system upon which the Common Stock is then listed or to
which it is admitted for quotation and any applicable federal or state
securities law. The Committee
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may cause a legend or legends to be placed upon such certificates (if any) to
make appropriate reference to such restrictions.
16. Unfunded Plan. Insofar as it provides for Awards of cash, Common Stock
or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Participants who are entitled to cash, Common
Stock or rights thereto under this Plan, any such accounts shall be used merely
as a bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, Common Stock or rights
thereto, nor shall this Plan be construed as providing for such segregation, nor
shall the Company, the Board, the Committee or any officer or other employee of
the Company be deemed to be a trustee of any cash, Common Stock or rights
thereto to be granted under this Plan. Any liability or obligation of the
Company to any Participant with respect to an Award of cash, Common Stock or
rights thereto under this Plan shall be based solely upon any contractual
obligations that may be created by this Plan and any Award Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. None of the Company,
the Board, the Committee or any other officer or other employee of the Company
shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.
17. Governing Law. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Delaware.
18. Effectiveness. This Plan shall be effective as of February 26, 1997,
(the "Effective Date"), the date on which it was approved by the Board of
Directors of the Company. Notwithstanding the foregoing, the ability of the
Company to issue any Incentive Options under this Plan is expressly conditioned
upon the approval of the Plan by the holders of a majority of shares of Common
Stock before the first anniversary of the Effective Date. If the Stockholders of
the Company should fail to so approve this Plan prior to such date, the
Company's ability to issue Incentive Options under this Plan shall terminate and
cease to be of any further force or effect and any and all grants of Incentive
Options hereunder shall be null and void.
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QuickLinks
1997 INCENTIVE PLAN of BRIGHAM EXPLORATION COMPANY (As Amended through March 6,
2001)
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Exhibit 10.12
Effective as of May 15, 2001
Mr. Walter Ogier
433 Main Street
Winchester, MA 01890
Dear Walter:
I am writing to confirm our offer to you for a position as President and Chief
Operating Officer, reporting to Elliot Lebowitz, Ph.D., Chief Executive
Officer. We are pleased to offer you a starting salary of $20,130.00 per month
(equivalent to $241,560.00 per year), to be paid semi-monthly and reviewed
annually. The monthly salary includes an allowance to help offset contributions
to certain benefits should you elect them. You are also eligible for an annual
cash bonus of 35% of base salary and to participate in our annual merit-based
stock option program, provided that any award of options will be subject to the
approval of our Board of Directors. You are also entitled to receive shares of
BTI common stock in accordance with the terms and conditions of the Eligix, Inc.
Management Equity Incentive Plan. In addition, you will receive medical and
dental insurance, 15% of the cost of which is contributed by the employee. Term
life insurance, equivalent to one times your annual salary, and parking will be
provided by the company without employee contribution. Long-term disability
insurance is provided, 100% of the cost is contributed by the employee (your
annual premium would be approximately $1,416.00). You will also be entitled to
three weeks paid vacation accrued on an annual basis and 11 paid holidays per
year. In the event your employment is terminated by Biotransplant without
cause, you would receive up to 12 months double base salary, payable in 24 equal
semi-monthly installments, which would be discontinued upon your securing other
employment.
Your employment is subject to your signing an Invention, Non-Disclosure and
Non-Compete Agreement with BioTransplant, in the form previously provided to
you, and review of any agreement you may have with others to insure that your
employment with BioTransplant is not in conflict with any such agreements.
Also, this offer is contingent upon your ability to provide proof of your legal
right to work in the United States, as defined by Federal regulations.
By signing this letter below, you acknowledge that the foregoing offered terms
of your employment with BioTransplant do not constitute (i) a significant
diminution of your duties, responsibilities, power, title or office in effect at
Eligix, Inc. immediately prior to your acceptance of this offer or (ii) a
material reduction in your compensation (including without limitation, salary,
bonuses, options and benefits) or material change in your manner of compensation
(including without limitation, the timing of any salary or bonus payments) in
effect for you at Eligix, Inc. immediately prior to your acceptance of this
offer.
If you agree to the terms outlined above, please sign both copies of this letter
and return one copy using the enclosed, stamped envelope.
We look forward to your joining BioTransplant. We are confident that you will
make a significant contribution to BioTransplant's future success.
Sincerely,
/s/ Elliot Lebowitz
Elliot Lebowitz, Ph.D.
President and CEO
Accepted and Agreed to:
/s/ Walter C. Ogier
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Name: Walter C. Ogier Date: May 15, 2001
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Exhibit 10-e(i)
PLAN AMENDMENTS
SBC SENIOR MANAGEMENT DEFERRED COMPENSATION PLAN
SBC MANAGEMENT DEFERRED COMPENSATION PLAN
(8 - Year Units)
Section 9.14, reading as follows, is hereby added to each Plan:
9.14 Termination Under EPR. Notwithstanding any other provisions of the Plan, if a Participant's
employment terminates before the Participant attains age fifty-five, and if such termination is as an
EPR Terminee under the Enhanced Pension and Retirement Program ("EPR") of the SBC Pension Benefit
Plan-Nonbargained Program ("SBC PBP") or as a Deceased Electing Employee under EPR and is on or after
the date Participant is within five years of being pension eligible, i.e., would be within five years
of being eligible to retire with a service pension under the rules for service pension eligibility as
in effect under the SBC PBP, and/or is a Senior Manager within five years of being eligible to retire
with an immediate pension based on the eligibility rules of the SBC Supplemental Retirement Income
Plan, whether or not actually a participant in either such plan, or a Participant who is age 55 or
over terminates employment under EPR, then the provisions of this Section 9.14 shall govern and
control with respect to the distribution of the Plan's benefits if the benefits offered by this
Section 9.14 are elected. In such case, the Participant, or the Participant's Beneficiary(ies) if the
Participant's employment terminates by reason of the Participant's death, may irrevocably elect in
writing, in an EPR special election form accompanied by a Waiver Agreement, as described below, filed
with the Company, to waive the Termination Benefit or the Pre-Retirement Survivor Benefit or the Early
Retirement Benefit, as applicable, with respect to any or all Units of Participation, and in lieu of
said Benefit for any such Unit, receive an "EPR Alternative Termination Benefit."
Such an EPR Alternative Termination Benefit for a Unit shall be the Unit as described in the
Participant's Agreement, provided in accordance with and governed in all respects by the terms of the
Plan and said Agreement, except that the Plan and Agreement shall be applied with respect to such
Unit, in accordance with Participant's special EPR election form applicable to such Unit, as if the
Participant had remained in employment and retired upon the Participant's Early Retirement Date
specified in his EPR special election form applicable to such Unit of Participation, regardless of
Participant's actual termination date. For purposes of applying the Plan and the Agreement, Normal
Retirement shall be the Participant's sixty-fifth birthday and Early Retirement shall be the date
specified by the Participant as Participant's Early Retirement date, which date shall be specified at
the time the Waiver Agreement, as described below, is filed with the Company, and which date may be no
earlier than Participant's fifty-fifth birthday. In the event of Participant's death prior to age
fifty-five, the EPR Alternative Termination Benefit for a Unit, whether such Benefit was elected by
the Participant or Participant's Beneficiary(ies), shall be determined, as described below, by
applying the Plan and Agreement with respect to such Unit as if the Participant had died upon or after
reaching age fifty-five.
Accordingly, notwithstanding any other provisions of the Plan, for purposes of application of this
Section 9.14, in the event a Participant elects an EPR Alternative Termination Benefit in lieu of the
Termination Benefit or the Early Retirement Benefit for a Unit, or a Beneficiary(ies) elects to
receive an EPR Alternative Termination Benefit in lieu of a Pre-Retirement Survivor Benefit for a
Unit, as applicable, survivor benefits for such Unit shall be determined as follows: (a) If
Participant dies on or after the date specified by Participant as Participant's Early Retirement date,
Participant's Beneficiary(ies) shall receive the remaining installments of Participant's retirement
benefit; or (b) If Participant dies on or after age fifty-five but prior to the date specified by
Participant as Participant's Early Retirement date, Participant's Beneficiary(ies) will receive
survivor benefits in accordance with the next to the last paragraph in Section 6.2, i.e., the
provision of the Plan that would have applied had Participant's death actually been an in service
death which occurred upon or after attainment of age fifty-five; or (c) If Participant's death occurs
prior to age fifty-five, Participant's Beneficiary(ies) will receive at such time as Participant would
have attained age fifty-five, survivor benefits in accordance with the next to the last paragraph in
Section 6.2, i.e., the provision of the Plan that would have applied had Participant's death actually
been an in service death which occurred upon attainment of age fifty-five; and (d) Finally, the
benefit described in Section 6.6 shall apply commencing on the later of the sixteenth year after
commencement of payments pursuant to the EPR Alternative Termination Benefit or the first of the month
following Participant's death.
For purposes of computing the Vested Benefits (as such term is used in rabbi trusts ("Trusts")
established by the Company for the purpose of providing for the payment of benefits under the Plan)
corresponding to an EPR Alternative Termination Benefit, for all Trust purposes, including for
purposes of determining the Trust funding level applicable for such EPR Alternative Termination
Benefit, the Participant shall be treated for each such EPR Alternative Termination Benefit Unit as if
continuing in employment until age fifty-five if the Participant dies before attaining age fifty-five
or until the date of Participant's death if Participant dies after attaining age fifty-five or until
reaching the Participant's Early Retirement date for such Unit as selected by the Participant if
Participant survives until such date, i.e., the Trust funding for any such Unit and the security
afforded Participant or Participant's Beneficiary(ies) thereby shall be no different as a result of
this Section 9.14 than they would have been had Participant continued in employment in the absence of
this Section 9.14 and lived until at least age fifty-five.
Waiver of a Termination Benefit or Early Retirement Benefit with respect to a Unit by a Participant,
or of a Pre-Retirement Survivor Benefit with respect to a Unit by a Beneficiary(ies), as applicable,
and receipt of an EPR Alternative Termination Benefit in lieu thereof, shall be conditioned upon the
agreement in writing by the Participant, or Participant's Beneficiary(ies), as applicable, at the time
of Participant's termination of employment, to provisions substantially as follows:
--------------------------------------------------------------------------------
SBC SENIOR MANAGEMENT DEFERRED COMPENSATION PLAN OF 1988
SBC MANAGEMENT DEFERRED COMPENSATION PLAN OF 1988
(4-Year Units- Retirement Option)
Section 6.8, reading as follows, is hereby added to each Plan:
6.8 Termination Under EPR. Notwithstanding any other provisions of the Plan, if a Participant's
employment terminates before the Participant attains age fifty-five, and if such termination is as an
EPR Terminee under the Enhanced Pension and Retirement Program ("EPR") of the SBC Pension Benefit
Plan-Nonbargained Program ("SBC PBP") or as a Deceased Electing Employee under EPR, and is on or after
the date Participant is within five years of being pension eligible, i.e., would be within five years
of being eligible to retire with a service pension under the rules for service pension eligibility as
in effect under the SBC PBP, and/or is a Senior Manager within five years of being eligible to retire
with an immediate pension based on the eligibility rules of the SBC Supplemental Retirement Income
Plan, whether or not actually a participant in either such plan, or a Participant who is age 55 or
over terminates employment under EPR, then the provisions of this Section 6.8 shall govern and control
with respect to the distribution of the Plan's benefits if the benefits offered by this Section 6.8
are elected. In such case, the Participant, or the Participant's Beneficiary(ies) if the
Participant's employment terminates by reason of the Participant's death, may irrevocably elect in
writing, in an EPR special election form filed with the Company, to waive the Termination Benefit or
the Pre-Retirement Survivor Benefit or the Early Retirement Benefit, as applicable, with respect to
any or all Units of Participation, and in lieu of said Benefit for any such Unit, receive an "EPR
Alternative Termination Benefit".
Such an EPR Alternative Termination Benefit for a Unit shall be the Unit as described in the
Participant's Agreement, provided in accordance with and governed in all respects by the terms of the
Plan and said Agreement, except that the Plan and Agreement shall be applied with respect to such
Unit, in accordance with Participant's special EPR election form applicable to such Unit, as if the
Participant had remained in employment and retired upon the Participant's Early Retirement Date
specified in his EPR special election form applicable to such Unit of Participation, regardless of
Participant's actual termination date. For purposes of applying the Plan and the Agreement, Normal
Retirement shall be the Participant's sixty-fifth birthday and Early Retirement shall be the date
specified by the Participant as Participant's Early Retirement date, which date shall be specified in
Participant's special EPR election form filed with the Company, and which date may be no earlier than
Participant's fifty-fifth birthday. In the event of Participant's death prior to age fifty-five, the
EPR Alternative Termination Benefit for a Unit, whether such Benefit was elected by the Participant or
Participant's Beneficiary(ies), shall be determined, as described below, by applying the Plan and
Agreement with respect to such Unit as if the Participant had died upon or after reaching age
fifty-five.
Accordingly, notwithstanding any other provisions of the Plan, for purposes of application of this
Section 6.8, in the event a Participant elects an EPR Alternative Termination Benefit in lieu of the
Termination Benefit or the Early Retirement Benefit for a Unit, or a Beneficiary(ies) elects to
receive an EPR Alternative Termination Benefit in lieu of a Pre-Retirement Survivor Benefit for a
Unit, as applicable, survivor benefits for such Unit shall be determined as follows: (a) If
Participant dies on or after the date specified by Participant as Participant's Early Retirement date,
Participant's Beneficiary(ies) shall receive the remaining installments of Participant's retirement
benefit; or (b) If Participant dies on or after age fifty-five but prior to the date specified by
Participant as Participant's Early Retirement date, Participant's Beneficiary(ies) will receive
survivor benefits in accordance with Section 6.6(b), i.e., the provision of the Plan that would have
applied had Participant's death actually been an in service death which occurred upon or after
attainment of age fifty-five, or (c) If Participant's death occurs prior to age fifty-five,
Participant's Beneficiary(ies) will receive at such time as Participant would have attained age
fifty-five, survivor benefits in accordance with Section 6.6(b), i.e., the provision of the Plan that
would have applied had Participant's death actually been an in service death which occurred upon
attainment of age fifty-five; and (d) Finally, the benefit described in Section 6.6(e) shall apply
commencing on the later of the sixteenth year after commencement of payments pursuant to the EPR
Alternative Termination Benefit or the first of the month following Participant's death.
For purposes of computing the Vested Benefits (as such term is used in rabbi trusts ("Trusts")
established by the Company for the purpose of providing for the payment of benefits under the Plan)
corresponding to an EPR Alternative Termination Benefit, for all Trust purposes, including for
purposes of determining the Trust funding level applicable for such EPR Alternative Termination
Benefit, the Participant shall be treated for each such EPR Alternative Termination Benefit Unit as if
continuing in employment until age fifty-five if the Participant dies before attaining age fifty-five
or until the date of Participant's death if Participant dies after attaining age fifty-five or until
reaching the Participant's Early Retirement Date for such Unit as selected by the Participant if
Participant survives until such date, i.e., the Trust funding for any such Unit and the security
afforded Participant or Participant's Beneficiary(ies) thereby shall be no different as a result of
this Section 6.8 than they would have been had Participant continued in employment in the absence of
this Section 6.8 and lived until at least age fifty-five.
--------------------------------------------------------------------------------
SBC COMPENSATION DEFERRAL PLAN
(4-Year Unit- Retirement Option)
Section 6.8, reading as follows, is hereby added to Plan:
6.8 Termination Under EPR. Notwithstanding any other provisions of the Plan, if a Participant's
employment terminates before the Participant attains age fifty-five, and if such termination is as an
EPR Terminee under the Enhanced Pension and Retirement Program ("EPR") of the SBC Pension Benefit
Plan-Nonbargained Program ("SBC PBP") or as a Deceased Electing Employee under EPR, and is on or after
the date Participant is within five years of being pension eligible, i.e., would be within five years
of being eligible to retire with a service pension under the rules for service pension eligibility as
in effect under the SBC PBP, and/or is a Senior Manager within five years of being eligible to retire
with an immediate pension based on the eligibility rules of the SBC Supplemental Retirement Income
Plan, whether or not actually a participant in either such plan, or a Participant who is age 55 or
over terminates employment under EPR, then the provisions of this Section 6.8 shall govern and control
with respect to the distribution of the Plan's benefits if the benefits offered by this Section 6.8
are elected. In such case, the Participant, or the Participant's Beneficiary(ies) if the
Participant's employment terminates by reason of the Participant's death, may irrevocably elect in
writing, in an EPR special election form filed with the Company, to waive the Termination Benefit or
the Pre-Retirement Survivor Benefit or the Early Retirement Benefit, as applicable, with respect to
any or all Units of Participation, and in lieu of said Benefit for any such Unit, receive an "EPR
Alternative Termination Benefit".
Such an EPR Alternative Termination Benefit for a Unit shall be the Unit as described in the
Participant's Agreement, provided in accordance with and governed in all respects by the terms of the
Plan and said Agreement, except that the Plan and Agreement shall be applied with respect to such
Unit, in accordance with Participant's special EPR election form applicable to such Unit, as if the
-- --
Participant had remained in employment and retired upon the Participant's Early Retirement Date
specified in his EPR special election form applicable to such Unit of Participation, regardless of
Participant's actual termination date. For purposes of applying the Plan and the Agreement, Normal
Retirement shall be the Participant's sixty-fifth birthday and Early Retirement shall be the date
specified by the Participant as Participant's Early Retirement date, which date shall be specified in
Participant's special EPR election form filed with the Company, and which date may be no earlier than
Participant's fifty-fifth birthday. In the event of Participant's death prior to age fifty-five, the
EPR Alternative Termination Benefit for a Unit, whether such Benefit was elected by the Participant or
Participant's Beneficiary(ies), shall be determined, as described below, by applying the Plan and
Agreement with respect to such Unit as if the Participant had died upon or after reaching age
fifty-five.
Accordingly, notwithstanding any other provisions of the Plan, for purposes of application of this
Section 6.8, in the event a Participant elects an EPR Alternative Termination Benefit in lieu of the
Termination Benefit or the Early Retirement Benefit for a Unit, or a Beneficiary(ies) elects to
receive an EPR Alternative Termination Benefit in lieu of a Pre-Retirement Survivor Benefit for a
Unit, as applicable, survivor benefits for such Unit shall be determined as follows: (a) If
Participant dies on or after the date specified by Participant as Participant's Early Retirement date,
Participant's Beneficiary(ies) shall receive the remaining installments of Participant's retirement
benefit; or (b) If Participant dies on or after age fifty-five but prior to the date specified by
Participant as Participant's Early Retirement date, Participant's Beneficiary(ies) will receive
survivor benefits in accordance with Section 6.6(b), i.e., the provision of the Plan that would have
applied had Participant's death actually been an in service death which occurred upon or after
attainment of age fifty-five, or (c) If Participant's death occurs prior to age fifty-five,
Participant's Beneficiary(ies) will receive at such time as Participant would have attained age
fifty-five, survivor benefits in accordance with Section 6.6(b), i.e., the provision of the Plan that
would have applied had Participant's death actually been an in service death which occurred upon
attainment of age fifty-five.
For purposes of computing the Vested Benefits (as such term is used in rabbi trusts ("Trusts")
established by the Company for the purpose of providing for the payment of benefits under the Plan)
corresponding to an EPR Alternative Termination Benefit, for all Trust purposes, including for
purposes of determining the Trust funding level applicable for such EPR Alternative Termination
Benefit, the Participant shall be treated for each such EPR Alternative Termination Benefit Unit as if
continuing in employment until age fifty-five if the Participant dies before attaining age fifty-five
or until the date of Participant's death if Participant dies after attaining age fifty-five or until
reaching the Participant's Early Retirement Date for such Unit as selected by the Participant if
Participant survives until such date, i.e., the Trust funding for any such Unit and the security
afforded Participant or Participant's Beneficiary(ies) thereby shall be no different as a result of
this Section 6.8 than they would have been had Participant continued in employment in the absence of
this Section 6.8 and lived until at least age fifty-five.
--------------------------------------------------------------------------------
SBC SENIOR MANAGEMENT DEFERRED COMPENSATION PLAN OF 1988
(EARLY RETIREMENT OPTION)
SBC MANAGEMENT DEFERRED COMPENSATION PLAN OF 1988
SBC COMPENSATION DEFERRAL PLAN
(4-Year Units- Early Payment Option)
Section 7.6, reading as follows, is hereby added to each Plan:
7.6 Termination Under EPR. Notwithstanding any other provisions of the Plan, if a Participant's
employment terminates before the Participant attains age fifty-five and prior to the Early Payment
Date with respect to a Unit of Participation, and if such termination is as an EPR Terminee under the
Enhanced Pension and Retirement Program ("EPR") of the SBC Pension Benefit Plan-Nonbargained Program
("SBC PBP") or as a Deceased Electing Employee under EPR, and is on or after the date Participant is
within five years of being pension eligible, i.e., would be within five years of being eligible to
retire with a service pension under the rules for service pension eligibility as in effect under the
SBC PBP, and/or is a Senior Manager within five years of being eligible to retire with an immediate
pension based on the eligibility rules of the SBC Supplemental Retirement Income Plan, whether or not
actually a Participant in either such Plan, or a Participant who is age 55 or over terminates
employment under EPR, then the provisions of this Section 7.6 shall govern and control with respect
to the distribution of the Plan's benefits if the benefits offered by this Section 7.6 are elected.
In such case, the Participant, or the Participant's Beneficiary(ies) if the Participant's employment
terminates by reason of the Participant's death, may irrevocably elect in writing, in an EPR special
election form filed with the Company, to waive the Termination Benefit or the Pre-Retirement Survivor
Benefit or the Early Payment Date benefit, as applicable, with respect to any or all Units of
Participation, and in lieu of said Benefit for any such Unit, receive an "EPR Alternative Termination
Benefit".
Such EPR Alternative Termination Benefit for a Unit shall be the Unit as described in the
Participant's Agreement, provided in accordance with and governed in all respects by the terms of the
Plan and said Agreement, except that the Plan and Agreement shall be applied with respect to such
Unit, in accordance with Participant's special EPR election form applicable to such Unit, as if the
Participant had remained in employment and retired upon attaining the Early Payment Date specified in
his EPR special election form applicable to such Unit of Participation, regardless of Participant's
actual termination date. For purposes of applying the Plan and the Agreement, Normal Retirement shall
be the Participant's sixty-fifth birthday and Early Retirement shall be the Early Payment Date for
such Unit, which date shall be specified in Participant's special EPR election form filed with the
Company, and which date may be no later than the first day of the month after the Participant attains
age sixty-five. In the event of Participant's death prior to age fifty-five, the EPR Alternative
Termination Benefit for a Unit, whether such Benefit was elected by the Participant or Participant's
Beneficiary(ies), shall be determined, as described below, by applying the Plan and Agreement with
respect to such Unit as if the Participant had died upon reaching age fifty-five.
Accordingly, notwithstanding any other provisions of the Plan, for purposes of application of this
Section 7.6, in the event a Participant elects an EPR Alternative Termination Benefit in lieu of the
Termination Benefit or the Early Payment Date benefit for a Unit, or a Beneficiary(ies) elects to
receive an EPR Alternative Termination Benefit in lieu of a Pre-Retirement Survivor Benefit for a
Unit, as applicable, survivor benefits for such Unit shall be determined as follows: (a) If
Participant dies on or after the Early Retirement Date for such Unit (i.e., on or after Participant's
Early Retirement date for such Unit), Participant's Beneficiary(ies) shall receive the remaining
installments of Participant's benefit; or (b) If Participant dies on or after age fifty-five but
prior to the Early Payment Date for a Unit (i.e., on or after Participant's Early Retirement date for
such Unit), Participant's Beneficiary(ies) will receive survivor benefits in accordance with Section
7.4(b), i.e., the provision of the Plan that would have applied had Participant's death actually been
an in service death which occurred upon or after attainment of age fifty-five; or (c) If Participant's
death occurs prior to age fifty-five, Participant's Beneficiary(ies) will receive at such time as
Participant would have attained age fifty-five, survivor benefits in accordance with Section 7.4(b),
i.e., the provision of the Plan that would have applied had Participant's death actually been an in
service death which occurred upon attainment of age fifty-five.
For purposes of computing the Vested Benefits (as such term is used in rabbi trusts ("Trusts")
established by the Company for the purpose of providing for the payment of benefits under the Plan)
corresponding to an EPR Alternative Termination Benefit, for all Trust purposes, including for
purposes of determining the Trust funding level applicable for such EPR Alternative Termination
Benefit, the Participant shall be treated for each such EPR Alternative Termination Benefit Unit as if
continuing in employment until age fifty-five if the Participant dies before attaining age fifty-five
or until the date of Participant's death if Participant dies after attaining age fifty-five or until
reaching the Early Payment Date for a Unit (i.e., on or after Participant's Early Retirement date for
such Unit) if Participant survives until such date, i.e., the Trust funding for any such Unit and the
security afforded Participant or Participant's Beneficiary(ies) thereby shall be no different as a
result of this Section 7.6 than they would have been had Participant continued in employment in the
absence of this Section 7.6 and lived until at least age fifty-five.
|
AMENDED AND RESTATED PLEDGE AGREEMENT
AMENDED AND RESTATED PLEDGE AGREEMENT (as amended, modified or supplemented from
time to time, this "Pledge Agreement"), dated as of September 28, 2001, made by
MEMC Electronic Materials, Inc., a Delaware corporation ("MEMC" or the
"Pledgor") to E.ON AG, a company organized under the laws of the Republic of
Germany (the "Pledgee"), for the benefit of the Secured Creditors (as defined
below). 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, MEMC, MEMC Pasadena, Inc. (together with MEMC, the "Borrowers"), the
lenders (the "Lenders") from time to time party thereto and E.ON AG, as agent
(the "Agent" and together with the Lenders, the "Secured Creditors"), have
entered into a Second Amended and Restated Revolving Credit Agreement, dated as
of September 4, 2001, providing for the making of Advances to the Borrowers, as
contemplated therein (the "Existing Credit Agreement");
WHEREAS, in connection with the Existing Credit Agreement, MEMC and E.ON AG, as
agent, under the Existing Credit Agreement entered into a Pledge Agreement,
dated as of September 4, 2001, by and between MEMC and the Agent (the "Existing
Pledge Agreement") pursuant to which MEMC agreed to pledge all of the issued and
outstanding shares of capital stock of the Company (as defined below);
WHEREAS, the Existing Credit Agreement has been amended pursuant to the
Amendment No. 1 to Second Amended and Restated Revolving Credit Agreement, dated
as of September 28, 2001 (as such agreement may be further amended, restated,
modified or supplemented at any time and from time to time from and after the
date hereof, the "Credit Agreement");
WHEREAS, it was the understanding of the parties to the Existing Pledge
Agreement that prior to September 30, 2001, the Pledge Agreement would be
amended so as to release the pledge of 35% of the issued and outstanding shares
of capital stock of the Company;
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to
the Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
Pledgor hereby makes the following representations and warranties to the Pledgee
for the benefit of the Secured Creditors and hereby covenants and agrees with
the Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Pledge Agreement is made by the Pledgor for
the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations and indebtedness (including,
without limitation, indemnities, fees and interest thereon) of the Pledgor to
the Secured Creditors, whether now existing or hereafter incurred under, arising
out of, or in connection with the Credit Agreement and the due performance and
compliance by the Pledgor with all of the terms, conditions and agreements
contained in the Credit Agreement;
(ii) any and all sums advanced by the Pledgee in accordance with the terms
hereof in order to preserve the Collateral (as hereinafter defined) 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 the Pledgor, 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 Pledgee of its
rights hereunder, together with reasonable attorneys' fees, applicable
registration tax and stamp duty, and court costs; and
(iv) all amounts paid by any Secured Creditor as to which such Secured Creditor
has the right to reimbursement under Section 11 of this Pledge Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (iv) of this Section 1 being herein collectively called the
"Obligations," 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 Pledge Agreement or extended from time to time after the
date of this Pledge Agreement.
2. DEFINITION OF STOCK, COLLATERAL, ETC. As used herein, the term "Stock" shall
mean all of the issued and outstanding shares of capital stock, and all warrants
and options to purchase any such capital stock, of MEMC Electronic Materials,
S.p.A., a company organized and existing under the laws of Italy, with a
registered office at Viale Gherzi, 31, 28100 Novara, Italy (the "Company"). All
Stock at any time pledged hereunder is hereinafter called the "Pledged Stock",
which Stock and the percentage pledged hereunder is listed in Annex A hereto.
All Pledged Stock, together with the proceeds thereof, including any securities
and moneys received at the time held by the Pledgee hereunder, are hereinafter
called the "Collateral."
3. PLEDGE OF SECURITIES, ETC. (a) To secure the Obligations of the Pledgor and
for the purposes set forth in Section 1 hereof, the Pledgor hereby (i) grants to
the Pledgee a security interest in all of the Collateral owned by the Pledgor,
(ii) pledges and deposits as security with the Pledgee, the Pledged Stock owned
by the Pledgor on the date hereof, and delivers to the Pledgee certificates or
instruments therefor, which bear an endorsement in favor of the Pledgee
substantially in the form and substance of Annex B (and accompanied by any
transfer tax stamps required in connection with the pledge of such Pledged
Stock), or such other instruments of transfer as are reasonably acceptable to
the Pledgee, (iii) assigns, transfers, hypothecates, mortgages, charges and sets
over to the Pledgee all of the Pledgor's right, title and interest in and to
such Pledged Stock (and in and to the certificates or instruments evidencing
such Pledged Stock), to be held by the Pledgee upon the terms and conditions set
forth in this Pledge Agreement.
(b) Promptly following the endorsement of the certificates representing the
Pledged Stock described in paragraph (a) above, the Pledgor shall (i) cause the
pledge granted hereby to be registered in the Shareholders' Book of the Company,
substantially in the form and substance of Annex C hereto, and (ii) deliver to
the Pledgee a copy of the page evidencing such registration.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. If and to the extent necessary
to enable the Pledgee to perfect its security interest in any of the Collateral
or to exercise any of its remedies hereunder, the Pledgee shall have the right,
upon written notice to the Borrower (provided that no such notice shall be
required to the extent that same may not be permitted to be given under
applicable law), to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Stock, which must be held in the name of the
Pledgor, endorsed in favor of the Pledgee or any nominee or nominees of the
Pledgee or a subagent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there shall have
occurred and be continuing an Event of Default, the Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Pledged Stock owned by it, and to give consents, waivers or ratifications in
respect thereof; provided, that, in each case, no vote shall be cast or any
consent, waiver or ratification given or any action taken or omitted to be taken
which would violate or be inconsistent with any of the terms of this Pledge
Agreement or the Credit Agreement, or which would have the effect of impairing
the value of the Collateral or any part thereof or the position or interests of
the Pledgee or any other Secured Creditor in the Collateral (including, without
limitation, the issuance of additional Stock or the grant of options to purchase
the Stock). All such rights of the Pledgor to vote and to give consents, waivers
and ratifications shall cease in case an Event of Default has occurred and is
continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) Unless and until there shall have
occurred and be continuing an Event of Default, all cash dividends and
distributions payable in respect of the Pledged Stock shall be paid to the
Pledgor. The Pledgee shall be entitled to receive directly, and to retain as
part of the Collateral:
(i) all other or additional stock or other securities (other than cash) paid or
distributed by way of dividend, distribution or otherwise in respect of the
Collateral;
(ii) all other or additional stock or other securities paid or distributed in
respect of the Collateral by way of merger, consolidation, conveyance of assets,
liquidation, exchange of stock, stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement; and
(iii) all other property (other than cash) paid or distributed by way of
dividend or distribution in respect of the Collateral.
All dividends, distributions or other payments which are received by the Pledgor
contrary to the provisions of this Section 6 and Section 7 hereof shall be
received in trust for the benefit of the Pledgee, shall be segregated from other
property or funds of the Pledgor and shall be forthwith paid over to the Pledgee
as Collateral in the same form as so received (with any necessary endorsement).
(b) The Pledgee shall take all reasonable actions required by applicable
mandatory provisions of Italian law in order to enable the Pledgor to exercise
all the rights to which the Pledgor is entitled under Sections 5 and 6 hereof.
7. REMEDIES IN CASE OF DEFAULT OR EVENT OF DEFAULT. If there shall have
occurred and be continuing an Event of Default, then and in every such case, the
Pledgee shall be entitled to exercise all of the rights, powers and remedies
(whether vested in it by this Pledge Agreement, any other Loan Document or by
law) for the protection and enforcement of its rights in respect of the
Collateral, and the Pledgee shall be entitled to exercise all the rights and
remedies of a secured party under the Uniform Commercial Code or other
applicable law and also shall be entitled, without limitation, to exercise the
following rights, which the Pledgor hereby agrees to be commercially reasonable:
(a) to vote all or any part of the Pledged Stock (whether or not transferred
into the name of the Pledgee) and give all consents, waivers and ratifications
in respect of the Collateral and otherwise act with respect thereto as though it
were the outright owner thereof (the Pledgor hereby irrevocably constituting and
appointing the Pledgee the proxy and attorney-in-fact of the Pledgor, with full
power of substitution to do so); and
(b) except as otherwise required by mandatory provisions of applicable law, at
any time and from time to time to sell, assign and deliver, or grant options to
purchase, all or any part of the Collateral, or any interest therein, at any
public or private sale, without demand of performance, advertisement or notice
of intention to sell or of the time or place of sale or adjournment thereof or
to redeem or otherwise (all of which are hereby waived by the Pledgor), for
cash, on credit or for other property, for immediate or future delivery without
any assumption of credit risk, and for such price or prices and on such terms as
the Pledgee in its absolute discretion may determine, provided that at least 10
days' written notice of the time and place of any such sale shall be given to
the Pledgor. The Pledgee shall not be obligated to make any such sale of
Collateral regardless of whether any such notice of sale has theretofore been
given. The Pledgor hereby waives and releases to the fullest extent permitted by
law any right or equity of redemption with respect to the Collateral, whether
before or after sale hereunder, and all rights, if any, of marshalling the
Collateral and any other security for the Obligations or otherwise. At any such
sale, unless prohibited by applicable law, the Pledgee on behalf of the Secured
Creditors may bid for and purchase all or any part of the Collateral so sold
free from any such right or equity of redemption. Neither the Pledgee nor any
other Secured Creditor shall be liable for failure to collect or realize upon
any or all of the Collateral or for any delay in so doing nor shall any of them
be under any obligation to take any action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each and every right, power and remedy of the
Pledgee provided for in this Pledge Agreement or in any other Loan Document, or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee or any other
Secured Creditor of any one or more of the rights, powers or remedies provided
for in this Pledge Agreement or in any other Loan Document or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. No notice to or demand on the
Pledgor 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 Pledgee or any other Secured Creditor to any other or further action in any
circumstances without notice or demand. The Secured Creditors agree that this
Pledge Agreement may be enforced only by the action of the Agent or the Pledgee,
in each case acting upon the instructions of the Secured Creditors and that no
other Secured Creditor shall have any right individually to seek to enforce or
to enforce this Pledge Agreement or to realize upon the security to be granted
hereby, it being understood and agreed that such rights and remedies may be
exercised by the Agent or the Pledgee, as the case may be, for the benefit of
the Secured Creditors upon the terms of this Pledge Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee upon any
sale or other disposition of the Collateral, together with all other moneys
received by the Pledgee hereunder, shall be applied as follows:
(i) first, to the payment of all amounts owing the Pledgee of the type described
in clauses (ii), (iii) and (iv) of the definition of "Obligations";
(ii) second, to the extent proceeds remain after the application pursuant to the
preceding clause (i), an amount equal to the outstanding Obligations shall be
paid to the Secured Creditors as provided in Section 9(c) hereof, with each
Secured Creditor receiving an amount equal to such outstanding Obligations or,
if the proceeds are insufficient to pay in full all such Obligations, its pro
rata share of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the application pursuant to the
preceding clauses (i) and (ii) and following the termination of this Agreement
pursuant to Section 18 hereof, to the Pledgor or to whomever may be lawfully
entitled to receive such surplus.
(b) If any payment to any Secured Creditor of its pro rata share of any
distribution would result in overpayment to such Secured Creditor, such excess
amount shall instead be distributed in respect of the unpaid Obligations of the
other Secured Creditors, with each Secured Creditor whose Obligations have not
been paid in full to receive an amount equal to such excess amount multiplied by
a fraction the numerator of which is the unpaid Obligations of such Secured
Creditor and the denominator of which is the unpaid Obligations of all Secured
Creditors entitled to such distribution.
(c) All payments required to be made hereunder shall be made to the Agent under
the Credit Agreement for the account of the Secured Creditors.
(d) For purposes of applying payments received in accordance with this Section
9, the Pledgee shall determine the outstanding Obligations owed to the Secured
Creditors.
(e) It is understood and agreed that the Pledgor shall remain liable to the
extent of any deficiency between the amount of the proceeds of the Collateral
hereunder and the aggregate amount of the Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the Pledgee
hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt of the Pledgee or the officer making
the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold, and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Pledgee or such officer or be answerable in any way for the misapplication or
nonapplication thereof.
11. INDEMNITY. The Pledgor agrees (i) to indemnify and hold harmless the
Pledgee in such capacity and each other Secured Creditor and their respective
successors, assigns, employees, agents and servants (individually an
"Indemnitee," and collectively the "Indemnitees") from and against any and all
claims, demands, losses, judgments and liabilities (including liabilities for
penalties) of whatsoever kind or nature, and (ii) to reimburse each Indemnitee
for all costs and expenses, including reasonable attorneys' fees, in each case
growing out of or resulting from this Pledge Agreement or the exercise by any
Indemnitee of any right or remedy granted to it hereunder (but excluding any
claims, demands, losses, judgments and liabilities or expenses to the extent
incurred by reason of gross negligence or willful misconduct of such
Indemnitee). In no event shall the Pledgee be liable, in the absence of gross
negligence or willful misconduct on its part, for any matter or thing in
connection with this Pledge Agreement other than to account for monies actually
received by it in accordance with the terms hereof. If and to the extent that
the obligations of the Pledgor under this Section 11 are unenforceable for any
reason, the Pledgor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible under
applicable law.
12. PLEDGEE NOT BOUND. (a) The Pledgee shall not be obligated to perform or
discharge any obligation of the Pledgor as a result of the collateral assignment
hereby effected.
(b) The acceptance by the Pledgee of this Pledge Agreement, with all the rights,
powers, privileges and authority so created, shall not at any time or in any
event obligate the Pledgee to appear in or defend any action or proceeding
relating to the Collateral to which it is not a party, or to take any action
hereunder or thereunder, or to expend any money or incur any expenses or perform
or discharge any obligation, duty or liability under the Collateral.
13. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) The Pledgor agrees that it will
join with the Pledgee in executing and, at the Pledgor's own expense, file and
refile under the Uniform Commercial Code or other applicable law such financing
statements, continuation statements and other documents in such offices as the
Pledgee may deem necessary and wherever required by law in order to perfect and
preserve the Pledgee's security interest in the Collateral and hereby authorizes
the Pledgee to file financing statements and amendments thereto relative to all
or any part of the Collateral without the signature of the Pledgor where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Pledgee such additional conveyances, assignments, agreements
and instruments as the Pledgee may reasonably require or deem necessary to carry
into effect the purposes of this Pledge Agreement or to further assure and
confirm unto the Pledgee its rights, powers and remedies hereunder.
(b) The Pledgor hereby appoints the Pledgee the Pledgor's attorney-in-fact, with
full authority in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise, to act from time to time solely after the occurrence and
during the continuance of an Event of Default in the Pledgee's reasonable
discretion to take any action and to execute any instrument which the Pledgee
may deem necessary or advisable to accomplish the purposes of this Pledge
Agreement.
14. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this Pledge
Agreement all items of the Collateral at any time received under this Pledge
Agreement. It is expressly understood and agreed by each Secured Creditor that
by accepting the benefits of this Pledge Agreement each such Secured Creditor
acknowledges and agrees that the obligations of the Pledgee as holder of the
Collateral and interests therein and with respect to the disposition thereof,
and otherwise under this Pledge Agreement, are only those expressly set forth in
this Pledge Agreement. The Pledgee shall act hereunder on the terms and
conditions set forth herein and in the other Loan Documents.
15. TRANSFER BY THE PLEDGOR. The Pledgor will not sell or otherwise dispose of,
grant any option with respect to, or mortgage, pledge or otherwise encumber any
of the Collateral or any interest therein, except for the rights of the Pledgee
and each other Secured Creditor as set forth herein.
16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR. The Pledgor
represents, warrants and covenants that (i) the Stock held by the Pledgor
consists of the number and type of shares of the stock of the Company as
described in Annex A hereto, (ii) such Stock constitutes all of the issued and
outstanding capital stock of the Company as is set forth in Annex A hereto,
(iii) no other person or entity holds any Stock or options to purchase the
Stock; (iv) it is the legal, record and beneficial owner of all Stock, subject
to no Lien (except the Lien created by this Pledge Agreement); (v) it has full
power, authority and legal right to pledge all the Pledged Stock pledged by it
pursuant to this Pledge Agreement; (vi) this Pledge Agreement has been duly
authorized, executed and delivered by the Pledgor and constitutes a legal, valid
and binding obligation of the Pledgor enforceable in accordance with its terms
except to the extent that the enforceability hereof 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); (vii) except as have been
obtained by the Pledgor as of the date hereof, no consent of any other party
(including, without limitation, any stockholder, partner or creditor of the
Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required to be obtained by the
Pledgor in connection with the execution, delivery or performance of this Pledge
Agreement, the validity or enforceability of this Pledge Agreement, the
perfection or enforceability of the Pledgee's security interest in the
Collateral or, except for compliance with or as may be required by applicable
securities laws, the exercise by the Pledgee of any of its rights or remedies
provided herein; (viii) the execution, delivery and performance of this Pledge
Agreement by the Pledgor will not violate any provision of any applicable law or
regulation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, applicable to the
Pledgor, or of the certificate of incorporation or by-laws (or equivalent
organizational documents) of the Pledgor or of any securities issued by the
Pledgor or any of its Subsidiaries, or of any mortgage, indenture, lease, deed
of trust, loan agreement, credit agreement or other material contract, agreement
or instrument or undertaking to which the Pledgor or any of its Subsidiaries is
a party or which purports to be binding upon the Pledgor or any of its
Subsidiaries or upon any of their respective assets and will not result in the
creation or imposition of (or the obligation to create or impose) any lien or
encumbrance on any of the assets of the Pledgor or any of its Subsidiaries
except as contemplated by this Pledge Agreement; (ix) all the shares of the
Stock have been duly and validly issued, are fully paid and non-assessable and
are subject to no options to purchase or similar rights; (x) upon the pledge,
assignment and delivery to the Pledgee of the endorsed Pledged Stock pursuant to
this Pledge Agreement and the registration in the Shareholders' Book of the
Company, the Pledgee in favor of the Secured Creditors will have a valid and
perfected first priority Lien in the Pledged Stock, and the proceeds thereof,
subject to no other Lien or to any agreement purporting to grant to any third
party a Lien on the Pledged Stock; (xi) there are no currently effective
financing statements under the UCC covering any property which is now or
hereafter may be included in the Collateral and the Pledgor will not, without
the prior written consent of the Pledgee, execute and, until the Termination
Date (as hereinafter defined), there will not ever be on file in any public
office any enforceable financing statement or statements covering any or all of
the Collateral, except financing statements filed or to be filed in favor of the
Pledgee as secured party; (xii) the Pledgor shall give the Pledgee prompt notice
of any written claim it receives relating to the Collateral; and (xiii) the
Pledgor shall deliver to the Pledgee a copy of each other demand, notice or
document received by it which may adversely affect the Pledgee's interest in the
Collateral promptly upon, but in any event within 10 days after, the Pledgor's
receipt thereof. The Pledgor covenants and agrees that it will defend the
Pledgee's right, title and security interest in and to the Collateral against
the claims and demands of all persons whomsoever; and the Pledgor covenants and
agrees that it will have like title to and right to pledge any other property at
any time hereafter pledged to the Pledgee as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the Pledgee
and the other Secured Creditors.
17. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of the Pledgor under
this Pledge Agreement shall be absolute and unconditional and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (i) any renewal, extension, amendment
or modification of or addition or supplement to or deletion from any Loan
Document or any other instrument or agreement referred to therein, or any
assignment or transfer of any thereof; (ii) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such agreement
or instrument including, without limitation, this Pledge Agreement; (iii) any
furnishing of any additional security to the Pledgee or its assignee or any
acceptance thereof or any release of any security by the Pledgee or its
assignee; (iv) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in whole or
in part, of any such instrument or agreement or any term thereof; or (v) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to the Pledgor or any Subsidiary
of the Pledgor, or any action taken with respect to this Pledge Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not the
Pledgor shall have notice or knowledge of any of the foregoing.
18. TERMINATION; RELEASE. (a) After payment in full of the Obligations and
termination of the Credit Agreement, this Pledge Agreement and the security
interest created hereby shall terminate (provided that all indemnities set forth
herein including, without limitation, in Section 11 hereof shall survive any
such termination), and the Pledgee, at the request and expense of the Pledgor,
will execute and deliver to the Pledgor a proper instrument or instruments
acknowledging the satisfaction and termination of this Pledge Agreement, and
will duly assign, transfer and deliver to the Pledgor (without recourse and
without any representation or warranty) such of the Collateral as has not
theretofore been sold or otherwise applied or released pursuant to this Pledge
Agreement, together with any moneys at the time held by the Pledgee or any of
its sub-agents hereunder.
(b) In the event that any part of the Collateral is released at the direction of
the Secured Creditors and the proceeds of such sale or sales or from such
release are applied in accordance with Section 9, to the extent required to be
so applied, the Pledgee, at the request and expense of the Pledgor, will duly
assign, transfer and deliver to the Pledgor (without recourse and without any
representation or warranty) such of the Collateral (and releases therefor) as is
then being (or has been) so sold or released and has not theretofore been
released pursuant to this Pledge Agreement.
(c) At any time that the Pledgor desires that the Pledgee assign, transfer and
deliver Collateral (and releases therefor) as provided in Section 18(a) or (b)
hereof, it shall deliver to the Pledgee a certificate signed by a principal
executive officer of the Pledgor stating that the release of the respective
Collateral is permitted pursuant to Section 18(a) or (b).
(d) The Pledgee shall have no liability whatsoever to any other Secured Creditor
as the result of any release of Collateral by it in accordance with this
Section 18.
19. NOTICES, ETC. Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the respective parties hereto shall
be made as provided in Section 9.02 of the Credit Agreement.
20. JURISDICTION, ETC. Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to the Loan Documents, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to the Loan Documents in the courts of any jurisdiction.
21. WAIVER; AMENDMENT. None of the terms and conditions of this Pledge
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Pledgor and the Pledgee (with the written
consent of the Secured Creditors).
22. MISCELLANEOUS. This Pledge Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of and be enforceable by each of the parties hereto and its successors
and assigns, provided that the Pledgor may not assign any of its rights or
obligations under this Pledge Agreement without the prior consent of the
Pledgee. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK. The headings in
this Pledge Agreement are for purposes of reference only and shall not limit or
define the meaning hereof. This Pledge Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Pledge
Agreement shall prove to be invalid or unenforceable, such provision shall be
deemed to be severable from the other provisions of this Pledge Agreement which
shall remain binding on all parties hereto.
23. RECOURSE. This Pledge Agreement is made with full recourse to the Pledgor
and pursuant to and upon all the representations, warranties, covenants and
agreements on the part of the Pledgor contained herein and in the other Loan
Documents and otherwise in writing in connection herewith or therewith.
24. CONTROLLED FOREIGN CORPORATION. Notwithstanding any provision of this
Pledge Agreement to the contrary, (i) no more than 65% of the capital stock in
or of the Company, to the extent the Company is a "controlled foreign
corporation" within the meaning of Section 957(a) of the Internal Revenue Code
of 1986, as amended, shall be pledged or similarly hypothecated to guaranty or
support any of the Obligations, (ii) the Company shall not guaranty or support
any of the Obligations, and (iii) no security or similar interest shall be
granted in the assets of the Company, which security or similar interest
guarantees or supports any of the Obligations. The parties agree that any
pledge, guaranty or security or similar interest made or granted in
contravention of this Section 24 shall be void ab initio.
* * * *
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this Pledge
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
MEMC ELECTRONIC MATERIALS, INC.,
as Pledgor
By /s/ James M. Stolze
Name: James M. Stolze
Title: Executive Vice President and
Chief Financial Officer
By /s/ Kenneth L. Young
Name: Kenneth L. Young
Title: Treasurer
Accepted and Agreed to:
E.ON AG,
as Pledgee
By /s/ Dr. Erhard Schipporeit
Name: Dr. Erhard Schipporeit
Title: Chief Financial Officer
By /s/ Dr. Michael Bangert
Name: Dr. Michael Bangert
Title: Vice President
ANNEX A to
PLEDGE AGREEMENT
LIST OF STOCK
Issuer
Number of Shares Owned by Pledgor
Type of Shares
% of Outstanding Shares
Owned by Pledgor
% of Outstanding Shares Constituting Pledged Stock
MEMC Electronic Materials S.p.A.
65,000,000
Common
100%
65%
ANNEX B to
PLEDGE AGREEMENT
TEXT OF THE ENDORSEMENT OF THE SHARE CERTIFICATES
Il presente certificato viene girato in garanzia a favore della E. ON AG,
società tedesca con sede a E.ON-Platz 1, D-40479 Dusseldorf, Germania, per conto
dei Creditori Garantiti, senza diritto al voto e senza diritto agli utili,
tranne che in caso di inadempimento delle obbligazioni garantite.
______________________
autentica notarile e Apostille
* * *
This certificate is pledged to E. ON AG, a company organized and existing under
the laws of Germany, with offices at E.ON-Platz 1, D-40479 Dusseldorf, Germany,
on behalf of the Secured Creditors, with no right to vote and no right to
dividend, except in case of non-fulfillment of the secured obligations.
_______________________
Notary certification and Apostille
ANNEX C to
PLEDGE AGREEMENT
TEXT OF THE REGISTRATION OF THE PLEDGE IN THE SHAREHOLDERS' BOOK
Si prende e si dà atto che:
E.ON AG ha rinunciato al pegno precedentemente costituito in suo favore da MEMC
Electronic Materials, Inc. su n. 22.750.000 azioni, mantenendo il pegno a suo
favore sulle restanti No. 42.250.000 azioni della Società;
su congiunta richiesta di E.ON AG e MEMC Electronic Materials, Inc. si è
proceduto all'annullamento dei certificati azionari n. 60 e n. 61 rappresentanti
rispettivamente n. 64.999.200 azioni e n. 800 azioni e alla loro sostituzione
con due nuovi certificati n. 62 e n. 63 rappresentanti rispettivamente n.
42.250.000 e n. 22.750.000 azioni della Società;
MEMC Electronic Materials, Inc. ha girato in garanzia, senza diritto di voto e
senza diritto ai dividendi (tranne che in caso di inadempimento delle
obbligazioni garantite) a favore della E.ON AG, il certificato azionario n. 62
rappresentante n. 42.250.000 azioni della Società, in tal modo confermando il
pegno precedentemente istituito su tali azioni;
Data: ________________________
Un amministratore
* * *
It is acknowledged that:
E.ON AG has released the pledge created in its favour by MEMC Electronic
Materials, Inc. on No. 22.750.000 shares, maintaining its pledge on the
remaining No. 42.250.000 shares of the Company;
upon joint request of E.ON AG and MEMC Electronic Materials, Inc., the share
certificates n. 60 and n. 61 representing respectively No. 64,999,200 shares and
No. 800 shares of the Company have been rendered null and void and have been
replaced with the two new certificates n. 62 and 63, respectively representing
No. 42,250,000 shares and No. 22,750,000 shares of the Company;
MEMC Electronic Materials, Inc. has pledged, with no right to vote and no right
to dividend (except in case of non-fulfilment of the secured obligations) in
favor of E.ON AG the No. 42,250,000 shares embodied in the said share
certificate n. 62, thus confirming the pledge previously created on such shares.
Data: ________________________
A Director |
Exhibit 10.1 (a)
LOAN AGREEMENT
THIS LOAN AGREEMENT, is made and entered into this 31st day of January 2001, by
and between the West Virginia Economic Development Authority ("WVEDA"), 1018
Kanawha Boulevard, East, Suite 501, Charleston, West Virginia 25301, and
American Woodmark Corporation (the "Company"), 3102 Shawnee Drive, P. O. Box
1980, Winchester, Virginia 22601.
WITNESSETH:
WHEREAS, the Company, a Virginia corporation authorized to do business in the
State of West Virginia, is the owner of that certain parcel of land containing
7.85 acres, more or less, situate in the Town of Moorefield, District of Hardy
County, West Virginia, that is more specifically described in Exhibit A attached
hereto (the "Property");
WHEREAS, the Company owns and occupies a manufacturing facility on the Property
(the "Existing Facility") and has constructed an addition (the "Addition") to
the Existing Facility that consists of a 126,000 square foot expansion (the
Existing Facility and the Addition together referred to as the "Facility");
WHEREAS, the Company has acquired certain equipment, machinery and fixtures used
in its manufacturing and processing including without limitation those items
that are more specifically described in Exhibit B attached hereto (the "Project
Equipment") that have been in stalled in the Facility on the Property (the
Facility including the Property and all Project Equipment installed therein are
hereinafter collectively referred to as the "Project");
WHEREAS, the total cost to complete the Addition and to acquire the Project
Equipment is at least Three Million Six Hundred Fourteen Thousand Seventy Five
Dollars ($3,614,075.00);
WHEREAS, the Company has made application to WVEDA for a term loan in the
principal amount of One Million Dollars ($1,000,000.00) (the "Loan") to provide
a portion of the permanent financing for the Project, and said application has
been approved upon those terms and conditions set forth in WVEDA's loan
commitment letter dated September 7, 1999, to the Company and WVEDA's final
approval letter dated October 22, 1999, to the Company, and ail subsequent
amendments thereto and extensions thereof, which are collectively incorporated
herein by reference in their entirety (collectively, the "Commitment Letter");
Loan Agreement: GBB.GBB.0066349
WHEREAS, the Company has represented to the WVEDA that all proceeds from the
Loan shall be used as permanent financing for the Project as described in
Company's loan application as submitted to WVEDA;
WHEREAS, Company has represented to WVEDA that it has expended at least Two
Million Six Hundred Fourteen Thousand Seventy Five Dollars ($2,614,075.00) of
its own funds on the Project; and
WHEREAS, the collateral for said WVEDA Loan shall be a first lien on the
Project;.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree to and with
each other as follows:
A. Financing:
1. WVEDA agrees to make a term loan to the Company as a portion of the permanent
financing for the Project under the following terms:
(a) WVEDA agrees to loan to the Company the sum of $1,000,000 for a term of
twelve (12) years at an annual fixed rate of interest which is a rate equal on
the date of Closing to the U.S. Treasury Note rate of equivalent maturity plus
one-half percent (as such rate is quoted in the Treasury Bonds, Notes and Bills
section of the Wall Street Journal).
(b) The Company agrees to execute and deliver to WVEDA a negotiable Promissory
Note which Promissory Note shall be in a form acceptable to WVEDA (the
"Promissory Note") payable to the order of WVEDA in the principal sum of
$1,000,000, due twelve (12) years from the date of the Promissory Note, and
bearing interest at the rate set out above calculated on the basis of the actual
number of days elapsed and a 360 day calendar year. This promissory note shall
be due and payable in thirty-six (36) equal and consecutive, amortized quarterly
payments of principal and interest commencing April 25, 2001, the first full
calendar quarter immediately following the date of the Promissory Note, and
continuing on the same day of the first month of each successive quarter
thereafter until the thirty-sixth (36th) and final installment, provided
however, on April 25, 2001, the Company shall pay to WVEDA interest on the
outstanding principal of the Loan for the period from (and including) the date
of funding of this Loan to (and including) April 25, 2001.
Loan Agreement: GBB.GBB.0066349 2
(c) The total loan proceeds of the Loan to the Company hereunder shall be used
only for the purposes set forth in the loan application submitted by the Company
to WVEDA.
2. Disbursement of the proceeds of said Loan shall be made at closing.
3. The construction of the Addition and the acquisition of the Equipment Project
shall be completed for a cost approximating Three Million Six Hundred Fourteen
Thousand Seventy Five Dollars ($3,614,075.00). The Company shall have expended a
total of at least Two Million Six Hundred Fourteen Thousand Seventy Five Dollars
($2,614,075.00) on the Project. Should at any time said costs exceed
$3,614,075.00 then the Company shall be responsible for the excess. If the said
cost is less than Three Million Six Hundred Fourteen Thousand Seventy Five
Dollars ($3,614,075.00), then the Loan shall not exceed the lesser of One
Million Dollars ($1,000,000) or thirty-eight percent (38%) of the cost of the
Project.
B. Collateral:
1. The Company shall grant a first priority deed of trust lien in the amount of
$1,000,000.00 by proper deed of trust of even date herewith (the "Deed of
Trust") encumbering the Property, together with all improvements, buildings and
fixtures now or hereafter located thereon granted by the Company to John R.
Snider, as trustee, for the benefit of WVEDA, to secure all principal, accrued
interest and other sums due and owing to the WVEDA under the Loan.
2. The Company shall grant a first lien security interest, pursuant to the
Uniform Commercial Code, on the Project Equipment and all replacements thereto
and proceeds therefrom, to WVEDA to secure all principal, accrued interest and
other sums due and owing to the WVEDA under the Loan. The Company further agrees
to execute and deliver to WVEDA a Security Agreement (the "Security Agreement")
in a form acceptable to WVEDA and UCC-I financing statements for filing in all
jurisdictions necessary to provide WVEDA with a perfected first lien on the
Project Equipment.
C. Conditions Precedent to Financing:
The obligation of the WVEDA to make the WVEDA Loan is subject to the following
conditions precedent:
Loan Agreement: GBB.OBB.0066349 3
1. Resolutions by the Company approving the execution, delivery and performance
of this Agreement and all transactions and documentation contemplated herein,
duly adopted by the Company's Board of Directors and accompanied by a
certification by the Secretary of the Company stating that such resolutions are
true and correct, have not been altered or repealed, and are in full force and
effect.
2. Certificates of Good Standing from the Office of the West Virginia Secretary
of State, the West Virginia Bureau of Employment Programs, Unemployment
Compensation Division and the West Virginia Bureau of Employment Programs,
Workers' Compensation Division.
3. All loan documentation has been duly executed by the parties hereto and each
document required to create the security interests contemplated herein,
including, but not limited to, all deeds of trust, security agreements,
promissory notes, and financing statements have been executed, delivered, filed,
registered or recorded in order to create those liens in favor of the WVEDA
necessary to secure the WVEDA Loan. These liens in favor of WVEDA shall be
evidenced by a certified UCC lien search of the West Virginia Secretary of State
and such other evidence acceptable to WVEDA as to the perfection of said
interest by filing and recordation.
4. An opinion by counsel to the Company or other certification or commitment for
title insurance satisfactory to WVEDA, which confirms the lien positions of the
WVEDA on the Project, and also addresses all other appropriate matters required
of the Company with respect to the transactions contemplated herein and their
documentation.
5. Certificates of insurance which evidence that the insurance policies required
by this Agreement, the Commitment Letter and any of the other loan documentation
have been obtained and are in full force and effect as of the date hereof.
6. The receipt of financial statements for the Company which are in a form
acceptable to the WVEDA.
?. Certificate to the WVEDA by the President or Treasurer of the Company that,
prior to Closing, the Company has expended at least Two Million Six Hundred
Fourteen Thousand and Seventy-Five Dollars ($2,614,075.00) of its own funds on
the construction of the Addition and the installation of the Project Equipment
at the Property have been completed, and the Project is fully operational.
Loan Agreement: GBB.GBB 0066349 4
8. The receipt of a legal description of the Property, a list of specific
equipment installed or placed at the Facility being the Project Equipment,
documentary evidence of the cost of said equipment acquired in connection with
the Loan, and certification to WVEDA that such equipment (which comprises the
Project Equipment and is to be pledged as collateral for the Loan) has a value
equal to or greater than $i,000,000 and has an average useful life of no less
than ten (10) years.
9. The receipt of evidence from an engineer acceptable to WVEDA that all Project
Equipment is in place and operational and that the Facility is structurally
sound and operational.
D. Representations and Warranties of the Company:
1. The Company is a duly organized and existing corporation under the laws of
the State of Virginia, and is qualified to do business in, and is in good
standing under the laws of, the State of West Virginia.
2. The Company is in good standing with the West Virginia Workers' Compensation
Division and the Unemployment Compensation Division of the West Virginia Bureau
of Employment Programs.
3. The execution, delivery and performance of this Loan Agreement and other
documents and writings referred to herein or otherwise relating hereto are all
within the Company's corporate powers, have been duly authorized and are not in
contravention of law, or the terms of the charters, bylaws, or other corporate
papers, or of any indenture, agreement or undertaking to which the Company is a
party or by which the Company is bound. This Loan Agreement, the Promissory
Note, the Deed of Trust, the Security Agreement and the other loan documents to
which the Company is a party, when executed by the Company are and will be
legal, valid and binding obligations of the Company (subject to bankruptcy and
equitable principles) and the Deed of Trust and Security Agreement shall create
a first priority security interest in the Property and Project Equipment.
4. All information at any time or times furnished to WVEDA by the Company
concerning the Company's financial condition or otherwise, for the purpose of
obtaining the Loan being made hereunder by WVEDA to the Company and any other
credit or extension or renewal of such Loan or other credit, and so long as any
part of such Loan or extensions or renewals thereof remain outstanding is and
will be at the time the same is furnished, accurate and correct in all material
Loan Agreement: GBB GBB.0066349 5
respects and complete insofar as completion may be necessary to give WVEDA true
and accurate knowledge with respect thereto.
5. To the best of the Company's knowledge, the Company is in material compliance
with all applicable Federal, Virginia and West Virginia laws, rules, and
regulations with respect to its business and the use, maintenance, and
operations of the Project, and further represents and warrants that so long as
any part of the Loan being made hereunder is outstanding the Company shall
conduct its business in material compliance with all applicable Federal,
Virginia and West Virginia laws, rules, and regulations and in regard to its
use, maintenance, and operations of the Project except where non-compliance,
which, if adversely determined, would not have a material adverse affect on the
financial condition of the Company or its ability to perform any of its
obligations under the Loan Documents.
6. Neither the execution and delivery by the Company of this Loan Agreement, the
Promissory Note, the Deed of Trust, the Security Agreement or other documents
referred to heroin nor consummation of the transactions contemplated thereby,
nor compliance with the terms, conditions and provisions thereof will (i)
conflict with or result in a breach of any of the terms, conditions or
provisions of any agreement or instrument to which the Company is a party, or
constitute a default thereunder, or (ii) violate any law or any rule,
regulation, order, writ, injunction or decree of any court or governmental
instrumentality or agency.
7. The Company has good and marketable title to the Project free and clear of
any liens or encumbrances except as required by this Loan Agreement and the
unconditional authority and right to grant and convey the interests conveyed by
the Deed of Trust and all of the other Loan Documents.
E. Covenants:
1. So long as any part of the Loan being made hereunder by WVEDA to the Company
is outstanding:
a. The Company shall promptly give WVEDA notice of any unusual problems or
developments affecting its business operations which may adversely affect: (i)
its ability to repay such Loan; and (ii) the collateral securing such Loan.
b. The Company shall pay and discharge or cause to be paid or discharged all tax
claims relating to the collateral securing the Loan being made hereunder, when
due, except such as to which a bona fide dispute exists, and which
Loan Agreement: GBB.GBB.0066349 6
are being contested in good faith.
C. The Company shall maintain proper books of records and accounts in accordance
with generally accepted accounting principles, in which full, true and correct
entries shall be made of all of its dealings and business affairs, and the
Company shall permit WVEDA or its authorized representatives, to inspect and
audit its books of records and accounts at any reasonable time or times upon
receiving a request with respect thereto. WVEDA personnel and all agents of
WVEDA shall be authorized to enter upon the premises of the Company and into any
building thereon, whether permanent or temporary, jointly or separately, to
carry out inspections. These inspections may be scheduled or unscheduled.
d. The Company shall:
(i) Promptly furnish WVEDA annual financial statements within 90 days of the end
of the Company's fiscal year, all in reasonable detail and prepared by an
independent certified public accountant of recognized standing acceptable to
WVEDA and whose certificate or opinion accompanying such financial statements is
in form and substance acceptable to WVEDA;
(ii) Not declare, or make, or incur any liability to make, any payment in cash
or other assets either as dividends or other distributions upon any shams of any
class of capital stock of the Company, or purchase, retire, redeem or otherwise
acquire for value any shams of any class of capital stock of the Company, if any
of the following circumstances are in existence at that time: (a) the Company is
in default of any financial covenant relating to the Loan; (b) the Company is in
default or is unable to pay its current financial obligations under any
financing documents with any of its lenders; or (c) the Company has failed to
pay when due any governmental tax, charge, fee or assessment (subject to the
absolute fight of the Company to in good faith challenge such tax, charge, fee
or assessment). Any change in this requirement for dividends must be approved by
WVEDA.
(iii) Not increase salaries or compensations of officers or owners unless all of
the Company's debts are paid to a current status;
Loan Agreement: GBB.GBB.0066349 7
(iv) Not make any loans or advances to any officer, shareholder, director or
employee, except for temporary advances in the ordinary course of business; and
(v) Cause loans to the Company from shareholders, directors or officers to be
subordinated, both for collateral and repayment, to the Loan, and payments
thereon shall be deferred until the Loan is paid in full.
2. So long as the Loan described hereunder from WVEDA to the Company or any
renewal or extension thereof, remains unpaid in whole or in part, or so long as
any other liability or indebtedness of the Company to WVEDA shall exist:
a. In the operation of the Facility, the Company shall conduct its business in a
normal manner in the ordinary course of business and remain in business and
employ generally persons from the general vicinity of Hardy County, West
Virginia to the extent qualified.
b. Maintain fire and other risk insurance which shall contain a "New York
Standard Mortgage Clause" or its equivalent, public liability insurance, and
such other insurance as the WVEDA may reasonably require with respect to the
Company's properties and operations, in form, amounts, coverages and with
insurance companies reasonably acceptable to the WVEDA. The Company shall
purchase Federal Flood Insurance in amounts and coverage satisfactory to the
WVEDA if the Property is located in a flood prone area and the FIA. map shows
the Company's property is located within a special flood hazard area. Upon
request of the WVEDA, the Company shall deliver to the WVEDA from time to time
the policies or certificates of insurance in a form satisfactory to the WVEDA,
including stipulations that coverage shall not be canceled or diminished without
at least twenty (20) days prior written notice to the WVEDA. In connection with
all policies covering assets in which the WVEDA holds or is offered a security
interest to secure its loan herein, the Company shall provide the WVEDA with
such loss payable or other endorsements as the WVEDA may require. The Company
agrees to assign to the WVEDA as its interests may appear, all sums, including,
without limitation, return of premiums, which may become payable under any and
all of the Company's policies of insurance, and upon the WVEDA's request, direct
each insurance company issuing any such policy to make payment thereof directly
to the
Loan Agreement: GBB.GBB.0066349 8
WVEDA. The Company shall maintain proper Worker's Compensation coverage and
other insurance against other risks as are commonly insured against by companies
in similar types of business, all in a manner reasonably satisfactory to the
WVEDA.
3. The Company covenants and warrants that the Property on which the equipment,
machinery and fixtures used as collateral for the Loan is to be installed or
located is not contaminated by the disposal of hazardous substances and the
Company hereby agrees to indemnify and hold WVEDA and its assigns harmless from
any loss or damage to the Equipment Project, including costs or expenses
connected therewith, resulting from hazardous substances and waste being located
on said real estate by reason of the "Comprehensive Environmental Response
Compensation and Liability Act of 1980" or other similar acts under the laws of
the United States or of any state.
4. The Company shall perform and observe all covenants, agreements, terms and
conditions contained in this Loan Agreement, the Promissory Note, the Deed of
Trust, the Security Agreement and other documents required to be executed and
delivered hereunder.
5. Except as provided herein or with the prior consent in writing of WVEDA, the
Company shall not participate in any merger, consolidation or other
reorganization unless the Company is the surviving entity, or sell or otherwise
transfer all or any part of its business or assets which are encumbered to
secure the Loan described herein including paragraph F. 1 (f).
6. The Company shall from time to time execute such further writings,
instruments and documents and do such further acts as WVEDA may reasonably
require to effect the purposes of this Loan Agreement.
7. All of the Company's representations, covenants and warranties contained in
this Loan Agreement shall survive the execution and delivery of this Loan
Agreement, as well as the Promissory Note, the Deed of Trust, the Security
Agreement and other documents described above, and the disbursement of the Loan
proceeds hereunder and any breach thereof by the Company shall be considered an
event of default under the Promissory Note, the Deed of Trust, the Security
Agreement and other documents.
8. Whenever any approvals may be required hereby by the parties or their
respective counsel with respect to the form and sufficiency of any documents or
writings, the condition of the title to any collateral securing the loans being
made hereunder, or on any
Loan Agreement: GBB GBB 0066349 9
other matter, such approval shall not be unreasonably withheld.
9. The Company shall be responsible for all Loan closing costs and expenses,
including, but not limited to, reasonable attorney's fees, incurred by WVEDA in
connection with this Loan.
10. The Company shall provide WVEDA annually, by November 1, of each year,
during the term of the Loan, a report showing the total number of permanent and
part-time employees of the Company working at the facility of the Company
financed in part with the proceeds of the Loan as of September 30 of that year
and the aggregate total of gross wages paid to these employees during the twelve
(12) month period ending September 30 of that same year.
F. Events of Default and Remedies:
1. The occurrence of any one of the following shall constitute an Event of
Default;
(a) Failure by the Company to pay any amounts required to be paid under the
Promissory Note or under this Loan Agreement at the times specified therein and
herein and such failure shall continue for a period of thirty (30) days after
the same has become due;
(b) Failure by the Company to observe and perform any covenant, condition or
agreement on its part to be observed or performed in this Loan Agreement, other
than as referred to in (a) above and (c) below, for a period of thirty (30) days
after written notice, specifying such failure, requesting that it be remedied
and stating that it is a notice of default, has been given to the Company by
WVEDA, unless WVEDA shall agree in writing to an extension of such time prior to
its expiration; provided, however, that if the Company has in good faith
commenced efforts to cure the default within the thirty (30) calendar day cure
period and the default cannot reasonably be cured before the end of such period,
then, as long as Borrower proceeds in good faith to cure the default, Borrower
shall have an additional thirty (30) days to cure the default;
Loan Agreement: GBB.GBB.0066349 10
(c) The dissolution or liquidation of the Company or the commencement by the
Company of a voluntary case under the United States Credit Bankruptcy Code, as
amended, or its failure promptly to lift or suspend any execution, garnishment
or attachment of such consequence as will impair its ability to perform its
obligations under this Loan Agreement, or the entry of an order for relief in
respect of the Company of the Loan under the United States Bankruptcy Code, as
amended, or the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator, or similar official of the Company
or of any substantial part of its property securing the Loan, or a general
assignment by it for the benefit of creditors, or the entry by it into an
agreement of composition with its creditors, or the filing of a petition
applicable to the Company of the Loan in any proceeding seeking its
reorganization, liquidation, adjustment, composition or other arrangement
instituted pursuant to any federal or state law; provided, however, that any
such petition filed against the Company or not filed by the Company that is
dismissed or stayed within thirty (30) days of such filing shall not constitute
an Event of Default so long as the Company gives written notice of such filing
to WVEDA;
(d) If the operations of the Company shall cease or be significantly curtailed
at the Facility. "Significant Curtailment of Operations" shall mean a condition
at the Facility where total employment (as measured in terms of man hours) at
the Facility for any calendar quarter is less than 50% of the average quarterly
employment at all of the Facility for the previous four quarters unless such
reduction is the result of unless such reduction is the result of strikes or
other labor unrest, casualty or causes wholly beyond the control of the Company;
(f) The sale or other transfer of the Project or Project Equipment, or any part
thereof, in any manner whatsoever by the Company to any person, firm, or
corporation without the consent obtained in writing from WVEDA except for sale
or transfer of damaged, worn or obsolete equipment or the transfer of equipment
the value of which is not to exceed $100,000.00 in the aggregate or which is
otherwise replaced by the Company; or
Loan Agreement: GBB.GBB.0066349 11
(g) Any warranty, representation or other statement by or on behalf of the
Company contained in this Loan Agreement or in any instrument or certificate
furnished in compliance with or in reference to this ban Agreement is false or
misleading in any material respect, or failure by the Company to perform or
observe any condition or covenant contained in any such document for a period of
30 days after compliance with the notice and request provisions of paragraph F.
1.(b) above.
2. Whenever any Event of Default shall have happened and is continuing, extent
permitted by applicable law, take any one or more of the following remedial
steps:
(a) (i) WVEDA may exercise any fight, power or remedy permitted to it by law,
and shall have in particular, without limiting the generality of the foregoing,
the right to declare the entire amount of the Loan (if not then due and payable)
to be due and payable immediately, and upon any such declaration the entire
amount of the Loan shall become and be immediately due and payable, anything in
this Loan Agreement contained to the contrary notwithstanding. The Company shall
forthwith pay to WVEDA such amounts.
(ii) WVEDA may waive, rescind and annul such declaration and the consequences
thereof.
(b) WVEDA may take any action or remedy specified in the Deed of Trust or
Security Agreement dated as of the date hereof between the Company and WVEDA.
(c) WVEDA may take whatever action at law or in equity may appear necessary or
desirable to collect the payments and other amounts then due and thereafter to
become due or to enforce performance and observance of any obligation, agreement
or covenant of the Company under this Loan Agreement.
In case WVEDA shall have proceeded to enforce its fights under this Loan
Agreement and such proceedings shall have been discontinued or abandoned for any
reason or shall have been determined adversely to WVEDA, then and in every such
case the Company and WVEDA shall be restored respectively to their several
positions and rights
Loan Agreement: GBB.GBB.0066349 12
hereunder, and all rights, remedies and powers of the Company and WVEDA shall
continue as though no such proceeding had been taken.
The Company covenants that, without limiting any remedies of WVEDA hereunder, in
case an Event of Default shall occur with respect to the payment of any
installment payable under Loan then, upon demand of WVEDA, the Company will pay
to WVEDA the whole amount that then shall have become due and payable under the
Loan, with interest on overdue principal (and interest to the extent permitted
by law) at the rate payable on the Loan.
In case the Company shall fail to pay such amounts within the time provided in
Section F.l.(a), WVEDA shall be entitled and empowered to institute any action
or proceeding at law or in equity without demand for the collection of the sums
so due and unpaid, and may prosecute any such action or proceeding to judgment
or final decree, and may enforce any such judgment or final decree against the
Company and collect, in the manner provided by law, out of the property of the
Company, the moneys adjudged or decreed to be payable.
3. In the event the Company should default under any of the provisions of this
Loan Agreement and WVEDA should employ attorneys or incur other expenses for the
collection of the payments due under this Loan Agreement or the enforcement of
performance or observance of any obligation or agreement on the part of the
Company herein contained, the Company agrees that it will on demand therefore
pay to WVEDA, the reasonable fees of such attorneys and such other reasonable
expenses so incurred by WVEDA.
4. To the extent permitted by law, the Company will not during the continuance
of any Event of Default hereunder insist upon, or plead, or in any manner
whatever claim or take any benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants and terms of performance of this Loan Agreement. The Company hereby
expressly waives all benefits or advantage of any such law or laws and covenants
not to hinder, delay or impede the execution of any power herein granted or
delegated to WVEDA, but to suffer and permit the execution of every power as
though no such law or laws had been made or enacted.
5. No remedy herein conferred upon or reserved to WVEDA is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Loan Agreement or now or hereafter existing at law or in equity or by
statute. No delay or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a
waiver
Loan Agreement: GBB.GBB.0066349 13
thereof, but any such right and power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle WVEDA to exercise any
remedy reserved to it in this Article, it shall not be necessary to give any
notice, other than such notice as may be herein expressly required.
6. In the event any agreement contained in this Loan Agreement should be
breached by the Company and thereafter waived by WVEDA, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder.
7. The Events of Default and remedies set forth in this Section F shall be in
addition to all other defaults and remedies set forth in this Loan Agreement and
the other loan documents.
G. General Provisions:
1. This Loan Agreement shall be binding upon and inure to the benefit of all of
the parties hereto, and their respective successors and assigns. This Loan
Agreement and the agreements and documents relating thereto may be assigned by
WVEDA without the consent of the Company. The Company may not assign this Loan
Agreement or any of its rights and obligations hereunder or under the other
documents and agreements relating thereto without the written consent of WVEDA,
and any attempted assignment without such consent shall be null and void.
2. The parties hereto shall not be deemed to have waived or agreed to the
modification of any of the provisions hereof, except by instrument in writing
duly signed by them.
3. If any provision of this Loan Agreement shall be held or deemed to be or
shall, in fact, be illegal, inoperative or unenforceable, the same shall not
affect any other provision or provisions herein contained or render the same
invalid, inoperative or unenforceable to any extent whatsoever.
4. This Loan Agreement and all other agreements related hereto shall be governed
and construed in accordance with the taws of the State of West Virginia.
Headings and titles herein and therein are for convenience only and shall not
influence such construction or interpretation.
Loan Agreement: GBB.GBB.0066349 14
5. All notices required or desired to be given hereunder shall be served by
certified mail on the party intended at its address shown below, which notice
shall be deemed given at the time deposited in the U.S. Mail, postage prepaid:
West Virginia Economic Development Authority
1018 Kanawha Boulevard, East
Suite 501
Charleston, West Virginia 25301
Attention: Executive Director
American Woodmark Corporation
P. O. Box 1980
Winchester, Virginia 22604
Attention: Treasurer
[Rest of Page Intentionally Left Blank. Signature Page to Follow.]
Loan Agreement: GBB.GBB,O066349 15
IN WITNESS WHEREOF, WVEDA and the Company have caused their corporate names to
be signed hereto by their respective officers duly authorized, all as of the day
and year first above written.
WEST VIRGINIA ECONOMIC DEVELOPMENT
AUTHORITY
By: Robin L. Greathouse
Its: Loan Officer
AMERICAN WOODMARK CORPORATION
By: Glenn Eanes
Its: Treasurer
Loan Agreement: GBB.GBB.0066349 16
EXHIBIT A
Description of the Property
TRACT I
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virginia, bounded by West Virginia County Route 7 on the West, an unpaved street
on the North and East, the lands of Allen Kexrode (134/345) on the South and is
more particularly described as follows:
BEGINNING at a T-bar set on the Eastern boundary line of West Virginia County
Route 7, also a corner of Rexrode. Thence with the Eastern boundary line of said
road North 04 degrees 02' 39" East 32.01 feet to a set T-bar. Thence continuing
with said road North 11 degrees 02' 57" East 48.54 feet to a set railroad spike.
Thence North 07 degrees 31' 53" East 60.16 feet to a set railroad spike. Thence
North 05 degrees 59' 53" West 37.17 feet to a set railroad spike. Thence North
19 degrees 51' 47" West 38.98 feet to a set railroad spike. Thence North 32
degrees 36' 09" West 30.51 feet to a set railroad spike on the Eastern boundary
line of aforesaid road and on the South side of an unpaved street. Thence
crossing said street South 83o 45' 29" East 293.09 feet to a set T-bar at the
intersection of two unpaved streets. Thence with the West side of said street
South 06 degrees 27' 45" West 240.00 feet to a set T- bar, a corner of Rexrode.
Thence with Rexrode's line North 82 degrees 45' 29" West 252.22 feet to the
BEGINNING, containing 1.4002 acres as surveyed by Charles W. W. Stultz, Licensed
Land Surveyor, Romney, West Virginia on June 8, 1977 as shown on a plat attached
hereto and made a part of this description.
Being the same parcel of land that was conveyed to Raygold Manufacturing
Corporation from Betty Baker, et als by deed dated 2nd day of March, 1970 and is
recorded in Deed Book 123, page 47 in the County Clerk's Office of Hardy County,
West Virginia.
TRACT II
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virginia, near the Town Limit, bounded by W.Va. County Route 7 on the East, the
lands of M.A. Bean Oil Company (W.B. 17, page 186) on the South, the B&O
Railroad on the West, the lands of Raygold Manufacturing Corporation (formerly
Mudin Crites, 82/327) and Lincoln Cox (100/363) on the North and is more
particularly described as follows:
BEGINNING at an iron pin on the Eastern boundary limit of the B&O Railroad
Right-Of-Way and corner to Raygold Manufacturing Corporation. Thence with said
corporation's lines South 07 degrees 56' 40" East 59.39 feet to an iron pin.
Thence North 040 20' 15" East 81.91 feet to an iron pin. Thence South 85 degrees
42' 12" East 107.27 feet to an iron pin. Thence South 04 degrees 22' 53" West
40.95 feet to an iron pin. Thence with said corporation's line and continuing
with Cox's line South 85 degrees 45' 06" East 120.07 feet to a set T-bar. Thence
with Cox's lines South 04 degrees 17' 58" West 83.70 feet to a set T-bar. Thence
North
Loan Agreement: GBB.GBB.0066349
88 degrees 39' 25" East 127.97 feet to a set T-bar on the Western boundary line
of W.Va. County Route 7. Thence with the Western boundary line of said road
South 32 degrees 36' 07" East 148.37 feet to a railroad spike. Thence South 19
degrees 51' 47" East 29.65 feet to a railroad spike. Thence South 05 degrees 59'
53" East 27.57 feet to a railroad spike. Thence South 07 degrees 31' 53" West
54.18 feet to a railroad spike. Thence South 11 degrees 02' 57" West 49.77 feet
to a railroad spike. Thence South 04 degrees 02' 39" West 52.10 feet to a
railroad spike. Thence South 02 degrees 04' 17" East 23.33 feet to a set T-bar
by a fence post, corner of M.A. Bean Oil Company. Thence with said oil company's
lines and following a wire fence North 68 degrees 29' 05" West 109.91 feet to a
set T- bar by a fence post. Thence South 85 degrees 52' 18" West 255.39 feet to
a set T-bar on the Eastern boundary limits of the B&O Railroad Right-of-Way.
Thence with the Eastern boundary limits of said railroad by arc distance 285.90
feet to a set T-bar. Thence South 85 degrees 20' 08" West 17.50 feet to a set
T-bar. Thence continuing with said railroad by arc distance 81.42 feet to a set
T-bar. Thence North 03 degrees 37' 36" East 95.02 feet to the BEGINNING,
containing 3.6166 acres more or less as surveyed by Charles W. W. Stultz,
Licensed Land Surveyor, Romney, West Virginia during May, 1977 as shown on a
plat attached hereto and made a part of this description.
Being the same tract of land that was conveyed to Raygold Manufacturing
Corporation from Alvin A. Goldhush, et ux by deed dated the 28th day of January,
1964, and is recorded in Deed Book 109, page 442 in the County Clerk's office in
Hardy County, West Virginia.
TRACT III:
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virginia, bounded by West Virginia Route 7 (South Fork Road) on the North and
Ea,qt, Raygold Manufacturing Corporation (82/327) on the West, and Boise Cascade
Cabinets (109/442) on the South and is more particularly described as follows:
BEGINNING at a found T-bar three feet from the Northeast corner of a quonset
type warehouse, a corner of Boise Cascade Cabinets' land. Thence with said
company's line and running parallel with the North end of said warehouse North
85 degrees 45' 08" West 35.00 feet to a set rebar, corner of Raygold
Manufacturing Corporation's land, said rebar being South 85 degrees 45' 08" East
85.07 feet from a found iron pin, another corner of Boise Cascade Cabinet's
property. Thence with Raygold Manufacturing Corporation's line North 10 degrees
12' 39" East 77.41 feet to a found rebar by a post on the Southern edge of a
sidewalk and West Virginia Route 7 (South Fork Road). Thence with the Southern
edge of said sidewalk and the Southern edge of said road South 46 degrees 01'
48" East 153.70 feet to a set rebar by a post. Thence leaving said sidewalk and
continuing with the Southern edge of said road South 31 degrees 32' 02" East
61.62 feet to a set railroad spike, a corner of Boise Cascade Cabinets'
property. Thence leaving said road and with said company's lines South 88
degrees 39' 25" West 127.97 feet to a found T-bar three feet East of warehouse
East side. Thence continuing with said
Loan Agreement: GBB.GBB.0066349
company's line and running parallel with said warehouse North 04 degrees 17' 58"
East 83.70 feet to the BEGINNING, containing 11,801.9665 square feet (0.2709
acre) more or less as surveyed by Stultz & Associates, Inc., Romney, West
Virginia, Charles W. W. Stultz. Licensed Land Surveyor, during March, 1979 and
as shown on a plat attached hereto and made a part of this description .
Being the same tract of land that was conveyed to Boise Cascade Corporation from
Lincoln and Nellie Cox by deed dated the 22nd day of December, 1978 and is
recorded in Deed Book 154 at page 256 in the Office of the Clerk of the County
Commission of Hardy County, West Virginia.
TRACT IV
A parcel of land in Moorefield Corporation, Hardy County, West Virginia between
Railroad Street and County Route 7 at the east end of Central Avenue, more
particularly described as follows:
Beginning at a point on the East bounds of the South Branch Valley Railroad
(S.B.V.R.R.) right-of-way, 20 feet from centerline of tracts, set a steel
reinforcing rod; thence N 87 degrees- 17'-30" E at 10.0 feet crossing a point
corner to S.B.V.R.R. right-of-way and American Woodmark (161/410) continuing
with American Woodmark and a fence in all 269.63 feet to a steel fence post;
thence with said Woodmark for one line S 65 degrees-55'-43" E 107.51 feet with a
fence to a steel road (found) at the base of a corner fence post, in the bounds
of County Route 7, 20 feet from the centerline thence with the West bounds of
County Route 7 for 4 lines S 06 degrees-12'-57'' E 53.38 feet to a point; thence
S 14 degrees-27'-25'' E 73.34 feet to a point; thence S 17 degrees-43'-03" E
120.73 feet to a point; thence S 21 degrees-17'-4g" E 195.60 feet to a corner
fence post, corner to Williams (107/484), thence with said Williams and fence
for one line S 70 degrees-24'-12" W 138.15 feet to a point, set a steel
reinforcing road in a fence a corner to Bean (177/32); thence with said Bean for
one line N 20 degrees-0T-03" W 74.58 feet to an utility pole, a corner to
Southern States (176/414); thence with said Southern States for 2 lines N 38
degrees-25'-15" W 157.25 feet to a steel reinforcing road; thence S 59
degrees-18'-40' W at about 77.6 feet crossing a railroad siding, in all 102.61
feet to a point in the East bounds of the S.B.V.R.R., 20 feet from centerline
set a steel reinforcing rod; thence with the East bounds of the S.B.V.R.R. for 4
lines N 250 degrees-59'- 18" W 79.08 feet to a point; thence N 250
degrees-40'-38'' W 46.18 feet to a point; thence N 24 degrees-49'-32" W 63.36
feet to a point; thence N 220 degrees- 23'-25" W 58.73 fee to the beginning
containing 2.56 acres, more or less, as surveyed December, 1983 by David O.
Heishman, Licensed Land Surveyor, Moorefield, West Virginia, and a shown on a
plat attached hereto and made a part of this description.
Being a portion of the land conveyed to William H. Bean by M.A. Bean Oil
Company, Inc. by deed dated 20 August 1983 and recorded in the Office of the
County Clerk of Hardy County in Deed Book 177 Page 32.
Loan Agreement: GBB.GBB.0066349
AMERICAN WOODMARK CORPORATION
AFE# DESCRIPTION SERIAL # ACQ DATE
99-206 Micro Gloss 60 degrees Sheen Meter 974036 Nov-99
99-206 Rhodes Hanging & Tow Cart
Finishing System Nov-99
99-206 Dynacycle RCO System-DCS-14-2 Nov-99
99-206 Finishing System Bldg Modification,
Electrical & Gas Line Installation Nov-99
99-206 Red Devil 5033 Paint Shaker 99IG0033 Nov-99
99-206 Langley EH-102 Power Lift M13628 Nov-99
99-206 Capitalized Interest-Finishing
Line Nov-99
99-206 PD-205 Rytec High Speed Rolling
Door Jan-00
00-044 100' x 100' VP Metal Bldg. Nov-99
00-044 Gravel Base Parking Lot Nov-99
00-044 SD1350-60 Ultra Filter Air Dryer 992/13195/
01 Nov-99
00-044 SSR-EP100 Intersoll Rand Air
Compressor CK1741U99
035 Nov-99
00-044 Mee Fost System Humidification 990255 Nov-99
00-044 Renznor RDF-2-120 LP Gas Air
Make Up Unit A4I172W3N Nov-99
SECURITY AGREEMENT
American Woodmark Corporation, with operations located at 117 South Fork Road,
Moore field, West Virginia 26836, herein called "Debtor," and the West Virginia
Economic Development Authority, herein called "Secured Party," agree as follows:
1. Debtor hereby grants to Secured Party a first lien security interest in all
equipment, machinery and fixtures of Debtor whether now owned or hereafter
acquired, located at or intended to be used by Debtor in the operation of or
related to its business at 117 South Fork Road, Moorefield, West Virginia, more
specifically described in Exhibit A hereto including without limitation the
equipment, machinery and fixtures described in Exhibit B hereto, and all
replacements and additions thereto and proceeds thereof.
2. Debtor warrants and agrees that:
a. Debtor shall pay Secured Party the sum of $1,000,000 evidenced by a
Promissory Note of even date herewith and referred to in the Loan Agreement of
even date herewith between the parties hereto, together with the interest and
other obligations described in said Promissory Note and the Loan Agreement.
This Security Agreement shall, in addition to securing said sums due to Secured
Party, secure all future advances made by Secured Party, to, or for the account
of Debtor, including advances for loans, repairs to or maintenance of the
collateral, and all reason able costs and expenses incurred in the collection of
any such indebtedness.
b. The collateral covered hereby will be used primarily in Debtor's business
located at the address mentioned above, unless Secured Party consents in writing
to another use and will not be misused or abused, wasted or allowed to
deteriorate, except for the ordinary wear and tear from its intended primary
use.
c. Until this Security Agreement is terminated, the collateral will be insured
against fire, theft, vandalism, malicious mischief, and other hazard in an
amount and with policy or policies of insurance acceptable to Secured Party and
payable to both Secured Party and Debtor, as their interest appear, and with the
policies, or copies thereof, deposited with Secured Party, and such policy or
policies shall
Security Agreement: GBBDBB.0066355
provide for not less than twenty (20) days written notice to Secured Party of
the cancellation of such policy or policies.
d. The collateral will not be sold, transferred or disposed of or be subjected
to any unpaid charges, including taxes, or to any subsequent interest of a third
person created or suffered by Debtor voluntarily or involuntarily, unless
Secured Party consents in advance in writing to such charge, transfer,
disposition or subsequent interest except for sale or transfer of damaged, worn
or obsolete equipment or the transfer of equipment the value of which is not to
exceed $100,000.00 in the aggregate or which is otherwise replaced by the
Debtor.
e. Debtor will sign and execute alone or with Secured Party any Financing
Statements or documents or procure any documents and pay all costs necessary to
protect the security interests under this Security Agreement against the rights
or interests of a third party.
f. Debtor will reimburse Secured Party for any action to remedy a default which
Secured Party elects pursuant to the terms hereof or under said Loan Agreement.
3. Until default hereunder, Debtor shall be entitled to the possession of the
collateral and to use and enjoy the same.
4. Debtor shall be in default hereunder upon an Event of Default as set forth in
said Loan Agreement or failure to pay any amount payable hereunder or under said
Promissory Note within the time provided in said Promissory Note or upon failure
to observe or perform any of Debtor's other agreements contained herein.
5. Upon Debtor's default, Secured Party may exercise its rights of enforcement
under the Uniform Commercial Code in force in West Virginia, at the date of this
Security Agreement and, in conjunction with, in addition to or in substitution
for those rights, at the discretion of Secured Party, may enter upon Debtor's
premises to take possession of, assemble, and collect the collateral or render
it unusable, and may require Debtor to assemble the collateral and make it
available at a place designated by Secured Party which is mutually convenient to
allow Secured Party to take possession of or dispose of the collateral. Secured
Party may waive any default or remedy any default in any reasonable manner
without waiving the default remedy and without waiving any other prior or
subsequent defaults. In the event of default by Debtor in his obligations to
Secured Party and the
Security Agreement: GBB.GBB.0066355 2
repossession of the collateral by Secured Party, such Secured Party may sell and
transfer the entire interest in and full and complete title to the collateral.
6. Debtor warrants that it has good title to the collateral described herein;
that the same is free and clear from all liens and encumbrances.
7. All the collateral described herein is located in Hardy County, West
Virginia, and will remain in said County until said Promissory Note is paid in
full.
Dated this 31st day of January, 2001.
AMERICAN WOODMARK CORPORATION
By: Glenn Eanes
Its: Treasurer
WEST VIRGINIA ECONOMIC DEVELOPMENT AUTHORITY
By: Robin Greathouse
Its: Loan Officer
Security Agreement: GBB.GBB.0066355 3
EXHIBIT A
Description of the Property
TRACT I
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virginia, bounded by West Virginia County Route 7 on the West, an unpaved street
on the North and East, the lands of Allen Rexrode (134/345) on the South and is
more particularly described as follows:
BEGINNING at a T-bar set on the Eastern boundary line of West Virginia County
Route 7, also a corner of Rexrode. Thence with the Eastern boundary line of said
road North 04 degrees 02' 39" East 32.01 feet to a set T-bar. Thence continuing
with said road North 11 degrees 02' 57" East 48.54 feet to a set railroad spike
Thence North 07 degrees 31' 53" East 60.16 feet to a set railroad spike. Thence
North 05 degrees 59' 53" West 37.17 feet to a set railroad spike. Thence North
19 degrees 51' 47" West 38.98 feet to a set railroad spike. Thence North 32
degrees 36' 09" West 30.51 feet to a set railroad spike on the Eastern boundary
line of aforesaid road and on the South side of an unpaved street. Thence
crossing said street South 83 degrees 45' 29" East 293.09 feet to a set T-bar at
the intersection of two unpaved streets. Thence with the West side of said
street South 06 degrees 27' 45" West 240.00 feet to a set T- bar, a corner of
Rexrode. Thence with Rexrode's line North 82 degrees 45' 29" West 252.22 feet to
the BEGINNING, containing 1.4002 acres as surveyed by Charles W. W. Stultz,
Licensed Land Surveyor, Romney, West Virginia on June 8, 1977 as shown on a plat
attached hereto and made a part of this description.
Being the same parcel of land that was conveyed to Raygold Manufacturing
Corporation from Betty Baker, et als by deed dated 2nd day of March, 1970 and is
recorded in Deed Book 123, page 47 in the County Clerk's Office of Hardy County,
West Virginia.
TRACT II
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virgina, near the Town Limit, bounded by W.Va. County Route 7 on the East, the
lands of M.A. Bean Oil Company (W.B. 17, page 186) on the South, the B&O
Railroad on the West, the lands of Raygold Manufacturing Corporation (formerly
Murlin Crites, 82/327) and Lincoln Cox (100/363) on the North and is more
particularly described as follows:
BEGINNING at an iron pin on the Eastern boundary limit of the B&O Railroad
Right-Of-Way and corner to Raygold Manufacturing Corporation. Thence with said
corporation's lines South 07 degrees 56' 40" East 59.39 feet to an iron pin.
Thence North 04 degrees 20' 15" East 81.91 feet to an iron pin. Thence South 85
degrees 42' 12" East 107.27 feet to an iron pin. Thence South 04 degrees 22' 53"
West 40.95 feet to an iron pin. Thence with said corporation's line and
continuing with Cox's line
South 85 degrees 45'
Security Agreement: GBB.GBB.0066355
06" East 120.07 feet to a set T-bar. Thence with Cox's lines South 04 degrees
17' 58" West 83.70 feet to a set T-bar. Thence North 88 degrees 39' 25" East
127.97 feet to a set T-bar on the Western boundary line of W.Va. County Route 7.
Thence with the Western boundary line of said road South 32 degrees 36' 07" East
148.37 feet to a railroad spike. Thence South 19 degrees 51' 47" East 29.65 feet
to a railroad spike. Thence South 05 degrees 59' 53" East 27.57 feet to a
railroad spike. Thence South 07 degrees 31' 53" West 54.18 feet to a railroad
spike. Thence South 11 degrees 02' 57" West 49.77 feet to a railroad spike.
Thence South 04 degrees 02' 39" West 52.10 feet to a railroad spike. Thence
South 02 degrees 04' 17" East 23.33 feet to a set T-bar by a fence post, corner
of M.A. Bean Oil Company. Thence with said oil company's lines and following a
wire fence North 68 degrees 29' 05" West 109.91 feet to a set T-bar by a fence
post. Thence South 85 degrees 52' 18" West 255.39 feet to a set T- bar on the
Eastern boundary limits of the B&O Railroad Right-of-Way. Thence with the
Eastern boundary limits of said railroad by arc distance 285.90 feet to a set
T-bar. Thence South 85 degrees 20' 08" West 17.50 feet to a set T-bar. Thence
continuing with said railroad by arc distance 81.42 feet to a set T-bar. Thence
North 03 degrees 37' 36" East 95.02 feet to the BEGINNING, containing 3.6166
acres more or less as surveyed by Charles W. W. Stultz, Licensed Land Surveyor,
Romney, West Virginia during May, 1977 as shown on a plat attached hereto and
made a part of this description.
Being the same tract of land that was conveyed to Raygold Manufacturing
Corporation from Alvin A. Goldhush, et ux by deed dated the 28th day of January,
1964, and is recorded in Deed Book 109, page 442 in the County Clerk's office in
Hardy County, West Virginia.
TRACT III:
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virginia, bounded by West Virginia Route 7 (South Fork Road) on the North and
East, Raygold Manufacturing Corporation (82/327) on the West, and Boise Cascade
Cabinets (109/4-42) on the South and is more particularly described as follows:
BEGINNING at a found T-bar three feet from the Northeast corner of a quonset
type warehouse, a corner of Boise Cascade Cabinets' land. Thence with said
company's line and running parallel with the North end of said warehouse North
85 degrees 45' 08" West 35.00 feet to a set rebar, corner of Raygold
Manufacturing Corporation's land, said rebar being South 85 degrees 45~ 08" East
85.07 feet from a found iron pin, another corner of Boise Cascade Cabinet's
property. Thence with Raygold Manufacturing Corporation's line North 10 degrees
12' 39" East 77.41 feet to a found rebar by a post on the Southern edge of a
sidewalk and West Virginia Route 7 (South Fork Road). Thence with the Southern
edge of said sidewalk and the Southern edge of said road South 46 degrees 01'
48" East 153.70 feet to a set rebar by a post. Thence leaving said sidewalk and
continuing with the Southern edge of said road South 31 degrees 32' 02" East
61.62 feet to a
Security Agreement: GBB.GBB.0066355
set railroad spike, a corner of Boise Cascade Cabinets' property. Thence leaving
said road and with said company's lines South 88 degrees 39' 25" West 127.97
feet to a found T-bar three feet East of warehouse East side. Thence continuing
with said company's line and running parallel with said warehouse North 04
degrees 17' 58" East 83.70 feet to the BEGINNING, containing 11,801.9665 square
feet (0.2709 acre) more or less as surveyed by Stultz & Associates, Inc.,
Romney, West Virginia, Charles W. Stultz, Licensed Land Surveyor, during March,
1979 and as shown on a plat attached hereto and made a part of this description.
Being the same tract of land that was conveyed to Boise Cascade Corporation from
Lincoln and Nellie Cox by deed dated the 22nd day of December, 1978 and is
recorded in Deed Book 154 at page 256 in the Office of the Clerk of the County
Commission of Hardy County, West Virginia.
TRACT IV
A parcel of land in Moorefield Corporation, Hardy County, West Virginia between
Railroad Street and County Route 7 at the east end of Central Avenue, more
particularly described as follows:
Beginning at a point on the East bounds of the South Branch Valley Railroad
(S.B.V.R.R.) fight-of-way, 20 feet from centerline of tracts, set a steel
reinforcing rod; thence N 87 degrees-17'-30" E at l 0.0 feet crossing a point
corner to S.B.V.R.R. right-of-way and American Woodmark (161/410) continuing
with American Woodmark and a fence in all 269.63 feet to a steel fence post;
thence with said Woodmark for one line S 65 degrees-55'-43" E 107.51 feet with a
fence to a steel road (found) at the base of a corner fence post, in the bounds
of County Route 7, 20 feet from the centerline thence with the West bounds of
County Route 7 for 4 lines S 06"-12'-57" E 53.38 feet to a point; thence S 14
degrees-27'-25'' E 73.34 feet to a point; thence S 17 degrees-43'-03" E 120.73
feet to a point; thence S 21 degrees-17'-48'' E 195.60 feet to a corner fence
post, corner to Williams (107/484), thence with said Williams and fence for one
line S 70 degrees-24'-12'' W 138.15 feet to a point, set a steel reinforcing
road in a fence a corner to Bean (177/32); thence with said Bean for one line N
200 degrees-03'-03'. W 74.58 feet to an utility pole, a corner to Southern
States (176/414); thence with said Southern States for 2 lines N 38
degrees-25'-15" W 157.25 feet to a steel reinforcing road; thence S 59"-18'-40"
W at about 77.6 feet crossing a railroad siding, in all 102.61 feet to a point
in the East bounds of the S.B.V.R.R., 20 feet from centerline set a steel
reinforcing rod; thence with the East bounds of the S.B .V.R.R. for 4 lines N 25
degrees-59'- 18" W 79.08 feet to a point; thence N 250 degrees-40'-38" W 46.18
feet to a point; thence N 24 degrees- 49'-32'' W 63.36 feet to a point; thence N
22 degrees-23'- 25" W 58.73 fee to the beginning containing 2.56 acres, more or
less, as surveyed December, 1983 by David O. Heishman, Licensed Land Surveyor,
Moorefield, West Virginia, and a shown on a plat attached hereto and made a part
of this description.
Security Agreement: GBB.GBB.0066355
Being a portion of the land conveyed to William H. Bean by M.A. Bean Oil
Company, Inc. by deed dated 20 August 1983 and recorded in the Office of the
County Clerk of Hardy County in Deed Book 177 Page 32.
Security Agreement: GBB.GBB.0066355
AMERICAN WOODMARK CORPORATION
AFE# DESCRIPTION SERIAL# ACQ DATE
99-206 Micro Gloss 60 degrees Sheen Meter 974036 Nov-99
99-206 Rhodes Hanging & Tow Cart
Finishing System Nov-99
99-206 Dynacycle RCO System-DCS-14-2 Nov-99
99-206 Finishing System Bldg Modification,
Electrical & Gas Line Installation Nov-99
99-206 Red Devil 5033 Paint Shaker 99IG0033 Nov-99
99-206 Langley EH-102 Power Lift M13628 Nov-99
99-206 Capitalized Interest-Finishing
Line Nov-99
99-206 PD-205 Rytec High Speed Rolling
Door Jan-00
00-044 100' x 100' VP Metal Bldg. Nov-99
00-044 Gravel Base Parking Lot Nov-99
00-044 SD1350-60 Ultra Filter Air Dryer 992/13195/
01 Nov-99
00-044 SSR-EP100 Intersoll Rand Air
Compressor CK1741U99
035 Nov-99
00-044 Mee Fost System Humidification 990255 Nov-99
00-044 Renznor RDF-2-120 LP Gas Air
Make Up Unit A4I172W3N Nov-99
STATE OF WEST VIRGINIA
UNIFORM COMMERCIAL CODE--FINANCING STATEMENT--FORM UCC-1
INSTRUCTIONS 12602
1. PLEASE TYPE this form. Fold only along perforation for mailing.
2. Remove Secured Party and Debtor copies (last two sheets) and send other 3
copies with interleaved carbon paper to the filing officer.
3. When filing is to be with more than one office, Form UCC-2 may be placed over
this set to avoid double typing. Type on last line all offices in which
statement is filed.
4. If the space provided for any item(s) on the form is inadequate the item(s)
should be continued on additional sheets, preferably 5"x8" or 8"x10". Only one
copy of such additional sheets need be presented to the filing officer with a
set of three copies of the financing statement. Long schedules of collateral,
indentures, etc., may be on any size paper that is convenient of the secured
party.
5. If collateral is crops or goods which are or are to become fixtures, describe
generally the real estate and give name of record owner.
6. When a copy of the security agreement is used as a financing statement. It is
requested that it be accompanied by a completed but unsigned set of these forms.
7. At the time of original filing, filing officer should return third copy as an
acknowledgement. At a later time, secured party may date and sign Termination
Legend and use third copy as a Termination Statement.
This FINANCING STATEMENT is presented to a filing officer for filing pursuant to
the Uniform Commercial Code:
1. Debtor(s)(Last Name First) and address(es)
American Woodmark Corporation
3102 Shawnee Drive
P. O. Box 1980
Winchester, VA 22601
2. Secured Party(ies) and address(es)
West Virginia Economic
Development Authority
1018 Kanawha Blvd., East
Suite 501
Charleston, WV 25301
3. Maturity date (if any):
For Filing Officer (Date, Time, Number, and Filing Office)
4. This financing statement covers the following types (or items) of property:
All equipment, machinery and fixtures, and all replacements thereto and proceeds
therefrom located at or intended to be utilized by Debtor in or otherwise
related to the operation of its business located at 117 South Fork Road,
Moorefield, West Virginia and more specifically described in Exhibit A attached
hereto as a part hereof and including without limitation the equipment described
on Exhibit B attached hereto and made a part hereof.
ASSIGNEE OF SECURED PARTY
Check X if covered: X Proceeds of Collateral are also covered
Products of Collateral are also covered
No. of additional Sheets presented:
Filed with:
AMERICAN WOODMARK CORPORATION
By: Glenn Eanes
Signature(s) of Debtor(s)
WEST VIRGINIA ECONOMIC DEVELOPMENT AUTHORITY
By: Robin L. Greathouse, Loan Officer
Signature(s) of Secured Party(ies)
(Form approved by Secretary of State of West Virginia)
FILING OFFICER COPY--ALPHABETICAL
EXHIBIT A
Description of the Property
TRACT I
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virginia, bounded by West Virginia County Route 7 on the West, an unpaved street
on the North and East, the lands of Allen Rexrode (134/345) on the South and is
more particularly described as follows:
BEGINNING at a T-bar set on the Eastern boundary line of West Virginia County
Route 7, also a corner of Rexrode. Thence with the Eastern boundary line of s
aid road North 04 degrees 02' 39" East 32.01 feet to a set T-bar. Thence
continuing with said road North 11 degrees 02' 57" East 48.54 feet to a set
railroad spike. Thence North 07 degrees 31' 53" East 60.16 feet to a set
railroad spike. Thence North 05 degrees 59' 53' West 37.17 feet to a set
railroad spike. Thence North 19 degrees 51'47" West 38 98 feet to a set railroad
spike. Thence North 32 degrees 36' 09" West 30.51 feet to a set railroad spike
on the Eastern boundary line of aforesaid road and on the South side of an
unpaved street. Thence crossing said street South 83 degrees 45' 29" East 293.09
feet to a set T-bar at the intersection of two unpaved streets. Thence with the
West side of said street South 06 degrees 27' 45" West 240.00 feet to a set
T-bar. a corner of Rexrode. Thence with Rexrode's line North 82 degrees 45' 29"
West 252.22 feet to the BEGINNING, containing 1.4002 acres as surveyed by
Charles W. W. Stultz, Licensed Land Surveyor, Romney, West Virginia on June 8,
1977 as shown on a plat attached hereto and made a part of this description.
Being the same parcel of land that was conveyed to Raygold Manufacturing
Corporation from Betty Baker, et als by deed dated 2nd day of March, 1970 and is
recorded in Deed Book 123, page 47 in the County Clerk's Office of Hardy County,
West Virginia.
TRACT I1
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virginia, near the Town Limit, bounded by W.Va. County Route 7 on the East. the
lands of M.A. Bean Oil Company (W.B. 17, page 186) on the South, the B&O
Railroad on the West, the lands of Raygold Manufacturing Corporation (formerly
Mudin Crites, 82/327) and Lincoln Cox (100/363) on the North and is more
particularly described as follows:
BEGINNING at an iron pin on the Eastern boundary limit of the B&O Railroad
Right-Of-Way and corner to Raygold Manufacturing Corporation. Thence with said
corporation's lines South 07 degrees 56' 40" East 59.39 feet to an iron pin.
Thence North 04 degrees 20' 15" East 81.91 feet to an iron pin. Thence South 85
degrees 42' 12" East 107.27 feet to an iron pin. Thence South 04 degrees 22' 53"
West 40.95 feet to an iron pin. Thence with said corporation's line and
continuing with Cox's line South 85 degrees 45' 06" East 120.07 feet to a set
T-bar. Thence with Cox's lines South 04 degrees 17' 58" West 83.70 feet to a set
T-bar. Thence North 88 degrees 39' 25" East 127.97 feet to a set T-bar on the
Western boundary line of W.Va. County Route 7. Thence with the Western boundary
line of said road South 320 degrees 36' 07' East 148.37 feet to a railroad
spike. Thence South 19 degrees 51' 47" East 29.65 feet to a railroad spike.
Thence South 05 degrees 59' 53" East 27.57 feet to a railroad spike. Thence
South 07 degrees 31' 53" West 54.18 feet to a railroad spike. Thence South 11
degrees 02' 57" West 49.77 feet to a railroad spike. Thence South 04 degrees 02'
39" West 52.10 feet to a railroad spike. Thence South 02 degrees 04' 17" East
23.33 feet to a set T-bar by a fence post, corner of M.A. Bean Oil Company.
Thence with said oil company's lines and following a wire fence North 68 degrees
29' 05" West 109.91 feet to a set T-bar by a fence post. Thence South 85 degrees
52' 18" West 255.39 feet to a set T-bar on the Eastern boundary limits of the
B&O Railroad Right-of-Way. Thence with the Eastern boundary limits of said
railroad by arc distance 285.90 feet to a set T-bar. Thence South 85 degrees 20'
08" West 17.50 feet to a set T-bar. Thence continuing with said railroad by arc
distance 81.42 feet to a set T-bar. Thence North 03 degrees 37' 36" East 95.02
feet to the BEGINNING, containing 3.6166 acres more or less as surveyed by
Charles W. W. Stultz, Licensed Land Surveyor, Romney, West Virginia during May,
1977 as shown on a plat attached hereto and made a part of this description.
Being the same tract of land that was conveyed to Raygold Manufacturing
Corporation from Alvin A. Goldhush, et ux by deed dated the 28th day of January,
1964. and is recorded in Deed Book 109, page 442 in the County Clerk's office in
Hardy County, West Virginia.
TRACT III:
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virginia, bounded by West Virginia Route 7 (South Fork Road) on the North and
East. Raygold Manufacturing Corporation (82/327) on the West, and Boise Cascade
Cabinets (109/442) on the South and is more particularly described as follows:
BEGINNING at a found T-bar three feet from the Northeast corner of a quonset
type warehouse, a corner of Boise Cascade Cabinets' land. Thence with said
company's line and running parallel with the North end of said warehouse North
85 degrees 45' 08" West 35.00 feet to a set rebar, corner of Raygold
Manufacturing Corporation's land, said rebar being South 85 degrees 45'08" East
85.07 feet from a found iron pin, another corner of Boise Cascade Cabinet's
property. Thence with Raygold Manufacturing Corporation's line North 10 degrees
12' 39" East 77.41 feet to a found rebar by a post on the Southern edge of a
sidewalk and West Virginia Route 7 (South Fork Road). Thence with the Southern
edge of said sidewalk and the Southern edge of said road South 46 degrees 01'
48" East 153.70 feet to a set rebar by a post. Thence leaving said sidewalk and
continuing with the Southern edge of said road South 31 degrees 32' 02" East
61.62 feet to a set railroad spike, a corner of Boise Cascade Cabinets'
property. Thence leaving said road and with said company's lines South 88
degrees 39' 25" West 127.97 feet to a found T-bar three feet East of warehouse
East side. Thence continuing with said company's line and running parallel with
said warehouse North 04 degrees 17' 58" East 83.70 feet to the BEGINNING,
containing 11,801.9665 square feet (0.2709 acre) more or less as surveyed by
Stultz & Associates, Inc., Romney, West Virginia, Charles W. Stultz, Licensed
Land Surveyor, during March, 1979 and as shown on a plat attached hereto and
made a part of this description.
Being the same tract of land that was conveyed to Boise Cascade Corporation from
Lincoln and Nellie Cox by deed dated the 22nd day of December, 1978 and is
recorded in Deed Book 154 at page 256 in the Office of the Clerk of the County
Commission of Hardy County, West Virginia.
TRACT IV
A parcel of land in Moorefield Corporation, Hardy County, West Virginia between
Railroad Street and County Route 7 at the east end of Central Avenue, more
particularly described as follows:
Beginning at a point on the East bounds of the South Branch Valley Railroad
(S.B.V.R.R.) right-of-way, 20 feet from centerline of tracts, set a steel
reinforcing rod; thence N 87 degrees-17'-30" E at I0.0 feet crossing a point
corner to S.B.V.R.R. right-of-way and American Woodmark (161/410) continuing
with American Woodmark and a fence in all 269.63 feet to a steel fence post;
thence with said Woodmark for one line S 650 degrees-55.-43' E 107.51 feet with
a fence to a steel road (found) at the base of a corner fence post, in the
bounds of County Route 7, 20 feet from the centerline thence with the West
bounds of County Route 7 for 4 lines S 06 degrees-12'-57'. E 53.38 feet to a
point; thence S 14 degrees-27'-25" E 73.34 feet to a point; thence S 17
degrees-43'-03" E 120.73 feet to a point; thence S 21 degrees-17'-48" E 195.60
feet to a corner fence post, corner to Williams (107/484), thence with said
Williams and fence for one line S 70 degrees-24'-12' W 138.15 feet to a point,
set a steel reinforcing road in a fence a corner to Bean (177/32); thence with
said Bean for one line N 20 degrees-03'-03" W 74.58 feet to an utility pole, a
corner to Southern States (176/414); thence with said Southern States for 2
lines N 38 degrees-25'-15" W 157.25 feet to a steel reinforcing road; thence S
59 degrees-18'40" W at about 77.6 feet crossing a railroad siding, in all 102.61
feet to a point in the East bounds of the S.B.V.R.R., 20 feet from centerline
set a steel reinforcing rod; thence with the East bounds of the S.B.V.R.R for 4
lines N 25 degrees-59'-18" W 79.08 feet to a point; thence N 250
degrees-40'-38". W 46.18 feet to a point; thence N 240 degrees- 49'-32" W 63.36
feet to a point; thence N 22 degrees-23'- 25" W 58.73 fee to the beginning
containing 2.56 acres, more or less, as surveyed December, 1983 by David O.
Heishman, Licensed Land Surveyor, Moorefield, West Virginia, and a shown on a
plat attached hereto and made a part of this description.
Being a portion of the land conveyed to William H. Bean by M.A. Bean Oil
Company, Inc. by deed dated 20 August 1983 and recorded in the Office of the
County Clerk of Hardy County in Deed Book 177 Page 32.
AMERICAN WOODMARK CORPORATION
AFE# DESCRIPTION SERIAL# ACQ DATE
99-206 Micro Gloss 60 degrees Sheen Meter 974036 Nov-99
99-206 Rhodes Hanging & Tow Cart
Finishing System Nov-99
99-206 Dynacycle RCO System-DCS-14-2 Nov-99
99-206 Finishing System Bldg Modification,
Electrical & Gas Line Installation Nov-99
99-206 Red Devil 5033 Paint Shaker 99IG0033 Nov-99
99-206 Langley EH-102 Power Lift M13628 Nov-99
99-206 Capitalized Interest-Finishing
Line Nov-99
99-206 PD-205 Rytec High Speed Rolling
Door Jan-00
00-044 100' x 100' VP Metal Bldg. Nov-99
00-044 Gravel Base Parking Lot Nov-99
00-044 SD1350-60 Ultra Filter Air Dryer 992/13195/
01 Nov-99
00-044 SSR-EP100 Intersoll Rand Air
Compressor CK1741U99
035 Nov-99
00-044 Mee Fost System Humidification 990255 Nov-99
00-044 Renznor RDF-2-120 LP Gas Air
Make Up Unit A4I172W3N Nov-99
AMERICAN WOODMARK CORPORATION
CERTIFICATE OF CORPORATE SECRETARY
The undersigned, Kent B. Guichard, Secretary of American Woodmark Corporation
(the "Corporation"), hereby certifies in accordance with the Loan Agreement (the
"Loan Agreement") (except as otherwise provided herein, capitalized terms used
herein shall have the meaning ascribed to them in the Loan Agreement) dated as
of January 31 2001, between the West Virginia Economic Development
Authority (the "WVEDA") and the Corporation as follows:
1. The Loan Documents executed by the Corporation have been duly authorized by
all necessary action on the part of the Corporation. Attached hereto as Exhibit
A is a true and correct copy of the Borrowing Resolutions duly adopted by the
Board of Directors of the Corporation by unanimous written consent. Such
Borrowing Resolutions do not contravene any provisions of the articles of
incorporation or bylaws of the Corporation or other governing instrument, and
the Resolutions have not been amended, modified or rescinded and are in full
force and effect as of the date hereof.
2. Each of the persons named below is a duly appointed, qualified and acting
officer of the Corporation, holding the office set forth opposite his/her name:
William F. Brandt, Jr. Chairman of the Board
James J. Gosa President and Chief Executive Officer
Kent B. Guichard Vice President and Chief Financial Officer
Kent B. Guichard Secretary
Glenn Eanes Treasurer
3. Attached hereto as Exhibit B is a Certificate of Good Standing from the State
of Virginia confirming that the Certificate of Incorporation has not been
revoked and is in full force and effect.
4. Attached hereto as Exhibit C is a Certificate of Good Standing from the State
of West Virginia confirming that the Corporation is qualified to do business and
is in good standing in the State of West Virginia.
Dated: 1/31, 2001.
Kent Guichard
Secretary
GBB.GBB.0067030
Exhibit A
Page 1 of 9
AMERICAN WOODMARK CORPORATION
UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF MEETING
The undersigned, being all of the directors of American Woodmark Corporation, a
Virginia corporation (the "Corporation"). acting pursuant to Va. Code Ann.
Section 13.1-685, do hereby consent to the following effective as of May
31,2000:
RESOLVED, that this Corporation borrow from the West Virginia Economic
Development Authority up to $1,000,000 upon the terms outlined in the letter
dated September 7, 1999 from David A. Warner to Glenn Eanes.
FURTHER RESOLVED, that this Corporation execute any Loan Agreement, Promissory
Note, Deed of Trust and Fixture Filing, Security Agreement, Certificate, UCC
Financing Statement or other document as may be necessary or desirable to close
such loan.
FURTHER RESOLVED, that the President, Senior Vice President, Finance or
Treasurer is authorized to execute on behalf of the Corporation any or all of
such documents.
This Consent may be executed in counterparts, all of which shall be read
together as one Consent.
Dated:
6/16
,2000 William F. Brandt, Jr.
,2000 James Jake Gosa
,2000 Kent Guichard
,2000 C. Anthony Wainwright
,2000 Daniel T. Carroll
,2000 Martha M. Dally
,2000 Fred S. Grunewald
,2000 Albert L. Prillaman
,2000 Kent J. Hussey
Exhibit A
Page 2 of 9
AMERICAN WOODMARK CORPORATION
UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF MEETING
The undersigned, being all of the directors of American Woodmark Corporation, a
Virginia corporation (the "Corporation"), acting pursuant to Va. Code Ann.
Section 13.1-685, do hereby consent to the following effective as of May
31,2000:
RESOLVED, that this Corporation borrow from the West Virginia Economic
Development Authority up to $1,000,000 upon the terms outlined in the letter
dated September 7, 1999 from David A. Warner to Glenn Eanes.
FURTHER RESOLVED, that this Corporation execute any Loan Agreement, Promissory
Note, Deed of Trust and Fixture Filing, Security Agreement, Certificate, UCC
Financing Statement or other document as may be necessary or desirable to close
such loan.
FURTHER RESOLVED, that the President, Senior Vice President, Finance or
Treasurer is authorized to execute on behalf of the Corporation any or all of
such documents.
This Consent may be executed in counterparts, all of which shall be read
together as one Consent.
Dated:
,2000 William F. Brandt, Jr.
6/15
,2000 James Jake Gosa
,2000 Kent Guichard
,2000 C. Anthony Wainwright
,2000 Daniel T. Carroll
,2000 Martha M. Dally
,2000 Fred S. Grunewald
,2000 Albert L. Prillaman
,2000 Kent J. Hussey
Exhibit A
Page 3 of 9
AMERICAN WOODMARK CORPORATION
UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF MEETING
The undersigned, being all of the directors of American Woodmark Corporation, a
Virginia corporation (the "Corporation"), acting pursuant to Va. Code Ann.
Section 13.1-685, do hereby consent to the following effective as of May 31,
2000:
RESOLVED, that this Corporation borrow from the West Virginia Economic
Development Authority up to $1,000,000 upon the terms outlined in the letter
dated September 7, 1999 from David A. Warner to Glenn Eanes.
FURTHER RESOLVED, that this Corporation execute any Loan Agreement, Promissory
Note, Deed of Trust and Fixture Filing, Security Agreement, Certificate, UCC
Financing Statement or other document as may be necessary or desirable to close
such loan.
FURTHER RESOLVED, that the President, Senior Vice President, Finance or
Treasurer is authorized to execute on behalf of the Corporation any or all of
such documents.
This Consent may be executed in counterparts, all of which shall be read
together as one Consent.
Dated:
,2000 William F. Brandt, Jr.
,2000 James Jake Gosa
,2000 Kent Guichard
,2000 C. Anthony Wainwright
,2000 Daniel T. Carroll
,2000 Martha M. Dally
,2000 Fred S. Grunewald
,2000 Albert L. Prillaman
,2000 Kent J. Hussey
Exhibit A
Page 4 of 9
AMERICAN WOODMARK CORPORATEION
UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF MEETING
The undersigned, being all of the directors of American Woodmark Corporation, a
Virginia corporation (the "Corporation"), acting pursuant to Va. Code Ann.
Section 13.1-685 do hereby consent to the following effective as of May 31,
2000:
RESOLVED, that this Corporation borrow from the West Virginia Economic
Development Authority up to $1,000,000 upon the terms outlined in the letter
dated September 7, 1999 from David A. Warner to Glenn Eanes.
FURTHER RESOLVED, that this Corporation execute any Loan Agreement Promissory
Note, Deed of Trust and Fixture Filing, Security Agreement, Certificate, UCC
Financing Statement or other document as may be necessary or desirable to close
such loan.
FURTHER RESOLVED, that the President, Senior Vice President, Finance or
Treasurer is authorized to execute on behalf of the Corporation any or all of
such documents.
This consent may be executed in counterparts, all of which shall be read
together as one Consent.
,2000 William F. Brandt, Jr.
,2000 James Jake Gosa
,2000 Kent Guichard
June15
,2000 C. Anthony Wainwright
,2000 Daniel T. Carroll
,2000 Martha M. Dally
,2000 Fred S. Grunewald
,2000 Albert L. Prillaman
,2000 Kent J. Hussey
Exhibit A
Page 5 of 9
AMERICAN WOODMARK CORPORATION
UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF MEETING
The undersigned, being all of the directors of American Woodmark Corporation, a
Virginia corporation (the "Corporation"), acting pursuant to Va. Code Ann.
Section 13.1-685 do hereby consent to the following effective as of May 31,
2000:
RESOLVED, that this Corporation borrow from the West Virginia Economic
Development Authority up to $1,000,000 upon the terms outlined in the letter
dated September 7, 1999 from David A. Warner to Glenn Eanes.
FURTHER RESOLVED, that this Corporation execute any Loan Agreement Promissory
Note, Deed of Trust and Fixture Filing, Security Agreement, Certificate, UCC
Financing Statement or other document as may be necessary or desirable to close
such loan.
FURTHER RESOLVED, that the President, Senior Vice President, Finance or
Treasurer is authorized to execute on behalf of the Corporation any or all of
such documents.
This consent may be executed in counterparts, all of which shall be read
together as one Consent.
,2000 William F. Brandt, Jr.
,2000 James Jake Gosa
,2000 Kent Guichard
,2000 C. Anthony Wainwright
,2000 Daniel T. Carroll
,2000 Martha M. Dally
,2000 Fred S. Grunewald
,2000 Albert L. Prillaman
,2000 Kent J. Hussey
Exhibit A
Page 6 of 9
AMERICAN WOODMARK CORPORATION
UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF MEETING
The undersigned, being all of the directors of American Woodmark Corporation, a
Virginia corporation (the "Corporation"), acting pursuant to Va. Code Ann.
Section 13.1-685 do hereby consent to the following effective as of May 31,
2000:
RESOLVED, that this Corporation borrow from the West Virginia Economic
Development Authority up to $1,000,000 upon the terms outlined in the letter
dated September 7, 1999 from David A. Warner to Glenn Eanes.
FURTHER RESOLVED, that this Corporation execute any Loan Agreement Promissory
Note, Deed of Trust and Fixture Filing, Security Agreement, Certificate, UCC
Financing Statement or other document as may be necessary or desirable to close
such loan.
FURTHER RESOLVED, that the President, Senior Vice President, Finance or
Treasurer is authorized to execute on behalf of the Corporation any or all of
such documents.
This consent may be executed in counterparts, all of which shall be read
together as one Consent.
,2000 William F. Brandt, Jr.
,2000 James Jake Gosa
,2000 Kent Guichard
,2000 C. Anthony Wainwright
,2000 Daniel T. Carroll
16June
,2000 Martha M. Dally
,2000 Fred S. Grunewald
,2000 Albert L. Prillaman
,2000 Kent J. Hussey
Exhibit A
Page 7 of 9
AMERICAN WOODMARK CORPORATION
UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF MEETING
The undersigned, being all of the directors of American Woodmark Corporation, a
Virginia corporation (the "Corporation"), acting pursuant to Va. Code Ann.
Section 13.1-685 do hereby consent to the following effective as of May 31,
2000:
RESOLVED, that this Corporation borrow from the West Virginia Economic
Development Authority up to $1,000,000 upon the terms outlined in the letter
dated September 7, 1999 from David A. Warner to Glenn Eanes.
FURTHER RESOLVED, that this Corporation execute any Loan Agreement Promissory
Note, Deed of Trust and Fixture Filing, Security Agreement, Certificate, UCC
Financing Statement or other document as may be necessary or desirable to close
such loan.
FURTHER RESOLVED, that the President, Senior Vice President, Finance or
Treasurer is authorized to execute on behalf of the Corporation any or all of
such documents.
This consent may be executed in counterparts, all of which shall be read
together as one Consent.
,2000 William F. Brandt, Jr.
,2000 James Jake Gosa
,2000 Kent Guichard
,2000 C. Anthony Wainwright
,2000 Daniel T. Carroll
,2000 Martha M. Dally
,2000 Fred S. Grunewald
,2000 Albert L. Prillaman
,2000 Kent J. Hussey
Exhibit A
Page 8 of 9
AMERICAN WOODMARK CORPORATION
UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF MEETING
The undersigned, being all of the directors of American Woodmark Corporation, a
Virginia corporation (the "Corporation"), acting pursuant to Va. Code Ann.
Section 13.1-685 do hereby consent to the following effective as of May 31,
2000:
RESOLVED, that this Corporation borrow from the West Virginia Economic
Development Authority up to $1,000,000 upon the terms outlined in the letter
dated September 7, 1999 from David A. Warner to Glenn Eanes.
FURTHER RESOLVED, that this Corporation execute any Loan Agreement Promissory
Note, Deed of Trust and Fixture Filing, Security Agreement, Certificate, UCC
Financing Statement or other document as may be necessary or desirable to close
such loan.
FURTHER RESOLVED, that the President, Senior Vice President, Finance or
Treasurer is authorized to execute on behalf of the Corporation any or all of
such documents.
This consent may be executed in counterparts, all of which shall be read
together as one Consent.
,2000 William F. Brandt, Jr.
,2000 James Jake Gosa
,2000 Kent Guichard
,2000 C. Anthony Wainwright
,2000 Daniel T. Carroll
,2000 Martha M. Dally
,2000 Fred S. Grunewald
June15
,2000 Albert L. Prillaman
,2000 Kent J. Hussey
Exhibit A
Page 9 of 9
AMERICAN WOODMARK CORPORATION
UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF MEETING
The undersigned, being all of the directors of American Woodmark Corporation, a
Virginia corporation (the "Corporation"), acting pursuant to Va. Code Ann.
Section 13.1-685 do hereby consent to the following effective as of May 31,
2000:
RESOLVED, that this Corporation borrow from the West Virginia Economic
Development Authority up to $1,000,000 upon the terms outlined in the letter
dated September 7, 1999 from David A. Warner to Glenn Eanes.
FURTHER RESOLVED, that this Corporation execute any Loan Agreement Promissory
Note, Deed of Trust and Fixture Filing, Security Agreement, Certificate, UCC
Financing Statement or other document as may be necessary or desirable to close
such loan.
FURTHER RESOLVED, that the President, Senior Vice President, Finance or
Treasurer is authorized to execute on behalf of the Corporation any or all of
such documents.
This consent may be executed in counterparts, all of which shall be read
together as one Consent.
,2000 William F. Brandt, Jr.
,2000 James Jake Gosa
,2000 Kent Guichard
,2000 C. Anthony Wainwright
,2000 Daniel T. Carroll
,2000 Martha M. Dally
,2000 Fred S. Grunewald
,2000 Albert L. Prillaman
June15
,2000 Kent J. Hussey
EXHIBIT B
EXHIBIT C
PROMISSORY NOTE
$1,000,000.00 Charleston, West Virginia
January 31, 2001
FOR VALUE RECEIVED, the undersigned American Woodmark Corporation (the "Company
") hereby promises to pay to the order of the West Virginia Economic Development
Authority (the "WVEDA") the sum of One Million and no/100th Dollars
($1,000,000.00), with interest fixed at five and nine tenths percent (5.9%) per
annum on the unpaid principal calculated on the basis of the actual number of
days elapsed and a 360 day calendar year, in lawful money of the United States,
at the offices of the WVEDA, 1018 Kanawha Boulevard, East, Suite 501,
Charleston, West Virginia 25301, or at such other place as the owner of this
Note shall designate, as follows:
1. Payment shall be, due and payable in forty-eight (48) equal and consecutive
quarterly installment payments of principal and interest at the rate set out
above; the first of such quarterly payments commencing on the 25th day of April,
2001, and continuing on the same day of the first month of each successive
quarter thereafter until the forty-eighth (48th) and final installment, at which
time the entire unpaid principal balance, together with the interest accrued
thereon at the rate aforesaid, shall be paid in full, provided, however, on
April 25, 2001, the Company shall pay to WVEDA the accrued interest on the
outstanding principal of this Note for the period from (and including) the date
of funding of this Note to (and including) April 25, 2001. Said quarterly
payments shall be applied first to the payment of said interest on the unpaid
balance and the balance to the payment of said principal.
2. This Note is tile one described in that certain Loan Agreement of even date
herewith by and between the WVEDA and the Company. If default shall be made in
the payment of any installment of this Note or any part thereof, when due, and
if such default shall continue for a period of thirty (30) days after the same
has become due, or if there shall be a breach at any time of any covenant,
condition, provision. warranty, stipulation or agreement contained in the Loan
Agreement, the Deed of Trust and Fixture Filing or the Security Agreement and
such breach shall continue for a period of thirty (30) days after notice thereof
has been given to the Company, or upon the occurrence of any of the events
described in paragraph F. 1. of the Loan Agreement, then in any such event the
entire principal balance hereof, with interest thereon then accrued, shall at
once be and become due, payable and demandable, without notice, at the option of
the holder hereof. Failure at any time on the part of the holder hereof to
exercise such option shall not constitute a waiver of the right to exercise the
same in the event of a subsequent similar default.
3. The undersigned shall have the right at any time, without notice, premium or
penalty to make payment of all or any part of this Note, but any such partial
payment shall not operate to postpone payment as and when due of the regular
installments due on this Note.
4. The undersigned expressly waives presentment for and demand of payment and
notice of the nonpayment of any installment of principal or interest falling due
under this Note, and also waives protest of same upon default in the payment of
such installment.
AMERICAN WOODMARK CORPORATION
By: Glenn Eanes
Its: Treasurer
GBB GBB.0066354
CORRECTIVE DEED OF TRUST AND FIXTURE FILING
THIS DEED OF TRUST AND FIXTURE FILING ("Deed of Trust"), is made as of the 31st
day of January, 2001, by and between American Woodmark Corporation, a Virginia
corporation, hereinafter called "Grantor," party of the first part, and JOHN R.
SNIDER, a resident of Kanawha County, West Virginia, Chairman of the Board of
the West Virginia Economic Development Auth6rity, or his successors in office,
hereinafter called "Trustee," and the West Virginia Economic Development
Authority, hereinafter called "Beneficiary," parties of the second part;
Whereas, by Deed of Trust and Fixture Filing dated January 31, 2001, of record
in the Office of the Clerk of the County Commission of Hardy County, West
Virginia in Trust Deed Book 159, page 557, and recorded February 2, 2001,
Grantor did grant and convey the property therein described unto the Trustee
which property description failed to describe all of the property to be subject
to the deed of trust and which set forth incorrectly the term of the therein
described Promissory Note; and
Whereas, Grantor executes this Deed of Trust to attach a corrected description
of the property and the correct payment term of the Promissory Note;
WITNESSETH:
That for and in consideration of the indebtedness and trusts hereinafter set
forth and the sum of Ten Dollars ($10.00), cash in hand paid, the receipt and
sufficiency of which are hereby acknowledged, the Grantor does hereby GRANT AND
CONVEY unto the Trustee, with power of sale, all of the following:
(a) All those certain lots, tracts or parcels of land located in Hardy County,
West Virginia, together with all buildings, improvements and structures at any
time now or hereafter erected, situated or placed thereon and all rights,
privileges, easements, hereditaments, appendages and appurtenances now or
hereafter belonging or in anywise appertaining to the real property hereby
conveyed, as more particularly described on Exhibit A, attached to and made a
part of this Deed of Trust;
(b) All right, title, interest and estate now or hereafter held by Grantor in
and to streets, roadways, sidewalks, curbs, alleys and areas adjoining the real
property hereby conveyed and portions thereof, and whether vacated by law or
ordinance (conditionally or otherwise); and
(c) All fixtures, fixed assets and personality of a permanent nature owned by
Grantor now or hereafter annexed, affixed or attached to the real property
hereby conveyed and the buildings, improvements or structures thereon and used
or intended to be used in the possession, occupation or enjoyment thereof, and
all replacements, additions and substitutions thereof or thereto, including but
without limiting the generality of the foregoing, all apparatus, appliances,
machinery, equipment and articles used to supply or provide or in connection
with beat, gas, air conditioning, plumbing, water, lighting, power, elevator
service, sewerage, refrigeration, cooling, ventilation, sprinkler system and
water heater, all of which, described in this item (c), shall be a part of the
freehold and a portion of the security for the obligation herein described.
All property described above, together with the real estate described above,
shall secure the obligation herein described and covered by this Deed of Trust,
and all the foregoing property, interests in property and other rights and
interests are herein sometimes referred to collectively as the "Property".
The Grantor does hereby covenant to and with the Trustee that it shall WARRANT
GENERALLY the title to its interest in the Property; that Grantor has the right
to convey the Property to Trustee; that the same is free from any and all liens
and encumbrances other than real estate taxes assessed but not yet due and
payable; and that Grantor shall execute such further assurances of the Property'
as may be requisite, including, but not limited to, the execution and
Deed of Trust and Fixture Filing: GBB.GBD.0066919
delivery of financing statements and such other instruments as may be required
to impose the lien hereof more specifically upon any item or items of property,
or rights or interests therein, covered by this Deed of Trust.
IN TRUST NEVERTHELESS, to secure the following: (i) the payment of the principal
sum of One Million Dollars ($1,000,000.00) with interest at the fixed rate of
five and nine tenths percent (5.9%) per annum, evidenced by a negotiable
Promissory Note of even date herewith (hereinafter sometimes called the "Note"),
made and executed by Grantor payable to the order of the West Virginia Economic
Development Authority (hereinafter referred to as either "WVEDA" or
"Beneficiary"), which is the beneficial owner of the debt secured hereby, and
has the address of 1018 Kanawha Boulevard, East, Suite 501, Charleston, West
Virginia 25301, said principal and interest being due and payable as follows:
The principal sum of One Million Dollars ($1,000,000.00) shall be, due and
payable in forty-eight (48) equal and consecutive quarterly installment payments
of principal and interest at the rate set out above calculated on the basis of
the actual number of days elapsed and a 360 day calendar year; the first of such
quarterly installment commencing on the 25th day of April, 2001, and continuing
on the same day of the first month of each successive quarter thereafter until
the forty-eighth (48th)and final installment, at which time the entire unpaid
principal balance, together with the interest accrued thereon at the rate
aforesaid, shall be paid in full, provided, however, on April 25, 2001, the
Grantor shall pay interest accrued on the outstanding principal for the period
from (and including) the date of the funding of the loan to (and including)
April 25, 2001. Said quarterly payments shall be applied first to the payment of
said interest on the unpaid balance and the balance to the payment of said
principal. All installments are payable at the office of the West Virginia
Economic Development Authority, 1018 Kanawha Boulevard, East, Suite 501,
Charleston, West Virginia, or at such other location as may be subsequently
designated by the holder.
The maker of the Promissory Note shall have the right at any time, without
notice, premium or penalty, to pay all or any part of this Promissory Note, but
any such partial payment shall not operate to postpone payment as and when due
of the regular installments due on this Promissory Note;
and (ii) the performance by Grantor of all terms, covenants, conditions,
agreements and provisions contained in that certain Loan Agreement of even date
herewith (hereinafter sometimes called the "Loan Agreement"), by and between
Grantor and WVEDA.
This Deed of Trust shall also secure any note or notes given in extension,
continuation, modification. renewal or in lieu of or in substitution for the
Note, however changed in form, manner or amount, together with any interest that
may be due thereon.
The Grantor covenants, represents, warrants and agrees with the Trustee and with
the Beneficial and each of them as follows:
1. That it shall promptly pay all taxes, charges and assessments lawfully levied
against the Property and upon its failure to so do, then the Trustee or the
Beneficiary may, without any obligation to do so, pay the same or any part
thereof remaining unpaid, and any amount so paid shall bear interest at ten
percent (10%) per annum from the date of such payment and be and become secured
by this Deed of Trust.
2. That it shall keep all buildings and other improvements now or hereafter
placed on the real property hereby conveyed, and the appurtenances thereunto
belonging, fully insured against loss by fire and against such
Deed of Trust and Fixture Filing: GBB GBB 0066919 2
other losses and in such amount as may be satisfactory to the Beneficiary during
the life of this Deed of Trust, in insurance companies acceptable to, and with a
New York Standard Mortgage Clause approved by, Beneficiary; that it shall
purchase Federal Flood Insurance in amounts and coverage satisfactory to the
Beneficiary if the Property is located in a flood prone area and the FIA map
shows the Property is located within a special flood hazard area; that upon the
request of the Beneficiary, the Grantor shall deliver to the Beneficiary from
time to time the policies or Certificates of insurance in a form satisfactory to
the Beneficiary, including stipulations that coverage shall not be canceled or
diminished without at least twenty (20) days prior written notice to the
Beneficiary; that Grantor shall pay, when due, the premiums on said insurance;
and that, in the event Grantor shall fait to pay said premiums, the Trustee or
the Beneficiary may, without any obligation to do so, pay the same, and any
amounts so paid shall bear interest at ten percent (10%) per annum from the date
of such payment and be and become secured by this Deed of Trust. Nothing
contained herein, however, shall be construed as placing any obligation upon the
Trustee or Beneficiary to obtain such insurance and they or none of them shall
be liable for their failure to do so. Upon full foreclosure or a deed in lieu of
such foreclosure, all of Grantor's right, title and interest in and to the
aforesaid insurance shall automatically pass to and be the property of the then
holder of the obligation hereby secured.
3. That it shall keep and maintain all buildings and other improvements now or
hereafter placed on the real property hereby conveyed in good repair and
condition and shall not abandon same, commit or permit waste upon the Property,
or do any act whereby the Property may become less valuable, and shall not
remove or permit the removal of any buildings or other improvements now on the
real property hereby conveyed, or which may be placed thereon, during the life
of this Deed of Trust, and shall comply with all laws, ordinances, rules and
regulations relating to the use or maintenance of the Property. Grantor shall
permit Trustee, Beneficiary or their designees to enter and inspect the Property
at all reasonable times. In the event Grantor shall fail to comply with the
provisions of this paragraph after written notice as hereinafter provided, the
Trustee or the Beneficiary may make and pay for any and all repairs which they,
or either of them, deem necessary to place or keep the Property in good
condition and repair, stop or mitigate waste on or in the Property or any part
thereof, stop or prevent the removal, destruction, demolition or structural
alteration of any building or improvement on the real property hereby conveyed,
or stop or prevent the violation of any law, ordinance, rule or regulation
relating to the use or maintenance of the Property or of any requirement,
direction, order or notice of violation thereof issued by any governmental
agency, body or officer.
4. That it shall not, without prior written consent of Beneficiary, create or
permit to exist or be created any mortgage, deed of trust, pledge or other lien
or encumbrance on any of the Property, other than this Deed of Trust, and shall
not suffer or permit any mechanic's or materialmen's liens or any other lien of
any nature whatsoever to attach to any of the Property or to remain outstanding
against same or any part thereof, provided, however, that Grantor may, in good
faith, contest the validity of any such lien and, in the case of such contest,
provide for the payment thereof in a manner satisfactory to Beneficiary.
5. That it shall pay to the Trustee and shall pay the holder of any obligations,
the payment of which is hereby secured, any and all sums of money, including
costs, expenses and reasonable attorney's fees incurred or expended in any
proceedings, legal or equitable, to sustain the lien of this Deed of Trust, or
its priority, or in defending any party hereto or any party hereby secured
against the liens, demands or claims of title, or any or either of them, of any
person or persons asserting priority over this Deed of Trust or asserting title
adverse to the title under which the Trustee holds, or in the discharge of any
such lien or claim, or in connection with any suit at law or in equity to
foreclose this Deed of Trust or to recover any obligation hereby secured,
together with interest on such sums at ten percent (10%) per annum until paid,
and this Trust shall stand as security therefore.
6. That the information furnished Beneficiary concerning Grantor's financial
status is correct and complete, and that there have been no material adverse
changes in Grantor's financial status since such information was furnished to
Beneficiary.
Deed of Trust and Fixture Filing: GBB.GBB.0066919 3
7. That it shall keep proper books of record and account in accordance with
sound accounting practice concerning its business, furnish Beneficiary an annual
report of its financial condition and give Beneficiary any further information
concerning its financial condition or business activities requested by
Beneficiary.
8. The occurrence of any of the following events shall constitute an ev6nt of
default under this Deed of Trust (hereinafter called an "Event of Default"),
and, unless such default is cured, as applicable, the entire unpaid balance of
principal, accrued interest, fees, expenses and other charges due under the Note
shall, at the option of Beneficiary, immediately become due and payable without
further notice to or demand on Grantor or any other person:
(a) if default shall be made in the payment as and when due of the Note, or any
installment or part thereof, or the interest thereon, or of any other sum due
under the provisions of the Loan Agreement, this Deed of Trust or the interest
thereon at the times specified therein and herein and such failure shall
continue for a period of thirty (30) days after the same has become due;
(b) if default shall be made in the performance of any term, covenant,
condition, agreement, warranty or provision contained in the Loan Agreement
other than as referred to in Paragraph F. 1. (a) and (c) of the Loan Agreement,
for a period of thirty (30) days after written notice has been given to the
Grantor by the Beneficiary as provided in the Loan Agreement, subject to an
extension of such time as provided in the Loan Agreement;
(c) if default shall be made in the payment, as and when due and payable, of any
tax, assessment or other governmental charge or fee for a period of thirty (30)
days after mailing written notice to Grantor of the occurrence of such Event of
Default, which is not being contested in good faith by Grantor after providing
for the payment thereof in a manner satisfactory to Beneficiary or of any
insurance premium or if the required insurance is not effected by Grantor or the
policies delivered to Beneficiary as herein required;
(d) if there shall be a breach of or default in the performance of any covenant,
condition, agreement, warranty or provision contained in this Deed of Trust for
a period of thirty (30) days after mailing written notice to Grantor of the
occurrence of such Event of Default;
(e) if Grantor, or any party to or guarantor of the Note, shall become insolvent
Dr make an assignment for the benefit of creditors, or if any petition for
bankruptcy or arrangement pursuant to the Federal Bankruptcy Act, or any similar
federal or state law, shall be filed by or against Grantor or any party to or
guarantor of the Note subject to the terms set forth in the Loan Agreement;
(f) if any warranty, representation or other statement made by or on behalf of
the Grantor contained in the Loan Agreement or in any other instrument or
certificate furnished in compliance with or in reference to the Loan is false or
misleading in any material respect, or failure by the Grantor to perform or
observe any condition or covenant contained in any such document for a period of
thirty (30) days after compliance with the notice and request provisions of
paragraph (b) above.
(g) if there shall now or hereafter exist upon the Property, or any part
thereof, any claim, lien or encumbrance, other than real estate taxes assessed
but not yet due and payable or other liens and encumbrances, if any, approved in
writing by Beneficiary, which is or might be superior to the lien of this Deed
of Trust and is not being contested in good faith by Grantor as provided in
paragraph 4 above;
(h) if the Property, or any part thereof or any interest therein, be sold,
assigned or transferred in any manner whatsoever, whether by deed, sales
contract or any other instrument, by Grantor to any person, firm or corporation
without the consent in writing of the Beneficiary or as otherwise provided in
the Loan Agreement;
Deed of Trust and Fixture Filing: GBB GBB.0066919 4
(i) if payment of the Note is assumed by any party other than Grantor without
the prior consent in writing of the Beneficiary; or
(j) if Grantor shall do or suffer to be done any act or thing which would impair
the security for the Note.
9. If any one or more Events of Default shall occur and be continuing after
written notice, when applicable, to Grantor as provided in paragraph 8 above,
any one or more of the following rights and remedies shall exist, any two or
more of which may be exercised concurrently:
(a) Trustee or Beneficiary may forthwith, without notice, separately or jointly:
(i) enter into and upon all of the Property and take possession of the Property
without process of law, without liability to Grantor or to other owner or owners
of the Property, and manage and rent the same, or any part thereof, collect and
receive the rents, issues and profits thereof (past due, due or become due) and
apply the same to the payment of the indebtedness hereby secured, after first
deducting the costs and expenses incurred in managing the Property and in
collecting said rents, issues and profits (including a commission of 10% of the
total amount collected, which shall be paid to Beneficiary, or to Trustee, as
the case may be, for managing the same and collecting and disbursing said rents,
issues and profits accruing therefrom), and after deducting such further amount
or amounts as may be necessary to pay or reimburse Beneficiary and Trustee for
any sum or sums of money paid by them, or any of them, under the provisions
hereof, together with interest thereon at the rate of ten percent (10%) per
annum to the date of payment; (ii) have a receiver appointed by any court having
jurisdiction to take charge of the Property and collect, receive and apply the
rants, issues and profits thereof, or (iii) exercise any or all of the other
rights and remedies provided for in this Deed of Trust. In either case, any
person or persons in possession of the Property, or any part thereof, shah be
deemed a tenant at will and shall at once surrender such possession on demand of
Beneficiary or Trustee or a receiver. It is understood and agreed by and between
the parties hereto that nothing herein contained shall be construed as a
substitute for, or in derogation of, the right to foreclose this Deed of Trust
or as imposing any duty or obligation upon Beneficiary or upon Trustee, or any
of them, to take charge of the Property or to collect said rents, issues or
profits or to have a receiver appointed for such purposes
(b) Without notice to or demand on Grantor or any other person, Beneficiary may
at its option declare the Note to be immediately due and payable and upon the
exercise of said option the Note may be collected by proper action, foreclosure
of this Deed of Trust, or any other legal or equitable proceeding.
(c) At any time after the exercise by Beneficiary of the option to declare the
Note immediately due and payable, Trustee, upon the written request of
Beneficiary, shall foreclose upon and sell the Property to satisfy the Note at
public auction at the front door of the Hardy County Courthouse, for cash in
hand on the day of sale, after first giving notice of such sale by publishing
such notice in a newspaper of general circulation published in Hardy County, or
if there be no such newspaper, in a qualified newspaper of general circulation
in said county, once a week for two successive weeks preceding the day of sale
and after giving notice to Grantor and to any subordinate lien holder who has
previously notified Beneficiary of the existence of a subordinate lien at least
20 days prior to the sale, and no other notice of such sale shall be required.
Out of the proceeds of such sale Trustee shall pay, first, the costs and
expenses of executing this trust, including an amount equal to three percent
(3%) of the gross proceeds of sale, whichever amount shall be greater, to
Trustee, or to the one so acting, as the Trustee's commission hereunder; second
to Beneficiary and Trustee all moneys which they or either of them may have paid
for taxes, assessments or other governmental charges or fees. insurance,
repairs, court costs, and all other costs and expenses incurred or paid under
the provisions of this Deed of Trust together with interest thereon at the rate
of ten percent (10%) per annum from the date of payment; third to Beneficiary
the full amount due and unpaid on the Note and all other indebtedness hereby
secured, together with all interest accrued thereon to date of payment; and
fourth, the balance, if any, to Grantor, its successors or assigns, upon
delivery of and surrender to the purchaser or purchasers of possession of the
Property less the expense, if any, of obtaining such possession. This Deed of
Trust shall, with respect to all fixtures subject to the lien hereof, be deemed
to grant a security interest to the Beneficiary under the Uniform Commercial
Code of West Virginia (the "Code"). In the event of the
Deed of Trust and Fixture Filing: GBB GBB 0066919 5
occurrence of any Event of Default, in addition to the rights, remedies and
powers hereinabove set forth, Beneficiary and Trustee shall have as to any and
all fixtures covered by this Deed of Trust, all rights, remedies and powers of a
secured party under the Code.
10. The parties hereto agree that any sale hereunder may be adjourned from time
to time without notice other than oral proclamation of such adjournment at the
time and place of sale, or at the time and place of any adjourned sale.
11. The parties hereto agree that Beneficiary may, at any time and from time to
time hereafter, without notice, appoint and substitute another Trustee or
Trustees, corporations or persons, in place of the Trustee herein named to
execute this Trust. Upon such appointment, either with or without a conveyance
to the substituted Trustee or Trustees by the Trustee herein named, or by any
substituted Trustee in case the right of appointment is exercised more than
once, the new and substituted Trustee or Trustees in each instance shall be
vested with all the rights, titles, interests, powers, duties and trusts in the
premises which are vested in and conferred upon the Trustee herein named; and
such new and substituted Trustee or Trustees shall be considered the successors
and assigns of the Trustee who is named herein within the meaning of this Deed
of Trust, and substituted in his place and stead. Each such appointment and
substitution shall be evidenced by an instrument in writing which shall recite
the parties to, and the book and page of record of, this Deed of Trust, and the
description of the Property herein described, which instrument, executed and
acknowledged by Beneficiary and recorded in the office of the Clerk of the Hardy
County Commission, shall be conclusive proof of the proper substitution and
appointment of such successor Trustee or Trustees, and notice of such proper
substitution and appointment to all parties in interest.
12. In the event foreclosure proceedings are instituted under the terms and
provisions of this Deed of Trust, but are not completed, the Trustee shall be
entitled to charge and collect the necessary costs and expenses incurred by
them, together with a fee of one percent (1%) of the balance due on the
obligations hereby secured.
13. A copy of any notice of trustee's sale under this Deed of Trust shall be
served on Grantor by certified mail, return receipt requested, directed to
Grantor at the address stated below or such other address given to Beneficiary
in writing by Grantor, subsequent to the execution and delivery of this Deed of
Trust. Any other notice shall be effective upon the deposit of such notice, in
writing, in the regular United States mail, postage prepaid, addressed to the
party or parties who receive such notice at the following, addresses or at such
other addresses as any such party may give to the other parties in writing:
To Grantor: American Woodmark Corporation
P.O. Box 1980
Winchester, VA 22604
Attention: Treasurer
To Beneficiary: West Virginia Economic Development Authority
1018 Kanawha Boulevard, East, Suite 501
Charleston, WV 25301
Attention: Executive Director
Deed of Trust and Fixture Filing: GBB GBB.0066919 6
To Trustee: Chairman of the Board
West Virginia Economic Development Authority
1018 Kanawha Boulevard, East, Suite 501
Charleston, WV 25301
14. Inasmuch as the parties intend that this Deed of Trust shall, among other
things, constitute a fixture filing pursuant to West Virginia Code 46-9-313, the
undersigned sets forth the following:
(a) The debtor is the Grantor, and its address is set forth in Paragraph 13
above;
(b) The secured party is the Beneficiary, and its address is set forth in
Paragraph 13 above;
(c) The real estate concerned is described in Exhibit A and the record holder
thereof is the Grantor; and
(d) THE SECURED PARTY REQUIRES THIS FIXTURE FILING TO BE INDEXED 1N THE REAL
PROPERTY RECORDS AGAINST THE RECORD OWNER OF THE PROPERTY.
15. The parties hereto further agree that the words "parties of the first part"
or the words "them," "they" or "their" when used in this Deed of Trust, shall,
when required by the context hereof, be taken to refer to and to mean, the
Grantor or Grantors herein, whether one or more in number, and whether
individual, firm or corporation; that the word "Trustee" shall include all
Trustees if more than one Trustee is named herein. It is further agreed that the
words "note", "obligation" or "indebtedness" shall include any and all notes or
obligations, if more than one, secured by this Deed of Trust; and singular or
plurals of words where the same meaning is intended shall not affect the
validity of this Deed of Trust.
16. In the event two or more trustees are named herein, or in the event two or
more substitute trustees are appointed under the provisions of paragraph 11
above, any one or more of such trustees or substitute trustees may act in the
execution of this trust with the full power and authority granted hereunder. The
Trustee herein may act by agent or attorney in the execution of this Trust and
it shall not be necessary for the Trustee to be present in person at any
foreclosure sale conducted hereunder.
17. Any failure on the part of Beneficiary or Trustee to exercise any option
herein provided shall not be construed as a waiver of any rights or privileges
contained herein.
18. The parties hereto agree that if any term or provision of this Deed of Trust
contravenes any law of the State of West Virginia or any other applicable law or
regulation, such term or provision is hereby amended and modified to conform to
such law or regulation.
19. The parties hereto agree that all covenants, agreements, representations and
warranties made herein shall extend to, bind, and inure to the benefit of the
heirs, devisees, personal representatives, successors and assigns of the parties
hereto.
Deed of Trust and Fixture Filing: GBB.GBB 0066919 7
IN WITNESS WHEREOF, American Woodmark Corporation, a Virginia corporation, has
caused this Deed of Trust to be executed by its duly authorized officer as of
the date first above written.
AMERICAN WOODMARK CORPORATION
By: Glenn Eanes
Its: Treasurer
STATE OF Virginia,
CITY OF Winchester, to-wit:
The foregoing: instrument was acknowledged before me this 22nd day of February,
2001, by Glenn Eanes, the Treasurer of American Woodmark Corporation, a Virginia
corporation, on behalf of the corporation.
My commission expires: December 31, 2003.
Brenda Dupont
Notary Public
[Notarial Seal]
This document was prepared by Ellen Maxwell-Hoffman, Attorney at Law, Bowles
Rice McDavid Graft & Love, PLLC, 600 Quarrier Street, Charleston, West Virginia
25301.
GBB.GBB.0066919 8
EXHIBIT A
TRACT I - 1.4002 ACRES BY SURVEY (1.40 ACRES BY DEED):
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virginia, bounded by West Virginia County Route 7 on the West, an unpaved street
on the North and East, the lands of Allen Rexrode (134/345) on the South and is
more particularly described as follows:
BEGINNING at a T-bar set on the Eastern boundary line of West Virginia County
Route 7, also a corner of Rexrode; thence with the Eastern boundary line of said
road North 04 degrees02'39" East 32.01 feet to a set T-bar; thence continuing
with said road North 11 degrees2'57" East 48.54 feet to a set railroad spike;
thence North 07 degrees 31'53" East 60.16 feet to a set railroad spike; thence
North 05 degrees59'53" West 37.17 feet to a set railroad spike; thence North 19
degrees51'47" West 38.98 feet to a set railroad spike; thence North 32
degrees36'09" West 30.51 feet to a set railroad spike on the Eastern boundary
line of aforesaid road and on the South side of an unpaved street; thence
crossing said street South 83 degrees45'29" East 293.09 feet to a set T-bar at
the intersection of two unpaved streets; thence with the West side of said
street South 06 degrees27'45" West 240.00 feet to a set T-bar, a comer of
Rexrode; thence with Rexrode's line North 82 degrees45'29" West 252.22 feet to
the BEGINNING, containing 1.4002 acres as surveyed by Charles W. W. Stultz,
Licensed Land Surveyor, Romney, West Virginia on June 8, 1977.
Being the same tract of land conveyed by Boise Cascade Corporation, a Delaware
corporation, to American Woodmark Corporation, a Virginia corporation, by deed
dated April 30, 1980, of record in the office of the Clerk of the County
Commission of Hardy County, West Virginia, in Deed Book 161, page 410, as
containing 1.40 acres, and being Parcel No. 2 therein.
TRACT II - 3.6166 ACRES BY SURVEY (4.10 ACRES BY DEED):
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virginia, near the Town Limit, bounded by W.Va. County Route 7 on the East, the
lands of M.A. Bean Oil Company (W.B. 17, page 186) on the South, the B&O
Railroad on the West, the lands of Raygold Manufacturing Corporation (formerly
Murlin Crites, 82/327) and Lincoln Cox (100/363) on the North and is more
particularly described as follows:
BEGINNING at an iron pin on the Eastern boundary limit of the B&O Railroad
Right-Of-Way and corner to Raygold Manufacturing Corporation; thence with said
corporation's lines South 07 degrees56'40" East 59.39 feet to an iron pin;
thence North 04 degrees20'15" East 81.91 feet to an iron pin; thence South 85
degrees42'12" East 107.27 feet to an iron pin; thence South 04 degrees20'53"
West 40.95 feet to an iron pin; thence with said corporation's line and
continuing with Cox's line South 85 degrees45'06" East 120.07 feet to a set
T-bar; thence with Cox's lines South 04 degrees17'58" West 83.70 feet to a set
T-bar; thence North 88 degrees39'25" East 127.97 feet to a set T-bar on the
Western boundary line of W.Va.
PAGE 1
County Route 7; thence with the Western boundary line of said road South 32
degrees36'07" East 148.37 feet to a railroad spike; thence South 19 degrees
51'47" East 29.65 feet to a railroad spike; thence South 05 degrees59'53" East
27.57 feet to a railroad spike; thence South 07 degrees31'53" West 54.18 feet to
a railroad spike; thence South 11 degrees02'57" West 49.77 feet to a railroad
spike; thence South 04 degrees02'39" West 52.10 feet to a railroad spike; thence
South 02 degrees04'17" East 23.33 feet to a set T-bar by a fence post, comer of
M.A. Bean Oil Company; thence with said oil company's lines and following a wire
fence North 68 degrees29'05" West 109.91 feet to a set T-bar by a fence post;
thence South 85 degrees52' 8" West 255.39 feet to a set T-bar on the Eastern
boundary limits of the B&O Railroad Right-of-Way; thence with the Eastern
boundary limits of said railroad by arc distance 285.90 feet to a set T-bar;
thence South 85 degrees20'08" West 17.50 feet to a set T-bar; thence continuing
with said railroad by arc distance 81.42 feet to a set T-bar; thence North 03
degrees37'36" East 95.02 feet to the BEGINNING, containing 3.6166 acres more or
less as surveyed by Charles W. Stultz, Licensed Land Surveyor, Romney, West
Virginia during May, 1977.
Being the same tract of land conveyed by Boise Cascade Corporation, a Delaware
corporation, to American Woodmark Corporation, a Virginia corporation, by deed
dated April 30, 1980, of record in the office of the Clerk of the County
Commission of Hardy County, West Virginia, in Deed Book 161, page 410, as
containing 4.10 acres, and being Parcel No. 1 therein.
TRACT III - 0.2709 ACRES BY SURVEY (5/10 ACRE BY DEED):
All that tract of land situated in the Town of Moorefield, Hardy County, West
Virginia, bounded by West Virginia Route 7 (South Fork Road) on the North and
East, Raygold Manufacturing Corporation (82/327) on the West, and Boise Cascade
Cabinets (109/442) on the South and is more particularly described as follows:
BEGINNING at a found T-bar three feet from the Northeast comer of a quonset type
warehouse, a comer of Boise Cascade Cabinets' land; thence with said company' s
line and running parallel with the North end of said warehouse North 85
degrees45'08' West 35.00 feet to a set rebar, comer of Raygold Manufacturing
Corporation' s land, said rebar being South 85 degrees45'08" East 85.07 feet
from a found iron pin, another comer of Boise Cascade Cabinet's property; thence
with Raygold Manufacturing Corporation's line North 10 degrees12'39" East 77.41
feet to a found rebar by a post on the Southern edge of a sidewalk and West
Virginia Route 7 (South Fork Road); thence with the Southern edge of said
sidewalk and the Southern edge of said road South 46 degrees01'48" East 153.70
feet to a set rebar by a post; thence leaving said sidewalk and continuing with
the Southern edge of said road South 31 degrees32'02" East 61.62 feet to a set
railroad spike, a comer of Boise Cascade Cabinets property; thence leaving said
road and with said company's lines South 88 degrees39'25" West 127.97 feet to a
found T-bar three feet East of warehouse East side; thence continuing with said
company's line and running parallel with said warehouse North 04 degrees17'58"
East 83.70 feet to the BEGINNING, containing 11,801.9665 square feet (0,2709
acre) more or less as surveyed by Stultz & Associates,Inc., Romney, West
Virginia, Charles W. Stultz, Licensed Land Surveyor, during March, i979 and as
shown on a plat attached hereto and made a part of this description.
PAGE 2
Being the same tract of land conveyed by Boise Cascade Corporation, a Delaware
corporation, to American Woodmark Corporation, a Virginia corporation, by deed
dated April 30, 1980, of record in the office of the Clerk of the County
Commission of Hardy County, West Virginia, in Deed Book 161, page 410, as
containing 1/2 acre, and being Parcel No. 4 therein.
TRACT IV - 5,828 SQUARE FEET:
All that certain lot or parcel of land lying and situate in the Town of
Moorefield, Hardy County, West Virginia, and described by metes and bounds as
follows:
BEGENNING at a fence post on the south side of the South Fork Road and on the
east side of lane, comer to the M. A. Bean lot; thence with said Bean's line and
with the east side of lane S. 9 degrees W. 78 feet to stake 3 feet from the
north wall of the quonset warehouse; thence with a line running with said
warehouse and 3 feet from wall of same N. 89 degrees W. 84 feet to stake, N. 1
degrees E. 44 feet, N. 89 degrees W. 104 feet to stake 3 feet from NW comer of
said warehouse; thence with wet end of said warehouse, running 4 feet from wall
S. 1 degrees W. 82 feet to post in railroad right-of-way; thence with railroad
right-of-way N. 6 degrees W. 59 feet to post; thence N. 3 degrees E. 33.5 feet
to fence post, comer to Harold Bean lot; thence with line between Bean and
George Keller S. 88 degrees E. 195.5 feet to post on west edge of walk at lane;
thence with west edge of walk and land N. 9 degrees E. 39.5 feet to south side
of sidewalk on South Fork Road; thence with said walk S. 51 degrees E. 17 feet
to the beginning, containing 5,828 square feet.
Being the same tract of land conveyed by Boise Cascade Corporation, a Delaware
corporation, to American Woodmark Corporation, a Virginia corporation, by deed
dated April 30, 1980, of record in the office of the Clerk of the County
Commission of Hardy County, West Virginia, in Deed Book 161, page 410, as
containing 5,828 square feet, and being Parcel No. 3 therein.
TRACT V - 2.56 ACRES:
A parcel of land in Moorefield Corporation, Hardy County, West Virginia between
Railroad Street and County Route 7 at the east end of Central Avenue, more
particularly described as follows:
Beginning at a point on the East bounds of the South Branch Valley Railroad
(S.B.V.R.R.) fight-of-way, 20 feet from centerline of tracts, set a steel
reinforcing rod; thence N 87 degrees17'30' E at 10.0 feet crossing a point comer
to S.B.V.R.R. right-of-way and American Woodmark (161/410) continuing with
American Woodmark and a fence in all 269.63 feet to a steel fence post; thence
with said Woodmark for one line S 65 degrees55'43" E 107.51 feet with a fence to
a steel road (found) at the base of a corner fence post, in the bounds of County
Route 7, 20 feet from the centerline thence with the West bounds of County Route
7 for 4 lines S 06 degrees12'57" E 53.38 feet to a point; thence S 14
degrees27'25'' E 73.34 feet to a point; thence S 17 degrees43'03" E 120.73 feet
to a point;
PAGE 3
thence S 21 degrees17'-48" E 195.60 feet to a comer fence post, comer to
Williams (107/484), thence with said Williams and fence for one line S 70
degrees24'12" W 138.15 feet to a point, set a steel reinforcing road in a fence
a comer to Bean (177/32); thence with said Bean for one line N 20 degrees03'03.'
W 74.58 feet to an utility pole, a comer to Southern States (176/414); thence
with said Southern States for 2 lines N 38 degrees25'15" W 157.25 feet to a
steel reinforcing road; thence S 59 degrees18'40" W at about 77.6' feet crossing
a railroad siding, in all 102.61 feet to a point in the East bounds of the
S.B.V.R.R., 20 feet from centerline set a steel reinforcing rod; thence with the
East bounds of the S.B.V.R.R. for 4 lines N 25 degrees59'18" W 79.08 feet to a
point; thence N 25 degrees40'38'W 46.18 feet to a point; thence N 24
degrees49'32" W 63.36 feet to a point; thence N 22 degrees23'25" W 58.73 fee to
the beginning containing 2.56 acres, more or less, as surveyed December, 1983 by
David O. Heishman, Licensed Land Surveyor, Moorefield, West Virginia, and a
shown on a plat attached hereto and made a part of this description.
Being the same tract of land conveyed to American Woodmark Corporation, a
Virginia corporation, by the following deeds:
a. Deed from Carrie R. Bean, widow, dated January 4, 1984, recorded in Deed Book
18t, page 119.
b. Deed from William H. Bean and Edna Elizabeth Bean, his wife, dated January 4,
1984, recorded in Deed Book 181, page 111.
c. Deed from Oscar M. Bean and Dixie T. Bean, his wife, dated January 4, 1984,
recorded in Deed Book 181, page 103.
d. Deed from Ralph J. Bean, Jr. and Barbara Bean, his wife, dated January 4,
1984, recorded in Deed Book 181, page 87.
e. Deed from Howard B. Bean and Ursula Bean, his wife, dated January 4, 1984,
recorded in Deed Book 181, page 95.
PAGE 4
CERTIFICATE
The undersigned, Glenn Eanes, Treasurer of American Woodmark Corporation, a
Virginia corporation (the "Corporation"), hereby certifies in accordance with
the Loan Agreement (the "Loan Agreement") (except as otherwise provided herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Loan Agreement) dated as of January 31, 2001, between the West Virginia Economic
Development Authority (the "WVEDA") and the Corporation as follows:
The Corporation has executed and delivered to WVEDA the Security Agreement
granting a first lien security interest on all Project Equipment being all
equipment, machinery and fixtures and replacement thereof and proceeds therefrom
used in its manufacturing and processing that have been installed in the
Project. I have examined the UCC-1 financing statement naming the Corporation as
Debtor and the WVEDA as Secured Party and describing the Project Equipment which
we understand will be filed with the Secretary of State of West Virginia. In
addition, I have examined the Certified Uniform Commercial Code Lien Searches of
the Secretary of State of the State of West Virginia dated May l2, 2000, and
January 30, 2001, as to the Uniform Commercial Code financing statements of
record naming the Corporation as debtor (collectively, the "UCC Search Report").
The Project Equipment is not subject to any liens of record on the UCC Search
Report and, to the best of the Corporation's knowledge, there is no lien prior
to WVEDA's lien with regard to the Project Equipment, and WVEDA will have a
first priority lien priority position on the Project Equipment as provided by
the Security Agreement and the UCC-1 Financing Statement including without
limitation, amounts payable under any policies of insurance insuring the Project
Equipment against loss or damage, to secure WVEDA in the payment of the Loan.
Effective as of 1/31/,2001.
Glenn Eanes, Treasurer |
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Exhibit 10.5
AMENDMENT TO LICENSE AGREEMENT
THIS AMENDMENT TO LICENSE AGREEMENT ("Amendment") is entered into
this day of August, 1999, by and between Ticketmaster Corporation
("Ticketmaster") and Ticketmaster Group Limited Partnership ("User"), with
reference to the following facts:
A. Ticketmaster and User entered into that certain License Agreement dated
as of May 23, 1991 ("License Agreement"), whereby Ticketmaster granted User an
exclusive license and right to use the Ticketmaster System, name, logo and Mark
in connection with User's computerized event ticketing business in the Market
Area upon the terms and conditions set forth in the License Agreement.
B. Ticketmaster and User hereby desire to amend the License Agreement in
certain respects as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereby agree as follows:
1. Defined Term(s). For purposes of the License Agreement, as hereby
amended, the following terms shall have the meanings set forth below:
"System" means and includes any software or hardware or combination thereof
which is owned or controlled by, or licensed to or otherwise authorized for use
by, Ticketmaster in connection with a computer based system for distributing
tickets used in the United States, including related procedures established and
maintained by Ticketmaster for the purpose of voice and data communications or
selling, accounting, auditing or controlling the sale of tickets for events.
"TM System User" means and includes any person, sole proprietorship,
partnership corporation, joint venture or other legal entity (other than
Ticketmaster) operating the System within the United States. Any such entity may
be wholly owned or controlled by Ticketmaster, partially owned, a joint venture
or independent of Ticketmaster.
All other capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the License Agreement.
2. Condition to Effectiveness. This Amendment shall not be effective
unless and until the parties have entered into and executed a definitive
settlement and release agreement with respect to claims asserted in and related
to that certain lawsuit entitled Ticketmaster Group Limited Partnership v.
Ticketmaster Corporation (and related counterclaim), USDC Case No. 97 C2337,
filed on or about April 4, 1997 in United States District Court for the Northern
District of Illinois, and the Court shall have entered a final non-appealable
Order dismissing the lawsuit with prejudice. The "Effective Date" of this
Amendment shall be the same date as the Effective Date of the Settlement
Agreement being executed concurrently herewith, as defined in paragraph 4
thereof.
3. Additional Payments. Effective as of September 1, 1997, each of the Per
Ticket Amounts set forth in the table in Section 4 of the License Agreement
shall be increased by an amount equal to $0.02. The amount of the Additional
Payment for each applicable period since September 1, 1997 shall be recalculated
based upon such increase in the Per Ticket Amounts, and the additional amount
due through July 31, 1999, shall be paid by User to Ticketmaster no later than
five days subsequent to the Effective Date. All Additional Payments resulting
from such $0.02 increase to the Per Ticket Amount shall be in consideration of
the settlement of the litigation referred to in Section 2 above and
Ticketmaster's agreement to permit User to continue to have the right and
license to use the Mark within the Market Area in accordance with the provisions
of the License Agreement, as amended hereby.
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4. Upgrades. Sections 12(b), 12(c), 12(d) and 12(e) of the License
Agreement are hereby deleted in their entirety and the following are hereby
substituted in lieu thereof:
(a) Ticketmaster shall provide to User during the term of this Agreement, at
no additional cost to User (except as set forth in Section 12(e) below) and at
the request of User, any software used on, in connection with or as any part of
any System operated or used in the United States by Ticketmaster or any TM
System User. Such software shall include, without limitation, enhancements,
upgrades to the System's operating software, new software products (including,
by way of example only, "FANTm" and "IVR") and software embedded in or part of
any hardware. Notwithstanding the foregoing, Ticketmaster shall have no
obligation to provide User with (i) the beta versions of any software, or
developmental or experimental software, whether or not in use by Ticketmaster or
any TM System User in connection with any System or (ii) software developed for
special events or attractions (including, by way of example only, the Olympics)
and which is not practical for day-to-day use because of its complexity or
unique purpose and may not be cost effective for day-to-day use, or which for
other economic reasons is not made generally available to TM System Users
outside of the scope of a single use special event application and therefore
does not become a permanent part of the System. Notwithstanding the foregoing,
User shall have the right to such special event software pursuant to the terms
of this Section 12(b) should a comparable special event (i.e., the Summer
Olympics occurs in the Washington/Baltimore region) be held in the Market Area.
(b) If, at any time during the term of this Agreement, User shall receive an
upgrade to or improved version of the software used in the System, the
implementation of which would require a conversion of User's database,
Ticketmaster shall, upon User's request, promptly effect such conversion on
behalf of User and shall bill User for such efforts in accordance with
Section 12(e) below.
(c) In the event that User shall, at any time during the term of this
Agreement, request that Ticketmaster develop custom enhancements to the System
to meet certain specific performance criteria reasonably requested by User,
Ticketmaster shall use reasonable efforts to cause such custom enhancements to
be developed by its programmers in consideration of the payment by User to
Ticketmaster of the costs set forth in Section 12(e) below.
(d) User shall be responsible for the direct and actual out-of-pocket costs
incurred by Ticketmaster in installing any provided software and training User's
personnel in the using of provided software under Section 12(b), converting
User's database under Section 12(c), and developing custom enhancements under
Section 12(d). Such direct and actual out-of-pocket costs shall include
transportation and lodging and actual hourly personnel costs, but shall not
include overhead, miscellaneous administrative costs and other similar indirect
costs. Pursuant to Section 14 of this Agreement, User shall also be responsible
for the costs of any and all hardware used by User in connection with any
software provided under this Section 12, including, without limitation, all
direct and actual costs for the installation of such hardware.
In addition, the second and third sentences of Section 8 of the License
Agreement are hereby deleted in their entirety, it being the intent of the
parties that User shall have access throughout the Term of the License Agreement
to the most current technology available from Ticketmaster for use in connection
with the System, and that Ticketmaster shall make available to User hardware and
software such that User will have the ability to operate a system having
performance capabilities equal to those of any other TM System User.
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5. Cooperation and Support. Section 12 of the License Agreement is hereby
amended to add the following to the end of such Section:
(a) At Ticketmaster's request, User shall cooperate with Ticketmaster and
utilize reasonable efforts to participate in Ticketmaster promotional campaigns,
tours, events or other programs which are conducted on a national or regional
basis. Ticketmaster shall use its reasonable efforts to offer User the
opportunity to participate fully in all such promotional campaigns, tours or
other programs which involve the Market Area. In the event that User shall
agree, in writing, to participate fully in any such program designated by
Ticketmaster, then User shall receive a share of revenues received by
Ticketmaster (after deduction of actual costs to Ticketmaster regarding the
establishment of the program, including, without limitation, legal fees, but
exclusive of administrative costs) for its participation in such programs that
is reasonably proportionate to User's participation, or a share of compensation
that is otherwise mutually agreeable to the parties.
(b) With User's prior consent, Ticketmaster and/or a TM System User may sell
tickets to events located or to take place within the Market Area and, with
Ticketmaster's prior consent (or that of the TM System User in the relevant
geographic area), User may sell tickets to events located or to take place
outside of the Market Area, in which event revenue due each party shall be
calculated taking the per ticket gross revenue received in excess of the ticket
face price (expressly excluding any revenue derived from handling charges),
reducing such gross revenue by direct actual sales costs such as (but not
necessarily limited to) credit card processing fees and venue and promoter
rebates and royalties, and splitting the resulting net revenue equally between
the parties, unless the parties shall mutually agree to a different revenue
distribution. User shall not receive a share of revenues as contemplated by the
immediately preceding sentence for special events covered by Section 5 of this
Agreement.
(c) Ticketmaster shall utilize reasonable efforts to permit User to
participate in (A) Ticketmaster's periodic national technology support
conference calls and meetings to the extent that those calls and meetings take
place, subject to Ticketmaster's right to exclude User in order to protect
attorney/client privileged communications or confidential or proprietary
information, and (B) conference calls and meetings concerning national or
regional promotional, marketing, sales or similar campaigns in which User has
agreed to participate to the extent that those calls and meetings take place.
Ticketmaster shall also provide User with appropriate documents relative to the
administration of any such campaign in which User has agreed to participate.
6. Internet Sales. Ticketmaster and/or Ticketmaster Online-City Search
shall integrate User's ticket sales information and ticket sales transaction
processing onto Ticketmaster's Internet web site (currently known as
"ticketmaster.com") (the "Web Site"), and shall enable User and its clients to
sell tickets through the Web Site in the same manner as other TM System Users,
it being agreed and understood that Ticketmaster will use reasonable efforts,
with User's cooperation, to perform its obligations pursuant to this sentence
within ten days after the date of this Amendment. User agrees to reimburse
Ticketmaster and/or Ticketmaster Online-City Search for all out-of-pocket
expenses incurred in connection with making such access to the Web Site
available to User, in accordance with Section 12(e) of the License Agreement, as
amended. In addition to any other payments due to Ticketmaster under the License
Agreement, as amended hereby, and in consideration of Ticketmaster and/or
Ticketmaster Online-City Search making the Web Site available to User as
aforesaid, User shall pay Ticketmaster an amount equal to $0.25 per ticket for
each ticket sold by User through the Web Site. Such payments shall constitute
Additional Payments as defined in Section 4 of the License Agreement, as amended
hereby. Upon completion of Ticketmaster's performance of its obligations
pursuant to the first sentence of this Section 6, User shall promptly
discontinue the provision of ticket
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and merchandise sales information and services on that certain web site
currently known as "ticketmasterwb.com".
7. Equipment. Section 14 of the License Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
During the term of this Agreement, User shall have the right to purchase
from Ticketmaster or from any entity owned or controlled by Ticketmaster (i) any
hardware, computer equipment, voice or data communications equipment or other
equipment developed or manufactured by Ticketmaster or any entity owned or
controlled by Ticketmaster, or (ii) any third party hardware or equipment
offered for sale by Ticketmaster or any entity owned or controlled by
Ticketmaster, where such hardware or equipment shall be used by User on or in
connection with the System. The obligations of this paragraph shall extend to
all upgrades, advances or other technological improvements, but Ticketmaster
shall have no obligation to sell to User developmental or experimental hardware
or equipment, whether or not in use by Ticketmaster or any TM System User in
connection with the System. The cost to User of any such provided hardware or
equipment sold hereunder shall be (i) 150% of Ticketmaster's direct and actual
cost for Ticketmaster developed or manufactured hardware or equipment or
(ii) 110% of Ticketmaster's cost for hardware and equipment developed or
manufactured by third parties. If requested by User, Ticketmaster shall assist
User with the installation, start-up, initial use and training on the use of
said hardware and equipment. User shall reimburse Ticketmaster for the cost of
delivering, installing, starting up and training User in the operation of such
hardware and equipment in accordance with Section 12(e) of this Agreement.
8. Non System-Related Software. The provisions of Section 12(b) of the
License Agreement, as amended hereby, shall not apply to software owned or
licensed by Ticketmaster or any entity owned or controlled by Ticketmaster that
does not work with or rely on a connection (either periodic or continuous) to
the System for proper operation and which are offered by Ticketmaster or such
other entity for sale or license to third parties (the "Non System-Related
Software"). Examples of software falling within the scope of Section 12(b) of
the License Agreement, as amended hereby (and not within the scope of this
Section 8), include, without limitation, bar coding (e.g., FANTm), IVR voice
response units, ticket sales kiosks, credit card authorization, client
settlement and similar accounting programs, PCI, disaster recovery programs,
VRun reports, offline archiving of accounts, niterun, TMWIN99 or similar Systems
communications software and fraud programs. Examples of software falling outside
of the scope of Section 12(b) of the License Agreement, as amended hereby (and
within the scope of this Section 8), include Archtics season ticketing software
and Foxman's FanTracker. Solely as a means of further illustrating the intent of
the parties, should Ticketmaster acquire the rights to software sometimes known
as Paceolan, the Paceolan software would be covered by this Section 8 and not by
Section 12(b) of the License Agreement, as amended hereby, but any interface
developed by Ticketmaster to connect the system to the Paceolan software would
be covered by Section 12(b), as amended hereby. User shall have the right to
license (if licensing is offered as an option) or purchase (if purchasing is
offered as an option) any and all of such Non System-Related Software from
Ticketmaster or such entity owned or controlled by Ticketmaster for sublicense
or sale to User's clients. The cost to User of any such Non System-Related
Software shall be equal to the lowest generally prevailing fee charged from time
to time to clients by Ticketmaster or such entity owned or controlled by
Ticketmaster for such Non Systems-Related Software, it being agreed and
understood that User may determine, in its sole discretion, the amount to be
charged to User's clients with respect to the sublicense or sale of such Non
Systems-Related Software to those clients. It is further agreed and understood
that User shall pay a separate fee to Ticketmaster each time that the Non
Systems-Related Software is sublicensed or sold by User to a client (e.g., if
the Archtics season ticketing software is sublicensed or sold by User to ten
venues, User shall pay Ticketmaster the applicable fee times ten). No later than
five days subsequent to the Effective Date, User shall pay $50,000 to
Ticketmaster, being
4
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the fee payable with respect to the license by User of the Archtics season
ticketing software to be sublicensed by User to the Baltimore Orioles.
Notwithstanding the foregoing, such $50,000 license payment shall not be
applicable for the use of the Archtics season ticketing software, alone or
through User's System, by the Washington Redskins or the Baltimore Ravens
National Football League football teams or their respective successors or
assigns inasmuch as the purchase of the Archtics use license by those entities
occurred prior to the acquisition of Distributed Systems Architects,
Inc/Archtics by Ticketmaster.
9. Use of Ticketmaster Facilities.
(a) Except as otherwise provided in Section 9(b), if Ticketmaster's or its
affiliates' facilities are to be used by User in connection with any software
provided by Ticketmaster to User pursuant to the License Agreement, as amended
hereby, then User shall pay to Ticketmaster or its affiliates, as applicable,
such amounts as may be required by Sections 12(e) and 14 of the License
Agreement, as amended hereby, together with an amount that reflects User's
proportionate share of costs of the use of the facility not otherwise covered by
said Sections 12(e) and 14.
(b) User shall have access to and use of Ticketmaster's disaster recovery
facility (the "Facility"), currently located at Ticketmaster's Detroit data
center, which access and use shall be pursuant to such guidelines as
Ticketmaster may reasonably establish for all similar Facility users. In
consideration of such access to and use of the Facility, User shall pay
Ticketmaster a fee of $40,000 for the first year of User's access to and use of
the Facility (which year shall commence as of the date of User's access to the
Facility) and $36,000 for each subsequent year of access to and use of the
Facility, payable in full, for each applicable year, no later than 30 days after
the commencement of such year, plus any direct and actual out-of-pocket costs
incurred by Ticketmaster in training User's personnel at User's offices relative
to the use of the Facility. In addition to the foregoing, User shall be
responsible for the cost of necessary data communication equipment upgrades made
by Ticketmaster on behalf of User (as determined pursuant to Section 14 of the
License Agreement, as amended hereby); a proportionate share of future data
communication cost increases related to the operation of the Facility; and, the
installation and operational costs of the data communications line necessary to
transmit User's System data to the Facility. The Facility shall receive and save
a continuous stream of User's System data during all of User's operating hours.
In the event that User's System fails, for whatever reason, the Facility shall
have the capability of regenerating User's then-current System database onto
hardware installed at the Facility, and coming online through dial-up or other
data communications to User's clients, outlets, phonerooms and administrative
offices, to provide continuing ticket sales and other ticketing functions until
full use of User's System is restored.
10. Consent to Transfer. Ticketmaster hereby consents to the transfer of
Centre Group Limited Partnership's interest in User to Washington Sports &
Entertainment Limited Partnership (or to a wholly-owned subsidiary of Washington
Sports & Entertainment Limited Partnership if such subsidiary agrees in writing
to be bound by the terms and conditions of Section 16 of the License Agreement);
provided, however, that such transfer is consummated by December 31, 1999 and
written verification of such transfer is received by Ticketmaster by January 15,
2000. Said transfer, if consummated, shall have no impact on the parties'
respective rights and obligations under the License Agreement or this Amendment,
and User shall remain liable for all of User's duties and obligations thereunder
and hereunder. By its execution of this Amendment in the space provided below,
Washington Sports & Entertainment Limited Partnership agrees to be bound by the
terms and conditions of Section 16 of the License Agreement if such transfer to
Washington Sports & Entertainment Limited Partnership is consummated. User
represents that Washington Sports & Entertainment Limited Partnership is under
common control with Centre Group Limited Partnership, and prior to the Effective
Date User has provided Ticketmaster with a letter outlining the identity of and
relationship between the transferor and the transferee.
5
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11. Remedies. The intent of the parties is to cooperate to advance their
mutual interests, and to reduce the likelihood of future disputes. To that end,
the parties amend as follows those provisions of the License Agreement outlining
their respective rights and remedies in the event of a breach or default
(including, without limitation, those governing termination). Except for the
provisions of Sections 10, 11(a)(i) and (ii), 11(b), (11(c) and 11(d) of the
License Agreement, which remain in full force and effect, in the event of any
breach or alleged breach of the License Agreement, the complaining party shall
give the other written notice of the alleged breach and, if curable, of the
proposed remedy or cure. The defaulting party shall remedy said breach within
seven days or (solely with respect to a breach other than a failure to pay when
due amounts owing to Ticketmaster under the License Agreement) such longer
period as may be reasonably required to effectuate such remedy so long as
remedial action is commenced within such seven-day period and is actively and
diligently pursued to completion. Except as set forth in Sections 10,
11(a)(i) and (ii), 11(b), 11(c) and 11(d) of the License Agreement, no breach
shall justify termination of the License Agreement unless there has been a
material and substantial non-performance or other breach of the License
Agreement.
12. Use of the System: In the event that the System is, at any time during
the term of the License Agreement, being operated by Ticketmaster or a TM System
User outside of the Market Area in connection with any independent or
third-party computer system (other than any such connection which is in the
developmental, experimental or testing stage), then Ticketmaster will authorize
User (at no additional charge to User by Ticketmaster solely to provide such
authorization) to operate the System within the Market Area in connection with
such independent or third-party computer system (if permitted by such
independent or third-party provider) in the same manner as being operated by
Ticketmaster or such TM System User. By way of example only:
If a theater uses the Paceolan ticketing system to sell season tickets and walk
up box office tickets, and interfaces the Paceolan system to a TM System User's
System, so that ticket inventory can be transferred back and forth between the
two systems to permit the sale of telephone, outlet, or internet sales on the TM
System User's System, then User shall be permitted that use.
13. Representations and Warranties. Each party represents and warrants
that (i) it has full and exclusive power and authority to enter into and be
bound by this Amendment and that the person executing this Amendment on behalf
of such party is duly authorized to do so, and (ii) this Amendment is a duly
authorized, valid and binding agreement of such party, enforceable against such
party in accordance with its terms.
14. Notices. Section 22 of the License Agreement is amended to change the
addresses for notice to the following:
If to Ticketmaster, to:
Ticketmaster Corporation
3701 Wilshire Blvd., 9th Floor
Los Angeles, CA 90010
Attn: Terry Barnes, President and CEO,
and Daniel R. Goodman, Executive V.P.
and General Counsel
With a copy to:
Neal, Gerber & Eisenberg
Two North LaSalle Street
Suite 2100
Chicago, Illinois 60602
Attn: Norman J. Gantz
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If to User, to:
Ticketmaster Group Limited Partnership
c/o AP Tickets, Inc.
One Harry S. Truman Drive
Landover, Maryland 20785
Attn: Abe Pollin
Paul d'Eustachio
With a copy to:
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5339
Attn: David M. Osnos
15. Conflicting Terms. In the event a conflict arises between this
Amendment and the terms and conditions of the License Agreement, the terms and
conditions of this Amendment shall control. Except as specifically set forth
herein to the contrary, all of the terms and conditions of the License Agreement
are in full force and effect, shall continue in full force and effect throughout
the term and are hereby ratified and confirmed by the parties.
16. Counterparts. This Amendment may be executed and delivered in multiple
counterparts, each of which, when so executed and delivered, shall be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
TICKETMASTER CORPORATION, TICKETMASTER GROUP LIMITED PARTNERSHIP, an Illinois
corporation a Maryland limited partnership
By:
AP Tickets, Inc., its sole General Partner
By:
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By:
_________________________________
Paul d'Eustachio
Title:
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Title:
_________________________________
President
AGREED TO AS OF THE DATE HEREOF FOR PURPOSES OF SECTION 10.
WASHINGTON SPORTS & ENTERTAINMENT LIMITED PARTNERSHIP
By:
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Title:
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LICENSE AGREEMENT
THIS AGREEMENT is made and entered into as of the 23rd day of May, 1991, by
and between Ticketmaster Corporation, an Illinois corporation ("Ticketmaster"),
and Ticketmaster Group Limited Partnership, a Maryland limited partnership
("User").
WITNESSETH:
WHEREAS, Ticketmaster is the owner of certain software systems, accounting
procedures and know-how which, in the aggregate, comprise a computerized event
ticketing system (the "System"); and
WHEREAS, Ticketmaster is the owner of and/or claims ownership rights to the
name, mark and logo "Ticketmaster" (the "Mark"), which Mark is used in
conjunction and identified with the System; and
WHEREAS, the System and the Mark are known within the computerized ticketing
industry and by the public as connoting a high level of quality and service; and
WHEREAS, User desires to be granted a license by Ticketmaster to use the
System and the Mark in connection with User's computerized event ticketing
business in the territory described in Exhibit I attached hereto (the "Market
Area");
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. License. Ticketmaster hereby grants to User an exclusive right and
license to use the System and (solely in connection with the System and the
provision of computerized ticketing services) the Mark within the Market Area;
subject to the rights retained by Ticketmaster in accordance with Section 5
hereof.
User hereby acknowledges that the System and the name "Ticketmaster" are
highly regarded in the computerized ticketing industry and by the public, and
that Ticketmaster deems it important that all persons using the System or such
name operate in a manner consistent with good business practice. Accordingly,
User agrees to operate its business in a manner that will not negatively affect
the reputation of the System or the Ticketmaster name, including, without
limitation thereby, the prompt settlement of accounts and the honoring of all
bona fide obligations.
Ticketmaster further assigns all of its right, title and interest in and to
those certain agreements described on Exhibit II attached hereto to User, it
being agreed and understood that (i) such agreements are assigned by
Ticketmaster to User as is, and without any representations and warranties
whatsoever, and (ii) User shall indemnify and hold Ticketmaster and its
officers, directors, employees, agents, representatives, affiliates,
shareholders, successors and assigns harmless from and against any and all
losses, claims, damages, liabilities, costs and expenses (including, without
limitation, reasonable attorneys fees) arising from or related to such
agreements and to the performance thereof by User at any time from and after the
date hereof.
2. Term. The initial term of this Agreement and the license granted hereby
shall commence on the date hereof, and shall remain in force, unless terminated
earlier in accordance with the provisions hereof, until the tenth (10th)
anniversary of the Operational Date. This Agreement may be renewed by User for
two additional five year terms by written notice of renewal delivered by User to
Ticketmaster no less than 90 but no more than 150 days prior to the expiration
of the then current term of this Agreement so long as User is not in default
under this Agreement either at the time such notice is delivered or at the time
the renewal period is scheduled to commence.
As used in this Agreement, (A) the term "Operational Date" shall mean the
date upon which the System becomes operational in the Market Area or any part
thereof, and (B) the term "Operational Year" shall mean the twelve-month period
commencing on the Operational Date and ending on the first anniversary of such
date and each twelve-month period thereafter.
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3. Base Payments. User shall pay to Ticketmaster during each year of the
term hereof a minimum annual royalty in the amount of $125,000 for the right to
use the System and the Mark in the Market Area (the "Base Payment"). The Base
Payment shall be payable in advance in equal quarterly installments commencing
on the Operational Date.
All Base Payments shall be made by User directly to Ticketmaster in United
States Dollars in the manner designated by Ticketmaster from time to time during
the term of this Agreement, which may include wire transfer into a Ticketmaster
bank account.
4. Additional Payments. In addition to the Base Payments, User shall pay
to Ticketmaster with respect to each Operational Year an additional royalty (the
"Additional Payment") equal to (i) the Number of Tickets Sold multiplied by the
Per Ticket Amount minus (ii) the aggregate Base Payments actually paid by User
to Ticketmaster during that Operational Year. To the extent that in any
Operational Year part (i) of the foregoing calculation does not exceed part (ii)
thereof, no Additional Payment shall be made by User to Ticketmaster for that
Operational Year and Ticketmaster shall not be obligated to return any portion
of the Base Payments paid during such Operational Year or to credit any amount
against Additional Payments payable in any succeeding Operational Year. As used
herein "Number of Tickets Sold" shall mean for any Operational Year the number
of tickets sold or distributed by User, whether or not by or through the System
or using the Mark, in the Market Area and to which a customer convenience charge
or service charge is or normally is attached, whether at remote ticket outlets,
by telephone, by mail order, at facility box offices, at User locations or
elsewhere (exclusive of complimentary and season tickets and tickets sold at a
facility box office by a party not affiliated with User where that party
assesses a service charge no part of which accrues to the benefit or is
otherwise payable to User or User's affiliates). Further, as used herein, the
"Per Ticket Amount" shall be the amount set forth below during each of the
indicated Operational Years (including permissible renewal periods):
During Operational Years
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The Per Ticket
Amount Shall Be
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1 through 2 $0.06 3 through 4 $0.07 5 through 6 $0.08 7 through
8 $0.09 9 through 10 $0.10 11 through 12 $0.11 13 through 14 $0.12 15
through 16 $0.13 17 through 18 $0.14 19 through 20 $0.15
In the event that this Agreement is terminated for any reason prior to its
expiration, the period commencing on the day following the end of the prior
Operational Year and ending on the date of termination shall be deemed to be an
Operational Year for purposes of this Agreement.
Additional Payments for each Operational Year shall be calculated and paid
by User to Ticketmaster in United States Dollars on a quarterly basis, within
ten (10) days following any quarter during an Operational Year in which the
aggregate per ticket royalty for such year exceeds the Base Payment for such
year and in each quarter thereafter during any such year. All Additional
Payments shall be made by User directly to Ticketmaster in the manner designated
by Ticketmaster from time to time during the term of this Agreement, which may
include wire transfer into a Ticketmaster bank account.
Within ten (10) days after the end of each quarter of the term hereof, User
shall deliver to Ticketmaster a report of all tickets sold, printed, produced
and distributed by User in the Market Area
2
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during such quarter, which report shall contain such information as may be
necessary for Ticketmaster to calculate Additional Payments and such other
information as Ticketmaster may reasonably request. Ticketmaster shall be
entitled upon reasonable notice to User to access to the books and records of
User during User's normal business hours and at User's premises for purposes of
confirming and computing the amounts of Additional Payments payable hereunder;
provided, however, that access to such books and records by Ticketmaster shall
not unduly disrupt normal business operations of User.
5. Ticketmaster Rights. Notwithstanding anything to the contrary herein,
Ticketmaster is hereby retaining the right for itself and for its affiliates to
sell, by telephone and/or at outlets, tickets or other evidences of admission or
entitlement to attend or receive transmission of the following events within the
Market Area and User shall have no right, license or interest in or to use the
System or the Mark with respect to said events:
(a)Any pay per view events for cable systems, whether by use of an 800 number or
otherwise; and (b)Special events, which do not involve any traditional venues or
tickets on sale to the general public;
; provided, however, that User will have the right and license, on a
nonexclusive basis, to use the System and the Mark with respect to pay per view
events for cable systems serving only the Market Area and no other areas outside
of the Market Area.
6. Title.
(a)Title, beneficial interest and all ownership rights to the System, the Mark
and all related materials furnished by Ticketmaster and licensed under this
Agreement shall remain in Ticketmaster. User hereby acknowledges that the
System, the Mark and all related materials furnished by Ticketmaster hereunder
are claimed by Ticketmaster to be Ticketmaster's proprietary information and
trade secrets, whether or not any portion thereof is, or may be, validly
copyrighted, patented, trademarked or otherwise protected. (b)User's rights in
and to the System and the Mark furnished by Ticketmaster as a result of this
Agreement may not be assigned, licensed or otherwise transferred voluntarily, by
operation of law or otherwise, without the prior written consent of
Ticketmaster. (c)Ticketmaster and/or User may add to, delete from or modify the
System and all related materials furnished by Ticketmaster hereunder in any
manner, but no such changes, however extensive, shall reduce Ticketmaster's
title to the System. Any improvements made by User shall be and remain the
confidential, proprietary property and information of User except that
Ticketmaster shall retain all proprietary rights in the underlying System as so
improved and User shall not have any right to use the System as so improved
without the prior written consent of Ticketmaster (except pursuant to this
Agreement). (d)User acknowledges and agrees that Ticketmaster has acquired all
right, title and interest in and to all equipment formerly used in connection
with the Ticketron System including, but not limited to, any such equipment or
personal computers used at any facility box offices or outlets in the Market
Area, but excluding, as to the Market Area, (i) the personal computers, printers
and CRTs currently installed and being used in the facility box office at the
Capital Centre in Landover, Maryland, (ii) the printers and CRTs currently
installed and being operated in the facility box offices at Baltimore Arena in
Baltimore, Maryland, and Patriot Center in Fairfax County, Virginia, and (iii)
all "dumb" CRTs formerly being used by Ticketron in the Market Area and attached
cabling (but not including any new CRTs).
7. Use of the System and Mark.
(a)The System (including any changes thereto made by or on behalf of
Ticketmaster or User) and all related materials may be used for, by or on behalf
of User only in connection with any
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computer equipment which User uses solely for, or solely in connection with,
computerized ticketing at the facility locations and remote terminal locations
within the Market Area. The System may not be utilized in connection with any
additional physical computer facilities (or other computers), for any other
reason or by or for any other person, firm, corporation or other organization,
without the prior written consent of Ticketmaster.
(b)User agrees that the Mark shall be the sole mark and name utilized by it in
connection with the System and the operation of its ticketing business, and
shall not be used with any other marks or names. (c)The Mark shall be used by
User in accordance with such quality control standards as Ticketmaster may from
time to time prescribe for use by its non-affiliated licensees with respect to
products and services in connection with which the Mark is utilized. Further,
User shall only use the Mark together with such notations as Ticketmaster may
from time to time prescribe for purposes of advising the public of service mark,
trademark and similar protection. User shall cease all use of the Mark ten (10)
days after notice from Ticketmaster that User has failed to comply with any such
standard unless, within such ten (10)-day period, User corrects such failure to
the satisfaction of Ticketmaster. (d)Neither User nor any of its employees,
agents or representatives shall reproduce, duplicate or otherwise copy the
System or any related materials furnished by Ticketmaster hereunder or any
portion thereof, except for internal use directly with the System. All such
materials and any copies thereof shall be returned by User to Ticketmaster
immediately following termination or expiration of this Agreement.
8. Warranties. Ticketmaster warrants to User that it is the owner of the
System and the Mark (or claims ownership rights to the Mark) and has the right
to grant this license to User. Ticketmaster further warrants that the System to
be installed in the Market Area will be substantially the same as, and will be
capable of performing (if used with the same equipment and subject to
limitations based on size and capacity) as, the basic system currently being
operated by Ticketmaster and its licensees in San Francisco and Philadelphia.
The System does not include certain custom enhancements such as direct line
credit card authorization, disaster recovery, off-line archiving of accounts,
nitrun, remote VAXNET software and the TM fraud program, all of which may be
purchased separately. IN THE EVENT OF ANY BREACH OF THE WARRANTY CONTAINED IN
THE PREVIOUS SENTENCE, TICKETMASTER'S SOLE RESPONSIBILITY SHALL BE TO USE ITS
BEST EFFORTS TO CORRECT THE SYSTEM SO THAT IT PERFORMS IN ALL MATERIAL RESPECTS
IN THE MANNER DESCRIBED ABOVE. THE WARRANTIES CONTAINED IN THIS PARAGRAPH 8 ARE
IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
User hereby warrants to Ticketmaster that (i) it is a duly organized and
validly existing limited partnership under the laws of the State of Maryland;
(ii) it has all necessary power and authority to execute and perform this
Agreement in accordance with its terms; (iii) the execution and performance of
this Agreement by it will not breach, constitute a default under or violate any
of User's governing instruments or any agreement to which it is a party or by
which its assets may be bound; (iv) this Agreement is enforceable against User
in accordance with its terms; and (v) no approvals or consents of any third
party (including any government agency) is necessary in order for User to
execute and deliver this Agreement and to perform hereunder.
9. Breach of Warranty.
(a)Ticketmaster shall, at its expense, defend any action brought against User to
the extent such action is based on a claim that the use of the System or the
Mark directly infringes any service mark, trademark, copyright or patent
("Infringement Action") and Ticketmaster shall pay any and all costs, expenses,
damages, recoveries, deficiencies and attorneys' fees awarded against User in
any Infringement Action; provided that (i) Ticketmaster's obligations under this
4
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Paragraph 9(a) are conditioned on User's promptly notifying Ticketmaster of any
Infringement Action (and all claims relating thereto); and (ii) Ticketmaster
shall have sole control of the defense and all negotiations for compromise of
any Infringement Action. Ticketmaster assumes no liability for the modification
of the System, or any part thereof, unless such modification is made by
Ticketmaster. THE FOREGOING STATES THE SOLE AND EXCLUSIVE LIABILITY OF
TICKETMASTER AND THE EXCLUSIVE REMEDY OF USER FOR SERVICE MARK, TRADEMARK,
COPYRIGHT OR PATENT INFRINGEMENT.
(b)User's remedy for any breach of warranty shall be limited solely to the
remedies provided in this Agreement. All other liability, either in contract or
tort, is expressly disclaimed, waived and negated. In no event shall
Ticketmaster be liable to User for any consequential or exemplary damages
resulting from a breach of any warranty contained in this Agreement or any
implied warranty or any requirement existing and applicable under the law, which
contrary to the intention of the parties hereto, the law states cannot be or is
not disclaimed, waived or negated.
10. Restrictive Covenants.
(a)User recognizes and acknowledges that the System and all related materials
furnished to User by Ticketmaster hereunder represent highly confidential,
proprietary information of Ticketmaster and constitutes a valuable, special and
unique asset of and to the business of Ticketmaster. User covenants and agrees
that, during and after the term hereof, no information, source materials, design
specifications, programs, flow charts, listings, magnetic tapes, disks, punched
cards, documentation or other supporting or related materials and information of
any nature or description whatsoever relating to the design and operation of the
System, or any portion thereof, are made available or disclosed by User, its
general partner or any of their principals, officers, directors, employees,
agents or representatives, directly or indirectly, to any other person, firm or
corporation, for any reason or purpose whatsoever or, directly or indirectly,
used by User, its general partner, or any of their principals, employees, agents
or representatives; provided, however, that User may disclose pertinent portions
of the System to those of its employees, agents or representatives who have a
need to have access to such portions of the System in order to enable User to
use the System within the Market Area, and further provided that the foregoing
restrictions shall not apply to information within the public domain.
Ticketmaster shall have the right to bring legal action to prevent a breach or
threatened breach of this confidentiality agreement and to pursue any other
legal or equitable remedies for any such breach or threatened breach, and User
shall reimburse Ticketmaster for all costs and expenses, including but not
limited to attorneys' fees, incurred by Ticketmaster with respect thereto. User
shall notify Ticketmaster of any such breach immediately upon discovery of such
breach. Additionally, User shall use the System only in accordance with the
terms and conditions hereof; and after the expiration of the term hereof, or
earlier termination of this Agreement, User shall: (i) cease all use of the
System, the Mark and all related materials furnished hereunder by Ticketmaster,
(ii) return to Ticketmaster all information, source materials, design
specifications, programs, flow charts, listings, magnetic tapes, disks, punched
cards, documentation and other supporting or related materials relating to the
System (and copies thereof), (iii) warrant that all such documentation and
materials (and copies thereof) have been returned to Ticketmaster or have been
destroyed, and (iv) warrant that any and all use of the Mark has ceased.
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(b)During the term of this Agreement, neither User, its general partner, nor any
of their principal's subsidiaries, affiliates, successors or assigns shall,
directly or indirectly, as principal, agent, shareholder, partner, joint
venturer, investor or in any other capacity or by any other means whatsoever,
(i) compete with Ticketmaster or its affiliates within the Market Area in the
computerized ticketing business or (ii) solicit the employment by User, its
general partner, or any of their principals, subsidiaries, affiliates,
successors or assigns of any employee of Ticketmaster or its affiliates.
(c)User acknowledges that the remedy at law for any breach or threatened breach
of the agreements and covenants set forth in this Paragraph 10 will be
inadequate, and Ticketmaster shall be entitled to preliminary and permanent
injunctive relief in any court of competent jurisdiction, without the
requirement of posting bond or any other condition precedent thereto, for any
breach or threatened breach of the agreements and covenants contained in this
Paragraph 10. Such remedy shall be in addition to, and not in limitation of, any
other remedy available to Ticketmaster at law, in equity or otherwise, and may
be obtained by Ticketmaster notwithstanding any assertion by User that
Ticketmaster's claims to proprietary rights in its confidential information is
invalid or unenforceable.
(d)Termination or expiration of this Agreement shall not terminate the
continuing confidentiality obligations imposed upon User, its employees,
servants and agents by the terms of this Paragraph 10.
(e)At Ticketmaster's request, User shall require each person permitted access to
any of the confidential information to execute a confidentiality agreement in
such form and containing such terms as Ticketmaster shall determine.
11. Termination.
(a)This Agreement may be immediately terminated by Ticketmaster if:
(i)User shall dissolve or commence winding up its activities to effect
dissolution, liquidation or termination, or shall make an assignment for the
benefit of creditors, or shall admit, in writing, its inability to pay its debts
as they become due, or shall file a voluntary petition in bankruptcy, or shall
be adjudicated a bankrupt or insolvent or shall file any petition or answer
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, or shall file any answer admitting or not contesting the material
allegations of a petition filed against it in any such proceedings, or shall
seek, consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of User or of all or any substantial part of the properties of User;
(ii)User, its general partner (or any of their principals, officers, directors,
employees, agents or representatives) shall breach, or threaten to breach, any
of the confidentiality obligations of User or any of them set forth in
Paragraph 10 hereof; or
(iii)User shall fail to pay when due any amounts owing Ticketmaster under, or to
observe or perform any terms or conditions of, this Agreement (other than
Paragraph 10); provided, that any such failure shall continue for a period of
seven (7) days after Ticketmaster has given written notice thereof to User.
(b)This Agreement may be immediately terminated by User if Ticketmaster shall
dissolve or commence winding up its activities to effect dissolution,
liquidation or termination, or shall make an assignment for the benefit of
creditors, or shall admit, in writing, its inability to pay its debts as they
become due, or shall file a voluntary petition in bankruptcy, or shall be
adjudicated a bankrupt or insolvent or shall file any petition or answer seeking
any
6
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reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation, or
shall file any answer admitting or not contesting the material allegations of a
petition filed against it in any such proceedings, or shall seek, consent to or
acquiesce in the appointment of any trustee, receiver or liquidator of
Ticketmaster or of all or any substantial part of the properties of
Ticketmaster.
(c)Upon any such termination, (i) any past due or currently due payments
(including Additional Payments for the period from the beginning of the then
current License Year through the date of termination) shall become due and
payable (or, if applicable, prepaid Base Payments for the remainder of the
current License Year quarter shall be reimbursed), and (ii) this Agreement and
the license granted hereby shall forthwith be revoked and of no further force or
effect except as stated otherwise herein. Ticketmaster's and User's right to
terminate this Agreement shall be in addition to and without prejudice to any
other remedies such party may have, except as otherwise specifically provided
herein.
(d)Immediately upon any such termination, User shall surrender to Ticketmaster,
and Ticketmaster shall have the right peacefully to take, possession of the
System, and User shall further cease to use the Mark. Ticketmaster shall
thereafter own and hold the System and the Mark free of any claim or interest of
User. Without limiting the generality of the foregoing, User shall immediately
after any such termination legally change its name so that its name shall no
longer include the word "Ticketmaster" or any derivation thereof. User shall
indemnify and hold Ticketmaster harmless from and against any claim, loss,
expense (including reasonable attorneys' fees) or liability whatsoever resulting
from, due to or arising by reason of any misuse of the System or Mark by User in
any manner.
12. Enhancements and Support; Source Code.
(a)In the event that the System shall, at any time during the term of this
Agreement, fail to perform in the manner warranted by Ticketmaster in
Paragraph 8 hereof, Ticketmaster shall, at no charge to User, correct the System
in the manner provided in said Paragraph 8.
(b)In the event that Ticketmaster shall, at any time during the term of this
Agreement, develop and complete testing of enhancements to the version of
software comprising a part of the System then being used by User, and
Ticketmaster shall make such enhancement available to its non-affiliated
licensees on a general basis, Ticketmaster shall also make such enhancement
available to User in consideration of the payment by User of any and all
out-of-pocket expenses incurred by Ticketmaster (including, without limitation
thereby, costs of materials and personnel) in connection with making such
enhancement available to User, as well as the costs of all necessary new
equipment.
(c)In the event that Ticketmaster shall, at any time during the term of this
Agreement, offer to User, and User shall elect to receive, an upgrade to or
improved version of the software used in the System, the implementation of which
would require a conversion of User's database, User shall pay to Ticketmaster
the sum of $30,000 U.S. therefor, and Ticketmaster shall effect such conversion
for and on behalf of User.
(d)In the event that User shall, at any time during the term of this Agreement,
request that Ticketmaster develop custom enhancements to the System to meet
certain specific performance criteria reasonably requested by User, Ticketmaster
shall use its reasonable efforts to cause such custom enhancements to be
developed by its programmers in consideration of the payment by User to
Ticketmaster of the prevailing rate then being charged by Ticketmaster to its
other non-affiliated licensees.
(e)In addition to any other fees payable by it to Ticketmaster pursuant to this
Paragraph 12, User shall be responsible, and shall immediately reimburse
Ticketmaster upon invoice, for any
7
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and all expenses (including travel) incurred by Ticketmaster's employees, agents
and representatives pursuant to or in connection with Ticketmaster's performance
under Paragraphs 12(b), (c) and (d) above.
(f)During the term of this Agreement Ticketmaster shall furnish User with the
access code to the System at least 30 days prior to the date upon which that
access code is to take effect.
13. Documentation. Ticketmaster will supply User with documentation which
will enable User, after the initial training of its personnel, to operate the
System.
14. Equipment. During the term of this Agreement, User shall have the
right to purchase all equipment it may require from time to time to be used
entirely or in material part with the System from or through Ticketmaster. The
cost of any such equipment which is manufactured by a party other than by
Ticketmaster shall be at Ticketmaster's cost plus ten percent (10%). The cost of
any such equipment manufactured in whole or in part for or by Ticketmaster shall
be at Ticketmaster's then current market rate to its non-affiliated licensees
for such equipment. The cost of delivering and installing such equipment shall
be borne solely by User.
15. Indemnification. User shall indemnify and hold Ticketmaster, and its
subsidiaries, affiliates, successors, assigns, officers, directors, employees,
representatives and agents, harmless from and against any and all losses,
liabilities, damages, claims, actions, causes of action and expenses (including
reasonable attorneys' fees) that said indemnified parties may incur or be
responsible for as a result or by virtue of the operation of User, including,
without limitation thereby, User's use of the System, but excluding those costs,
expenses, damages, recoveries, deficiencies and attorneys' fees awarded in any
Infringement Action pursuant to Paragraph 10(a) above.
16. Right of First Refusal. User and, by their execution of this Agreement
in the space provided below, the holders of all of the general and limited
partnership interests of User (the "Partners"), agree that in the event (i) User
receives an offer from a third party to purchase for cash or other property any
or all of the assets of User (including this Agreement) or (ii) the Partners, or
any of them, receive an offer from a third party to purchase for cash or other
property any or all of the general or limited partnership interests of User,
which either User or the Partners wish to accept, User or the Partners, as
applicable, will cause such offer to be reduced to writing and shall deliver
written notice of such offer to Ticketmaster. Ticketmaster may designate one or
more persons to accept the right of first refusal contained in this Section 16.
The notice from User or the Partners shall also contain an irrevocable offer by
them to sell the covered assets or partnership interests to Ticketmaster or its
designees at a price equal to the price, and upon substantially the same terms
and conditions as the terms and conditions contained in, the offer transmitted
with the notice; provided, however, that if the price is not payable solely in
cash, then User or the Partners, as applicable, shall advise Ticketmaster of the
reasonable value of such non-cash consideration (which reasonable value
Ticketmaster may contest) and Ticketmaster shall be permitted to deliver cash in
the amount thereof in substitution for such non-cash consideration. Ticketmaster
or its designees shall have the right and option, exercisable within 15 days
after delivery of the notice from User or the Partners, to accept such offer as
to all, but not less than all, of the assets or partnership interests affected
by the offer. The closing of the purchase of the assets or partnership interests
covered by the offer by Ticketmaster or its designees shall take place at the
principal office of Ticketmaster (or such other place as may be agreed upon by
the parties) on the fifth business day after the expiration of the 15-day period
following the giving of the notice. At such closing, Ticketmaster or its
designees shall make payment of the purchase price against delivery of the
assets or partnership interests covered by the offer, together with appropriate
instruments of assignment and transfer. If at the end of the 15-day period
following the giving of notice by User or the Partners, neither Ticketmaster nor
its designees have accepted the offer as to all of the assets and partnership
interests covered by the offer, then User and the Partners shall have 20 days in
which to sell the assets or the partnership interests covered by the offer at a
price
8
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equal to that contained in the notice and upon terms and conditions not more
favorable to the offeror than were contained in the notice. If, at the end of
such 20-day period, User or the Partners have not completed the sale of the
assets or partnership interests covered by the offer, then they shall no longer
be permitted to sell such assets or partnership interests pursuant to this
Section 16 without again fully complying with the provisions of this Section 16.
During the term of this Agreement, User shall keep this Agreement free and clear
of any liens, pledges, security interests and encumbrances of any kind or nature
whatsoever, and the Partners shall neither sell, assign, transfer, give, donate
or otherwise dispose of their partnership interests (except in accordance with
the terms of this Section 16).
17. Assignment. User may not assign its rights, duties, and/or obligations
hereunder, nor may the System, the Mark or any materials furnished by
Ticketmaster hereunder be transferred, assigned, sublicensed or otherwise
disposed of by User, without the prior written consent of Ticketmaster;
provided, however, that User may assign this Agreement to an entity controlled
by, controlling or under common control with User solely as part of an internal
reorganization of User and its affiliates so long as such entity becomes a party
to and agrees to be bound by the terms and conditions of this Agreement.
18. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective, successors and assigns.
19. Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the parties hereto relative to the subject matter hereof, and
supersedes any and all prior agreements, written or oral, between the parties
relating to such subject matter. No modifications or amendments of any of the
terms hereof shall be valid or binding unless made in writing and signed by
Ticketmaster and User.
20. Waiver. No waiver of any breach of any provision of this Agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of the
same or any other provision hereof, and no waiver shall be effective unless made
in writing.
21. Attorneys' Fees. In case of any action or proceeding to compel
compliance with, or for a breach of, the provisions of this Agreement, the
prevailing party shall be entitled to recover from the other party all costs of
such action or proceeding including, but not limited to, reasonable attorneys'
fees.
22. Notices. All notices which are required or permitted hereunder shall
be sufficient if given in writing and delivered personally, by telecopy or by
registered or certified mail, postage prepaid, addressed to the party receiving
such notice at the following address or at such other address as may be
requested in writing by either party pursuant to this Paragraph 22:
If to Ticketmaster, to: Ticketmaster Corporation
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010 Attn: Fredric D. Rosen
Ned S. Goldstein
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Suite 2200
Chicago, Illinois 60602 Attn: Norman J. Gantz, Esq.
9
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If to User, to:
Ticketmaster Group Limited Partnership
c/o Abe Pollin Tickets, Inc.
One Harry S. Truman Drive
Landover, Maryland 20785 Attn: Abe Pollin
With a copy to:
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036 Attn: David M. Osnos and
Daniel F. Van Horn
23. Severability. If any provision of this Agreement shall be held invalid
or unenforceable by any court of competent jurisdiction, the remaining
provisions of this Agreement shall remain in full force and effect. Further,
should any provision of this Agreement be deemed unenforceable by virtue of its
scope, such provision shall be deemed limited to the extent necessary to render
the same enforceable.
24. Law to Govern. The validity, construction and enforceability of this
Agreement shall be governed in all respects by the laws of the State of
Illinois, without regard to its conflict of laws rules. Any legal proceeding or
other action taken or to be taken by any of the parties hereto relative to this
Agreement or the transactions contemplated hereby, or to enforce or interpret
the terms and conditions of this Agreement, shall be instituted in a state or
Federal court located in Cook County, Illinois. The parties hereto hereby
irrevocably consent to the jurisdiction of any such court and irrevocably waive,
to the fullest extent that they may effectively do so, the defense of an
inconvenient forum to the maintenance of such proceeding or action. The parties
hereto agree that a final judgment, from which no further appeal may be taken or
from which no further petition for review may be filed, in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgement or in any other manner provided by law.
25. Headings. The headings of paragraphs in this Agreement have been
inserted for the convenience of reference only and shall in no way restrict or
otherwise modify the terms of this Agreement.
26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but each of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TICKETMASTER CORPORATION
By:
[ILLEGIBLE]
--------------------------------------------------------------------------------
Title:
[ILLEGIBLE]
--------------------------------------------------------------------------------
TICKETMASTER GROUP LIMITED PARTNERSHIP
By:
AP TICKETS, INC.
its General Partner
By:
[ILLEGIBLE]
--------------------------------------------------------------------------------
Title:
[ILLEGIBLE]
--------------------------------------------------------------------------------
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AGREED TO AS OF THE DATE HEREOF FOR PURPOSES OF SECTION 16
GENERAL PARTNER:
AP TICKETS, INC.
a Maryland corporation
By:
[ILLEGIBLE]
--------------------------------------------------------------------------------
Title:
[ILLEGIBLE]
--------------------------------------------------------------------------------
LIMITED PARTNER:
CENTER GROUP LIMITED PARTNERSHIP,
a Maryland limited partnership
By:
Abe Pollin Sports, Inc.,
its general partner
By:
[ILLEGIBLE]
--------------------------------------------------------------------------------
Title:
[ILLEGIBLE]
--------------------------------------------------------------------------------
11
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EXHIBIT I
MARKET AREA
(a)The State of Maryland.
(b)Washington, D.C.; and
(c)The independent cities of Alexandria, Fairfax, Falls Church, Manassas and
Manassas Park, and the Counties of Arlington, Loudoun, Fairfax and Prince
William, in the Commonwealth of Virginia.
--------------------------------------------------------------------------------
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WITNESSETH
EXHIBIT I MARKET AREA
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EXHIBIT 10.42
Termination Agreement dated July 21, 2000
Agreement dated as of July 21, 2000 among 3D Systems Corporation, a
California corporation ("3D Systems"), Charles W. Hull ("Hull"), as Founders'
Agent pursuant to the Shareholders Agreement (defined below) and Ciba Specialty
Chemicals Canada Inc., a Canadian corporation ("Ciba Canada").
WHEREAS, 3D Systems, Ciba Canada and certain individuals referred to as
"Founder's" are parties to a Shareholders Agreement dated April 10, 1991, as
amended May 5, 1993 (the "Shareholders Agreement");
WHEREAS, Ciba Canada has given notice to Hull, as Founders Agent pursuant to
the Shareholders Agreement that Ciba Canada intends to sell 1,725,366 shares of
the common stock of 3D Systems Corporation (representing all the shares of 3D
Systems owned by Ciba Canada) to Vantico SA, a Luxembourg corporation
("Vantico"), and Hull, as Founders Agent pursuant to such Shareholders
Agreement, is prepared to wave the Founder's Right of First Refusal with respect
to such sale; and
WHEREAS, the parties desire to terminate the Shareholders Agreement
effective as to the date of this Agreement;
Now, therefore, in consideration of their mutual undertakings set forth
below, the parties agree as follows:
1. Hull represents that he is duly appointed Founder's Agent, as defined as
in the Shareholders Agreement and that he is fully authorized to act for, and
bind, any other individual who might be considered a Founder (as defined in the
Shareholders Agreement) for purposed of this Agreement.
2. As Founders Agent, Hull hereby consents to the sale by Ciba Canada of
all of its 1,725,366 shares of common stock of 3D Systems to Vantico in
consideration of 27 million Swiss francs.
3. The Shareholders Agreement is hereby terminated effective as of the date
of this Agreement. None of its terms or requirements shall have any effect after
the date hereof.
4. Ciba shall request and cause Miriam V. Gold to resign as a director of
3D Systems, effective as of the date of this agreement.
5. This agreement represents the entire understanding of the parties with
respect to the subject matter hereof.
/s/ Charles W. Hull
--------------------------------------------------------------------------------
As Founders Agent
Ciba Specialty Chemicals Canada Inc.
By /s/
--------------------------------------------------------------------------------
By /s/
--------------------------------------------------------------------------------
3D Systems Corporation
/s/ C. W. Hull
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EXHIBIT 10.42
Termination Agreement dated July 21, 2000
|
Exhibit 10.2
LUMERA CORPORATION
INVESTORS’ RIGHTS AGREEMENT
MARCH 14, 2001
TABLE OF CONTENTS
1. Registration Rights
1.1 Definitions
1.2 Request for Registration
1.3 Company Registration
1.4 Form S-3 Registration
1.5 Obligations of the Company
1.6 Furnish Information
1.7 Expenses of Registration.
1.8 Underwriting Requirements
1.9 Delay of Registration
1.10 Indemnification
1.11 Reports Under Securities Exchange Act of 1934
1.12 Assignment of Registration Rights
1.13 Limitations on Subsequent Registration Rights
1.14 “Market Stand-Off” Agreement
1.15 Termination of Registration Rights
2. Covenants of the Company
2.1 Delivery of Financial Statements
2.2 Inspection
2.3 Right of Participation
2.4 Stock Vesting
2.5 Employee Non-Disclosure and Assignment of Inventions Agreement
2.6 IRS Ruling
2.7 Termination of Covenants
3. Miscellaneous
3.1 Successors and Assigns
3.2 Amendments and Waivers
3.3 Notices
3.4 Severability
3.5 Governing Law
3.6 Counterparts
3.7 Titles and Subtitles
3.8 Aggregation of Stock
3.9 Specific Enforcement
LUMERA CORPORATION
INVESTORS’ RIGHTS AGREEMENT
This Investors’ Rights Agreement (the “Agreement”) is made as of
the 14 day of March, 2001, by and among Lumera Corporation, a Washington
corporation (the “Company”) and the investors listed on Exhibit A hereto, each
of which is herein referred to as an “Investor.”
RECITALS
WHEREAS, the Company and certain Investors have entered into a
Series A Preferred Stock Purchase Agreement (the “Purchase Agreement”) of even
date herewith pursuant to which the Company desires to sell to such Investors
and such Investors desire to purchase from the Company shares of the Company’s
Series A Preferred Stock;
WHEREAS, a condition to the Investors’ obligations under the
Purchase Agreement is that the Company and the Investors enter into this
Agreement in order to provide the Investors with (i) certain rights to register
shares of the Company’s Class A Common Stock issuable upon conversion of the
Series A Preferred Stock held by the Investors, (ii) certain rights to receive
or inspect information pertaining to the Company, and (iii) a right of
participation with respect to certain issuances by the Company of its
securities; and
WHEREAS, the Company desires to induce certain of the Investors to
purchase shares of Series A Preferred Stock pursuant to the Purchase Agreement
by agreeing to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties hereto agree as follows:
1. Registration Rights. The Company and the Investors covenant and
agree as follows:
1.1 Definitions . For purposes of this Section 1:
(a) The terms “register,” “registered,” and
“registration” refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities Act
of 1933, as amended (the “Securities Act”), and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term “Registrable Securities” means
(i) the shares of Class A Common Stock issuable or issued upon conversion of the
Series A Preferred Stock purchased pursuant to the Purchase Agreement and (ii)
any other shares of Class A Common Stock of the Company issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the shares listed in (i); provided, however, that the
foregoing definition shall exclude in all cases any Registrable Securities sold
by a person in a transaction in which his or her rights under this Agreement are
not assigned. Notwithstanding the foregoing, Class A Common Stock or other
securities shall only be treated as Registrable Securities if and so long as
they have not been (A) sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, or (B) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Section 4(l) thereof or Rule 144 thereunder so that all
transfer restrictions, and restrictive legends with respect thereto, if any, are
removed upon the consummation of such sale;
(c) The number of shares of “Registrable
Securities then outstanding” shall be determined by the number of shares of
Class A Common Stock outstanding which are, and the number of shares of Class A
Common Stock issuable pursuant to then exercisable or convertible securities
which are, Registrable Securities;
(d) The term “Holder” means any person owning
or having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.12 of this Agreement;
(e) The term “Form S-3” means such form under
the Securities Act as in effect on the date hereof or any successor form under
the Securities Act;
(f) The term “SEC” means the Securities and
Exchange Commission; and
(g) The term “Qualified IPO” means a firm
commitment underwritten public offering by the Company of shares of its Common
Stock pursuant to a registration statement under the Securities Act, with a
public offering price per share of not less than $10 and which results in
aggregate cash proceeds to the Company of an amount equal to or greater than
$20,000,000 (net of underwriting discounts and commissions).
1.2 Request for Registration
(a) If the Company shall receive at any time
after the earlier of (i) March __, 2004 or (ii) six (6) months after the
effective date of the first registration statement for a public offering of
securities of the Company (other than a registration statement relating either
to the sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan approved by the Board of Directors of the
Company or an SEC Rule 145 transaction approved by the Board of Directors of the
Company), a written request from the Holders of at least 30% of the Registrable
Securities then outstanding that the Company file a registration statement under
the Securities Act covering the registration of not less than 30% of the
Registrable Securities then outstanding with an anticipated aggregate gross
offering price of at least $10,000,000, then the Company shall, within ten (10)
days of the receipt thereof, give written notice of such request to all Holders
and shall, subject to the limitations of subsection 1.2(b), use reasonable
efforts to effect as soon as practicable, and in any event within 90 days of the
receipt of such request, the registration under the Securities Act of all
Registrable Securities which the Holders request to be registered within fifteen
(15) days of the mailing of such notice by the Company in accordance with
Section 3.3. Subject to the limitations of this Section 1.2, the Company may
also include shares of its capital stock in such registration.
(b) If the Holders initiating the registration
request hereunder (“Initiating Holders”) intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 1.2
and the Company shall include such information in the written notice referred to
in subsection 1.2(a). The underwriter will be selected by a majority in interest
of the Initiating Holders and shall be reasonably acceptable to the Company. In
such event, the right of any Holder to include his Registrable Securities in
such registration shall be conditioned upon such Holder’s participation in such
underwriting and the inclusion of such Holder’s Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.5(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting; provided, further, that notwithstanding the
foregoing, if the University of Washington (the “University”) requests pursuant
to the Restricted Stock Purchase Agreement dated October 20, 2000 between the
University and the Company to include in a registration pursuant to this
Section 1.2 shares of the Company’s Class A Common Stock held by the University
(the “UW Shares”), the number of securities to be registered in such
registration shall be allocated to each Holder and the University in proportion
(as nearly as practicable) to the amount of the Company’s securities held by
each Holder exercising its rights hereunder and the University (so long as, in a
registration subsequent to the Company’s initial public offering, the number of
UW Shares is not reduced below twenty percent (20%) of the number of securities
to be registered in such registration.
(c) Notwithstanding the foregoing, if the
Company shall furnish to Holders requesting a registration statement pursuant to
this Section 1.2, a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors of the Company, the
filing would interfere with a material financing, corporate reorganization,
acquisition, merger, consolidation or other material fact or event, the Company
shall have the right to defer such filing for a period of not more than ninety
(90) days after receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than once in any
twelve-month period.
(d) In addition, the Company shall not be
obligated to effect, or to take any action to effect, any registration pursuant
to this Section 1.2:
(i) After the Company has
effected two (2) registrations pursuant to this Section 1.2 and such
registrations have been declared or ordered effective;
(ii) During the period starting
with the date sixty (60) days prior to the Company’s good faith estimate of the
date of filing of, and ending on a date one hundred eighty (180) days after the
effective date of, a registration subject to Section 1.3 hereof; provided that
the Company is in good faith using reasonable efforts to cause such registration
statement to become effective; or
(iii) If the Initiating Holders
propose to dispose of shares of Registrable Securities that may be immediately
registered on Form S-3 pursuant to a request made pursuant to Section 1.4 below.
1.3 Company Registration . After the Company’s initial
public offering, if (but without any obligation to do so) the Company proposes
to register (including for this purpose a registration effected by the Company
for shareholders other than the Holders) any of its stock under the Securities
Act in connection with the public offering of such securities solely for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan approved by the Board of Directors of the
Company or a transaction covered by Rule 145 under the Securities Act approved
by the Board of Directors of the Company, a registration in which the only stock
being registered is Common Stock issuable upon conversion of debt securities
which are also being registered, or any registration on any form which does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities),
the Company shall, at such time, promptly give each Holder written notice of
such registration. Upon the written request of each Holder given within twenty
(20) days after mailing of such notice by the Company in accordance with
Section 3.3, the Company shall, subject to the provisions of Section 1.8, cause
to be registered under the Securities Act all of the Registrable Securities that
each such Holder has requested to be registered. If a Holder decides not to
include any or all of its Registrable Securities in any registration statement
filed by the Company, such holder shall nevertheless continue to have the right
to include any Registrable Securities in any subsequent registration statement
or statements as may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein.
1.4 Form S-3 Registration . In case the Company shall
receive from any Holder or Holders a written request or requests that the
Company effect a registration on Form S-3, with an anticipated aggregate gross
offering price of not less than $2,000,000, and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the
proposed registration, and any, related qualification or compliance, to all
other Holders; and
(b) as soon as practicable, effect such
registration, up to one (1) per year, and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holder’s or Holders’ Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given within twenty (20) days
after receipt of such written notice from the Company; provided, however, that
the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1.4: (i) if Form S-3 is
not available for such offering by the Holders; (ii) if the Holders, together
with the holders of any other securities of the Company entitled to inclusion in
such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate gross price to the public of less than
$2,000,000; (iii) if the Company shall furnish to the Holders a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors of the Company, the filing would interfere with a
material financing, corporate reorganization, acquisition, merger, consolidation
or other material fact or event, in which event the Company shall have the right
to defer the filing of the Form S-3 registration statement for a period of not
more than 90 days after receipt of the request of the Holder or Holders under
this Section 1.4; provided, however, that the Company shall not utilize this
right more than once in any twelve month period; (iv) if the Company has, within
the twelve (12) month period preceding the date of such request, already
effected one registration on Form S-3 for the Holders pursuant to this
Section 1.4; (v) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance, and in
which the Company is not already qualified to do business or subject to service
of process; or (vi) during the period ending one hundred eighty (180) days after
the effective date of (x) a registration statement filed pursuant to Section 1.2
or a registration statement subject to Section 1.3 or (y) the registration
statement for the Company’s initial public offering.
(c) Subject to the foregoing, the Company
shall file a registration statement covering the Registrable Securities and
other securities so requested to be registered as soon as practicable after
receipt of the request or requests of the Holders. Registrations effected
pursuant to this Section 1.4 shall not be counted as demands for registration or
registrations effected pursuant to Sections 1.2 or 1.3, respectively.
1.5 Obligations of the Company. Whenever required under
this Section 1 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a
registration statement with respect to such Registrable Securities and use
reasonable efforts to cause such registration statement to become effective,
and, upon the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for up to
ninety (90) days. The Company shall not be required to file, cause to become
effective or maintain the effectiveness of any registration statement that
contemplates a distribution of securities on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, except for registrations pursuant
to Section 1.4; provided, however, that the Company will only be required to
keep such registration statement effective for up to ninety (90) days.
(b) Prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement for up to ninety (90)
days.
(c) Furnish to the Holders such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, and in which the Company is not already qualified to do business
or subject to service of process.
(e) In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
(f) Notify each Holder of Registrable
Securities covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing, such obligation to continue for ninety (90) days.
(g) Cause all such Registrable Securities
registered pursuant hereunder to be listed on each securities exchange or
over-the-counter market on which similar securities issued by the Company are
then listed.
(h) Provide a transfer agent and registrar for
all Registrable Securities registered pursuant hereunder and a CUSIP number for
all such Registrable Securities, in each case not later than the effective date
of such registration.
(i) Use reasonable efforts to furnish, at
the request of any Holder requesting registration of Registrable Securities
pursuant to this Section 1, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a registration
pursuant to this Section 1, being sold through underwriters, (i) an opinion,
dated such date, of the counsel representing the Company for the purposes of
such registration, in form and substance as is customarily given to underwriters
in an underwritten public offering, addressed to the underwriters, and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters and to the Holders requesting registration of Registrable
Securities.
1.6 Furnish Information . It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder’s
Registrable Securities. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.4 of this Agreement
if, as a result of the application of the preceding sentence, the number of
shares or the anticipated aggregate offering price of the Registrable Securities
to be included in the registration does not equal or exceed the number of shares
or the anticipated aggregate offering price required to originally trigger the
Company’s obligation to initiate such registration as specified in
subsection 1.2(a) or section 1.4, whichever is applicable.
1.7 Expenses of Registration.
(a) Demand Registration. All expenses other
than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers’
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable and documented fees and disbursements of one counsel for the selling
Holders selected by them not to exceed $15,000 shall be borne by the Company;
provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered and the Company is in
compliance with this Agreement (in which case all participating Holders shall
bear all such reasonable expenses in proportion to the number of shares for
which registration was requested), unless the Holders of a majority of the
Registrable Securities agree to forfeit their right to one demand registration
pursuant to Section 1.2; provided further, however, that if at the time of such
withdrawal, the Holders have learned of a material adverse change in the
condition, results, business, or prospects of the Company that would adversely
affect the offering and have withdrawn the request with reasonable promptness
following disclosure by the Company of such material adverse change, then the
Holders shall not be required to pay any of such expenses and shall retain their
rights pursuant to Section 1.2.
(b) Company Registration. All expenses other
than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications of Registrable Securities pursuant to
Section 1.3 for each Holder, including (without limitation) all registration,
filing, and qualification fees, printers’ and accounting fees, fees and
disbursements of counsel for the Company and the reasonable and documented fees
and disbursements of one counsel for the selling Holder or Holders selected by
them not to exceed $15,000 shall be borne by the Company.
(c) Registration on Form S-3. All expenses
incurred in connection with registrations requested pursuant to Section 1.4,
including (without limitation) all registration, filing, qualification,
printers’ and accounting fees and the reasonable and documented fees and
disbursements of one counsel for the selling Holder or Holders selected by them
not to exceed $15,000 and counsel for the Company, and any underwriters’
discounts or commissions associated with Registrable Securities, shall be borne
by the Company.
1.8 Underwriting Requirements. In connection with any
offering involving an underwriting of shares of the Company’s capital stock, the
Company shall not be required under Section 1.3 to include any of the Holders’
securities in such underwriting unless they accept the usual and customary terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it (or by other persons entitled to select the underwriters), and
then only in such quantity as the underwriters determine in their sole
discretion will not jeopardize the success of the offering by the Company. If
the total amount of securities, including Registrable Securities, requested by
shareholders to be included in such offering exceeds the amount of securities to
be sold, other than by the Company, that the underwriters determine in their
sole discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling shareholders
according to the total amount of securities entitled to be included therein
owned by each selling shareholder or in such other proportions as shall mutually
be agreed to by such selling shareholders) but in no event shall (i) any shares
being sold by a shareholder exercising a demand registration right similar to
that granted in Section 1.2 be excluded from such offering; (ii) or any
securities held by an officer or director of the Company (or an affiliate
thereof, other than Microvision, Inc. or the University of Washington) be
included if any securities held by any selling Holder are excluded; provided,
however, that in a registration subsequent to the Company’s initial public
offering the number of UW Shares is not reduced below twenty percent (20%) of
the number of securities to be registered in such registration. For purposes of
the preceding parenthetical concerning apportionment, for any selling
shareholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and shareholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single “selling shareholder,” and any pro-rata reduction with
respect to such “selling shareholder” shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such “selling shareholder,” as defined in this sentence.
1.9 Delay of Registration . No Holder shall have any right
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.10 Indemnification . In the event any Registrable
Securities are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the
Company will indemnify and hold harmless each Holder, any underwriter (as
defined in the Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Securities Act or
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), against
any losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (each, a “Violation”): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
subsection 1.10(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable to any Holder, underwriter or controlling person
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each
selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other Holder,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person indemnified pursuant to this
subsection 1.10(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.10(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that in no event shall any indemnity
under this subsection 1.10(b) exceed the net proceeds from the offering received
by such Holder, except in the case of fraud by such Holder.
(c) Promptly after receipt by an indemnified
party under this Section 1.10 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this
Section 1.10, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party (together with all other indemnified parties which may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the reasonable and documented fees and expenses to be
paid by the indemnifying party, if representation of such indemnified party by
the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.10, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this
Section 1.10.
(d) If the indemnification provided for in
this Section 1.10 is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, liability, claim, damage or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage or expense as well as any other relevant
equitable considerations; provided, that in no event shall any contribution by a
Holder under this subsection 1.10(d) exceed the net proceeds from the offering
received by such Holder, except in the case of fraud by such Holder. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the
extent that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and
Holders under this Section 1.10 shall survive the completion of any offering of
Registrable Securities in a registration statement and the termination of this
Agreement.
1.11 Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the SEC that may at
any time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information
available, as those terms are understood and defined in SEC Rule 144, at all
times after ninety (90) days after the effective date of the first registration
statement filed by the Company for the offering of its securities to the general
public so long as the Company remains subject to the periodic reporting
requirements under Sections 13 or 15(d) of the Exchange Act;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the Exchange Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed by the
Company for the offering of its securities to the general public is declared
effective;
(c) file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act; and
(d) furnish to any Holder, so long as the
Holder owns any Registrable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting requirements of
SEC Rule 144 (at any time after ninety (90) days after the effective date of the
first registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.
1.12 Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder (i) to parent
corporation of or a subsidiary of such Holder or (ii) any trust for the benefit
of the Holder or a spouse or family member or (iii) to a transferee or assignee
of at least 500,000 shares of such securities, provided the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such affiliate, transferee or assignee and the securities with
respect to which such registration rights are being assigned, provided such
transferee shall agree to be subject to all restrictions set forth in this
Agreement; and provided, further, that such assignment shall be effective only
if immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act.
For the purposes of determining the number of shares of Registrable Securities
held by a transferee or assignee, the holdings of transferees and assignees of a
partnership who are partners or retired partners of such partnership (including
spouses and ancestors, lineal descendants and siblings of such partners or
spouses who acquire Registrable Securities by gift, will or intestate
succession) shall be aggregated together and with the partnership; provided that
all assignees and transferees who would not qualify individually for assignment
of registration rights shall have a single attorney-in-fact for the purpose of
exercising any rights, receiving notices or taking any action under Section 1.
1.13 Limitations on Subsequent Registration Rights. Except
for registration rights to be granted to Microvision, Inc. covering Class A
Common Stock issuable upon conversion of shares of Series A Preferred Stock
issuable upon exercise of warrants to be issued under the terms of the Company’s
Convertible Promissory Note dated February 28, 2001 payable to Microvision, Inc.
(the “Convertible Note”), from and after the date of this Agreement, the Company
shall not, without the prior written consent of the Holders of a majority of the
outstanding Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company which would allow such
holder or prospective holder (a) to include such securities in any registration
filed under Section 1.2 hereof, unless under the terms of such agreement, such
holder or prospective holder may include such securities in any such
registration only to the extent that the inclusion of his securities will not
reduce the amount of the Registrable Securities of the Holders which is
included, (b) to make a demand registration which could result in such
registration statement being declared effective prior to the earlier of either
of the dates set forth in subsection 1.2(a) or within one hundred twenty (120)
days of the effective date of any registration effected pursuant to Section 1.2.
1.14 “Market Stand-Off” Agreement. Each Holder hereby agrees
that, during the period of duration (up to, but not exceeding, one hundred
eighty (180) days) specified by the Company and an underwriter of Common Stock
or other securities of the Company, following the effective date of a
registration statement of the Company filed under the Securities Act, it shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except Common Stock included
in such registration; provided, however, that:
(a) such agreement shall be applicable only
to the first such registration statement of the Company which covers Common
Stock (or other securities) to be sold on its behalf to the public in an
underwritten offering; and
(b) all officers and directors of the Company
and all one-percent (1%) securityholders, and all other persons with
registration rights (whether or not pursuant to this Agreement) enter into
similar agreements, except that the University of Washington shall only be
required to do so to the extent required under the terms of the Restricted Stock
Purchase Agreement between the Company and the University of Washington dated
October 20, 2000.
In order to enforce the foregoing covenant, the Company may impose
stop transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period, and each Holder agrees
that, if so requested, such Holder will execute an agreement in the form
provided by the underwriter containing terms which are essentially consistent
with the provisions of this Section 1.14.
Notwithstanding the foregoing, the obligations described in this
Section 1.14 shall not apply to a registration relating solely to employee
benefit plans on Form S-8 or similar forms which may be promulgated in the
future, or a registration relating solely to an SEC Rule 145 transaction on Form
S-4 or similar forms which may be promulgated in the future.
1.15 Termination of Registration Rights. No Holder shall be
entitled to exercise any right provided for in this Section 1 after the earlier
of (i) three (3) years following the consummation of a Qualified IPO, (ii) March
__, 2008, or (ii) such time as Rule 144 or another similar exemption under the
Securities Act is available for the sale of all of such Holder’s shares during a
ninety (90) day period without registration.
2. Covenants of the Company
2.1 Delivery of Financial Statements. The Company shall
deliver to each Holder of at least 500,000 shares of Registrable Securities:
(a) as soon as practicable, but in any event
within ninety (90) days after the end of each fiscal year of the Company ending
after the date hereof, an income statement for such fiscal year, a balance sheet
of the Company and statement of shareholder’s equity as of the end of such year,
and a statement of cash flows for such year, such year-end financial reports to
be in reasonable detail, prepared in accordance with generally accepted
accounting principles (“GAAP”), and audited and certified by an independent
public accounting firm of nationally recognized standing selected by the
Company;
(b) as soon as practicable, but in any event
within forty-five (45) days after the end of each of the first three (3)
quarters of each fiscal year of the Company, an unaudited profit or loss
statement, a statement of cash flows for such fiscal quarter, a summary of
bookings and backlog and an unaudited balance sheet as of the end of such fiscal
quarter;
(c) within thirty (30) days of the beginning
of each fiscal year, monthly financial projections for such fiscal year,
operating budgets for such fiscal year and a fiscal business plan in reasonable
detail; and
(d) with respect to the financial statements
called for in subsections (b) of this Section 2.1, an instrument executed by the
Chief Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to normal and
recurring year-end audit adjustment, provided that the foregoing shall not
restrict the right of the Company to change its accounting principles consistent
with GAAP.
2.2 Inspection . The Company shall permit each Holder of at
least 500,000 shares of Series A Preferred Stock, at such Holder’s expense and
at reasonable times and with advance notice, to visit and inspect the Company’s
properties, to examine its books of account and records and to discuss the
Company’s affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Investor; provided, however, that
the Company shall not be obligated pursuant to this Section 2.2 to provide
access to any information which it reasonably considers to be a trade secret or
similar confidential information.
2.3 Right of Participation. Subject to the terms and
conditions specified in this paragraph 2.3, the Company hereby grants to each
Holder who holds at least 250,000 shares of Series A Preferred Stock (a “Major
Investor”) a right of participation with respect to future sales by the Company
of its shares of, or securities convertible into or exercisable for any shares
of, any class of its capital stock (“Shares”).
Each time the Company proposes to issue and sell any Shares, the
Company shall first make an offering of such Shares to each Major Investor in
accordance with the following provisions:
(a) The Company shall deliver a notice by
certified mail (“Notice”) to the Major Investors stating (i) its bona fide
intention to offer such Shares, (ii) the number of such Shares to be offered,
and (iii) the price and terms, if any, upon which it proposes to offer such
Shares.
(b) Withi n fifteen (15) calendar days after
receiving the Notice, the Major Investor may elect to purchase or obtain, at the
price and on the terms specified in the Notice, up to that portion of such
Shares that equals the proportion that the number of shares of common stock
issued and held, or issuable upon conversion of the Series A Preferred Stock
then held, by such Major Investor bears to the total number of shares of common
stock issued and held, or issuable upon conversion of all convertible or
exercisable securities then held, by all the Major Investors.
(c) If not all Shares that Investors are
entitled to obtain pursuant to this Section 2.3 (b) are elected to be obtained
as provided in Section 2.3(b), the Company may, during the one hundred twenty
(120) day period following the expiration of the period provided in Section
2.3(b) hereof, offer the remaining unsubscribed portion of such Shares to any
person or persons at a price not less than, and upon terms no more favorable to
the offeree than, those specified in the Notice. If the Company does not sell
such Shares or enter into an agreement for the sale of the Shares within such
period, or if such agreement is not consummated within sixty (60) days of the
execution thereof, the right provided hereunder shall be deemed to be revived
and such Shares shall not be offered unless first reoffered to the Major
Investors in accordance herewith.
(d) The right of participation set forth in
this Section 2.3 shall not apply to Shares issued or issuable: (i) upon
conversion of shares of Series A Preferred Stock; (ii) upon conversion of
Class B Common Stock into Class A Common Stock; (iii) to officers, directors or
employees of, or consultants to, the Company pursuant to stock option or stock
purchase plans or agreements on terms approved by the Board of Directors;
(iv) in connection with equipment financings or similar transactions, or in
connection with strategic investments or corporate partnering transactions, the
terms of which are approved by the Board of Directors of the Corporation; (v) as
a dividend or distribution on Series A Preferred Stock; (vi) under the terms of
the Convertible Note; (vii) for which adjustment of the Conversion Price (as
defined in the Company’s Statement of Rights and Preferences for the Series A
Preferred Stock (the “Statement of Rights and Preferences”)) is made pursuant to
the Statement of Rights and Preferences; (viii) in connection with a Qualified
IPO; (ix) pursuant to the acquisition of another business entity or business
segment of any such entity by the Company by merger, purchase of substantially
all the assets or other reorganization whereby the Company will own more than
fifty percent (50%) of the voting power of such business entity or business
segment of any such entity; (x) upon the exercise, conversion or exchange of any
security outstanding as of the date hereof or securities issued or issuable
pursuant to subsections (i) through (ix) above; or (xi) any right, option or
warrant to acquire any security convertible into the securities issued or
issuable pursuant to subsections (i) through (x) above.
The right of first offer set forth in this Section 2.3 may not be
assigned or transferred, except that (a) such right is assignable by each Holder
to any wholly owned subsidiary or parent of, or to any corporation or entity
that is, within the meaning of the Act, controlling, controlled by or under
common control with, any such Holder, and (b) such right is assignable between
and among any of the Holders.
2.4 Stock Vesting. All stock options and other stock
equivalents issued after the date of this Agreement to employees, directors,
consultants and other service providers shall be subject to vesting as
determined by the Board of Directors or a committee thereof composed of
non-employee directors.
2.5 Employee Non-Disclosure and Assignment of Inventions
Agreement. Except as provided in the Purchase Agreement, the Company and each
of its employees shall have entered into the Company’s standard form Employee
Agreement, in substantially the form provided to special counsel to the
Investors.
2.6 IRS Ruling. Before distributing any stock of the
Company to the shareholders of Microvision, Inc. (“Parent”), Parent will use its
reasonable best efforts to obtain a favorable ruling from the Internal Revenue
Service that the distribution qualifies for tax-free treatment under Section 355
of the Internal Revenue Code.
2.7 Termination of Covenants
(a) The covenant set forth in Section 2.1,
Section 2.2, Section 2.3 and Section 2.5 shall terminate as to each Holder and
be of no further force or effect (i) immediately prior to the consummation of a
Qualified IPO, or (ii) when the Company shall sell, convey, or otherwise dispose
of or encumber all or substantially all of its property or business or merge
into or consolidate with any other corporation (other than a wholly-owned
subsidiary corporation) or effect any other transaction or series of related
transactions in which more than fifty percent (50%) of the voting power of the
Company is disposed of, provided that this subsection (ii) shall not apply to a
merger effected exclusively for the purpose of changing the domicile of the
Company and which does not affect the percentage equity interests of
securityholders of the Company in and to the Company.
(b) The covenants set forth in Sections 2.1
and 2.2 shall terminate as to each Holder and be of no further force or effect
when the Company first becomes subject to the periodic reporting requirements of
Sections 13 or 15(d) of the Exchange Act, if this occurs earlier than the events
described in Section 2.7(a) above.
3. Miscellaneous.
3.1 Successors and Assign s. Except as otherwise provided
in this Agreement, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties (including transferees of any of the Series A Preferred Stock or
any Class A Common Stock issued upon conversion thereof). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
3.2 Amendments and Waivers . Any term of this Agreement may
be amended or waived only with the written consent of the Company and the
holders of a majority of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder or Holder of any Registrable Securities then outstanding, each
future holder or Holder of all such Registrable Securities, and the Company.
3.3 Notices. Unless otherwise provided, any notice required
or permitted by this Agreement shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally or by overnight courier or
sent by telegram or fax, or forty-eight (48) hours after being deposited in the
U.S. mail, as certified or registered mail, with postage prepaid, and addressed
to the party to be notified at such party’s address or fax number as set forth
below or on Exhibit A hereto or as subsequently modified by written notice.
3.4 Severability . If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith. In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision, then (a) such provision shall be excluded from this Agreement, (b)
the balance of the Agreement shall be interpreted as if such provision were so
excluded and (c) the balance of the Agreement shall be enforceable in accordance
with its terms.
3.5 Governing Law. This Agreement and all acts and
transactions pursuant hereto shall be governed, construed and interpreted in
accordance with the laws of the State of Washington, without giving effect to
principles of conflicts of laws.
3.6 Counterparts . This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.7 Titles and Subtitles . The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.8 Aggregation of Stock . All shares of the Preferred
Stock held or acquired by (i) affiliated entities or persons or (ii) persons or
entities under common investment management, shall be aggregated together for
the purpose of determining the availability of any rights as a Holder under this
Agreement.
3.9 Specific Enforcement . It is agreed and understood that
monetary damages would not adequately compensate an injured party for the breach
of this Agreement by any party, that this Agreement shall be specifically
enforceable, and that any breach or threatened breach of this Agreement shall be
the proper subject of a temporary or permanent injunction or restraining order.
Further, each party hereto waives any claim or defense that there is an adequate
remedy at law for such breach or threatened breach.
The parties have executed this Investors’ Rights Agreement as of
the date first above written.
COMPANY: INVESTORS: LUMERA CORPORATION By:
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By:
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Name:
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(print) Title:
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EXHIBIT A
INVESTORS
Name/Address/Fax No.
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Exhibit 10hh
AGREEMENT
THIS AGREEMENT is made and entered into this 26th day of October, 2000, by
and between BellSouth Corporation, a Georgia corporation ("Company"), and Ronald
M. Dykes ("Executive"):
Reasons for this Agreement. Company has identified Executive as an
individual with significant skills and experience critical to the business of
Company. In view of the significant and growing demand for executive talent, the
potential impact on Company's executives of the transformational changes
occurring within our industry and company, and the need to ensure continuity of
Company's senior executive team, Company desires to provide Executive through
this Agreement with certain incentives to remain in Company's employment. This
Agreement is also designed to provide additional motivation for meeting
Company's goals and objectives, to address potential long term employment
concerns of Executive, and to impose certain reasonable restrictions on
Executive's activities designed to protect Company's interests should
Executive's employment terminate.
Executive has been employed by Company and its Affiliated Companies since
1971 and, during his tenure, has served in a variety of senior capacities.
Executive assumed his current position as Chief Financial Officer in 1995.
Executive is responsible for all financial matters and investor relations for
Company and all Affiliated Companies and reports to Company's Chairman.
Executive acknowledges that Company and Affiliated Companies have disclosed
or made available Confidential Information to Executive which could be used by
Executive to Company's or Affiliated Companies' detriment. In addition, in
connection with his employment, Executive has developed important relationships
and contacts with employees valuable to Company and Affiliated Companies.
Executive further acknowledges that the covenant not to compete and other
restrictive covenants in this Agreement are fair and reasonable, that
enforcement of the provisions of this Agreement will not cause him undue
hardship, and that the provisions of this Agreement are reasonably necessary and
commensurate with the need to protect Company and Affiliated Companies and their
business interests and property from irreparable harm.
Agreement. In consideration of the mutual promises contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Executive and Company agree as follows:
1. Restricted Shares Award. In connection with execution of this Agreement,
Company shall grant to Executive an award of one hundred thousand (100,000)
restricted shares of Company's common stock (such award being referred to in
this Agreement as the "Restricted Shares Award"). The Restricted Shares Award
shall be granted pursuant to an agreement (the "Restricted Shares Award
Agreement") substantially identical to the BellSouth Corporation Restricted
Shares Award Agreement attached hereto as Exhibit "A" and incorporated by this
reference herein.
2. Minimum SERP Benefit. In determining the amount of benefits payable with
respect to Executive under SERP, upon attainment by Executive of the age of
fifty-eight (58) while still employed by Company, Executive shall be entitled to
benefits equal to the greater of:
(i)an aggregate annual benefit based on (A) sixty percent (60%) of "Included
Earnings" (as such term is defined in SERP), increased by two (2) percentage
points for each additional year of "Net Credited Service" (as such term is
defined in SERP) earned by Executive after the year in which his fifty-eighth
(58th) birthday occurs (such percentage not to exceed, however, in the aggregate
seventy percent (70%) of Included Earnings), instead of the formula described in
section 4.4(a)(i)(A) of SERP, and (B) no early retirement discount, instead of
the otherwise applicable early retirement discount described in section 4.4(c)
of SERP; and
(ii)the benefits provided to Executive under SERP without regard to this
Section 2.
Except as otherwise provided in this Section 2, all other terms and
conditions of SERP shall govern Executive's entitlement to benefits thereunder.
In the event SERP shall be amended or restated or redesigned, benefits payable
with respect to Executive under such amended, restated or redesigned plan shall
include a benefit enhancement designed to approximate as nearly as reasonably
possible the SERP benefit enhancement described in this Section 2.
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3. Termination Allowance. In the event Executive's employment is terminated
under circumstances described below in this Section 3, Company shall pay to
Executive a termination allowance. The termination allowance shall be an amount
equal to the sum of (i) two hundred percent (200%) of Executive's Base Salary in
effect on the date of Executive's termination of employment, plus (ii) two
hundred percent (200%) of the standard award amount applicable to Executive
under the BellSouth Short Term Incentive Award Plan ("STIAP") for the year in
which his date of termination occurs, less all applicable withholdings, payable
in a single lump sum payment. Payment of the termination allowance shall be made
as soon as practicable following Executive's termination of employment under
circumstances entitling him to such payment, and satisfaction of all conditions
described in this Agreement on Executive's entitlement to such payment.
For purposes of this Agreement, "Base Salary" shall refer to the gross
annual base salary payable to Executive including (i) the amounts of any
before-tax contributions made by Executive from such salary to the BellSouth
Retirement Savings Plan, or any other tax-qualified cash or deferred arrangement
sponsored by Company, and (ii) the amount of any other deferrals of such salary
under any nonqualified deferred compensation plan(s) maintained by Company.
Executive's employment shall be deemed to have been terminated under
circumstances described in this Section 3 only if all of the following
conditions are satisfied:
(A)Executive's employment is terminated either (1) by Company, other than for
Cause, or (2) by Executive for Good Reason; and
(B)Executive executes a release satisfying the terms of Section 4(b) of this
Agreement; and
(C)Executive executes an agreement regarding competition with Company and
Affiliated Companies satisfying the terms of Section 7(b) of this Agreement; and
(D)Executive is not transferred to or reemployed by an Affiliated Company.
4. Discharge and Waiver. (a) Executive fully releases and forever discharges
Company and Affiliated Companies, and any employee, officer, director,
representative, agent, successor or assign of Company and Affiliated Companies
(both in their personal and official capacities), and all persons acting by,
through and under or in concert with any of them, from any and all claims,
demands, causes of action, remedies, obligations, costs and expenses of whatever
nature, whether under the common law, state law, federal law (including but not
limited to the Age Discrimination in Employment Act of 1967) or otherwise,
through the date of this Agreement, including those arising from or in
connection with the terms and conditions of employment with Company (and
Affiliated Companies). This paragraph is not intended to and shall not affect
benefits to which Executive may be entitled under any pension, savings, health,
welfare, or other benefit plan in which Executive is a participant.
(b) Furthermore, Company's obligations under this Agreement upon termination
of Executive's employment, and Executive's entitlement to any such benefits, are
expressly conditioned upon execution by Executive, upon termination of his
employment, of a release agreement substantially in the form of the release
agreement attached to this Agreement as Exhibit "B," which is incorporated
herein by this reference.
5. Covenant Not to Sue. Executive covenants and agrees not to make or file
any claim, demand or cause of action or seek any remedy of whatever nature,
whether under the common law, state law, federal law (including but not limited
to the Age Discrimination in Employment Act of 1967) or otherwise, arising from
or in connection with the matters discharged and waived in Section 4, above.
6. Confidential Information. Executive agrees to protect Confidential
Information. Executive will not use, except in connection with work for Company
or Affiliated Companies, threaten to use, disclose or threaten to disclose, give
or threaten to give to others any Confidential Information. For purposes of this
Agreement, "Confidential Information" shall mean information, whether generated
internally or externally, relating to Company's business or to Affiliated
Companies' businesses which derives economic value, actual or potential, from
not being generally known to other Persons and is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy or
confidentiality, including, but not limited to, studies and analyses, technical
or nontechnical data, programs, patterns, compilations, devices, methods, models
(including cost and/or pricing models and operating models), techniques,
drawings, processes, employee compensation data, and financial data (including
marketing information and strategies and personnel data). For purposes of this
Agreement, Confidential Information does not include information which is not a
trade secret three (3) years after termination of Executive's employment
2
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with Company, but shall continue to include trade secrets as long as information
remains a trade secret under applicable law.
7. Employment with Competitors. (a) While employed by Company or an
Affiliated Company, and during the period of eighteen (18) months after the
termination of such employment, Executive agrees not to provide services (as
more fully described below) in competition with Company or any Affiliated
Company to any person or entity which provides products or services identical to
or similar to products and services provided by Company or Affiliated Companies
in the same market(s), whether as an employee, consultant, independent
contractor or otherwise, within the Territory.
For purposes of this Agreement, the term "Territory" shall mean the
territory in which Executive provides services to Company and Affiliated
Companies, consisting of those portions of Alabama, Florida, Georgia, Kentucky,
Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee, and those
additional markets listed on Exhibit "C" attached hereto and incorporated herein
by this reference, in which Company or Affiliated Companies are engaged in
business. Executive agrees that because of the widespread nature of Company's
business, breach of this Agreement by engaging in competitive activity anywhere
in this broad Territory would irreparably injure Company or Affiliated Companies
and that, therefore, a more limited geographic restriction is neither feasible
nor appropriate.
The services which Executive has provided to Company and Affiliated
Companies, and which Executive shall be prohibited from providing in competition
with Company or Affiliated Companies in accordance with the terms of this
Agreement shall be financial management, planning, administration, strategic
planning or other participation in or providing advice with respect to the
communications services business, including without limitation all forms of
wireline (including without limitation local exchange, exchange access and
intraLATA toll) telecommunications services, systems and products, all forms of
wireless (including without limitation cellular, personal communications
service, and mobile data) communications services, systems and products, all
forms of electronic commerce or communications including internet and other web
based applications, data transmission and networking, entertainment services,
systems and products, paging services, systems and products, and advertising and
publishing, to the extent engaged in by Company and Affiliated Companies on the
date of this Agreement.
Executive represents to Company that Executive's education, training and
experience are such that this covenant not to compete will not jeopardize or
significantly interfere with Executive's ability to secure other gainful
employment.
(b) After Executive's termination of employment, Company's obligation to
provide any of the benefits, entitlements or payments described in this
Agreement or in the Restricted Shares Award Agreement are expressly conditioned
upon execution by Executive of an agreement, in form and substance reasonably
acceptable to Company, and reflecting terms substantially identical to the terms
of Section 7(a) of this Agreement updated, however, to reflect, as of the date
of Executive's termination of employment, (i) the products and services provided
by Company and Affiliated Companies, (ii) the territory in which such products
and services are provided by Company and Affiliated Companies, and (iii) the
nature of the services provided, and activities engaged in, by Executive, on
behalf of Company and Affiliated Companies. Upon execution of such agreement,
the provisions of Section 7(a) of this Agreement shall thereafter be void.
(c) In the event that Executive either (i) fails or refuses to execute an
agreement satisfying the terms of Section 7(b) of this Agreement following his
termination of employment, or (ii) fails to comply with the terms of
Section 7(a), the agreement described in Section 7(b), or Section 8 of this
Agreement, then, in addition to all other rights and remedies available to
Company and Affiliated Companies under this Agreement or at law or in equity:
(A)all amounts otherwise payable by Company or an Affiliated Company to (or on
behalf of) Executive pursuant to the terms of this Agreement for periods
subsequent to the date of termination of employment, with regard to clause (i)
above, or of such failure, with regard to clause (ii) above, as the case may be,
shall be forfeited and Company and Affiliated Companies shall cease to be under
any further obligation to Executive with respect to the compensation and
benefits described in this Agreement;
(B)Executive shall refund to Company promptly any and all amounts previously
paid to or on behalf of Executive pursuant to the terms of this Agreement for
periods subsequent to the occurrence of any event described in clause (ii) above
of this Section 7(c); and
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(C)Executive shall promptly return to Company all shares of Company's common
stock delivered to Executive pursuant to the Restricted Shares Award plus, if
any of such shares shall have been previously disposed of, a cash amount equal
to the proceeds from such disposition (or the fair market value of such shares
on the date of such disposition, if disposed of for less than fair market
value).
8. Hiring or Solicitation of Company Employees. While employed by Company or
an Affiliated Company, and during the period of eighteen (18) months after the
termination of such employment, Executive will not hire or induce or attempt to
induce or solicit to leave employment with Company or Affiliated Companies, for
himself or on behalf of any other Person, anyone who is or was, during
Executive's employment with Company, an employee of Company or Affiliated
Companies. However, Executive may offer employment on behalf of himself or on
behalf of any company or entity to any such employee who terminated his or her
employment without any inducement or attempted inducement or solicitation by
Executive.
9. Interpretation; Severability of Invalid Provisions. Executive
acknowledges and agrees that the limitations described in this Agreement,
including specifically the limitations upon his activities, are reasonable in
scope, are necessary for the protection of Company's and Affiliated Companies'
business, and form an essential part of the consideration for which this
Agreement has been entered into. It is the intention of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible under
applicable laws and public policies. Nonetheless, the rights and restrictions
contained in this Agreement may be exercised and shall be applicable and binding
only to the extent they do not violate any applicable laws and are intended to
be limited to the extent necessary so that they will not render this Agreement
illegal, invalid or unenforceable. If any provision of this Agreement shall be
held to be illegal, invalid or unenforceable by a court of competent
jurisdiction, the remaining provisions shall remain in full force and effect.
The provisions of this Agreement do not in any way limit or abridge Company's or
Affiliated Companies' rights under the laws of unfair competition, trade secret,
copyright, patent, trademark or any other applicable law(s), all of which are in
addition to and cumulative of Company's or Affiliated Companies' rights under
this Agreement. Executive agrees that the existence of any claim by Executive
against Company or any Affiliated Company, whether predicated on this Agreement
or otherwise, shall not constitute a defense to enforcement by Company or any
Affiliated Company of any or all of such provisions or covenants.
10. Relief. The parties acknowledge that a breach or threatened breach by
Executive of any of the terms of this Agreement would result in material and
irreparable damage and injury to Company or Affiliated Companies, and that it
would be difficult or impossible to establish the full monetary value of such
damage. Therefore, Company and Affiliated Companies shall be entitled to
injunctive relief in the event of Executive's breach or threatened breach of any
of the terms contained in this Agreement. In the event of any breach of this
Agreement by Executive, if Company or any Affiliated Company should employ
attorneys or incur other expenses for the enforcement of any obligation or
agreement of Executive contained herein, Executive agrees that, on demand and to
the extent permitted by law, Executive shall reimburse Company or the Affiliated
Company for its reasonable attorneys' fees and such other reasonable expenses so
incurred.
11. Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement, or the breach, termination or invalidity hereof
(collectively, a "Claim") shall be settled by arbitration pursuant to the rules
of the American Arbitration Association. Any such arbitration shall be conducted
by one arbitrator, with experience in the matters covered by this Agreement,
mutually acceptable to the parties. If the parties are unable to agree on the
arbitrator within thirty (30) days of one party giving the other party written
notice of intent to arbitrate a Claim, the American Arbitration Association
shall appoint an arbitrator with such qualifications to conduct such
arbitration. The decision of the arbitrator in any such arbitration shall be
conclusive and binding on the parties. Any such arbitration shall be conducted
in Atlanta, Georgia.
12. Agreement Binding. This Agreement shall be binding upon and inure to the
benefit of Company and Affiliated Companies, and their successors, assignees,
and designees, and Executive and Executive's heirs, executors, administrators,
personal representatives and assigns.
13. Entire Agreement; Previous Agreement. This Agreement contains the entire
agreement between the parties and no statements, promises or inducements made by
any party hereto, or agent of either party, which are not contained in this
Agreement shall be valid or binding; provided, however, that the matters dealt
with herein supersede previous written agreements between the parties on the
same subject matters only to the extent such previous provisions are
inconsistent with this Agreement and other provisions in written agreements
between the
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parties not inconsistent with this Agreement are not affected. This Agreement
may not be enlarged, modified or altered except in writing signed by the
parties.
14. Nonwaiver. The failure of Company or any Affiliated Companies to insist
upon strict performance of the terms of this Agreement, or to exercise any
option herein, shall not be construed as a waiver or a relinquishment for the
future of such term or option, but rather the same shall continue in full force
and effect.
15. Notices. All notices, requests, demands and other communications
required or permitted by this Agreement or by any statute relating to this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered or mailed, first-class, certified mail, postage prepaid, addressed as
follows:
To Company: Charles R. Morgan
Executive Vice President and General Counsel
BellSouth Corporation
2002 Campanile
1155 Peachtree Street, N.E.
Atlanta, GA 30309
To Executive: Ronald M. Dykes
110 Green Fall Pointe
Atlanta, GA 30350
(or such other address as shall be provided by Executive to Company from time to
time)
16. Pooling of Interests Accounting Treatment. Notwithstanding anything to
the contrary in this Agreement, if the application of any provision(s) of this
Agreement, including without limitation the Restricted Shares Award described in
Section 1, would preclude the use of pooling of interests accounting treatment
with respect to a transaction for which such treatment otherwise is available
and to be adopted by Company, this Agreement shall be modified as it applies to
such transaction, to the minimum extent necessary to prevent such impact,
including if necessary the invalidation of such provisions (or the entire
Agreement, as the case may be). If the pooling of interests accounting rules
require modification or invalidation of one or more provisions of this Agreement
as it applies to such transaction, the adverse impact on the Executive shall, to
the extent reasonably possible, be proportionate to the adverse impact on other
similarly situated employees of Company. The Board of Directors of Company
shall, in its sole and absolute discretion, make all determinations necessary
under this Section; provided, that determinations regarding the application of
the pooling of interests accounting rules for these purposes shall be made by
Company, with the concurrence of Company's independent auditors at the time such
determination is to be made.
17. Nonduplication. Notwithstanding any other provisions of this Agreement,
if Executive becomes entitled to benefits under Article III of the CIC
Agreement, the severance benefits described in Article III(a) of the CIC
Agreement shall be in lieu of any termination allowance to which Executive is
otherwise entitled under Section 3 of this Agreement. Except as otherwise
specifically provided in this Section 17, both this Agreement and the CIC
Agreement shall continue in full force and effect, and Article X(e) of the CIC
Agreement shall be interpreted consistently herewith.
18. Nondisclosure. Executive shall not disclose the existence or terms of
this Agreement to any third party (excluding Executive's spouse and children),
except to receive advice of legal counsel, financial advisors or tax advisors
(who shall also be required to maintain its confidentiality) or to comply with
any statutory or common law duty; provided that these restrictions on disclosure
shall not apply to the extent that the existence of this Agreement are disclosed
by Company or any Affiliated Company as part of its periodic public filings and
disclosures or otherwise.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
20. Governing Law. This Agreement shall be construed under and governed by
the laws of the State of Georgia. Executive has been advised to consult with an
attorney, acknowledges having had ample opportunity to do so and fully
understands the binding effect of this Agreement. In this regard, Executive
acknowledges that a
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copy of this Agreement was provided to Executive for review and consideration
for up to twenty-two (22) days. Further, Executive understands that this
Agreement may be revoked by Executive within seven (7) days from the date of
execution of this Agreement.
21. Definitions. For purposes of this Agreement, the following terms shall
have the meaning specified below:
(a) "Affiliated Companies"—shall mean Company and each entity in respect of
which Company owns directly or indirectly (i) with respect to a corporation,
stock that represents at least ten (10%) percent of the total combined voting
power of all classes of stock in the corporation in connection with the election
of directors of such corporation, or (ii) in the case of a joint venture,
partnership, limited liability company or similar entity, and interest of at
least ten (10%) percent in the capital or profits of such entity.
(b)"Base Salary"—shall have the meaning ascribed to such term in Section 3 of
this Agreement.
(c) "Cause"—shall mean Executive's (i) engaging in an act (or acts) of
willful dishonesty involving Company or Affiliated Companies or their
business(es) that is demonstrably injurious to Company or Affiliated Companies;
(ii) refusal or failure to follow reasonable instructions of Company's Chief
Executive Officer or Board of Directors; or (iii) conviction of a crime
classified as a felony.
(d) "CIC Agreement"—the Executive Severance Agreement entered into by and
between Executive and Company on October 17, 1996, providing certain benefits in
the event of a change in corporate control of Company, as amended from time to
time.
(e) "Confidential Information"—shall have the meaning ascribed to such term
in Section 6 of this Agreement.
(f) "Good Reason"—shall mean, without Executive's express written consent a
reduction in Executive's Base Salary, or his compensation band, as in effect
immediately prior to such reduction, or the failure to pay a bonus award to
which Executive is otherwise entitled under any of the short term or long term
incentive plans in which Executive participates (or any successor incentive
compensation plans) at the time such awards are usually paid.
(g) "Person"—shall mean any individual, corporation, bank, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, governmental or other legal or business entity.
(h) "Restricted Shares Award"—shall have the meaning ascribed to such term
in Section 1 of this Agreement.
(i) "Restricted Shares Award Agreement"—shall have the meaning ascribed to
such term in Section 1 of this Agreement.
(j) "SERP"—the BellSouth Corporation Supplemental Executive Retirement Plan,
as amended from time to time.
(k) "Stock Plan"—the BellSouth Corporation Stock Plan and related award
agreements, as amended from time to time.
(l) "Territory"—shall have the meaning ascribed to such term in Section 7 of
this Agreement.
IN WITNESS WHEREOF, Company has caused this Agreement to be executed by its
duly authorized representative, and Executive has executed this Agreement, as of
the date written above.
EXECUTIVE: BELLSOUTH CORPORATION:
/s/ RONALD M. DYKES
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RONALD M. DYKES
By: /s/ RICHARD D. SIBBERNSEN
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Title: Vice President—Human Resources
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AGREEMENT
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EXHIBIT 10.2
SEVERANCE/CHANGE OF CONTROL AGREEMENT
Patrick M. Fahey
This Agreement dated November 21, 2000, by and between PACIFIC NORTHWEST
BANCORP and PACIFIC NORTHWEST BANK (hereinafter referred to jointly as the
"Company") and PATRICK M. FAHEY (the "Executive"):
WHEREAS, the Executive is presently employed by the Company in the capacity
of President and Chief Executive Officer; and
WHEREAS, the Company wishes to assure itself of continuity of management in
the event of a Change of Control of the Company, and
WHEREAS, the Executive wishes to continue to serve the Company but desires
assurance that he will be protected in the event of termination of his
employment without cause or a Change of Control;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Severance Benefits.
(a) If the Executive's employment is involuntarily terminated (other than
discharge for cause as defined below), the Executive shall be entitled to
receive, in a lump sum payable on the first day of the first calendar month
following discontinuance of his employment due to involuntary termination, a
cash payment in an amount equal to the Executive's W-2 income before salary
deferrals over the twelve (12) months preceding the month of termination,
excluding any one-time payment made to the Executive relating to the termination
of his employment under his Employment Contract with Pacific Northwest Bank
dated January 15, 1998.
(b) If the Executive's employment is involuntarily terminated (other than
discharge for cause as defined below) before a Change of Control but after the
Board of Directors has authorized proceeding with negotiations which result in a
Change of Control, the effective date of which is on or after October 17, 2001,
the Executive shall be entitled to the severance benefits described in Paragraph
1(c), said benefits to be paid after the Change of Control actually occurs, less
any amount paid under Paragraph 1(a) hereof.
(c) If there is a Change of Control of the Company on or after October 17,
2001, and the Executive leaves the employment of the Company, whether
voluntarily or involuntarily (other than discharge for cause as defined below),
within twelve (12) months after such Change of Control, the Executive shall
receive, in a lump sum payable on the first day of the first calendar month
following discontinuance of his employment due to a Change of Control, a cash
payment in an amount equal to two times the Executive's W-2 income before salary
deferrals over the last twelve (12) months of his employment with the Company
preceding the month in which the Change of Control occurs, excluding any
one-time payment made to the Executive relating to the termination of his
employment under his Employment Contract with Pacific Northwest Bank dated
January 15, 1998. Payment under this Paragraph 1(c) shall be reduced by any
amount paid the Executive under Paragraph 1(a), above.
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2. Consideration.
(a) The amounts paid to the Executive hereunder shall be considered
severance pay in consideration of the past services he has rendered to the
Company and in consideration of his continued service from the date hereof to
his entitlement to those payments.
(b) Once entitled to receive severance benefits under Paragraph (1) of this
Agreement, the Executive shall have no duty to mitigate the obligation of the
Company to make severance payments due by seeking other employment. Should the
Executive actually receive compensation from any such other employment, the
payments called for hereunder shall not be reduced or offset by any such future
earnings.
3. Definition of "Change of Control". A "Change of Control" of the Company
shall be deemed to have occurred as of the first day any one or more of the
following conditions is satisfied:
(a) Any individual, corporation (other than the Company), partnership,
trust, association, pool, syndicate or any other entity or any group of persons
acting in concert becomes the beneficial owner, as that concept is defined in
Rule 13d-3 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, of securities of the Company possessing fifty
percent (50%) or more of the voting power for the election of directors of the
Company;
(b) There shall be consummated any consolidation, merger, or other business
combination involving the Company or the securities of the Company in which
holders of voting securities of the Company immediately prior to such
consummation own, as a group, immediately after such consummation, voting
securities of the Company (or, if the Company does not survive such transaction,
voting securities of the corporation surviving such transaction) having less
than sixty percent (60%) of the total voting power in an election of directors
of the Company (or such other surviving corporation);
(c) During any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the directors of the Company cease for any
reason to constitute at least a majority thereof unless the election, or the
nomination for election by the Company's shareholders, of each new director of
the Company was approved by a vote of at least two-thirds (2/3) of the directors
of the Company then still in office who were directors of the Company at the
beginning of any such period; or
(d) There shall be consummated any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company (on a consolidated basis) to a
party which is not controlled by or under common control with the Company.
4. Discharge for Cause. For purposes of this Agreement, the termination of
the Executive's employment shall be deemed to have been made for cause only upon
termination as a result of:
(a) An act of dishonesty on the part of the Executive constituting a felony
and resulting or intended to result directly or indirectly in gain or personal
enrichment of the Executive at the expense of the Company;
(b) A deliberate act of proven fraud having a material adverse impact on the
business or consolidated financial condition or results of operations of the
Company and its subsidiaries; or
(c) The deliberate and continuing failure to comply with applicable laws and
regulations having a material adverse impact on the business.
5. Termination of the Agreement. This Agreement shall terminate if the
Executive shall voluntarily resign, retire, become permanently and totally
disabled, or die; provided, however, if the
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Executive becomes permanently and totally disabled or dies after the Board of
Directors has authorized proceeding with negotiations which result in a Change
of Control or within twelve (12) months after a Change of Control, if the
Executive is then employed by the Company, the Executive or his personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees, as the case may be, shall be entitled to
receive the Change of Control payment under Paragraph 1(c) hereof.
6. Effect on Other Benefits. The arrangements called for by this Agreement
are not intended to have any effect on the Executive's participation in any
other benefits available to executive personnel or to preclude other
compensation or additional benefits as may be authorized by the Board of
Directors from time to time.
7. Limitations on Payments Related to Severance Benefits. The following
apply, notwithstanding any other provision of this Agreement:
(a) The severance benefits payable under Paragraph 1 shall not exceed an
amount that would cause it to be a "parachute payment" within the meaning of
Section 280G(b)(2)(A) of the Internal Revenue Code; and
(b) The Company shall not be obligated to make, and the Executive shall not
be entitled to, any payment under this Agreement if such payment would
constitute a "golden parachute" payment prohibited by 12 U.S.C. 1828(k) or 12
CFR §359.0 et seq. The Company shall have no liability to the Executive under or
in relation to this Agreement should any payment be deemed a prohibited "golden
parachute" payment.
8. Confidentiality and Noncompetition.
(a) Confidentiality. From the date of this Agreement the Executive will
not, directly or indirectly, disclose to any third party not affiliated with the
Company, Confidential Information of the Company and its subsidiaries and
affiliates, except as to any of the Confidential Information which shall be or
become in the public domain or shall be required to be disclosed by applicable
laws or regulations, any judicial or administrative authority or stock exchange
rule or regulation. For the purposes of this Paragraph 8(a), "Confidential
Information" shall mean: (i) internal policies and procedures, (ii) financial
information, (iii) marketing strategies, (iv) customer information, and (v)
other non-public information relating to the Company's business or financial
condition.
(b) Noncompetition. During the one (1) year period following a Change of
Control or a termination of Executive's employment resulting in Executive's
right to receive the severance benefit under paragraph 1(a) hereof ("Restricted
Period"), the Executive shall not engage in Competition with the Company. For
purposes of this Paragraph 8(b), "Competition" shall mean the Executive engaging
in or otherwise being a director, officer, employee, principal, agent,
stockholders, member, owner or partner of, or permitting his name to be used in
connection with the activities of any business or organization in the financial
services industry in direct competition with the Company, but shall not preclude
the Executive becoming the registered or beneficial owner of up to two percent
(2%) of any class of capital stock of any such corporation which is registered
under the Securities Exchange Act of 1934, as amended, provided the Executive
does not actively participate in the business of such corporation until
expiration of the Restricted Period.
9. Assignment.
(a) By the Company. This Agreement may and shall be assigned or
transferred to, and shall be binding upon and inure to the benefit of, any
successor of the Company, and any such successor shall be deemed substituted for
all purposes of the "Company" under the terms of this
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Agreement. As used in this Agreement, the term "successor" shall mean any
person, firm, corporation or business entity that at any time causes a Change of
Control as described in Paragraph 3. Notwithstanding such assignment, the
Company shall remain, with such successor, jointly and severally liable for all
its obligations hereunder.
Except as herein provided, the Company may not otherwise assign this
Agreement.
(b) By the Executive. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors and
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts payable to the Executive hereunder remain
outstanding, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's devisees,
legatee or other designee, or, in the absence of such designee, to the
Executive's estate. This Agreement is not otherwise assignable by the Executive.
10. Jurisdiction/Venue/Mandatory Arbitration. Any legal action brought to
resolve disputes arising out of this Agreement, or any amendments thereto, shall
be commenced in King County Superior Court in the state of Washington and shall
be resolved in accordance with the Superior Court Mandatory Arbitration Rules
and the King County Local Rules for Mandatory Arbitration, if any, with the
parties agreeing to waive the jurisdictional limits. The decision of the
arbitrator shall be binding on the parties, and the parties waive the right of
de novo appeal from such decision.
It is agreed that the arbitrator shall award to the prevailing or
substantially prevailing party all fees incurred by such party with regard to
such arbitration, including reasonable legal, accounting, and expert witness
fees. If the arbitrator determines that there is no prevailing or substantially
prevailing party, the reasonable legal, accounting, and expert witnesses fees
shall be the responsibility of each party.
11. Miscellaneous.
(a) Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
(b) Entire Agreement. This Agreement supersedes any prior agreements or
understandings, oral or written, between the Executive and the Company, with
respect to the subject matter hereof and constitutes the entire agreement of the
parties with respect thereto.
(c) Modification. This Agreement shall not be varied, altered, modified,
canceled, changed or in any way amended except by mutual agreement of the
parties in a written instrument executed by the parties hereto or their legal
representatives.
(d) Severability. In the event any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provision of this Agreement shall be unaffected thereby and shall remain in full
force and effect.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
(f) Tax Withholding. The Company may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
(g) Beneficiaries. The Executive may designate one or more persons or
entities as the primary and/or contingent beneficiaries of any amounts to be
received under this Agreement. Such
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designation must be in the form of a signed writing acceptable to the Board or
the Board's designee. The Executive may make or change such designation at any
time.
(h) Governing Law. To the extent not preempted by federal law, the
provisions of this Agreement shall be construed and enforced in accordance with
the laws of the state of Washington.
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement, as of the day and year first above written.
PACIFIC NORTHWEST BANCORP
By:
/s/ STEPHEN M. WALDEN
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/s/ PATRICK M. FAHEY
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PATRICK M. FAHEY
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SEVERANCE/CHANGE OF CONTROL AGREEMENT Patrick M. Fahey
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AGREEMENT BETWEEN OCP AND MPC
DATED AUGUST 15, 1991
A G R E E M E N T
This Agreement, made and entered into as of its effective date by and,
between:
OFFICE CHERIFIEN DES PHOSPHATES (OCP)
Angle Route d'El Jadida et
Boulevard de la Grande Ceinture
CASABLANCA MOROCCO
on the one part,
and:
MISSISSIPPI PHOSPHATES CORPORATION (MPC)
P.O. Box 848
Pascagoula, MISSISSIPPI U.S.A. 39568-0848
on the other part,
W I T N E S S E T H
WHEREAS, MPC contemplates the resumption of the production of phosphatic
fertilizers at MPC's manufacturing facility located at Pascagoula, Mississippi,
U.S.A. (the "Pascagoula Plant"); and
WHEREAS, MPC desires to purchase from OCP and OCP, desires to sell to MPC, all
of MPC's requirements of phosphate rock at the Pascagoula Plant, which
requirements are estimated to be approximately one million (1,000,000) metric
tons per year upon resuming full production and which are projected to be
approximately one million four hundred thousand (1,400,000) metric tons per year
if certain expansions of the Pascagoula Plant are completed.
NOW, THEREFORE, in consideration of these premises and the mutual promises set
forth herein, OCP and MPC hereby agree as follows:
ARTICLE I
The "Effective Date" of this agreement shall be september 15, 1991 ("Effective
Date"), if, as of September 15, 1991, Phosphate Industries, Inc. ("PII") has not
purchased all of the authorized, issued and outstanding shares of MPC as
contemplated by that certain Option Agreement dated May 31, 1991, as amended,
between PII and Mississippi Chemical Corporation ("MCC"). The term of this
Agreement shall commence on the Effective Date and shall continue until June 30,
2001.
For purposes of this Agreement, Contract Year shall mean the period commencing
on the Effective Date and ending on the next following June 30 and all
succeeding one (1) year periods during the term hereof that begin on a July 1
and end on the next June 30.
ARTICLE II
OCP hereby agrees to sell and deliver to MPC, and MPC hereby agrees to purchase
and accept from OCP, all of MPC's requirements of phosphate rock for MPC's use
at the Pascagoula Plant.
The phosphate rock to be sold and delivered to MPC shall be dried Khouribga
68/69 BPL grade. The parties contemplate that from time to time it may be
desirable to change the grade of rock supplied hereunder. It is clearly
understood that parties agreed to switch from dried phosphate rock to wet rock
as soon as practicaly feasable by both parties. Such changes shall be discussed
by the parties and shall be effected upon mutual agreement.
ARTICLE III
Within thirty (30) days after the Effective Date of this Agreement and within
ten (10) days following the end of the sixth week of each subsequent Contract
Year, the parties will execute a Sale Contract Addendum which shall contain the
following:
a. the Base Price for the Contract Year, dermined in accordance with
Article IV hereof;
b. the billing and payment terms (if different from those set forth
in Article VI hereof or in
the General Conditions Governing FOB Sale) applicable for the
Contract Year;
c. in the event of any change, the grade and quality specifications
of the phosphate rock to
be sold during the Contract Year and any price adjustment
associated with any change in
the grade or quality of phosphate rock supplied; and
d. the estimated requirements of phosphate rock for the Contract
Year.
The terms and conditions of this transaction which are not contained in this
Agreement or in any Sale Contract Addendum for any Contract Year are
incorporated into the following appendices to this Agreement:
Appendix 1 - Indicative Chemical and
Screen Analysis of
Phosphate Rock
Appendix 2 - General Conditions
Governing FOB Sale.
In the event of any conflict between this Agreement and/or any Sale Contract
Addendum and the General Conditions Governing FOB Sale (Appendix 2), this
Agreement and/or the Sale Contract Addendum shall control.
ARTICLE IV
For each Contract Year, the purchase price (expressed in U.S. Dollars) per
metric ton of phosphate rock delivered FOB vessel, Casablanca or Jorf Lasfar
shall be determined in accordance with the following formula:
Purchase Price = Base Price + Additional Price
As used in the above formula:
"Purchase Price" shall mean the total price per metric ton of phosphate rock for
the Contract Year, which price shall in all cases be equal to or greater than
the Base Price.
"Base Price" shall be (confidential portion has been deleted and filed
separately with the Securities and Exchange Commission). In the event the
above-referenced (confidential portion has been deleted and filed separately
with the Securities and Exchange Commission) the Base Price shall be
(confidential portion has been deleted and filed separately with the Securities
and Exchange Commission).
"Additional Price" shall mean an additional price for phosphate rock determined
as of the end of each Contract Year by (confidential portion has been deleted
and filed separately with the Securities and Exchange Commission).
For the purpose of determining the Additional Price, (confidential portion has
been deleted and filed separately with the Securities and Exchange Commission)
as of the end of each Contract Year, shall be an amount consisting of the
excess, if any, of (i) the sum of any (confidential portion has been deleted and
filed separately with the Securities and Exchange Commission) (calculated in
accordance with the formula below) realized for such Contract Year and all prior
Contract Years over (ii) the sum of any (confidential portion has been deleted
and filed separately with the Securities and Exchange Commission) (calculated in
accordance with the formula below) realized for such Contract Year and all prior
Contract Years:
(Confidential portion has been deleted and filed separately with the Securities
and Exchange Commission).
For purposes hereof:
(Confidential portion has been deleted and filed separately with the Securities
and Exchange Commission) shall, with respect to each Contract Year, mean
(confidential portion has been deleted and filed separately with the Securities
and Exchange Commission) shall be reflected in the determination of
(confidential portion has been deleted and filed separately with the Securities
and Exchange Commission). The determination of (confidential portion has been
deleted and filed separately with the Securities and Exchange Commission) shall
be made in conformity with Generally Accepted Accounting Principles in the
U.S.A.
(Confidential portion has been deleted and filed separately with the Securities
and Exchange Commission) shall, with respect to each Contract Year, mean the
(confidential portion has been deleted and filed separately with the Securities
and Exchange Commission) during such Contract Year. In the determination of the
(confidential portion has been deleted and filed separately with the Securities
and Exchange Commission), the price of phosphate rock shall be the (confidential
portion has been deleted and filed separately with the Securities and Exchange
Commission). Otherwise, the determination of (confidential portion has been
deleted and filed separately with the Securities and Exchange Commission) shall
be made in conformity with Generally Accepted Accounting Principles in the
U.S.A.
"Sales, General and Administrative Expense" shall, with respect to each Contract
Year, mean all selling expense and all general and administrative expense
(including net interest expense) for such Contract Year. Expenses shall include
an annual payment of Two Million and 00/100 Dollars ($2,000,000.00) to MCC for
certain services to be provided by MCC to MPC Sales, General and Administrative
Expense shall be determined in conformity with Generally Accepted Accounting
Principles in the U.S.A.
Within sixty (60) days following the end of each Contract Year, MPC shall
furnish to OCP its calculation of the Purchase Price of phosphate rock delivered
by OCP during the said Contract Year. MPC shall simultaneously provide OCP with
the written opinion of certified public accounting firm, stating that MPC's
calculation of (confidential portion has been deleted and filed separately with
the Securities and Exchange Commission) has been fairly calculated in accordance
with the terms of this Article IV and stating that it has found no
irregularities such as would constitute a material weakness in MPC's internal
control structure or would constitute fraud. This opinion shall be provided by a
certified public accounting firm mutually acceptable to both parties.
ARTICLE V
This Agreement shall not be assignable by MPC without the prior written consent
of OCP.
ARTICLE VI
Paragraph 6, Invoicing and Payment, of the General Conditions Governing FOB Sale
shall, to the extent inconsistent with this Article VI, be superseded by this
Article VI.
OCP shall invoice MPC for each shipment as of the date of the bill of lading.
Such invoice shall be priced at the Base Price (determined in accordance with
Article IV hereof) of phosphate rock for the then Contract Year. Invoices issued
prior to the determination of the Base Price for the Contract Year shall be
tentatively priced at the Base Price for the immediately preceding Contract Year
and shall be subject to adjustment when the Base Price for the current Contract
Year is determined.
During the first twelve (12) months following the initial shipment of phosphate
rock hereunder, OCP's invoices shall be due and payable (without interest)
within sixty (60) days from the date of bill of lading. Thereafter, OCP's
invoices shall be due and payable (without interest) within thirty (30) days
from the date of bill of lading. Payment of OCP's invoices shall be made in U.S.
Dollars by wire transfer of immediately available funds to such bank account of
OCP as OCP shall designate.
All payments of the Additional Price of phosphate rock for a Contract Year shall
be made within ten (10) days following the determination of the Additional Price
in accordance with Article IV hereof. All payments (both base price and
additional price) shall be guaranteed by Mississippi Chemical Corporation.
ARTICLE VII
By entering into this Agreement, MPC and OCP evidence their mutual commitment to
long-term cooperation regarding the use of phosphate rock supply by OCP in the
Pascagoula Plant. This Agreement evidences the desire and commitment of the
parties hereto to take all reasonable steps required to establish the Pascagoula
Plant as a viable, competitive operation. (Confidential portion has been deleted
and filed separately with the Securities and Exchange Commission).
ARTICLE VIII
(Confidential portion has been deleted and filed separately with the Securities
and Exchange Commission). MPC and OCP agree to meet not less than twice annually
to discuss MPC's overall management operations.
ARTICLE IX
In the event that MPC sells to a purchaser all or substantially all of the
assets of the Pascagoula Plant, OCP shall be entitled to receive fifty percent
(50%) of the excess of (i) the purchase price payable by the purchaser of all or
substantially all of the assets of the Pascagoula Plant over (ii) the then
current book value of the assets to be purchased.
In the event that (confidential portion has been deleted and filed separately
with the Securities and Exchange Commission).
In both cases, (confidential portion has been deleted and filed separately with
the Securities and Exchange Commission) shall apply to its full extent.
ARTICLE X
If MPC during the term of this Agreement voluntarily petitions for relief under,
or otherwise seeks the benefit of, any bankruptcy, reorganization, or insolvency
law, at any time thereafter, OCP may, at its option, cancel this Agreement
without indemnity.
ARTICLE XI
This Agreement and all ancillary documents being based on good faith, the
parties concerned expressly declare their willingness to amicably resolve any
disputes which may arise between them from the interpretation or implementation
hereof.
Any dispute which cannot be amicably resolved arising from this Agreement, any
Sale Contract Addendum or the General Conditions Governing FOB Sale shall be
finally settled under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce by three arbitrators appointed in accordance
with the said rules. The Arbitration Tribunal shall sit in Paris, France. This
Agreement, any Sale Contract Addendum and the General Conditions Governing FOB
Sale shall be governed by French law. The foregoing shall supersede the first
paragraph of Article 12, Arbitration, of the General Conditions Governing FOB
Sale.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
duplicate originals as of the 15th day of August, 1991.
MISSISSIPPI PHOSPHATES CORPORATION OFFICE CHERIFIEN
DES PHOSPHATES
By: /s/ Tom C.
Parry
By: /s/ Mohamed Fettah
Tom C. Parry,
President
Mohamed Fettah, General Manager
APPENDIX 1
INDICATIVE CHEMICAL & SCREEN ANALYSIS
OF PHOSPHATE ROCK
CHEMICAL ANALYSIS
- P2O5....................................................
31.30
- CO2......................................................
7.00
- SO3......................................................
1.55
- SIO2.....................................................
2.54
- CAO.....................................................
51.17
- MGO.....................................................
0.40
- F2O3.....................................................
0.28
- AL2O3..................................................
0.45
- NA2O...................................................
0.75
- K2O......................................................
0.06
- F...........................................................
3.60
- CL.........................................................
0.03
- C.ORG...................................................
0.17
APPENDIX 1
INDICATIVE CHEMICAL & SCREEN ANALYSIS
OF PHOSPHATE ROCK
SCREEN ANALYSIS
>
2.000........................................................
2.0
>
1.000........................................................
4.7
>
800........................................................
5.4
>
630........................................................
7.0
>
500........................................................
8.8
>
400........................................................
11.2
>
315........................................................
19.3
>
200........................................................
52.4
>
160........................................................
72.3
>
80........................................................
94.5
>
50........................................................
97.2
APPENDIX 2
GENERAL CONDITIONS GOVERNING FOB SALE
PHOSPHATE ROCK
GENERAL CONDITIONS GOVERNING FOB SALE
1. ORIGIN OF PRODUCT
Phosphate rock supplied by the Seller shall be natural phosphate of lime of
Moroccan origin.
2. DELIVERIES - CHARTERING
A/ - Deliveries shall be made in bulk on board vessels chartered by the Buyer
and shall be spread as evenly as possible over all the duration of the sale
contract.
Phosphate rock of other origins shall not be loaded on vessels thus chartered
without prior authorization of the Seller.
B/ - Prior to the chartering of each vessel, the Buyer shall secure the
agreement of the Seller on the specifications of the vessel as well as on the
quality and quantity of phosphate rock to be loaded and on laydays.
The Seller shall then indicate the amount of the deposit for disbursements at
the loading port to be made by the Shipowner.
If the product to be loaded is available in two ports, it shall be the option of
the Seller to load in either of these ports. Such option shall however be
announced by the Seller at the latest when he receives the seventy two (72)
hours notice provided for in the "Chartering Conditions on Shipment" annexed
hereto.
With the Seller's agreement, other lots of the same grade to be shipped to other
Receivers may be loaded on board the vessel chartered by the Buyer. In such
case, if the various lots are not stowed in separate holds, they will be
invoiced to each Receiver on the basis of the corresponding individual bill of
lading, the Seller not being involved in the distribution of the cargo at the
unloading port.
C/ - Vessels for transportation of phosphate rock shall be chartered under the
conditions annexed hereto (Chartering Conditions on Shipment).
In case the Charter Party signed by the Buyer does not, for whatever reason,
include such conditions or the ship's Master refuses to abide by them, the
Seller shall debit the Buyer with any ensuing difference.
D/ - Prior to arrival of the vessel at the loading port, the Shipowner shall
credit the Seller's account, at a bank to be indicted by the latter, with a
sufficient deposit in US Dollars to cover disbursments at the loading port,
including possible despatch-money.
Should such a deposit not be made in due time or its amount not be sufficient to
cover actual disbursments, the Seller shall reserve the right to refuse loading
or keep the vessel until such time when necessary funds are received.
If however the Seller were to allow the ship's Master to hold over payment of
whole or part of the amount of the disbursments in pursuance of Clause C of the
Chartering Conditions on Shipment, the Buyer shall be advised by the Seller
accordingly and shall be responsible vis-a-vis the Seller for the settlement of
all the amount remaining due increased by an interest on arrears of 1% for each
month as from the bill of lading date; a portion of a month being counted as a
whole month.
E/ - As soon as the vessel has left the loading port, the Seller shall inform
the Buyer, by telex or telegraph, of the quantity loaded as well as the day and
time of departure of the vessel, her estimated date of arrival at the unloading
port and, should it be the case, the amount of disbursments or the part of
disbursments which has not been paid in cash.
3. WEIGHING - SAMPLING
A/ - The Buyer has the faculty to be present or represented at the weighing
operations which shall be made while product is being loaded on the vessel.
Should this faculty not be used, the weighing operations as performed by the
Seller shall be final and only results thereof shall be binding.
B/ - For the purpose of establishing the moisture, BPL and Feral contents of the
product, samples shall be drawn during the loading operations according to the
usual methods. Phosphate rock thus drawn shall be used to make up six (6)
two-bottle samples which shall be sealed by the Seller. One sample shall be sent
to the Buyer by the ship's mail or by postal mail while the others shall be kept
by the Seller for a period of six (6) weeks.
The Buyer has also the faculty to be present or represented at the sampling
operations as described above. Should this faculty not be used, the operations
as performed by the Seller shall be final and only samples thus drawn shall by
binding.
4. ANALYSES
A/ - As soon as possible after each shipment, the Buyer and the Seller shall
exchange, at a date to be agreed upon, the results of analyses made in their
respective laboratories on the samples drawn during the loading operations
displaying both moisture content of the product as delivered and dry basis BPL
concentration.
In case the difference between the dry basis BPL contents shown by the two
analyses is below or equal to one BPL unit per cent, the average of moisture
contents of the product as delivered and the average of dry basis BPL contents
shall be taken into consideration as concerns the corresponding cargo for the
drafting of the debit or credit note provided for in Article 7 below.
B/ - In case the difference between the dry basis BPL contents shown by the two
analyses is above one BPL unit per cent, one of the samples drawn during the
loading operations shall be handed over by the Seller to the arbitration
laboratory jointly appointed by the two parties.
Results of the analysis performed by such laboratory shall be accepted as final
by the two parties and shall be taken into consideration for the drafting of the
debit or credit note provided for in Article 7 below.
The cost of the arbitration analysis shall be borne by the party whose own
findings display the largest difference with the dry basis BPL content shown by
the arbitration analysis.
5. PRICE
A/ - The FOB price applies to one metric ton of dry rock (moisture deducted) and
to a dry basis BPL content equal to the grade of reference.
B/ - The price shall be readjusted according to the final results of analysis
for each cargo as reached in persuance of Article 4 above, on a Rise/Fall basis
per metric ton and per unit of dry basis BPL content above or below the grade of
reference.
C/ - The Seller shall undertake to load and spout trim phosphate rock on board
the Buyer's vessel (excluding any special trimming and levelling, which shall be
borne by the Shipowner).
The cost of this loading operation is included in the price as defined above.
D/ - With the exception of export tax, all dues, duties and taxes to be paid
under the regulations in force on goods or services or on the vessel for these
goods or services when leaving the loading port, including dues, duties and
taxes related to import into the receiving country, are not included in the
price and shall therefore be borne by the Buyer when they are not at the
Shipowner's expenses.
6. INVOICING AND PAYMENT
A/ - The invoice for each shipment shall be due at the date of the bill of
lading. It shall be established, after loading, on the basis of the bill of
lading weight minus moisture according to the percentage of reference.
B/ - The settlement of the invoice shall be made by way of irrevocable
documentary letter of credit, confirmed by a first class international bank, to
be paid at sight against the documents agreed upon by both parties prior to
shipment. This letter of credit is to be opened fifteen (15) days before the
vessel's loading date in favour of the Seller with a bank to be indicated by the
latter. It should remain valid for a period of sixty (60) days, which may be
extended on the request of either party. Such letter of credit is governed by
the Uniform Customs and Practice for Documentary Credits published by the
International Chamber of Commerce (1983 revision, publication Nr 400). All bank
charges regarding in particular the opening, amendment, modification,
confirmation and negotiation of the letter of credit shall be borne by the
Buyer.
Debit notes shall be settled in cash by telegraphic transfer. The Buyer, as soon
as he issues instructions to the bank for payment, shall send to the Seller a
telex specifying the amount paid, the value date and the corresponding invoices
and notes.
In case of delay, for whatever reason, in the settlement of all or part of the
amount due to the Seller, the amount remaining to be paid shall be increased by
an interest to be calculated, in case of invoices and notes annexed thereto, as
from the fifteenth (15th) day following the bill of lading date, and, in case of
separate debit notes, as from the fifteenth (15th) day following the date borne
on these. In both cases, such calculation shall be made on the basis of the
London Interbank Offered Rate (Libor) at six (6) months, as it is quoted on the
date of the bill of lading, increased by a margin of three (3) per cent per
year. Interests on arrears shall themselves be increased, under the same
conditions as those applied to the principal sum, by interests to be calculated
after each period of six (6) months. No dues, taxes or duties to be paid in
relation with the settlement of interests in the Buyer's country shall be borne
by the Seller. The payment of interests shall be made without any deduction
whatsoever.
C/ - Each delivery being considered as a separate deal, the Seller may suspend
deliveries for non-settlement of an invoice or a debit note.
If the Buyer goes into liquidation or bankruptcy or if he fails, whatever the
reason be, to conform to the payment conditions agreed upon, the Seller shall
reserve the right to cancel the contract with respect to the balance of
deliveries. As for the quantities already delivered but still floating, the
Seller may exercise his right to retain the cargo or the part of the cargo
attributed to the Buyer.
In both cases, the Buyer shall remain accountable for the possible charges and
damages thereof.
7. READJUSTMENT
A/ - At the end of each semester, the amount to be invoiced for each of the
shipments made during that semester, shall be readjusted according to the
moisture content and to the dry basis BPL concentration shown by the
corresponding analysis as reached in pursuance of Article 4 above.
Such readjustment shall be used as a basis for a debit or a credit note to be
sent by the Seller to the Buyer.
B/ - In case of dispute over Feral content of a cargo, the Seller shall request
the arbitration laboratory to perform an analysis of the element in question on
one of the samples drawn during the loading operations.
Should the arbitration analysis establish that Feral content, at the departure
from the loading port, is higher than 1.5%, the final dry basis BPL content as
reached for the price variation shall be diminished by two BPL points per cent
for each point of Feral in excess of 1.5% and proportionately for fractions.
C/ - Readjustment shall in no case be accepted as a justification for delay in
payment of invoices and debit notes related to the delivery.
8. INSURANCE
Phosphate rock shall be considered to have been delivered at the moment when it
has actually passed on board the vessel at the loading port.
Insurance against all risks, be they marine or other, covering the value of
phosphate rock increased, should it be the case, by disbursements or the part of
disbursements which have not been paid in cash at the loading port, shall not be
borne by the Seller who declines any responsibility for damages which may occur
to the cargo from the moment when phosphate rock has been loaded.
9. RESALE AND ASSIGNMENT
Phosphate rock shall be used in the Buyer's own plants. It may not be resold as
such without the Seller's written consent.
Should the Buyer lose, through transfer of ownership or merger or for any other
reason, the property of his plants as they stand at the time of signature of the
sale contract, the quantities of product remaining to be delivered shall be
assigned, with the Seller's consent, to the new owners or successors, whether
universal or not.
The Seller shall however reserve the right simply to cancel the delivery of such
quantities and the cancellation in such case shall give rise to no indemnity.
10. FORCE MAJEURE
Any war, any prohibition or restriction, from a Government or local authority,
affecting either the receiving country or the areas involved in the shipping of
product, floods, cyclones, earthquakes, fires, epidemics, general or partial
strikes, whenever they may occur, lock-outs, stoppage of production in the
Seller's operations or in the railway system transporting phosphate rock to the
loading ports and any other cause beyond the control of the Seller and which
impedes production, transportation or loading of phosphate rock represent, by
express agreement, a case of force majeure. The party affected shall have to
give notice of the event to the other party by registered letter and the only
justification to be produced by the party affected shall be the evidence of the
event invoked.
In a case such as mentioned above, shipments may be suspended until such
hindrances are overcome or removed. Should the interruption of deliveries last
more than three (3) months, the shipments thus delayed may be cancelled by
either party and such cancellation shall be notified by registered letter.
Cancellation of this nature shall give rise to no indemnity.
11. SAFEGUARD CLAUSE
The parties hereby expressly agree that, should the market conditions change in
such a way as to cause a serious harm to either party while the sale contract is
being implemented, they shall consult each other in order to take necessary
steps to re-establish the equilibrium of the sale contract within the spirit
which prevailed initially.
12. ARBITRATION
All disputes arising in connection with the sale contract shall be finally
settled through arbitration to take place in Casablanca under the Rules of
Conciliation and Arbitration of the International Chamber of Commerce of Paris
by one or more arbitrators appointed in accordance with these Rules, Moroccan
law being applied as to the substance of the matter.
Judicial acceptance and enforcement of the arbitration award may be requested by
either party from any court having jurisdiction, in any country, on submission
of the original copy or a duly certified copy of the award as well as the
original copy or a duly certified copy of the sale contract.
The termination of the sale contract shall not prejudice any rights accruing at
or before or in connection with the termination thereof or any remedies or
proceedings with respect to such rights. The provisions of the sale contract
with regard to arbitration shall have effect notwithstanding the termination
thereof.
MADE OUT IN DUPLICATE
At Yazoo City, Mississippi
At Casablanca
On August 29, 1991
On August 15th, 1991
THE BUYER,
THE SELLER,
/s/ Tom C. Parry
/s/ Mohamed FETTAH
TOM C. PARRY
Mohamed FETTAH
PRESIDENT
GENERAL MANAGER
CHARTERING CONDITIONS ON SHIPMENT
AFRICANPHOS C/P
Concerning the chartering which will be effected by Buyers for the
transportation of phosphate, the charter-party will have to stipulate the
following conditions:
A - Before leaving his last port of discharge and at least three days before
arriving at Safi or Jorf Lasfar or Laayoune or Casablanca, the Captain has to
telegraph to:
> > PHOSPHAT - SAFI if loading is at Safi - Telex No. 71708 - 71784.
> > Postal address: Office Cherifien des Phosphates, Service des Embarquements.
> > Boite
> > Postale 26, Safi
> >
> > PHOSPHAT - CASABLANCA if loading is at Casablanca - Telex No. 25987 - 25095
> > Postal address: Office Cherifien des Phosphates, Service des Embarquements.
> > Boite
> > Postale 119, Casablanca
> >
> > PHOSTLS if loading is at Laayoune - Telex No. 26796 - 26614
> > Postal Address: PHOSPHATES DE BOUCRAA S.A. Boite Postale: 26 - 101 Laayoune
> >
> > MARPHORE if loading is at Jorf Lasfar - Telex No. 78964
stating the probable date of vessel's arrival, failing which an extra twenty
four hours to be allowed to Shippers for loading.
In case telegraphic address is not admitted, the Captain will use postal address
as indicated above.
B - At loading port, the vessel shall be consigned for her phosphate cargo and
customs business to Shippers. Owners to pay in cash at loading port and
according to the total tonnage loaded the sum hereunder stipulated (in Dirhams
(DH) per metric ton loaded) as agency fee, Shippers having the right to choose
at their expense the Shipbroker who will attend to Customs formalities:
From 1 to 3000 tons: 5000 DH
from 10001 to 12500 tons: 9000 DH
from 25001 to 30000 tons: 17000 DH
" 3001 to 4000 tons: 6000 DH
from 12501 to 15000 tons: 10000 DH
" 30001 to 35000 tons: 20000 DH
" 4001 to 5000 tons: 6500 DH
from 15001 to 17500 tons: 11000 DH
" 35001 to 40000 tons: 22000 DH
" 5001 to 7500 tons: 7000 DH
from 17501 to 20000 tons: 12000 DH
above ............40000 tons: 22000 DH
" 7501 to 10000 tons: 8000 DH
from 20001 to 25000 tons: 15000 DH
plus 750 dirhams per 2000 tons
or fraction above 40000 tons.
Should the Captain fail to apply to the Shippers' Agents named in the present
charter, the Owners shall, in any case, pay to Shippers the agency fee mentioned
above.
C - At port of loading, vessel to pay all customary dues and port expenses, all
tolls (peages) as well as all other charges customarily paid by the vessel, at
the rates ruling on the date of the bill of lading. In application of the lawful
regulations in force in Morocco, Owners shall pay in cash at port of loading all
their disbursments including amounts due by them under clauses B, D and I. A
sufficient amount for ship disbursments only, not exceeding one-third of the
freight, may be advanced to the Captain if required by him. In any case, an
interest on arrears of 1% per month, a portion of month being counted as a whole
month, shall be applied to the amount remaining due. A receipt of the latter to
be endorsed on the bills of lading by the Captain. Shippers shall not be held
responsible for the employment of these advances. The Shippers decline all
responsibility toward Owners or Charterers, if, in order to avoid delaying the
vessel's departure, they shall be called upon, on justification of the expenses,
to advance the Captain amounts over and above one-third of the freight.
D - The vessel will be loaded in turn not exceeding 48 running hours, Sundays,
legal and local holidays included, counting from 7 a.m. or 1 p.m. after the
vessel having been admitted in free pratique and written notice having been
given to Shippers between usual office hours that she is ready to load. The
cargo will be loaded into vessel's holds by Shippers. The Owners shall pay in
case of FAS sale 2 US Dollars plus value added tax per ton of one thousand kilos
loaded (bill of lading weight) for this operation. Leveling or any other special
trimming required by the Captain shall be in all cases at Owners' expense and
risk.
Vessel to supply free of charge the full use of windlasses, winches and
necessary power. All supplementary expenses for working outside usual hours to
be for account of the party ordering same and to be charged at the tariff
according to the custom of the port. It is however pointed out that if such work
is done at Shippers' request without the use of the vessel's derricks, the
expenses charged by the Master may not exceed [pounds] 12.00 per shift and will
only be payable for actual hours of working.
E - Laydays to commence on expiry of turn according to clause D above or, if
there is no turn at 1 p.m., if the vessel complies with the prescribed
conditions before noon, and at 7 a.m. on the following day if she complies with
the said conditions after noon, the Captain or his representative having advised
Shippers in writing that he is ready to load and that the vessel, being in free
pratique, has occupied the berth indicated by the Shippers. Legal and local
holidays, each being considered as a day of 24 hours, and the time between
1 p.m. on Saturday and 7 a.m. on Monday shall not count as laydays, but if the
loading proceeds during these periods or before laytime commences, only half
time such employed shall be deducted from the time saved for the calculation of
despatch-money.
If necessary, vessel's holds shall be cleaned at vessel's expense before loading
commences. All time occupied in shifting berths at Shippers' request shall count
as laytime. Time allowed will be calculated based on the bill of lading weight
expressed in metric tons.
Days to be of 24 consecutive hours, weather permitting (portions prorata) force
majeure excepted.
The Captain is to facilitate the rapid loading of his vessel by all means on
board. Vessel shall leave the loading berth as soon as loading is completed if
the Captain is required to do so, failing which Owners are to indemnify Shippers
for time so lost at the demurrage rate stipulated in clause I. Any delays which
may be attributed to the vessel or her crew are not to count as laytime.
F - Provided the vessel puts at least two workable hatches at Shippers' disposal
at loading (at Casablanca, Safi, Jorf Lasfar and Laayoune) the daily rate for
loading to be (in metric tons):
* 3.000 tons with minimum time of 36 hours allowed for a loaded quantity up to
9.999 tons
* 3.600 tons for 10.000 to 14.999 tons, loaded quantity
* 7.500 tons for 25.000 to 29.999 tons, loaded quantity
* 4.500 " " 15.000 to 19.999 " " "
* 9.000 " " 30.000 to 39.999 " " "
* 6.000 " " 20.000 to 24.999 " " "
* 10.000 " " 40.000 and above.
If however the vessel provides a lower number of workable hatches than called
for above the loading rate to be reduced in proportion to the number of workable
hatches put at the Shipper's disposal.
The vessel will be loaded in the customary manner alongside the wharf reserved
to Shippers at the berth indicated by them and according to their orders.
Shippers have the right to load by day and by night without interruption by all
the hatches of the holds intented to receive the cargo.
G - Shippers guarantee that vessels can load and sail from their usual loading
berth with a draught of:
At Casablanca:
30' at berths No. 1 and 2; 36' at berth No. 3
At Safi:
30'
At Jorf Lasfar:
44' at berth No. 1
At Laayoune:
52' at berth No. 2
Should the vessel's draft make it necessary to complete loading at another berth
or in the roads, Captain to obtain the necessary lighters at Owners' expense.
The risk and cost of transport from the wharf to another berth or to the roads
and transshipment expenses are to be borne by the vessel, and the time spent in
loading at such other berth or in the roads and in shifting, not to count as
laytime.
H - Should loading be rendered impossible in consequence of a strike, lock-out
or any other cause of force majeure beyond the Shippers' control, latter to give
written notice to Receivers-Charterers (eventually by telegramm) latest on
receipt of the telegraphic notice stipulated in clause A. If vessels have
already telegraphed this preliminary notice, Shippers shall notify them and
Receivers-Charterers of the case of force majeure as soon as this is known to
them.
At any time before vessel's arrival at loading port or before loading commences
Receivers-Charterers may notify Shippers of their intention to cancel the
charter-party.
This cancellation is to become effective if within 48 running hours following
the receipt of this notification shippers have not declared that they are able
to load. In case the charter-party should be maintained, the time shall count as
stipulated in Article E above notwithstanding the invocation of the case of
force majeure.
At any time during the interruption of the loading owing to force majeure,
Shippers have the right to ask the Receivers-Charterers to cancel the
charter-party by giving 48 running hours notice.
If the vessel has started loading, the Captain to have the option of sailing 48
running hours after the interruption through force majeure with the quantity
loaded unless within this delay, shippers declare that they are able to load,
time counting notwithstanding the invoked case of force majeure. Should the
vessel sail with a part of cargo, shippers could not be mixed up in the
discussion between Charterers and Owners concerning the freight settlement of
the part of the cargo.
I - Demurrage at loading port if any, to be paid to Owners at the rate of 0,16
US Dollars per gross register ton per running day (portions prorata).
For all working time saved at port of loading, Owners to pay in cash to Shippers
despatch-money at half of the demurrage rate per day (portions prorata). It is
understood that despatch-money will only be calculated on time saved after
expiration of the actual turn, if any (see clause E). Any delays which may be
attributed to the vessel or her crew shall not count as laydays.
J - Should only part of the vessel be chartered, the Owners shall have the
option of completing her, in agreement with Charterers and Office Cherifien des
Phosphates, up to a full cargo with other goods, either before or after loading
the phosphate. Owners shall ensure under penalty of damages, proper separation
of such goods from the phosphate in order to avoid any mixing or communication
of moisture, such goods, however, not to consist of either ore or phosphate of
whatsoever origin, unless authorized by the Office Cherifien des Phosphates.
Under no circumstances shall the complementary cargo be discharged at the same
time as the phosphate.
In order to determine moisture of phosphate acquired during the transport,
Captain to receive a sample taken during the loading in accordance with the
contract.
K - In case of dispute between the Shippers and the Captain on the
interpretation of the clauses of the charter-party, the Captain will sign papers
or official documents as presented to him by the Shippers, in as many copies as
required by them in respect of all or part of the cargo on board, endorsing his
objections, any discussion on the matter being reserved to Owners. |
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
EXHIBIT 10.37
AMENDMENT #3 TO THE RESEARCH, DEVELOPMENT AND MARKETING COLLABORATION AGREEMENT
BETWEEN
ONYX PHARMACEUTICALS, INC.
AND WARNER-LAMBERT COMPANY
THIS AMENDMENT #3 to the Research, Development and Marketing Collaboration
Agreement dated as of July 31, 1997 (“Third Amendment”) is made and entered into
on August 6, 2001 (the “Amendment Date”), by and between Onyx Pharmaceuticals,
Inc., a Delaware corporation having its principal place of business at 3031
Research Drive, Richmond, California 94806 (“Onyx”), and the Warner-Lambert
Company, a Delaware corporation and a wholly-owned subsidiary of Pfizer Inc,
having a place of business at 2800 Plymouth Road, Ann Arbor, MI 48105
("Warner").
RECITALS
WHEREAS, Onyx and Warner entered into a Research Development and
Marketing Collaboration Agreement dated July 31, 1997 (“Agreement”); and
WHEREAS,the parties subsequently amended the Agreement on August
2, 1999 and March 1, 2000; and
WHEREAS, the parties wish to further amend some of the terms and conditions
under which they will proceed with the collaboration as a result of the
acquisition by Pfizer Inc. (“Pfizer”) of Warner;
NOW THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the parties hereby agree as follows:
1. Except as expressly provided herein, defined terms will have the
meanings set forth in the Agreement.
2. The definition of Field in Article 1 of the Agreement is deleted
and replaced in its entirety with the following:
“Field shall mean research, drug discovery and development of [ * ].
For the avoidance of doubt intellectual property, including patents, developed
by Pfizer against targets in the Field prior to and subsequent to the
acquisition of Warner including, but not limited to, compounds, assays, cell
lines, reagents, clinical data, etc., shall be contributed to the Collaboration;
provided, however, that there will be no obligation to contribute intellectual
property regarding targets outside the Field.”
3. Section 2.4 is deleted and Article 6.0 (Licenses and Royalties)
is amended as follows:
A. New Sections 6.3 and 6.4 are added and inserted after Section
6.2:
“6.3 (a) Grant of Research Licenses within the Field. Onyx and Warner each grant
to the other a nonexclusive, irrevocable, worldwide, royalty-free, perpetual
license, including the right to grant sub-licenses to Affiliates, to make and
use the other’s Confidential Information, Know-How and Patents for all research
purposes other than the sale or manufacture for sale of products or processes;
(b) Grant of Research Licenses outside the Field. Onyx and Warner each grant to
the other a nonexclusive, irrevocable, worldwide, royalty-free, perpetual
license, including the right to grant sub-licenses to Affiliates, to make and
use the other’s confidential information, know-how and patents covering the
target [ * ], developed during the Term of the Research Collaboration pursuant
to the Research Plan, for all research purposes other than the sale or
manufacture for sale of products or processes.”
“6.4. Materials. Onyx and Warner shall, upon each other’s written request, [ *
] of Warner Patents and Know-How or Onyx Patents and Know-How and which are
licensed under this Article 6.0.”
B. All other Sections within Article 6.0 will be renumbered to
reflect these insertions, i.e. “Royalties Payable by Warner” will become Section
6.5.
4. New Section 6.15 is added and inserted after the renumbered
Section “Restrictions on Payment” as follows:
“6.15 Acquisition and Assignment. In the event that either Onyx or Warner is
acquired or assigns the Agreement to a third party, such third party’s
confidential information, know-how and patents shall not be subject to the
licenses granted under this Agreement.”
5. Article 2.0 is amended. The following sentence is added to
Section 2.1.
“Warner will provide Onyx with a list of all Collaboration Compounds within
sixty (60) days after the end of the Term of the Research Collaboration and a
list of all Collaboration Compounds within sixty (60) days after the one year
anniversary of the Term of the Research Collaboration. The Research Management
Committee may elect to meet to discuss these lists.”
6. Article 3.0 is amended. The following sentence is added to the
end of Section 3.1.
“During the one year after the Term of the Research Collaboration the Research
Management Committee will provide each other with reports, quarterly after the
Effective Date of this Third Amendment. The Research Management Committee may
also agree to convene by teleconference or other media to discuss the results
disclosed in the reports.
7. Section 5.4 (Warner’s Re-engagement Option) is deleted from the
Agreement.
8. Article 10.0 is amended. A new Section 10.1 (c) is added as
follows:
“(c) Notwithstanding the foregoing, Onyx will have the right to disclose
Confidential Information of Warner’s to third parties in connection with a
potential assignment of Onyx’s rights under the Agreement, in addition to a
potential equity investment, merger or acquisition or collaboration, provided,
however, that the third party will be required to sign a confidentiality
agreement with Onyx, prior to such disclosure and also provided that Warner
receives a copy of such agreement prior to disclosure.”
9. Article 12.0 is amended. A sentence is added within Section 12.2
(Assignment) so that Section 12.2 reads in its entirety as follows:
“This Agreement shall not be assignable by either party without the prior
written consent of the other party, such consent not to be unreasonably
withheld. In no event will any assignment relieve the assigning party of its
obligations hereunder. This Agreement shall be binding upon and, subject to the
terms of the foregoing sentence, inure to the benefit of the parties’
successors, legal representatives and assigns. If either party wishes to assign
this Agreement, they will so notify the other party in writing. The party
receiving the notice of intention to assign will have 30 days in which to object
to such assignment by the assigning party. Notwithstanding the foregoing,
Warner may assign this Agreement to any of its wholly-owned subsidiaries or any
entity succeeding to a majority of its Parke-Davis business, and either party
may assign this Agreement to its successor in connection with any merger,
consolidation or sale of all or substantially all of its assets.”
10. Section 12.7 is amended as follows regarding notices to Warner:
“…To Warner:
George M. Milne, Jr., Ph.D.
President, Strategic & Operations Management,
Pfizer Inc.
50 Pequot Avenue
New London, CT 06320
With copy to:
Joshua A. Kalkstein
Assistant General Counsel, PGRD
Pfizer Inc.
50 Pequot Avenue
New London, CT 06320
11. A new Section 12.17 is added as follows:
“12.7 Diligence. Warner shall use reasonably diligent efforts to exploit
Collaboration Compounds, Collaboration Lead Compounds and Collaboration
Products, commercially employing similar efforts applied to other products
similarly situated.”
Except as specifically stated in this Third Amendment all terms and conditions
of the amended Agreement remain in full force and effect.
IN WITNESS WHEREOF, each of the parties has caused its duly authorized
representative to execute and deliver this Third Amendment as of the date set
forth above.
WARNER LAMBERT COMPANY
ONYX PHARMACEUTICALS, INC.
By
/s/ Peter B. Corr
By
/s/ Hollings C. Renton
(Signature)
(Signature)
Peter B. Corr, Ph.D.
Hollings C. Renton
Sr. Vice President, Pfizer Inc.
Chairman and Chief Executive Officer
Executive Vice President, Pfizer Global R&D
And President, Worldwide Development
Name and Title
Name and Title
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
|
EXHIBIT 10.42
[w54922tcs.gif]
EMPLOYMENT AGREEMENT
between
TeleCommunication Systems, Inc.
and
Thomas M. Brandt, Jr.
(Employee Name)
THIS EMPLOYMENT AGREEMENT (“Agreement”), effective as February 1, 2001 (the
“Effective Date”), between the individual signing as “Employee” at the end of
this Agreement (hereinafter referred to as “Employee”), and TeleCommunication
Systems, Inc. (hereinafter referred to as “Company”);
WHEREAS, Company desires to employ Employee, or to continue Employee’s
employment, and Employee desires to be employed by Company on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Employment. The Company agrees to employ Employee for the position of
Senior Vice President & Chief Financial Officer. Employee shall perform such
duties as the management of the Company may from time to time assign to him
hereunder, including (without limitation) responsibility for the Company's
financial management, reporting, controls, accounting, and investor relations.
2. Duties and Responsibilities. Employee agrees to devote his or her full time
and attention and his or her best efforts to performing his or her duties
hereunder. While employed by the Company, Employee will not, without the
Company’s prior written consent, engage in any other business activity, other
than investment of Employee’s personal funds on a passive basis and without
lending assistance directly to any competitor. Attachment A hereto is a complete
list of Employee’s current other business activities to which the Company
consents. In the event the Employee wishes to change the approved activities,
then the Employee shall submit the requested change in writing to the Company.
Any changes consented to by the Company shall be documented as a revised
Attachment A and will become incorporated into the Agreement by reference. In no
event shall Employee pursue outside business or personal interests that
interfere with his or her full-time responsibilities or entail any use of the
Company’s resources.
Page 1 of 15
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3. Compensation and Benefits.
3.1 Base Salary. During Employee’s employment under this
Agreement, Company shall pay or cause to be paid to Employee a base salary at an
annual rate of not less than $188,216, payable in cash in equal periodic
installments not less frequent than the periodic installments in effect for
salaries of Company employees of the same level as Employee (the “Base Salary”).
The Base Salary shall be subject to increases pursuant to reviews by the Board
of Directors, where applicable, or a committee appointed by the Board of
Directors, at such times as salary reviews are conducted generally for Company
employees of the same level as Employee, but in no event less frequent than
annually. 3.2 Incentive Compensation. During Employee’s employment under
this Agreement, Company shall cause Employee to be eligible to participate in
each bonus or incentive compensation plan, program or policy maintained by
Company from time to time, in whole or in part, for employees of his level
(“Bonus Plan”). Employee’s target and maximum compensation under, and his
performance goals and other terms of participation in, each Bonus Plan shall be
determined by Company or by such person or administrative body as provided in
the Bonus Plan. Said incentive compensation is not guaranteed and is contingent
upon Employee and Company achieving deliverables or goals agreed upon. Said
incentive compensation shall not be considered “earned” by Employee until
Company has allocated payment to be made to Employee for any performance period.
3.3 Incentive Stock Compensation. During Employee’s employment under
this Agreement, Company shall cause Employee to be eligible to participate in an
incentive stock plan as may be maintained by Company from time to time, in whole
or in part, for employees of his level. Employee’s awards under such plan shall
be determined by the administrator of the plan, the vesting for which shall be
accelerated in the event of a Change in Control as defined herein. The specific
terms and conditions of these options shall be set out in a stock option
agreement between Employee and Company. The grant of stock options
shall not be construed to constitute or to be evidence of a commitment or
guarantee to renew this Agreement or to employ or retain Employee for any period
of time inconsistent with Sections 4 and 5 of this Agreement. 3.4
Benefits. During his employment under this Agreement, Employee shall be entitled
to: (i) participation in such employee retirement and welfare benefit plans,
programs, policies and arrangements as maintained by Company from time to time,
in whole or in part, for employees of his level, including but not limited to
Company’s employee stock ownership plan, and its health, disability, life
insurance and sickness and accident insurance plans; and (ii) paid vacation,
holidays, leave of absence, leave for illness, funeral leave
Page 2 of 15
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and temporary disability leave in accordance with the policies
of Company; and (iii) perquisites as from time to time provided by Company to
employees of his level. 3.4 Expenses. During Employee’s employment under
this Agreement, Company shall reimburse Employee for ordinary and reasonable
out-of-pocket expenses incurred by him in the performance of his duties
hereunder, provided that Employee shall account to Company for such expenses in
accordance with the employee business expense policies and practices of Company.
3.5 Effect of Termination. Upon termination of employment for any
reason, Employee shall no longer be entitled to participation in any Benefits
programs, including the period when severance is payable under the Agreement.
4. Term of Employment. The term of Employee’s employment (the “Term”) shall
commence on the effective date of this Agreement and continue through January
31, 2002 for the initial term, unless sooner terminated as provided herein. Upon
expiration of the initial term, the term of Employee’s employment shall
automatically renew on February 1st for successive 12-month renewal periods,
unless and until terminated as provided herein.
5. Termination of Employment.
5.1 Dismissal without Good Cause and Resignation for Good Reason.
5.1.1 Dismissal without Good Cause. Company may terminate
Employee’s employment under this Agreement without Good Cause (as defined in
Section 5.1.4) at any time by giving notice thereof to Employee at least 30 days
before the effective date of such termination. Upon such termination, Employee
shall be entitled to such compensation as provided in Section 5.1.3.
5.1.2 Resignation for Good Reason. Employee may terminate his employment under
this Agreement for Good Reason (as defined in Section 5.1.5) at any time by
written notice thereof to Company at least 30 days before the effective date of
such termination. Such notice shall specify in reasonable detail the Good Reason
based upon which Employee intends to terminate his employment. Upon such
termination, Employee shall be entitled to such compensation as provided in
Section 5.1.3. 5.1.3 Severance Pay upon Dismissal without Good Cause
or Resignation for Good Reason. If Employee’s employment under this Agreement is
terminated by Company without Good Cause or by Employee for Good Reason,
Employee shall be entitled to the sum of the following, payable in equal
periodic installments the same as Base Salary was received
Page 3 of 15
--------------------------------------------------------------------------------
during the term of Employee’s employment as provided
in Section 3.1 herein:
(i) Base Salary, at the rate in effect immediately
before the date of termination, for the greater of (A) the period from the day
after his last day of employment hereunder through the last day of the Term of
this Agreement, or (B) six months; and (ii) The amount “earned”
by Employee under the annual Bonus Plan if at the time of termination Company
has allocated payment to be made to Employee under the terms of the Bonus Plan
for any performance period. Employee will not be eligible to receive payment
under the Bonus Plan for any performance period if he is terminated prior to a
decision by Company as to the payment due to Employee, if any, under the terms
of the Bonus Plan. If no such decision by Company is made or necessary, Employee
will not be eligible to receive any payments under the Bonus Plan if he is not
employed at the time bonus payments are made to employees.
5.1.4 Definition of “Good Cause.” “Good Cause” means:
(A) Employee’s willful gross misconduct, willful gross
neglect, willful malfeasance or gross negligence in carrying out his duties
hereunder, or willful breach of this Agreement (other than an inadvertent and
nonrecurring breach cured and corrected by Employee within 30 days after notice
thereof by Company). Under this provision, “willful breach” shall include, but
not be limited to, insubordination, serious dereliction of fiduciary obligation,
chronic abuse by Employee of alcohol or narcotics, a violation of any material
Company rule, regulation or policy, or a serious violation of any law governing
the workplace. It is provided further that, no act or failure to act shall be
considered “willful” if Employee reasonably believed in good faith that such act
or failure to act was in, or not opposed to, the best interest of Company and
its affiliates; (B) Any act or conduct of dishonesty to Company
by Employee involving fraud and embezzlement; or (C) Employee’s
conviction, including a plea of guilty or nolo contendere, of a felony involving
theft or moral turpitude, other than a felony predicated on Employee’s vicarious
liability (for purposes of this Agreement, “vicarious liability” means
Employee’s liability based on acts of Company for which Employee is charged
solely as a result of his offices with Company and in which he was not directly
involved or did not have prior knowledge of such acts)
5.1.5 Definition of “Good Reason.” “Good Reason” means any
of the following if not cured and corrected by Company within 30 days after
Page 4 of 15
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notice thereof by Employee to Company under
Section 5.1.2:
(A) Any change in Employee’s title or position that
constitutes a material diminution in authority as compared to the authority of
his title or position as of the Effective Date, or any substantial diminution in
Employee’s duties and responsibilities (other than a change due to Employee’s
Disability), provided that no diminution of title, position, duties or
responsibilities shall be deemed to occur solely because Company becomes a
subsidiary of another corporation or because there has been a change in the
reporting hierarchy incident thereto involving Employee; (B) Any
requirement by Company that Employee involuntarily physically relocate from
Employee’s current work location to another work location more than 75 miles
away; or (C) Any material breach by Company of its obligations
under this Agreement.
5.2 Dismissal for Good Cause, Resignation without Good Reason and
Termination upon Death or Disability.
5.2.1 Dismissal for Good Cause. Company may terminate
Employee’s employment under this Agreement for Good Cause by (i) giving notice
thereof to Employee specifying in reasonable detail the Good Cause based upon
which Company intends to terminate his employment; (ii) if Good Cause exists
under 5.1.4(A) only, after at least 30 days after such notice, providing
Employee an opportunity to be heard at a meeting with the CEO and the Board of
Directors; and (iii) thereafter, effectuating such termination by a majority
vote of the Board of Directors. For Good Cause terminations under
Sections 5.1.4(B) & (C), Company may terminate Employee’s employment immediately
under this Agreement upon notice thereof to Employee. The effect of such
termination is provided in Section 5.2.4. 5.2.2 Resignation without
Good Reason. Employee may terminate his employment hereunder at any time without
Good Reason by notice thereof to Company at least 30 days before the effective
date of such termination. The effect of such termination is provided in
Section 5.2.4. 5.2.3 Termination upon Death or Disability. This
Agreement shall terminate automatically upon Employee’s death. If Company
determines in good faith that Employee has a Disability as defined in this
Section, Company may terminate his employment under this Agreement by notifying
Employee thereof at least 30 days before the effective date of termination. For
purposes of this Agreement, “Disability” means any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to
Page 5 of 15
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last for a continuous period of not less than six
months and which renders Employee unable to perform his material duties under
this Agreement. If there is any dispute between the parties as to Employee’s
Disability, Company shall select or approve a physician whose determination as
to Employee’s Disability shall bind the parties hereto. The effect of a
termination due to Employee’s death or Disability is provided in Section 5.2.4.
5.2.4 Effect of Dismissal for Good Cause, Resignation without Good
Reason, or Termination upon Death or Disability. If Employee’s employment under
this Agreement is terminated by Company for Good Cause, by Employee without Good
Reason, or due to Employee’s death or Disability as provided in this Agreement,
all obligations of Company under this Agreement shall terminate, except as
provided in Section 5.6.
5.3 Termination by Mutual Consent. Company and Employee may
terminate Employee’s employment under this Agreement at any time and for any
reason upon the mutual consent of both parties, effective as of such date as
agreed upon by the parties. Upon such termination, except as provided in
Section 5.6 or as agreed to by the parties in connection with their mutual
consent to terminate Employee’s employment, all obligations of Company hereunder
shall terminate. 5.4 Termination after a Change in Control.
5.4.1 Termination Events Triggering Compensation. Company
shall pay or cause to be paid to Employee such compensation as provided in
Section 5.4.2, if his employment under this Agreement is terminated by Company
without Good Cause or by Employee for Good Reason within 12 months after a
Change in Control (as defined in Section 5.4.3) 5.4.2 Compensation
upon Termination. If Employee’s employment hereunder is terminated as provided
in Section 5.4.1, Company shall pay or cause to be paid to Employee the
following in a cash lump sum within 30 days after the date of termination, one
times the annual Base Salary at the greater of (A) the rate in effect
immediately before the date of termination or (B) the rate in effect immediately
before the Change in Control. 5.4.3 Definition of “Change in
Control.” A “Change in Control” means:
(i) A sale of all or substantially all of the assets
of Company; (ii) An acquisition by any “person” or “group” of
persons (within the meaning of such terms as used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other
than Company, its subsidiaries, any employee benefit plan of Company, or an
underwriter temporarily holding securities
Page 6 of 15
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pursuant to an offering of such securities) of
the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of the total voting power represented by Company’s
outstanding voting securities; (iii) A dissolution or
liquidation of Company; or (iv) Any merger, consolidation or
reorganization involving Company immediately after which either (A) a majority
of the directors of the surviving entity is not comprised of persons who were
directors of Company immediately prior to such transaction or (B) persons who
hold more than a majority of the total voting power represented by outstanding
voting securities of the surviving entity are not persons who held outstanding
voting securities of Company immediately prior to such transaction.
5.5 Duplication of Severance Pay. Employee is entitled to receive
the payment under both Section 5.1 and Section 5.4. Employee hereby irrevocably
waives the right to receive benefits under any severance or similar plan or
policy of Company if Employee is entitled to receive a payment under Section 5.1
and/or 5.4, provided that if the value of such benefits exceeds the amount
payable to such Employee under Section 5.1 and/or 5.4, Employee may elect to
receive such benefits in lieu of the payment under Section 5.1 and/or 5.4.
5.6 Payment of Base Salary upon Termination. Upon a termination of Employee’s
employment under this Agreement for any reason, Company shall pay or cause to be
paid to Employee the increment of Base Salary earned but unpaid in the payroll
period immediately preceding the date of termination, payable in cash on or
before the day on which Employee would have been paid such amount if his
employment hereunder had not been terminated, but in no event later than the
date as required by law. 5.7 No Duty to Mitigate. Employee shall not be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Employee under any of the provisions of this
Agreement, and such amounts shall not be reduced whether or not Employee obtains
other employment.
6. Ownership of Work Product.
6.1 The Company shall own all Work Product (as defined below). To
the extent permitted by law, All Work Product shall be considered work made for
hire by Employee and owned by the Company. 6.2 If any of the Work
Product may not, by operation of law, be considered work made for hire by
Employee for the Company (or if ownership of all right, title and interest of
the intellectual property rights therein shall not otherwise vest
Page 7 of 15
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exclusively in the Company), Employee agrees to assign, and
upon creation thereof automatically assigns, without further consideration, the
ownership of all Trade Secrets (as defined below), U.S. and international
copyrights, patentable inventions, and other intellectual property rights
therein to the Company, its successors and assigns. 6.3 The Company, it
successors and assigns, shall have the right to obtain and hold in its or their
own name copyrights, registrations, and any other protection available in the
foregoing. 6.4 Employee agrees to perform upon the reasonable request of
the Company, during or after Employee’s employment, such further acts as may be
necessary or desirable to transfer, perfect and defend the Company’s ownership
of the Work Product. When requested, Employee will
(i) Execute, acknowledge and deliver any requested
affidavits and documents of assignment and conveyance; (ii) Obtain
and aid in the enforcement of copyrights (and, if applicable, patents) with
respect to the Work Product in any countries; (iii) Provide
testimony in connection with any proceeding affecting the right, title or
interest of the Company in any Work Product; and (iv) Perform any
other acts deemed necessary or desirable to carry out the purposes of this
Agreement.
The Company shall reimburse all reasonable out-of-pocket
expenses incurred by Employee at the Company’s request in connection with the
foregoing, including (unless Employee is otherwise being compensated at the
time) a reasonable per diem or hourly fee for services rendered following
termination of Employee’s employment. 6.5 For purposes hereof, “Work
Product” shall mean all intellectual property rights, including all Trade
Secrets, U.S. and international copyrights, patentable inventions, discoveries
and improvements, and other intellectual property rights, in any programming,
documentation, technology or other work product that relates to the business and
interests of the Company and that Employee conceives, develops, or delivers to
the Company at any time during the term of Employee’s employment. “Work Product”
shall also include all intellectual property rights in any programming,
documentation, technology or other work product that is now contained in any of
the products or systems (including
Page 8 of 15
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development and support systems) of the Company to the extent
Employee conceived, developed or delivered such Work Product to the Company
prior to the date of this Agreement while Employee was engaged as an independent
contractor or employee of the Company. Employee hereby irrevocably relinquishes
for the benefit of the Company and its assigns any moral rights in the Work
Product recognized by applicable law.
7. Restrictive Covenants.
7.1 Competition. During the Term of this Agreement and, if
Employee’s employment under this Agreement is terminated by Company or by
Employee for any reason, the greater of (I) any period of time in which Employee
continues to receive compensation of any kind from Company and continuing for a
period of six (6) months after said payment(s) cease, or (ii) one year after the
Term of this Agreement, employee shall not: (i) own, manage, operate, join,
control or participate in the ownership, management, operation or control of a
Competitor (as defined in Section 7.5); (ii) become a director, officer,
employee, consultant or lender of, or be compensated by, a Competitor; or
(iii) solicit any client of Company on behalf of or for the benefit of a
Competitor. Notwithstanding the foregoing, Employee may own up to 1% of a
publicly-traded Competitor. 7.2 Confidential Information. Employee shall
at all times hold in a fiduciary capacity for the benefit of Company all secret,
confidential or proprietary information, knowledge or data relating to Company,
and all of its businesses, which shall have been obtained by Employee during his
employment by Company and which shall not be or become public knowledge (other
than by acts by Employee or his representatives in violation of this Agreement)
including, but not limited to, information regarding clients and agents of
Company (“Confidential Information”). During Employee’s employment with Company
under this Agreement and after the termination of such employment, Employee
shall not, without the prior written consent of Company, communicate or divulge
any Confidential Information to any Person other than Company and those
designated by it or use any Confidential Information except for the benefit of
Company, provided that Employee may make disclosures to comply with the law or
legal process. Immediately upon termination of Employee’s employment with
Company at any time and for any reason, Employee shall return to Company all
Confidential Information, including, but not limited to, any and all copies,
reproductions, notes or extracts of Confidential Information. 7.3
Solicitation of Employees. During the Term of this Agreement and, if Employee’s
employment under this Agreement is terminated by Company or by Employee for any
reason, for the greater of (I) any period of time in which Employee continues to
receive compensation of any kind from
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Company and continuing for a period of six (6) months after
said payment(s) cease, or (ii) one year after the Term of this Agreement,
Employee shall not: (i) solicit, participate in or promote the solicitation of
any person who was employed by Company at any time during the three-month period
prior to Employee’s termination of employment under this Agreement to leave the
employ of Company; or (ii) on behalf of himself or any other Person, hire,
employ or engage any such person. Employee further agrees that, during such
time, if an employee of Company contacts Employee about prospective employment,
Employee will inform such employee that he cannot discuss the matter further
without informing Company. 7.4 Remedies for Breach. Employee agrees that
damages in the event of any breach of Sections 7.1 through 7.3 by Employee would
be difficult to ascertain. Employee therefore agrees that, notwithstanding
anything in this Agreement to the contrary, including but not limited to the
provisions of Section 14, Company, in addition to and without limiting any other
remedy or right it may have, shall have the right to an injunction or other
equitable relief in any court of competent jurisdiction, enjoining any such
breach. Employee hereby waives any and all defenses he may have on the ground of
lack of jurisdiction or competence of the court to grant such an injunction or
other equitable relief. Employee also agrees that a bond shall not be required
by Employer in obtaining an injunction. The existence of this right shall not
preclude any other rights and remedies at law or in equity that Company may
have. The provisions of Section 7 shall survive termination of this Agreement.
The existence of a claim or cause of action of any kind by Employee against
Company shall not constitute a defense to the enforcement by Company of the
rights provided in this Section 7 and shall not be a defense to any injunction
proceeding. 7.5 Definitions.
7.5.1 “Competitor.” For purposes of Section 7, “Competitor”
means any Person which sells goods or provides services which are directly
competitive with those sold or provided by a business that (i) is being
conducted by Company at the relevant time and (ii) was being conducted by
Company at any time during the Term of this Agreement. 7.5.2
“Company.” For purposes of Section 7, “Company” means TeleCommunication Systems,
Inc., and its subsidiaries and affiliates. 7.5.3 “Person.” For
purposes of Section 7, “Person” means any individual or entity, including but
not limited to any corporation, trust, sole proprietorship, joint venture or
partnership.
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7.6 Survival of Section 7. Employee agrees that the
non-competition agreements, nondisclosure agreements and non-employment
agreements in this Section 7 each constitute separate agreements independently
supported by good and adequate consideration and, notwithstanding anything in
this Agreement to the contrary, shall be severable from the other provisions of,
and shall survive, this Agreement.
8. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to Employee at the last address he has filed in
writing with Company or, in the case of Company, to Company’s principal employee
offices.
9. Taxes.
9.1 Withholding Taxes. Company shall have the right, to the extent
permitted by law, to withhold from any payment of any kind due to Employee under
this Agreement to satisfy the tax withholding obligations of Company under
applicable law. 9.2 Adjustment relating to Tax on Excess Parachute
Payments.
9.2.1. Adjustment. Notwithstanding anything in this Agreement to
the contrary, in the event the Company’s Law or Accounting Firm (as defined in
Section 9.2.2) determines that any portion of the cash compensation payable
under this Agreement (such portion of compensation, the “Agreement Payment”),
and the portions, if any, of other payments or distributions in the nature of
compensation by Company to or for the benefit of Employee (including, but not
limited to, the value of the acceleration in vesting or exercisability of stock
options) whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement (the Agreement Payment, together with such portions of
other payments and distributions, the “Payments”), would cause any portion of
the Payments to be subject to the excise tax imposed by section 4999, or any
successor provision, of the Internal Revenue Code of 1986, as amended (the
“Code”) (the portion subject to excise tax, the “Parachute Payment”), the
Agreement Payment shall be reduced to an amount not less than zero which shall
not cause any portion of the Payments to constitute a Parachute Payment,
provided that no such reduction shall be made if the Payments, after the
reduction and after the application of Federal income tax at the highest rate
applicable to individual taxpayers, would not be greater than the present value
(determined in accordance with section 280G, or any successor provision, of the
Code) of the Payments before the reduction but after the application of (i)
excise tax under section 4999 of the Code and (ii) Federal income tax at the
highest rate applicable to individual taxpayers. 9.2.2 Determination.
All determinations required to be made under this Section 9.2, including the
assumptions to be utilized in arriving at such
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determination, shall be made by such nationally recognized law
firm (including Piper Marbury Rudnick & Wolfe L.L.P.) or accounting firm
(including Ernst & Young LP) as selected by Company (the “Law or Accounting
Firm”), which shall provide detailed supporting calculations to both Company and
Employee (i) within 15 business days after receipt by Company of a notice from
Employee that he may have a Parachute Payment, or (ii) at such earlier time as
may be requested by Company. The Law or Accounting Firm may employ and rely upon
the opinions of actuarial or accounting professionals to the extent it deems
necessary or advisable. In the event that the Law or Accounting Firm determines,
for any reason, that it is unable to perform such services, or declines to do
so, Company shall select another nationally recognized law or accounting firm to
make the determinations required under this Section (which law or accounting
firm shall then be referred to as the Law or Accounting Firm hereunder). All
fees and expenses of the Law or Accounting Firm shall be borne solely by
Company. Any determination by the Law or Accounting Firm shall be binding upon
Company and Employee.
10. Successors and Assigns. The rights, duties and obligations of a
party hereunder may not be assigned, delegated or assumed without the prior
written consent of the other party, provided that Company may assign this
Agreement to any subsidiary thereof, without Employee’s consent, and such
assignment shall not constitute, a termination of his employment hereunder.
Nothing herein shall cause a termination of this Agreement upon the acquisition,
reorganization, or merger of Company. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
or permitted assigns. Nothing herein shall be construed to confer upon any
person not a party hereto any right, remedy or claim under or by reason of this
Agreement. 11. Entire Agreement. This Agreement constitutes the entire
understanding of Employee and Company with respect to the subject matter hereof
and supersedes and voids any and all prior agreements or understandings, written
or oral, regarding the subject matter hereof. 12. Amendment and Waiver. This
Agreement may not be changed, modified or discharged orally, but only by an
instrument in writing signed by the parties. No waiver of any term or condition
of this Agreement shall be effective unless agreed to in writing between the
parties. 13. Governing Law and Severability. This Agreement shall be
governed by the laws of the State of Maryland (without giving effect to choice
of law principles or rules thereof that would cause the application of the laws
of any jurisdiction other than the State of Maryland) and the invalidity or
unenforceability of any provisions hereof shall in no way affect the validity or
enforceability of any other provision. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction
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shall not invalidate or render unenforceable such provision in any
other jurisdiction. 14. Arbitration. DISPUTES REGARDING EMPLOYEE’S
EMPLOYMENT WITH COMPANY, INCLUDING, WITHOUT LIMITATION, ANY DISPUTE UNDER THIS
AGREEMENT WHICH CANNOT BE RESOLVED BY NEGOTIATIONS BETWEEN COMPANY AND EMPLOYEE,
BUT EXCLUDING ANY DISPUTES REGARDING EMPLOYEE’S COMPLIANCE WITH SECTION 7, SHALL
BE SUBMITTED TO, AND SOLELY DETERMINED BY, FINAL AND BINDING ARBITRATION
CONDUCTED BY JAMS/ENDISPUTE, INC.’S ARBITRATION RULES APPLICABLE TO EMPLOYMENT
DISPUTES, AND THE PARTIES AGREE TO BE BOUND BY THE FINAL AWARD OF THE ARBITRATOR
IN ANY SUCH PROCEEDING. THE ARBITRATOR SHALL APPLY THE LAWS OF THE STATE OF
MARYLAND WITH RESPECT TO THE INTERPRETATION OR ENFORCEMENT OF ANY MATTER
RELATING TO THIS AGREEMENT; IN ALL OTHER CASES THE ARBITRATOR SHALL APPLY THE
LAWS OF THE STATE SPECIFIED IN COMPANY’S ALTERNATIVE DISPUTE RESOLUTION POLICY
AS IN EFFECT FROM TIME TO TIME (IF ANY). ARBITRATION SHALL BE HELD IN BALTIMORE,
MARYLAND, OR SUCH OTHER PLACE AS THE PARTIES MAY MUTUALLY AGREE, AND SHALL BE
CONDUCTED ONLY BY A FORMER JUDGE. JUDGMENT UPON THE AWARD BY THE ARBITRATOR MAY
BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.
[Signatures appear on following page]
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
WITNESS/ATTEST TELECOMMUNICATION SYSTEMS, INC. /s/ BRUCE A. WHITE
By: /s/ MAURICE B. TOSE Title: President and Chief Executive Officer
EMPLOYEE /s/ BRUCE A. WHITE /s/ THOMAS M. BRANDT, JR. Thomas M. Brandt,
Jr.
Page 14 of 15
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ATTACHMENT A TO EMPLOYMENT AGREEMENT
Employee:Thomas M. Brandt, Jr.
Agreement dated: February 1, 2001
In accordance with paragraph 2 of the Employment Agreement, the Company hereby
consents to the following other business activities:
Board of Directors service with: Opptelcom, Inc.
Antenna Research Associates, Inc.
AmericasBank Corp.
WITNESS/ATTEST TELECOMMUNICATION SYSTEMS, INC. /s/ BRUCE A. WHITE
By: /s/ MAURICE B. TOSE Title: President and Chief Executive Officer
EMPLOYEE /s/ BRUCE A. WHITE /s/ THOMAS M. BRANDT, JR. Thomas M. Brandt,
Jr.
Page 15 of 15 |
October 19, 2000
AMENDMENT TO JANUARY 24, 2000 AMENDED AND RESTATED
AGREEMENT LETTER
This amendment is made between Skyhub Far East Inc. (Skyhub FE, a BVI company),
Skyhub Asia Holdings Limited (Skyhub Asia, a Hong Kong company) and eVision
USA.Com, Inc (eVision, a Colorado company) to their AMENDED AND RESTATED
AGREEMENT LETTER, dated January 24, 2000. All parties agree to the following:
1. Skyhub FE and eVision agree to permit Skyhub Asia to be a party to the
January 24, 2000 Amended and Restated Agreement Letter, and to assume Skyhub
FE’s obligations under the Loan Commitment Agreement dated February 18, 2000,
and any promissory notes drafted pursuant to that Agreement, between Skyhub FE
and eBanker USA.com, Inc.
2. Skyhub FE confirms that all assets and agreements have been transferred from
Skyhub FE to Skyhub Asia including the 1,185,209 eVision shares previously
issued.
3. eVision will guarantee that an orderly and reasonable sale of the 1,185,209
eVision shares in the open market will generate funds of no less than
US$3,000,000 plus the accrued interest from the loans made by eBanker USA.com,
Inc. pursuant to the Loan Commitment dated February 18, 2000. Any shortfall will
be made up, at eVision’s discretion, through cash or the issuance of additional
eVision shares with piggyback registration rights. The board of directors of
Skyhub Asia will agree upon the execution of the orderly and reasonable sale of
these shares.
4. All other terms of the January 24, 2000 agreement remain unaffected by this
amendment.
For and on behalf of: For and on behalf of:
eVision USA.Com, Inc. Skyhub Far East Inc.
/s/ Fai H. Chan /s/ Edward Chan
___________________________ _______________________________
Authorized Signature Authorized Signature
Name : Fai H. Chan Name : Edward Chan
Date : 10/19/00 Date : 10/19/00
For and on behalf of:
Skyhub Asia Holdings Limited
/s/ Fai H. Chan
____________________________
Authorized Signature
Name : Fai H. Chan
Date : 10/19/00
|
EXHIBIT NO. 10-4
NIAGARA MOHAWK CEO SPECIAL AWARD PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE AND DURATION
1.1 Establishment of the Plan. Niagara Mohawk Power Corporation, a New York
corporation, established a special award plan, known as the “Niagara Mohawk
Power Corporation CEO Special Award Plan.” The plan was amended and restated
effective as of June 10, 1997 (“Effective Date”). Effective as of January 1,
1999, the name of the plan was changed to the “Niagara Mohawk CEO Special Award
Plan” (“Plan”).
1.2 Purpose of the Plan. The purpose of the Plan is to promote the success
and enhance the value of the Company through awards to Participants which
recognize contributions to a successful initiative which results in a major
positive impact on the Company.
1.3 Duration of the Plan. The amendment and restatement of the Plan shall
commence on the Effective Date and shall remain in effect, subject to the right
of the Board of Directors to terminate the Plan at any time pursuant to
Article 14 herein, until June 9, 2007. The applicable terms of the Plan and any
terms and conditions applicable to any Awards, including any deferral elections,
granted prior to such date shall survive the termination of the Plan.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set forth
below and, when such meaning is intended, the initial letter of the word is
capitalized:
2.1 “Award” means, individually or collectively, a grant under the Plan of
SARs, Stock Units or cash.
2.2 “Award Agreement” means an agreement entered into by each Participant
and the Company setting forth the terms and provisions applicable to an Award
granted under the Plan.
2.3 “Base Value.” The Base Value of an SAR shall equal the Fair Market
Value of a Share determined for the 12 trading day period immediately preceding
the date of the grant, or for such other period as the Compensation Committee,
in its sole discretion, shall determine at the time of grant.
2.4 “Board” or “Board of Directors” means, effective March 17, 1999, the
Board of Directors of Niagara Mohawk Holdings, Inc. Prior to March 17, 1999,
references to “Board” mean the Board of Directors of Niagara Mohawk Power
Corporation.
2.5 “Cause” means: (i) a material default or other material breach by a
Participant of his obligations under any Employment Agreement he may have with
the Company, (ii) failure by a Participant diligently and competently to perform
his duties with the Company, (iii) misconduct, dishonesty, insubordination or
other act by a Participant detrimental to the good will of the Company or
damaging the Company’s relationships with its customers, suppliers or employees.
“Cause” shall be determined in good faith by the Committee.
2.6 “Change in Control” of the Company shall be deemed to have occurred as
of the first day that any one or more of the following conditions shall have
been satisfied:
(1) The acquisition by any Person of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding Shares of the Company or (ii) the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion privilege),
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in clauses
(i), (ii) and (iii) of subparagraph (3) below are satisfied; or
(2) Individuals who, as of April 1, 1999, constitute the Board of
Directors (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or
(3) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, in each case, unless, following such reorganization,
merger or consolidation, (i) more than 75% of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors are then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively of the Outstanding Shares and Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation, in substantially the same proportions as their ownership
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Shares and Outstanding Company Voting Securities, as the case may
be, (ii) no Person (excluding the Company, any employee benefit plan (or related
trust) of the Company or such corporation resulting from such reorganization,
merger or consolidation and any Pension beneficially owning, immediately prior
to such reorganization, merger or consolidation, directly or indirectly, 20% or
more of the Outstanding Shares or Outstanding Voting Securities, as the case may
be) beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(4) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company or, on or after April
1, 1999, of Niagara Mohawk Power Corporation, (A) more than 75% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Shares and the Outstanding Company Voting Securities immediately
prior to such sale or other disposition in substantially the same proportion as
their ownership immediately prior to such sale or other disposition of the
Outstanding Shares and Outstanding Company Voting Securities, as the case may
be, (B) no Person (excluding the Company and any employee benefit plan (or
related trust) of the Company or such corporation and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly, 20% or more of the Outstanding Shares or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 20%
or more of, respectively the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company;
provided, however, that the implementation of the corporate restructuring
contemplated by the Company’s Power Choice proposal filed with the New York
Public Service Commission on October 6, 1995, or any substantially similar
corporate restructuring (as determined by the Committee) shall not be deemed to
be a “Change in Control.”
2.7 “Committee” means the committee, as specified in Article 3, appointed by
the Board to administer the Plan.
2.8 “Company” means Niagara Mohawk Holdings, Inc. (effective as of March 17,
1999), Niagara Mohawk Power Corporation, and any other separate employer that
participates in this Plan with the consent of the Board (each of these separate
employers, as well as any other separate employer that participates in this Plan
with the consent of the Board, shall hereinafter be referred to as a
“Participating Employer”). Notwithstanding the foregoing, the term “Company”
means Niagara Mohawk Holdings, Inc. for purposes of the administration of the
Plan and for purposes of Section 2.6. The term “Company” is being used solely
for convenience to make the Plan easier to read, and does not alter the fact
that an Employee is employed by the separate Participating Employer from which
the Employee regularly receives his paycheck. With respect to any Employee, the
term “Company” means such separate Participating Employer.
2.9 “Dividend Equivalent” means, with respect to Shares underlying a Stock
Unit, an amount equal to all cash and stock dividends declared on an equal
number of outstanding Shares on all common stock dividend payment dates
occurring during the Vesting Period.
2.10 “Eligible Employee” means an Employee who is eligible to participate in
the Plan, as set forth in Section 4.1 herein.
2.11 “Employee” means any full-time employee of the Company or one of its
subsidiaries who is not covered by any collective bargaining agreement to which
the Company or such subsidiary is a party.
2.12 “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
2.13 “Exercise Period” means the period during which an SAR is exercisable,
as set forth in the related Award Agreement.
2.14 “Fair Market Value” means the average of the daily opening and closing
sale prices as reported in the consolidated transaction reporting system.
2.15 “Participant” means an Employee who has an outstanding Award granted
under the Plan.
2.16 “Person” shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act, as used in Sections 13(d) and 14(d) thereof, including
usage in the definition of a "group" in Section 13(d) thereof.
2.17 “Shares” means, through March 17, 1999, the shares of common stock of
Niagara Mohawk Power Corporation, par value $1.00. After March 17, 1999, all
references to “Shares” mean the shares of common stock of Niagara Mohawk
Holdings, Inc., par value $1.00.
2.18 “Stock Appreciation Right” or “SAR” means a right, designated as an SAR,
to receive a payment on the day the right is exercised, pursuant to the terms of
Article 5 herein. Each SAR shall be denominated in terms of one Share.
2.19 “Stock Unit” means a right, designated as a Stock Unit, to receive a
payment as soon as practicable following the last day of a Vesting Period,
pursuant to the terms of Article 6 herein. Each Stock Unit shall be denominated
in terms of one Share.
2.20 “Valuation Period” means the 12 trading day period ending on and
including the relevant date.
2.21 “Vesting Period” means the period during which Stock Units are not yet
payable, as set forth in the related Award Agreement.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Compensation and
Succession Committee of the Board, or by any other Committee appointed by the
Board consisting of not less than two (2) members of the Board who are
“non-employee directors” within the meaning of Rule 16b-3 under the Exchange
Act. The members of the Committee shall be appointed from time to time by, and
shall serve at the discretion of, the Board.
3.2 Authority of the Committee. The Committee shall have full power except
as limited by law, the Articles of Incorporation and the Bylaws of the Company,
subject to such other restricting limitations or directions as may be imposed by
the Board and the provisions of the Plan, to determine the amounts and types of
Awards; to determine the terms and conditions of such Awards; to construe and
interpret the Plan and any agreement or instrument entered into under the Plan;
to establish, amend or waive rules and regulations for the Plan’s
administration; and to amend the terms and conditions of any outstanding Award.
Further, the Committee shall make all other determinations that may be necessary
or advisable for the administration of the Plan. As permitted by law, the
Committee may delegate its authorities as identified hereunder.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its shareholders, Employees, Participants and their
estates and beneficiaries.
3.4 Costs. The Company shall pay all costs of administration of the Plan.
ARTICLE 4. ELIGIBILITY AND PARTICIPATION
4.1 Eligibility. All officers of the Company and other key Employees, as
determined by the Committee, are eligible to participate in the Plan.
4.2 Actual Participation. The Committee may, from time to time, select which
Eligible Employees shall be granted Awards and shall determine the type and
amount of each Award.
ARTICLE 5. STOCK APPRECIATION RIGHTS
5.1 Grants. SARs may be granted to Eligible Employees at any time and from
time to time by the Committee, which shall have complete discretion in
determining the number of SARs granted, the Exercise Period of such SARs and the
other terms and conditions pertaining to such SARs.
5.2 Exercise and Payment. A Participant may exercise an SAR at any time
during the Exercise Period by the delivery of a written notice of exercise to
the Company, setting forth the number of SARs being exercised. Upon exercise of
an SAR, a Participant shall be entitled to receive payment in cash from the
Company in an amount equal to the excess of (i) the Fair Market Value of one
Share on the date of exercise over (ii) the Base Value of the SAR.
5.3 Award Agreement. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the number of SARs granted, the Base Value, the Exercise
Period, the expiration date and such other provisions as the Committee shall
determine.
ARTICLE 6. STOCK UNITS
6.1 Grant. Stock Units may be granted to Eligible Employees at any time and
from time to time by the Committee, which shall have complete discretion in
determining the number of Stock Units granted, the Vesting Period of such Stock
Units and the other terms and conditions pertaining to such Stock Units.
6.2 Payment. After the applicable Vesting Period has ended, the holder of
Stock Units shall be entitled to receive, for each Stock Unit held, payment in
cash from the Company in an amount equal to the Fair Market Value of one Share
as determined as of the Valuation Period ending on the last day of the Vesting
Period. Payment shall be made as soon as practicable following the last business
day of the Vesting Period.
6.3 Award Agreement. Each Stock Unit grant shall be evidenced by an Award
Agreement that shall specify the number of Stock Units granted, the Vesting
Period and such other provisions as the Committee shall determine.
ARTICLE 7. DIVIDEND EQUIVALENTS
Simultaneously with the grant of Stock Units, the Committee may grant the
Participant Dividend Equivalents, to be credited to a bookkeeping entry account,
on each common stock dividend payment date with respect to the Shares subject to
such Award. In the case of cash dividends, the number of Dividend Equivalents
credited on each common stock dividend payment date shall equal the number of
Shares (including fractional Shares) that could be purchased on the dividend
payment date, based on the average of the opening and closing sale price, as
reported in the consolidated transaction reporting system on that date, with
cash dividends that would have been paid on Awards of Stock Units and on
Dividend Equivalents previously credited to such bookkeeping entry account, if
such Stock Units or Dividend Equivalents were Shares. In the case of stock
dividends, the number of Dividend Equivalents credited on each stock dividend
payment date shall be equal to the number of Shares (including fractional
Shares) that would have been issued as a stock dividend in respect of the
Participant’s Stock Units and on Dividend Equivalents previously credited to
such bookkeeping entry account, if such Stock Units or Dividend Equivalents were
Shares.
Participants shall receive cash payment from the Company of the Fair Market
Value of the Dividend Equivalents, if and when they receive payment of the
related Stock Units, the Fair Market Value of such Dividend Equivalents to be
determined in the same manner as for the related Stock Units.
The Committee may, in its discretion, establish such rules and procedures
governing the crediting of Dividend Equivalents, including timing and payment
contingencies that apply to the Dividend Equivalents, as the Committee deems
necessary or appropriate in order to comply with applicable law.
ARTICLE 8. CASH AWARDS
The Committee may, at any time and from time to time, make an Award to an
Eligible Employee payable in the form of a lump sum in cash in such amount as
determined by the Committee. Each such Award shall be payable at such time as
the Committee shall determine and, if applicable, as evidenced by an Award
Agreement that shall specify such provisions as the Committee shall determine.
ARTICLE 9. BENEFICIARY DESIGNATION; NONTRANSFERABILITY OF AWARDS
9.1 Designation of Beneficiary. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his death before he receives any or all of such benefit. Each such
designation shall revoke all prior designations by the same Participant, shall
be in a form prescribed by the Committee, and will be effective only when filed
by the Participant in writing with the Committee during the Participant’s
lifetime. In the absence of any such designation, benefits remaining unpaid at
the Participant’s death shall be paid to the Participant’s estate.
The spouse of a married Participant domiciled in a community property
jurisdiction shall join in any designation of beneficiary or beneficiaries other
than the spouse.
9.2 Nontransferability of Awards. No Award granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
Awards granted to a Participant under the Plan shall be exercisable/payable
during his or her lifetime only by or to such Participant or his or her legal
representative. Notwithstanding the foregoing, the Committee may in its
discretion authorize a participant to transfer all or a portion of any award to
the participant’s family members on such terms prescribed by the Committee.
ARTICLE 10. DEFERRALS
The Committee may permit a Participant to defer such Participant’s receipt of
the payment of cash that would otherwise be due to such Participant. If any such
deferral election is permitted, the Committee shall, in its sole discretion,
establish such rules and procedures as it deems necessary or desirable for such
payment deferrals.
ARTICLE 11. ADJUSTMENTS IN AWARDS
In the event of any merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock dividend, split-up, share combination or other
change in the corporate structure of the Company affecting the Shares, such
adjustment shall be made to the number of SARs and Stock Units under outstanding
Awards granted under the Plan and the Base Value of SARs, as may be determined
to be appropriate and equitable by the Committee, in its sole discretion, to
prevent dilution or enlargement of rights; provided, however, that the number of
SARs and Stock Units subject to an Award shall always be a whole number.
ARTICLE 12. NO RIGHTS OF EMPLOYEES
12.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant’s employment at any
time, for any reason or no reason, in the Company’s sole discretion, nor confer
upon any Participant any right to continue in the employ of the Company.
12.2 Awards. No Employee shall have the right to be selected to receive an
Award under the Plan, or, having been so selected, to be selected to receive a
future Award.
ARTICLE 13. TERMINATION OF EMPLOYMENT
13.1 In the event the employment of a participant is terminated for any
reason other than for Cause, or as set forth in Article 14,
(a) during a Vesting Period for Stock Units, the Participant shall
receive a full payout of the Stock Units and related Dividend Equivalents, as
and when provided in
Article 6.2 herein;
(b) before the Exercise Period commences for SARs subject to an
Award, such SARs may be exercised in full at any time during the one year period
commencing on
the day the Exercise Period begins; and
(c) during the Exercise Period for SARs, but before exercise, such
SARs may be exercised in full at any time during the one year period after such
termination, but
in no event after the Exercise Period for such SARs has
expired.
(d) all outstanding cash Awards shall be paid in full as and when
provided in Article 8.
ARTICLE 14. CORPORATE RESTRUCTURING; CHANGE IN CONTROL
14.1 Corporate Restructuring. In the event (i) the corporate restructuring
as contemplated by the Company’s Power Choice proposal filed with the New York
Public Service Commission on October 6, 1995, or any substantially similar
corporate restructuring (determined by the Committee), is implemented and
(ii) the employment of a Participant with the Company is terminated (other than
for Cause), then with respect to Awards granted prior to implementation of the
restructuring,
(a) during a Vesting Period for Stock Units, the Participant shall
receive a full payout of Stock Units and related Dividend Equivalents, as and
when provided in Article 7;
(b) before the Exercise Period commences for SARs subject to an
Award, such SARs may be exercised in full at any time during the one year period
commencing on
the day the Exercise Period begins;
(c) during the Exercise Period for SARs, but before exercise, such
SARs may be exercised in full at any time during the one year period after such
termination, but in
no event after the Exercise Period for such SARs has expired;
and
(d) all outstanding cash Awards shall be paid in full within 30 days
following termination.
14.2 Change In Control. Upon the occurrence of a Change in Control, as
defined herein, unless otherwise specifically prohibited by the terms of Article
18 herein:
(a) If the Change in Control results in cash payment for the
outstanding Shares and such Shares cease to be readily tradeable on a national
securities exchange which is registered under Section 6 of the Exchange Act or
on NASDAQ, then any and all SARs granted hereunder shall be deemed to have been
exercised on the date such Change in Control occurs;
(b) If the Change in Control does not result in a cash payment for the
outstanding Shares or such Shares continue to be readily tradeable on a national
securities exchange which is registered under Section 6 of the Exchange Act or
on NASDAQ, then any and all SARs granted hereunder shall be fully and
immediately exercisable and may be exercised at any time in full or in part from
time to time until the end of the Exercise period. In such event, if the Shares
are converted into the common stock of the Person referred to in subsection (1)
of Section 2.6, the corporation resulting from the reorganization, merger or
consolidation referred to in subsection (3) of Section 2.6 (the “Resulting
Corporation”) or the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities of such Person or the
Resulting Corporation (the “Ultimate Parent”), then (i) payments for SARS shall
be based on the value of the common stock of such Person, Resulting Corporation
or Ultimate Parent and (ii) the Base Value and number of SARs shall be
appropriately adjusted to reflect the per Share consideration received by the
holders of the Shares.
(c) Any Vesting Period with respect to Stock Units shall be deemed to
have expired, and there shall be paid out in cash to Participants within thirty
(30) days following the effective date of the Change in Control the cash payment
due with respect to such Stock Units and related Dividend Equivalents based on
the Fair Market Value of one Share on the effective date of the Change in
Control; and
(d) All outstanding cash Awards shall be paid in full within 30 days
following the effective date of the Change in Control.
ARTICLE 15. AMENDMENT, MODIFICATION AND TERMINATION
15.1 Amendment, Modification and Termination. The Board may, at any time and
from time to time, alter, amend, suspend or terminate the Plan in whole or in
part.
15.2 Awards Previously Granted. No termination, amendment or modification
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award, unless such termination, modification or amendment is required by
applicable law.
ARTICLE 16. TAX WITHHOLDING
The Company shall have the power and the right to deduct or withhold, or require
a Participant to remit to the Company, an amount sufficient to satisfy Federal,
state and local income and employment taxes required by law to be withheld with
respect to any taxable event arising out of or as a result of an Award made
under the Plan.
ARTICLE 17. SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 18. LEGAL CONSTRUCTION
18.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular and the singular shall include the plural.
18.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
18.3 Requirements of Law. The granting of Awards under the Plan shall be
subject to all applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
18.4 Governing Law. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with, and
governed by, the laws of the state of New York, without regard to conflicts of
law provisions. |
EXHIBIT 10.3 CONTINUING SECURITY AGREEMENT WELLS FARGO BANK
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RIGHTS TO PAYMENT AND INVENTORY
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1. GRANT OF SECURTY INTEREST. For valuable consideration, the
undersigned Fiberstars, Inc., or any of them (“Debtor”), hereby grants and
transfers to WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) a security interest
in all accounts, deposit accounts, chattel paper, instrument, documents and
general intangibles (collectively called “Rights to Payment”), now existing or
at any time hereafter, and prior to the termination hereof, arising (whether
they arise from the sale, lease or other disposition of inventor or from
performance of contracts for service, manufacture, construction, repair or
otherwise or from any other source whatsoever), including all securities,
guaranties, warranties, indemnity agreements, insurance policies and other
agreements pertaining to the same or the property described therein, and in all
goods returned by or repossessed from Debtor’s customers, together with a
security interest in all inventory, goods held for sale or lease or to be
furnished under contracts for service, goods so leased or furnished, raw
materials, component parts, work in process or materials used or consumed in
Debtor’s business and all warehouse receipts, bills of lading and other
documents evidencing goods owned or acquired by Debtor, and all goods covered
thereby, now or at any time hereafter, and prior to the termination hereof,
owned or acquired by Debtor, wherever located, and all products thereof
(collectively called “Inventory”), whether in the possession of Debtor,
warehousemen, bailees or any other person, or in process of delivery and whether
located at Debtor’s places of business of elsewhere (with all Rights to Payment
and Inventory referred to herein collectively as the “Collateral”), together
with whatever is receivable or received when any of the Collateral or proceeds
thereof are sold, leased, collected, exchanged or otherwise disposed of, whether
such disposition is voluntary or involuntary, including without limitation, all
Rights to Payment, including returned premiums, with respect to involuntary,
including with limitation, all Rights to Payment, including returned premiums,
with respect to any insurance relating to any of the foregoing, and all Rights
to Payment with respect to any cause of action affecting or relating to any of
the foregoing (hereinafter called “Proceeds”).
2. OBLIGATIONS SECURED. The obligations secured hereby are the payment
and performance of: (a) all present and future Indebtedness of Debtor to Bank;
(b) all obligations of Debtor and rights of Bank under this Agreement; and (c)
all present and future obligations of Debtor to Bank of other kinds. The word
“Indebtedness” is used herein in its most comprehensive sense and includes any
and all advances, debts, obligations and liabilities of Debtor, or any of them,
hereto fore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Debtor may
be liable individually or jointly, or whether recovery upon such Indebtedness
may be or hereafter becomes unenforceable.
3. TERMINATION. This Agreement will terminate upon the performance of
all obligations of Debtor o Bank, including without limitation, the payment of
all Indebtedness of Debtor to Bank, and the termination of all commitments of
Bank to extend credit to Debtor, existing at the time Bank receives written
notice from Debtor of the termination of this Agreement.
4. OBLIGATIONS OF BANK. Bank has no obligation to make any loans
hereunder. Any money received by Bank in respect of the Collateral may be
deposited, at Bank’s option, into a non-interest bearing account over which
Debtor shall have no control, and the same shall, for all purposes, be deemed
Collateral hereunder.
5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to
Bank that: (a) Debtor is the owner and has possession or control of the
Collateral and Proceeds; (b) Debtor has the right to grant a security interest
in the Collateral and Proceeds; (c) all Collateral and Proceeds are genuine,
free from liens, adverse claims, setoffs, default, prepayment, defenses and
conditions precedent of any kind or character, except the lien created hereby or
as otherwise agreed to by Bank, or heretofore disclosed by Debtor to Bank, in
writing; (d) all settlements contained herein and, where applicable, in the
Collateral are true and complete in all material respects; (e) no financing
statement covering any of the Collateral or Proceeds, and naming any public
office; (f) all persons appearing to be obligated on Rights to Payment and
Proceeds have authority and capacity to contract and are bound as they appear to
be; (g) all property subject to chattel paper has be properly registered and
filed in compliance with law and to perfect the interest of Debtor in such
property; and (h) all Rights to Payment and Proceeds comply with all applicable
laws concerning form, content and manner of preparation and execution, including
where applicable Federal Reserve Regulation Z and any State consumer credit
laws.
6. CONVENANTS OF DEBTOR.
(a) Debtor Agrees in general: (i) to pay Indebtedness
secured hereby when due; (ii) to Indemnify Bank against all losses, claims,
demands, liabilities, and expenses of every kind caused by property subject
hereto; (iii) to pay all costs and expenses, including reasonable attorneys’
fees, incurred by Bank in the perfection and preservation of the Collateral or
Bank’s interest therein and/or the realization, enforcement and exercise of
Bank’s rights, powers and remedies hereunder; (iv) to permit Bank to exercise
it’s power; (v) to execute and deliver such documents as Bank deems necessary to
create, perfect and continue the security interests contemplated hereby; and
(vi) not to change its chief place of business (or personal residence, if
applicable) or the place where Debtor keeps any of the Collateral or Debtor’s
records concerning the Collateral and Proceeds without first giving Bank written
notice of the address to which Debtor is moving same.
(b) Debtor agrees with regard to the Collateral and
Proceeds, unless Bank agrees otherwise in writing: (i) to insure Inventory and,
where applicable, Rights to Payment with Bank as loss payee, in form, substance
and amounts, under agreements, against risks and liabilities, and with insurance
companies satisfactory to Bank; (ii) not to use any Inventory for any unlawful
purpose or in anyway that would void any insurance required to be carried in
connection therewith; (iii) not to remove Inventory from Debtor’s premises,
except for deliveries to buyers in the ordinary course of Debtor’s business and
except Inventory which consists of mobile goods as defined in the California
Uniform Commercial Code, in which case Debtor agrees not to remove or permit the
removal of the Inventory from its state of domicile for a period in excess of 30
calendar days; (iv) not to permit any security interest in or lien on the
Collateral or Proceeds, including without limitation, liens arising from the
storage of Inventory, except in favor of Bank; (v) not to sell, hypothecate or
otherwise dispose of, nor permit the transfer by operation of law of, any of the
Collateral or Proceeds or any interest therein, except sales of Inventory to
buyers in the ordinary course of Debtor’s business; (vi) to furnish reports to
Bank of all acquisitions, returns, sales and other dispositions of the Inventory
in such form and detail and at such times as Bank may require; (vii) to permit
Bank to inspect the Collateral at any time ; (viii) to keep, in accordance with
generally accepted accounting principles, complete and accurate records
regarding all Collateral and Proceeds, and to permit Bank to inspect the same
and make copies thereof at any reasonable time; (ix) if requested by Bank, to
receive and use reasonable diligence to collect Rights to Payment and Proceeds,
in trust and as the property of Bank and to immediately endorse an appropriate
and deliver such Rights to Payment and Proceeds to Bank daily in the exact form
in which they are received together with a collection report in form
satisfactory to Bank; (x) not to commingle Rights to Payment , Proceeds or
collections thereunder with other property; (xi) to give only normal allowances
and credits and to advise Bank thereof immediately in writing if they affect any
Rights to Payment or Proceeds in any material respect; (xii) on demand, to
deliver to Bank returned property resulting from, or payment equal to, such
allowances or credits on any Rights to Payment or Proceeds or to execute such
documents and do such other things as Bank may reasonably request for the
purpose of perfecting, preserving and enforcing its security interest in such
returned property; (xiii) from time to time, when requested by Bank, to prepare
and deliver a schedule of all Collateral and Proceeds subject to this Agreement
and to assign in writing and deliver to Bank all accounts, contracts, leases and
other chattel paper, instruments, documents and other evidences thereof; (xiv)
in the event Bank elects to receive payments of Rights to Payment or Proceeds
hereunder, to pay all expenses incurred by Bank in connection therewith,
including expenses of accounting, correspondence, collection efforts, reporting
to account or contract debtors, filing, recording, record keeping and expenses
incidental thereto; and (xv) to provide any service and do any other acts which
may be necessary to maintain, preserve and protect all Collateral and, as
appropriate and applicable, to keep all Collateral in good and saleable
condition in accordance with the standards and practices adhered to generally by
users and manufacturers of like property, and to keep all Collateral and
Proceeds free and clear of all defenses, rights of offset and counterclaims.
7. POWERS OF BANK. Debtor appoints Bank its true attorney-in-fact to
perform any of the following powers, which are coupled with an interest, are
irrevocable until termination of this Agreement and may be exercised from time
to time by Bank’s officers and employees, or any of them, whether or not Debtor
is in default: (a) to perform any obligation of Debtor hereunder in Debtor’s
name or otherwise; (b) to give notice to account debtors or others of Bank’s
rights in the Collateral and Proceeds, to enforce the same and make extension
agreements with respect thereto; (c) to release persons liable on Proceeds and
to give receipts and acquittances and compromise disputes in connection
therewith; (d) to release security; (e) to resort to security in any order; (f)
to prepare, execute, file, record or deliver notes, assignments, schedules,
designation statements, financing statements continuation statements,
termination statements, statements of assignment, applications of registration
or like papers to perfect, preserve or release Bank’s interest in the Collateral
and Proceeds; (g) to receive, open and real mail address to Debtor; (h) to take
cash, instruments for the payment of money and other property to which Bank is
entitled; (I) to verify facts concerning the Collateral and Proceeds by inquiry
of obligors thereon, or otherwise, in its own name or a fictitious name; (j) to
endorse, collect, deliver and receive payment under instruments for the payment
of money constituting or relating to Proceeds; (k) to prepare, adjust, execute,
deliver and receive payment under insurance claims, and to collect and receive
payment of and endorse any instrument in payment of loss or returned premiums or
any other insurance refund or return, and to apply such amounts received by
Bank, at Bank’s sole option, toward repayment of the Indebtedness or replacement
of the Collateral; (l) to exercise all rights, powers and remedies which Debtor
would have, but for this agreement, with respect to all Collateral and Proceeds
subject hereto; (m) to enter onto Debtor’s premises in inspecting the
Collateral; (n) to make withdrawals from and to close deposit accounts or other
accounts with any financial institution, wherever located, into which Proceeds
may have deposited, and to apply funds so withdrawn to payment of the
Indebtedness; (o) to preserve or release the interest evidenced by chattel paper
to which Bank is entitled hereunder and to endorse and deliver evidences of
title incidental thereto; and (p) to do all acts and things and execute all
documents in the name of Debtor or otherwise, deemed by Bank as necessary,
proper and convenient in connection with the preservation, perfection or
enforcement of its rights hereunder.
8. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor
agrees to pay prior to delinquency, all insurance premiums, taxes, charges,
liens and assessments against the Collateral and Proceeds, and upon the failure
of Debtor to do so, Bank at its option may pay any of them and shall be the sole
judge of the legality or validity thereof and the amount necessary to discharge
the same. Any such payments made by Bank shall be obligations of Debtor to
Bank, due and payable immediately upon demand, together with interest at a rate
determined in accordance with the provisions of Section 15 herein, and shall be
secured by the Collateral and Proceeds, subject to all terms and conditions of
this Agreement.
9. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an “Event of Default” under this Agreement: (a) any default in the
payment or performance of any obligation, or any defined event of default, under
(i) any contract or instrument evidencing any Indebtedness, or (ii) any other
agreement between any Debtor and Bank, including without limitation any loan
agreement, relating to or executed in connection with any Indebtedness; (b) any
representation or warranty made by any Debtor herein shall prove to be incorrect
in any material respect when made; (c) any Debtor shall fail to observe or
perform any obligation or agreement contained herein; (d) any attachment or like
levy on any property of any Debtor; and (e) Bank, in good faith, believes any or
all of the Collateral and/or Proceeds to be in danger of misuse, dissipation,
commingling, loss, theft, damage or destruction, or otherwise in jeopardy or
unsatisfactory in character or value.
10. REMEDIES. Upon the occurrence of any Event of Default, Bank shall
have the right to declare immediately due and payable all or any Indebtedness
secured hereby and to terminate any commitments to make loans or otherwise
extend credit to Debtor. Bank shall have all other rights, powers, privileges
and remedies granted to a secured party upon default under the California
Uniform Commercial Code or otherwise provided by law, including without
limitation, the right to contact all persons obligated to Debtor on any
Collateral or Proceeds and to instruct such persons to deliver all Collateral
and/or Proceeds directly to Bank. All rights, powers, privileges and remedies
of Bank shall be cumulative. No delay, failure or discontinuance of Bank in
exercising any right, power, privilege or remedy hereunder shall affect or
operate as a waiver of such right, power, privilege or remedy; nor shall any
single or partial exercise of any such right, power, privilege or remedy
preclude, waive or otherwise affect any other or further exercise thereof or the
exercise of any other right, power, privilege or remedy. Any waiver, permit,
consent or approval of any kind by Bank of any default hereunder, or any such
waiver of any provisions or conditions hereof, must be in writing and shall be
effective only to the extent set forth in writing. It is agreed that public or
private sales, for cash or on credit, to a wholesaler or retailer or investor,
or user of property of the types subject to this Agreement, or public auction,
are all commercially reasonable since differences in the sales prices generally
realized in the different kinds of sales are ordinarily offset by the
differences in the costs and credit risks of such sales. While an Event Default
exists: (a) Debtor will deliver to Bank from time to time, as requested by Bank,
current lists of all Collateral and Proceeds; (b) Debtor will not dispose of any
of the Collateral or Proceeds except on terms approve by Bank; (c) at Bank’s
request, Debtor will assemble and deliver all Collateral and Proceeds, and books
and records pertaining thereto, to Bank at a reasonably convenient place
designated by Bank; and (d) Bank may, without notice to Debtor, enter onto
Debtor’s premises and take possession of the Collateral. With respect to any
sale by Bank of any Collateral subject to this Agreement, Debtor hereby
expressly grants to Bank the right to sell such Collateral using any or all of
Debtor’s trademarks, trade names, trade name rights and/or proprietary labeles
or marks.
11. DISPOSITION OF COLLATERAL AND PROCEEDS. Upon the transfer of all or
any part of the Indebtedness, Bank may transfer all or any part of the
Collateral or Proceeds and shall be fully discharged thereafter from all
liability and responsibility with respect to any of the foregoing so
transferred, and the transferee shall be vested with all rights and powers of
Bank hereunder with respect to any of the foregoing so transferred; but with
respect to any Collateral or Proceeds not so transferred Bank shall retain all
rights, powers, privileges and remedies herein given. Any proceeds of any
disposition of any of the Collateral or Proceeds, or any part thereof, may be
applied by Bank to the payment of expenses incurred by Bank in connection with
the foregoing, including reasonable attorney’s fees, and the balance of such
proceeds may be applied by Bank toward the payment of the Indebtedness in such
order of application as Bank may from time to time elect.
12. STATUTE OF LIMITATIONS. Until all Indebtedness shall have been paid
in full and all commitments by Bank to extend credit to Debtor have been
terminated, the power of sale and all other rights, powers, privileges and
remedies granted to Bank hereunder shall continue to exist and may be exercised
by Bank at any time and from time to time irrespective of the fact that the
Indebtedness or any part thereof may have become barred by any statute of
limitations, or that the personal liability of Debtor may have ceased, unless
such liability shall have ceased due tot the payment in full of all Indebtedness
secured hereunder.
13. MISCELLANEOUS. (a) The obligations of Debtor are joint and several;
(b) Debtor hereby waives any right (I) to require Bank to make any presentment
or demand, or give any notice of nonpayment or nonperformance, protest, notice
of protest or notice of dishonor hereunder, (ii) to direct the application of
payments or security for Indebtedness of Debtor or indebtedness of customers of
Debtor, or (iii) to require proceedings against others or to require exhaustion
of security; and (c) Debtor hereby consents to extensions, for bearances or
alterations of the terms of Indebtedness, the release or substitution of
security, and the release of any guarantors; provided however, that in each
instance, Bank believes in good faith that the action in question is
commercially reasonable in that it does not unreasonably increase the risk of
nonpayment of the Indebtedness to which the action applies. Until all
Indebtedness shall have been paid in full, no Debtor shall have any right of
subrogation or contribution, and each Debtor hereby waives any benefit of or
right to participate in any of the Collateral or Proceeds or any other security
now or hereafter held by Bank.
14. NOTICES. All notices, requests and demands required under this
Agreement must be in writing, addressed to Bank at the address specified in any
other loan documents entered into between Debtor and Bank and to Debtor at the
address of its chief executive office (or personal residence, if applicable)
specified below or to such other address as any party may designate by written
notice to each other party, and shall be deemed to have been given or made as
follows: (a) if personally delivered, upon delivery; (b) if sent by mail, upon
the earlier of the date of receipt or 3 days after deposit in the U.S. mail,
first class and postage prepaid; and (c) if sent by telecopy, upon receipt.
15. COSTS, EXPENSES AND ATTORNEYS’ FEES. Debtor shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys’ fees (to include outside
counsel feels and all allocated costs of Bank’s in-house counsel), expended or
incurred by Bank in exercising any right, power, privilege or remedy conferred
by this Agreement or in the enforcement thereof, whether incurred at the trial
or appellate level, in an arbitration proceeding or otherwise, and including any
of the foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding, contested matter or
motion brought by Bank or any other person) relating to Debtor or in any way
affecting any of the Collateral or Bank’s ability to exercise any of its rights
or remedies with respect thereto. All of the foregoing shall be paid by Debtor
with interest from the date of demand until paid in full at a rate per annum
equal to the greater of ten percent (10%) or Bank’s Prime Rate in effect from
time to time.
16. SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement shall be binding upon
and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties, and may be amended or
modifies only in writing signed by Bank and Debtor.
17. OBLIGATIONS OF MARRIED PERSONS. Any married person who signs this
Agreement as Debtor hereby expressly agrees that recourse may be had against his
or her separate property for all his or her Indebtedness to Bank secured by the
Collateral and Proceeds under this Agreement.
18. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall
be held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision of such provision or any
remaining provisions of this Agreement.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the law of the State of California.
Debtor warrants that its chief executive office (or personal residence, if
applicable) is located at the following address: 44259 NOBEL DRIVE, FREMONT,
CA 94538
Debtor warrants that the Collateral (except goods in transit) is located or
domiciled at the following additional address:
NONE
IN WITNESS WHEREOF, this Agreement has been duly executed as of March 23,
2001.
Fiberstars, Inc.
By: /s/ Robert A. Connors
Title: Chief Financial Officer
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Exhibit 10.3.6.1
WESTAFF, INC.
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of Westaff, Inc. (the "Corporation"):
Optionee: Tom D. Seip
Grant Date: May 1, 2001
Vesting Commencement Date: May 1, 2001
Exercise Price: $2.05 per share
Number of Option Shares: 243,900 shares
Expiration Date: April 30, 2011
Type of Option: Incentive Stock Option
Exercise Schedule: The Option shall vest in accordance with the following
schedule. In no event shall the Option become exercisable for any additional
Option Shares after Optionee's cessation of Service.
Date
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Vested Option Shares
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Vesting Commencement Date 48,780 First Anniversary of the Vesting Commencement
Date 48,780 Second Anniversary of the Vesting Commencement Date 48,780 Third
Anniversary of the Vesting Commencement Date 48,780 Fourth Anniversary of the
Vesting Commencement Date 48,780
Optionee understands and agrees that the Option is granted subject to and in
accordance with the terms of the Westaff, Inc. 1996 Stock Option/Stock Issuance
Plan (the "Plan"). Optionee further agrees to be bound by the terms of the Plan
and the terms of the Option as set forth in the Stock Option Agreement attached
hereto as Exhibit A. Optionee hereby acknowledges receipt of a copy of the
official prospectus for the Plan and a copy of the Plan in the forms attached
hereto as Exhibit B.
The foregoing provisions of this section are pursuant to the terms of the
Employment Agreement.
No Employment or Service Contract. Nothing in this Grant Notice or in the
attached Stock Option Agreement or in the Plan shall confer upon Optionee any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining Optionee) or of Optionee, which
rights are hereby expressly reserved by each, to terminate Optionee's Service at
any time for any reason, with or without cause, subject to the terms of any
effective employment agreement between the Corporation (or any Parent or
Subsidiary employing or retaining Optionee) and Optionee.
Definitions. All capitalized terms in this Grant Notice shall have the
meaning assigned to them in this Grant Notice or in the attached Stock Option
Agreement.
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Date: May 1, 2001
WESTAFF, INC.
By:
/s/ W. Robert Stover
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W. Robert Stover
Title: Chairman of the Board
/s/ Tom D. Seip
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Tom D. Seip, OPTIONEE
Address: 30 Ridge Lane Orinda, California 94563
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EXHIBIT A
STOCK OPTION AGREEMENT
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WESTAFF, INC.
STOCK OPTION AGREEMENT
RECITALS
A. The Corporation has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or the board
of directors of any Parent or Subsidiary and consultants and other independent
advisors who provide services to the Corporation (or any Parent or Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a Parent
or Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Corporation's grant
of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of the
Grant Date, an option to purchase up to the number of Option Shares specified in
the Grant Notice. The Option Shares shall be purchasable from time to time
during the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a term of ten (10) years measured
from the Grant Date and shall accordingly expire at the close of business on the
Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6.
3. Limited Transferability. This option shall be neither transferable nor
assignable by Optionee other than by will or by the laws of descent and
distribution following Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee.
4. Dates of Exercise. This option shall become exercisable for the Option
Shares in one or more installments as specified in the Grant Notice. As the
option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. Cessation of Service. The option term specified in Paragraph 2 shall
terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service for any reason (other than
death, Permanent Disability, Cause or termination of Service by the Corporation
(or any Parent or Subsidiary employing or retaining Optionee) for any reason
other than Cause) while this option is outstanding, then Optionee shall have a
period of three (3) months (commencing with the date of such cessation of
Service) during which to exercise this option, but in no event shall this option
be exercisable at any time after the Expiration Date.
(b) Should the Corporation (or any Parent or Subsidiary employing or
retaining Optionee) terminate Optionee's Service for any reason other than Cause
while this option is outstanding, then Optionee shall have a period of twelve
(12) months (commencing with the date of such cessation of Service) during which
to exercise this option, but in no event shall this option be exercisable at any
time after the Expiration Date.
(c) Should Optionee die while this option is outstanding, then the personal
representative of Optionee's estate or the person or persons to whom the option
is transferred
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pursuant to Optionee's will or in accordance with the laws of descent and
distribution shall have the right to exercise this option. Such right shall
lapse, and this option shall cease to be outstanding, upon the earlier of
(i) the expiration of the twelve (12)-month period measured from the date of
Optionee's death or (ii) the Expiration Date.
(d) Should Optionee cease Service by reason of Permanent Disability while
this option is outstanding, then Optionee shall have a period of twelve
(12) months (commencing with the date of such cessation of Service) during which
to exercise this option. In no event shall this option be exercisable at any
time after the Expiration Date.
(e) Should Optionee's Service be terminated for Cause, then this option
shall terminate immediately and cease to remain outstanding.
(f) During the applicable post-Service exercise period, this option may not
be exercised in the aggregate for more than the number of vested Option Shares
for which the option is exercisable at the time of Optionee's cessation of
Service. Upon the expiration of such exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding for any
vested Option Shares for which the option has not been exercised. However, this
option shall, immediately upon Optionee's cessation of Service for any reason,
terminate and cease to be outstanding with respect to any Option Shares in which
Optionee is not otherwise at that time vested or for which this option is not
otherwise at that time exercisable.
6. Special Acceleration of Option.
(a) Corporate Transaction.
(i) This option, to the extent outstanding at the time of a Corporate
Transaction but not otherwise fully exercisable, shall automatically accelerate
so that this option shall, immediately prior to the effective date of such
Corporate Transaction become exercisable for all of the Option Shares at the
time subject to this option and may be exercised for any or all of those Option
Shares as fully-vested shares of Common Stock. Immediately following the
Corporate Transaction, this option, to the extent not previously exercised,
shall terminate and cease to be outstanding or exercisable except to the extent
assumed by the successor corporation (or parent thereof) in connection with such
Corporate Transaction.
(ii) If this option is assumed in connection with a Corporate Transaction,
then this option shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
(b) Change in Control/Hostile Take-Over. In the event of a Change in
Control or Hostile Take-Over, this option, to the extent outstanding but not
otherwise fully exercisable, shall automatically accelerate so that this option
shall, immediately prior to the effective date of such Change in Control or
Hostile Take-Over, become exercisable for all the Option Shares at the time
subject to the option and may be exercised for any or all of the Option Shares
as fully-vested shares of Common Stock. This option shall remain exercisable for
such fully-vested Option Shares until the earlier to occur of the Expiration
Date or the sooner termination of this option in accordance with Paragraphs 5 or
6(a).
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(c) This Agreement shall not in any way affect the right of the Corporation
to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
7. Adjustment in Option Shares. Should any change be made to the Common
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
8. Stockholder Rights. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or any part of the
Option Shares for which this option is at the time exercisable, Optionee (or any
other person or persons exercising the option) must take the following actions:
(i) Execute and deliver to the Corporation a Notice of Exercise for the
Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased shares in one or
more of the following forms:
(A) cash or check made payable to the Corporation;
(B) shares of Common Stock held by Optionee (or any other person or persons
exercising the option) for the requisite period necessary to avoid a charge to
the Corporation's earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or
(C) to the extent this option is exercised for vested Option Shares, through
a special sale and remittance procedure pursuant to which Optionee (or any other
person or persons exercising the option) shall concurrently provide irrevocable
written instructions (I) to a Corporation-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the Corporation, out of
the sale proceeds available on the settlement date, sufficient funds to cover
the aggregate Exercise Price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (II) to the
Corporation to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction. Except to the
extent the sale and remittance procedure is utilized in connection with the
option exercise, payment of the Exercise Price must accompany the Notice of
Exercise delivered to the Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate documentation that the person
or persons exercising the option (if other than Optionee) have the right to
exercise this option.
(iv) Make appropriate arrangements with the Corporation (or Parent or
Subsidiary employing or retaining Optionee) for the satisfaction of all Federal,
state and local income and employment tax withholding requirements applicable to
the option exercise.
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(b) As soon as practical after the Exercise Date, the Corporation shall
issue to or on behalf of Optionee (or any other person or persons exercising
this option) a certificate for the purchased Option Shares, with the appropriate
legends affixed thereto.
(c) In no event may this option be exercised for any fractional shares.
10. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of the Option Shares upon
such exercise shall be subject to compliance by the Corporation and Optionee
with all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the Nasdaq National Market, if applicable)
on which the Common Stock may be listed for trading at the time of such exercise
and issuance.
(b) The inability of the Corporation to obtain approval from any regulatory
body having authority deemed by the Corporation to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option shall relieve the
Corporation of any liability with respect to the non-issuance or sale of the
Common Stock as to which such approval shall not have been obtained. The
Corporation, however, shall use its best efforts to obtain all such approvals.
11. Successors and Assigns. Except to the extent otherwise provided in
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.
12. Notices. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
13. Construction. This Agreement and the option evidenced hereby are made
and granted pursuant to the Plan and are in all respects limited by and subject
to the terms of the Plan. All decisions of the Plan Administrator with respect
to any question or issue arising under the Plan or this Agreement shall be
conclusive and binding on all persons having an interest in this option.
14. Governing Law. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
15. Additional Terms Applicable to an Incentive Option. In the event this
option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
(a) This option shall cease to qualify for favorable tax treatment as an
Incentive Option if (and to the extent) this option is exercised for one or more
Option Shares: (A) more than three (3) months after the date Optionee ceases to
be an Employee for any reason other than death or Permanent Disability or
(B) more than twelve (12) months after the date Optionee ceases to be an
Employee by reason of Permanent Disability.
(b) No installment under this option shall qualify for favorable tax
treatment as an Incentive Option if (and to the extent) the aggregate Fair
Market Value (determined at the Grant Date) of the Common Stock for which such
installment first becomes exercisable hereunder would, when added to the
aggregate value (determined as of the respective date or
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dates of grant) of the Common Stock or other securities for which this option or
any other Incentive Options granted to Optionee prior to the Grant Date (whether
under the Plan or any other option plan of the Corporation or any Parent or
Subsidiary) first become exercisable during the same calendar year, exceed One
Hundred Thousand Dollars ($100,000) in the aggregate. Should such One Hundred
Thousand Dollar ($100,000) limitation be exceeded in any calendar year, this
option shall nevertheless become exercisable for the excess shares in such
calendar year as a Non-Statutory Option.
(c) Should the exercisability of this option be accelerated upon a Corporate
Transaction, Change in Control or Hostile Take-Over, then this option shall
qualify for favorable tax treatment as an Incentive Option only to the extent
the aggregate Fair Market Value (determined at the Grant Date) of the Common
Stock for which this option first becomes exercisable in the calendar year in
which the Corporate Transaction, Change in Control or Hostile Take-Over occurs
does not, when added to the aggregate value (determined as of the respective
date or dates of grant) of the Common Stock or other securities for which this
option or one or more other Incentive Options granted to Optionee prior to the
Grant Date (whether under the Plan or any other option plan of the Corporation
or any Parent or Subsidiary) first become exercisable during the same calendar
year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate. Should
the applicable One Hundred Thousand Dollar ($100,000) limitation be exceeded in
the calendar year of such Corporate Transaction, Change in Control or Hostile
Take-Over, the option may nevertheless be exercised for the excess shares in
such calendar year as a Non-Statutory Option.
(d) Should Optionee hold, in addition to this option, one or more other
options to purchase Common Stock which become exercisable for the first time in
the same calendar year as this option, then the foregoing limitations on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
16. Leave of Absence. The following provisions shall apply upon Optionee's
commencement of an authorized leave of absence:
(a) The exercise schedule in effect under the Grant Notice shall be frozen
as of the first day of the authorized leave, and the option shall not become
exercisable for any additional installments of the Option Shares during the
period Optionee remains on such leave.
(b) Should Optionee resume active Employee status within sixty (60) days
after the start date of the authorized leave, Optionee shall, for purposes of
the exercise schedule set forth in the Grant Notice, receive Service credit for
the entire period of such leave. If Optionee does not resume active Employee
status within such sixty (60)-day period, then no Service credit shall be given
for the period of the leave.
(c) If the option is designated as an Incentive Stock Option in the Grant
Notice, then the following additional provision shall apply:
If the leave of absence continues for more than ninety (90) days, then the
option shall automatically convert to a Non-Statutory Option under the federal
tax laws on the day three (3) months and one (1) day following the ninety-first
(91st) day of such leave, unless Optionee's reemployment rights are guaranteed
by statute or by written agreement. Following any such conversion of the option,
all subsequent exercises of such option, whether effected before or after
Optionee's return to active Employee status, shall result in an immediate
taxable event, and the Corporation shall be required to collect from Optionee
the federal, state and local income and employment withholding taxes applicable
to such exercise.
(d) In no event shall this option become exercisable for any additional
Option Shares or otherwise remain outstanding if Optionee does not resume
Employee status prior to the Expiration Date of the option term.
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EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Westaff, Inc. (the "Corporation") that I elect to purchase
shares of the Corporation's Common Stock (the "Purchased Shares") at the option
exercise price of $2.05 per share (the "Exercise Price") pursuant to that
certain option (the "Option") granted to me under the Corporation's 1996 Stock
Option/Stock Issuance Plan on May 1, 2001.
Concurrently with the delivery of this Notice of Exercise to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price for any Purchased Shares in which I am at the time vested.
, 200
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Date
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Optionee
Address:
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Print name in exact manner it
is to appear on the stock
certificate:
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Address to which certificate
is to be sent, if different from
address above:
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Social Security Number:
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Employee Number:
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APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
B. Board shall mean the Corporation's Board of Directors.
C. Cause shall mean as such term is expressly defined in the Employment
Agreement.
D. Change in Control shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(a) the acquisition directly or indirectly by any person or related group of
persons (other than the Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept;
(b) or a change in the composition of the Board over a period of thirty-six
(36) consecutive months or less such that a majority of the Board members
ceases, by reason of one or more contested elections for Board membership, to be
comprised of individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (A) who were still in office at the time such
election or nomination was approved by the Board.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
F. Common Stock shall mean the Corporation's common stock, with par value
of $0.01 per share.
G. Corporate Transaction shall mean either of the following stockholder
approved transactions to which the Corporation is a party:
(a) a merger or consolidation in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or
(b) the sale, transfer or other disposition of all or substantially all of
the Corporation's assets in complete liquidation or dissolution of the
Corporation.
H. Corporation shall mean Westaff, Inc., a Delaware corporation.
I. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
J. Employment Agreement shall mean the Employment Agreement, effective as
of May 1, 2001, among Optionee, the Corporation and Westaff Support, Inc., or
any successor employment agreement entered into between Optionee, the
Corporation and/or any Parent or Subsidiary employing or retaining Optionee from
time to time.
K. Exercise Date shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.
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L. Exercise Price shall mean the exercise price per share as specified in
the Grant Notice.
M. Expiration Date shall mean the date on which the option expires as
specified in the Grant Notice.
N. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(a) If the Common Stock is at the time traded on the Nasdaq National Market,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question, as the price is reported by the National
Association of Securities Dealers on the Nasdaq National Market or any successor
system. If there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(b) If the Common Stock is at the time listed on any Stock Exchange, then
the Fair Market Value shall be the closing selling price per share of Common
Stock on the date in question on the Stock Exchange determined by the Plan
Administrator to be the primary- market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
O. Grant Date shall mean the date of grant of the option as specified in
the Grant Notice.
P. Grant Notice shall mean the Notice of Grant of Stock Option accompanying
the Agreement, pursuant to which Optionee has been informed of the basic terms
of the option evidenced hereby.
Q. Hostile Take-Over shall mean a change in ownership of the Corporation
effected through the following transaction:
(a) the direct or indirect acquisition by any person or related group of
persons (other than the Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept, and
(b) the acceptance of more than fifty percent (50%) of the securities so
acquired in such tender or exchange offer from holders other than the officers
and directors of the Corporation subject to the short-swing profit restrictions
of Section 16 of the 1934 Act.
R. Incentive Option shall mean an option which satisfies the requirements
of Code Section 422.
S. Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
T. Notice of Exercise shall mean the notice of exercise in the form
attached hereto as Exhibit I.
U. Option Shares shall mean the number of shares of Common Stock subject to
the option as specified in the Grant Notice.
V. Optionee shall mean the person to whom the option is granted as
specified in the Grant Notice.
W. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than
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the Corporation) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
X. Permanent Disability shall mean the inability of Optionee to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
Y. Plan shall mean the Corporation's 1996 Stock Option/Stock Issuance Plan,
as amended and restated from time to time.
Z. Plan Administrator shall mean either the Board or a committee of Board
members, to the extent the committee is at the time responsible for the
administration of the Plan.
AA. Service shall mean Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
BB. Stock Exchange shall mean the American Stock Exchange or the New York
Stock Exchange.
CC. Subsidiary shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
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QuickLinks
Exhibit 10.3.6.1
WESTAFF, INC. NOTICE OF GRANT OF STOCK OPTION
EXHIBIT A STOCK OPTION AGREEMENT
WESTAFF, INC. STOCK OPTION AGREEMENT
EXHIBIT I NOTICE OF EXERCISE
APPENDIX
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Exhibit 10.23
Notice of Grant of Stock Option
and Option Agreement Wind River Systems, Inc.
ID: 94-2873391
500 Wind River Way Alameda, CA 94501
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[Name of Optionholder]
[Address of Optionholder]
Option Number:
Plan:
[Option Number]
1998 Equity Incentive Plan
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Effective on [Date of Grant] (the "Date of Grant"), you have been granted a(n)
Non-Qualified Stock Option to buy [Number of Shares] shares of Wind River
Systems, Inc. (the Company) stock at $[Price Per Share] per share. The date on
which your shares begin to vest is [Vesting Start Date] (the "Vesting Start
Date").
The total option price of the shares granted is [Total Exercise Price of
Option].
Shares in each period will become fully vested on the date shown.
Shares
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Vest Type
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Full Vest
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Expiration Date
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[Number of Shares] On Vest Date [Month/Day/Year] [Month/Day/Year] [Number
of Shares] Monthly [Month/Day/Year] [Month/Day/Year]
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By your signature and the Company's signature below, you and the Company agree
that this option is granted under and governed by the terms and conditions of
the Company's Stock Option Plan (see above reference to plan) as amended and
made available on the Wind River internal web site and the attached Option
Agreement, both of which are incorporated by reference and made a part of this
document.
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Wind River Systems, Inc. Date
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[Name of Optionholder] Date
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ATTACHMENT I
Wind River Systems, Inc.
1998 Equity Incentive Plan
Nonstatutory Stock Option Agreement
Pursuant to your Notice of Grant of Stock Option ("Grant Notice") and this
Stock Option Agreement, Wind River Systems, Inc. (the "Company") has granted you
an option under its 1998 Equity Incentive Plan (the "Plan") to purchase the
number of shares of the Company's Common Stock indicated in your Grant Notice at
the exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.
The details of your option are as follows:
1. Vesting. Subject to the limitations contained herein, your option will vest
as provided in your Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service.
2. Number of Shares and Exercise Price. The number of shares of Common Stock
subject to your option and your exercise price per share referenced in your
Grant Notice may be adjusted from time to time for capitalization adjustments,
as provided in Section 11 of the Plan.
3. Method of Payment. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or in the following manner:
(a) In the Company's sole discretion at the time your option is exercised
and provided that at the time of exercise the Common Stock is publicly traded
and quoted regularly in The Wall Street Journal, pursuant to a program developed
under Regulation T as promulgated by the Federal Reserve Board that, prior to
the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.
4. Whole Shares. You may exercise your option only for whole shares of Common
Stock.
5. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act.
The exercise of your option must also comply with other applicable laws and
regulations governing your option, and you may not exercise your option if the
Company determines that such exercise would not be in material compliance with
such laws and regulations.
6. Term. You may not exercise your option before the commencement of its term
or after its term expires. The term of your option commences on the Date of
Grant and expires upon the earliest of the following:
(a) three (3) months after the termination of your Continuous Service for
any reason other than your Disability or death, provided that if during any part
of such three- (3-) month period your option is not exercisable solely because
of the condition set forth in the preceding paragraph relating to "Securities
Law Compliance," your option shall not expire until the earlier of the
Expiration Date or until it shall have been exercisable for an aggregate period
of three (3) months after the termination of your Continuous Service;
(b) twelve (12) months after the termination of your Continuous Service due
to your Disability;
2
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(c) eighteen (18) months after your death if you die either during your
Continuous Service or within three (3) months after your Continuous Service
terminates;
(d) the Expiration Date indicated in your Grant Notice; or
(e) the day before the tenth (10th) anniversary of the Date of Grant.
7. Exercise.
(a) You may exercise the vested portion of your option (and the unvested
portion of your option if your Grant Notice so permits) during its term by
delivering a Notice of Exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require.
(b) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option or (2) the disposition of shares of Common Stock acquired upon such
exercise.
8. Transferability.
[For non-officers: Your option is not transferable, except by will or by the
laws of descent and distribution, and is exercisable during your life only by
you. Notwithstanding the foregoing, by delivering written notice to the Company,
in a form satisfactory to the Company, you may designate a third party who, in
the event of your death, shall thereafter be entitled to exercise your option.]
[For officers: If your option is a nonstatutory stock option, your option is
not transferable, except (i) by will or by the laws of descent and distribution,
(ii) with the prior written approval of the Company, by instrument to an inter
vivos or testamentary trust, in a form accepted by the Company, in which the
option is to be passed to beneficiaries upon the death of the trustor (settlor)
and (iii) with the prior written approval of the Company, by gift, in a form
accepted by the Company, to your "immediate family" as that term is defined in
17 C.F.R. 240.16a-1(e). The term "immediate family" is defined in 17 C.F.R.
240.16a-1(e) to mean any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, and includes adoptive
relationships. Your option is exercisable during your life only by you or a
transferee satisfying the above-stated conditions. The right of a transferee to
exercise the transferred portion of your option after termination of your
Continuous Service shall terminate in accordance with your right to exercise
your option as specified in your option. In the event that your Continuous
Service terminates due to your death, your transferee will be treated as a
person who acquired the right to exercise your option by bequest or inheritance.
In addition to the foregoing, the Company may require, as a condition of the
transfer of your option to a trust or by gift, that your transferee enter into
an option transfer agreement provided by, or acceptable to, the Company. The
terms of your option shall be binding upon your transferees, executors,
administrators, heirs, successors, and assigns. Notwithstanding the foregoing,
by delivering written notice to the Company, in a form satisfactory to the
Company, you may designate a third party who, in the event of your death, shall
thereafter be entitled to exercise your option.]
9. Option not a Service Contract. Your option is not an employment or service
contract, and nothing in your option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an Affiliate, or of the Company or an Affiliate to continue your employment.
In addition, nothing in your option shall obligate the Company or an Affiliate,
their respective shareholders, Boards of Directors, Officers or Employees to
continue any relationship that you might have as a Director or Consultant for
the Company or an Affiliate.
3
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10. Withholding Obligations.
(a) At the time you exercise your option, in whole or in part, or at any
time thereafter as requested by the Company, you hereby authorize withholding
from payroll and any other amounts payable to you, and otherwise agree to make
adequate provision for (including by means of a "cashless exercise" pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with your option.
(b) Upon your request and subject to approval by the Company, in its sole
discretion, and compliance with any applicable conditions or restrictions of
law, the Company may withhold from fully vested shares of Common Stock otherwise
issuable to you upon the exercise of your option a number of whole shares of
Common Stock having a Fair Market Value, determined by the Company as of the
date of exercise, not in excess of the minimum amount of tax required to be
withheld by law. Any adverse consequences to you arising in connection with such
share withholding procedure shall be your sole responsibility.
(c) You may not exercise your option unless the tax withholding obligations
of the Company and/or any Affiliate are satisfied. Accordingly, you may not be
able to exercise your option when desired even though your option is vested, and
the Company shall have no obligation to issue a certificate for such shares of
Common Stock or release such shares of Common Stock from any escrow provided for
herein.
11. Notices. Any notices provided for in your option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.
12. Governing Plan Document. Your option is subject to all the provisions of
the Plan, the provisions of which are hereby made a part of your option, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of your option and those of the
Plan, the provisions of the Plan shall control.
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ATTACHMENT II
NOTICE OF EXERCISE
Wind River Systems, Inc.
500 Wind River Way
Alameda, CA 94501 Date of Exercise:
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.
Type of option (check one): Incentive / / Nonstatutory / /
Effective Date of Option/Date of Grant:
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Number of shares as to which option is exercised:
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Certificate(s) to be issued in the name of:
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Total exercise price:
$
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Cash payment delivered herewith:
$
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By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the 1998 Equity Incentive Plan and (ii) to
provide for the payment by me to you (in the manner designated by you) of your
withholding obligation, if any, relating to the exercise of this option.
Very truly yours,
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(Signature)
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(Print Name)
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QuickLinks
ATTACHMENT I Wind River Systems, Inc. 1998 Equity Incentive Plan Nonstatutory
Stock Option Agreement
ATTACHMENT II NOTICE OF EXERCISE
|
Exhibit 10.8
DATED: July 28, 2001
(1) HOLLEY GROUP SHARE HOLDING CO., LTD.
(Parent Company) and (2) PACIFICNET.COM, INC.
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AGREEMENT
for the sale and purchase of an equity interest in a Joint Venture to be formed
in the People’s Republic of China
by Holley Group Co., Ltd.
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[j1278ex10d8image001.gif]
SOLICITORS
10th Floor,
Hutchison House,
10 Harcourt Road,
Central, Hong Kong.
Tel: (852) 2230 3500 Fax: (852) 2899 2996
Website: www.prestongates.com
Our ref.: 44036-00006/NKA-KA1L/KA1L
CONTENTS
Clause Heading 1 Interpretation 2 Sale of Shares 3 Consideration 4
Conditions 5 Completion 6 Representations and warranties 7 Special Terms 8
Confidentiality and Exclusive Negotiation 9 Outsourcing 10 Release 11 Further
Assurance, Attorney, Information and Debts 12 Costs 13 Announcements 14 Return
of Documents 15 Complete Agreement 16 Assignment 17 Severability 18 Counterparts
19 Remaining in Force 20 Time of the Essence 21 No Waiver 22 Notices 23
Governing Law and Jurisdiction
THIS AGREEMENT is made the 28th day of
July 2001.
BETWEEN:
(1) HOLLEY GROUP SHARE HOLDING CO., LTD (Parent Company) a company existing
under the laws of the People’s Republic of China whose principal place of
business is at No. 78 Morganshan Road, Hangzhou 310005, People’s Republic of
China (“Vendor”); and (2) PACIFICNET.COM, Inc. a company existing under the
laws of the State of Delaware in the United States of America and having its
registered office at 7808 Creekridge Circle, Suite 101, Bloomington, MN 55439,
United States of America (the “Purchaser”) WHEREAS: A. As at the date
hereof, the Vendor and its Subsidiaries (“the Vendor Group”) are principally
engaged in operations covering electrical instruments, electronic materials,
fine chemicals and real estate (“Holley Business”). The Group includes 16
manufacturing enterprises and two public companies which are listed on certain
stock exchanges in the PRC (Holley Holding, Code: 0607; ST Hengtai, Code:
600097). B. The Vendor and the Purchaser are desirous of entering into a
joint venture in the PRC such that the Purchaser shall own a 51% legal and
beneficial interest in the Joint Venture (as defined below) and the Vendor shall
own a 49% legal and beneficial interest in the Joint Venture. In order to
facilitate the joint venture relationship between the parties, it has been
agreed that the Purchaser shall purchase from the Vendor, either directly or
indirectly, the said 51% interest in the Joint Venture (“Sale and Purchase”).
In order to facilitate such Sale and Purchase, it is agreed that the Vendor
shall immediately after execution of this Agreement either :- (a) within
45 days of the date of this Agreement form (subject to the approval of the
Purchaser) the Joint Venture whereby the shareholding structure of the Joint
Venture shall allow and permit, in accordance with all rules, regulations and
laws of the PRC (together with all legal and government approvals being
obtained) for the Purchaser to directly purchase and hold an interest in the
Joint Venture from the Vendor (“Holley JV Structure”); or (b) in the
event the Vendor is unable to form the Joint Venture based on the Holley JV
Structure or the Purchaser (for any reason whatsoever) disapproves of the Holley
JV Structure, then the Vendor shall procure that there be formed and
incorporated in the British Virgin Islands a private company limited by shares
in accordance with the laws of the British Virgin Islands ( the “Company”) for
the sole purpose of holding and owning 51% of the entire equity interest in the
Joint Venture and whereby the Vendor shall own 100% of the entire issued share
capital of and in the Company after the Company’s incorporation and immediately
prior to Completion and to be transferred and assigned to the Purchaser at
Completion (“BVI JV Structure”).
C. The Vendor shall immediately after the execution of this Agreement procure to
be formed and established (subject to the approval of the Purchaser) a PRC
Sino-foreign co-operative joint venture enterprise (“Joint Venture”) whereby the
Purchaser shall upon Completion be the legal and beneficial owner of 51% of the
Joint Venture (whether directly under the Holley JV Structure or indirectly
under the BVI JV Structure) and the Vendor has agreed it will become the legal
and beneficial owner of 49% of the Joint Venture upon incorporation of the Joint
Venture. The Vendor shall be responsible (subject to the approval of the
Purchaser) of procuring all agreements and documents be entered into by all
necessary parties and person in order to form the Joint Venture, including the
JV Agreement (hereinafter defined). D. The Vendor will transfer to the Joint
Venture its interest in such portion of its business comprising cash, working
capital and business assets (“Injected Business”) equal to the lesser amount
of: USD$1million; OR Operating Cash Reserve Requirements
of the Joint Venture, being the sum of total monthly operating expenses and
costs of good sold of the Joint Venture (derived from the proforma Joint Venture
information provided under Clause 4.1.9) divided by 6. E. In addition to
the JV Agreement, the Vendor shall, immediately after the signing of this
Agreement, enter into the Extinguishment Agreement (hereinafter defined) to the
effect that the Vendor shall upon the transfer of the Injected Business to the
Joint Venture, extinguish and keep the Purchaser fully indemnified against all
debts and liabilities attributable to the Injected Business which have arisen
prior to such transfer. F. Subject to the above, the Vendor has agreed to
sell and Purchaser has agreed to purchase from the Vendor the Sale Shares
subject to and in accordance with the terms and conditions hereinafter set out.
NOW IT IS HEREBY AGREED as follows : 1. INTERPRETATION 1.1 The
Recitals and Schedules form part of this Agreement and shall have the same force
and effect as if expressly set out in the body of this Agreement and any
reference to this Agreement shall include the Recitals and Schedules. 1.2 In
this Agreement except where the context otherwise requires the following words
and expressions shall have the following meanings:
"Accounts" the audited financial statements (including balance sheet and profit
and loss account) relating to the Injected Business and each of the Joint
Venture, the Vendor, the Company (if applicable) and of each of their respective
Subsidiaries prepared in accordance with generally accepted accounting
principles in the PRC if in relation to the Vendor and each of its Subsidiaries
(excluding the Company), and in accordance with generally accepted accounting
principles of the United States if in relation to the Injected Business, the
Joint Venture and the Company (if applicable) and each of their respective
Subsidiaries; this “Agreement” means this agreement, and reference to this
Agreement shall be construed as references to this Agreement as it may be
amended or supplemented from time to time by the parties hereto in writing;
“Articles of Association” means the articles of association and the terms
thereof of the Joint Venture to be negotiated by the Vendor and the Purchaser in
good faith and the terms of which are to be mutually agreed upon by the parties
on or before the Conditions Precedent Date subject at all times that the final
version as executed or to be executed shall be in such form and substance
satisfactory to the Purchaser; "Auditors" Auditors mutually approved and
agreed by the parties hereto on or before the Conditions Precedent Date;
"Business Day" any day on which banks are open for business in Hong Kong and
Hangzhou, PRC (excluding Sundays, public holidays in Hong Kong, Hangzhou, PRC
and days on which the Typhoon Signal No.8 is hoisted or the Black Rainstorm
warning is signaled and still in effect before 3 p.m. in Hong Kong or similar
signals are hoisted or in place and still in effect before 3 pm in Hangzhou, PRC
such that businesses and schools are closed in Hangzhou, PRC), provided that
each business day shall finish (and then the next business day commence) at 4pm
except Saturdays which shall so finish at 12.30pm; "Completion" completion
of the sale and purchase of the Sale Shares in accordance with Clause 5 of this
Agreement; "Completion Accounts" the consolidated balance sheet relating
to the Injected Business and to each of the Joint Venture, the Vendor, the
Company (if applicable) and each of their respective Subsidiaries made up to
the close of business on the Completion Date and the audited consolidated profit
and loss account relating to the Injected Business and to each of the Joint
Venture, the Vendor, the Company and each of their respective Subsidiaries for
the period from the Accounting Date to the Completion Date, prepared in
accordance with generally accepted accounting principles in the PRC if in
relation to the Vendor and each of its Subsidiaries (excluding the Company (if
applicable)), and in accordance with generally accepted accounting principles of
the United States if in relation to the Injected Business, the Joint Venture and
the Company (if applicable) and each of their respective Subsidiaries; and
certified by Auditors.
"Consideration" the consideration payable for the sale and purchase of the Sale
Shares to the Vendor pursuant to Clause 3; “Consideration Shares” means
4,000,000 PACT Shares to be issued to the Vendor on Completion as the
Consideration in accordance with the terms and conditions of this Agreement;
The shares to be issued and allotted to the Purchaser pursuant to the terms and
condition of this Agreement by the Purchaser to the Vendor will not be
registered under the Securities and Exchange Act of 1933 of the United States
and are subject to restrictions on transferability; “Control” means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise; “Dispose” means, to make or to
effect any sale, assignment, exchange, transfer, or to grant any option, right
of first refusal or other right or interest whatsoever or to enter into any
agreement for any of the same and the expression “Disposal” shall be construed
accordingly; “Distributions” means with respect to any period, such amount
of profit distributions and allocations given or to be given to the shareholders
of the Joint Venture in an amount as may be reasonably determined by the board
of directors of the Joint Venture or required or authorized in accordance with
the relevant laws of the PRC; “Employment Agreements” means the
Employment Agreements to be entered into between the Joint Venture and each of
the Key Employees to be negotiated by the Vendor and the Purchaser in good faith
and the terms of which are to be mutually agreed upon by the parties on or
before the Conditions Precedent Date subject at all times that the final version
as executed or to be executed shall be in such form and substance satisfactory
to the Purchaser; “EMS Distribution Agreement” means the distribution
agreement to be entered into between the Purchaser and the Vendor whereby the
Purchaser shall grant the Vendor rights to distribute and market EMS in such
territory agreeable to the Purchaser and to be negotiated by the Vendor and the
Purchaser in good faith and the terms of which are to be mutually agreed upon by
the parties subject at all times that the final version as executed or to be
executed shall be in such form and substance satisfactory to the Purchaser;
“EMS Software Agreement” means the software development agreement to be entered
into between the Purchaser and the Vendor in respect of the development of
e-commerce and EMS software and application to be negotiated by the Vendor and
the Purchaser in good faith and the terms of which are to be mutually agreed
upon by the parties subject at all times that the final version as executed or
to be executed shall be in such form and substance satisfactory to the
Purchaser; “EMS License” means the software license to be granted by the
Purchaser in favour of the Vendor in respect of those software developed in
accordance with the EMS Software Agreement to be negotiated by the Vendor and
the Purchaser in good faith and the terms of which are to be mutually agreed
upon by the parties subject at all times that the final version as executed or
to be executed shall be in such form and substance satisfactory to the
Purchaser; “Encumbrance” means and includes any option, right to acquire,
right of pre-emption, mortgage, charge, pledge, lien, hypothecation, title
retention, right of set off, claim or counterclaim, trust arrangement or other
security or encumbrance or any equity or restriction; “Escrow Agent” means
such person mutually acceptable to the Purchaser and the Vendor and to be
appointed by the parties hereto to facilitate the escrow arrangements set out in
this Agreement; “Escrow Agreement” means the escrow agreement in to be
entered into between the Vendor, the Purchaser and the Escrow Agent in respect
of the Consideration Shares pursuant to Clause 7 to be negotiated by the Vendor
and the Purchaser in good faith and the terms of which are to be mutually agreed
upon by the parties on or before the Conditions Precedent Date subject at all
times that the final version as executed or to be executed shall be in such form
and substance satisfactory to the Purchaser; “Extinguishment Agreement”
means the indemnity agreement to be entered into by the Vendor and the Joint
Venture in respect of the liabilities and debts attributable to the Injected
Business being transferred to the Joint Venture to be negotiated by the Vendor
and the Purchaser in good faith and the terms of which are to be mutually agreed
upon by the parties on or before the Conditions Precedent Date subject at all
times that the final version as executed or to be executed shall be in such form
and substance satisfactory to the Purchaser; “Government Contract and
Recognition” means those agreements (to be negotiated by the Vendor and the
Purchaser in good faith and to be mutually agreed upon by the parties on or
before the Conditions Precedent Date) entered into between the Vendor and/or its
Subsidiaries with such PRC government authorities concerning the Holley Business
which are to be transferred and assigned to the Joint Venture by the Vendor;
"Hong Kong” Hong Kong Special Administrative Region of the PRC;
“HK$” Hong Kong dollars; "Intellectual Property” patents, trade marks,
service marks, registered designs, utility models, applications for any of the
foregoing and the right to apply for any of the foregoing in any part of the
world, copyright, inventions, confidential information, know–how and business
names and any similar rights situated in any country; and the benefit (subject
to the burden) of any and all licenses in connection with any of the foregoing;
“JV Agreement” means the PRC Sino foreign co-operative joint venture
agreement and the related Memorandum of Association and Articles of Association
to be entered into (subject to the approval of the Purchaser) on or before the
Conditions Precedent Date either (i) between the Company and the Vendor if in
relation to the BVI JV Structure; or (ii) between the Vendor and such third
party used to form the Joint Venture if in relation to the Holley JV Structure,
including its variation, modification and supplement necessitated by the
requirements of the PRC approving authority and approved by the Purchaser;
“Key Employees” means key employees mutually agreed upon by the Purchaser and
Vendor on or before the Condition Precedent Date and who shall be employed by
the Joint Venture; “Memorandum of Association” means the memorandum of
association and the terms thereof of the Joint Venture to be negotiated by the
Vendor and the Purchaser in good faith and the terms of which are to be mutually
agreed upon by the parties on or before the Conditions Precedent Date subject at
all times that the final version as executed or to be executed shall be in such
form and substance satisfactory to the Purchaser; “Net Income” means, for
any period, all revenues and income of any kind or description received during
such period by the Joint Venture minus all costs, expenses and taxes paid
(whether income, corporate, sales or otherwise to the relevant tax authorities)
or incurred during such period by the Joint Venture as may be determined in
accordance with generally accepted accounting principles in the United States;
“Net Revenue” means, for any period, all revenues and income of any kind or
description received during such period by the Joint Venture as may be
determined in accordance with generally accepted accounting principles in the
United States; “PACT Shares” ordinary shares of US$0.0001 each in the
capital of the Purchaser; “Person” means any individual, partnership,
corporation, trust, unincorporated association, joint venture, limited liability
company or other entity or any government, governmental agency or political
subdivision;
“PRC” the People’s Republic of China; "Purchaser’s Solicitors” Preston
Gates & Ellis, 10th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong
(Attn : Mr. Keith A. Lee); “Release Criteria” means the basis and
conditions by which the Escrow Agent shall release the relevant portion of
Consideration Shares to the Vendor on the Release Date pursuant to the schedule
in Clause 7.1; “Release Date” means the relevant date by which the Escrow
Agent, pursuant to the Escrow Agreement, shall release such portion of
Consideration Shares to the Vendor in accordance with the schedule in Clause 7.1
and upon the Release Criteria being satisfied; “Reserves” means, with
respect to any period, the amount of funds set aside, or amounts allocated
during such period, for (a) funding reserves for contingent liabilities, working
capital, repairs, replacements, renewals, and (b) paying taxes, insurance, debt
service, or other costs or expenses incident to the ownership or operation of
the Joint Venture; "Sale Shares" means either (i) the ordinary shares of
the Company (being 100% of the existing issued and allotted share capital on a
fully diluted basis) such shares being beneficially owned by and registered in
the name of the Vendor if in relation to the BVI JV Structure which may be used
as the basis of the Sale and Purchase in accordance with the terms of this
Agreement; or (ii) 51% of the entire legal and equity interest of and in the
Joint Venture if in relation to the Holley JV Structure which may be used as the
basis of the Sale and Purchase in accordance with the terms of this Agreement;
"Subsidiaries" means in respect of a Person, a subsidiary of another company
(or shall deemed to be), if :- (a) that other company (i) controls the
composition of the board of directors of such Person; or (ii) controls more than
half of the voting power of such Person; or (iii) holds more than half of the
issued share capital of such Person (excluding any part of it which carries no
right to participate beyond a specified amount in a distribution of either
profits or capital); or (b) such Person is a subsidiary of any company
which is that other company's subsidiary; “Supply of Goods and Services
Agreement” means the agreement to be entered into between the Joint Venture and
the Vendor for the supply of goods and services by the Joint Venture to the
Vendor in order for the Joint Venture to achieve the Net Revenue and Net Income
warranted by the Vendor in Clause 7 to be negotiated by the Vendor and the
Purchaser in good faith and the terms of which are to be mutually agreed upon by
the parties on or before the Conditions Precedent Date subject at all times that
the final version as executed or to be executed shall be in such form and
substance satisfactory to the Purchaser;
"tax" and "taxation" includes all forms of tax, levy, duty, charge, fee,
contribution, impost or withholding of any nature now or hereafter imposed,
levied, collected, withheld or assessed by a local, municipal, governmental,
state, federal or other body or authority in Hong Kong or elsewhere (including
any fine, penalty, surcharge or interest in relation thereto); “US$”
United States dollars; “United States” United States of America;
"Warranties" the representations, warranties and undertakings contained or
referred to in Clause 6.
1.3 References in this Agreement to ordinances and to statutory provisions shall
be construed as references to those ordinances or statutory provisions as
respectively as modified (on or before the date hereof) or re–enacted (whether
before or after the date hereof) from time to time and to any orders,
regulations, instruments or subordinate legislation made under the relevant
ordinances or provisions thereof and shall include references to any repealed
ordinance or provisions thereof which has been so re–enacted (with or without
modifications). 1.4 The headings are for convenience only and shall not
affect the construction of this Agreement. 1.5 All representations,
undertakings, warranties, indemnities, covenants, agreements and obligations
given or entered into by more than one person are given or entered into jointly
and severally. 1.6 Any document referred to herein as being "in the agreed
terms" shall be in a form already agreed between the Solicitors acting for the
parties hereto. 1.7 Except where the context otherwise requires words
denoting the singular include the plural and vice versa; words denoting any one
gender include all genders; words denoting persons include incorporations and
firms and vice versa. 1.8 Reference to clauses, sub–clauses, paragraphs
and schedules are (unless the context requires otherwise) to clauses,
sub–clauses, paragraphs and schedules of this Agreement. 1.9 The
expressions "the Vendor", the “Company” and “the Purchaser” shall unless the
context requires otherwise shall include their successors, personal
representatives and permitted assigns.
2A. FORMATION OF JOINT VENTURE AND STRUCTURE 2A.1 The Vendor hereby agrees
that it shall within 45 days from the date hereof (“45 Day Period”) use its best
endeavors to procure the formation of the Joint Venture under the Holley JV
Structure (such formation and structure is subject at all times to the approval
in writing of the Purchaser in its sole discretion) and such that the Purchaser
shall be able to, on Completion, directly purchase, own and hold 51% of the
entire legal and beneficial interest of and in the Joint Venture in accordance
with the terms of this Agreement. Such 51% equity interest of and in the Joint
Venture shall be the subject of the Sale Shares of this Agreement to be sold by
Vendor to the Purchaser free from all Encumbrances; 2A.2 In the event that
Vendor is unable to procure the formation of the Joint Venture under the Holley
JV Structure either within the 45 Day Period or with the approval of the
Purchaser such that the Purchaser shall be able to, on Completion, directly
purchase, own and hold 51% of the entire legal and beneficial interest of and in
the Joint Venture, then the Vendor agrees that it shall on the expiry of the 45
Day Period or disapproval by the Purchaser in writing (whichever is earlier) :-
(a) Within 5 days immediately after the 45 Day Period shall and/or shall
procure to be incorporated the Company in order to facilitate the formation of
the Joint Venture in accordance with the BVI JV Structure; (b) The primary
objective of the Company and its Subsidiaries is to carry on the business of
holding the Sale Shares and participate in the management and affairs of the
Joint Venture. (c) The Vendor shall procure that the Company shall have an
authorized share capital of US$100,000 divided into 10,000,000 ordinary shares
of [US$0.01] each; (d) The Vendor shall be the first and only shareholders and
directors of the Company holding one (1) share to be fully paid up which shall
represent the entire issued share capital of the Company on a fully diluted
basis before and after Completion; (e) The terms and conditions of the
Company’s memorandum and articles of association shall be those as agreed to and
approved by the Purchaser in writing; (f) All costs and expenses (including
legal costs) in respect of the formation and incorporation of the Company shall
be borne by the Vendor absolutely. 2A.3 In the event that Holley JV
Structure is not agreed upon or adopted to be used by the Purchaser within the
45 Day Period to facilitate the Sale and Purchase contemplated herein this
Agreement, then the BVI JV Structure shall be deemed to be the agreed structure
to be used by the parties to the facilitate the Joint Venture and sale of the
51% equity interest in the Joint Venture to the Purchaser. The entire issued
share capital of and in the Company representing the 51% beneficial and legal
ownership in the Joint Venture shall be the subject of the Sale Shares to be
sold to and purchased by the Purchaser from the Vendor herein. 2. SALE OF
SHARES 2.1 Subject to the fulfilment of all the conditions in Clause
4.1, the Vendor shall sell as beneficial owner and the Purchaser shall purchase
the Sale Shares free from all liens, charges and encumbrances and together with
all rights now or hereafter attaching thereto including all dividends and
distributions declared, made or paid on or after the date of this Agreement in
respect of the Sale Shares.
2.2 The Vendor hereby waives and agrees to procure before Completion the
irrevocable waiver of pre–emption rights and any other restrictions whatsoever
on the transfer or issue which may exist in relation to the Sale Shares
howsoever derived. 3. CONSIDERATION 3.1 The Consideration
for the Sale Shares shall be satisfied by the Purchaser upon Completion by the
Purchaser issuing and allotting to the Vendor the Consideration Shares.
4. CONDITIONS 4.1 This Agreement is conditional upon:
4.1.1 the Purchaser being satisfied with the results of financial and legal due
diligence review to be conducted by it on the Vendor Group, the Company (if
applicable) and the Injected Business; 4.1.2 the receipt of the
Vendor of all necessary consents, approvals and authorisations having been
obtained from the applicable PRC approving state authorities (“Main Approving
Authority”) and the State Administration for Industry and Commerce and any other
approving authority, if necessary (“Other Approving Authorities”) in connection
with the purchase of the Sale Shares by the Purchaser, the establishment and
incorporation of the Joint Venture, the implementation of all transactions
contemplated under the JV Agreement and the Extinguishment Agreement and all
other matters incidental thereto and their certified copies having been provided
to the Purchaser and which are all in form and substance satisfactory to the
Purchaser; 4.1.3 the performance in full by the Vendor of its
obligations contained in Clause 6.2; 4.1.4 the formation of the
Joint Venture based on the Holley JV Structure which is in form and substance
satisfactory to the Purchaser and as set out it Clause 2A.1 or formation of the
Joint Venture in accordance with the BVI JV Structure which is in form and
substance satisfactory to the Purchaser. 4.1.4A If the BVI JV
Structure is adopted in accordance with Clause 2A, the establishment and
incorporation of the Company by the Vendor (to the satisfaction of the
Purchaser) including the fulfillment of all those matters set out in Clause
2A.2. 4.1.5 the establishment and incorporation of the Joint Venture
to the satisfaction (in writing) of the Purchaser, including the execution of
following documents in the form and based on the terms and conditions that have
been approved by and are satisfactory to the Purchaser and with approval of the
directors of the Purchaser at a meeting of directors: (a) JV
Agreement; (b) Articles of Association of the Joint Venture (c)
Memorandum of Association of the Joint Venture; (d) Extinguishment
Agreement 4.1.6 save for those matters required to be performed by
the parties at Completion, all steps and actions required to be taken by the
Vendor to give effect to the purchase of the Sale Shares by the Purchaser and
the transfer of the business of the Vendor to the Joint Venture in accordance
with the JV Agreement and the Extinguishment Agreement having been completed;
4.1.7 the Purchaser having received :- (a) a legal
opinion from a legal adviser in the PRC acceptable and satisfactory to the
Purchaser confirming, inter alia, (i) the legality, validity and enforceability
of the JV Agreement, the Extinguishment Agreement, the Employment Agreements,
the PACT-Holley Agreements (as defined below and to be entered into by the
Vendor pursuant to Clause 7), Supply of Goods and Services Agreement, and any
other agreements to be entered into by any of the Vendor or the Joint Venture
pursuant to or as contemplated under this Agreement; (ii) that the Sale Shares
can be transferred to and owned by the Purchaser in the manner contemplated
herein; (iii) the consents, approvals and authorisations referred to in Clause
[4.1.2] and the matters referred to in Clause [4.1.4] having been obtained,
performed and completed; and (b) a legal opinion (in form and
substance satisfactory to it from a legal adviser in each of the jurisdictions
the Company (if applicable) and the Vendor are incorporated confirming, inter
alia (i) the legality, validity and enforceability of this Agreement and the
transactions contemplated herein in its jurisdiction of incorporation and (ii)
that the Company and the Vendor (as applicable) are validly existing and duly
incorporated and are of good standing in its jurisdiction of incorporation.
4.1.8 the Vendor having duly executed, delivered and exchanged (or
procured to be executed, delivered and exchanged) the following agreements:-
(a) The Employment Agreement (in such form and upon such terms
mutually agreed upon by the Purchaser and Vendor) duly executed by the Joint
Venture and each of the Key Employees; (b) The Supply of Goods and
Services Agreement (in such form and upon such terms mutually agreed upon by the
Purchaser and Vendor) duly executed by the Vendor and the Joint Venture; and
(c) The Escrow Agreement (in such form and upon such terms mutually agreed
upon by the Escrow Agent, the Purchaser and Vendor) duly executed by the Escrow
Agent, the Purchaser and the Vendor. 4.1.9 The Vendor having
obtained certification from the Auditors stating that proforma financial results
of the Joint Venture as set out in Section A(2) (a) (2) of the Agreement in
Principle dated 11th June 2001 and signed between the Purchaser and the Vendor
are suitable and appropriate for inclusion in a Form 8K filing of the Purchaser
with the Securities and Exchange Commission in the United States;
4.1.10 The Vendor having made reasonable efforts to duly directly or indirectly
transfer and assign the Government Contracts and Recognition and Operational
Contracts (the “Holley Assignments”) to the Joint Venture and obtained all
necessary licenses and approvals from all relevant authorities in the PRC and in
accordance with all PRC rules, regulations and laws; 4.1.11 All
necessary consents, approvals and authorisations having been obtained from all
applicable authorities in the PRC by the Vendor in respect of the establishment
and incorporation of the Joint Venture and the operation of its business and the
Company or the Purchaser (as the case may be) becoming the foreign investor in
the Joint Venture; 4.1.12 The Vendor having undertaken in writing to
the Company (such written undertaking to be in form and substance satisfactory
to the Purchaser) that it will bear and indemnify the Company and the Joint
Venture against all losses, damages, claims and liabilities suffered or incurred
by each or either of them which arises, whether directly or indirectly, from any
breach or non-compliance by the Joint Venture or the Vendor of any applicable
laws, rules, regulations, orders, directives or policies (whether having the
force of law or otherwise) prior to the Company effectively acquiring a fifty
one per cent (51%) equity interest in the Joint Venture (including without
limitation any breach or non-compliance in connection with the establishment of
the Joint Venture, the operation of its business and any transfer of interests
in the Joint Venture by any existing or former shareholders of the Joint
Venture); 4.1.13 evidence satisfactory to the Purchaser having been
provided to it showing that the Company or the party owning the Sale Shares (as
the case may be) and all other shareholders of the Joint Venture have made
capital contributions to the Joint Venture in the manner provided by its
Memorandum of Association and Article of Association or by any certificates,
licenses, consents or permits granted to the Joint Venture in respect of its
establishment and/or operation; 4.1.14 such documents and other
evidence as the Purchaser may request having been provided to it showing that
the Joint Venture is legally and properly established and in existence and that
the Company has effectively acquired a 51 per cent equity interest in the Joint
Venture in accordance with all applicable laws, rules and regulations;
4.1.15 the parties hereby agree that the Vendor shall give warranties and
representations (in addition to those Warranties set out in Clause 6) to the
Purchaser concerning the state, affairs, business and matters of each of the
Vendor, Company (if applicable), Joint Venture. In this regard, it shall be a
condition precedent to Completion that the Vendor shall make such warranties and
representations in writing to the Purchaser in form and substance mutually
acceptable to the Vendor and Purchaser concerning the state, affairs, business
and matters of each of the Vendor, Company (if applicable), Joint Venture as at
Completion and deliver the same, duly executed, to the Purchaser.
4.1.16 save for Completion, all steps and actions required to be taken by the
parties hereto and the Company (if applicable) to give effect to the sale and
purchase of the Sale Shares hereunder and all other transactions contemplated
hereunder having been taken and completed; 4.1.17 if required, the
relevant stock exchange, government and securities authority and regulator in
the United States granting listing of and permission to issue and allot the
Consideration Shares (including the escrow arrangement as stated in Clause 7)
which fall to be issued in accordance with the terms herein; 4.1.18
if required, the shareholders of the Purchaser at a meeting of members approving
this Agreement, the purchase of the Sale Shares, creating and giving authority
for the issue of the Consideration Shares to the Vendor, the implementation of
the transactions contemplated hereunder and all other matters incidental hereto
in accordance with the provisions of the Purchaser’s articles of association
and by-laws and such rules, regulations and laws in force from time to time in
the United States and which apply to the Purchaser; 4.1.19 if
required, a resolution at a meeting of Directors of the Purchaser approving this
Agreement, the PACT Assignments, the purchase of the Sale Shares, creating and
giving authority for the issue of the Consideration Shares to the Vendor, the
implementation of the transactions contemplated hereunder and all other matters
incidental hereto in accordance with the provisions of its articles of
association and by-laws and such rules, regulations and laws in force from time
to time in the United States and which apply to the Purchaser;
4.1.20 all other matters as may be reasonably required or may be deemed
reasonably necessary by the Purchaser and/or the Vendor (as the case may be) in
order to complete all of the transactions contemplated herein this Agreement.
4.2 The Vendor and the Purchaser shall use their respective endeavors to
ensure that the conditions set out in Clause 4.1 shall be fulfilled by the date
set out in Clause 4.3. The Purchaser may in its sole and absolute discretion,
waive any of the conditions set out in Clauses 4.1.1 to 4.1.16 prior to
Completion. 4.3 If the Vendor is unable to comply with and fulfill any
of the conditions set out in Clauses 4.1.2 to 4.1.16 and 4.1.20 (save for the
event of termination by either party pursuant to Clause 4.4 below) or has failed
to procure, provide, execute, deliver or perform such documents, acts or deeds
it is obligated to perform in Clauses 4.1.2 to 4.1.16 and 4.1.20 (save for the
event of termination by either party pursuant to Clause 4.4 below) to the full
satisfaction of the Purchaser and with the approval of the directors of the
Purchaser at a meeting of directors on or before 30th October 2001 (“Conditions
Precedent Date”), the Purchaser may in its sole discretion: (a)
defer the Conditions Precedent Date and Completion Date to a date not later than
November 30, 2001 (and so that the provisions of this Clause 4 shall apply to
fulfilment of the Conditions as so deferred and the Completion and Completion
Date as set out in Clause 5 shall be deferred accordingly); or (b)
proceed to Completion so far as practicable but without prejudice to the rights
of the Purchaser; or (c) rescind this Agreement, without prejudice to
any rights the Purchaser may have in respect of the Vendor’s non-compliance or
non-fulfilment of the conditions set out in Clause 4.1. In the event
that this Agreement is rescinded by the Purchaser pursuant to Clause 4.3 (c)
above, then the Vendor shall pay to the Purchaser the sum of US$500,000
immediately upon rescission by the Purchaser thereafter payment neither party
shall have any claim against or liability to the other party. The Vendor and
Purchaser agree that the payment to the Purchaser for the sum of US$500,000
shall be waived in the event that the conditions outlined in Clause 4.1.2 and
Clause 4.1.11 respectively are not fulfilled by the Vendor. 4.3A If the
Purchaser is unable to comply with and fulfill any of the conditions set out in
Clauses 4.1.17 to 4.1.20 (save for the default or cause of the Vendor or event
of termination by either party pursuant to Clause 4.4 below) or has failed to
procure, provide, execute, deliver or perform such documents, acts or deeds it
is obligated to perform in Clauses 4.1.17 to 4.1.20 (save for the default or
cause of the Vendor) on or before the Conditions Precedent Date, the Vendor may
in its sole discretion: (a) defer the Conditions Precedent Date and
Completion Date to a date not later than November 30, 2001 (and so that the
provisions of this Clause 4 shall apply to fulfilment of the Conditions as so
deferred and the Completion and Completion Date as set out in Clause 5 shall be
deferred accordingly); or (b) proceed to Completion so far as
practicable but without prejudice to the rights of the Vendor; or (c)
rescind this Agreement, without prejudice to any rights the Vendor may have in
respect of the Purchaser’s non-compliance or non-fulfilment of the conditions
set out in Clause 4.1. In the event that this Agreement is rescinded by
the Vendor pursuant to Clause 4.3A(c) above, then the Purchaser shall pay to the
Vendor the sum of US$500,000 immediately upon rescission by the Vendor and
thereafter payment neither party shall have any claim against or liability to
the other party. 4.4 The parties hereto agree that this Agreement may be
terminated at any time (by written notice served on the other party) on or
before 30th October 2001 (with immediate effect and thereafter no party to this
Agreement shall have any claim against or liability to the other party save in
respect of any antecedent breaches of this Agreement and subject to the payment
of such amounts to such party as set out below) by either the Vendor or the
Purchaser upon the resolution of the board of directors at a meeting of
directors of either the Vendor or the Purchaser (as the case may be). It is
acknowledged by the parties hereto that the matters set out in this Agreement
leading up to Completion, including those set out in Clause 4.1 shall incur a
considerable amount of time, costs and expenses on the part of both parties and
in this regard it is hereby further agreed by all parties hereto that :-
(i) in the event that this Agreement is terminated by the board of directors at
a meeting of directors of the Purchaser or the Vendor (as the case may be),
following the approval of this Agreement by the board of the Purchaser and by
the board of the Vendor, but prior to the voting of this Agreement by the
shareholders of the Purchaser and/or the shareholders of the Vendor on or before
30th October 2001 (if required), then the terminating party shall pay to the
other party the sum of US$250,000 within three days of a termination notice
being served on the other party; (ii) In the event the shareholders at a
meeting of shareholders (if required) of the Purchaser or the Vendor (as the
case may be) do not approve this Agreement and the transactions contemplated
herein, the first party whose shareholders at a meeting of shareholders (if
required) has failed to obtain the relevant approval shall pay to the other
party sum of US$250,000 within three days of the relevant shareholders meeting.
(iii) in the event that this Agreement is terminated by the board of
directors at a meeting of directors of the Purchaser or the Vendor (as the case
may be), following the approval of this Agreement by the board of the Purchaser,
and after the approval of this Agreement by the shareholders of the Purchaser
on or before 30th October 2001 (if required), then the terminating party shall
pay to the other party the sum of US$500,000 within three days of a termination
notice being served on the other party. For the purpose of guaranteeing
the payment of the damages referred to in Clause 4.3 and 5.4 (if any) or
break-up fees by the Vendor to the Purchaser (if any) as set out above, the
Vendor hereby agrees to procure that its Subsidiary, Holley Holding (U.S.A.)
Ltd (“China Holley USA”), a company incorporated in California with registered
office address at 131 South Maple Avenue, Unit 6, South San Francisco, CA 94080,
shall within 3 business days from the date of this Agreement, duly execute and
deliver a deed of guarantee (in form and substance acceptable to the Purchaser)
of payment for the fulfillment and payment of the amounts set out in and in
accordance with this Clauses 4.4, 4.3 or 5.4 in favor of the Purchaser and shall
procure that China Holley USA shall maintain a minimum balance of US$500,000 in
a bank account in the United States and send such details of bank account and
bank statements to the Purchaser immediately upon request. 4.5 The Vendor
and the Company undertakes to disclose in writing to the Purchaser anything
which will or may prevent any of the conditions from being satisfied at or prior
to Completion, as applicable, immediately upon the Vendor and/or the Company
becoming aware of such a situation. 4.6 Until Completion, the Vendor and
the Company shall procure that the Purchaser, its agents and representatives are
given reasonable access to such documents relating to the Joint Venture, the
Injected Business, the Vendor Group, the Company and the Subsidiaries, as the
Purchaser shall request. 5. COMPLETION 5.1 Subject to the terms of
this Agreement, Completion shall take place pursuant to this clause at such
place and location to be mutually agreed upon by the Purchaser and the Vendor on
or before the 31st October 2001 or such later date as may be stipulated in
accordance with Clause 4.3 (a) or 4.3A (a), as the case may be (“the Completion
Date”). The parties shall agree on the place and location where Completion
shall take place on or before 31st October 2001 and failing such agreement then
the place and location where Completion shall take place shall be in Hong Kong
at the office of the Purchaser’s Solicitors. 5.2 On Completion the Vendor
shall: (a) cause to be delivered to the Purchaser: (i) if the
same shall not have been provided prior to Completion, certified copies of all
consents, approvals and authorisations referred to in Clause 4.1. and such other
documents and evidence showing the fulfilment of the conditions by the Vendor of
the applicable conditions set out in Clause 4.1 ; (ii) if the same
shall not have been provided prior to Completion, certified copies of the
documents referred to in Clauses 4.1; (iii) if the same shall not have
been provided prior to Completion, certified copies of the business licence of
the Joint Venture the JV Agreement (in its final form as approved by the Main
Approving Authority) duly executed by the Company and the Vendor and the final
version of the Memorandum of Association and Articles of Association of the
Joint Venture (in the agreed terms and in its final form duly approved by the
Main Approving Authority) of the Joint Venture; (iv) if the same shall
not have been provided prior to Completion, certified copies of all necessary
resolutions of the board of directors and the shareholders of the Vendor
approving the signing of the JV Agreement and the Extinguishment Agreement, all
other documents required by the Main Approving Authority and all those other
agreements set out in Clause 4.1; (v) if required and if applicable,
the original Certificate of Good Standing of the Company and the consent letter
(if applicable) issued by the Vendor to the BVI agent for release of information
to the Purchaser and the registration of the Sale Shares in favour of the
Purchaser together with the duly executed instrument(s) of transfer of the Sale
Shares by the registered holder(s) thereof in favour of the Purchaser or as it
may direct together with the relative certificates; (vi) if required
and if this transaction is on the basis of the Holley JV Structure, the duly
executed instrument(s) of transfer of the Sale Shares by the registered
holder(s) thereof in favour of the Purchaser or as it may direct together with
the relative certificates together within any other documents or deeds which
shall prove and render the Purchaser the lawful legal and beneficial owner of
51% of the entire equitable interest of and in the Joint Venture;
(vii) if applicable, resolutions of the board of directors of the Company
approving the transfer of the Sale Shares by the Vendor to the Purchaser or as
it may direct; (viii) such other documents as may be reasonably
required to give to the Purchaser good title to the Sale Shares free from all
claims, liens, charges, equities and encumbrances and third party rights of any
kind and to enable the Purchaser (or as it may nominate) to become the
registered holder thereof; (ix) if applicable, all statutory and
other books and records (including financial records) duly written up to date of
the Company and its certificate of incorporation, common seal and any other
papers, records and documents of the Company; (x) the Completion
Accounts; (xi) if applicable, a certified copy of the resignation of
all existing directors of the Company; (xii) The certificate referred
to in Clause 4.1.9. (b) if requested by the Purchaser, cause such
person(s) as the Purchaser may nominate to be validly appointed as additional
directors of the Company and cause the existing directors of the Company to
resign with effect from the Completion Date. 5.3 On Completion and subject
to the simultaneous performance of the obligations of the Vendor contained in
Clause 5.2, the Purchaser shall cause to be delivered to the Escrow Agent the
certificate(s) for such number of Consideration Shares issued and credited as
fully paid, such shares upon issue to rank pari passu (save and subject to any
restrictions on sale and transfer of the Consideration Shares by the Purchaser
as well as those restrictions set out in Clause 7 hereof) with the existing
Consideration Shares registered in the name of the Vendor or Holley Holding
(U.S.A.) Ltd. In addition, Purchaser should deliver to Vendor: a)
certified copy of Board resolution approving this agreement and the issue and
allotment of consideration shares and certified copy of share holders resolution
certified by any director of the Purchaser , b) certified copy of the receipt
of the escrow agent of the consideration shares pursuant to this clause 5.3, and
, c) certified copy of Board resolution approving the appointment of the three
directors named by the Vendor as directors of the Board of Purchaser. The total
number of directors of the Purchaser as outlined in the by laws is 9. d) If
required, the Purchaser should deliver to the Vendor certified copy of approvals
of the relevant stock exchange, government and securities authority and
regulator in the United States granting listing of and permission to issue and
allot the Consideration Shares. 5.4 If any party hereto shall be unable to
comply with any of its obligations under this Clause 5 on the Completion Date,
the party not in default may :- (a) defer Completion to a date not more
than 28 days after the Completion Date (and so that the provisions of this
Clause 5 shall apply to Completion as so deferred); or (b) proceed to
Completion so far as practicable but without prejudice to the rights of the
non-defaulting party; or (c) rescind this Agreement, without prejudice
to any rights the non-defaulting party may have in respect of such default.
In the event that this Agreement is rescinded pursuant to Clause 5.4(c),
then the defaulting party shall (in addition and without prejudice to any other
rights or claims for damages the non-defaulting may have against the defaulting
party) pay to the non-defaulting party the sum of US$500,000 immediately upon
rescission by the non-defaulting party 6. REPRESENTATIONS, WARRANTIES AND
UNDERTAKINGS 6.1 Representations, Warranties and Undertakings of Both the
Vendor and Purchaser 6.1.1. Each of the Warranties shall be deemed
repeated by the Vendor and Purchaser during the period from the date of this
Agreement up to and including the day of Completion with reference to the facts
and circumstances then subsisting. 6.1.2. Each of the Warranties is
without prejudice to any other Warranty and, except where expressly stated
otherwise, no provision contained in this Agreement shall govern or limit the
extent or application of any other provision. 6.1.3. The Warranties
shall survive Completion insofar as the same are not fully performed on
Completion. 6.1.4. The Vendor and the Purchaser hereby undertake to
indemnify and keep indemnified the other party against any loss or liability
suffered by the as a result of or in connection with any breach of any of the
Warranties and against any costs and expenses incurred in connection therewith
provided that the indemnity contained in this Clause shall be without prejudice
to any other rights and remedies of either party in relation to any such
breach. 6.2 Representations, Warranties and Undertakings of the Vendor:
6.2.1 The Vendor hereby warrants and represents that: (a) it has
the full power, authority and legal right to enter into this Agreement and this
Agreement constitutes binding obligations on it in accordance with its terms;
(b) the execution and delivery of this Agreement and the consummation of
transactions contemplated hereby will not result in the breach and/or
cancellation and/or termination of any of the terms or conditions of or
constitute a default under any agreement, commitment or other instrument to
which it is a party or by which it or its property or assets may be bound or
affected or violate any law or any rule or regulation of any administrative
agency or governmental body or any court order, writ, injunction or decree of
any court, administrative agency or governmental body affecting it; and
(c) there has been no material adverse change in the assets, as a whole, or
the business, prospects, financial condition or result of operations of the
Vendor since its last date of audited financial statement. For the purpose of
this Clause 6.2, “material adverse change” shall mean (i) a reduction in cash
balance to less than US$5,000,000; or (ii) reduction in Net Revenue (for the
last 12 months) to less than US$5,000,000 6.2.2 The Vendor hereby
warrants, represent and undertakes that it shall procure that, except with the
prior consent in writing of the Purchaser, the following events and matters will
not occur, at any time between the date of this Agreement and Completion, or if
this Agreement is rescinded or terminated earlier, the day of termination:-
(a) if applicable, that the Company will not issue or transfer or agree to
issue and allot or transfer any securities in respect of any equity (inter alia,
the issued and unissued shares) or loan capital of the Company or grant any
option over or right to acquire any equity or loan capital of the Company or
increase the registered capital of the Company; (b) the Joint Venture
and the Company (if applicable) will not borrow or otherwise raise money or
incur any indebtedness or create any security over any of its assets and
properties; (c) the Joint Venture and the Company (if applicable) will
not enter into any contract or incur any capital commitment, expenditure or
contingent liability other than as contemplated under the JV Agreement and the
Extinguishment Agreement; (d) the Joint Venture and the Company (if
applicable) will not enter into any other agreement with the Vendor or any third
party or carry on any business, trading or other activities except as
contemplated under this Agreement, the JV Agreement and the Extinguishment
Agreement; (e) if applicable, propose at its own accord or vote on any
resolution in general meeting of the Company other than resolutions relating to
the business of an annual general meeting which is not special business;
(f) if applicable, increase or authorise the increase of or undertake to
increase the emoluments or benefits payable or granted to any director or
employee of the Company with immediate, prospective or retrospective effect;
(g) if applicable, appoint any directors of the Company other than the
existing directors on the date of this Agreement; (h) if applicable,
issue any dividends of the Company to any shareholders of the Company and/ or
allow the Vendor to make any remittance of profits to its holders of equity or
shares; (i) if applicable, it will not sell, transfer, assign, charge,
or otherwise dispose of any shares beneficially owned by him or any legal or
beneficial interest in the Company (save for the sale of the Sale Shares
pursuant to this Agreement) 6.2.3 The Vendor hereby warrants,
represents and undertakes it shall procure that:- (a) at any time
prior to Completion, the Purchaser, its agent and professional advisers are
given, promptly on request, all such information regarding the business, assets,
liabilities, contracts and affairs of the Vendor Group, the Company (if
applicable) and the Injected Business and of the documents of title and other
evidence of ownership of assets contemplated in this Agreement and the JV
Agreement as the Purchaser may require; and (b) whether before or
after Completion, the Purchaser, its agent and professional advisers are given,
promptly on request, all such other information and documents (including without
limitation any accounts of the Vendor Group, the Company and accounts relating
to the Injected Business) relating to the Vendor Group, the Company, the Joint
Venture and the Injected Business as the Purchaser may require for the purpose
of or in connection with the performance, observance and compliance by the
Purchaser of any provision of the such rules, regulations and laws in force from
time to time in the United States and which apply to the Purchaser or otherwise
as may be required by the relevant regulatory authorities in the United States
or any other applicable authorities. 6.2.4 The Vendor hereby warrants,
represents and undertakes it shall procure that on or before the day on which
the Purchaser is obliged to satisfy such part of the Consideration as is
referred to in Clause 3:- (a) If applicable, the Vendor and its
affiliates and the directors of the Company and/or the Joint Venture will each
have discharged in full any indebtedness of such person to the Company and/or
the Joint Venture (whether or not then due for payment); (b) If
applicable, the Company and/or the Joint Venture shall be released, without
payment by or other cost to the Company and/or the Joint Venture, from all debts
and obligations to, and from all guarantees, indemnities, mortgages and surety
or security arrangements of any kind given by the Company and/or the Joint
Venture in favour of the Vendor or any affiliates of the Vendor, or any director
of the Company and/or the Joint Venture; and (c) If applicable, the
accounts of the Company and/or the Joint Venture, audited by an independent
accountant acceptable to the Purchaser, will be provided to the Purchaser
reflecting the matters referred to in Clauses 6.2.4(a) and (b). and
the Vendor shall, on demand, indemnify the Purchaser and keep it indemnified
from and against any failure so to procure and from any liability pending any
such release. 6.2.5 The Vendor shall use its best endeavors to procure the
Company (if applicable) and to procure all parties in the Joint Venture to
promptly perform, observe and comply with all its obligations under the JV
Agreement and the Extinguishment Agreement and take all necessary steps and sign
and execute all necessary documents to facilitate or effect the transactions
contemplated under the JV Agreement and the Extinguishment Agreement, including
without limitation procuring such modification to the terms of the JV Agreement,
the Extinguishment Agreement and other documents ancillary thereto as may be
required by the Main Approving Authority and Other Approving Authorities.
6.2.6 The Vendor shall not (save only as may be necessary to give effect to
this Agreement) do or allow and shall procure that no act or omission shall
occur before Completion which would constitute a breach of any of the Warranties
if they were given at Completion or which would make any of the Warranties
inaccurate or misleading if they were so given. 6.3. Representations,
Warranties and Undertakings of the Purchaser 6.3.1 The Purchaser hereby
warrants and represents that :- (a) it has the full power, authority
and legal right to enter into this Agreement and this Agreement constitutes
binding obligations on it in accordance with its terms; (b) the
execution and delivery of this Agreement and the consummation of transactions
contemplated hereby will not result in the breach and/or cancellation and/or
termination of any of the terms or conditions of or constitute a default under
any agreement, commitment or other instrument to which it is a party or by which
it or its property or assets may be bound or affected or violate any law or any
rule or regulation of any administrative agency or governmental body or any
court order, writ, injunction or decree of any court, administrative agency or
governmental body affecting it; and (c) there has been no material
adverse change in the assets, as a whole, or the business, prospects, financial
condition or result of operations of the Purchaser since its last date of
audited financial statement. For the For the purpose of this Clause 6.3.1(c),
“material adverse change” shall mean (i) a reduction in cash balance to less
than US$1,500,000; and/or (ii) termination in employment of any of Tony Tong,
Richard Hui and Chuck Mueller as employees of the Purchaser. 6.3.2
Notwithstanding any other terms and conditions of this Agreement, it is hereby
agreed by the Vendor that in the event of a transfer of the Purchaser from the
Nasdaq National Market to the Nasdaq Small Cap Market, , that such event shall
not constitute an event of default, breach of warranty, representation or
undertaking or any act or event whatsoever which would entitle the Vendor to
rescind this Agreement and/or claim a breach, default or damages against the
Purchaser. 7. SPECIAL TERMS 7.1 Escrow Arrangement for Consideration
Sharesand Adjustment 7.1.1 The Vendor warrants, represents and
undertakes that (i) the total Net Revenue of the Joint Venture for the period
from 1st November 2001 to 31st December 2001 (“First Year”) will not be less
than US$5,000,000, the period from 1st January 2002 to 31st December 2002
(“Second Year”) will not be less than US$39,000,000 and for the period from 1st
January 2003 to 31st December 2003 (“Third Year”) will not be less than
US$50,000,000; and (ii) the total Net Income of the Joint Venture for the First
Year will not be less than US$250,000, the Second Year will not be less than
US$1,950,000 and for the Third Year will not be less than US$2,500,000. The
First Year, Second Year and Third Year shall collectively hereinafter be
referred to as the “Warranted Years”. The Vendor hereby agrees and
acknowledges that the total Consideration payable by the Purchaser is based on
the Vendor’s warranty in respect of the Net Revenue and Net Income of the Joint
Venture as described above. In this regard the Vendor hereby agrees to appoint
the Escrow Agent upon the terms of the Escrow Agreement in the agreed terms to
hold all the Consideration Shares to be issued in accordance with this Agreement
on Completion and the Vendor undertakes with the Purchaser that it shall not
either sell, transfer, charge, encumber, grant options over or otherwise dispose
of, or of any legal or beneficial interest in any of the Consideration Shares
until such part of the Consideration Shares are released to by the Escrow Agent
to the Vendor in accordance with the following schedule but subject to Clause
7.2 below :
Release Date Number of Consideration Shares to be Released Release Criteria
After the First Year, within 10 days of the Auditors certifying (in writing to
the Purchaser that the audited financial statements (including balance sheet
and profit and loss account) in accordance with generally accepted accounting
principles in the United States relating to the Joint Venture and its business
is acceptable and can be consolidated into the Purchaser’s audited accounts,
balance sheet and financial statements. 500,000 PACT Shares The Joint
Venture has achieved (i) Net Revenue for the First Year of not less than
US$5,000,000; and (ii) Net Income for the First Year of not less than US$250,000
After the Second Year, within 10 days of the Auditors certifying (in
writing to the Purchaser that the audited financial statements (including
balance sheet and profit and loss account) in accordance with generally accepted
accounting principles in the United States relating to the Joint Venture and its
business is acceptable and can be consolidated into the Purchaser’s audited
accounts, balance sheet and financial statements. 1,642,000 PACT Shares The
Joint Venture has achieved (i) Net Revenue for the Second Year of not less than
US$39,000,000; and (ii) Net Income for the Second Year of not less than
US$1,950,000 After the Third Year, within 10 days of the Auditors
certifying (in writing to the Purchaser that the audited financial statements
(including balance sheet and profit and loss account) in accordance with
generally accepted accounting principles in the United States relating to the
Joint Venture and its business is acceptable and can be consolidated into the
Purchaser’s audited accounts, balance sheet and financial statements.
1,858,000 PACT Shares The Joint Venture has achieved (i) Net Revenue for the
Third Year of not less than US$50,000,000; and (ii) Net Income for the Third
Year of not less than US$2,500,000
7.1.2 The Vendor agrees and undertakes not to dismiss nor withdraw its
instructions to the Escrow Agent pursuant to the Escrow Agreement unless the
Escrow Agent has voluntarily resigned or ceased to act as escrow agent in
accordance with the Escrow Agreement, in which case the Vendor agrees and
undertakes to appoint an escrow agent (as is agreeable to the Purchaser) in its
place to act as escrow agent on the same terms and conditions of the Escrow
Agreement. 7.1.3 In the event any of the Release Dates referred to above
is not a Business Day in Hong Kong, then the relevant portion of the
Consideration Shares shall be released on the immediately following Business
Day. 7.1.4 It is agreed that where reference to US$ is made in this
Clause 7.1, it shall also mean and include “or its equivalent value in RMB at
the mid-price of bid and offer of the prevailing exchange rate quoted by the
Bank of China in the PRC at 11.00 am on the last Business Day of the relevant
financial year of the Joint Venture subject to the Maximum Rate (as defined
hereafter), which if exceeded shall be deemed to be the Maximum Rate. The
parties agree that the fluctuation in the prevailing exchange rate under this
Agreement shall be limited to a maximum of not more than 10% of the mid-price of
bid and offer of the prevailing exchange rate quoted by the Bank of China in the
PRC at 11.00 am on the day of Completion (the "Maximum Rate"). 7.1.5 The
Vendor hereby warrants, represents and undertakes that it shall, within 60 days
will make the best effort in reasonable short period time after Completion enter
into the following agreements with the Purchaser :- (a) The EMS
Software Agreement; (b) The EMS License; and (c) The EMS
Distribution Agreement. (the EMS Software Agreement, EMS License and
EMS Distribution Agreement are all collectively herein this Agreement referred
to as the “PACT-Holley Agreements”)
7.1.6 The Vendor hereby agrees and undertakes that after Completion and issue
and allotment of the Consideration Shares in the name of the Vendor that it
shall not nominate more than three (3) directors to the board of directors of
the Purchaser. Currently, there are 6 directors (including independent
directors) that have been elected by the shareholders to serve on the board of
directors of the Purchaser. 7.2 Adjustments Consideration Shares and the
Purchaser Board Seats 7.2.1 Adjustment in Consideration Shares :- In the
event that any of the Net Revenue or Net Income as warranted by the Vendor in
Clause 7.1.1 during any of Warranted Years fall below any of the amounts
specified in the corresponding Release Criteria set out in Clause 7.1.1 above
then the Vendor shall upon written notice (“Notice”) by the Purchaser, pay to
the Purchaser an amount in the form of PACT Shares on each of the relevant
Release Dates which is calculated as follows : Number of PACT Shares
to be delivered by Vendor to Purchaser (“Adjustment Shares”) = Number of
Consideration Shares to be released by the Escrow Agent on any relevant Release
Date multiplied by the greater of either Adjustment Percentage A (as defined
below) or Adjustment Percentage B (as defined below). Adjustment
Percentage A, shall mean the warranted Net Revenue amount minus the actual
amount of Net Revenue during the relevant term of Warranted Years divided by the
warranted Net Revenue amount during the relevant term of the Warranted Years, of
which 5% is then subtracted Adjustment Percentage B, shall mean the
warranted Net Income amount minus the actual amount of Net Income during the
relevant term of Warranted Years divided by the warranted Net Income amount
during the relevant term of the Warranted Years Notwithstanding the
above calculation of Adjustment Shares, in the event that either Adjustment
Percentage A plus 5% or Adjustment Percentage B is greater than 50%, the Vendor
hereby agrees it shall pay to the Purchaser 100% of the Consideration Shares to
be released on the applicable Release Date. Upon any of the events
described above occurs, the Purchaser shall provide the Escrow Agent with the
Notice, that will include the calculation of Adjustment Shares (which shall be
deemed final and correct upon such delivery save in the event of a manifest
error), and the Escrow Agent shall immediately thereafter deliver the Adjustment
Shares or all the Consideration Shares falling to be released on the Relevant
Release Date (as the case may be) to the Purchaser. In addition, the Vendor
shall do and execute or procure to be done and executed all other necessary
acts, deeds, documents and things within its power to transfer and assign the
legal and beneficial ownership of the Adjustment Shares or all the Consideration
Shares falling to be released on the Relevant Release Date (as the case may be)
in the name of the Purchaser. For the avoidance of doubt, the balance of the
Consideration Shares after deducting the Adjustment Shares delivered to the
Purchaser (if any) on the Relevant Release Date shall be released and delivered
by the Escrow Agent to the Vendor.
7.2.2 Adjustment in the Purchaser Board Seats :– In the event that any of the
actual Net Revenue or Net Income achieved by the Joint Venture during any of the
Warranted Years is/are less than 50% of the respective amounts specified in the
corresponding Release Criteria during the Warranted Years and set out in Clause
7.1.1, the Vendor agrees that the number of directors it may be entitled to
nominate to the board of the Purchaser shall be reduced by one (1) director for
every year during the Warranted Years it fails to meet the warranted Net Revenue
or Net Income. In the event that the number of directors appointed/nominated by
the Vendor to the board of directors of the Purchaser exceeds the number the
directors the Vendor is entitled to appoint/nominate in accordance with the
terms of this Agreement, the Vendor shall immediately procure such director(s)
exceeding the number it is entitled to nominate to resign as a director of the
Purchaser (and shall keep the Purchaser fully indemnified of any claims or
proceeding such resigning director may have against the Purchaser). 7.3
Rights Attached to Consideration Shares while in Escrow 7.3.1 It is hereby
agreed by the parties that the Vendor shall be allowed to exercise at any time,
any rights (whatsoever) it may have as a registered owner of such portion of
Consideration Shares (including voting rights, rights to appoint directors or
rights to attend meetings of members) that the Escrow Agent is holding pursuant
to Clause 7.1 and which have not been released on or by the relevant Release
Date to the Vendor, except for the rights outlined in Clause 7.3.2.
7.3.2 It is further agreed by the Vendor that if any dividends are declared or
any distributions are made to any shareholders of PACT Shares, the dividends and
such distributions attached to such Consideration Shares which are held by the
Escrow Agent in the meantime, pursuant to Clause 7.1, shall be paid to Escrow
Agent. It is agreed that dividends and distributions attached to each
Consideration Share and held by the Escrow Agent shall only be released by the
Escrow Agent, together with any interest thereon, to the Vendor as and when such
Consideration Shares fall to be released in accordance with Clause 7.1. All
remaining dividends and distributions (together with interest thereon) held by
the Escrow Agent shall be released to the Purchaser on the relevant Release
Dates. 7.4 Right of First Refusal 7.4.1 Before any shares or
interest in the Joint Venture be sold or otherwise transferred or Disposed of by
the Vendor (“Selling Shareholder”), the Purchaser shall have a right of first
refusal (“Right of First Refusal”) to purchase such shares or interest
(“Offered Securities”) in accordance with Clauses 7.4.2 and 7.4.3 below.
7.4.2 Before the transfer or Disposal of any Offered Securities, the Selling
Shareholders shall deliver to the Purchaser and the Company a written notice
(“Transfer Notice”) stating :- (a) the Selling Shareholder’s intention
to sell or otherwise Dispose of such Offered Securities; (b) the name of
each proposed purchaser or other transferee (a “Proposed Transferee”); (c)
the number of Offered Securities to be transferred to each Proposed Transferee;
(d) the cash price and/or other consideration for which the Selling
Shareholder proposes to transfer the Offered Securities to the Proposed
Transferee (“Offered Price”).
The Transfer Notice shall certify that the Selling Shareholder(s) has
received a firm offer from the Proposed Transferee(s) and in good faith believes
a binding agreement for the Disposal is obtainable on the terms set forth in the
Transfer Notice. The Transfer Notice shall also include a copy of any written
proposal, term sheet or letter of intent or other agreement relating to the
proposed Disposal. The Transfer Notice shall constitute an irrevocable offer by
the Selling Shareholder to sell the Offered Securities to the Purchaser.
7.4.3 The Purchaser shall have a right, upon notice to the Selling Shareholder
at any time within 30 calendar days after receipt of the Transfer Notice, to
purchase all, any or a portion of such Offered Securities at (a) such price per
share of the Offered Securities as (i) determined by an independent
international appraiser experienced in the valuation of such shares and business
of the Company as chosen by the Purchaser or (ii) the Offered Price, which ever
shall be lower (“Purchaser Offer Price”); and (b) upon the same terms (or as
similar as reasonably possible), upon which the Selling Shareholder is proposing
or is to Dispose of such Offered Securities, save the sale/purchase price shall
be the Purchaser Offer Price, and the Selling Shareholder shall, upon receipt of
the notice of purchase from the Purchaser, sell such Offered Securities to the
Purchaser pursuant to such terms, with such closing to take place within 45
calendar days after delivery of the Transfer Notice (“Purchase Right Period”).
7.4.4 If any of the Offered Securities proposed in the Transfer Notice to
be transferred are not purchased by the Purchaser, then after expiry of the
Purchase Right Period, the Selling Shareholder may sell or otherwise transfer or
Dispose of such Offered Securities which have not been purchased by the
Purchaser at the Offered Price or at a higher price, provided that such sale or
other transfer shall be completed and consummated within 45 days after the
expiry of Purchase Right Period, and provided further that the Proposed
Transferee agrees in writing that the provisions of this Agreement and any
Shareholder’s Agreement between the Purchaser and the Vendors regulating their
respective rights within the Company (if any) shall continue to apply to the
Offered Securities that are transferred to the Proposed Transferee. If the
Offered Securities described in the Transfer Notice are not transferred to the
Proposed Transferee within such 45 day period, such Selling Shareholder will not
transfer or Dispose of any Offered Securities unless such securities are first
re-offered to the Purchaser in accordance with Clauses 7.4.2 and 7.4.3 above.
7.5 Right of First Offer for Sale Shares 7.5.1 If within 24 months
from the Completion Date, any of the following events shall occur (“Sale
Events”), then the Vendor shall have the right to purchase all of the Sale
Shares (but not part thereof) from the Purchaser in priority to any other party
or third party at the lower consideration of (i) as determined by an
independent international appraiser experienced in the valuation of such shares
and business of the Company as chosen by mutual agreement by the Purchaser and
the Vendor, based on a willing buyer and a willing seller or (ii) as the parties
may agree (“JV Share Price”):- (a) The Purchaser having sought
creditor’s protection under Chapter 7 or Chapter 11 of the United States’
insolvency or bankruptcy laws and regulations; or
(b) The departure, retirement or termination of employment of Tony Tong,
Richard Hui and Chuck Mueller of the Purchaser. For the avoidance of doubt, so
long as any one of the aforesaid persons are still an employee, independent
contractor or consultant of the Purchaser then this provision shall not apply.
7.5.2 If any of the Sale Events occur within 24 month from the
Completion Date, then the Vendor shall within 30 calendar days of any of the
Sale Events occurring serve such written notice on the Purchaser exercising its
rights to purchase all the Sale Share at the JV Share Price. Completion of the
sale and purchase of the Sale Shares pursuant to this Clause shall occur within
45 calendar days from receipt of written notice by the Purchaser and upon such
completion date, the Vendor shall deliver all of the relevant consideration to
the Purchaser in cash in exchange for the relevant share certificates and other
necessary transfer documents for the Sale Shares. If no written notice is
served by the Vendor on the Purchaser in accordance with this Agreement, then
the Purchaser shall have the right to dispose of all or any of the Sale Shares
as it shall deem appropriate without offering the same to the Vendor. 7.6
Assignment of Reselling and Development Rights of EMS and ETS The
Purchaser hereby undertakes that it shall use reasonable efforts to procure that
such research and development rights (as agreed upon by the Purchaser) of
certain Energy Management System (“EMS”) and Energy Trading System (“ETS”)
solutions and applications are assigned by the Purchaser to the Vendor as soon
as possible after the Completion Date. In the event that the Purchaser is
unable to procure the assignment of such EMS and ETS to the Vendor, then the
Vendor shall have no rights or claims against the Purchaser for failing to do
so. 7.7 Appointment to Board of Joint Venture The Vendor hereby agrees
that it shall and shall procure that so long as the Purchaser is a beneficial
owner of shares or has an equitable interest in the Joint Venture, it shall
procure that the Purchaser shall have a right to appoint a majority of directors
to the Joint Venture and in the event that the number of directors to the board
of the Joint Venture is 5 that the Purchaser shall have the right to nominate at
least 3 directors. 8. CONFIDENTIALITY AND EXCLUSIVE NEGOTIATION 8.1
Confidentiality The parties recognize that, in connection with the
performance of this Agreement, a party (in such capacity, the “Disclosing
Party”) may disclose Confidential Information to another party (in such capacity
the “Receiving Party”). The Receiving Party agrees (A) not to use any such
Confidential Information for any purpose other than in the performance of its
obligations under this Agreement and (B) not to disclose any such Confidential
Information to any Person whatsoever, except (1) to its employees who are
reasonably required to have the Confidential Information in connection herewith;
provided, however, that the Receiving Party shall remain liable for any breach
by its employees of any provision of this Clause 8.1, (2) to its agents,
representatives, lawyers and other advisers that have a need to know such
Confidential Information, subject to the written obligation of any such agent,
representative, lawyer or other advisor to whom Confidential Information is
disclosed in accordance with this Clause 8.1 to maintain the confidentiality
thereof, and (3) pursuant to, and to the extent of, a request or order by a
governmental authority. The Receiving Party agrees to take all reasonable
measures to protect the secrecy and confidentiality of, and avoid disclosure or
unauthorized use of, the Disclosing Party’s Confidential Information. Each
party acknowledges and agrees that (i) any violation of these provisions could
cause irreparable injury to the Disclosing Party for which money damages would
be inadequate to compensate for such breach, and (ii) as a result, the
Disclosing Party may, in addition to other remedies, seek to immediately obtain
and enforce injunctive relief prohibiting the breach or threatened breach of the
provisions of this Clause 8.1 without the necessity of proving actual damages or
compelling specific performance.
8.2 Exclusive Negotiation (a) The Vendor hereby agrees and undertakes that
it will not after the date of this Agreement enter into any negotiations to form
any agreement, understanding or joint venture with any third party relating to
e-commerce services of a similar nature to those services contemplated in this
Agreement and to be carried on by the Joint Venture without the express written
consent of the Purchaser. This Clause shall survive Completion or termination of
this Agreement. (b) The Purchaser hereby undertakes and agrees that it
will not after the date of this Agreement enter into any negotiations or
agreements to merge with or acquire any other entity with similar business as
the Joint Venture or enter into any negotiations or agreements to merge with or
acquire any other entity whereby the Purchaser shall issue (in aggregate) more
than 5% of its entire issued share capital on a fully diluted basis (after issue
of such shares to such entity) subsequent to the date of this Agreement without
the express written consent of the Vendor. The Purchaser further undertakes and
agrees that it shall not to grant any warrants or options without written
consent of the Vendor. (c) It is further agreed and the Vendor hereby
represents and undertakes that in the event any of the Net Income and Net
Revenue targets are not satisfied in any of the First Year, Second Year or Third
Year (as set out in Clause 7.1.1) or the Escrow Agent has not released all of
the Consideration Shares to the Vendor, the Purchaser shall be released from its
undertakings, obligations and the terms and conditions outlined in 8.2 (b)
above. 9. OUTSOURCING 9.1 The Vendor hereby agrees that it shall use
its best endeavors to ensure that all goods, services and technology
requirements of the Vendor Group, including procurement for electrical devices
and information technology services shall first be outsourced and/or contracted
from the Joint Venture and its Subsidiaries upon such terms and conditions
agreeable to the Purchaser prior to acquiring, licensing or contracting for the
same from a relevant third party.
10. RELEASE Both parties agree that neither of them shall be released from its
obligations hereunder by the granting by the other party of any time or other
indulgence, or by the taking by the other party of any other security in respect
of the obligations or liabilities of such party to this Agreement or by the
termination or variation of any of the provisions of this Agreement or of any
such other security or the release of any other security. 11. FURTHER
ASSURANCE AND INFORMATION 11.1 Upon and after Completion each party shall
do and execute or procure to be done and executed all other necessary acts,
deeds, documents and things within their power to give effect to this Agreement.
11.2 Both parties shall mutually provide or procure to be provided all
information that from time to time may be reasonably requested or required
(both before and after the Completion Date) from time to time relating to the
business and affairs of the Joint Venture, the Injected Business, the Vendor
Group, the Company and each of it Subsidiaries, and the Purchaser. 12. COSTS
12.1 Each party to this Agreement shall pay its own legal costs and expenses
and other incidental costs and disbursements in relation to the negotiations
leading up to the purchase of the Sale Shares, the establishment of the Joint
Venture and all other matters and transactions contemplated under this Agreement
and to the preparation, execution and carrying into effect of this Agreement.
13. ANNOUNCEMENTS No party hereto shall except as required by law or the
rules and regulations in the United States or NASDAQ stock exchange or relevant
authority in the United States make any announcement or communication to the
press in connection with the transaction hereby contemplated or effected without
the written approval of the other party. Notwithstanding anything contained in
this Agreement, the Purchaser shall be permitted to make such announcements and
disclosure in respect of this Agreement and the matters contemplated herein to
its shareholders and the relevant government and regulatory authority in the
United States. 14. RETURN OF DOCUMENTS If this Agreement ceases to
have effect both parties shall release and return to the other party all
documents concerning the other party and provided to such party or its advisors
in connection with this Agreement.
15. COMPLETE AGREEMENT This Agreement represents the entire and complete
agreement between the parties in relation to the subject matter hereof and
supersedes any previous agreement whether written or oral in relation thereto.
No variations to this Agreement shall be effective unless made or confirmed in
writing and signed by all the parties hereto. 16. ASSIGNMENT 16.1 This
Agreement shall be binding upon and inure for the benefit of each party's
successors and assigns [and personal representatives] (as the case may be) but,
except as expressly provided herein, none of the rights of the parties under
this Agreement shall be assigned or transferred without the agreement in writing
of the other party. 17. SEVERABILITY In the event that any provision
of this Agreement is held to be unenforceable, illegal or invalid by any court
of competent jurisdiction, the validity, legality or enforceability of the
remaining provisions shall not be affected nor shall any subsequent application
of such provisions be affected. In lieu of any such invalid, illegal or
unenforceable provision, the parties hereto intend that there shall be added as
part of this Agreement a provision as similar in terms to such invalid, illegal
or unenforceable provision as may be possible and be valid, legal and
enforceable. 18. COUNTERPARTS This Agreement may be executed in
counterparts with the same force and effect as if executed on a single document
and all such counterparts shall constitute one and the same instrument. 19.
REMAINING IN FORCE The provisions of this Agreement insofar as the same
shall not have been performed at Completion shall remain in full force and
effect notwithstanding Completion. 20. TIME OF THE ESSENCE Time shall
be of the essence of this Agreement, both as regards the dates and periods
specifically mentioned and as to any dates and periods which may be substituted
by Agreement in writing between or on behalf of the Vendor and the Purchaser.
21. NO WAIVER 21.1 No failure or delay by a party to this Agreement in
exercising any right, power or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of the same preclude
any further exercise thereof or the exercise of any other right, power or
remedy. Without limiting the foregoing, no waiver by a party to this Agreement
of any breach by the other party of any provisions of this Agreement shall be
deemed to be a waiver of any subsequent breach of that or any other provision
hereof. 22. NOTICES 22.1 Any notice required to be given under this
Agreement shall be sufficiently given if delivered in person, forwarded by
registered post or sent by overnight international couriers or facsimile
transmission to the relevant party at its address, or fax number set out below
(or such other address as the addressee has by five days prior written notice
specified to the other parties):
To the Vendor: Holley Group Share Holding Co., Ltd. No. 493 Moganshan Rd.,
Hangzhou 31005 China Fax Number: 86-571-88081888 Attention: Wang
Li Cheng To the Purchaser: PacificNet.com, Inc. 29th Floor, 3
Lockhart Road, Wanchai, Hong Kong Fax Number: 852-27930689
Attention: Tony Tong
22.2 Any notice (i) sent by pre–paid registered post shall be deemed to have
been served [48] hours after the time at which it was posted and in proving such
service it shall be sufficient to prove that the notice was properly addressed
and posted by prepaid registered letter post; and sent by facsimile transmission
shall be deemed to have been served on the receipt of a completed transmission
without error and answer–back advice; and (iii) sent by overnight international
courier shall be deemed to have been served [48] hours after the time at which
it was delivered to such courier and in proving such service it shall be
sufficient to prove that the notice was properly addressed and delivered to the
courier; and (iv) if delivered in person shall be deemed to have been served at
the time of delivery at the address of the relevant party.
22.3 The Vendor will appoint an agent, within 5 business days following
signature by the parties of this Agreement, to receive and acknowledge on its
behalf service of any writ, summons, order, judgment or other notice of legal
process in Hong Kong. If for any reason the agent named above (or its
successor) no longer serves as agent of the Vendor for this purpose, the Vendor
shall promptly appoint a successor agent and notify the other parties hereto.
The Vendor agrees that any such legal process shall be sufficiently served on it
if delivered to such agent for service at its address for the time being in Hong
Kong whether or not such agent gives notice thereof to the Vendor. 22.4 The
Purchaser hereby appoints the Purchaser’s Solicitors as its agent to receive and
acknowledge on its behalf service of any writ, summons, order, judgment or other
notice of legal process in Hong Kong. If for any reason the agent named above
(or its successor) no longer serves as agent of the Purchaser for this purpose,
the Purchaser shall promptly appoint a successor agent and notify the other
parties hereto. The Purchaser agrees that any such legal process shall be
sufficiently served on it if delivered to such agent for service at its address
for the time being in Hong Kong whether or not such agent gives notice thereof
to the Purchaser. 23 GOVERNING LAW AND ARBITRATION 23.1 For any disputes
arising between the Purchaser and the Vendor regarding the establishment and the
operation of the Joint Venture, the PRC Laws will be the governing law.
For any disputes arising from the allotment of the consideration shares, or the
appointment of directors to the Purchaser’s Board, USA Delaware laws will be the
governing laws. 23.2 Any dispute arising from or in connection with this
Agreement shall be submitted to China International Economic and Trade
Arbitration Commission for arbitration which shall be conducted in accordance
with the Commission’s arbitration rules in effect at the time of applying for
arbitration. This arbitral award is final and binding upon both parties 24.
CONFLICT OF LANGUAGE This Agreement has been written in the English
language and the Chinese language. The parties hereby agree that in the event
of a conflict between the English language and the Chinese language of the
Agreement, the English language and version shall prevail. AS WITNESS the
parties hereto have caused this agreement to be executed the day and year first
above written.
EXECUTION PAGE
SIGNED BY ) ./s/ TONY TONG Chairman and CEO ) for and on
behalf of ) PACIFICNET.COM, INC ) ) in the presence of : )
SIGNED BY ) ./s/ LICHENG WANG ) Chairman for
and on behalf of ) ) HOLLEY GROUP SHARE HOLDING CO., LTD. )
in the presence of : )
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Exhibit 10.19a
Amendment A
to the
Termination Protection Agreement
between
[Executive Officer] and Esterline Technologies Corporation
Pursuant to a resolution by the Board of Directors at its June 8, 2000
meeting, Section 5.2 of the Termination Protection Agreement between [Executive
Officer] and Esterline Technologies Corporation, dated [date], shall be remove
and replaced with the following provision:
5.2 In addition, the Company shall pay to Employee a lump sum cash amount
equal to the greater of: (a) three (3) times the Minimum Total Compensation; or,
(b) the maximum amount of such payment that can be made without any portion of
such payment being characterized as an "excess parachute payment" under
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"). The
comparison shall be made by determining which of (a) or (b) results in the
higher after tax payment to Employee, including any excise tax due under Code
Section 4999. "Base Amount" is defined in Code Section 280G.
All other terms and conditions of the Agreement shall remain in full force
and effect.
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QuickLinks
Amendment A to the Termination Protection Agreement between [Executive Officer]
and Esterline Technologies Corporation
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CHURCHILL DOWNS INCORPORATED
AMENDED AND RESTATED
INCENTIVE COMPENSATION PLAN (1997)
ARTICLE 1
PURPOSE
The purpose of the CHURCHILL DOWNS INCORPORATED AMENDED AND RESTATED
INCENTIVE COMPENSATION PLAN is to promote the interests of the Company and its
stockholders by providing greater incentives to officers and other key
management employees by rewarding them for services rendered with compensation
in an amount which is directly related to the success of the Company as well as
the performance of the operating units and the individual employees.
ARTICLE 2
DEFINITIONS
2.1 Definitions. The following words and phrases, when used herein,
unless their context clearly indicates otherwise, shall have the following
respective meanings:
A. Beneficiary. A person or persons (natural or otherwise) designated
by a Participant in accordance with the provisions of Article 8 to receive any
benefits which shall be payable under this Plan. B. Board. The
Board of Directors of Churchill Downs Incorporated. C. Budget. The
annual operating budget approved by the Board for each year during the term of
the Plan. D. CEO. The Chief Executive Officer of Churchill Downs
Incorporated E. Company. Churchill Downs Incorporated and its
subsidiaries. F. Company Achievement Percentage Levels. The
percentages established annually by the Committee to be used, as provided in
Section 6.2, in computing a part of an Annual Incentive Compensation Award based
upon achievement of a Company Performance Goal. G. Company
Performance Goals. The goal defined in Section 6.1.A. H.
Disability. A physical or mental condition arising after the Effective Date
hereof which qualifies a Participant for disability benefits under the Social
Security Act in effect on the date of disability. 38
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I. Discretionary Achievement Percentage Levels. The percentages
established annually by the Committee to be used, as provided in Section 6.5, in
computing a part of an Annual Incentive Compensation Award, based upon
achievement of a Discretionary Performance Goal. J. Discretionary
Performance Goals. K. Effective Date. January 1, 1997.
L. Incentive Compensation Award. The award as defined in Article 6. An
award under the Churchill Downs Incorporated Incentive Compensation Plan (1997)
during any year shall be an "Annual Incentive Compensation Award."
M. Participant. An employee of the Company who is selected for
participation in the Plan in accordance with the provisions of Article 5. For
purposes of Articles 7 and 8, the term Participant shall also include a former
employee who is entitled to benefits under this Plan. N.
Participation Classification. The classification assigned to each Participant in
accordance with the provisions of Article 5. O. Participation
Percentage. The percentages of participation in the Plan as defined in Article
6. P. Performance Goals. The performance goals as defined in
Article 6. Q. Plan. The Churchill Downs Incorporated Incentive
Compensation Plan (1997) R. Plan Year. The twelve-month period
commencing on January 1 of one calendar year and ending on December 31 of the
same calendar year, which period is also the Company's fiscal year.
S. Profit Center. Each Churchill Downs Incorporated racing operation,
Churchill Downs Incorporated Corporate Sales, Churchill Downs Management
Company, and any other profit centers designated by the CEO. T.
Pre-tax Income. The annual consolidated income of the Company, before federal
and state income taxes, after any allowance for payments made or to be made
under this Plan, and after inclusion of all extraordinary revenues and deduction
of all extraordinary expenses, all as calculated in accordance with generally
accepted accounting principles consistently applied and confirmed by the audit
report of the Company's independent public accountants. 39
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U. Profit Center Achievement Percentage Levels. The percentages
established annually by the Committee to be used, as provided in Section 6.3, in
computing a part of an Annual Incentive Compensation Award, based upon
achievement of a Profit Center Performance Goal. V. Profit Center
Performance Goals. The goals defined in Section 6.1.B. W. Salary.
The Participant's base annual salary as set by either the Compensation Committee
of the Board or the CEO. X. Service Center. The Finance,
Development & Technology Service Center, the Legal Service Center, the Corporate
Communications Service Center, and any other service center designated by the
CEO. Y. Service Center Achievement Percentage Levels. The
percentages established annually by the Committee to be used, as provided in
Section 6.4, in computing a part of an Annual Incentive Compensation Award based
upon achievement of a Service Center Performance Goal. Z. Service
Center Performance Goals. The goals defined in Section 6.1.C.
AA. Termination Date. December 31, 2001, or such earlier date as may be
determined under Section 9.2.
2.2 Construction. The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, unless the context clearly
indicates to the contrary.
ARTICLE 3
ADMINISTRATION
3.1 Committee. The Plan shall be administered by the Compensation
Committee of the Board (hereinafter the "Committee").
3.2 Committee’s Power and Authority. The Committee shall have full
and complete authority and power, subject only to the direction of the Board, to
administer the Plan in accordance with its terms and carry out the provisions of
the Plan. The Committee shall interpret the Plan and shall determine all
questions, factual, legal or otherwise, arising in the administration,
interpretation and application of the Plan, including but not limited to
questions of eligibility and the status and rights of Participants,
Beneficiaries and other persons. The Committee shall have any and all power and
authority (including discretion with respect to the exercise of such power and
authority) which shall be necessary, properly advisable, desirable, or
convenient to enable it to carry out its duties under the Plan. By way of
illustration and not limitation, the Committee is empowered and authorized to
make rules and regulations in respect
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to the Plan not inconsistent with the Plan; to determine, consistently
therewith, all questions that may arise as to the eligibility, benefits, status
and right of any person claiming benefits under the Plan; to determine whether a
Participant was terminated for just cause; and subject to and consistent with,
any applicable laws, to make factual determinations, to construe and interpret
the Plan and correct any defect, supply any omissions or reconcile any
inconsistencies in the Plan. Any such determination by the Committee shall
presumptively be conclusive and binding on all persons. The regularly kept
records of the Company shall be conclusive and binding upon all persons with
respect to a Participant’s date and length of employment, time and amount of
salary and the manner of payment thereof, type and length of any absence from
work and all other matters contained therein relating to employment. All rules
and determinations of the Committee shall be uniformly and consistently applied
to all persons in similar circumstances.
3.3 Committee’s Annual Review. The Committee shall review the
operation of the Plan to determine its effectiveness in promoting its operating
results and the shareholders’ investment; further, the Committee shall report
annually to the Board on its findings and make such recommendations as the
Committee deems appropriate.
ARTICLE 4
EFFECTIVE DATE AND TERMINATION
The Plan shall be effective as of January 1, 1997. The Plan shall
terminate on December 31, 2001, except with respect to the payment of any
Incentive Compensation Awards which may become due and payable thereafter, or
unless terminated earlier by action of the Board under Section 9.2.
ARTICLE 5
ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. All Company officers and other key management
employees who are employed by the Company on the date of the adoption of this
Plan and who are specifically designated by the Committee as Participants shall
be Participants in the Plan as of January 1, 1997. In addition, any officers and
other key management employees who are subsequently designated by the Committee
as participants shall become Participants in the Plan on the date established by
the Committee for such participation. Once an employee becomes a Participant, he
will remain a Participant until the earliest of: [i] termination of this Plan;
[ii] termination of his active service with the Company; or [iii] termination of
his status as a Participant by decision of the Committee, provided, however,
that a Participant will be terminated from participation in the Plan only at the
beginning of a Plan Year.
5.2 Classifications of Participants. The Committee shall, from
time to time, establish Participation Classifications which will determine the
Participants’ Performance Goals. Simultaneous with the Committee’s designation
of an employee as a Participant, the Committee shall designate in which
classifications of Participants the employee shall participate. The
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Committee may change the Class designation of a Participant as of the beginning
of any Plan Year.
ARTICLE 6
ANNUAL INCENTIVE COMPENSATION AWARDS
6.1 Performance Goals. Annual Incentive Compensation Awards to
each Participant shall be determined on the basis of the achievement of the
following Performance Goals:
A. The Company achieves certain Pre-tax Income for the
applicable year: the “Threshold Company Goal” (90% of the Pre-tax Income target
set in the applicable Budget); the “Target Company Goal” (100% of the Pre-tax
Income target set in the applicable Budget); and the Maximum Company Goal” (115%
of the Pre-tax Income target set in the applicable Budget) (the “Company
Performance Goal[s]”). The Committee shall establish annually the percentage of
the Annual Incentive Compensation Award to each Participant which is awarded to
each Participant based upon the Company Performance Goals (the “Company
Performance Goals Percentage”).
B. In the case of Classes to which Participants working in
Profit Centers are assigned, the Profit Center achieves certain pre-tax net
income levels for the applicable year: the “Threshold Profit Center Goal” (90%
of the pre-tax net income set in the Profit Center’s applicable Budget); the
“Target Profit Center Goal” (100% of the pre-tax net income set in the Profit
Center’s applicable Budget); and the “Maximum Profit Center Goal” (115% of the
pre-tax net income set in the Profit Center’s applicable Budget) (the “Profit
Center Performance Goal[s]”). The Committee shall establish annually the
percentage of the Annual Incentive Compensation Award which is awarded to each
Participant based upon the Profit Center Performance Goals (the “Profit Center
Performance Goals Percentage”).
C. In the case of Classes to which Participants working in
Service Centers are assigned, such Service Center meets certain objective
financial and other criteria established by the CEO and the Senior Vice
President of that Service Center for the applicable year: the “Threshold Service
Center Goal” (90% of the Service Center’s established criteria); the “Target
Service Center Goal” (100% of the Service Center’s established criteria); and
the “Maximum Service Center Goal” (115% of the Service Center’s established
criteria) (the “Service Center Performance Goal[s]”). Achievement of the Service
Center Performance Goals shall be determined in the CEO’s sole discretion. The
Committee shall establish annually the percentage of the Annual Incentive
Compensation Award which is awarded to each Participant based upon the Service
Center Performance Goals (the “Service Center Performance Goals Percentage”)
42
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D. The Participant achieves certain performance standards
particular to his or her position in the Company for the applicable year: the
“Threshold Discretionary Goal” (90% of the Participant’s performance standards);
the “Target Discretionary Goal” (100% of the Participant’s performance
standards); and the “Maximum Discretionary Goal” (115% of the Participant’s
performance standards) (the “Discretionary Performance Goal[s]”). Achievement of
the Discretionary Performance Goals shall be determined in the sole discretion
of the CEO. The Committee shall establish annually the percentage of the Annual
Incentive Compensation Award which is awarded based upon the Discretionary
Performance Goals (the “Discretionary Performance Goals Percentage”).
6.2 Computation of Award Based Upon Company Performance Goals.
For each Plan Year for which the Company achieves the “Threshold Company Goal”,
each Participant shall be awarded an Annual Incentive Compensation Award which
shall be computed by multiplying: (i) the Participant’s Salary for the Plan
Year; by (ii) the Participation Percentage, as established annually by the
Committee for the Participant’s Class; by (iii) the Company Performance Goals
Percentage, as established annually by the Committee for the Participant’s
Class; by (iv) the applicable Company Achievement Percentage Level as
established annually by the Committee.
6.3 Computation of Award based on Profit Center Performance
Goals. For each Plan Year for which the Company achieves at least the Threshold
Company Performance Goal and the Profit Center in which that Participant works
achieves at least its Threshold Profit Center Performance Goal, each Participant
of a Profit Center Class shall be awarded an Annual Incentive Compensation Award
which shall be computed by multiplying: (i) the Participant’s Salary for the
Plan Year; by (ii) the Participation Percentage, as established annually by the
Committee for the Participant’s class; by (iii) the Profit Center Performance
Goals Percentage as established annually by the Committee for the Participant’s
Class; (iv) by the applicable Profit Center Achievement Percentage Level as
established annually by the Committee.
6.4 Computation of Award based on Service Center Performance
Goals. For each Plan Year for which the Company achieves at least the Threshold
Company Performance Goal and the Service Center in which that Participant works
achieves at least its Threshold Service Center Performance Goal, each
Participant in a Service Center Class shall be awarded an Annual Incentive
Compensation Award which shall be computed by multiplying: (i) the Participant’s
Salary for the Plan Year; by (ii) the Participation Percentage, as established
annually by the Committee for the Participant’s Class; by (iii) the Service
Center Performance Goals Percentage as established annually by the Committee for
the Participant’s Class; by (iv) the applicable Service Center Achievement
Percentage Level as established annually by the Committee.
6.5 Computation of Award based on Discretionary Performance
Goals. For each Plan Year for which the Company achieves at least the Threshold
Company Performance Goal and that Participant achieves at least his/her
Threshold Discretionary Performance Goal, a Participant may be awarded an Annual
Incentive Compensation Award which shall be computed by multiplying: (i) the
Participant’s Salary for the Plan Year; by (ii) the Participation Percentage as
established annually by the Committee; by (iii) the Discretionary Performance
Goals Percentage for the Participant’s Class as established annually by the
Committee; by (iv) the applicable
43
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Discretionary Achievement Percentage Level as established annually by the
Committee. Notwithstanding the foregoing, the Discretionary Achievement
Percentage Level for any Plan Year shall not exceed the greater of 100% or the
Company Achievement Percentage Level or the greater of 100% or the Profit Unit
Achievement Percentage Level (in the case of the Racetrack Profit Centers) for
that Plan Year. The CEO, in his/her sole discretion, shall determine whether a
Participant has met Discretionary Performance Goals.
6.6 Adjustments to Annual Incentive Compensation Award. An
Annual Incentive Compensation Award shall be adjusted by any one or more of the
following adjustments:
A. In the event a Participant shall, during a
Plan Year, die, retire, go on a leave of absence with the Company's consent,
terminate employment due to Disability, or be terminated without just cause, the
Annual Incentive Compensation Award for that Participant for such Plan Year
shall be reduced, pro rata, based on the number of days in such Plan Year during
which he was not a Participant.
B. In the event that during a Plan Year a
Participant shall be discharged for just cause or shall voluntarily resign for
any reason other than Disability, the Annual Incentive Compensation Award for
that Participant shall be reduced to zero, and no Annual Incentive Compensation
Award shall be payable to that Participant for such Plan Year.
ARTICLE 7
PAYMENT OF BENEFITS
7.1 Method of Payments. As soon as the Committee has determined
the amount of all of the Annual Incentive Compensation Awards at the end of a
Plan Year, the Committee shall instruct the Company to pay each award in cash in
one lump sum.
ARTICLE 8
DESIGNATION OF BENEFICIARIES
A Participant may file with the Committee a designation of a Beneficiary
or Beneficiaries in writing, which designation may be changed or revoked by the
Participant’s sole action, provided that the change or revocation is filed with
the Committee in writing. If a Participant dies, any benefit which the
Participant is entitled to receive under the Plan shall be delivered to the
Beneficiary or Beneficiaries so designated, or if no Beneficiary has been
designated or survives the Participant, shall be delivered to the Executor or
Administrator of the Participant’s estate.
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ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 Other Plans. Any payment made under the provisions of this
Plan shall be includable in or excludable from a Participant’s compensation for
purposes of any other qualified or nonqualified benefit plan in which the
Participant may be eligible to participate by reference to the terms of such
other plan.
9.2 Plan Amendment and Terminations. The Company, acting
through the Committee or the Board, reserves the right to amend and/or to
terminate the Plan for any reason and at any time. Any amendment or termination
of this Plan shall not affect the right of any Participant or his Beneficiary to
receive an Incentive Compensation Award after it has been earned.
9.3 Right to Transfer, Alienate and Attach. Except to the
extent that a Participant may designate a Beneficiary under the provisions
contained in Article 8, the right of any Participant or any beneficiary to any
benefit or to any payment hereunder shall not be subject in any manner to
attachment or other legal process for the debts of such Participant or
Beneficiary; and any such benefit or payment shall not be subject to
anticipation, alienation, sale, transfer, assignment or encumbrance, except to
the extent that the right to such benefit is transferable by the Participant by
will or the laws of descent and distribution.
9.4 Indemnification. No member of the Board or of the Committee
and no officer or employee of the Company shall be liable to any person for any
action taken in connection with the administration of this Plan unless
attributable to his own fraud or willful misconduct; nor shall the Company be
liable to any person for any such action unless attributable to fraud or willful
misconduct on the part of a director, officer or employee of the Company.
9.5 Non-Guarantee of Employment. Neither the existence of this
Plan nor any award or benefit granted pursuant to it shall create any right to
continued employment of any Participant by the Company. No Participant shall,
under any circumstances, have any interest whatsoever, vested or contingent, in
any particular property or asset of the Company by virtue of any award, unpaid
bonus or other accrued benefit under the Plan.
9.6 Source of Payment. No special or separate fund shall be
established or other segregation of assets made with respect to any immediate or
deferred payment under the Plan. All payment of awards shall be made from the
general funds of the Company. To the extent that a Participant or his
Beneficiary acquires a right to receive payments under this Plan, such right
shall be no greater than that of any unsecured general creditor of the Company.
9.7 Withholding Taxes. The Company shall have the right to
deduct from all payments made to the Participant, whether pursuant to this Plan
or otherwise, amounts required by federal, state or local law to be withheld
with respect to any payments made pursuant to this Plan.
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Exhibit 10.44
DTE Energy Company
Annual Incentive Plan
Overview
The Annual Incentive Plan (“Plan”) rewards eligible key executives of DTE Energy
Company (“DTE”) and its Subsidiaries, as defined below, for accomplishment of
financial and strategic objectives that improve DTE’s operating results and
position DTE for long-term profitability and successful individual performance.
The Plan measures calendar year performance. The current year’s performance
targets, performance measures and weights will be communicated annually. For
purposes of the Plan, “Subsidiary” means a corporation, partnership, joint
venture, limited liability company, unincorporated association or other entity
in which DTE has a direct or indirect ownership or other equity interest.
Administration
The Plan shall be administered by the Special Committee on Compensation
(“Committee”) of DTE’s Board of Directors (“Board”) or such other Board
committee as may be designated from time to time by the Board, provided that any
such committee is composed solely of individuals who are “Outside Directors” as
that term is used in Section 162(m) of the Internal Revenue Code of 1986, as
amended (“Code”) and Treasury Regulation promulgated thereunder. The Committee
has the authority to interpret the provisions of the Plan and prescribe any
regulations relating to its administration. The decisions of the Committee with
respect to the administration of the Plan shall be conclusive, subject to the
limitations on the Committee’s action.
The Committee, on an annual basis, will establish and report to the Board of
Directors the specific criteria for eligibility, the type and timing of awards
and the manner of payment of awards, the performance measures and related
weights to be used in computing award amounts, and the performance levels for
each performance measure. The Board of Directors reserves the right to amend,
suspend or terminate the Plan at any time; provided, however, that on or after
the occurrence of a Change in Control, as defined below, no amendment,
suspension or termination of the Plan may be made that adversely affects the
rights of any person under an outstanding Award without his or her prior written
consent.
Outstanding awards are not payable until such time as the Committee has
certified that the performance measures and levels entitling an individual to
payment have been satisfied; provided, however, that notwithstanding the
foregoing or any other provision of the Plan, after a Change in Control, as
defined herein, such certification is not required with respect to any award in
respect of a Plan year ending prior to a Change in Control or any outstanding at
the time of a Change in Control. The Committee reserves the right to reduce (by
up to 100%) the amount payable under any award or cancel any outstanding award
if, in its sole discretion, it determines that such reduction or cancellation is
in DTE’s best interests. If such a determination is made, the Plan may be
terminated or substantially modified resulting in the termination or decrease in
any award made hereunder. Notwithstanding the foregoing or any other provision
of the Plan, no award in respect of a Plan year ending prior to the occurrence
of a Change in Control, as defined herein nor any award outstanding at the time
of the Change in Control, may be reduced by the Committee, modified or canceled,
nor may the Plan be terminated or substantially modified in a way that adversely
affects such an award, following the occurrence of a Change in Control, without
the affected participant’s written consent.
The Treasurer will be responsible for making award payments, for maintaining
deferred accounts for award recipients, and for maintaining all necessary
records regarding the valuation and payment of awards.
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Eligibility
Any key executive of DTE or a Subsidiary shall become a participant in the Plan
if selected to receive an award by the Committee.
Participation in the Plan does not guarantee continued employment with DTE or a
Subsidiary.
Plan Year
The Plan year will be the calendar year.
Performance Measures, Levels and Weights
The applicable percentages, e.g., target, minimum and maximum percentages;
measures of performance; weights; and performance levels for each performance
measure, for each Plan year, will be established by the Committee in writing,
and communicated to all employees who have been selected to receive an award, no
later than 90 days after the beginning of the Plan year. The measures of
performance established by the Committee may include objectives stated with
respect to (i) shareholder value growth based on stock price and dividends,
(ii) customer price, (iii) customer satisfaction, (iv) growth based on
increasing sales or profitability of one or more business units, (v) performance
against the companies in the Dow Jones Electric Utility Industry Group index,
the companies in the S&P 500 Electric Utility Industry index, a peer group or
similar benchmark selected by the Committee, (vi) earnings per share growth,
(vii) employee satisfaction, (viii) nuclear plant performance achievement,
(ix) return on equity, (x) economic value added, (xi) cash flow, (xii) earnings
growth, (xiii) integration success, (xiv) diversity, (xv) safety, or
(xvi) production cost or such other measures as may be selected by the
Committee. Each of the performance objectives described in the preceding
sentence may be stated with respect to the performance of DTE, a Subsidiary or a
division of DTE or a Subsidiary.
Award Payment
The payment, if any, under an award will be made as soon as practicable
following certification by the Committee that applicable performance measures
and levels entitling an individual to payment have been satisfied, and a
determination by the Committee of the amount of payment due. The Committee’s
determination may reflect its discretion to reduce the amount of any award
otherwise payable as a result of attainment of applicable performance measures.
The maximum amount that may be paid under this Plan to any participant in a
single calendar year is $6,000,000.
Notwithstanding the foregoing, following a Change in Control, no certification
shall be required with respect to an award for a Plan year ending prior to the
Change in Control or outstanding at the time of the Change in Control. If no
such certification is made within 30 (thirty) days after the end of the year to
which the award relates, payment shall be made on such 30th day. As provided
above under “Administration,” following a Change in Control, the Committee shall
not have the discretion to reduce the amount of any such award.
Deferral of Awards
Participants may defer the receipt of awards earned under this Plan in
accordance with procedures established by the Committee from time to time.
Deferred awards are fully vested.
Forfeiture
A participant whose employment with DTE and its Subsidiaries terminates prior to
the end of a Plan year forfeits any award to which he or she may have been
entitled for such Plan year unless the termination is the result of
(i) disability (where disability is defined as being eligible to receive a
benefit under a long-term disability plan of DTE or a Subsidiary), (ii) death or
(iii) retirement (a) at or after age 55 with at least 10 years of service with
DTE and its Subsidiaries or (b) at or after age 65. In the event of termination
due to disability, death or retirement in accordance with the preceding
sentence, a participant
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shall be eligible to receive a payment equal to a pro rata portion of the award
he or she would have received absent his or her termination. The amount paid
shall be (i) the amount of the award payable absent his or her termination,
based on actual attainment of applicable performance measures, times (ii) a
fraction, the numerator of which is the number of days in the year to which the
award relates prior to the participant’s termination date, and the denominator
of which is 365, subject to reduction in the Committee’s sole discretion based
on the participant’s individual performance during his or her period of
employment during the year of termination; provided, that no reduction shall be
permitted following a Change in Control. Any such payment shall be made at the
time the payment would have been made absent the termination.
Funding Status
Benefits under the Plan, including any deferred amounts, are payable solely from
the general assets of the DTE and its Subsidiaries and shall remain unfunded and
unsecured (under the Code and Title I of the Employee Retirement Income Security
Act of 1974, as amended) during the entire period of the Plan’s existence. Each
participant and the participant’s spouse or beneficiary are merely general
creditors of DTE and its Subsidiaries and the obligations of the DTE and its
Subsidiaries hereunder are contractual and are not funded or secured in any way.
Nothing herein, however, shall preclude DTE and its Subsidiaries from
segregating assets which are intended to be a source of payment of benefits
under the Plan, provided that such assets remain subject to the general
creditors of DTE and any Subsidiary that is an employer of a participant.
Non-Alienability and Non-Transferability
The right of a participant and the participant’s spouse or beneficiary to
payment of any benefit or deferred compensation hereunder shall not be
alienated, assigned, transferred, pledged or encumbered and shall not be subject
to execution, attachment or similar process. No participant may borrow against a
deferred account established for his or her benefit hereunder. No account shall
be subject in any manner to alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution or levy of any kind, whether
voluntary or involuntary, including but not limited to any liability which is
for alimony or other payments for the support of a spouse or former spouse, or
for any other relative of any employee. Any attempted assignment, pledge, levy
or similar process shall be null and void and without effect.
Beneficiary Designation
Each eligible participant may name a beneficiary to whom awards under the Plan
are to be paid in case of his or her death. Each designation revokes all prior
designations by the eligible participant and shall be on a form prescribed by
the Committee or its delegate and will be effective only when filed by the
eligible participant with DTE. In the absence of any such designation, awards
payable after the death of a participant shall be paid (i) to the participant’s
beneficiary designated by the participant with respect to group life insurance
maintained by DTE or a Subsidiary on the life of the participant, or, (ii) in
the absence of a designated group life insurance beneficiary, to the
participant’s estate.
Governing Law
The Plan shall be governed by the laws of the State of Michigan, except for its
choice-of-law provisions.
Change In Control Definition
A change in control (“Change in Control”) for purposes of the Plan shall have
occurred if at any time any of the following events shall occur:
(1) The consummation of a transaction in which DTE is merged, consolidated
or reorganized into or with another corporation or other legal person, and as a
result of such transaction, less than 55% of the combined voting power of the
then-outstanding securities entitled to vote generally in the election of
directors (“Voting Stock”) of such corporation or person immediately after
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such transaction is held in the aggregate by the holders of Voting Stock of DTE
immediately prior to such transaction; (2) The consummation of a
transaction in which DTE sells or otherwise transfers all or substantially all
of its assets to another corporation or other legal person and, as a result of
such sale or transfer, less then 55% of the combined voting power of the
then-outstanding Voting Stock of such corporation or person immediately after
such sale or transfer is held in the aggregate (directly or through ownership of
Voting Stock of DTE or a Subsidiary) by the holders of Voting Stock of DTE
immediately prior to such sale or transfer; or (3) The approval by the
shareholders of DTE of a complete liquidation or dissolution of DTE.
4 |
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT made as of July 1, 2001 by and between JONES APPAREL GROUP, INC.,
a Pennsylvania corporation (the "Company"), and IRWIN SAMELMAN (the
"Executive").
W I T N E S S E T H
:
WHEREAS, Executive has been serving as a senior executive of the Company
pursuant to an employment agreement dated as of July 1, 2000 between the Company
and the Executive (the "Prior Agreement"), and
WHEREAS, the Company wishes to continue to employ the Executive, and the
Executive wishes to continue employment with the Company, on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, it is agreed as follows:
1. Employment. During the term of this Agreement, the Company shall employ
the Executive as the Executive Vice President-Marketing of the Company, with
such responsibilities and authority as Executive has heretofore had as Executive
Vice President-Marketing of the Company. The Executive shall report directly to
the Chief Executive Officer of the Company. During the term of this Agreement,
and excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote all of Executive's business time and
attention to the business affairs of the Company, and to perform such
responsibilities in a professional manner. Notwithstanding the foregoing, during
the term of this Agreement, it shall not be a violation of this Agreement for
the Executive to (a) serve on civic or charitable boards or committees; (b)
deliver lectures, fulfill speaking engagements or teach at educational
institutions; (c) serve as a non-employee member of a board of directors of a
business entity which is not competitive with the Company and as to which the
Board of Directors of the Company has given its consent; and (d) attend to
personal business, so long as such activities do not interfere with the
performance of the Executive's responsibilities as a senior executive of the
Company in accordance with this Agreement.
2. Term. The Company shall employ the Executive for the period commencing as
of July 1, 2001 and ending as of June 30, 2004 (the "Expiration Date"), as
renewed in accordance with the following sentence (the "Term"). The Executive's
employment with the Company will continue, and this Agreement will be
automatically extended without limitation, for successive 12-month periods
commencing July 1 and ending June 30 (a "Contract Year"), unless either party to
this Agreement advises the other in writing, no later than June 30, 2002 and no
later than each June 30 thereafter, that
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such party does not wish to extend (a "Non-extension Notice"). If this Agreement
shall be so extended, the "Expiration Date" shall mean the then applicable
extended "Expiration Date", and the "Term" shall mean the period commencing July
1, 2001 and ending on the then applicable extended "Expiration Date".
For example, (i) if by June 30, 2002, neither party has given a Non-extension
Notice to the other, the Term will be automatically extended through June 30,
2005, and (ii) if the Term is so extended through June 30, 2005, then if by June
30, 2003, neither party has given a Non-extension Notice to the other, the Term
will be automatically extended through June 30, 2006.
3. Salary, Retirement Plans, Fringe Benefits and Allowances.
(a) Throughout the Term, the Executive shall receive a salary at the
annual rate of not less than $1,000,000. The Executive's salary shall be payable
at such regular times and intervals as the Company customarily pays its senior
executives from time to time, but no less frequently than once a month.
(b) During the Term, the Executive shall be eligible to participate in
all savings and retirement plans, practices, policies and programs to the extent
applicable generally to other senior executives of the Company.
(c)(i) During the Term, the Executive and/or the Executive's family, as
the case may be, shall be eligible for participation in and shall receive all
benefits under welfare, fringe and other benefit plans, practices, policies and
programs provided by the Company (including, without limitation, medical,
prescription drug, dental, disability, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other senior
executives of the Company.
(ii) During the period commencing with the termination of the
Executive's employment with the Company for any reason other than for Cause and
ending with the death of the Executive or death of the individual who was his
spouse at the date of termination of the Executive's employment, whichever
occurs later, the Company (at its sole expense) shall continue to provide the
Executive and such spouse (and eligible dependents, if any) with health care
benefits comparable to those which the Executive was receiving immediately prior
to termination of employment.
(d) The Executive shall be entitled to an aggregate of four (4) weeks
paid vacation during each calendar year of the Term. The Executive shall also be
entitled to the benefits of the Company's policies relating to sick leave and
holidays.
(e) The Executive shall have all expenses reasonably incurred by
Executive on behalf of the Company reimbursed by the Company in accordance with
the Company's standard policies and practices. The Executive shall be entitled
to first class seating for air travel on Company business.
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(f) The Company shall make available to the Executive all perquisites
that are made available to senior executives of the Company.
4. Calendar Year Bonus; Contract Year Bonus.
(a) Executive shall participate in the Company's Executive Annual
Incentive Plan (the "Bonus Plan"), pursuant to which the Executive may be
entitled to receive annual bonus payments for each full calendar year of
employment which ends prior to the Expiration Date and throughout which the
Executive has been employed by the Company, and a partial annual bonus payment
for the calendar year in which this Agreement expires (such full or partial year
bonus payments being hereinafter referred to as a "Calendar Year Bonus"),
prorated for the portion of such year preceding expiration, conditioned upon the
attainment of annual criteria and objectives established for participants in the
Bonus Plan.
(b)(i) In addition to the Calendar Year Bonuses that the Executive may
receive pursuant to Section 4(a)hereof, the Executive shall be paid an aggregate
bonus of $1,500,000 for each full Contract Year throughout which the Executive
has been employed by the Company during the Term (the "Contract Year Bonus").
The Contract Year Bonus shall be paid in two installments of $750,000 (each a
"Contract Year Bonus Installment"), payable within 10 days after the first day
and the last day of each Contract Year (except that the first Contract Year
Bonus Installment for the Contract Year beginning July 1, 2001 shall be paid
within 10 days following the execution of this Agreement).
(ii) Executive may elect to receive all or part of a Contract Year
Bonus Installment in shares ("Common Shares") of the Company's common stock (the
"Common Stock Amount"), by giving written notice of such election (a "Stock
Election Notice") to the Company no later than the July 10 immediately following
the end of a Contract Year. If such Stock Election Notice has been given, the
number of Common Shares that the Company shall deliver to the Executive shall be
equal to the Common Stock Amount divided by the average daily last sale price of
the Company's common stock on the New York Stock Exchange (adjusted for
intervening stock dividends, stock splits, recapitalizations and any other
transactions having a similar effect ) during the period from the day following
the Company's receipt of the Stock Election Notice and ending on the immediately
following July 31 (the "Price Calculation Period"). A stock certificate for the
Common Shares comprising the Common Stock Amount shall be delivered to the
Executive no later than the end of the fifth business day immediately following
the end of the Price Calculation Period.
5. Stock Options; Restricted Stock. (a) In anticipation of entering into
this Agreement and as an inducement to the Executive to do so, the Stock Option
Committee of the Board of Directors of the Company granted to the Executive (x)
on June 15, 2001, an option to purchase 250,000 Common Shares, and (y) on July
9, 2001, 100,000 Restricted Shares, in accordance with the terms of such grants
contained in agreements relating thereto between the Executive and the Company.
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(b) Subject to the absolute authority of the Stock Option Committee of
the Board of Directors of the Company from time to time to grant (or not to
grant) to eligible individuals options to purchase common stock of the Company
("Options"), it is the intention of the Company and the expectation of the
Executive that while the Executive is employed hereunder, the Executive will
receive Options annually, on the following terms and conditions (and any Options
so granted shall be subject to the following terms and conditions, which shall
govern any conflicts in the terms hereof with any terms and conditions in any
stock option agreement):
(i) Target awards will be in an amount (plus or minus 25%) equal to
150% of Executive's salary;
(ii) For purposes of determining the number of shares subject to a
given Option grant, the value of such Option shall be determined using the
Black-Scholes valuation method, or another generally recognized valuation method
which is being used uniformly by the Company for its senior executives;
(iii) The exercise price per share of the Options shall be the fair
market value of the common stock on the date of grant, and the Options shall
expire on the tenth anniversary of the date of grant; and
(iv) The Options shall vest ratably on the first three anniversaries
of the date of grant; provided, however, that all such Options and all other
options to purchase Common Shares then held by the Executive which are not then
vested (in the aggregate being referred to herein as "Accelerated Options")
shall become fully vested and immediately exercisable during the remaining
original term of each such Accelerated Option, upon the occurrence of any of the
following events ("Acceleration Events"): Executive's Retirement (as defined
herein), death, Disability, a Change in Control (as defined herein), and
termination of Executive's employment by the Company without Cause or by the
Executive for Good Reason; and
(v) The Options shall be granted on such other terms and conditions
as are generally made applicable to Options granted to the other senior
executives of the Company.
6. Termination of Employment.
(a) By the Company for Cause, or by the Executive without Good Reason.
The Company may terminate the Executive's employment for Cause (as defined
herein) before the Expiration Date. If the Executive's employment is terminated
for Cause, or if Executive resigns during the Term without Good Reason (as
defined below), the Company shall pay to the Executive any unpaid salary through
the date of termination, as well as reimburse the Executive for any unpaid
reimbursable expenses incurred on behalf of the Company, and thereafter the
Company shall have no additional obligations to the Executive under this
Agreement.
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(b) Death or Disability; Retirement. (i) If the Executive's employment
terminates before the Expiration Date because of Executive's death or Disability
or Retirement (as defined herein), the Company shall pay Executive or
Executive's duly appointed personal representative, as the case may be, (i) any
unpaid salary through the date of death or the Disability Termination Date or
the date of Retirement (as defined herein) and any bonus earned in the prior
year but not yet paid, as well as reimbursement of any unpaid reimbursable
expenses incurred on behalf of the Company, (ii) an amount equal to Executive's
monthly salary during each of the six (6) months following Executive's death or
the Disability Termination Date, (iii) the Target Bonus for the calendar year in
which Executive dies or becomes Disabled or Retires, prorated for the portion of
such year preceding Executive's death or the Disability Termination Date, and
(iv) the Contract Year Bonus for the Contract Year in which the Executive dies
or becomes Disabled or Retires, prorated for the portion of such year preceding
Executive's death or the Disability Termination Date, which shall be paid not
later than 120 days after the end of such year. Except as set forth in this
Section 6(b) and in Section 2(c)(ii) hereof, the Company shall have no
additional obligations to the Executive under this Agreement in the event of
Executive's termination of employment under this Section 6(b).
(ii) In addition to the foregoing and notwithstanding any other
agreement between the Executive and the Company, all Accelerated Options which
were held by the Executive at the time of the Executive's Retirement, death or
the Disability Termination Date, shall become fully exercisable and shall remain
exercisable by the Executive or by the Executive's estate or his representative,
as the case may be, during the remaining original term of the Accelerated Option
in the case of the Executive's Retirement or Disability, or during the 3-year
period following the date of the Executive's death.
(c) By the Company without Cause, or by the Executive for Good Reason.
(i) The Company may terminate the Executive's employment before the Expiration
Date without Cause, and the Executive may terminate Executive's employment
before the Expiration Date for Good Reason, upon 30-days written notice to the
other party. If the Executive's employment is so terminated by the Company
without Cause, or by the Executive for Good Reason, as the case may be, the
Company shall pay and provide to the Executive (i) any unpaid salary through the
date of termination and any bonus earned in the prior year but not yet paid, as
well as reimbursement of any unpaid reimbursable expenses incurred on behalf of
the Company, (ii) the Target Bonus for the calendar year in which termination
occurs, prorated for the portion of such year preceding termination (payable no
later than the 30th day immediately following termination of employment), (iii)
the Contract Year Bonus for the Contract Year in which termination occurs,
prorated for the portion of such year preceding termination (payable no later
than the 30th day immediately following termination of employment), (iv) during
each month of the Severance Period (as defined below), an amount equal to the
sum of (x) Executive's monthly salary at the rate in effect immediately
preceding termination and (y) one-twelfth of the Executive's Target Bonus for
the calendar year in which termination occurs, and (z) one-twelfth of the
Contract Year Bonus, (v) throughout the
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Severance Period, continuation of Executive's participation (including the
Company's contributions thereto) in all benefit plans and practices in which
Executive was participating immediately preceding termination, and (vi)
reimbursement to the Executive for up to $10,000 of executive outplacement
services. Except as set forth in this Subsection 6(c), the Company shall not
have any additional obligations to the Executive under this Agreement in the
event of Executive's termination of employment under this Subsection 6(c).
(ii) In addition to the foregoing and notwithstanding any other
agreement between the Executive and the Company, all options to purchase the
Company's common stock which were held by the Executive at the time of the
termination of the Executive's employment by the Company without Cause or by the
Executive for Good Reason (whether or not following a Change of Control), shall
become fully exercisable and shall remain exercisable for the same period
following termination as would apply if the Executive's employment had not
terminated.
(d) Change in Control. If, following a "Change in Control" (as defined
herein) and prior to the Expiration Date, the Company terminates the Executive's
employment without Cause, or the Executive terminates employment hereunder for
Good Reason, the Company shall pay to the Executive, within 20 days following
termination, (i) any unpaid salary through the date of termination and any bonus
earned in the prior year but not yet paid, as well as reimbursement of any
unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target
Bonus for the calendar year in which termination occurs, prorated for the
portion of such year preceding termination, (iii) the Contract Year Bonus for
the Contract Year in which the termination occurs, prorated for the portion of
such year preceding termination, (iv) a lump-sum payment equal to (x) 200% of
Executive's yearly salary at the rate in effect immediately preceding
termination multiplied by (y) the Severance Multiple (as defined herein), (v)
reimbursement to the Executive for up to $10,000 of executive outplacement
services, and (vi) a lump-sum equal to the Company's cost for life insurance and
retirement benefits for the Severance Period.
(e) Special Termination Provision. (i) Any other provision in this
Agreement notwithstanding, during the period commencing either when Sidney
Kimmel first does not hold the position of Chief Executive Officer of the
Company or a Change in Control has occurred, and ending on the 90th day
immediately following either such event, Executive may give written notice (an
"Early Termination Notice") to the Company that he is terminating his employment
effective on the 30th day following the giving of such Early Termination Notice.
(ii) If the Executive's employment is so terminated by the
Executive, the Company shall pay to the Executive, within 20 days following
termination, (i) any unpaid salary through the date of termination, as well as
reimbursement of any unpaid reimbursable expenses incurred on behalf of the
Company, (ii) the Target Bonus for the calendar year in which termination
occurs, prorated for the portion of such year preceding termination, (iii) the
Contract Year Bonus for the Contract
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Year in which termination occurs, prorated for the portion of such year
preceding termination (payable no later than the 30th day immediately following
termination of employment, plus, if the Severance Period ends after the
termination of employment, (iv) a lump-sum payment equal to (x) 200% of
Executive's yearly salary at the rate in effect immediately preceding
termination multiplied by (y) the Severance Multiple (as defined herein), (v)
reimbursement to the Executive for up to $10,000 of executive outplacement
services, and (vi) a lump-sum equal to the Company's cost for life insurance and
retirement benefits for the Severance Period.
(f) As used herein:
(i) the term "Cause" shall mean (v) the Executive's commission of an
act of fraud or dishonesty or a crime involving money or other property of the
Company; (w) the Executive's conviction of a felony or a plea of guilty or nolo
contendere to an indictment for a felony; (x) if, in carrying out Executive's
duties hereunder, the Executive engages in conduct which constitutes willful
misconduct or gross negligence; (y) the Executive's failure to carry out a
lawful order of the Board of Directors of the Company or its Chief Executive
Officer; or (z) a material breach by the Executive of this Agreement. Any act or
failure to act on the part of the Executive which is based upon authority given
pursuant to a resolution duly adopted by the Board of Directors of the Company
or authorized in writing by the Chief Executive Officer of the Company, or based
upon the advice of counsel for the Company, shall not constitute Cause as used
herein. For purposes of this provision only, a breach shall be "material" if it
is demonstrably injurious to the Company, its affiliates or any of its
respective business units, financially or otherwise.
Cause shall not exist unless and until the Company (i) has delivered
to the Executive a written Notice of Termination that specifically identifies
the events, actions, or non-actions, as applicable, that the Company believes
constitute Cause hereunder, and, in the case of termination for Cause under
clauses (x), (y) or (z) above, the Executive has been provided with an
opportunity to cure the offending conduct (if curable) within 30 days after
delivery of the written Notice of Termination, and has not so cured such conduct
(if curable), and (ii) the Executive has been provided an opportunity to be
heard (with counsel) within 30 days after delivery of the notice of Termination;
provided, however, that in the case of termination for Cause under clauses (x),
(y), and (z) above, the date of termination shall be no earlier than 35 days
after delivery of the Notice of Termination.
(ii) the term "Good Reason" shall mean any one of the following:
(1) a material breach of the Company's obligations under this
Agreement, which breach has not been cured within 20 business days after the
Company's receipt of written notice from the Executive of such breach;
(2) a reduction in the Executive's then annual base salary;
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(3) the relocation of the Executive's office to a location more
than 30 miles from Executive's present office;
(4) the failure to pay the Executive any undisputed portion of
the Executive's compensation within 15 business days after the date of receipt
of written notice that such compensation or payment is due;
(5) the failure to continue in effect any compensation or
benefit plan in which the Executive is participating, unless either (i) an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan; or (ii) the failure to continue the
Executive's participation therein (or in such substitute or alternative plan)
does not discriminate against the Executive, both with respect to the amount of
benefits provided and the level of the Executive's participation, relative to
other similarly situated participants;
(6) a reduction in the Executive's title and status as Executive
Vice President-Marketing of the Company, or any change in the Executive's status
as reporting directly to the Chief Executive Officer; or the assignment to the
Executive of any duties materially inconsistent with the Executive's position
(including, without limitation, status, office, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
1 of this Agreement, or any other action by the Company which results in a
material diminution in such position, authority, duties or responsibilities,
excluding for this purpose any action not taken in bad faith and which is
remedied by the Company no later than thirty (30) days after written notice by
the Executive; or
(7) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted in this Agreement.
(iii) the terms "Disabled" or "Disability" shall mean the
Executive's physical or mental incapacity which renders the Executive incapable,
even with a reasonable accommodation by the Company, of performing the essential
functions of the duties required of Executive by this Agreement for one hundred
twenty (120) or more consecutive days; the term "Disability Termination Date"
shall mean the date as of which the Executive's employment with the Company is
terminated, either by the Executive or by the Company, following the suffering
of a Disability by the Executive.
(iv) the term "Severance Period" shall mean the period commencing
with the termination of the Executive's employment and ending with the
Expiration Date, as renewed in accordance with Section 2 hereof.
(v) the term "Severance Multiple" shall mean 3 times.
(vi) the term "Change in Control" shall have the same meaning as in
the Company's 1999 Stock Option Plan, as in effect on the date hereof.
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(vii) the term "Target Bonus" shall mean 75% of Executive's annual
salary for any given year during the Term.
(viii) The term "Retirement" shall mean voluntary retirement by the
Executive after attaining age 55 with 10 years of service with the Company, or,
if the Executive has not attained age 55 and/or less than 10 years of service
with the Company, the Company determines that circumstances exist that warrant
the granting of Retirement status.
(g) The Executive shall have no obligation to seek other employment or
otherwise mitigate the Company's obligations to make payments under this Section
6, and the Company's obligations shall not be reduced by the amount, if any, of
other compensation or income earned or received by the Executive after the
effective date of Executive's termination.
7. Effect of Section 280G of the Internal Revenue Code.
(a) Notwithstanding any other provision of this Agreement to the
contrary, and except as provided in Section 7(b), to the extent that any payment
or distribution of any type to or for the benefit of the Executive by the
Company (or by any affiliate of the Company, any person or entity who acquires
ownership or effective control of the Company or ownership of a substantial
portion of the Company's assets (within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder), or any affiliate of such person or entity, whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Total Payments"), is or will be subject to the excise tax
imposed under Section 4999 of the Code (the "Excise Tax"), then the Total
Payments shall be reduced (but not below zero) if and to the extent that a
reduction in the Total Payments would result in the Executive retaining a larger
amount, on an after-tax basis (taking into account federal, state and local
income taxes and the Excise Tax), than if the Executive received the entire
amount of such Total Payments. Unless the Executive shall have given prior
written notice specifying a different order to the Company to effectuate the
foregoing, the Company shall reduce or eliminate the Total Payments, by first
reducing or eliminating the portion of the Total Payments which are not payable
in cash and then by reducing or eliminating cash payments, in each case in
reverse order beginning with payments or benefits which are to be paid the
farthest in time from the Determination (as defined herein). Any notice given by
the Executive pursuant to the preceding sentence shall take precedence over the
provisions of any other plan, arrangement or agreement governing the Executive's
rights and entitlements to any benefits or compensation.
(b) The determination of whether the Total Payments shall be reduced as
provided in this Section 7 and the amount of such reduction shall be made at the
Company's expense by an accounting firm selected by the Company from among its
independent auditors and the five (5) largest accounting firms (an "Eligible
Accounting Firm") in the United States (the "Accounting Firm"). The Accounting
Firm shall provide
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its determination (the "Determination"), together with detailed supporting
calculations and documentation to the Company and the Executive within ten (10)
days of the last day of Executive's employment. If the Accounting Firm
determines that no Excise Tax is payable by the Executive with respect to the
Total Payments, it shall furnish the Executive with an opinion reasonably
acceptable to the Executive that no Excise Tax will be imposed with respect to
any such payments and, absent manifest error, such Determination shall be
binding, final and conclusive upon the Company and the Executive. If the
Accounting Firm determines that an Excise Tax would be payable, the Executive
shall have the right to accept the Determination of the Accounting Firm as to
the extent of the reduction, if any, pursuant to this Section 7, or to have such
Determination reviewed by another Eligible Accounting Firm selected by the
Executive, at the expense of the Company, in which case the determination of
such second accounting firm shall be binding, final and conclusive upon the
Company and Executive.
8. Company Property. Any trade name or mark, program, discovery, process,
design, invention or improvement which the Executive makes or develops, which
relates, directly or indirectly, to the business of the Company or its
affiliates, or Executive's employment by the Company, shall be considered as
"made for hire" and shall belong to the Company and shall be promptly disclosed
to the Company. During the Executive's employment and thereafter, the Executive
shall, without additional compensation, execute and deliver to or as requested
by the Company, any instruments of transfer and take such other action as the
Company may reasonably request to carry out the provisions hereof, including
filing, at the Company's sole expense, trademark, patent or copyright
applications for any trade name or mark, invention or writing covered hereby and
assigning such applications to the Company.
9. Confidential Information. The Executive shall not, either during the term
of Executive's employment by the Company or thereafter, disclose to anyone or
use (except, in each case, in the performance of Executive's responsibilities
hereunder and in the regular course of the Company's business), any information
acquired by the Executive in connection with or during the period of Executive's
employment by the Company, with respect to any confidential, proprietary or
secret aspect of the affairs of the Company or any of its affiliates, including
but not limited to the requirements and terms of dealings with existing or
potential licensors, licensees, designers, suppliers and customers and methods
of doing business, all of which the Executive acknowledges are confidential and
proprietary to the Company, and any of its affiliates, as the case may be.
10. Competition; Recruitment; Non-Disparagement.
(a) The Executive shall not, at any time during Executive's employment
by the Company and during the Severance Period (provided that the Company is
making the payments to Executive which may be required hereby during such
Severance Period) (the "Non-Compete Period") and under the following
circumstances, engage or become interested (as an owner, stockholder, partner,
director, officer, employee, consultant or otherwise) in any business which then
competes, directly or indirectly, with the business then conducted by the
Company or any of its subsidiaries or affiliates. The ownership
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of less than 5% of the stock of a publicly owned company which competes with the
Company, any of its subsidiaries or affiliates, in and of itself, shall not be
considered a violation of the provisions of this Section 10.
(b) The Executive shall not, at any time during Executive's employment
by the Company and thereafter until the second anniversary of the expiration of
the Non-Compete Period, recruit, solicit for employment, hire or engage, or
assist any person or entity in recruiting, soliciting for employment, hiring or
engaging, any employee or consultant of the Company, any of its subsidiaries or
affiliates, or any person who was an employee or consultant of the Company, any
of its subsidiaries or affiliates within one year before the termination of the
Executive's employment.
(c) For the longer of any period applicable under this Section 10 or a
period of three years immediately following the date of termination, (i) the
Company, and its respective affiliates and employees shall not disparage the
Executive, and (ii) the Executive shall not disparage the Company, or its
respective affiliates and employees.
(d) The Executive acknowledges that these provisions are necessary for
the protection of the Company, and its subsidiaries and affiliates and are not
unreasonable, because the Executive would be able to recruit and hire personnel
other than employees of the Company, and any of their subsidiaries and
affiliates. The Executive further agrees that a breach of Section 8, 9 or 10 of
this Agreement shall result in the immediate cessation of any payments pursuant
to this Section 10 and Section 6 hereof, if applicable. The duration and the
scope of these restrictions on the Executive's activities are divisible, so that
if any provision of this Section 10 is held or deemed to be invalid, that
provision shall be automatically modified to the extent necessary to make it
valid.
11. Notices. Any notice or other communication to the Company or to the
Executive under this Agreement shall be in writing and shall be considered given
when mailed by certified mail, return receipt requested, to such party at
Executive's latest address on the Company's payroll records, or to the Company
at 1411 Broadway, New York, New York 10018, Attention: General Counsel (or at
such other address as such party may specify by written notice to the other
party).
12. Successors; Binding Agreement.
(a) Company's Successors. No rights or obligations of the Company under
this Agreement may be assigned or transferred by the Company, except that such
rights or obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or the sale or
liquidation of all or substantially all of the business or assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the business or assets of the Company and such assignee or
transferee assumes all of the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law. The Company will require any such successor to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company
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would be required to perform it if no such succession had taken place. As used
in this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business or assets as aforesaid, which executes and
delivers the agreement provided for in this Section 12 or which otherwise
becomes bound by all the terms and provisions of this Agreement or by operation
of law.
(b) Executive's Successors. This Agreement shall not be assignable by
the Executive. This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. Upon the Executive's death, all amounts to which
Executive is entitled hereunder, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
13. Indemnification. The Company shall indemnify Executive and hold the
Executive harmless, to the maximum extent permitted by applicable law, from and
against all claims, actions, suits, proceedings, loss, damage, liability, costs,
charges and expenses, including reasonable attorneys' fees and costs arising in
connection with the Executive's performance of Executive's duties hereunder or
Executive's status as an employee, officer, director or agent of the Company or
its affiliates, in accordance with the Company's indemnity policies for its
senior executives.
14. Interest on Late Payments. "Undisputed Late Obligations" shall bear
interest beginning on the Due Date until paid in full at an annual rate of one
percent (1.0%) plus the prime rate as declared from time to time by The Chase
Manhattan Bank. For purposes hereof, "Undisputed Late Obligations" shall mean
any obligation which remains unpaid 5 days after written notice thereof is
delivered to the other party in accordance with Section 11 (the "Due Date") for
money under this Agreement owing from one party to another, which obligation (i)
is not subject to any bona fide dispute or (ii) has been adjudicated by an
arbitration panel or court of competent jurisdiction to be due and payable.
15. Arbitration. Except as otherwise provided herein, all controversies,
claims or disputes arising out of or related to this Agreement shall be settled
under the rules of the American Arbitration Association then in effect in the
State of New York, as the sole and exclusive remedy of either party, and
judgment upon such award rendered by the arbitrator(s) may be entered in any
court of competent jurisdiction.
16. Attorneys' Fees. The Company shall reimburse the Executive (or the
Executive shall reimburse the Company) for all reasonable costs, including
without limitation reasonable attorneys' fees, of the Executive or the Company,
as the case may be, in any dispute, arbitration or proceeding arising under this
Agreement (collectively, a "Proceeding"), so long as the Executive or the
Company, as the case may be, "prevails in substantial part" with respect to
Executive's or the Company's claims or defenses in such Proceeding. For purposes
hereof, the Executive shall be deemed to have "prevailed in
12
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substantial part" if (i) the Executive is the party originally demanding a
Proceeding, and the arbitrator(s) shall have awarded the Executive at least 75%
of the amount originally demanded by the Executive, or (ii) the Company is the
party originally demanding a Proceeding, and the arbitrator(s) shall have denied
the Company the relief originally requested. The Company shall be deemed to have
"prevailed in substantial part" if the Executive is the party originally
demanding a Proceeding and the arbitrator(s) shall have awarded the Executive
less than 25% of the amount originally demanded by the Executive.
17. Miscellaneous.
(a) Given that a breach of the provisions of this Agreement would injure
the Company irreparably, the Company may, in addition to its other remedies,
obtain an injunction or other comparable relief restraining any violation of
this Agreement, and no bond, security or other undertaking shall be required of
the Company in connection therewith.
(b) The provisions of this Agreement are separable, and if any provision
of this Agreement is invalid or unenforceable, the remaining provisions shall
continue in full force and effect.
(c) This Agreement constitutes the entire understanding and agreement
between the parties, and supersedes the Prior Agreement and all other existing
agreements between them and cannot be amended, unless such amendment is in
writing and signed by both parties to this Agreement.
(d) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (other than its choice of laws rules), where
it has been entered and where it is to be performed. The parties hereto consent
to the exclusive jurisdiction of any federal or state court in the State of New
York to resolve any dispute arising under this Agreement or otherwise.
(e) The headings in this Agreement are solely for convenience of
reference and shall not affect its interpretation.
(f) The failure of either party to insist on strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. For any waiver of a provision of
this Agreement to be effective, it must be in writing and signed by the party
against whom the waiver is claimed.
(g) The obligations of the Executive and the Company hereunder shall
survive the termination of the term of this Agreement and the Executive's
employment hereunder, to the extent necessary to give full effect to the
provisions of this Agreement.
14
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the date first above written.
JONES APPAREL GROUP, INC.
By: /s/ Sidney Kimmel
Chairman and Chief Executive Officer
/s/ Irwin Samelman
Executive |
EXHIBIT 10.2
SECOND AMENDED AND RESTATED
COMMITTED LINE OF CREDIT NOTE
$5,000,000.00
November 1, 2000
FOR VALUE RECEIVED, INTEST CORPORATION, INTEST SUNNYVALE CORPORATION, TEMPTRONIC
CORPORATION, INTEST INVESTMENTS, INC., INTEST LICENSING CORP. and INTEST IP
CORP. (collectively, the "Borrower"), with an address at Seven Esterbrook Lane,
Cherry Hill, New Jersey 08003, jointly and severally promise to pay to the order
of PNC BANK, NATIONAL ASSOCIATION (the "Bank"), in lawful money of the United
States of America in immediately available funds at its offices located at 1950
East Route 70, Cherry Hill, New Jersey 08003, or at such other location as the
Bank may designate from time to time, the principal sum of FIVE MILLION DOLLARS
($5,000,000.00) (the "Facility") or such lesser amount as may be advanced to or
for the benefit of the Borrower hereunder, together with interest accruing on
the outstanding principal balance from the date hereof, all as provided below:
1. Advances. The Borrower may request advances, repay and request additional
advances hereunder until the Expiration Date, subject to the terms and
conditions of this Note and the Loan Documents (as hereinafter defined). The
"Expiration Date" shall mean June 30, 2001, or such later date as may be
designated by the Bank by written notice from the Bank to the Borrower. The
Borrower acknowledges and agrees that in no event will the Bank be under any
obligation to extend or renew the Facility or this Note beyond the Expiration
Date. The Borrower may request advances hereunder upon giving oral or written
notice to the Bank by 11:00 a.m. (Philadelphia, Pennsylvania time) (a) on the
day of the proposed advance, in the case of advances to bear interest under the
Base Rate Option (as hereinafter defined) and (b) three (3) Business Days prior
to the proposed advance, in the case of advances to bear interest under the
Euro-Rate Option (as hereinafter defined), followed promptly thereafter by the
Borrower's written confirmation to the Bank of any oral notice. The aggregate
unpaid principal amount of advances under this Note shall not exceed the face
amount of this Note.
2. Rate of Interest. Each advance outstanding under this Note will bear
interest at a rate or rates per annum as may be selected by the Borrower from
the interest rate options set forth below (each, an "Option"):
(i) Base Rate Option. A rate of interest per annum which is at all times
equal to the sum of (A) the Prime Rate minus (B) one hundred (100) basis points
(1.00%) ("Base Rate" ). For purposes hereof, the term "Prime Rate" shall mean
the rate publicly announced by the Bank from time to time as its prime rate. The
Prime Rate is determined from time to time by the Bank as a means of pricing
some loans to its borrowers. The Prime Rate is not tied to any external rate of
interest or index, and does not necessarily reflect the lowest rate of interest
actually charged by the Bank to any particular class or category of customers.
If and when the Prime Rate changes, the rate of interest with respect to any
advance to which the Base Rate Option applies will change automatically without
notice to the Borrower, effective on the date of any such change. There are no
required minimum interest periods for advances bearing interest under the Base
Rate Option.
(ii) Euro-Rate Option. A rate per annum equal to the sum of (A) the Euro-Rate
plus (B) one hundred fifty (150) basis points (1.50%), for the applicable
Euro-Rate Interest Period.
For purposes hereof, the following terms shall have the following meanings:
"Business Day" shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be closed for
business in Philadelphia, Pennsylvania.
"Euro-Rate" shall mean, with respect to any advance to which the Euro-Rate
Option applies for the applicable Euro-Rate Interest Period, the interest rate
per annum determined by the Bank by dividing (the resulting quotient rounded
upwards, if necessary, to the nearest 1/100th of 1%) (i) the rate of interest
determined by the Bank in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the eurodollar
rate two (2) Business Days prior to the first day of such Euro-Rate Interest
Period for an amount comparable to such advance and having a borrowing date and
a maturity comparable to such Euro-Rate Interest Period by (ii) a number equal
to 1.00 minus the Euro-Rate Reserve Percentage.
"Euro-Rate Interest Period" shall mean the period of one (1), three (3) or six
(6) months selected by the Borrower commencing on the date of disbursement of an
advance (or the date of conversion of an advance to the Euro-Rate Option, as the
case may be) and each successive period selected by the Borrower thereafter;
provided, that if a Euro-Rate Interest Period would end on a day which is not a
Business Day, it shall end on the next succeeding Business Day, unless such day
falls in the succeeding calendar month in which case the Euro-Rate Interest
Period shall end on the next preceding Business Day. In no event shall any
Euro-Rate Interest Period end on a day after the Expiration Date.
"Euro-Rate Reserve Percentage" shall mean the maximum effective percentage in
effect on such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including, without limitation, supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities").
The Euro-Rate shall be adjusted with respect to any advance to which the
Euro-Rate Option applies on and as of the effective date of any change in the
Euro-Rate Reserve Percentage. The Bank shall give prompt notice to the Borrower
of the Euro-Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
If the Bank determines (which determination shall be final and conclusive) that,
by reason of circumstances affecting the eurodollar market generally, deposits
in dollars (in the applicable amounts) are not being offered to banks in the
eurodollar market for the selected term, or adequate means do not exist for
ascertaining the Euro-Rate, then the Bank shall give notice thereof to the
Borrower. Thereafter, until the Bank notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, (a) the
availability of the Euro-Rate Option shall be suspended, and (b) the interest
rate for all advances then bearing interest under the Euro-Rate Option shall be
converted at the expiration of the then current Euro-Rate Interest Period(s) to
the Base Rate Option.
- 2 -
In addition, if, after the date of this Note, the Bank shall determine (which
determination shall be final and conclusive) that any enactment, promulgation or
adoption of or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by a governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline, request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for the
Bank to make or maintain or fund loans under the Euro-Rate Option, the Bank
shall notify the Borrower. Upon receipt of such notice, until the Bank notifies
the Borrower that the circumstances giving rise to such determination no longer
apply, (a) the availability of the Euro-Rate Option shall be suspended, and (b)
the interest rate on all advances then bearing interest under the Euro-Rate
Option shall be converted to the Base Rate Option either (i) on the last day of
the then current Euro-Rate Interest Period(s) if the Bank may lawfully continue
to maintain advances under the Euro-Rate Option to such day, or (ii) immediately
if the Bank may not lawfully continue to maintain advances under the Euro-Rate
Option.
The foregoing notwithstanding, it is understood that the Borrower may select
different Options to apply simultaneously to different portions of the advances
and may select up to three (3) different interest periods to apply
simultaneously to different portions of the advances bearing interest under the
Euro-Rate Option. Interest hereunder will be calculated on the basis of a year
of 360 days for the actual number of days elapsed. In no event will the rate of
interest hereunder exceed the maximum rate allowed by law.
3. Interest Rate Election. Subject to the terms and conditions of this Note,
at the end of each interest period applicable to any advance, the Borrower may
renew the Option applicable to such advance or convert such advance to a
different Option; provided that, during any period in which any Event of Default
(as hereinafter defined) has occurred and is continuing, any advances bearing
interest under the Euro-Rate Option shall, at the Bank's sole discretion, be
converted at the end of the applicable Euro-Rate Interest Period to the Base
Rate Option and the Euro-Rate Option will not be available to Borrower with
respect to any new advances until such Event of Default has been cured by the
Borrower or waived by the Bank. The Borrower shall notify the Bank of each
election of an Option, each conversion from one Option to another, the amount of
the advances then outstanding to be allocated to each Option and where relevant
the interest periods therefor. In the case of converting to the Euro-Rate
Option, such notice shall be given at least three (3) Business Days prior to the
commencement of any Euro-Rate Interest Period. If no notice of conversion or
renewal is timely received by the Bank, the Borrower shall be deemed to have
converted such advance to the Base Rate Option. Any such election shall be
promptly confirmed in writing by such method as the Bank may require.
4. Advance Procedures. A request for advance made by telephone must be
promptly confirmed in writing by such method as the Bank may require. The
Borrower authorizes the Bank to accept telephonic requests for advances, and the
Bank shall be entitled to rely upon the authority of any person providing such
instructions. The Borrower hereby indemnifies and holds the Bank harmless from
and against any and all damages, losses, liabilities, costs and expenses
(including reasonable attorneys' fees and expenses) which may arise or be
created by the acceptance of such telephone requests or making such advances.
The Bank will enter on its books and records, which entry when made will be
presumed correct, the date and amount of each advance, the interest rate and
interest period applicable thereto, as well as the date and amount of each
payment.
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5. Payment Terms
. The Borrower shall pay accrued interest on the unpaid principal balance of
this Note in arrears: (a) for the portion of advances bearing interest under the
Base Rate Option, on the first day of each month during the term hereof, (b) for
the portion of advances bearing interest under the Euro-Rate Option, on the last
day of the respective Euro-Rate Interest Period for such advance, (c) if any
Euro-Rate Interest Period is longer than three (3) months, then also on the
three (3) month anniversary of such interest period and every three (3) months
thereafter, and (d) for all advances, at maturity, whether by acceleration of
this Note or otherwise, and after maturity, on demand until paid in full. All
outstanding principal and accrued interest hereunder shall be due and payable in
full on the Expiration Date.
If any payment under this Note shall become due on a Saturday, Sunday or public
holiday under the laws of the State where the Bank's office indicated above is
located, such payment shall be made on the next succeeding business day and such
extension of time shall be included in computing interest in connection with
such payment. The Borrower hereby authorizes the Bank to charge the Borrower's
deposit account at the Bank for any payment when due hereunder. Payments
received will be applied to charges, fees and expenses (including attorneys'
fees), accrued interest and principal in any order the Bank may choose, in its
sole discretion.
6. Late Payments; Default Rate. If the Borrower fails to make any payment of
principal, interest or other amount coming due pursuant to the provisions of
this Note within fifteen (15) calendar days of the date due and payable, the
Borrower also shall pay to the Bank a late charge equal to the lesser of five
percent (5%) of the amount of such payment or $100.00 (the "Late Charge"). Such
fifteen (15) day period shall not be construed in any way to extend the due date
of any such payment. Upon maturity, whether by acceleration, demand or
otherwise, and at the Bank's option upon the occurrence of any Event of Default
(as hereinafter defined) and during the continuance thereof, this Note shall
bear interest at a rate per annum (based on a year of 360 days and actual days
elapsed) which shall be three percentage points (3%) in excess of the interest
rate in effect from time to time under this Note but not more than the maximum
rate allowed by law (the "Default Rate"). The Default Rate shall continue to
apply whether or not judgment shall be entered on this Note. Both the Late
Charge and the Default Rate are imposed as liquidated damages for the purposes
of defraying the Bank's expenses incident to the handling of delinquent
payments, but are in addition to, and not in lieu of, the Bank's exercise of any
rights and remedies hereunder, under the other Loan Documents or under
applicable law, and any fees and expenses of any agents or attorneys which the
Bank may employ. In addition, the Default Rate reflects the increased credit
risk to the Bank of carrying a loan that is in default. The Borrower agrees that
the Late Charge and Default Rate are reasonable forecasts of just compensation
for anticipated and actual harm incurred by the Bank, and that the actual harm
incurred by the Bank cannot be estimated with certainty and without difficulty.
7. Prepayment. The Borrower shall have the right to prepay at any time and from
time to time, in whole or in part, without penalty, any advance hereunder which
is accruing interest under the Base Rate Option. If the Borrower prepays
(whether voluntary, on default or otherwise) all or any part of any advance
which is accruing interest under the Euro-Rate Option on other than the last day
of the applicable Euro-Rate Interest Period, the Borrower shall pay to the Bank,
on demand therefor, all amounts due pursuant to paragraph 8 below, including the
Cost of Prepayment, if any.
8. Yield Protection. The Borrower shall pay to the Bank, on written demand
therefor, together with the written evidence of the justification therefor, all
direct costs incurred, losses suffered or payments made by Bank by reason of any
change in law or regulation or its interpretation imposing any reserve, deposit,
- 4 -
allocation of capital, or similar requirement (including without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) on the
Bank, its holding company or any of their respective assets. In addition, the
Borrower agrees to indemnify the Bank against any liabilities, losses or
expenses (including loss of margin, any loss or expense sustained or incurred in
liquidating or employing deposits from third parties, and any loss or expense
incurred in connection with funds acquired to effect, fund or maintain any
advance (or any part thereof) bearing interest under the Euro-Rate Option) which
the Bank sustains or incurs as a consequence of either (i) the Borrower's
failure to make a payment on the due date thereof, (ii) the Borrower's
revocation (expressly, by later inconsistent notices or otherwise) in whole or
in part of any notice given to Bank to request, convert, renew or prepay any
advance, or (iii) the Borrower's payment, prepayment or conversion of any
advance bearing interest under the Euro-Rate Option on a day other than the last
day of the applicable Euro-Rate Interest Period, including but not limited to
the Cost of Prepayment. "Cost of Prepayment" means an amount equal to the
present value, if positive, of the product of (a) the difference between (i) the
yield, on the beginning date of the applicable interest period, of a U.S.
Treasury obligation with a maturity similar to the applicable interest period
minus (ii) the yield, on the prepayment date, of a U.S. Treasury obligation with
a maturity similar to the remaining maturity of the applicable interest period,
and (b) the principal amount to be prepaid, and (c) the number of years,
including fractional years from the prepayment date to the end of the applicable
interest period. The yield on any U.S. Treasury obligation shall be determined
by reference to Federal Reserve Statistical Release H.15(519) "Selected Interest
Rates". For purposes of making present value calculations, the yield to maturity
of a similar maturity U.S. Treasury obligation on the prepayment date shall be
deemed the discount rate. The Cost of Prepayment shall also apply to any
payments made after acceleration of the maturity of this Note. The Bank's
determination of an amount payable under this paragraph shall, in the absence of
manifest error, be conclusive and shall be payable on demand.
9. Other Loan Documents. This Note is issued in connection with a Letter
Agreement between the Borrower and the Bank dated on or before the date hereof,
and the other agreements and documents executed in connection therewith or
referred to therein, the terms of which are incorporated herein by reference (as
amended, modified or renewed from time to time, collectively the "Loan
Documents"), and is secured by the property described in the Loan Documents (if
any) and by such other collateral as previously may have been or may in the
future be granted to the Bank to secure this Note.
10. Events of Default. The occurrence of any of the following events will be
deemed to be an "Event of Default" under this Note: (i) the nonpayment of any
principal, interest or other indebtedness under this Note when due; (ii) the
occurrence of any event of default or default and the lapse of any notice or
cure period under any Loan Document or any other debt, liability or obligation
to the Bank of any Obligor; (iii) the filing by or against any Obligor of any
proceeding in bankruptcy, receivership, insolvency, reorganization, liquidation,
conservatorship or similar proceeding (and, in the case of any such proceeding
instituted against any Obligor, such proceeding is not dismissed or stayed
within sixty (60) days of the commencement thereof, provided that the Bank shall
not be obligated to advance additional funds during such period); (iv) any
assignment by any Obligor for the benefit of creditors, or any levy,
garnishment, attachment or similar proceeding is instituted against any property
of any Obligor held by or deposited with the Bank; (v) a default with respect to
any other indebtedness of any Obligor for borrowed money, if the effect of such
default is to cause or permit the acceleration of such debt; (vi) the
commencement of any foreclosure or forfeiture proceeding, execution or
attachment against any collateral securing the obligations of any Obligor to the
Bank; (vii) the entry of a final judgment (not fully covered by insurance)
against any Obligor in excess of $50,000 (or judgments aggregating $75,000) and
the failure of such Obligor to discharge the judgment within ten days of the
entry thereof; (viii) if
- 5 -
this Note or any guarantee executed by any Guarantor is secured, the failure of
any Obligor to provide the Bank with additional collateral if in the Bank's
opinion at any time or times, the market value of any of the collateral securing
this Note or any guarantee has depreciated below that required pursuant to the
Loan Documents (if any) or, if no specific value is so required, then in an
amount deemed material by the Bank; (ix) any material adverse change in any
Obligor's business, assets, operations, financial condition or results of
operations; (x) any Obligor ceases doing business as a going concern; (xi) the
revocation or attempted revocation, in whole or in part, of any guarantee by any
Guarantor; (xii) the death, incarceration, indictment or legal incompetency of
any individual Obligor or, if any Obligor is a partnership or limited liability
company, the death, incarceration, indictment or legal incompetency of any
individual general partner or member; (xiii) any representation or warranty made
by any Obligor to the Bank in any Loan Document, or any other documents now or
in the future evidencing or securing the obligations of any Obligor to the Bank,
is false, erroneous or misleading in any material respect; or (xiv) any
Obligor's failure to observe or perform any covenant or other agreement with the
Bank contained in any Loan Document or any other documents now or in the future
evidencing or securing the obligations of any Obligor to the Bank. As used
herein, the term "Obligor" means any Borrower and any Guarantor, and the term
"Guarantor" means any guarantor of the Borrower's obligations to the Bank
existing on the date of this Note or arising in the future.
Upon the occurrence of an Event of Default: (a) the Bank shall be under no
further obligation to make advances hereunder; (b) if an Event of Default
specified in clause (iii) or (iv) above shall occur, the outstanding principal
balance and accrued interest hereunder together with any additional amounts
payable hereunder shall be immediately due and payable without demand or notice
of any kind; (c) if any other Event of Default shall occur, the outstanding
principal balance and accrued interest hereunder together with any additional
amounts payable hereunder, at the Bank's option and without demand or notice of
any kind, may be accelerated and become immediately due and payable; (d) at the
Bank's option, this Note will bear interest at the Default Rate from the date of
the occurrence of the Event of Default; and (e) the Bank may exercise from time
to time any of the rights and remedies available under the Loan Documents or
under applicable law.
11. Right of Setoff. In addition to all liens upon and rights of setoff against
the Borrower's money, securities or other property given to the Bank by law, the
Bank shall have, with respect to the Borrower's obligations to the Bank under
this Note and to the extent permitted by law, a contractual possessory security
interest in and a contractual right of setoff against, and the Borrower hereby
assigns, conveys, delivers, pledges and transfers to the Bank all of the
Borrower's right, title and interest in and to, all of the Borrower's deposits,
moneys, securities and other property now or hereafter in the possession of or
on deposit with, or in transit to, the Bank or any other direct or indirect
subsidiary of The PNC Financial Services Group, Inc., whether held in a general
or special account or deposit, whether held jointly with someone else, or
whether held for safekeeping or otherwise, excluding, however, all IRA, Keogh,
and trust accounts. Every such security interest and right of setoff may be
exercised without demand upon or notice to the Borrower. Every such right of
setoff shall be deemed to have been exercised immediately upon the occurrence of
an Event of Default hereunder without any action of the Bank, although the Bank
may enter such setoff on its books and records at a later time.
12. Miscellaneous. All notices, demands, requests, consents, approvals and
other communications required or permitted hereunder must be in writing (except
as may be agreed otherwise above with respect to borrowing requests) and will be
effective upon receipt. Such notices and other communications may be
hand-delivered, sent by facsimile transmission with confirmation of delivery and
a copy sent by first-class mail, or sent by nationally recognized overnight
courier service, to the addresses
- 6 -
for the Bank and the Borrower set forth above or to such other address as either
may give to the other in writing for such purpose. No delay or omission on the
Bank's part to exercise any right or power arising hereunder will impair any
such right or power or be considered a waiver of any such right or power, nor
will the Bank's action or inaction impair any such right or power. No
modification, amendment or waiver of any provision of this Note nor consent to
any departure by the Borrower therefrom will be effective unless made in a
writing signed by the Bank. The Borrower agrees to pay on demand, to the extent
permitted by law, all costs and expenses incurred by the Bank in the enforcement
of its rights in this Note and in any security therefor, including without
limitation reasonable fees and expenses of the Bank's counsel. If any provision
of this Note is found to be invalid by a court, all the other provisions of this
Note will remain in full force and effect. The Borrower and all other makers and
indorsers of this Note hereby forever waive presentment, protest, notice of
dishonor and notice of non-payment. The Borrower also waives all defenses based
on suretyship or impairment of collateral. If this Note is executed by more than
one Borrower, the obligations of such persons or entities hereunder will be
joint and several. This Note shall bind the Borrower and its heirs, executors,
administrators, successors and assigns, and the benefits hereof shall inure to
the benefit of the Bank and its successors and assigns; provided, however, that
the Borrower may not assign this Note in whole or in part without the Bank's
written consent and the Bank at any time may assign this Note in whole or in
part.
This Note has been delivered to and accepted by the Bank and will be deemed to
be made in the State where the Bank's office indicated above is located. This
Note will be interpreted and the rights and liabilities of the Bank and the
Borrower determined in accordance with the laws of the State where the Bank's
office indicated above is located, excluding its conflict of laws rules. The
Borrower hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court in the county or judicial district where the Bank's office
indicated above is located; provided that nothing contained in this Note will
prevent the Bank from bringing any action, enforcing any award or judgment or
exercising any rights against the Borrower individually, against any security or
against any property of the Borrower within any other county, state or other
foreign or domestic jurisdiction. The Borrower acknowledges and agrees that the
venue provided above is the most convenient forum for both the Bank and the
Borrower. The Borrower waives any objection to venue and any objection based on
a more convenient forum in any action instituted under this Note.
13. Amendment and Restatement. This Note amends and restates, and is in
substitution for, that certain Amended and Restated Committed Line of Credit
Note in the original principal amount of $1,500,000.00 payable to the order of
the Bank and dated June 30, 1996 (the "Existing Note"). However, without
duplication, this Note shall in no way extinguish, cancel or satisfy Borrower's
unconditional obligation to repay all indebtedness evidenced by the Existing
Note or constitute a novation of the Existing Note. Nothing herein is intended
to extinguish, cancel or impair the lien priority or effect of any security
agreement, pledge agreement or mortgage with respect to any Obligor's
obligations hereunder and under any other document relating hereto.
14. WAIVER OF JURY TRIAL. The Borrower irrevocably waives any and all rights
the Borrower may have to a trial by jury in any action, proceeding or claim of
any nature relating to this Note, any documents executed in connection with this
Note or any transaction contemplated in any of such documents. The Borrower
acknowledges that the foregoing waiver is knowing and voluntary.
The Borrower acknowledges that it has read and understood all the provisions of
this Note, including the waiver of jury trial, and has been advised by counsel
as necessary or appropriate.
- 7 -
WITNESS
the due execution hereof as a document under seal, as of the date first written
above, with the intent to be legally bound hereby.
[CORPORATE SEAL]
INTEST CORPORATION
By: /s/Denise Monahan
By: /s/Hugh T. Regan, Jr.
Print Name: Denise Monahan
Print Name: Hugh T. Regan, Jr.
Title: Vice President
Title: CFO
[CORPORATE SEAL]
INTEST SUNNYVALE CORPORATION
By: /s/Denise Monahan
By: /s/Hugh T. Regan, Jr.
Print Name: Denise Monahan
Print Name: Hugh T. Regan, Jr.
Title: Vice President
Title: CFO
[CORPORATE SEAL]
TEMPTRONIC CORPORATION
By: /s/Denise Monahan
By: /s/Hugh T. Regan, Jr.
Print Name: Denise Monahan
Print Name: Hugh T. Regan, Jr.
Title: Vice President
Title: CFO
[CORPORATE SEAL]
INTEST INVESTMENTS, INC.
By: /s/Denise Monahan
By: /s/Hugh T. Regan, Jr.
Print Name: Denise Monahan
Print Name: Hugh T. Regan, Jr.
Title: Vice President
Title: CFO
- 8 -
[CORPORATE SEAL]
INTEST LICENSING CORP.
By: /s/Denise Monahan
By: /s/Hugh T. Regan, Jr.
Print Name: Denise Monahan
Print Name: Hugh T. Regan, Jr.
Title: Vice President
Title: CFO
[CORPORATE SEAL]
INTEST IP CORP.
By: /s/Denise Monahan
By: /s/Hugh T. Regan, Jr.
Print Name: Denise Monahan
Print Name: Hugh T. Regan, Jr.
Title: Vice President
Title: CFO
- 9 - |
EXHIBIT 10.48
(408) 556-5876 October 18, 2000
Lee McGrath
Chief Financial Officer
Versant Corporation
6539 Dumbarton Circle
Fremont, CA 94555
Re: Revolving Loan and Security Agreement dated as of May 15, 1997, as modified
from time to time in writing (the "Agreement"), between Versant Corporation
("Borrower") and Comerica Bank - California ("Bank").
Dear Lee,
We have learned of the following breach of the Agreement for the quarter ending
September 30, 2000 based upon telephone communications with Borrower and
subsequent company prepared financial statements.
Section 6.17 (f) Net Cash provided by Operating Activities, as defined in FASB
95 and 102, equal to or greater than $1,000,000 per quarter for the quarter
ending September 30, 2000.
Bank has agreed to waive the breach described above for the period ending
September 30, 2000. Except as specifically set forth in this letter, all other
terms and conditions of the Agreement shall remain in full force and effect.
This waiver is not a waiver of any other, or future breach, or any other term or
conditions of the Agreement.
Sincerely,
Comerica Bank - California
Peter Palsson, VP
High Technology Banking Group
|
Exhibit 10.32
GREENWICH INSURANCE COMPANY
COMMERCIAL SURETY GENERAL INDEMNITY AGREEMENT
This Agreement of Indemnity, made and entered into this 4th day of January is
executed by the Undersigned for the purpose of inderrmifying from all losses and
costs of any kind GREEWICH INSURANCE COMPANY, herein referred to as "Surety", in
connection with any Bonds on which GREENWICCH INSURANCE COMPANY is now or
hereafter may become Surety for or at the request of any of the following as
Principal:
Labor Ready Inc.
In consideration of the execution of any such Bonds for Principal and as an
inducement to such execution by Surety, the Undersigned, jointly and severally,
agree as follows:
I . DEFINITIONS – The following definitions apply in this Agreement:
Bond: Any surety bond, undertaking, guaranty or other contractual
obligation undertaken by Surety on behalf of or at the request of Principal,
before or after the date of this Agreement, and any renewal or extension of said
obligation.
Principal: The persons or entities set forth above, their
subsidiaries, affiliates, successors, executors, administrators, personal
representatives and assigns, now in existence or hereafter formed or acquired
and/or any one of them or any combination thereof, or their successors in
interest, whether alone or in joint venture with others named herein or not.
Undersigned: The Principal and all other persons or entities executing
this Agreement, their successors, executors, administrators, personal
representatives and assigns.
Surety: GREENWICH INSURANCE COMPANY, its affiliates, subsidiaries or
reinsurers, and any other persons or entities which it may procure to act as a
surety, co-surety or obligor on any Bond, or any other person or entity who
executes 3 Bond at its request.
2. INDEMNITY
(a) Undersigned agrees to pay to Surety upon demand:
(i) all losses, costs, damages, attorneys' fees, including
outside or in-house counsel staff, and expenses of whatever kind or nature which
Surety may incur or pay by reason of, or in consequence of, the execution by
Surety of any Bond and/or in enforcing the terms of this Agreemen~ with interest
thereon;
(ii) the amount of any claim made against Surety on any Bond,
whether disputed or not. This sum may be used by Surety to pay such claim or be
held by Surety as collateral security against loss on any Bond. Such collateral
may be hold by Surety until it has received evidence satisfactory to Surety of
its complete discharge from all claims or potential claims under any Bond(s),
and until it has been fully reimbursed for all loss, cost, expenses and
attorneys' fees incurred by reason of its issuance of any Bond(s) and in
enforcing this Agreement and unpaid premiums. Surety shall be under no
obligation to invest or provide any return on any such collateral deposited with
it.
(iii) any premium due for any Bond at a rate equal to that charged
by Surety for such bonds and any renewal premiums until such time as adequate
proof is presented to Surety discharging it from any further liability relating
to or arising out of such Bond.
(b) Regarding claims against Surety:
(i) Undersigned shall exonerate, indemnify and keep Surety
indemnified against any liability with respect to such claims.
(ii) Surety shall have the exclusive right for itself and
Undersigned to determine in good faith, in its sole and absolute discretion,
whether any claim or suit upon any Bond shall, on the basis of liability,
necessity, expediency or otherwise, be paid, settled, compron–dsed, defended or
appealed to protect Surety's rights or interests or reduce Surety's liability or
alleged liability, whether or not such liability, necessity or expediency
exists.
(iii) Surety shall have the right to incur such expenses in
handling a claim and in enforcing this Agreement as it in good faith shall deem
necessary or expedient, including but not limited to the expenses for
investigative accounting, technical and legal services.
(iv) "Good faith" as used in this Agreement shall mean honesty in
fact and the absence of willful misfeasance, malfeasance, fraud or corruption.
(v) Surety shall have the foregoing rights regardless of the fact
that Undersigned may have assumed or offered to assume the defense of Surety
upon such claim. In any claim or suit hereunder, an itemized statement of the
aforesaid losses and expenses, sworn to by an officer of Surety or the vouchers
or other evidence of disbursement by Surety shall be prima facie evidence of the
fact and amount of the liability hereunder of Undersigned.
(vi) Repeated actions may be maintained by Surety on this
instrument as breaches of it occur without any prior action operating as a bar
to any subsequent action.
(vii) Undersigned shall authorize Surety to join any and all of the
Undersigned as defendants in any action, regardless of venue, against Surety
arising out of or relating to any Bond, and to enforce the obligations hereunder
directly against any of the Undersigned and without the necessity of first
proceeding against Principal.
(viii) If Undersigned, or any of them, demands that Surety not pay
or perform in response to a claim under a Bond, and Surety complies with such
demand, Undersigned agree to exonerate, indemnify and hold Surety harmless from
any and all damages which may be imposed upon Surety, including, but not limited
to, any claim for consequential or punitive damages based upon any assertion
that Surety acted in bad faith in connection with any such claim.
3. GENERAL PROVISIONS
(a) Surety may, without giving notice thereof to Undersigned, consent
or refuse to consent to changes to a Bond, including, but not limited to,
increases or decreases in the penal sum of the Bond and changes to the
underlying obligations secured by the Bond, and any such action shall not
impair, waive or diminish the obligations of Undersigned under this Agreement.
(b) Surety shall have the right at its option and in its sole
discretion, to issue, cancel or decline the execution of any Bond, or renewal
thereof, notwithstanding its execution of any other Bond or undertaking for or
on behalf of the Principal.
(c) Until Surety has been furnished with conclusive evidence of its
discharge without loss from all Bonds, and until Surety has been otherwise fully
indemnified as hereunder provided, Surety shall have the right of free access to
the books, records and accounts of Undersigned for the purpose of examining and
copying them. Undersigned hereby authorize third parties, including but not
limited to depositories of funds of Undersigned, to furnish to Surety any
information requested by Surety in connection with any transaction. Surety may
furnish any information, which it now has or may hereafter acquire concerning
Undersigned to other persons, firms or entities for the purpose of procuring
co-suretyship or reinsurance or of advising such persons, firms, or entities as
it may deem appropriate.
(d) Surety shall have every right, defense or remedy which a personal
Surety without compensation would have, including the tight of exoneration, and
the right of subrogation.
(e) Undersigned shall, upon the request of Surety, procure the
discharge of Surety from any Bond and all liability by reason thereof. If such
discharge is unattainable, Undersigned shall, if requested by Surety, either
deposit collateral with Surety, acceptable to Surety, sufficient to cover all
exposure under such Bond or Bonds, or make provisions acceptable to Surety for
the funding of the bonded obligation(s).
(f) Undersigned warrant that each of them is specifically and
beneficially interested in obtaining each Bond and agree to pay the initial,
renewal, and additional premiums thereon according to Surety's current rate
manual or rate filings recognizing that the initial premium is fully earned upon
execution of each Bond. Renewal premiums shall be paid until Undersigned shall
serve evidence satisfactory to Surety of its discharge or release from each Bond
and all liability arising out of or relating thereto.
(g) Surety is not a fiduciary and owes no fiduciary obligations to
Undersigned.
(h) Undersigned agree to submit themselves to personal jurisdiction in
whatever jurisdiction in which Surety sustains or pays any loss for which
Undersigned are liable hereunder and in whatever jurisdiction Surety may be Sued
as a consequence of its having issued any Bond. With respect to any action
brought by Surety on this Agreement in a jurisdiction in which one or more of
the Undersigned reside, are domiciled, are doing business or are found, each of
the Undersigned who are not in the jurisdiction hereby designates each of the
Undersigned in such jurisdiction as his agent to receive on his behalf service
of process in such action.
(i) Interest shall be paid by Undersigned to Surety on the amount of
all expenditures made by Surety for which it is entitled to reimbursement
hereunder from the date of each such expenditure until repaid in full. The
unpaid principal amount owing with respect to such expenditures shall bear
interest at the rate of nine percent (9%) per annum. Interest shall be
calculated on the basis of a 365-day year for the actual number of days elapsed.
Anything herein to the contrary notwithstanding, the obligations , Undersigned
hereunder shall be subject to the limitation that payments of interest shall not
be required to the extent that receipt any such payment by Surety would be
contrary to provisions of law applicable to Surety limiting the maximum rate of
interest which may be charged or collected by Surety.
(j) Bonds may be issued for the purpose of providing assurances to
obligees under the Bonds concerning performance or fulfillment of certain
contractual, statutory or other undertakings by the Principal, all as described
in more detail in each individual Bond. This agreement is intended to cover the
full range of different types of Bonds which might be issued by Surety, and
nothing in this Agreement shall be construed to limit the types of Bonds covered
by this Agreement. To the extent that particular provisions of this Agreement
are applicable only to certain types of Bonds, the inclusion of such provisions
in this Agreement is for the purpose of specifying in more detail the parties'
rights and obligations with respect to such types of Bonds and their inclusion
shall not limit the applicability of other provisions of this Agreement to other
types of Bonds.
(k) Undersigned agree that Surety need not give to Undersigned notice
of execution of any Bond, of any Default, the making of any claim against
Surety, or of any act, fact or information coming to the notice or knowledge of
Surety concerning or affecting its rights or liabilities under any Bond or the
rights or liabilities of Undersigned hereunder, notice of all such being hereby
expressly waived.
(1) Each of the Undersigned further affirms that Bonds are a credit
relationship and hereby authorizes Surety, or any authorized agent, to gather
such credit information it considers necessary and appropriate for purposes of
evaluating whether such credit should be effected or continued, for purposes of
enforcing or evaluating the possible enforcement of this Agreement or for any
other purpose.
(m) If the execution of this Agreement by any of the Undersigned
shall, be found defective or invalid for any reason, such defect or invalidity
shall not affect the validity of this Agreement with respect to any other of the
Undersigned. In the event any of the Undersigned shall fail to execute this
instrument or become insolvent, or in the event any of the Undersigned who
execute this Agreement, shall not be bound for any reason, the other Undersigned
shall, nevertheless, be bound hereunder for the full amount of the liability as
aforesaid. The invalidity of any provision of this Agreement by reason of the
law of any state or for any other reason shall not affect the validity of any
other provision of this Agreement, and Undersigned shall remain fully bound and
liable hereunder to Surety to the same extent as if the invalid provision had
not existed.
(n) Liability of Undersigned hereunder shall not be affected by
(i) the failure of Principal to sign any Bond;
(ii) any claim that other indemnity or security was to have been
obtained,
(iii) the release of any indemnity, and
(iv) the return or exchange of any collateral that may have been
obtained.
(o) The obligations of Undersigned are joint and several. Surety need
not proceed against Principal or any of the Undersigned, or any third party, or
exhaust or avail itself of any other legal remedy or of any collateral.
(p) Undersigned agree to give Surety prompt notice of any facts which
might give rise to a claim upon any Bond.
(q) This Agreement may not be changed or modified orally. No change or
modification shall be effective unless specifically agreed to in writing. Surety
shall have the right to fill in any blanks left herein and to correct any errors
by filling in any blanks herein.
(r) If any Bonds are issued in connection with Principal's performance
of a contract, Principal hereby assigns the proceeds of, and its rights in, such
contract to Surety, but only in the event of a default of the Principal under
such contract or default of Undersigned hereunder. In connection with said
assignrnent this Agreement shall constitute and Surety may file or record this
Agreement as a security agreement and/or financing statement under the Uniform
Commercial Code or any other law. The filing or recording of such document shall
be solely at the option of Surety and the failure to do so shall not release or
impair any of the obligations of Undersigned under this Agreement. Any copy of
this Agreement certified as such by Surety shall be considered an original for
purposes of filing as a financing statement.
(s) Failure by Surety to take any action or assert any right hereunder
shall not be a waiver of any Surety rights hereunder or as provided by law.
(t) The rights of Surety under this Agreement are in addition to and
not in lieu of any other rights the Surety may have with respect to Undersigned
by contract or operation of law.
(u) Undersigned waive any defense that this instrument was executed
subsequent to the date of any such Bond, admitting and covenanting that such
Bond was executed pursuant to Undersigned's request and in reliance on
Undersigned's promise to execute this instrument.
(v) Wherever used in this instrument, the plural shall include the
singular, the singular shall include the plural, and the neuter shall include
both genders as the circumstances require.
4. POWER OF ATTORNEY–Undersigned hereby irrevocably appoint Surety as
its/their attorney-in-fact with the power, but not the obligation, to exercise
all rights and execute all documents on behalf of Undersigned in order to give
full effect to the obligations of Undersigned under this Agreement.
5. WAIVER OF TRIAL BY JURY –Undersigned hereby waive trial by jury in any
action or proceeding to which any or all of the Undersigned and Surety may be
parties, arising out of or in any way pertaining to this Agreement. It is agreed
and understood that this waiver constitutes a waiver of trial by jury of all
claims against all parties to such actions or proceedinp, including claims
against parties who are not parties to this Agreement.
6. TERMINATION – This Agreement is a continuing obligation of
Undersigned unless terminated by written notice to Surety as provided hereafter.
In order to terminate liability as to future Bonds of Principal, Undersigned
must:
(a) give written notice of such termination by means of certified mail
to Surety at its office at lGreenwich Plaza, Greenwich, CT 06836, with a copy to
General Agent Avalon Risk Associates, Inc. 160 Water Street 16th F1 New York, NY
10038; and
(b) state in such notice the effective date (not less than thirty days
after receipt thereof by Surety) of termination of such Undersigneds liability
for future Bonds. After the effective date of such termination by giving notice,
Undersigned shall nonetheless be liable hereunder for Bonds executed or
authorized prior to such date, Bonds which Surety has otherwise become obligated
to issue prior to such date, and renewals, substitutions and extensions thereof
Such termination of liability as to an Undersigned shall in no way affect the
obligation of any other Undersigned who has not given notice as herein provided
7. REPRESENTATIONS – EACH OF THE UNDERSIGNED REPRESENTS TO SURETY THAT HE
HAS CAREFULLY READ THE ENTIRE AGREEMENT AND THAT THERE ARE NO OTHER AGREEMENTS
OR UNDERSTANDINGS WHICH IN ANY WAY LESSEN OR MODIFY THE OBLIGATIONS SET FORTH
HEREIN, OR, TO THE EXTENT SUCH OTHER AGREEMENTS OR UNDERSTANDINGS EXIST, THEY
ARE HEREBY SUPERSEDED BY THIS AGREEMENT.
8. IN TESTUAONY WHEREOF, Undersigned, intending to be legally bound
hereby, have hereunder set their hands and affixed their seals as of the 4th day
of January, 2001.
Principals:
Witness or Attest: Name: Labor Ready, Inc. /s/ Ronald L. Junck /s/ Richard
L. King, President / CEO
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Exhibit 10.5
LEASE MODIFICATION AGREEMENT
Lease Amendment made as of January 31, 2001, by and between 29 WEST THIRTY
LLC, the landlord of premises known as 29 West 30th Street, New York, New York
(hereinafter called "Landlord"), and NARA BANK, N.A., the present tenant of the
entire ground floor (except lobby and/or common areas) entire second floor and
entire basement (hereinafter called "Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into a lease on October 12, 2000, for a
fifteen year period ending on October 31, 2015 (hereinafter called the "Lease");
and
WHEREAS, the Lease provided for the Landlord's option to require the Tenant
to lease the entire third floor of the 29 West 30th Street, New York, New York
premises (hereinafter called the "premises") from the Landlord on terms provided
for in said Lease, provided said third floor became available for Tenant's
occupancy prior to December 31, 2001; and
WHEREAS, the third floor will become available for Tenant's occupancy prior
to March 15, 2001, and the Landlord desires to and opts to lease said third
floor space to the Tenant and the Tenant desires to lease said third floor space
from the Landlord on the terms as provided for in the Lease and which are more
fully described herein.
NOW THEREFORE, in consideration of the mutual promises herein contained and
other good and valuable consideration exchanged by and between the parties
hereto,
IT IS AGREED AS FOLLOWS:
1. The option contained in Paragraph 100 of the Lease rider is hereby
exercised by Landlord and agreed to by Tenant so that Tenant does hereby lease
the entire third floor space at the premises. The commencement date of said
leasing of the third floor space shall be March 15, 2001.
2. The term of the lease of said third floor space shall be from March 15,
2001 through March 31, 2011, with a further option extending said third floor
lease until October 31, 2015 that may be exercised by either Landlord or Tenant.
3. The non-rent schedule portion of Paragraph 52 is modified to read as
follows:
"The base annual rental rate for the premises before the payment of any
additional rentals as provided for in this lease, to be paid on the first day of
each calendar month, shall be as listed as below and said base rent shall be
increased by escalations of 5% per year as listed below. There shall be
additional rentals required to be paid by the tenant as a labor and maintenance
surcharge of 5% as well as the tenant's real estate tax contribution of 28.5% in
excess of the 2000/2001 base year real estate taxes. No representation is made
as to the amount of actual square footage leased to tenant."
In addition to the base rent as set forth in the rent schedule in
Paragraph 52 of the lease for Tenant's occupancy of the ground floor, second
floor and basement of the 29 West 30th Street, New
1
--------------------------------------------------------------------------------
York, New York premises, Tenant shall pay the following base rent for its third
floor occupancy as well as any additional rentals set forth in the lease:
Period
--------------------------------------------------------------------------------
Per Month
--------------------------------------------------------------------------------
Per Year
--------------------------------------------------------------------------------
Yearly Surcharge for
Labor & Maintenance
--------------------------------------------------------------------------------
March 15, 2001 to March 31, 2001 $ 7,500.00 $ 375.00
April 1, 2001 to March 31, 2002
$
15,000.00
$
180,000.00
$
9,000.00
April 1, 2002 to March 31, 2003
$
15,750.00
$
189,000.00
$
9,450.00
April 1, 2003 to March 31, 2004
$
16,537.50
$
198,450.00
$
9,922.50
April 1, 2004 to March 31, 2005
$
17,364.38
$
208,372.50
$
10,418.63
April 1, 2005 to March 31, 2006
$
18,232.59
$
218,791.13
$
10,939.56
April 1, 2006 to March 31, 2007
$
19,144.22
$
229,730.68
$
11,486.53
April 1, 2007 to March 31, 2008
$
20,101.43
$
241,217.22
$
12,060.86
April 1, 2008 to March 31, 2009
$
21,106.51
$
253,278.08
$
12,663.90
April 1, 2009 to March 31, 2010
$
22,161.83
$
265,941.98
$
13,297.10
April 1, 2010 to March 31, 2011
$
23,269.92
$
279,239.08
$
13,961.95
4. Paragraph 62 of the Lease is amended so that Tenant's real estate tax
contribution shall be increased by 8.5% to a total of 28.5% of the annual real
estate taxes paid by the Landlord that is in excess of the real estate taxes
paid by the Landlord for the fiscal year at the lease inception (2000/2001
fiscal year).
5. Paragraph 53 of the Lease Rider is amended so that Tenant is to increase
the security deposit at the execution of this Lease Amendment from $96,666.66 to
$126,666.66 and paragraph 53 is modified to read as follows:
"At the time of the execution of this lease modification, Tenant shall deposit
with the landlord two months security representing the first two month's rental
as set forth in the rental schedule of Paragraph 52 ($48,333.33 × 2 =
$96,666.66) and two months security representing the first full two months of
rental of the third floor ($15,000.00 × 2 = $30,000.00) for a total of
$126,666.66. Landlord shall deposit said security in an interest bearing account
with interest less 1% administrative fee payable to tenant annually."
6. The Tenant shall have the right to sublet the third floor space with the
consent of the Landlord, which consent shall not be unreasonably withheld.
However, Tenant may not sublet the third floor space to tenants already
occupying space in the 29 West 30th Street, New York, New York, building.
7. The Tenant takes the third floor premises in their present "as is"
condition and Landlord makes no representation or warranty as to the condition
or the permitted use of same.
8. The Lease term is modified so as to have commenced on November 1, 2000
and to end on October 31, 2010.
However, the lease shall be deemed extended for an additional five year
period ending October 31, 2015 at the option of either the Landlord or the
Tenant by either one of them giving the other party written notice of said
party's desire to exercise the mandatory renewal option. It shall be an
obligation of the other party to whom the renewal notice has been given to
accept the lease renewal extension. The rental during the five year lease
extension for the ground floor, second floor and basement shall be
2
--------------------------------------------------------------------------------
as contained in the Lease rent schedule (Paragraph 52) and the rental during the
four year seven month extension for the third floor shall be as set forth below.
All of the terms of the lease shall continue in effect for said Lease
renewal term.
In the event either party, the Landlord or the Tenant, fail to notify the
other of the of the exercise of their respective options to renew and the Tenant
remains in possession and the Landlord does not initiate a holdover proceeding,
then it shall be deemed that both parties exercised the renewal option even
though no written notice exercising the renewal option was sent and the lease
shall continue in effect for the renewal period ending October 31, 2015. The
renewal option is for all of the space leased by the Tenant, which said space
includes the basement, ground floor, second floor and third floor.
The base rental and additional rental for the third floor space for the
renewal period shall be as follows:
Period
--------------------------------------------------------------------------------
Per Month
--------------------------------------------------------------------------------
Per Year
--------------------------------------------------------------------------------
Yearly Surcharge for
Labor & Maintenance
--------------------------------------------------------------------------------
April 1, 2011 to March 31, 2012 $ 24,433.42 $ 293,201.03 $ 14,660.05
April 1, 2012 to March 31, 2013
$
25,655.09
$
307,861.09
$
15,393.05
April 1, 2013 to March 31, 2014
$
26,937.85
$
323,254.14
$
16,162.71
April 1, 2014 to March 31, 2015
$
28,284.74
$
339,416.85
$
16,970.84
April 1, 2015 to October 31, 2015
$
29,698.97
$
356,387.69
$
17,819.38 (to be pro rated)
9. Except as herein specifically modified, all of the other terms and
conditions of the Lease remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the
date first above written.
29 WEST THIRTY LLC
BY:
/s/ [ILLEGIBLE]
--------------------------------------------------------------------------------
Name: [ILLEGIBLE]
Title: [ILLEGIBLE]
NARA BANK, N.A.
BY:
/s/ NANI THANAWALA
--------------------------------------------------------------------------------
Name: Nani Thanawala
Title: Vice President & Controller
3
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STANDARD FORM OF STORE LEASE
The Real Estate Board of New York, Inc.
Agreement of Lease, made as of this 12th day of Oct. 2000, between 29 West
Thirty LLC, of 21 Windsor Drive, Old Westbury, NY 11568 party of the first part,
hereinafter referred to as OWNER, and Nara Bank, N.A. a duly licensed bank
authorized to do business in New York State, of 29 West 30th Street New York, NY
party of the second part, hereinafter referred to as TENANT,
Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner
the entire ground floor except for lobby and/or common areas, entire second
floor and entire basement in the building known as 29 West 30th Street in the
Borough of Manhattan, City of New York, for the term of fifteen (15) years (or
until such term shall sooner cease and expire as hereinafter provided) to
commence on the 1st day of November two thousand, and to end on the 31st day of
October two thousand and fifteen and both dates inclusive, at an annual rental
rate of see rider annexed hereto which Tenant agrees to pay in lawful money of
the United States which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment, in equal monthly installments in
advance on the first day of each month during said term, at the office of Owner
or such other place as Owner may designate, without any set off or deduction
whatsoever, except that Tenant shall pay the first monthly installment(s) on
the execution hereof (unless this lease be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent:
1. Tenant shall pay the rent as above and as hereinafter provided.
Occupancy:
2. Tenant shall use and occupy demised premises for use as a bank and
related offices and for no other purpose. Tenant shall at all times conduct its
business in a high grade and reputable manner, shall not violate Article 37
hereof, and shall keep show windows and signs in a neat and clean condition.
Alterations:
3. Tenant shall make no changes in or to the demised premises of any nature
without Owner's prior written consent. Subject to the prior written consent of
Owner, and to the provisions of this article, Tenant, at Tenant's expense, may
make alterations, installations, additions or improvements which are
non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or mechanics first approved in each instance by Owner. Tenant shall,
before making any alterations, additions, installations, or improvements, at its
expense, obtain all permits, approvals and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Owner and Tenant agrees to carry and will
cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as Owner
may require. If any mechanics lien is filed against the demised premises, or the
building of which the same forms a part,
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for work claimed to have done for, or materials furnished to, Tenant, whether or
not done pursuant to this article, the same shall be discharged by Tenant within
30 days thereafter, at Tenant's expense, by payment or filing the bond required
by law. All fixtures and all paneling, partitions, railings and like
installations, installed in the premises at any time, either by Tenant or by
Owner on Tenant's behalf, shall, upon installation, become the property of Owner
and shall remain upon and be surrendered with the demised premises unless Owner,
by notice to Tenant no later than twenty days prior to the date fixed as the
termination of this lease, elects to relinquish Owner's rights thereto and to
have them removed by Tenant, in which event, the same shall be removed from the
premises by Tenant prior to the expiration of the lease, at Tenant's expense.
Nothing in this article shall be construed to give Owner title to or to prevent
Tenant's removal of trade fixtures, moveable office furniture and equipment, but
upon removal of any such from the premises or upon removal of other installation
as may be required by Owner, Tenant shall immediately and at its expense, repair
and restore the premises to the condition existing prior to installation and
repair any damage to the demised premises or the building due to such removal.
All property permitted or required to be removed by Tenant at the end of the
term remaining in the premises after Tenant's removal shall be deemed abandoned
and may, at the election of Owner, either be retained as Owner's property or may
be removed from the premises by Owner at Tenant's expense.
Repairs:
4. Owner shall maintain and repair the public portions of the building, both
exterior and interior, except that if Owner allows Tenant to erect on the
outside of the building a sign or signs, or a hoist, lift or sidewalk elevator
for the exclusive use of Tenant, Tenant shall maintain such exterior
installations in good appearance and shall cause the same to be operated in a
good and workmanlike manner and shall make all repairs thereto necessary to keep
same in good order and condition, at Tenant's own cost and expense, and shall
cause the same to be covered by the insurance provided for hereafter in Article
8. Tenant shall, throughout the term of this lease, take good care of the
demised premises and the fixtures and appurtenances therein, and the sidewalks
adjacent thereto, and at its sole cost and expense, make all non-structural
repairs thereto as and when needed to preserve them in good working order and
condition, reasonable wear and tear, obsolescence and damage from the elements,
fire or other casualty, excepted. If the demised premises be or become infested
with vermin, Tenant shall at Tenant's expense, cause the same to be exterminated
from time to time to the satisfaction of Owner. Except as specifically provided
in Article 9 or elsewhere in this lease, there shall be no allowance to the
Tenant for the diminution of rental value and no liability on the part of Owner
by reason of inconvenience, annoyance or injury to business arising from Owner,
Tenant or others making or failing to make any repairs, alterations, additions
or improvements in or to any portion of the building including the erection or
operation of any crane, derrick or sidewalk shed, or in or to the demised
premises or the fixtures, appurtenances or equipment thereof. It is specifically
agreed that Tenant shall be not entitled to any set off or reduction of rent by
reason of any failure of Owner to comply with the covenants of this or any other
article of this lease. Tenant agrees that Tenant's sole remedy at law in such
instance will be by way of an action for damages for breach of contract. The
provisions of this Article 4 with respect to the making of repairs shall not
apply in the case of fire or other Casualty which are dealt with in Article 9
hereof.
Window Cleaning:
5. Tenant will not clean nor require, permit, suffer or allow any window in
the demised premises to be cleaned from outside in violation of Section 202 of
the New York State Labor law or any other applicable law or of the Rules of the
Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
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Requirements of Law, Fire Insurance:
6. Prior to the commencement of the lease term, if Tenant is then in
possession, and at all times thereafter, Tenant, at Tenant's sole cost and
expense, shall promptly comply with all present and future laws, orders and
regulations of all state, federal, municipal and local governments, departments,
commissions and boards and any direction of any public officer pursuant to law,
and all orders, rules and regulations of the New York Board of Fire Underwriters
or the Insurance Services Office, or any similar body which shall impose any
violation, order or duty upon Owner or Tenant with respect to the demised
premises, and with respect to the portion of the sidewalk adjacent to the
premises, if the premises are on the street level, whether or not arising out of
Tenant's use or manner of use thereof, or with respect to the building if
arising out of Tenant's use or manner of use of the premises or the building
(including the use permitted under the lease). Except as provided in Article 29
hereof, nothing herein shall require Tenant to make structural repairs or
alterations unless Tenant has by its manner of use of the demised premises or
method of operation therein, violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto. Tenant shall not do
or permit any act or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner. Tenant shall pay all costs, expenses, fines, penalties or
damages, which may be imposed upon Owner by reason of Tenant's failure to comply
with the provisions of this article. If the fire insurance rate shall, at the
beginning of the lease or at any time thereafter, be higher than it otherwise
would be, then Tenant shall reimburse Owner, as additional rent hereunder, for
that portion of all fire insurance premiums thereafter paid by Owner which shall
have been charged because of such failure by Tenant, to comply with the terms of
this article. In any action or proceeding wherein Owner and Tenant are parties,
a schedule or "make-up" of rate for the building or demised premises issued by a
body making fire insurance rates applicable to said premises shall be conclusive
evidence of the facts therein stated and of the several items and charges in the
fire insurance rate then applicable to said premises.
Subordination:
7. This lease is subject and subordinate to all ground or underlying leases
and to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
request.
Tenant's Liability Insurance Property Loss, Damage, Indemnity:
8. Owner or its agents shall not be liable for any damage to property of
Tenant or of others entrusted to employees of the building, nor for loss of or
damage to any property of Tenant by theft or otherwise, nor for any injury or
damage to persons or property resulting from any cause of whatsoever nature,
unless caused by or due to the negligence of Owner, its agents, servants or
employees. Owner or its agents will not be liable for any such damage caused by
other tenants or persons in, upon or about said building or caused by operations
in construction of any private, public or quasi public work. Tenant agrees, at
Tenant's sole cost and expense, to maintain general public liability insurance
in standard form in favor of Owner and Tenant against claims for bodily injury
or death or property damage occurring in or upon the demised premises, effective
from the date the Tenant enters into possession and during the term of this
lease. Such insurance shall be in an amount and with carriers acceptable to the
Owner. Such policy or policies shall be delivered to the Owner. On Tenant's
default in obtaining or delivering any such policy or policies or failure to pay
the charges therefor, Owner may
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secure or pay the charges for any such policy or policies and charge the Tenant
as additional rent therefor. Tenant shall indemnify and save harmless Owner
against and from all liabilities, obligations, damages, penalties, claims, costs
and expenses for which Owner shall not be reimbursed by insurance, including
reasonable attorneys fees, paid, suffered or incurred as a result of any breach
by Tenant, Tenant's agent, contractors, employees, invitees, or licensees, of
any covenant on condition of this lease, or the carelessness, negligence or
improper conduct of the Tenant, Tenant's agents, contractors, employees,
invitees or licensees. Tenant's liability under this lease extends to the acts
and omissions of any subtenant, and any agent, contractor, employee, invitee or
licensee of any subtenant. In case any action or proceeding is brought against
Owner by reason of any such claim, Tenant, upon written notice from Owner, will,
at Tenant's expense, resist or defend such action or proceeding by counsel
approved by Owner in writing, such approval not to be unreasonably withheld.
Destruction, Fire, and Other Casualty:
9. (a) If the demised premises or any part thereof shall be damaged by fire
or other casualty, Tenant shall give immediate notice thereof to Owner and this
lease shall continue in full force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Owner and the rent and other items of additional rent, until such
repair shall be substantially completed, shall be apportioned from the day
following the casualty according to the part of the premises which is usable.
(c) If the demised premises are totally damaged or rendered wholly unusable by
fire or other casualty, then the rent and other items of additional rent as
hereinafter expressly provided shall be proportionately paid up to the time of
the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Owner (or sooner reoccupied in part by Tenant
then rent shall be apportioned as provided in subsection (b) above), subject to
Owner's right to elect not to restore the same as hereinafter provided. (d) If
the demised premises are rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building shall be so damaged
that Owner shall decide to demolish it or to rebuild it, then, in any of such
events, Owner may elect to terminate this lease by written notice to Tenant
given within 90 days after such fire or casualty or 30 days after adjustment of
the insurance claim for such fire or casualty, whichever is sooner, specifying a
date for the expiration of the lease, which date shall not be more than 60 days
after the giving of such notice, and upon the date specified in such notice the
term of this lease shall expire fully and completely as if such date were the
date set forth above for the termination of this lease and Tenant shall
forthwith quit, surrender and vacate the premises without prejudice however, to
Owner's rights and remedies against Tenant under the lease provisions in effect
prior to such termination, and any rent owing shall be paid up to such date and
any payments of rent made by Tenant which were on account of any period
subsequent to such date shall be returned to Tenant. Unless Owner shall serve a
termination notice as provided for herein, Owner shall make the repairs and
restorations under the conditions of (b) and (c) hereof, with all reasonable
expedition subject to delays due to adjustment of insurance claims, labor
troubles and causes beyond Owner's control. After any such casualty, Tenant
shall cooperate with Owner's restoration by removing from the premises as
promptly as reasonably possible, all of Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Owner that the premises are
substantially ready for Tenant's occupancy. (e) Nothing contained hereinabove
shall relieve Tenant from liability that may exist as a result of damage from
fire or other casualty. Notwithstanding the foregoing, including Owner's
obligation to restore under subparagraph (b) above, each party shall look first
to any insurance in its favor before making any claim against the other party
for recovery for loss or damage resulting from fire or other casualty, and to
the extent that such insurance is in force and collectible and to the extent
permitted by law, Owner and Tenant each hereby releases and waives all right of
recovery with respect to subparagraphs (b), (d) and (e) above, against the other
or any one claiming through or under each of them by way of subrogation or
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otherwise. The release and waiver herein referred to shall be deemed to include
any loss or damage to the demised premises and/or to any personal property,
equipment, trade fixtures, goods and merchandise located therein. The foregoing
release and waiver shall be in force only if both releasors' insurance policies
contain a clause providing that such a release or waiver shall not invalidate
the insurance. Tenant acknowledges that Owner will not carry insurance on
Tenant's furniture and/or furnishings or any fixtures or equipment,
improvements, or appurtenances removable by Tenant and agrees that Owner will
not be obligated to repair any damage thereto or replace the same. (f) Tenant
hereby waives the provisions of Section 227 of the Real Property Law and agrees
that the provisions of this article shall govern and control in lieu thereof.
Eminent Domain:
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim for the
value of any unexpired term of said lease. Tenant shall have the right to make
an independent claim to the condemning authority for the value of Tenant's
moving expenses and personal property, trade fixtures and equipment, provided
Tenant is entitled pursuant to the terms of the lease to remove such property,
trade fixtures and equipment at the end of the term and provided further such
claim does not reduce Owner's award.
Assignment, Mortgage, Etc.:
11. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns expressly covenants that it shall
not assign, mortgage or encumber this agreement, nor underlet, or suffer or
permit the demised premises or any part thereof to be used by others, without
the prior written consent of Owner in each instance. Transfer of the majority of
the stock of a corporate tenant or the majority partnership interest of a
partnership tenant shall be deemed an assignment. If this lease be assigned, or
if the demised premises or any part thereof be underlet or occupied by anybody
other than Tenant, Owner may, after default by Tenant, collect rent from the
assignee, under-tenant or occupant, and apply the net amount collected to the
rent herein reserved, but no such assignment, underletting, occupancy or
collection shall be deemed a waiver of the covenant, or the acceptance of the
assignee, under-tenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant herein
contained. The consent by Owner to an assignment or underletting shall not in
any way be construed to relieve Tenant from obtaining the express consent in
writing of Owner to any further assignment or underletting.
Electric Current:
12. Rates and conditions in respect to submetering or rent inclusions, as
the case may be, to be added in RIDER attached hereto. Tenant covenants and
agrees that at all times its use of electric current shall not exceed the
capacity of existing feeders to the building or the risers or wiring
installation and Tenant may not use any electrical equipment which, in Owner's
opinion, reasonably exercised, will overload such installations or interfere
with the use thereof by other tenants of the building. The change at any time of
the character of electric service shall in no way make Owner liable or
responsible to Tenant, for any loss, damages or expenses which Tenant may
sustain.
Access to Premises:
13. Owner or Owner's agents shall have the right (but shall not be
obligated) to enter the demised premises in any emergency at any time, and, at
other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Owner may deem necessary and reasonably
desirable to any portion of the building or which Owner may elect to perform, in
the premises,
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following Tenant's failure to make repairs or perform any work which Tenant is
obligated to perform under this lease, or for the purpose of complying with
laws, regulations and other directions of governmental authorities. Tenant shall
permit Owner to use and maintain and replace pipes and conduits in and through
the demised premises and to erect new pipes and conduits therein, provided they
are concealed within the walls, floors or ceiling, wherever practicable. Owner
may, during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants and may, during said six months period, place upon the demised premises
the usual notice "To Let" and "For Sale" which notices Tenant shall permit to
remain thereon without molestation. If Tenant is not present to open and permit
entry into the demised premises, Owner or Owner's agents may enter the same
whenever such entry may be necessary or permissible by master key or forcibly
and provided reasonable care is exercised to safeguard Tenant's property, such
entry shall not render Owner or its agents liable therefor, nor in any event
shall the obligations of Tenant hereunder be affected. If during the last month
of term Tenant shall have removed all or substantially all of Tenant's property
therefrom, Owner may immediately enter, alter, renovate or redecorate the
demised premises without limitation or abatement of rent, or incurring liability
to Tenant for any compensation and such act shall have no effect on this lease
or Tenant's obligations hereunder. Owner shall have the right at any time,
without the same constituting an eviction and without incurring liability to
Tenant therefor to change the arrangement and/or location of public entrances,
passageways, doors, doorways, corridors, elevators, stairs, toilets, or other
public parts of the building and to change the name, number or designation by
which the building may be known.
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Vault, Vault Space, Area:
14. No vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder, anything contained
in or indicated on any sketch, blue print or plan, or anything contained
elsewhere in this lease to the contrary notwithstanding. Owner makes no
representation as to the location of the property line of the
building. All vaults and vault space and all such areas not within the property
line of the building, which Tenant may be permitted to use and/or occupy, is to
be used and/or occupied under a revocable license, and if any such license is
revoked, or if the amount of such space or area be diminished or required by any
federal, state or municipal authority or public utility, Owner shall not be
subject to any liability nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall such revocation, diminution or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by Tenant.
Occupancy:
15. Tenant will not at any time use or occupy the demised premises in
violation of Articles 2 or 37 hereof, or of the certificate of occupancy issued
for the building of which the demised premises are a part. Tenant has inspected
the premises and accepts them as is, subject to the riders annexed hereto with
respect to Owner's work, if any. In any event, Owner makes no representation as
to the condition of the premises and Tenant agrees to accept the same subject to
violations whether or not of record.
Bankruptcy:
16. (a) Anything elsewhere in this lease to the contrary notwithstanding,
this lease may be cancelled by Landlord by the sending of a written notice to
Tenant within a reasonable time after the happening of any one or more of the
following events: (1) the commencement of a case in bankruptcy or under the laws
of any state naming Tenant as the debtor; or (2) the making by Tenant of an
assignment or any other arrangement for the benefit of creditors under any state
statute. Neither Tenant nor any person claiming through or under Tenant, or by
reason of any statute or order of court, shall therafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of the termination of this
lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any other
provisions of this lease to the contrary, be entitled to recover from Tenant as
and for liquidated damages an amount equal to the difference between the rent
reserved hereunder for the unexpired portion of the term demised and the fair
and reasonable rental value of the demised premises for the same period. In the
computation of such damages the difference between any installment of rent
becoming due hereunder after the date of termination and the fair and reasonable
rental value of the demised premises for the period for which such installment
was payable shall be discounted to the date of termination at the rate of four
percent (4%) per annum. If such premises or any part thereof be re-let by the
Owner for the unexpired term of said lease, or any part thereof, before
presentation of proof of such liquidated damages to any court, commission or
tribunal, the amount of rent reserved upon such re-letting shall be deemed to be
the fair and reasonable rental value for the part or the whole of the premises
so re-let during the term of the re-letting. Nothing herein contained shall
limit or prejudice the right of the Owner to prove for and obtain as liquidated
damages by reason of such termination, an amount equal to the maximum allowed by
any statute or rule of law in effect at the time when, and governing the
proceedings in which, such damages are to be proved, whether or not such amount
be greater, equal to, or less than the amount of the difference referred to
above.
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Default:
17. (1) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of rent or additional rent; or if the
demised premises become vacant or deserted; or if any execution or attachment
shall be issued against Tenant or any of Tenant's property whereupon the demised
premises shall be taken or occupied by someone other than Tenant; or if this
lease be rejected under Section 365 of Title II of the U.S. Code (Bankruptcy
Code); or if Tenant shall fail to move into or take possession of the premises
within thirty (30) days after the commencement of the term of this lease, of
which fact Owner shall be the whole judge; then, in any one or more of such
events, upon Owner serving a written fifteen (15) days notice upon Tenant
specifying the nature of said default and upon the expiration of said fifteen
(15) days, if Tenant shall have failed to comply with or remedy such default, or
if the said default or omission complained of shall be of a nature that the same
cannot be completely cured or remedied within said fifteen (15) day period, and
if Tenant shall not have diligently commenced curing such default within such
fifteen (15) day period, and shall not thereafter with reasonable diligence and
in good faith proceed to remedy or cure such default, then Owner may serve a
written five (5) days notice of cancellation of this lease upon Tenant, and upon
the expiration of said five (5) days, this lease and the term thereunder shall
end and expire as fully and completely as if the expiration of such five (5) day
period were the day herein definitely fixed for the end and expiration of this
lease and the term thereof and Tenant shall then quit and surrender the demised
premises to Owner but Tenant shall remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given, and the
term shall expire as aforesaid; or if Tenant shall make default in the payment
of the rent reserved herein or any item of additional rent herein mentioned or
any part of either or in making any other payment herein required; then and in
any such events Owner may without notice, re-enter the demised premises either
by force or otherwise, and dispossess Tenant by summary proceedings or
otherwise, and the legal representative of Tenant or other occupant of demised
premises and remove their effects and hold the premises as if this lease had not
been made, and Tenant hereby waives the service of notice of intention to
re-enter or to institute legal proceedings to that end.
Remedies of Owner and Waiver of Redemption:
18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or other wise, (a) the rent, and additional rent, shall
become due thereupon and be paid up to the time of such re-entry, dispossess
and/or expiration. (b) Owner may re-let the premises or any part or parts
thereof, either in the name of Owner or otherwise, for a term or terms, which
may at Owner's option be less than or exceed the period which would otherwise
have constituted the balance of the term of this lease and may grant concessions
or free rent or charge a higher rental than that in this lease, and/or (c)
Tenant or the legal representatives of Tenant shall also pay Owner as liquidated
damages for the failure of Tenant to observe and perform said Tenant's covenants
herein contained, any deficiency between the rent hereby reserved and/or
covenanted to be paid and the net amount, if any, of the rents collected on
account of the subsequent lease or leases of the demised premises for each month
of the period which would otherwise have constituted the balance of the term of
this lease. The failure of Owner to re-let the premises or any part or parts
thereof shall not release or affect Tenant's liability for damages. In computing
such liquidated damages there shall be added to the said deficiency such
expenses as Owner may incur in connection with re-letting, such as legal
expenses, reasonable attorneys' fees, brokerage, advertising and for keeping the
demised premises in good order or for preparing the same for re-letting. Any
such liquidated damages shall be paid in monthly installments by Tenant on the
rent day specified in this lease. Owner, in putting the demised premises in good
order or preparing the same for re-rental may, at Owner's option, make such
alterations, repairs, replacements, and/or decorations in the demised premises
as Owner, in Owner's sole judgement, considers advisable and necessary for the
purpose of re-letting the demised premises, and the making of such alterations,
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repairs, replacements, and/or decorations shall not operate or be construed to
release Tenant from liability. Owner shall in no event be liable in any way
whatsoever for failure to re-let the demised premises, or in the event that the
demised premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rent collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant or any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity, Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws.
Fees and Expenses:
19. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, after notice if
required and upon expiration of any applicable grace period if any, (except in
an emergency), then, unless otherwise provided elsewhere in this lease, Owner
may immediately or at any time thereafter and without notice perform the
obligation of Tenant thereunder, and if Owner, in connection therewith or in
connection with any default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or incurs any obligations for the payment of money,
including but not limited to reasonable attorney's fees, in instituting,
prosecuting or defending any actions or proceeding and prevails in any such
action or proceeding, such sums so paid or obligations incurred with interest
and costs shall be deemed to be additional rent hereunder and shall be paid by
Tenant to Owner within ten (10) days of rendition of any bill or statement to
Tenant therefor, and if Tenant's lease term shall have expired at the time of
making of such expenditures or incurring of such obligations, such sums shall be
recoverable by Owner as damages.
No Representations by Owner:
20. Neither Owner nor Owner's agent have made any representations or
promises with respect to the physical condition of the building, the land upon
which it is erected or the demised premises, the rents, leases, expenses of
operation, or any other matter or thing affecting or related to the premises
except as herein expressly set forth and no rights, easements or licenses are
acquired by Tenant by implication or otherwise except as expressly set forth in
the provisions of this lease. Tenant has inspected the building and the demised
premises and is thoroughly acquainted with their condition, and agrees to take
the same 'as is' and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
End of Term:
21. Upon the expiration or other termination of the term of this lease,
Tenant shall quit and surrender to Owner the demised premises, broom clean, in
good order and condition, ordinary wear excepted, and Tenant shall remove all
its property. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this lease. If the last day of
the term of
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this lease or any renewal thereof, falls on Sunday, this lease shall expire at
noon on the preceding Saturday unless it be a legal holiday in which case it
shall expire at noon on the preceding business day.
Quiet Enjoyment:
22. Owner covenants and agrees with Tenant that upon Tenant paying the rent
and additional rent and observing and performing all the terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may peaceable
and quietly enjoy the premises hereby demised, subject, nevertheless, to the
terms and conditions of this lease including, but not limited to, Article 33
hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
Failure to Give Possession:
23. if Owner is unable to give possession of the demised premises on the
date of the commencement of the term hereof, because of the holding-over or
retention of possession of any tenant, undertenant or occupants, or if the
premises are located in a building being constructed, because such building has
not been sufficiently completed to make the premises ready for occupancy or
because of the fact that a certificate of occupancy has not been procured or for
any other reason, Owner shall not be subject to any liability for failure to
give possession on said date and the validity of the lease shall not be impaired
under such circumstances, nor shall the same be construed in any way to extend
the term of this lease, but the rent is payable hereunder shall be abated
(provided Tenant is not responsible for the inability to obtain possession or
complete construction) until after Owner shall have given Tenant written notice
that the Owner is able to deliver possession in the condition required by this
lease. If permission is given to Tenant to enter into the possession of the
demised premises or to occupy premises other than the demised premises prior to
the date specified as the commencement of the term of this lease, Tenant
covenants and agrees that such possession and/or occupancy shall be deemed to be
under all the terms, covenants, conditions and provisions of this lease except
the obligation to pay the fixed annual rent set forth in page one of this lease.
The provision of this a are intended to constitute "an express provision to
the contrary" within the meaning of Section 223 of the New York Real Property
Law.
No Waiver:
24. The failure of Owner to seek redress for violation of, or to insist upon
the strict performance of any covenant or condition of this lease or of any of
the Rules or Regulations set forth or hereafter adopted by Owner, shall not
prevent a subsequent act which would have originally constituted a violation
from having all the force and effect of an original violation. The receipt by
Owner of rent and/or additional rent with knowledge of the breach of any
covenant of this lease shall not be deemed a waiver of such breach and no
provision of this lease shall be deemed to have been waived by Owner unless such
waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner
of a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any endorsement
or statement of any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the balance of such rent
or pursue any other remedy in this lease provided. No act or thing done by Owner
or Owner's agents during the term hereby demised shall be deemed in acceptance
of a surrender of said premises and no agreement to accept such surrender shall
be valid unless in writing signed by Owner. No employee of Owner or Owner's
agent shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
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Waiver of Trial by Jury:
25. It is mutually agreed by and between Owner and Tenant that the
respective parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other (except for personal injury or property damage) on any matters
whatsoever arising out of or in any way connected with this lease, the
relationship of Owner and Tenant, Tenant's use of or occupancy of said premises,
and any emergency statutory or any other statutory remedy. It is further
mutually agreed that in the event Owner commences any proceeding or action for
possession including a summary proceeding for possession of the premises, Tenant
will not interpose any counterclaim of whatever nature or description in any
such proceeding, including a counterclaim under Article 4 except for statutory
mandatory counterclaims.
Inability to Perform:
26. This lease and the obligation of Tenant to pay rent hereunder and
perform all of the other covenants and agreements hereunder on part of Tenant to
be performed shall in no way be affected, impaired or excused because Owner is
unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment,
fixtures or other materials if Owner is prevented or delayed from so doing by
reason of strike or labor troubles, government preemption or restrictions or by
reason of any rule, order or regulation of any department or subdivision thereof
of any government agency or by reason of the conditions of which have been or
are affected, either directly or indirectly, by war or other emergency, or when,
in the judgement of Owner, temporary interruption of such services is necessary
by reason of accident, mechanical breakdown, or to make repairs, alterations or
improvements.
Bills and Notices:
27. Except as otherwise in this lease provided, a bill, statement, notice or
communication which Owner may desire or be required to give to Tenant, shall be
deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premises addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
Water Charges:
28. If Tenant requires, uses or consumes water for any purpose in addition
to ordinary lavatory purposes (of which Tenant constitutes Owner to be the sole
judge) Owner may install a water meter and thereby measure Tenant's water
consumption for all purposes. Tenant shall pay Owner for the cost of the meter
and the cost of the installation thereof and throughout the duration of Tenant's
occupancy Tenant shall keep said meter and installation equipment in good
working order and repair at Tenant's own cost and expense. Tenant agrees to pay
for water consumed, as shown on said meter as and when bills are rendered.
Tenant covenants and agrees to pay the sewer rent, charge or any other tax,
rent, levy or charge which now or hereafter is assessed, imposed or a lien upon
the demised premises or the realty of which they are part pursuant to law, order
or regulation made or issued in connection with the use, consumption,
maintenance or supply of water, water system or sewage or sewage connection or
system. The bill rendered by Owner shall be payable by Tenant as additional
rent. If the building or the demised premises or any part thereof be supplied
with water through a meter through which water is
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also supplied to other premises Tenant shall pay to Owner as additional rent, on
the first day of each month, % ($ ) of the total meter charges, as
Tenant's portion. Independently of and in addition to any of the remedies
reserved to Owner hereinabove or elsewhere in this lease, Owner may sue for and
collect any monies to be paid by Tenant or paid by Owner for any of the reasons
or purposes hereinabove set forth.
Sprinklers:
29. Anything elsewhere in this lease to the contrary notwithstanding, if the
New York Board of Fire Underwriters or the Insurance Services Office or any
bureau, department or official of the federal, state or city government require
or recommend the installation of a sprinkler system or that any changes,
modifications, alterations, or additional sprinkler heads or other equipment be
made or supplied in an existing sprinkler system by reason of Tenant's business,
or the location of partitions, trade fixtures, or other contents of the demised
premises, or for any other reason, or if any such sprinkler system
installations, changes, modifications, alterations, additional sprinkler heads
or other such equipment, become necessary to prevent the imposition of a penalty
or charge against the full allowance for a sprinkler system in the fire
insurance rate set by any said Exchange or by any fire insurance company, Tenant
shall, at Tenant's expense, prompty make such sprinkler system installations,
changes, modifications, alterations, and supply additional sprinkler heads or
other equipment as required whether the work involved shall be structural or
non-structural in nature. Tenant shall pay to Owner as additional rent the sum
of $ , on the first day of each month during the term of this lease, as
Tenant's portion of the contract price for sprinkler supervisory service.
Elevators, Heat, Cleaning:
30. As long as Tenant is not in default under any of the covenants of this
lease beyond the applicable grace period provided in this lease for the curing
of such defaults, Owner shall, if and insofar as existing facilities permit
furnish heat to the demised premises, when and as required by law, on business
days from 8:00 a.m. to 6:00 p.m. and on Saturdays from 8:00 a.m. to 1:00 p.m.
Tenant shall at Tenant's expense, keep demised premises clean and in order, to
the satisfaction to Owner, and if demised premises are situated on the street
floor, Tenant shall, at Tenant's own expense, make all repairs and replacements
to the sidewalks and curbs adjacent thereto, and keep said sidewalks and curbs
free from snow, ice, dirt and rubbish. Tenant shall pay to Owner the cost of
removal of any of Tenant's refuse and rubbish from the building. Bills for the
same shall be rendered by Owner to Tenant at such times as Owner may elect and
shall be due and payable when rendered, and the amount of such bills shall be
deemed to be, and be paid as, additional rent. Tenant shall, however, have the
option of independently contracting for the removal of such rubbish and refuse
in the event that Tenant does not wish to have same done by employees of Owner.
Under such circumstances, however, the removal of such refuse and rubbish by
others shall be subject to such rules and regulations as, in the judgment of
Owner, are necessary for the proper operation of the building.
Security:
31. Tenant has deposited with Owner the sum of $96,666.66 as security for
the faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect to any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which Tenant is in default or for any sum which Owner may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the re-letting of the premises, whether such damages or
deficiency accrued before or after summary
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proceedings or other re-entry by Owner. In the event that Tenant shall fully and
faithfully comply with all of the terms, provisions, covenants and conditions of
this lease, the security shall be returned to Tenant after the date fixed as the
end of the Lease and after delivery of entire possession of the demised premises
to Owner. In the event of a sale of the land and building or leasing of the
building, of which the demised premises form a part, Owner shall have the right
to transfer the security to the vendee or lessee and Owner shall thereupon be
released by Tenant from all liability for the return of such security, and
Tenant agrees to look to the new Owner solely for the return of said security;
and it is agreed that the provisions hereof shall apply to every transfer or
assignment made of the security to a new Owner. Tenant further covenants that it
will not assign or encumber or attempt to assign or encumber the monies
deposited herein as security and that neither Owner nor its successors or
assigns shall be bound by any such assignment, encumbrance, attempted assignment
or attempted encumbrance.
Captions:
32. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provision thereof.
Definitions:
33. The term "Owner" as used in this lease means only the Owner, or the
mortgagee in possession, for the time being of the land and building (or the
Owner of a lease of the building or of the land and building) of which the
demised premises form a part, so that in the event of any sale or sales of said
land and building or of said lease, or in the event of a lease of said building,
or of the land and building, the said Owner shall be and hereby is entirely
freed and relieved of all covenants and obligations of Owner hereunder, and it
shall be deemed and construed without further agreement between the parties of
their successors in interest, or between the parties and the purchaser, at any
such sale, or the said lessee of the building, or of the land and building, that
the purchaser or the lessee of the building has assumed and agreed to carry out
any and all covenants and obligations of Owner hereunder. The words "re-enter"
and "re-entry" as used in this lease are not restricted to their technical legal
meaning. The term "business days" as used in this lease shall exclude Saturdays,
Sundays and all days designated as holidays by the applicable building service
union employees service contract or by the applicable Operating Engineers
contract with respect to HVAC service. Wherever it is expressly provided in this
lease that consent shall not be unreasonably withheld, such consent shall not be
unreasonably delayed.
Adjacent Excavation-Shoring
34. If an excavation shall be made upon land adjacent to the demised
premises, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter upon the
demised premises for the purpose of doing such work as said person shall deem
necessary to preserve the wall or the building of which demised premises form a
part from injury or damage and to support the same by proper foundations without
any claim for damages or indemnity against Owner, or diminution or abatement of
rent.
Rules and Regulations:
35. Tenant and Tenant's servants, employees, agents, visitors, and licensees
shall observe faithfully, and comply strictly with the Rules and Regulations and
such other and further reasonable Rules and Regulations as Owner or Owner's
agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulation hereafter made
or adopted by Owner or Owner's agents, the parties hereto agree to submit to
question of the reasonableness of such Rule or Regulation
13
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for decision to the New York office of the American Arbitration Association,
whose determination shall be final and conclusive upon the parties hereto. The
right to dispute the reasonableness of any additional Rule or Regulation upon
Tenant's part shall be deemed waived unless the same shall be asserted by
service of a notice, in writing upon Owner within fifteen (15) days after the
giving of notice thereof. Nothing in this lease contained shall be construed to
impose upon Owner any duty or obligation to enforce the Rules and Regulations or
terms, covenants or conditions in any other lease, as against any other tenant
and Owner shall not be liable to Tenant for violation of the same by any other
tenant, its servants, employees, agents, visitors or licensees.
Glass:
36. Owner shall replace, at the expense of Tenant, any and all plate and
other glass damaged or broken from any cause whatsoever in and about the demised
premises. Owner may insure, and keep insured, at Tenant's expense, all plate and
other glass in the demised premises for and in the name of Owner. Bills for the
premiums therefor shall be rendered by Owner to Tenant at such times as Owner
may elect, and shall be due from, and payable by, Tenant who rendered, and the
amount thereof shall be deemed to be, and be paid as, additional rent.
Pornographic Uses Prohibited:
37. Tenant agrees that the value of the demised premises and the reputation
of the Owner will be seriously injured if the premises are used for any obscene
or pornographic purposes or any sort of commercial sex establishment. Tenant
agrees that Tenant will not bring or permit any obscene or pornographic material
on the premises, and shall not permit or conduct any obscene, nude, or semi-nude
live performances on the premises, nor permit use of the premises for nude
modeling, rap sessions, or as a so called rubber goods shops, or as a sex club
of any sort, or as a "massage parlor." Tenant agrees further that Tenant will
not permit any of these uses by any sublessee or assignee of the premises. This
Article shall directly bind any successors in interest to the Tenant. Tenant
agrees that if at any time Tenant violates any of the provisions of this
Article, such violation shall be deemed a breach of a substantial obligation of
the terms of this lease and objectionable conduct. Pornographic material is
defined for purposes of this Article as any written or pictorial manner with
prurient appeal or any objects of instrument that are primarily concerned with
lewd or prurient sexual activity. Obscene material is defined here as it is in
Penal law §235.00.
Estoppel Certificate:
38. Tenant, at any time, and from time to time, upon at least 10 days prior
notice by Owner, shall execute, acknowledge and deliver to Owner, and/or to any
other person, firm or corporation specified by Owner, a statement certifying
that this lease is unmodified and in full force and effect (or, if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), stating the dates which the rent and additional rent
have been paid, and stating whether or not there exists any defaults by Owner
under this lease, and, if so, specifying each such default.
Successor and Assigns:
39. The covenants, conditions and agreements contained in this lease shall
bind and inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns. Tenant shall look only to Owner's estate
and interest in the land and building for the satisfaction of Tenant's remedies
for the collection of a judgment (or other judicial process) against Owner in
the event of any default by Owner hereunder, and no other property or assets of
such Owner (or any partner, member, officer or director thereof, disclosed or
undisclosed), shall be subject to levy, execution or other enforcement procedure
14
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for the satisfaction of Tenant's remedies under or with respect to this lease,
the relationship of Owner and Tenant hereunder, or Tenant's use and occupancy of
the demised premises.
SEE RIDER ANNEXED HERETO AND MADE A PART HEREOF[AT FINAL]
In Witness Whereof, Owner and Tenant have respectively signed and sealed
this lease as of the day and year first above written.
Witness for Owner: 29 WEST THIRTY LLC
--------------------------------------------------------------------------------
BY:
/s/ [ILLEGIBLE]
--------------------------------------------------------------------------------
[ILLEGIBLE]
Witness for Tenant:
NARA BANK, N.A.
--------------------------------------------------------------------------------
[ILLEGIBLE]
BY:
/s/ NANI THANAWALA
--------------------------------------------------------------------------------
Nani Thanawala
Vice President & Controller
ACKNOWLEDGEMENTS
CORPORATE OWNER
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally
came to me known, who being by me duly sworn, did depose and
say that he resides in that he is the
of the corporation described in and which executed the
foregoing instrument, as OWNER; that he knows the seal of said corporation; the
seal affixed to said instrument is such corporate seal; that it was so affixed
by order of the Board of Directors of said corporation, and that he signed his
name thereto by like order.
--------------------------------------------------------------------------------
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally
came to me known, who being by me duly sworn, did depose and
say that he resides in that he is the
of the corporation described in and which executed the
foregoing instrument, as TENANT; that he knows the seal of said corporation; the
seal affixed to said instrument is such corporate seal; that it was so affixed
by order of the Board of Directors of said corporation, and that he signed his
name thereto by like order.
--------------------------------------------------------------------------------
INDIVIDUAL OWNER
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally
came to be known and known to me to be the individual
described in and who, as
15
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OWNER, executed the foregoing instrument and acknowledged to me
that he executed the same.
--------------------------------------------------------------------------------
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of
On this day of , 19 , before me personally
came to be known and known to me to be the individual
described in and who, as TENANT, executed the foregoing
instrument and acknowledged to me that he executed the same.
--------------------------------------------------------------------------------
GUARANTY
The undersigned Guarantor guarantees to Owner, Owner's successors and
assigns, the full performance and observance of all the agreements to be
performed and observed by Tenant in the attached Lease, including the "Rules and
Regulations" as therein provided, without requiring any notice to Guarantor of
nonpayment, or nonperformance, or proof, or notice of demand, to hold the
undersigned responsible under this guaranty, all of which the undersigned hereby
expressly waives and expressly agrees that the legality of this agreement and
the agreements of the Guarantor under this agreement shall not be ended, or
changed by reason of the claims to Owner against Tenant of any of the rights or
remedies given to the Owner as agreed in the attached Lease. The Guarantor
further agrees that this guaranty shall remain and continue in full force and
effect as to any renewal, change or extension of the Lease. As a further
inducement to Owner to make the Lease Owner and Guarantor agree that in any
action or proceeding brought by either Owner or the Guarantor against the other
on any matters concerning the Lease or of this guaranty that Owner and the
undersigned shall and do waive trial by jury.
Dated:
--------------------------------------------------------------------------------
19
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Guarantor
--------------------------------------------------------------------------------
Witness
--------------------------------------------------------------------------------
Guarantor's Residence
--------------------------------------------------------------------------------
Business Address
--------------------------------------------------------------------------------
Firm Name
State of New York ) ss.:
County of
)
16
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On this day of , 19 , before me personally
came to me known and known to me to be the individual
described in, and who executed the foregoing Guaranty and acknowledged to me
that he executed the same.
--------------------------------------------------------------------------------
Notary
IMPORTANT—PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE
IN ACCORDANCE WITH ARTICLE 35.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress to and egress from
the demised premises and for delivery of merchandise and equipment in a prompt
and efficient manner using elevators and passageways designated for such
delivery by Owner. There shall not be used in any space, or in the public hall
of the building, either by any tenant or by jobbers, or others in the delivery
or receipt of merchandise, any hand trucks except those equipped with rubber
tires and safeguards.
2. If the premises are situated on the ground floor of the building, Tenant
thereof shall further, at Tenant's expense, keep the sidewalks and curb in front
of said premises clean and free from ice, snow, etc.
3. The water and wash closets and plumbing fixtures shall not be used for
any purposes other than those for which they were designed or constructed.
4. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the demised premises, or permit or suffer the
demised premises to be occupied or used in a manner offensive or objectionable
to Owner or other occupants of the building by reason of noise, odors, and/or
vibrations or interfere in any way with other Tenants or those having business
therein.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Signs on interior
doors and directory tablet shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant, and shall be of a size, color and
style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part
of the demised premises or the building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or
other similar floor covering, so that the same shall come in direct contact with
the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to floor, by a paste or other material, soluble in water, the
use of cement or other similar adhesive material being expressly prohibited.
7. Freight, furniture, business equipment, merchandise and bulky matter of
any description shall be delivered to and removed from the premises only on the
freight elevators and through the service
17
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entrances and corridors, and only during hours and in a manner approved by
Owner. Owner reserves the right to inspect all freight to be brought into the
building and to exclude from the building all freight which violates any of
these Rules and Regulations or the lease of which these Rules and Regulations
are a part.
8. Owner reserves the right to exclude from the building between the hours
of 6 P.M. and 8 A.M. and at all hours on Sundays, and holidays all persons who
do not present a pass to the building signed by Owner. Owner will furnish passes
to persons for whom any Tenant requests same in writing. Each Tenant shall be
responsible for all persons for whom he requests such pass and shall be liable
to Owner for all acts of such person.
9. Owner shall have the right to prohibit any advertising by any Tenant
which, in Owner's opinion, tends to impair the reputation of Owner or its
desirability as a building for stores or offices, and upon written notice from
Owner, Tenant shall refrain from or discontinue such advertising.
10. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible, or explosive, or hazardous
fluid, material, chemical or substance, or cause or permit any odors of cooking
or other processes, or any unusual or other objectionable odors to permeate in
or emanate from the demised premises.
11. Tenant shall not place a load on any floor of the demised premises
exceeding the floor load per square foot area which it was designed to carry and
which is allowed by law. Owner reserves the right to prescribe the weight and
position of all safes, business machines and mechanical equipment. Such
installations shall be placed and maintained by Tenant at Tenant's expense in
setting sufficient in Owner's judgement to absorb and prevent vibration, noise
and annoyance.
12. Refuse and Trash—Tenant covenants and agrees, at its sole cost and
expense, to comply with all present and future laws, orders and regulations of
all state, federal, municipal and local governments, departments, commissions
and boards regarding the collection, sorting, separation and recycling of waste
products, garbage, refuse and trash. Tenant shall pay all costs, expenses,
fines, penalties or damages that may be imposed on Owner or Tenant by reason of
Tenant's failure to comply with the provisions of this Building Rule 12, and, at
Tenant's sole cost and expense, shall indemnify, defend and hold Owner harmless
(including reasonable legal fees and expenses) from and against any actions,
claims and suits arising from such non-compliance, utilizing counsel reasonably
satisfactory to Owner.
Address
Premises
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TO
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STANDARD FORM OF
STORE
LEASE
The Real Estate Board of New York, Inc.
© Copyright 1994. All rights Reserved.
Reproduction in whole or in part prohibited.
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18
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Dated 19
Rent Per Year
Rent Per Month
Term
From
To
Drawn by
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Checked by
--------------------------------------------------------------------------------
Entered by
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Approved by
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19
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RIDER TO LEASE BY AND BETWEEN 29 WEST THIRTY, LLC
AS LANDLORD, AND NARA BANK, N.A.
AS TENANT
DATED: OCTOBER 12 2000
--------------------------------------------------------------------------------
The provisions contained in this rider are intended to supplement the provisions
contained in this lease, and not to supersede or vitiate any of the provisions
contained in this lease. All of the printed provisions of this lease continue in
full force and effect, except to the extent that they may be inconsistent with
the provisions contained in this rider, in which case, the rider provisions
shall prevail.
40. The tenant agrees that the rent hereunder provided to be paid shall
become due and payable to the landlord without any demand therefor, and without
any offset or defense of any kind whatsoever. If the tenant shall allege or
claim any damages resulting from any breach, or alleged breach by the landlord,
under the terms of the lease, or any claim of any kind whatsoever, arising in
favor of the tenant against the landlord, the tenant agrees that such claim
shall not be asserted, and may not be asserted against the landlord, either as a
counter-claim, set-off or defense in any action or proceeding brought by the
landlord against the tenant for the payment of rent, or recovery of possession
of the demised premises. Such claim by the tenant against the landlord shall
only be enforced, prosecuted or maintained by a separate action or proceeding
instituted by the tenant against the landlord and shall not be consolidated with
any action or proceeding brought by the landlord to recover rent or to recover
possession of the demised premises.
41. In addition to any of the remedies available to the landlord, as
provided in Paragraph "18" herein, the landlord shall have the privilege of
electing to terminate this lease, pursuant to the provisions of this lease by
summary proceedings as a result of the default on the part of the tenant; the
landlord shall have the option, which right shall be exercised in writing, to
retain as liquidated damages any rent, security, deposit and monies received by
the landlord from the tenant. In such event, and upon the exercise of such
option by the landlord, the tenant shall be released and relieved of any
obligations to pay damages, or the difference in rent between that stipulated
hereunder and thereafter received by the landlord in reletting.
42. The landlord in no way warrants the fitness of the demised premises as
now constituted, or that the Certificate of Occupancy permits tenant's use, and
makes no representations that the premises are presently in good repair or
otherwise fit or zoned for the use and occupancy intended. The tenant takes the
premises "as is" and at its own risk and will not hold the landlord liable for
any defects whatsoever in the demised premises during the term of the within
lease, but landlord shall remain responsible for repairs to the outside walls,
roof of building and foundation, public areas of the property and building
thereon. Tenant further represents that it is presently in occupancy of the
demised premises and is familiar with its condition and that it is not relying
upon any representations of the landlord or its agents with reference to the
fitness of the premises for use as a Bank and offices and further represents
that tenant will make its own independent investigation as to the fitness of the
premises.
43. The tenant represents, covenants and agrees with landlord that no real
estate broker or finder introduced the tenant to the landlord, or to the demised
premises, and insofar as the conduct of the tenant is concerned, no broker is
entitled to any commissions in connection with this lease and tenant agrees to
indemnify and hold landlord harmless from any brokerage claims other than
brokerage made to Landlord's recognized broker.
44. The security deposited under this lease, if any, shall not be mortgaged,
assigned or encumbered by the tenant without the written consent of the
landlord, except in connection with permitted assignments of the lease.
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45. If the demised premises be, or become infested with vermin, flies or
other insects, the tenant shall, at the tenant's expense cause the same to be
exterminated, from time to time, to the reasonable satisfaction of the landlord.
Tenant agrees to subscribe to an exterminating service that will spray and
otherwise service the tenant's premises on a regular basis, so as to prevent
vermin, roach or insect infestation. Tenant shall be required to install,
service and maintain appropriate fire protection and alarm and surveillance
equipment for the premises if required.
46. Landlord shall be under no obligation to furnish or pay for electricity,
gas, power, telephone, light, garbage removal or provide any other service or
services whatsoever, it being the intention of the parties that landlord is not
to provide, furnish or pay any service or services of any nature whatsoever to
Tenant or to the demised premises during the term of this lease. Tenant shall
provide for and maintain within the demised premises its own janitor service,
rubbish removal, light, power, telephone, gas, electricity, extermination, etc.,
and pay for same. Any provision in this agreement inconsistent with the
foregoing shall be deemed modified and amended accordingly. Notwithstanding the
above, Landlord shall provide heat at no additional cost and shall repair and
maintain building wide electrical and plumbing systems but shall not be required
to repair lighting or plumbing fixtures that service any tenant's premises or
damages inflicted by reason of Tenant's negligence or negligence of its
employees or invitees.
47. Notwithstanding anything herein contained to the contrary, tenant at its
own cost and expense, shall carry general liability insurance in the minimum
limits of $2,000,000/ $4,000,000 and have landlord listed as an additional
assured and will supply the landlord with a Certificate of such insurance within
thirty (30) days from the date of possession of the premises. In the event that
the tenant fails to provide such coverage, landlord may do so, pay the premium
therefor, and tenant agrees to pay the said premium to the landlord within
fifteen (15) days upon demand, and such premium shall be considered as
additional rent.
With reference to paragraph 36 of the within lease, the tenant agrees to
procure plate glass insurance covering the glass in and about the demised
premises, and to pay premiums therefor, and to deliver a copy of such insurance
to the landlord, or in the alternative, tenant may be a self-insurer; however,
if plate glass remains broken, cracked or defective for more than 48 hours then
upon notice from landlord tenant shall no longer be permitted to be a
self-insurer and Tenant shall promptly repair/replace said broken or cracked
plate glass and failing to do so Landlord may do so at Tenant's cost and
expense, with same being deemed additional rent and tenant shall obtain and
maintain plate glass insurance. Upon the tenant's failure to obtain such
insurance the landlord, upon five (5) days notice to tenant to cure lack of
insurance, may procure the same and tenant agrees to pay to landlord the
premiums for such insurance upon presentation of a bill therefor, as additional
rental under the lease.
48. Tenant agrees to comply with any and all laws, statutes, ordinances and
regulations, Federal, State, County or Municipal, now or hereafter in force,
applicable to the tenant's use and occupancy of the leased premises.
49. It is understood and agreed that this lease is offered to the tenant for
signature, subject to the landlord's acceptance and approval, and this lease is
not binding until the landlord has affixed its signature thereto and all
required considerations are received good and collected by landlord.
50. Tenant covenants and agrees that during the term of this lease, tenant
shall maintain at tenant's own cost and expense, adequate fire insurance with
extended coverage, covering the trade fixtures, merchandise and personal
property owned by the tenant, or owned by others but in the possession of the
tenant in the demised premises. Tenant, on his own behalf, and on behalf of any
bailor of personal property in the possession of the tenant, as bailee, in the
demised premises, hereby releases the landlord to the extent of the tenant's and
of its bailor's insurance coverage, from the liability for loss or damage caused
by fire or any of the extended coverage casualties listed in the tenant's and/or
its bailor's insurance policies against fire and/or extended coverages. In
further
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consideration of the lease herein, fire and casualty insurance policies
providing coverage of the premises for the benefit of the tenant shall contain
waiver of subrogation clauses whereby the insurance companies shall not acquire
by subrogation any rights on behalf of their assured as against the landlord,
and in consideration of the lease herein the tenant hereby releases the landlord
from any liability with regard to damage or destruction of the premises or its
contents, where said loss is covered by insurance.
51. Landlord shall at his own cost and expense keep the sidewalk in front of
the demised premises clean, free of rubbish and snow, and in good order and
repair.
52. The base annual rental rate for the premises before the payment of any
additional rentals as provided for in this lease, to be paid on the first day of
each calendar month, shall be as listed as below and said base rent shall be
increased by escalations of 5% per year as listed below. There shall be
additional rentals required to be paid by the tenant as a labor and maintenance
surcharge of 5% as well as the tenant's real estate tax contribution of 20% in
excess of the 2000/2001 base year real estate taxes. No representation is made
as to the amount of actual square footage leased to tenant.
Period
--------------------------------------------------------------------------------
Per Month
--------------------------------------------------------------------------------
Per Year
--------------------------------------------------------------------------------
Yearly Surcharge for
Labor & Maintenance
--------------------------------------------------------------------------------
Lease Year 1 $ 48,333.33 $ 580,000.00 $ 29,000.00
Lease Year 2
$
50,750.00
$
609,000.00
$
30,450.00
Lease Year 3
$
53,287.50
$
639,450.00
$
31,972.50
Lease Year 4
$
55,951.88
$
671,422.50
$
33,571.13
Lease Year 5
$
58,749.47
$
704,993.63
$
35,249.68
Lease Year 6
$
61,686.94
$
740,243.31
$
37,012.17
Lease Year 7
$
64,771.29
$
777,255.47
$
38,862.77
Lease Year 8
$
68,009.85
$
816,118.25
$
40,805.91
Lease Year 9
$
71,410.35
$
856,924.16
$
42,846.21
Lease Year 10
$
74,980.86
$
899,770.37
$
44,988.52
Lease Year 11
$
78,729.91
$
944,758.88
$
47,237.94
Lease Year 12
$
82,666.40
$
991,996.83
$
49,599.84
Lease Year 13
$
86,799.72
$
1,041,596.67
$
52,079.83
Lease Year 14
$
91,139.71
$
1,093,676.50
$
54,683.83
Lease Year 15
$
95,696.69
$
1,148,360.33
$
57,418.02
53. At the time of the execution of this lease, Tenant shall deposit with
the landlord the two months security for a total of $96,666.66 Landlord shall
deposit said security in an interest bearing account with interest less 1%
administrative fee payable to tenant annually.
54. In addition to the covenants on the part of the landlord to be
performed, the landlord shall at all times keep its premises, and any adjoining
yards or alleys, if any, free from all excessive rubbish, refuse, etc., and
tenant shall conduct its business in the demised building in a neat and orderly
manner.
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55. As a supplement to the provisions of this lease contained in
paragraph 11 hereof, and provided tenant is not in default of any of the
provisions of this lease, the tenant may assign this lease or sublet the within
premises, upon the tenant's strict compliance with the following conditions:
(a) That said assignee or sublessee shall, in writing, assume and agree to
keep, observe and perform all the agreements, conditions, covenants and terms of
this lease on the part of the tenant to be kept, observed and performed, and
shall be and become, jointly and severally liable with the tenant for the
non-performance thereof;
(b) That a duplicate original of such assignment or sublease and assumption,
duly executed and acknowledged by the tenant and by such assignee, or sublessee,
and in a form satisfactory to the landlord, shall be delivered to the landlord
as soon as such assignment and assumption shall have been executed and
delivered;
(c) That the sublessee or assignee uses the premises solely for the purposes
set forth in this lease.
(d) This right to assign or sublease is granted to any holder of this lease
only upon landlord's prior written consent, which said consent landlord shall
not unreasonably withhold. Landlord shall be entitled to make inquiry into
proposed assignee's or subtenant's experience and financial ability.
(e) That the assignee or subtenant deposits with landlord an additional
security deposit equal to one month's current rent.
56. That in the event that an excavation shall be made for building or other
purposes, upon land adjacent to the demised premises, or shall be contemplated
to be made, the tenant shall afford to the person or persons, causing, or to
cause, such excavation, a license to enter upon the demised premises for the
doing of such work as said person or persons shall deem to be necessary to
protect, or preserve the wall or walls, structure or structures upon the demised
premises, from injury and to support the same by proper foundations, pinning
and/or underpinning, However, Landlord shall not unreasonably interfere with the
Tenant's business or security.
57. The tenant shall permit the landlord to erect, use and maintain pipes
and conduits in and through the demised premises, and to make such decorations,
repairs, alteration and improvements or additions as landlord may deem necessary
or desirable, and landlord shall be allowed to take material into and upon said
premises that may be required therefor without the same constituting an eviction
of tenant in whole or in part and the rent reserved shall in no way be abated
while said decoration, repairs, alterations, improvements or additions are being
made. The landlord shall take all precautions and care whenever making such
repairs, alterations, and improvements, so that the business or security of the
tenant shall not be unreasonably disturbed or interfered with.
58. As a supplement to paragraph 6 of the printed portion of this lease and
paragraph 47 of the rider tenant agrees to pay, as additional rent, any
increment in insurance rates increases of said rates imposed upon the premises
as a whole as a result of tenant's use and occupancy thereof.
59. Notwithstanding anything in this lease contained to the contrary and as
a supplement to paragraph 42 of the rider of this lease, tenant shall, at its
own cost and expense, maintain and repair its own premises including but not
limited to its plumbing, air conditioning, exhaust and ventilating systems, if
any, and any and all electrical systems, which systems are presently in the
premises or added to the premises by the tenant as a supplement to the existing
systems. In the event the plumbing or electrical service or exhaust or
ventilating systems for the premises is insufficient to service tenant's needs,
tenant shall, at tenant's cost and expense, install or cause to be installed
increased plumbing and/or exhaust, ventilating or electric service capacity for
the premises. Notwithstanding the above, Landlord shall repair and maintain
building wide plumbing and electrical systems unless said systems are damaged by
tenant's negligence.
4
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60. If at anytime during the lease term the tenant intends to remodel and
alter the premises then:
Said alterations and improvements made by the tenant shall comply with the
zoning and/or Certificate of Occupancy requirements for the premises as a whole.
Tenant agrees to submit plans for the renovation or alteration of the store
premises to be consented to by the landlord, which said consent landlord agrees
not to unreasonably withhold.
The tenant covenants and agrees that, if necessary, it shall employ a
licensed architect, at its own cost and expense to prepare plans for the demised
premises and all other proposed improvements to be installed herein. The said
architect shall prepare stamped certified plans and submit said certified plans
to the Building Department of the City of New York for approval and filing and
tenant shall pay all fees and charges in connection therewith. The Landlord will
cooperate and execute any such documents as may reasonably be required for said
purposes.
The tenant further covenants and agrees that it shall obtain a permit for
all renovations and improvements to the premises from the Landmarks Commission,
if same is applicable with regard to the facade and from the Building Department
of the City of New York or any other governmental department or agency having
jurisdiction thereover, all at tenant's sole cost and expense.
61. It is understood and agreed that the Tenant is not to conduct its
business or offer for sale any of its services except in the interior of the
demised premises.
62. The tenant covenants and agrees to pay, annually, as additional rent
hereunder, in installments as billed, an amount equal to 20% of the aggregate
real estate taxes and assessments required to be paid by the landlord for the
entire premises of which the demised premises forms a part in excess of the
aggregate real estate taxes and assessments paid by the landlord for the entire
premises for the fiscal year 2000/2001 which said year shall be deemed to be the
base year throughout this lease term. In the event that in any year subsequent
to the base year the real estate taxes for that year are reduced below the
amount of real estate taxes required to be paid for the base year, then the
tenant shall receive a credit towards its rental for that year of 20% of said
amount that is less than the base year's real estate taxes.
63. The tenant agrees to keep the demised premises in a clean and sanitary
condition and at all times to promptly comply with all the rules and regulations
of the Board of Health of the City of New York, or any other Governmental
Department having jurisdiction thereof. Tenant further agrees that it will not
permit the undue accumulation of refuse matter of any description in or about
the demised premises, and at its own cost and expense, tenant agrees to arrange
for the frequent removal of such refuse matter. The tenant hereby assumes the
obligation to remove all refuse and garbage from the premises, at its own cost
and expense and in such a manner that the garbage will not remain in the
premises for any length of time that will create a health hazard. It is
expressly understood and agreed that no garbage or refuse will be kept in any
part of the building premises not herein leased to the tenant and that all
garbage will remain in the tenant's demised premises until removed from the
building.
64. It is understood and agreed that the tenant is not to receive any window
cleaning service or any other cleaning services in the demised premises from the
landlord.
65. The tenant agrees to maintain in the demised premises, at its own cost
and expense, its own electric submeter and tenant agrees to pay landlord the
charges for electricity upon rendition of bills therefore by Landlord on
submeter reading.
66. Intentionally Omitted.
5
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67. In the event tenant fails to pay landlord the required rental for the
month on or before the 10th day of that month, then in such event landlord, at
its option, may assess a late charge of 2% for every dollar due and unpaid per
month.
68. Notwithstanding anything herein contained to the contrary, at the
termination of the lease herein the ownership of the fixtures and equipment
except for trade fixtures and equipment shall belong to the Landlord.
Notwithstanding anything herein contained to the contrary, all plumbing,
electric wiring, air conditioning ducts and wall paneling shall be deemed to be
permanently installed in the premises and shall be deemed to belong to the
landlord at the termination of the lease.
69. Tenant may erect and maintain exterior signs against the building to the
extent permitted by law, and to the extent that same are in character and
keeping with the building of which the demised premises forms a part, all at
tenant's cost and expense and tenant agrees to maintain said signs in working
order and to pay any and all permit fees, if any, in connection therewith.
Notwithstanding anything herein contained to the contrary, tenant covenants
and agrees that all plans for any signs must be submitted to the landlord for
landlord's prior approval which approval landlord shall not unreasonably
withhold.
70. Intentionally omitted.
71. Intentionally Omitted.
72. Intentionally omitted.
73. All obligations of the tenant under this lease to pay a sum of money in
addition to the stated rent, shall be deemed to be an additional rent and the
landlord shall have the same rights and remedies for non-payment thereof as upon
a default in the payment of the base rent. The above includes the 5% surcharge
for labor and maintenance which tenant is obligated to pay.
6
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74. All checks tendered to the landlord as and for the rent of the demised
premises shall be deemed payments for the account of the tenant. If landlord
receives from tenant any payment (partial payment) less than the sum of the
fixed annual rent, additional rent and other charges then due and owing pursuant
to the terms of this lease, landlord in its sole discretion may allocate such
partial payment in whole or in part to any fixed annual rent, any additional
rent and/or other charges or to any combination thereof. Acceptance by the
landlord of rent from anyone other than the tenant shall not be deemed to
operate as an attornment to the landlord by the payer of such rent or as a
consent by the landlord to an assignment or subletting by the tenant of the
demised premises to such payer, or as a modification of the provisions of this
lease. Any partial payments marked paid in full or otherwise deposited by
landlord shall not be deemed paid in full or forgive tenant of any outstanding
or remaining balance owed. Only written amendments executed by landlord may
reduce monies owed by tenant.
75. The items now in the demised premises, if any, belonging to the landlord
may be used by tenant during the term of this lease, but are to remain in the
ownership of the landlord. Tenant covenants and agrees to keep in proper repair
and maintenance all of the items in the premises, if any, belonging to the
landlord.
In this connection tenant may use any existing air conditioning and
ventilation system in the premises, if any. Tenant agrees to accept said air
conditioning and ventilation system in their present "as is" condition and to
upgrade and repair same if necessary and to maintain said system or replace same
with a system at least equal to it, during the lease term.
76. The tenant hereby assumes liability for, and agrees to indemnify and
hold harmless the landlord from and against any and all suits, actions demands,
claims for damages and any and all liability, loss and expenses arising from
injury and/or damage (including but not limited to, the property of the
landlord) caused by the acts or omissions of the tenant, its agents, servants,
employees, subcontractors, licensees, invitees, or occurring by reason of or in
connection with the use or operation of the demised premises or any of the
appurtenances, facilities, or equipment used in connection therewith by anyone
including the public, the tenant, the tenant's agents, servants, employees,
subcontractors, licensees or invitees while in, on or about the demised
premises, or while acting in the course of or in the scope of their employment,
it being the intent of the provisions of this article that the tenant shall
assume all the risks of liability for and indemnify, defend, and hold harmless,
the landlord against all claims against landlord for liabilities arising out of
or in any manner, directly or indirectly, in connection with the conduct of
tenant's business or the use of the premises by the tenant. The tenant agrees
that the liability insurance of the tenant shall name landlord as co-insured.
77. Tenant's obligation to pay any additional rent under this lease for the
final lease year shall survive the expiration of the term of this lease.
78. Sprinklers or additional sprinklers, if necessary, because of the
Tenant's business operations or the manner tenant uses its premises are the sole
responsibility of the tenant. However if sprinklers or additional sprinklers are
required uniformly according to the code regardless of tenant's specific use of
the premises, said responsibility for installing same are landlords
responsibility.
79. Intentionally Omitted.
80. Intentionally Omitted.
81. There is no charge to tenant for water consumed by tenant for ordinary
lavatory purposes inasmuch as same is included in the 5% tenant surcharge
payment.
82. Intentionally Omitted.
84. Intentionally Omitted.
7
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85. Neither this lease nor any part hereof nor the interest of tenant
hereunder or in any lease or the rentals thereunder, shall, by operation of law
or otherwise, be assigned, sublet, mortgaged, pledged, encumbered or otherwise
transferred by tenant's legal representatives or successors in interest and
neither the leased premises, nor any part thereof, nor any property therein
shall be encumbered in any manner by reason of any act or omission on the part
of tenant or anyone claiming under or through tenant except as provided in
paragraph 55. Any assignment, mortgage, pledge, encumbrance or transfer in
contravention of this article shall be void. Notwithstanding the above, tenant
may sell the bank branch operating at the demised premises and in connection
therewith assign this lease to the purchaser provided the use of the premises is
for a banking purpose and the provisions of Paragraph 55 are followed.
If this lease be assigned, whether or not in violation of the terms of this
lease, landlord may collect rent from the assignee. If the leased premises or
any part thereof be sublet or be used or occupied by anybody other than tenant,
whether or not in violation of this lease, landlord may, after default by tenant
and expiration of tenant's time to cure such default, if any, collect rent from
the under tenant or occupant. In either event, landlord may apply the amount
collected to the fixed rent, additional rent or any other charge or sum due to
landlord pursuant to this lease. Neither any assignment of this lease nor any
subletting, occupancy or use of the leased premises or any part thereof by any
person other than tenant, nor any collection of rent by landlord from any person
other than tenant, nor any application of any such rent as provided in this
article, nor any direct dealing by landlord with any under tenant, occupant or
assignee, shall under any circumstances be deemed a waiver of any of the
provisions of this article or relieve, impair, release or discharge tenant of
its obligations fully to perform the terms of this lease on tenant's part to be
performed and tenant shall remain fully and primarily liable therefor.
A. To the extent permitted by law, if this lease is assigned to any person
or entity pursuant to the provisions of 11 U.S.C. Section 101 et seq., or any
statute now or hereafter enacted of similar nature and purpose (collectively,
the "Bankruptcy Code"), any and all monies or other consideration payable or
otherwise to be delivered in connection with such assignment shall be paid or
delivered to landlord, shall be and remain the exclusive property of landlord
and shall not constitute property of tenant or the estate of tenant within the
meaning of the Bankruptcy Code. Any and all monies or other considerations
constituting landlord's property under the preceding sentence not paid or
delivered to landlord shall be promptly paid to trust for the benefit of
landlord and shall be promptly paid to or turned over to landlord. For purposes
of this section, any reference to tenant shall be deemed to include tenant's
estate within the meaning of the Bankruptcy Code.
B. To the extent permitted by applicable law, any person or entity to which
this lease is assigned pursuant to the provisions of the Bankruptcy Code shall
be deemed without further act or deed to have assumed all of the obligations
arising under this lease on and after the date of such assignment. Any such
assignee shall execute and deliver to landlord upon demand an instrument
confirming such assumption.
C. To the extent permitted by applicable law, if tenant proposes to assign
this lease pursuant to the provisions of the Bankruptcy Code to any person or
entity who shall have made a bona fide offer to accept an assignment of this
lease on terms acceptable to tenant, then notice of such proposed assignment
shall be given to landlord by tenant no later than twenty (20) days after
receipt by tenant of such bona fide offer, but in any event no later than ten
(10) days prior to the date that tenant shall make application to a court of
competent jurisdiction for authority and approval to enter into such assignment
and assumption. Such notice shall set forth
(i) the name and address of such person
(ii) all of the terms and conditions of such offer, and
8
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(iii) adequate assurance of future performance by such person under this
lease, including, without limitation, the assurance referred to in
Section 365(b)(3) of the Bankruptcy Code.
Landlord shall have the prior right and option, to be exercised by notice to
tenant given at any time prior to the effective date of such proposed
assignment, to accept an assignment of this lease upon the same terms and
conditions and for the same consideration, if any, as the bona fide offer made
by such person, less any brokerage commissions which would otherwise be payable
by tenant out of the consideration to be paid by such person in connection with
the assignment of this lease.
86. Each party agrees to use its best efforts to include in each of its
respective insurance policies a waiver of the insurer's right of subrogation
against the other party, or if such waiver should be unobtainable or
unenforceable (a) an express agreement that such policy shall not be invalidated
if the insured waives or has waived before the casualty the right of recovery
against any party responsible for a casualty covered by the policy, or (b) any
other form of permission for the release of the other party. If such waiver,
agreement or permission shall not be, or shall cease to be obtainable without
additional charge or at all, from either party's then current insurance company,
then the insured party shall so notify the other party promptly after learning
thereof. In such case, if the other party shall agree in writing to pay the
insurer's additional charge therefor, such waiver, agreement or permission shall
(if obtainable) be included in the policy. As long as both party's casualty
insurance policies include the waiver of subrogation or agreement or permission
to release liability referred to above, each party, to the extent that such
insurance is in force and collectible, hereby waives (a) any obligation on the
part of the building necessitated or occasioned by fire or other insured
casualty, and (b) any right of recovery against the other party, any other
permitted occupant of the leased premises, any of their employees, agent or
contractors, for any loss occasioned by fire or other insured casualty.
87. The tenant agrees to deliver to landlord within ten days of any demand
therefor, a statement certifying that this lease is unmodified and in full force
and effect, certifying the dates to which the fixed rent and any additional rent
have been paid and status of any existing defaults.
88. As a supplement to and in clarification of paragraph 62, the term "Real
Estate Taxes" shall mean all the real estate taxes levied, assessed or imposed
by Local Governments against or upon the building (29 West 30th Street, New
York, New York) of which the demised premises forms a part and the land upon
which it is erected. If due to a future change in the method of taxation, any
franchise, income, profit or other tax, or other payment, shall be levied
against landlord in whole or in part in substitution for or in lieu of any tax
which would otherwise constitute a Real Estate Tax, such franchise, income,
profit, or other tax or payment shall be deemed to be a Real Estate Tax for the
purpose hereof. If landlord should incur expense in connection with landlord's
endeavor to reduce or prevent increase in assessed valuation, tenant shall be
obligated to pay as additional rent from any refund received or savings of
future increases the amount computed by multiplying 20% times such expense of
landlord and such amount shall be due and payable upon demand by landlord and
collectible in the same manner as annual rent.
89. In any action brought to enforce the obligations of landlord under this
lease, any judgment or decree shall be enforceable against landlord only to the
extent of landlord's interest in the building of which the demised premises
form a part, and no such judgment shall be the basis of execution on, or be a
lien on, assets of landlord or any assets of any party being a partner or
stockholder in landlord other than the interest in said building.
90. In the event Tenant shall make default in the payment of the rent
reserved herein, or any item of additional rent herein mentioned, or any part of
either, or in making any other payment herein required for a total of three
(3) months, whether or not consecutive, in any twelve (12) month period, and
landlord shall have served upon tenant ten (10) days after the due date of such
rent or additional rent petitions and notices of petition to dispossess tenant
by summary proceedings in each such instance, then, notwithstanding that such
defaults may have been cured prior to the entry of a judgment
9
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against tenant, any further default in the payment of any money due landlord
during this same twelve (12) month period shall be deemed to be deliberate and
landlord may serve a written three (3) days' notice of cancellation of this
lease upon tenant, and upon the expiration of said three (3) days, this lease
and the term thereunder shall end and expire as fully and completely as if the
expiration of such three (3) day period were the day herein definitely fixed for
the end and expiration of this lease and the term hereof, and tenant shall then
quit and surrender the demised premises to landlord, but tenant shall remain
liable as elsewhere provided in this lease.
91. Tenant shall not suffer or permit the demised premises or any part
thereof to be used in any manner, or anything to be done therein, or suffer or
permit anything to be brought into or kept therein, which would in any way
(i) violate any of the provisions of any grant, lease or mortgage to which this
lease is subordinate; (ii) violate any laws or requirements of public
authorities; (iii) make void or voidable any fire or liability insurance policy
then in force with respect to the building; (iv) make unobtainable from
reputable insurance companies authorized to do business in New York State any
fire insurance with extended coverage or liability elevator, boiler or other
insurance required to be furnished by landlord under the terms of any lease or
mortgage to which this lease is subordinate at standard rates; (v) cause or in
landlord's reasonable opinion by likely to cause physical damage to the building
or any part thereof, (vi) constitute a public or private nuisance; (vii) impair,
in the sole opinion of landlord, the appearance, character or reputation of the
building; (viii) discharge objectionable fumes, vapors or odors into the
building air-conditioning system or into the building flues or vents not
designed to receive them or otherwise in such manner as may unreasonably offend
other occupants of the building or the carriage house behind the main building;
(ix) impair or interfere with any of the building services or the proper
servicing of the building or the demised premises or impair or interfere with or
tend to impair or interfere with the use of any of the other areas of the
building by; (ix) impair of occasion discomfort, annoyance or inconvenience to,
landlord or any of the other tenants or occupants of the building, any such
impairment or interference to be in the sole judgment of landlord; or (x) if
tenant utilizes courtyard or outside a/c equipment, tenant's utilization of the
courtyard area air conditioning equipment and/or vents may not create noise
disturbing to the courtyard neighbors nor produce annoying or objectionable
fumes nor gases and all equipment must be installed and operated in accordance
with applicable law and code. (xi) use labor or contractors that by tenants use
thereof will cause a labor disturbance or strike, or picketing of the demised
premises.
92. Intentionally Omitted.
93. The tenant will, at tenant's own cost and expense, install and maintain
such equipment and devices that may be required by any governmental authority
having jurisdiction for the elimination of offensive noises, odors, or discharge
of air, gas or waste materials in the operation of the business conducted in the
demised premises. The tenant expressly covenants and agrees that it will conduct
its business in the demised premises in full compliance with all requirements of
law applicable thereto and in such a manner that it shall not make any, or
permit to be made on or from the demised premises, loud or objectional noises
which may disturb, interfere with, or annoy the landlord or other occupants of
the building or others.
94. The tenant and its successors and assigns hereby subject themselves to
the jurisdiction of any state or federal court located within such county.
95. Legal Requirements shall mean laws, statutes and ordinances (including
building codes and zoning regulations and ordinances) and the orders, rules,
regulations, directives and requirements of all federal, state, county, city and
borough departments, bureaus, boards, agencies, offices, commissions and other
subdivisions thereof, or of any other governmental, public or quasi-public
authority, whether now or hereafter in force, and all requirements, obligations
and conditions of all instruments of record which may be applicable to the
Building or the leased premises or any part thereof or the sidewalks, curbs or
areas adjacent thereto.
10
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96. If any of the provisions of the lease, or the application thereof to any
person or circumstance, shall, to any extent, be invalid or unenforceable, the
remainder of this lease, or the application of such provision or provisions to
persons or circumstances other than those as to whom or which it is held invalid
or unenforceable, shall not be affected thereby, and every provision of this
lease shall be valid and enforceable to the fullest extent permitted by law.
97. Tenant shall also carry water damage and sprinkler damage insurance,
sufficient to insure tenant against loss because of water and sprinkler damage
to inventories, fixtures, equipment and/or other property, in no event in an
amount less than 100% of the insurance value thereof. Tenant agrees that it
shall proceed solely against its own insurance company for any water or
sprinkler damage and tenant agrees not to sue, make claim or bring action
against landlord, or its successors and assigns, for any such damage.
98. Intentionally omitted.
99. Intentionally Omitted.
100. At the option of the landlord, and in the event that the 3rd floor of
the premises presently leased to IMS Business system Corp., becomes available
for occupancy by the tenant herein and said availability occurs prior to
December 31, 2001, the tenant agrees to lease said space at an annual rental of
$180,000.00 per year ($15,000.00 per month) with escalations of 5% per lease
year plus a 5% surcharge. The tenant's real estate tax contribution shall be
8.5% of the annual real estate taxes paid by the Landlord that is in excess of
the real estate taxes paid by the landlord for the fiscal year at the lease
inception. The lease term shall be for a period ending October 31, 2015 and the
lease shall contain substantially similar provisions as the ones contained
herein.
101. Landlord agrees that except for emergency situations, Landlord's access
to tenant's premises shall be limited to such times that it has given tenant
prior notice of its access request and has received the consent of the tenant
for said access, which said consent shall not be unreasonably withheld or
delayed. Access by the Landlord shall not unreasonably interfere with the
tenant's business or security.
29 WEST THIRTY, LLC
By:
/s/ [ILLEGIBLE]
--------------------------------------------------------------------------------
Member
NARA BANK N.A.
BY:
/s/ NANI THANAWALA
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Nani Thanawala
Vice President & Controller
11
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Exhibit 10.5
LEASE MODIFICATION AGREEMENT
W I T N E S S E T H:
IT IS AGREED AS FOLLOWS:
STANDARD FORM OF STORE LEASE The Real Estate Board of New York, Inc.
ACKNOWLEDGEMENTS
GUARANTY
IMPORTANT—PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE IN ACCORDANCE
WITH ARTICLE 35.
STANDARD FORM OF
STORE LEASE
The Real Estate Board of New York, Inc. © Copyright 1994. All rights Reserved.
Reproduction in whole or in part prohibited.
|
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EXHIBIT 10A
MENTOR GRAPHICS CORPORATION
1982 STOCK OPTION PLAN
Mentor Graphics recognizes that its continuing success depends upon the
initiative, ability and significant contributions of officers and key employees.
Mentor Graphics believes that by affording such employees the opportunity to
purchase shares in Mentor Graphics it will enhance its ability to attract and
retain such employees and will provide an incentive for them to exert their best
efforts on its behalf.
The Plan is as follows:
1.SHARES SUBJECT TO OPTION.
1.1 Options granted under this Plan shall be for authorized but unissued or
reacquired common stock of Mentor Graphics.
1.2 Options may be granted under paragraph 4 of the Plan and stock
appreciation rights may be granted under paragraph 8.2 of the Plan for a total
of not more than 21,670,000 shares of common stock, subject to adjustment under
paragraph 9. Shares subject to options and to stock appreciation rights granted
under paragraph 8.2 that are terminated or expire without being exercised, other
than options that are surrendered on exercise of a stock appreciation right
granted under paragraph 8.1, shall be added to the shares remaining for future
options and stock appreciation rights.
1.3 No employee may be granted options or stock appreciation rights under
the Plan for more than an aggregate of 500,000 shares of Common Stock in any
calendar year.
2.EFFECTIVE DATE; DURATION.
This Plan shall be effective January 1, 1982 and shall continue until all
shares available for issuance under the Plan have been issued, unless sooner
terminated by the Board of Directors of Mentor Graphics (Board of Directors).
Expiration or termination of the Plan shall not affect outstanding options,
bonus rights or stock appreciation rights.
3.ADMINISTRATION.
3.1 The Plan shall be administered by a compensation committee appointed by
the Board of Directors (Committee). The Committee may delegate any of its
administrative duties to one or more agents and may retain advisors to assist
it.
3.2 The Committee shall have general responsibility to interpret and
administer the Plan. Any decision by the Committee shall be final and bind all
parties. Notwithstanding the foregoing, the Committee's exclusive power to make
final and binding interpretations of the Plan shall immediately terminate upon
the occurrence of a Change in Control (as defined in paragraph 7.2). The
Committee shall keep adequate records of options, bonus rights and stock
appreciation rights granted under the Plan and shall be responsible for
communication with optionees.
3.3 No Committee member shall participate in the decision of any question
relating exclusively to an option, bonus right or stock appreciation right
granted to the member.
4GRANT OF OPTIONS.
4.1 Options granted under the Plan may be either incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the Code), or options other than incentive stock options (nonqualified
stock options). No incentive stock options may be granted under the Plan on or
after the tenth anniversary of the last action by the Board of Directors
approving an increase in the number of shares available for issuance under the
Plan, which action was subsequently approved within 12 months by the
shareholders.
4.2 Options may be granted to any officer or key employee of Mentor Graphics
and any subsidiary of Mentor Graphics and may be granted in substitution for
outstanding options of another
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corporation by reason of merger, consolidation, acquisition of property or
stock, or other reorganization between such other corporation and Mentor
Graphics or any subsidiary of Mentor Graphics. Additional options may be granted
to existing optionees and may be granted in exchange for outstanding options.
4.3 The Committee shall designate persons to receive grants, and as to each
option shall specify the number of shares, the option price and term, the time
or times at which the option may be exercised, whether the option is an
incentive stock option or a nonqualified stock option and all other terms and
conditions of the option.
4.4 No employee may be granted incentive stock options under the Plan such
that the aggregate fair market value, on the date of grant, of the shares with
regard to which incentive stock options are exercisable for the first time by
that employee during any calendar year under the Plan and under any other stock
option plan of Mentor Graphics or any parent or subsidiary of Mentor Graphics
exceeds $100,000. Fair market value shall be determined under subparagraph
5.1(c) as of the date of each grant.
5.OPTION TERMS.
5.1 The option price shall be fixed by the Committee as follows:
(a) Subject to (b) the option price for an incentive stock option shall be
not less than the fair market value of the shares on the date of grant. The
option price for a nonqualified stock option shall be not less than 50% of the
fair market value of the shares on the date of grant.
(b) If the optionee at the time of grant owns stock possessing more than
10 percent of the combined voting power of all classes of stock of Mentor
Graphics, the option price for an incentive stock option shall be not less than
110 percent of the fair market value of the shares on the date of grant. Stock
owned by the optionee shall include for this purpose, and for purposes of
paragraph 5.2, stock attributed to the optionee pursuant to applicable
provisions of the Code.
(c) "Fair market value" means an amount determined by, or in an manner
approved by, the Committee. The Committee may appoint and rely on one or more
qualified independent appraisers to value the stock or use such other evaluation
as it considers appropriate.
5.2 The Committee shall fix a time limit of not over 10 years after the date
of grant for exercise of an incentive stock option. The Committee shall fix a
time limit of not over 10 years plus seven days after the date of grant for
exercise of a nonqualified stock option. For a more than 10 percent shareholder
the maximum limit for exercise of an incentive stock option shall be 5 years.
The Committee may make the option exercisable in full immediately or in
graduated amounts over the option term.
5.3 The option shall be evidenced by a stock option agreement executed by
Mentor Graphics and the optionee in a form prescribed by the Committee.
5.4 The option may not be assigned or transferred except (a) on death, by
will or operation of law, or pursuant to a qualified domestic relations order as
defined under the Code or Title I of the Employee Retirement Income Security Act
or (b) with respect to nonqualified options, as otherwise approved by the
Committee. The option may be exercised only by the optionee or by a successor or
representative after death, except as otherwise approved by the Committee with
respect to nonqualified options.
5.5 Unless otherwise determined by the Committee, if an officer of Mentor
Graphics subject to Section 16 of the Securities Exchange Act of 1934 (1934 Act)
exercises an option within six months of the grant of the option, the shares
acquired upon exercise of the option may not be sold until six months after the
date of grant of the option.
6.BONUS RIGHTS.
6.1 The Committee may grant bonus rights in connection with nonqualified
stock options granted under the Plan. Bonus rights may be granted with the
related option or at a later time. A bonus right
--------------------------------------------------------------------------------
may not be assigned or transferred except on death, by will or operation of law,
or pursuant to a qualified domestic relations order as defined under the Code or
Title I of the Employee Retirement Income Security Act. Bonus rights will be
subject to such rules, terms, and conditions as the Committee may prescribe.
6.2 A bonus right will entitle an optionee to a cash bonus in connection
with the exercise in whole or in part of the related option. Subject to
paragraph 6.3, the amount of the bonus shall be determined by multiplying the
applicable bonus percentage by the amount by which the fair market value, on the
exercise date, of the shares received on exercise of the related option exceeds
the option price. The cash bonus will be payable within 30 days following the
date as of which its amount is determined. For the purpose of this paragraph,
fair market value shall be determined according to subparagraph 5.1(c). The
bonus percentage applicable to a bonus right shall be determined by the
Committee, but shall in no event exceed 100 percent.
6.3 The Committee may set a maximum dollar limit on the amount of cash to be
paid under any bonus right.
7.ACCELERATION UPON CHANGE IN CONTROL.
7.1 The Committee may grant acceleration rights to holders of options or
stock appreciation rights which will provide that the options or stock
appreciation rights will become exercisable in full for the remainder of their
terms upon the occurrence of a Change in Control. Acceleration rights may be
granted with an option or stock appreciation right or at a later time by
amendment of outstanding options or stock appreciation rights.
7.2 "Change in Control" means the occurrence of any of the following events,
unless prior to the occurrence of the event, the Committee determines that the
specific event shall not be considered a Change in Control:
(a) the shareholders of Mentor Graphics shall approve:
(i)any consolidation, merger or plan of share exchange involving Mentor Graphics
(Merger) in which Mentor Graphics is not the continuing or surviving corporation
or pursuant to which shares of common stock would be converted into cash,
securities or other property, other than a Merger involving Mentor Graphics in
which the holders of Mentor Graphics' common stock immediately prior to the
Merger have the same proportionate ownership of common stock of the surviving
corporation immediately after the Merger;
(ii)any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all, or substantially all, the assets of Mentor
Graphics; or
(iii)the adoption of any plan or proposal for the liquidation or dissolution of
Mentor Graphics;
(b) at any time during a period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (Incumbent
Directors) shall cease for any reason to constitute at least a majority thereof,
unless each new director elected during such two-year period was nominated or
elected by two-thirds of the Incumbent Directors then in office and voting (new
directors nominated or elected by two-thirds of the Incumbent Directors shall
also be deemed to be Incumbent Directors); or
(c) any person (as such term is used in Section 13(d) of the 1934 Act)
shall, as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, have become the beneficial owner
(within the meaning of Rule 13d-3 under the 1934 Act), directly or indirectly,
of securities of Mentor Graphics ordinarily having the right to vote in the
election of directors (Voting Securities) representing twenty percent (20%) or
more of the combined voting power of the then outstanding Voting Securities.
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8.STOCK APPRECIATION RIGHTS.
8.1 (a) The Committee, in its sole discretion, may grant both "general" and
"limited" stock appreciation rights with all or any part of an incentive stock
option or a nonqualified stock option granted under the Plan. Stock appreciation
rights may be granted with the related option or at any later time during the
term of the option.
(b) A general stock appreciation right granted with all or any part of an
option shall be exercisable only at the time or times established by the
Committee and only to the extent that the related option could be exercised. A
limited stock appreciation right shall be exercisable only during the 60
calendar days immediately following a Change in Control and only if the
immediate resale of shares acquired upon exercise of the related option would
subject the optionee to liability under Section 16(b) of the 1934 Act; provided,
however, that a limited stock appreciation right may not be exercised within six
months of its date of grant. Upon exercise of a stock appreciation right, the
option or portion thereof to which the stock appreciation right relates must be
surrendered. The shares subject to an option or portion thereof that is
surrendered upon exercise of a stock appreciation right shall not be available
for future option or stock appreciation right grants under the Plan.
(c) Each stock appreciation right granted with all or any part of an option
shall entitle the holder to receive from Mentor Graphics an amount equal to the
excess of the fair market value at the time of exercise of one share of Mentor
Graphics common stock over the option price per share under the related option,
multiplied by the number of shares covered by the related option or portion of
the related option.
(d) The terms of a limited stock appreciation right granted with a
nonqualified stock option may provide, if so determined by the Committee, that
the fair market value of the common stock for purposes of subparagraph 8.1(c)
shall be equal to the higher of:
(i)the highest reported sales price of the common stock during the 60-day period
ending on the date the limited stock appreciation right is exercised;
(ii)the highest per share price paid for shares of common stock purchased in any
tender or exchange offer during the 60 calendar days preceding the exercise of
the limited stock appreciation right;
(iii)the fixed or formula price to be received by holders of shares of common
stock in or as a result of any transaction described in subparagraph 7.2(a) if
such price is determinable on the date of exercise, provided that any securities
or other property that are part of the fixed or formula price shall be valued at
the highest valuation placed on the securities or property in any communication
to the shareholders of Mentor Graphics by any party to the transaction; and
(iv)the highest price per share shown on a Schedule 13D, or any amendment
thereto, filed by the holder or holders of the specified percentage of common
stock whose acquisition gives rise to the exercisability of the limited stock
appreciation right.
8.2 (a) The Committee may grant general stock appreciation rights without
related options under the Plan to any officer or key employee of Mentor Graphics
and any subsidiary of Mentor Graphics. Such stock appreciation rights may be
granted in substitution for outstanding stock appreciation rights of another
corporation by reason of merger, consolidation, acquisition of property or
stock, or other reorganization between such other corporation and Mentor
Graphics or any subsidiary of Mentor Graphics. Additional stock appreciation
rights may be granted to existing holders of stock appreciation rights and may
be granted in exchange for outstanding stock appreciation rights.
(b) The Committee shall designate persons to receive grants of stock
appreciation rights, and as to each stock appreciation right shall specify the
number of shares, the stock appreciation right price, the term, the time or
times at which the stock appreciation right may be exercised and all
--------------------------------------------------------------------------------
other terms and conditions of the stock appreciation right. The stock
appreciation right price shall not be less than 50% of the fair market value of
the shares on the date of grant.
(c) Each stock appreciation right granted without a related option shall
entitle the holder to receive from Mentor Graphics an amount equal to the excess
of the fair market value at the time of exercise of one share of Mentor Graphics
common stock over the stock appreciation right price, multiplied by the number
of shares covered by the stock appreciation right or portion thereof that is
exercised. The shares subject to a stock appreciation right or portion thereof
that is exercised shall not be available for future option or stock appreciation
right grants under the Plan.
8.3 (a) Payment upon exercise of a general stock appreciation right by
Mentor Graphics may be made in shares of Mentor Graphics common stock valued at
fair market value, or in cash, or partly in shares and partly in cash. The
Committee shall either specify the form of payment or retain the power to
disapprove any election by a holder to receive cash on exercise of a stock
appreciation right. For the purpose of this paragraph, fair market value shall
be determined according to subparagraph 5.1(c).
(b) Payment upon exercise of a limited stock appreciation right by Mentor
Graphics may be made only in cash.
8.4 No fractional shares shall be issued upon exercise of a stock
appreciation right. In lieu thereof, cash may be paid in an amount equal to the
value of the fraction or, in the discretion of the Committee, the number of
shares may be rounded to the next whole share.
8.5 Stock appreciation rights will be subject to such rules, terms, and
conditions, and shall be evidenced by an agreement in such form, as the
Committee may prescribe prior to the occurrence of a Change in Control.
8.6 Stock appreciation rights may not be assigned or transferred except on
death, by will or operation of law, or pursuant to a qualified domestic
relations order as defined under the Code or Title I of the Employee Retirement
Income Security Act. Stock appreciation rights may be exercised only by the
holder or by a successor or representative after death.
8.7 Unless otherwise determined by the Committee, no stock appreciation
right may be exercised by an officer of Mentor Graphics subject to Section 16 of
the 1934 Act during the first six months following the date of grant.
9.CHANGES IN CAPITAL STRUCTURE.
If any change is made in the outstanding common stock without Mentor
Graphics' receiving any consideration, such as a stock split, reverse stock
split, stock dividend, or combination or reclassification of the common stock, a
corresponding change shall be made in the number of shares remaining available
for grants of options or stock appreciation rights under paragraph 1,
disregarding fractional shares, without any further approval of the
shareholders. The adjustment shall be made by the Committee whose determination
shall be conclusive.
10.AMENDMENT OR TERMINATION OF THE PLAN.
10.1 The Board of Directors may amend or terminate this Plan at anytime
subject to paragraph 10.2.
10.2 Unless the amendment is approved by the shareholders, no amendment
shall be made in the Plan that would:
(a) Increase the total number of shares available for options or stock
appreciation rights;
(b) Increase the maximum option term; or
(c) Modify the requirements for eligibility under the Plan.
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EXHIBIT 10A MENTOR GRAPHICS CORPORATION 1982 STOCK OPTION PLAN
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Exhibit 10.30 - Form of Retention
MEMORANDUM
PERSONAL & CONFIDENTIAL
To: ______________________
From: Rick Rowe
Date: June __, 2001
Subject: "Pay to Stay"/ Retention Bonus
MCMS, Inc. (the "Company") has determined that you are an employee who is
engaged in activities critical to the success of its current operations. To
encourage you to continue your employment, the Company is offering you special
lump sum payments equal to ________ and _________ (each a "Retention Bonus" and
collectively the "Retention Bonuses") payable, respectively, on September 1,
2001 and the earlier to occur of December 31, 2001 or a Change in Control of the
Company (each a "Retention Date"). The payment of Retention Bonuses will be
subject to the following terms and conditions:
You must remain continuously employed with the Company through a Retention Date
to receive the Retention Bonus payable on such date. If you meet this condition,
the Company will pay you the Retention Bonus as soon as practicable following
the Retention Date.
If you resign or your employment with the Company is terminated, voluntarily or
involuntarily, before a Retention Date, you will automatically forfeit your
rights to any Retention Bonus payable after the date of your resignation or
termination.
Each Retention Bonus is subject to applicable payroll deductions and tax
withholding and may constitute taxable income to you. You are responsible for
all tax obligations and should consult with your own tax advisor regarding the
tax treatment of the Retention Bonuses.
This Memorandum and the offer of Retention Bonuses are confidential information.
As a condition to receiving payment of the Retention Bonuses, you agree to keep
confidential the terms and conditions of this Memorandum. However, you may
discuss the offer of the Retention Bonuses and this Memorandum with your
attorney, financial advisor or immediate family member or other legal
representative on a confidential basis. Failure to adhere to this
confidentiality obligation will result in your forfeiture of the Retention
Bonuses.
The Retention Bonuses are in addition to any compensation, wages, salary,
benefits, or bonuses that you may otherwise earn at the Company. During the
applicable retention period, you will remain eligible to receive bonuses or
other forms of compensation as determined appropriate by management in its sole
discretion.
This Memorandum is not a contract of employment, and its does not create a
guarantee of continued employment with the Company or any subsidiary or
affiliate. Your employment will continue to be at-will, which means that your
employment may be terminated by you or the Company, at any time for any reason,
with or without prior notice.
A "Change in Control" means the occurrence of any of the following events:
> > > (a) Any "person" (as such term is used Sections 13(d) and 14(d)
> > > of the Securities and Exchange Act of 1934, as amended) becomes the
> > > "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
> > > indirectly, of securities of the Company representing fifty percent (50%)
> > > or more of the total voting power represented by the Company's then
> > > outstanding voting securities,
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> > > (b) A merger or consolidation of the Company with any other
> > > corporation (herein, "successor employer"), other than a merger or
> > > consolidation which would result in the voting securities of the Company
> > > outstanding immediately prior thereto continuing to represent (either by
> > > remaining outstanding or by being converted into voting securities of the
> > > surviving entity) at least fifty-one percent (51%) of the total voting
> > > power represented by the voting securities of the Company or such
> > > surviving entity outstanding immediately after such merger or
> > > consolidation, or
> > >
> > > (c) A sale or disposition by the Company of all or substantially
> > > all of the Company's assets.
We value your continuing contributions as a team member. We are pleased
to be able to demonstrate our appreciation and recognition of your skills and
contributions to the Company in this way. By signing below, you acknowledge your
acceptance of this offer and agree to be bound by the terms and conditions set
forth above. Please return the signed original of this Memorandum to MCMS's
Legal Department.
<<First_Name>> <<Last_Name>>
Date Signed
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Exhibit 10.74
PARTICIPATION AGREEMENT
This Participation Agreement
, dated as of December 6, 2000 (as amended, modified, extended, supplemented,
restated and/or replaced from time to time, this "Agreement"), is by and among
Lam Research Corporation, a Delaware corporation (the "Lessee" or the
"Guarantor"); the Cushing 2000 Trust, a Delaware business trust (the "Trust,"
"Borrower" or "Lessor"); Wilmington Trust Company, a banking corporation
organized under the laws of the State of Delaware ("Wilmington Trust Company");
Wilmington Trust FSB, a federal savings bank (together with Wilmington Trust
Company, the "Trust Companies"); Scotiabanc Inc., a Delaware corporation, and
the various banks and other lending institutions which are parties hereto from
time to time as holders of certificates issued with respect to the Cushing 2000
Trust (subject to the definition of Holders in Annex A hereto, individually, a
"Holder" and collectively, the "Holders"); The Bank of Nova Scotia and the
various banks and other lending institutions which are parties hereto from time
to time as lenders (subject to the definition of Lenders in Annex A hereto,
individually, a "Lender" and collectively, the "Lenders"); and The Bank of Nova
Scotia, as the administrative agent for the Lenders and with respect to the
Security Documents, as agent for the Lenders and the Holders, to the extent of
their interests (in such capacity, the "Agent"). Capitalized terms used but not
otherwise defined in this Agreement shall have the meanings set forth in Annex A
hereto.
In consideration of the mutual agreements herein contained and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto hereby agree as follows:
THE LOANS
.
Subject to the terms and conditions of this Agreement and the other Operative
Agreements and in reliance on the representations and warranties of each of the
parties hereto contained herein or made pursuant hereto, the Lenders have agreed
to make Loans to the Trust from time to time in an aggregate principal amount of
up to the aggregate amount of the Commitments of the Lenders in order for the
Trust to acquire the Property and for the other purposes described herein, and
in consideration of the receipt of proceeds of the Loans, the Trust will issue
the Notes. The Loans shall be made and the Notes shall be issued pursuant to the
Credit Agreement. Pursuant to Section 5 of this Agreement and Section 2 of the
Credit Agreement, the Loans will be made to the Trust at the request of the
Lessee to acquire the Property, in consideration for the Lessee agreeing
pursuant to the Lease to lease the Property. The Loans and the obligations of
the Trust under the Credit Agreement shall be secured by the Collateral.
HOLDER ADVANCES
.
Subject to the terms and conditions of this Agreement and the other Operative
Agreements, and in reliance on the representations and warranties of each of the
parties hereto contained herein or made pursuant hereto, each Holder shall make
an advance of immediately available funds (a "Holder Advance") on a pro rata
basis to the Trust, based on such Holder's percentage commitment set forth on
Schedule 2.1 attached hereto (the "Holder Commitment"), provided, that Agent
shall have received a Requisition from Lessee in accordance with Section 5
hereof. The aggregate amount of all Holder Advances shall be four percent (4%)
of the amount of all Advances requested; provided, that no Holder shall be
obligated to make any Holder Advance in excess of its pro rata share of the
Available Holder Commitment. The aggregate amount of Holder Advances shall not
exceed the aggregate amount of the Holder Commitments. No prepayment or any
other payment with respect to any Advance shall be permitted such that the
Holder Advances equal less than four percent (4%) of the outstanding amount of
the Advances; except in connection with termination or expiration of the Term,
or in connection with the exercise of remedies relating to the occurrence of a
Lease Event of Default. To the extent the Trust, in its capacity as Borrower
under the Credit Agreement, shall have elected to terminate or reduce the amount
of the Lender Commitment pursuant to Section 2.4 of the Credit Agreement, a pro
rata election shall be deemed to have been made with respect to the Holder
Commitment. On any date on which the Lender Commitment shall be reduced to zero
as a result of a Credit Agreement Event of Default, the Holder Commitment shall
automatically be reduced to zero and the Trust shall prepay the Holder Advances
in full, together with accrued but unpaid Holder Yield thereon and all other
amounts owing under the Certificates.
The representations, warranties, covenants and agreements of the Holders herein
and in the other Operative Agreements are several, and not joint or joint and
several.
SUMMARY OF TRANSACTIONS
.
Operative Agreements
.
On the Closing Date, each of the respective parties hereto and thereto shall
execute and deliver this Agreement, the Lease, the Credit Agreement, the Notes,
the Trust Agreement, the Certificates, the Pledge Agreement, the Deed of Trust
and such other documents, instruments, certificates and opinions of counsel as
agreed to by the parties hereto.
Property Purchase
. On the Funding Date and subject to the terms and conditions of this Agreement
(a) the Holders will each make a Holder Advance in accordance with Sections 2
and 5 of this Agreement and the terms and provisions of the Trust Agreement; (b)
the Lenders will each make Loans in accordance with Sections 1 and 5 of this
Agreement and the terms and provisions of the Credit Agreement; (c) the Trust
will purchase and acquire good and marketable title to the Land and Improvements
identified by the Lessee pursuant to a Deed or Deeds, and grant the Agent a lien
on such Property by execution of the required Security Documents; (d) the Lessee
and the Lessor shall execute and deliver separate Lease Supplements relating to
the Land and the Improvements; and (e) the Term shall commence with respect to
the Land and the Improvements.
Interest on Loans
.
Each Loan shall accrue interest computed and payable in accordance with the
terms of the Credit Agreement. Each Loan shall become due and payable at the
dates and times provided under the Credit Agreement.
The Lessor shall distribute, in accordance with Section 13, the Lender Basic
Rent and all other amounts due with respect to the Loans paid to the Lessor by
the Lessee under the Lease from time to time.
Yield on Holder Certificates
.
The amount of the Holder Advances outstanding from time to time shall accrue
yield ("Holder Yield") at the Yield Rate, calculated using the actual number of
days elapsed and, when the Yield Rate is based on the Adjusted LIBOR, a 360-day
year basis and, if calculated at the ABR, a 360-day year basis if the ABR is
calculated at the Federal Funds Effective Rate, and a 365-, or, if applicable,
366-, day year basis if the ABR is calculated at the Base Rate.
Each Holder shall receive its pro rata portion of the Holder Yield on Holder
Advances from the Trust Estate. Payment of Holder Yield to each Holder shall be
made on each Scheduled Interest Payment Date, or as otherwise provided herein,
in the Trust Agreement, or in the Credit Agreement. If not repaid sooner, the
outstanding aggregate Holder Advances shall be due in full on the Maturity Date.
On the Maturity Date, the Trust shall pay to each Holder its portion of the
Holder Advances then due, together with all accrued but unpaid Holder Yield and
all other amounts due to such Holder from the Trust.
The calculation of Holder Yield shall be made by the Agent, such calculation
being conclusive and binding on the Trust and the Holders in the absence of
manifest error. The Agent shall distribute, in accordance with Section 13, the
Lessor Basic Rent and all other amounts due with respect to the Holder Advances
paid to the Agent by the Lessee under the Lease or the other Operative
Agreements from time to time.
If all or any portion of the Holder Advances, any Holder Yield payable thereon,
or any other amount payable hereunder shall not be paid when due (whether at
stated maturity, acceleration thereof or otherwise), such overdue amount shall,
without limiting the rights of the Holders under any Operative Agreement, bear
interest at a rate per annum equal to the Overdue Rate, in each case from the
date of nonpayment until paid (whether before or after judgment). Upon the
occurrence, and during the continuance of an Event of Default, the amount of,
and, to the extent permitted by law, interest on (or Holder Yield on) the Holder
Advances and any other amounts owing hereunder or under the other Operative
Agreements shall bear interest, payable on demand, at a per annum rate equal to
the Overdue Rate.
Interest Period Selection Elections
. By delivering an Interest Period Selection Notice to the Trust and Agent with
respect to Holder Advances and Loans, respectively, the Lessee may from time to
time during the Term irrevocably select, on not less than three (3) nor more
than five (5) Business Days' notice (other than the initial Interest Period with
respect to the Advance to be made on the Closing Date, where such Advance is to
bear interest at a rate equal to the ABR and notice may be given on the Closing
Date), the duration for the next succeeding Interest Period; provided, however,
that (a) in the absence of a delivery of an Interest Period Selection Notice
with respect to any Loan or Holder Advance at least three (3) Business Days
before the last day of the then current Interest Period with respect thereto,
the Lessee shall be deemed to have selected that such Loan or Holder Advance
have an Interest Period of one month, (b) each such selection shall be prorated
among the applicable outstanding Loans and Holder Advances of all Financing
Parties and (c) the outstanding Loans and Holder Advances may not be apportioned
into more than three (3) separate Interest Periods at any one time. Each
Interest Period Selection Notice so delivered or deemed delivered by the Lessee
shall be deemed an effective election by the Borrower of the method for
computing interest on the Loans under the Credit Agreement.
Prepayments
.
Voluntary Prepayments
. The Lessee shall have the right to prepay an amount equal to the aggregate
outstanding Land and/or Improvements Balance in whole, but not in part, pursuant
to the exercise of the purchase options permitted under the Lease without
premium or penalty.
Mandatory Prepayments
. If at any time the sum of the aggregate amount of outstanding Loans and Holder
Advances shall exceed the Aggregate Commitment Amount, the Lessee shall
immediately make payment on the Loans or Holders Advances in an amount
sufficient to eliminate such excess. Payments required to be made hereunder
shall be applied first to ABR Loans or ABR Holder Advances and second to LIBOR
Loans or LIBOR Holder Advances in direct order of their Interest Period
maturities.
Notice
. The Lessee will provide irrevocable notice to the Agent of any prepayment of
Loans or Holder Advances at least three (3) Business Days prior to the date of
prepayment.
THE CLOSING
.
All documents and instruments required to be delivered on the Closing Date shall
be delivered at the offices of Cooley Godward LLP, Palo Alto, California or at
such other location as may be determined by the Trust, the Agent and the Lessee.
FUNDING OF ADVANCES; PLEDGED COLLATERAL.
General
. To the extent funds have been made available to or advanced to the Borrower as
Loans by the Lenders and as Holder Advances by the Holders, the Trust will use
such funds from time to time in accordance with the terms and conditions of this
Agreement and the other Operative Agreements (i) at the direction of the Lessee
to acquire the Property in accordance with the terms of this Agreement and (ii)
to pay Transaction Expenses; and (iii) to pay all other Project Costs.
Procedures for Funding
.
The Lessee shall designate the date for Advances hereunder in accordance with
the terms and provisions hereof which date shall not be earlier than three (3)
Business Days following the Lessee's delivery to Agent of a Requisition in the
form of Exhibit A hereto with respect to any such Advance; provided, however, it
is understood and agreed that with respect to the Advance to be made on the
Funding Date, such Advance is to bear interest at a rate equal to the ABR and
notice may be given on the Funding Date.
Each Requisition shall: (i) be irrevocable, (ii) request funds in an amount that
is not in excess of the total aggregate amount of the Available Commitments at
such time, and (iii) request that the Holders make Holder Advances and that the
Lenders make Loans to the Trust for the payment of Transaction Expenses,
Property Acquisition Costs or other Property Costs that have previously been
incurred or are to be incurred on the date of such Advance to the extent such
were not subject to a prior Requisition, in each case as specified in the
Requisition.
Subject to the satisfaction of the conditions precedent set forth in Section
6.1, (i) the Lenders shall make Loans based on their respective Lender
Commitments to the Borrower in an aggregate amount equal to ninety-six percent
(96%) of the amount specified in any Requisition plus any additional amount of
Transaction Expenses as referenced in Sections 8.1(a) and 8.1(b) and any
additional amount respecting any indemnity payment as referenced in Section
12.6, unless any such funding of Transaction Expenses or any indemnity payment
is declined in writing by each Lender and each Holder (such decision to be in
the sole discretion of each Lender and each Holder) up to an aggregate principal
amount equal to the aggregate of the Available Lender Commitments; (ii) the
Holders shall make Holder Advances based on their respective Holder Commitments
in an aggregate amount equal to four percent (4%) of the amount specified in
such Requisition plus any additional amount of Transaction Expenses as
referenced in Sections 8.1(a) and 8.1(b) and any additional amount respecting
any indemnity payment as referenced in Section 12.6, unless any such funding of
Transaction Expenses or any indemnity payment is declined in writing by each
Lender and each Holder (such decision to be in the sole discretion of each
Lender and each Holder), up to an aggregate amount equal to the aggregate of the
Available Holder Commitments; and (iii) the total amount of such Loans and
Holder Advances made on such date shall (x) be used by the Trust to pay Project
Costs including Transaction Expenses or (y) be advanced by the Trust on the date
of such Advance to the Lessee to pay Property Costs, as applicable.
Notwithstanding that the Operative Agreements state that Advances shall be
directed to the Trust, each Advance shall in fact be directed to the Lessee (for
the benefit of the Trust) and applied by the Lessee (for the benefit of the
Trust) pursuant to the requirements imposed on the Trust under the Operative
Agreements.
All Operative Agreements which are to be delivered to the Trust, the Agent, the
Lenders or the Holders shall be delivered to the Agent, on behalf of the Trust,
the Agent, the Lenders or the Holders, and such items (except for Notes,
certificates, bills of sale, and chattel paper originals, with respect to which
in each case there shall be only one original) shall be delivered with originals
sufficient for the Trust, the Agent, each Lender and each Holder. All other
items which are to be delivered to the Trust, the Agent, the Lenders or the
Holders shall be delivered to the Agent, on behalf of the Trust, the Agent, the
Lenders or the Holders, and such other items shall be held by the Agent. To the
extent any such other items are requested in writing from time to time by the
Trust, any Lender or any Holder, the Agent shall provide a copy of such item to
the party requesting it.
Notwithstanding the completion of any closing under this Agreement pursuant to
Sections 6.1 or 6.2, each condition precedent in connection with any such
closing may be subsequently enforced by the Agent (unless such has been
expressly waived in writing by the Agent).
Allocation of Advances Between Land and Improvements.
In the event the Fair Market Sales Value of the Land leased pursuant to the
Lease as set forth in the Appraisal is greater than twenty-five percent of the
aggregate Fair Market Sales Value of the Property as set forth in the Appraisal,
Lessor shall determine a separate Project Cost for each of the Land and
Improvements, and Lessee shall execute and deliver a separate Lease Supplement
for each of the Land and Improvements.
Pledged Collateral.
Mandatory Pledged Collateral.
If as of the last day of any Fiscal Quarter (i) the Lessee's EBITDA equals an
amount less than $200,000,000, or (ii) the Lessee's Cash Balance equals an
amount less than $200,000,000, provided, that if as of the date six (6) months
prior to the Maturity Date, the Lessee has not refinanced the Subordinated
Notes, there shall be deducted from the Cash Balance at all times thereafter the
principal amount of such outstanding Subordinated Notes in determining the Cash
Balance under this clause (ii), then (x) in the case of clause (i), on or before
the third Business Day (or if such date is not a Business Day, the next
succeeding Business Day) (the "Deposit Date") following the date on which
financial statements are delivered pursuant to Section 9.3(b)(i) or (ii) hereof
until the third Business Day following the date on which financial statements
are delivered pursuant to Section 9.3(b)(i) or (ii) hereof for the Fiscal
Quarter when the Lessee shall satisfy such tests, and (y) in the case of clause
(ii), on such specified date (also, a "Deposit Date") for so long as any
Obligations remain outstanding or until the third Business Day following the
date on which financial statements are delivered pursuant to Section 9.3(b)(i)
or (ii) hereof for the second consecutive Fiscal Quarter when the Lessee shall
satisfy such tests, the Lessee shall deliver Pledged Collateral to the
Collateral Agent in an amount equal to 100% of the aggregate outstanding
Advances. Thereafter, the Lessee covenants to maintain the Value of the Pledged
Collateral at a level equal to 100% of the aggregate outstanding Advances, and
within two (2) Business Days after receipt of notice from the Collateral Agent
that the Value of the Pledged Collateral is less than 100% of the aggregate
outstanding Advances, the Lessee shall be obligated to deliver a portion of the
Pledged Collateral in an amount required to maintain the Value of the Pledged
Collateral at a level equal to 100% of the aggregate outstanding Advances. Each
such deposit (collectively, the "Pledge") shall be the property of the
Collateral Agent and shall be held and administered in accordance with the
Pledge Agreement.
Optional Pledged Collateral.
Notwithstanding the requirements of Section 5.4(a), from time to time, the
Lessee may make a deposit of additional Pledged Collateral to the Collateral
Agent in an amount equal to not less than 100% of the aggregate outstanding
Advances in order to have a lower Applicable Margin apply to the outstanding
Advances. In order to maintain a lower Applicable Margin, the Lessee covenants
to maintain the Value of the Pledged Collateral at a level equal to 100% of the
aggregate outstanding Advances, and within two (2) Business Days after receipt
of notice from the Collateral Agent that the Value of the Pledged Collateral is
less than 100% of the aggregate outstanding Advances, the Lessee shall deliver a
portion of Pledged Collateral in an amount required to maintain the Value of the
Pledged Collateral at a level equal to 100% of the aggregate outstanding
Advances. Each such deposit shall constitute part of the Pledge, shall be the
property of the Collateral Agent and shall be held and administered in
accordance with the Pledge Agreement.
CONDITIONS OF THE CLOSING AND ADVANCES.
General Conditions to the Closing Date
. The Closing Date is subject to the satisfaction, immediately prior to or
concurrently therewith, of the following conditions precedent:
Operative Agreements.
Each of the Operative Agreements entered into on the Closing Date or
subsequently shall have been duly authorized, executed, acknowledged and
delivered by the parties thereto and shall be in full force and effect, and no
Default shall exist thereunder (both before and after giving effect to the
transactions contemplated by the Operative Agreements), and the Agent, Lenders,
Holders and Lessor shall have received a fully executed copy of each of the
Operative Agreements.
Taxes.
All taxes, fees and other charges in connection with the execution, delivery,
and, where applicable, recording, filing and registration of the Operative
Agreements shall have been paid or provisions for such payment shall have been
made to the reasonable satisfaction of the Agent and the Lessor.
Governmental Approvals.
All necessary (or, in the reasonable opinion of the Agent, the Lessor and their
respective counsel, advisable) Governmental Actions shall have been obtained or
made and be in full force and effect.
Litigation.
No action or proceeding shall have been instituted before any Governmental
Authority, nor shall any order, judgment or decree have been issued or proposed
to be issued by any Governmental Authority (i) to set aside, restrain, enjoin or
prevent the full performance of this Agreement, any other Operative Agreement or
any of the transactions contemplated hereby or thereby or (ii) other than as set
forth on Schedule 7.3, which is reasonably likely to have a Material Adverse
Effect.
Legal Requirements.
In the opinion of the Agent, the Lessor and their respective counsel, the
transactions contemplated by the Operative Agreements do not and will not
violate in any material respect any Legal Requirements and do not and will not
subject the Lenders, the Holders or the Lessor to any adverse regulatory
prohibitions or constraints.
Corporate Proceedings of the Lessee.
The Agent and the Lessor shall have received a copy of the resolutions or
minutes, in form and substance reasonably satisfactory to the Agent and the
Lessor, of the Board of Directors of the Lessee authorizing the execution,
delivery and performance of this Agreement and the other Operative Agreements to
which it is a party, certified by the Secretary or an Assistant Secretary of the
Lessee as of the Closing Date, which certificate shall be in form and substance
reasonably satisfactory to the Agent and the Lessor and shall state that the
resolutions or minutes thereby certified have not been amended, modified,
revoked or rescinded.
Lessee Incumbency Certificate.
The Agent and the Lessor shall have received a certificate of the Lessee, dated
the Closing Date, as to the incumbency and signature of the officers of the
Lessee executing any Operative Agreement reasonably satisfactory in form and
substance to the Agent and the Lessor, executed by the Secretary or any
Assistant Secretary of the Lessee.
Lessee's Officer's Certificate.
The Agent and the Lessor shall each have received a Certificate of the President
or any Vice President of the Lessee, dated as of the Closing Date, stating that
(i) each and every representation and warranty of the Lessee contained in the
Operative Agreements to which it is a party is true and correct on and as of the
Closing Date; (ii) no Default or Event of Default has occurred and is continuing
under any Operative Agreement; (iii) each Operative Agreement to which the
Lessee is a party is in full force and effect with respect to it; and (iv) the
Lessee has duly performed and complied with all covenants, agreements and
conditions contained herein or in any Operative Agreement required to be
performed or complied with by it on or prior to the Closing Date.
Good Standing
. The Agent and the Lessor shall have received (i) Certificates of the
Secretaries of State of the State of Delaware and the State of California dated
as of a recent date stating that the Lessee is a corporation in good legal
standing under the laws of such states, and (ii) Certificates of the Franchise
Tax Boards of the State of Delaware and the State of California dated as of a
recent date stating that the Lessee is in good standing under the laws of such
states.
Lessee's Corporate Documents.
The Agent and the Lessor shall have received true and complete copies of the
certificate or articles of incorporation and bylaws of the Lessee, certified as
of the Closing Date as complete and correct copies thereof by the Secretary or
an Assistant Secretary of the Lessee.
Consents, Licenses and Approvals.
The Agent and the Lessor shall have received a certificate of the President or a
Vice President of the Lessee stating that any consents, licenses and filings
required to consummate the transaction contemplated by this Agreement are in
full force and effect, and each such consent, authorization and filing shall be
in form and substance reasonably satisfactory to the Agent and the Lessor.
Legal Opinion.
The Agent and the Lessor shall have received the executed legal opinion of
Heller Ehrman White & McAuliffe LLP, special counsel to the Lessee.
Environmental Audit
.
The Lessor and the Agent shall have received not less than ten (10) days prior
to the Funding Date an Environmental Audit with respect to the Property being
acquired on the Funding Date, prepared by the Environmental Engineer, and the
results of the Environmental Audit shall be in form and substance satisfactory
to the Lessor and the Agent; and
the Lessor and the Agent shall have received letters from the Environmental
Engineer stating, among other things, that the Agent, the Lenders, the Holders
and the Lessor may rely in all respects on the Environmental Audit and other
environmental reports with respect to the Property which have been prepared by
such firm as if they were addressed to them.
Survey
. The Lessor and the Agent shall have received, and the Title Company shall have
received, a survey of the Property being acquired on the Funding Date, certified
to the Lessor and the Title Company in a manner satisfactory to them, dated as
of a date within three (3) months of the Funding Date, by an independent
professionally licensed land surveyor satisfactory to the Lessor, which survey
shall be made in accordance with the Minimum Standard Detail Requirements for
Land Title Surveys jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping in 1999, and,
without limiting the generality of the foregoing, there shall be surveyed and
shown on such survey the following: (i) the locations on such Property of all
the buildings, structures and other improvements, if any, and the established
building setback lines; (ii) the lines of streets abutting such Property; (iii)
all access and other easements appurtenant to such Property; (iv) all roadways,
paths, driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting such Property, whether recorded, apparent from a
physical inspection of the Property or otherwise known to the surveyor; (v) any
encroachments on any adjoining property by the building, structures and
improvements on such Property; and (vi) if such Property is described as being
on a filed map, a legend relating the survey to said map.
Appraisal
. The Lessor and the Agent shall have received an Appraisal of the Property,
which Appraisal shall show as of the Funding Date the Fair Market Sales Value of
the Property, and meet the other applicable requirements set forth in the
definition of the term "
Appraisal
" contained in Annex A.
Lien Searches.
The Lessor and the Agent shall have received the results of a recent search by a
Person reasonably satisfactory to the Lessor and the Agent, of the Uniform
Commercial Code, judgement and tax lien filings which may have been filed in
State of California with respect to personal property of the Lessee, and the
results of such search shall be satisfactory to the Lessor and the Agent.
Representations
. The representations and warranties of the Lessee and the Lessor contained
herein and in each of the other Operative Agreements shall be true and correct.
Performance of Agreements.
The parties hereto and thereto shall have performed their respective agreements
to be performed on or prior to the Closing Date contained herein and in the
other Operative Agreements on or prior to the Closing Date.
Fees.
The Lessor and the Holders and the Agent and the Lenders shall have received the
fees pursuant to the Fee Letter.
Lessor Certificate.
The Agent shall have received a certificate, executed by each Trust Company on
behalf of the Lessor, dated as of the Closing Date in such form as is acceptable
to the Agent, stating that (i) each and every representation and warranty of the
Lessor contained in the Operative Agreements to which it is a party is true and
correct on and as of the Closing Date, (ii) each Operative Agreement to which it
is a party is in full force and effect with respect to it, and (iii) Lessor has
duly performed and complied with all covenants, agreements and conditions
contained herein or in any Operative Agreement required to be performed or
complied with by it on or prior to the Closing Date.
Trust Company Certificates.
The Agent shall have received from each Trust Company (i) a certificate of the
Secretary, an Assistant Secretary, Trust Officer or vice president of the Trust
Company in such form as is acceptable to the Agent, attaching and certifying as
to (A) the signing resolutions duly authorizing the execution, delivery and
performance by such Trust Company of each of the Operative Agreements to which
it is or will be a party, (B) such Trust Company's articles of association or
other equivalent charter documents, and its bylaws, as the case may be,
certified as of a recent date by an appropriate officer of such Trust Company,
and (C) the incumbency and signature of persons authorized to execute and
deliver on such Trust Company's behalf the Operative Agreements to which it is a
party, and (ii) a good standing certificate from the Office of the Comptroller
of the Currency.
Lessor Legal Opinion
. Counsel for the Lessor acceptable to the Agent shall have issued to the
Lessee, the Holders, the Lenders and the Agent its opinion in such form as is
reasonably acceptable to the Agent.
Conditions to Lenders' and Holders' Obligations to Make Loans and Holder
Advances.
The agreement of each Lender to make the Loans to the Borrower, and of the
Holders to make the Holder Advances is further subject to the satisfaction,
immediately prior to or concurrently with the making of such Loans and Holder
Advances, of the following conditions precedent:
Title
. Title to the Property being acquired on the Funding Date shall conform to the
representations and warranties set forth in Section 7.3(w).
Title Insurance
.
The Lessor shall have received an owner's title policy, or marked up
unconditional binder for such insurance, dated the Funding Date, for the
Property being acquired on the Funding Date, insuring the Lessor that the Lien
of the Lease is a first and primary Lien in the Lessee's interest in the
Improvements and the Land; and the Lessor shall have received evidence
reasonably satisfactory to it that all premiums in respect of such policy have
been paid or provision made therefor.
The Agent shall have received with respect to the Deed of Trust a mortgage title
policy or marked up unconditional binder for such insurance dated the Funding
Date; such policies shall (i) be in an amount equal to the aggregate amount of
the Commitments (with a pending disbursements clause); (ii) be issued at
ordinary rates; (iii) insure that the Deed of Trust insured thereby creates a
valid first Lien on the Lessor's interest in the Lease and in the fee title to
the Property, free and clear of all defects and encumbrances, except Permitted
Exceptions; (iv) name the Agent for the benefit of the Lenders as the insured
thereunder; (v) be in the form of ALTA Loan Policy - 1992; (vi) contain such
endorsements and affirmative coverage as the Agent may reasonably request; and
(vii) be issued by the Title Company; and the Agent shall have received evidence
reasonably satisfactory to it that all premiums in respect of such policy, and
all charges for mortgage recording tax with respect to the Deed of Trust have
been paid or provision made therefor.
Title Documents
. The Lessor shall have received a copy of all recorded documents referred to,
or listed as exceptions to title in, the title policies referred to above.
Insurance.
The Lessor and the Agent shall have received evidence in form and substance
satisfactory to them that all of the requirements of Article 14 of the Lease
shall have been satisfied.
Lease.
The Lessor and the Agent shall have received each Lease Supplement, executed by
the Lessee, and assuming proper recordation of each Memorandum of Lease, each
Lease shall constitute a valid and perfected first lien on the Land and the
Improvements, subject only to Permitted Exceptions.
Actions to Perfect Liens.
The Lessor shall have received evidence in form and substance satisfactory to it
that all filings, recordings, registrations and other actions, including,
without limitation, the filing of duly executed financing statements on form
UCC-1, necessary or, in the opinion of the Lessor and the Agent, desirable to
perfect the Liens created by the Security Documents shall have been completed.
Bringdown Certificate
. The Lessor and the Agent shall have received an Officer's Certificate on
behalf of the Lessee dated as of the Funding Date (if different from the Closing
Date) stating that (i) the representations and warranties of the Lessee
contained herein and in each of the other Operative Agreements are true and
correct in all material respects as of the Funding Date as though made as of the
Funding Date, and (ii) no Default or Event of Default has occurred and is
continuing.
Performance of Agreements
. The parties hereto and thereto shall have performed their respective
agreements contained herein and in the other Operative Agreements on or prior to
such Funding Date.
Restrictions on Liens
.
On the date the Property is either sold to a third party in accordance with the
terms of the Operative Agreements or, pursuant to Section 22.1(a) of the Lease
Agreement, retained by the Lessor, the Lessee shall cause such Property to be
free and clear of all Liens (other than Lessor Liens and such other Liens that
are expressly set forth as title exceptions on the title commitment issued under
Section 6.2(b) with respect to such Property, to the extent such title
commitment has been approved by the Agent).
Payments
.
All payments of principal, interest, Holder Advances, Holder Yield and other
amounts to be made by the Lessee under this Agreement or any other Operative
Agreement (excluding Excepted Payments which shall be paid directly to the party
to whom such payments are owed) shall be made in Dollars and in immediately
available funds, without setoff, deduction, or counterclaim, to the Agent at the
address set forth on Schedule 6.4 hereto. Subject to the definition of "Interest
Period" in Annex A attached hereto, whenever any payment under this Agreement or
any other Operative Agreement shall be stated to be due on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time in such case shall be included in the computation of
interest, Holder Yield and fees payable pursuant to the Operative Agreements, as
applicable and as the case may be.
REPRESENTATIONS AND WARRANTIES
.
Representations and Warranties of the Trust Companies
.
Effective as of the Closing Date and the date of each Advance, each Trust
Company represents and warrants to each of the other parties hereto as follows:
Wilmington Trust Company is a banking corporation organized under the laws of
the State of Delaware and Wilmington Trust FSB is a federal savings bank, each
duly organized and validly existing and in good standing under the laws of the
State of Delaware and the United States of America, as applicable, and each has
the power and authority to enter into and perform its obligations under the
Trust Agreement and (assuming due authorization, execution and delivery of the
Trust Agreement by the Holders) each has the corporate and trust power and
authority to act as a trustee and to enter into and perform the obligations
under each of the other Operative Agreements to which it is or will be a party,
and each other agreement, instrument and document to be executed and delivered
by it on or before the Closing Date in connection with or as contemplated by
each such Operative Agreement to which such Trust Company is or will be a party;
The execution, delivery and performance of each Operative Agreement to which it
is or will be a party has been duly authorized by all necessary action on its
part and neither the execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor compliance by it with any of the terms
and provisions thereof (i) does or will require any approval or consent of any
trustee or holders of any of its indebtedness or obligations, (ii) does or will
contravene any Legal Requirement relating to its banking or trust powers, (iii)
does or will contravene or result in any breach of or constitute any default
under, (A) its charter or bylaws, or (B) any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan or credit
agreement or other agreement or instrument to which it is a party, which
contravention, breach or default under clause (B) would materially and adversely
affect its ability to perform its obligations under the Operative Agreements to
which it is a party or (iv) does or will require any Governmental Action by any
Governmental Authority regulating its banking or trust powers;
This Agreement and each other Operative Agreement to which it is or will be a
party, if any, have been, or on or before such Closing Date will be, duly
executed and delivered by it, and the Trust Agreement constitutes, or upon
execution and delivery will constitute, a legal, valid and binding obligation
enforceable against it in accordance with the terms thereof;
There is no action or proceeding pending or, to its knowledge, threatened to
which it is or will be a party before any Governmental Authority that, if
adversely determined, would materially and adversely affect its ability to
perform its obligations under the Operative Agreements to which it is a party or
would question the validity or enforceability of any of the Operative Agreements
to which it is or will become a party;
Each Trust Company's principal place of business and chief executive office are
located at:
In the case of Wilmington Trust Company:
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
In the case of Wilmington Trust FSB:
100 Wilshire Boulevard, Suite 1230
Santa Monica, CA 90401
(f) All documents, accounts and records relating to the transactions
contemplated by this Agreement and the other Operative Agreements shall be
located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware,
19890- 0001.
Representations and Warranties of the Borrower
.
The Borrower represents and warrants to each of the other parties hereto as of
the Closing Date and the Funding Date as follows:
It is a business trust and is duly formed and validly existing and in good
standing under the laws of the State of Delaware and has the power and authority
to enter into and perform its obligations under the Operative Agreements to
which it is a party and (assuming due authorization, execution and delivery of
the Trust Agreement by the parties thereto) has the trust power and authority to
enter into and perform the obligations under each of the other Operative
Agreements to which it is or will be a party, and each other agreement,
instrument and document to be executed and delivered by it on or before the
Closing Date in connection with or as contemplated by each such Operative
Agreement to which it is or will be a party;
The execution, delivery and performance of each Operative Agreement to which it
is or will be a party (assuming due authorization, execution and delivery of the
Trust Agreement by the parties thereto) has been duly authorized by all
necessary action on its part and neither the execution and delivery thereof, nor
the consummation of the transactions contemplated thereby, nor compliance by it
with any of the terms and provisions thereof (i) does or will require any
approval or consent of any trustee or holders of any of its indebtedness or
obligations, (ii) does or will contravene any Legal Requirement relating to its
trust powers, (iii) does or will contravene or result in any breach of or
constitute any default under, or result in the creation of any Lien upon any of
its property under, (A) the Trust Agreement or Certificate of Trust, or (B) any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement or other agreement or instrument to
which it is a party or by which it or its properties may be bound or affected,
which contravention, breach, default or Lien under clause (B) would materially
and adversely affect its ability to perform its obligations under the Operative
Agreements to which it is a party or (iv) does or will require any Governmental
Action by any Governmental Authority regulating its trust powers;
The Trust Agreement and, assuming the Trust Agreement is the legal, valid and
binding obligation of the parties hereto, each other Operative Agreement to
which the Borrower is or will be a party have been, or on or before such Closing
Date will be, duly executed and delivered by it, and each Operative Agreement to
which it is a party constitutes, or upon execution and delivery will constitute,
a legal, valid and binding obligation enforceable against it in accordance with
the terms thereof;
There is no action or proceeding pending or, to its knowledge, threatened to
which it is or will be a party before any Governmental Authority that, if
adversely determined, would materially and adversely affect its ability to
perform its obligations under the Operative Agreements to which it is a party or
would question the validity or enforceability of any of the Operative Agreements
to which it is or will become a party;
It has not assigned or transferred any of its right, title or interest in or
under the Lease or its interest in the Property or any portion thereof, except
in accordance with the Operative Agreements;
No Default or Event of Default under the Operative Agreements attributable to it
has occurred and is continuing;
Except as otherwise contemplated in the Operative Agreements, the proceeds of
the Loans and Holder Advances shall not be applied by it for any purpose other
than the purchase and/or lease of the Property and the payment of Transaction
Expenses and the fees, expenses and other disbursements referenced in Sections
8.1(a) and 8.1(b) of this Agreement;
Neither it nor any Person authorized by it to act on its behalf has offered or
sold any interest in the Trust Estate or the Notes, or in any similar security
relating to the Property, or in any security the offering of which for the
purposes of the Securities Act would be deemed to be part of the same offering
as the offering of the aforementioned securities to, or solicited any offer to
acquire any of the same from, any Person other than, in the case of the Notes,
the Agent, and neither it nor any Person authorized by it to act on its behalf
will take any action which would subject, as a direct result of such action
alone, the issuance or sale of any interest in the Trust Estate or the Notes to
the provisions of Section 5 of the Securities Act or require the qualification
of any Operative Agreement under the Trust Indenture Act of 1939, as amended;
The principal place of business, chief executive office and office where the
documents, accounts and records relating to the transactions contemplated by
this Agreement and the other Operative Agreements are located at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware, 19890-0001;
It is not engaged principally in, and does not have as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying any margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System of the United States), and no part of
the proceeds of the Loans or the Holder Advances will be used by it to purchase
or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock or for any purpose that violates,
or is inconsistent with, the provisions of Regulations T, U, or X of the Board
of Governors of the Federal Reserve System of the United States;
The Property is free and clear of all Lessor Liens attributable to it;
It is not (i) an "investment company" or a company controlled by an "investment
company" within the meaning of the Investment Company Act, or (ii) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935; and
It is not a party to any documents, instruments or agreements other than the
Operative Agreements executed by it.
Representations and Warranties of the Lessee
.
Subject to
Schedule 7.3
hereto, the Lessee represents and warrants to each of the other parties hereto
as of the Closing Date and the Funding Date as follows:
Organization; Powers.
Each of the Lessee and its Subsidiaries (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (iii) is
qualified to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify would not result in a Material
Adverse Effect, and (iv) has the power and authority to execute, deliver and
perform its obligations under each of the Operative Agreements and each other
agreement or instrument contemplated thereby to which it is or will be a party.
Authorization.
The execution, delivery and performance by the Lessee of each of the Operative
Agreements to which it is a party (i) have been duly authorized by all requisite
action on the part of the Lessee, including, if required, stockholder action and
(ii) will not (A) violate (1) any provision of law, statute, rule or regulation,
or of the certificate or articles of incorporation or other constitutive
documents or bylaws of the Lessee or any Subsidiary, (2) any order of any
Governmental Authority, or (3) any provision of any indenture, agreement or
other instrument to which the Lessee or any Subsidiary is a party or by which
any of them or any of their property is or may be bound, including, without
limitation, the Credit Facility and the Subordinated Notes, (B) be in conflict
with, result in a breach of or constitute (alone or with notice or lapse of time
or both) a default under any such indenture, agreement or other instrument, or
(C) result in the creation or imposition of any Lien upon or with respect to any
property or assets now owned or hereafter acquired by the Lessee or any
Subsidiary except in accordance with the Operative Agreements.
Enforceability.
This Agreement and each of the other Operative Agreements to which the Lessee is
a party has been duly executed and delivered by the Lessee and constitutes a
legal, valid and binding obligation of the Lessee enforceable against the Lessee
in accordance with its terms, subject, in each case as to enforceability, to
bankruptcy, insolvency, reorganization and other similar laws affecting
enforcement of creditor rights generally (insofar as any such law relates to the
bankruptcy, insolvency, reorganization or similar event of the Lessee) and, as
to the availability of specific performance or other injunctive relief, subject
to the discretionary power of a court to deny such relief and to general
equitable principles.
Governmental Approvals.
No action, consent or approval of, registration or filing with or any other
action by any Governmental Authority is or will be required by the Lessee in
connection with the purchase, leasing or financing of the Property (the
"Transactions"
), except such as have been made or obtained and are in full force and effect.
Financial Statements.
The consolidated balance sheet of the Lessee and its Subsidiaries as at June 25,
2000, and the related consolidated statements of income and cash flows of the
Lessee and its Subsidiaries for the fiscal year then ended, accompanied by an
opinion of Ernst & Young LLP, independent auditors, copies of which have been
furnished to the Lessor and the Agent, fairly present the consolidated financial
condition of the Lessee and its Subsidiaries as at such date and the
consolidated results of the Lessee and its Subsidiaries for the period ended on
such date, all in accordance with GAAP consistently applied. Since June 25,
2000, no event has occurred which could have a Material Adverse Effect.
No Material Adverse Change.
As of the Closing Date, there has been no material adverse change in the
business, assets, property or condition, financial or otherwise, of the Lessee
and its Subsidiaries since June 25, 2000.
Title to Properties; Possession Under Leases.
Each of the Lessee and its Subsidiaries has good and marketable title to, or
valid leasehold interests in, all its material properties and assets. All such
properties and assets are free and clear of Liens, other than Liens expressly
permitted by any of the Operative Agreements.
Each of the Lessee and its Subsidiaries has complied with all obligations under
all leases to which it is a party and all such leases are in full force and
effect. Each of the Lessee and its Subsidiaries enjoys peaceful and undisturbed
possession under all such leases, except to the extent that Lessee is a
sublandlord under a sublease of premises.
Litigation, Compliance with Laws.
There are not any actions, suits or proceedings at law or in equity or by or
before any Governmental Authority now pending or threatened against the Lessee
or any Subsidiary or any business, property or rights of any such person (A)
which involve any Operative Agreements or the Transactions or (B) to the
Lessee's knowledge, which might have a Material Adverse Effect.
Neither the Lessee nor any of its Subsidiaries is in violation of any law, rule
or regulation, or in default with respect to any judgment, writ, injunction or
decree of any Governmental Authority, where such violation or default could
reasonably be anticipated to result in a Material Adverse Effect.
Federal Reserve Regulations.
Neither the Lessee nor any of its Subsidiaries is engaged principally in, or has
as one of its most important activities, the business of extending credit for
the purpose of purchasing or carrying any margin stock (within the meaning of
Regulation U of the Board), and no part of the proceeds of the Advances will be
used by it to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any such margin stock or for any
purpose that violates, or is inconsistent with, the provisions of Regulations T,
U or X of the Board.
Investment Company Act; Public Utility Holding Company Act.
Neither the Lessee nor any of its Subsidiaries is (i) an "investment company" or
a company controlled by an "investment company" within the meaning of the
Investment Company Act, or (ii) a "holding company" as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935.
Agreements.
Neither the Lessee nor any of its Subsidiaries is a party to any agreement or
instrument or subject to any corporate or other restriction that has resulted or
could reasonably be anticipated to result in a Material Adverse Effect.
Neither the Lessee nor any of its Subsidiaries is in default in any manner under
any provision of any indenture or other agreement or instrument evidencing
Indebtedness, or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be bound,
where such default could reasonably be anticipated to result in a Material
Adverse Effect.
Tax Returns.
Each of the Lessee and its Subsidiaries has filed or caused to be filed all
Federal, state, local and foreign tax returns required to have been filed by it
and has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, except taxes that are being
contested in good faith by appropriate proceedings and for which the Lessee or
such Subsidiary shall have set aside on its books adequate reserves.
No Material Misstatements.
No information, report, financial statement, exhibit or schedule furnished by or
on behalf of the Lessee to the Lessor, the Holders, the Agent or any Lender in
connection with the negotiation of any Operative Agreement or included therein
or delivered pursuant thereto contained, contains or will contain any
misstatement of a material fact or omitted, omits or will omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were, are or will be made, not misleading.
Employee Benefit Plans.
Each of the Lessee and its ERISA Affiliates is in compliance in all material
respects with the applicable provisions of ERISA and the regulations and
published interpretations thereunder. No Reportable Event has occurred as to
which the Lessee or any ERISA Affiliate was required to file a report with the
PBGC, and the present value of all benefit liabilities under each Plan (based on
those assumptions used to fund such Plan) did not, as of the last annual
valuation date applicable thereto, exceed by more than $1,000,000 the value of
the assets of such Plan. Neither the Lessee nor any ERISA Affiliate has incurred
any Withdrawal Liability which remains unpaid and that could result in a
Material Adverse Effect. Neither the Lessee nor any ERISA Affiliate has received
any notification that any Multiemployer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, and to the best knowledge of
the Lessee no Multiemployer Plan is reasonably expected to be in reorganization
or to be terminated, where such reorganization or termination has resulted or
could reasonably be expected to result, through increases in the contributions
required to be made to such Plan or otherwise, in a Material Adverse Effect.
Environmental Matters.
To the best of Lessee's knowledge after due inquiry, the Property is free of
contamination from any Release of Hazardous Substances. Neither the Lessee nor
any of its Subsidiaries has any material contingent liability related to
noncompliance with any Environmental Laws, or related to any Release or
threatened Release of a Hazardous Substance or the generation, use, storage or
disposal of Hazardous Substances associated with the Property. The Lessee and
each Subsidiary is conducting its respective business in compliance with all
applicable Environmental Laws. Neither the Lessee nor any of its Subsidiaries
has received notice of any failure to so comply. The Lessee and its
Subsidiaries, at the Lessee's and its Subsidiaries' facilities, do not manage
any hazardous wastes, hazardous substances, hazardous materials, toxic
substances, toxic pollutants or substances similarly denominated, as those terms
or similar terms are used in the Environmental Laws, in violation of any such
law or any regulations promulgated pursuant thereto. Neither the Lessee nor any
of its Subsidiaries has caused or suffered to occur any Release with respect to
any Hazardous Substance at, under, above or upon any real property which it owns
or leases or to which it transported, disposed or arranged for disposal of
Hazardous Substances that would result in a Material Adverse Effect. Neither the
Lessee nor any of its Subsidiaries is involved in operations which are
reasonably likely to result in the imposition of any material liability on the
Lessee or any of its Subsidiaries under any Environmental Law, and neither the
Lessee nor any of its Subsidiaries has permitted any tenant or occupant of such
premises to engage in any such activities.
Insurance.
The Lessee has obtained insurance coverage covering the Property which meets the
requirements of Section 14.1 of Lease and such coverage is in full force and
effect.
Nature of the Property.
The Lessee shall use the Property for office, manufacturing and research and
development purposes.
Flood Zone.
No portion of the Property is located in an area identified as a special flood
hazard area by the Federal Emergency Management Agency or other applicable
agency, or if the Property is located in an area identified as a special flood
hazard area by the Federal Emergency Management Agency or other applicable
agency, then flood insurance has been obtained for such Property in accordance
with Section 14.2(b) of the Lease and in accordance with the National Flood
Insurance Act of 1968, as amended.
Legal Requirements.
The Property being acquired by the Trust complies with all Legal Requirements
(including all zoning and land use laws and Environmental Laws).
Consents, etc.
All consents, licenses and building permits required by all Legal Requirements
by the time required by such Legal Requirements for occupancy and operation of
the Property have been or will be obtained and are or will be in full force and
effect.
Solvency
. The fair salable value of Lessee's assets exceeds the fair value of its
liabilities; the Lessee is not left with unreasonably small capital after
consummation of the transactions contemplated by the Operative Agreements; and
Lessee is able to pay its debts (including trade debts) as they mature.
[intentionally omitted]
Title to Property.
As of the Funding Date, the Trust has a valid fee interest in the Land, subject
only to the Permitted Exceptions. The Trust will at all times have good and
marketable title to the Improvements, subject only to Permitted Exceptions.
Property-Related Matters.
The Property will comply with all Legal Requirements (including all applicable
zoning and land use laws and Environmental Laws) and Insurance Requirements. No
Improvements on the Property will encroach in any manner onto any adjoining land
(except as permitted by express written easements or variance) and such
Improvements and the use thereof by the Lessee and its agents, assignees,
employees, invitees, lessees, licensees and tenants will comply with all
applicable Legal Requirements (including all applicable Environmental Laws and
building, planning, zoning and fire codes). There are no defects to such
Improvements including, without limitation, the plumbing, heating, air
conditioning and electrical systems thereof, and all water, sewer, electric,
gas, telephone and drainage facilities and all other utilities required to
adequately service such Improvements for their intended use will be available
pursuant to adequate permits (including any that may be required under
applicable Environmental Laws). There is no action, suit or proceeding
(including any proceeding in condemnation or eminent domain or under any
applicable Environmental Law) pending or threatened which adversely affects the
title to, or the use, operation or value of, the Property. As of the Closing
Date, no fire or other casualty with respect to the Property has occurred which
fire or other casualty involves an uninsured loss in excess of $1,000,000. As of
each subsequent Funding Date, no fire or other casualty with respect to the
Property has occurred after the Closing Date which fire or other casualty
involves an uninsured loss in excess of $500,000. All utilities serving the
Property are located in, and in the future will be located in, and vehicular
access to the Improvements on the Property is provided by, either public
rights-of-way abutting the Property or Appurtenant Rights. All applicable
licenses, approvals, authorizations, consents, permits (including, without
limitation, building, demolition and environmental permits, licenses, approvals,
authorizations and consents), easements and rights- of-way, including proof of
dedication, required for the use and operation of the Improvements as permitted
pursuant to the Lease have been obtained from the appropriate Governmental
Authorities having jurisdiction or from private parties.
Lease Requirements
.
The Improvements will comply with all requirements and conditions set forth in
the Lease and all other conditions and requirements of the Operative Agreements.
PAYMENT OF CERTAIN EXPENSES
.
Transaction Expenses
.
The Lessee agrees to pay, or cause to be paid, on the Closing Date, all
Transaction Expenses arising from the Closing Date, including without limitation
all reasonable fees, expenses and disbursements of the various legal counsels
for the Lessor, the Trustees and the Agent in connection with the transactions
contemplated by the Operative Agreements and incurred in connection with such
Closing Date, the initial fees and expenses of the Trustees due and payable on
such Closing Date, all fees, taxes and expenses for the recording, registration
and filing of documents and all other reasonable fees, expenses and
disbursements incurred in connection with such Closing Date, including
syndication expenses and all expenses relating to the Appraisal.
All fees payable pursuant to the Operative Agreements shall be calculated on the
basis of a year of three hundred sixty (360) days for the actual days elapsed.
Brokers' Fees and Stamp Taxes.
Pay or cause to be paid brokers' fees and any and all stamp, transfer and other
similar taxes, fees and excises, if any, including any interest and penalties,
which are payable in connection with the transactions contemplated by this
Agreement and the other Operative Agreements.
Certain Fees and Expenses
. Lessee agrees to pay or to cause to be paid (a) the initial and annual fee of
the Trust Companies and all reasonable expenses of the Trust Companies and any
co-trustees (including without limitation reasonable counsel fees and expenses)
or any successor trustee and/or co-trustee, for acting as a trustee under the
Trust Agreement; (b) all costs and expenses incurred by the Lessee, the Agent,
the Lenders, the Holders or the Lessor in entering into any Lease Supplement and
any future amendments, modifications, supplements, restatements and/or
replacements with respect to any of the Operative Agreements, whether or not
such Lease Supplement, amendments, modifications, supplements, restatements
and/or replacements are ultimately entered into, or giving or withholding of
waivers of consents hereto or thereto, which have been requested by the Lessee;
(c) all costs and expenses incurred by the Agent, the Lenders, the Holders or
the Lessor in connection with any exercise of remedies under any Operative
Agreement or any purchase of the Property by the Lessee or any third party; and
(d) all reasonable costs and expenses incurred by the Agent, the Lenders, the
Holders or the Lessor in connection with any transfer or conveyance of Property,
whether or not such transfer or conveyance is ultimately accomplished.
Commitment Fee
. From the Closing Date until the Commitment Termination Date, the Lessee agrees
to pay or cause to be paid to the Agent for the account of the Lenders and the
Holders, a commitment fee (the "Commitment Fee") on the average daily undrawn
portion of the Aggregate Commitment Amount equal to the Commitment Fee
Percentage for the applicable Pricing Level.
Other Fees
. Lessee agrees to pay or cause to be paid to the Agent, Lenders and Holders the
fees set forth in the Fee Letter.
OTHER COVENANTS AND AGREEMENTS
.
Cooperation with the Lessee
.
The Holders, the Lenders, the Lessor (at the direction of the Majority Secured
Parties) and the Agent shall, at the expense of and to the extent reasonably
requested by the Lessee (but without assuming additional liabilities on account
thereof and only to the extent such is acceptable to the Holders, the Lenders,
the Lessor (at the direction of the Majority Secured Parties) and the Agent in
their reasonable discretion), cooperate with the Lessee in connection with the
Lessee satisfying its covenant obligations contained in the Operative Agreements
including without limitation at any time and from time to time, promptly and
duly executing and delivering any and all such further instruments, documents
and financing statements (and continuation statements related thereto) as the
Lessee may reasonably request in order to perform such covenants. The Lessor
agrees that, to the extent it shall obtain actual knowledge of the occurrence of
a Default caused by the Lessor or any of its Affiliates, it shall promptly
notify the Lessee describing the same in reasonable detail.
Covenants of the Trust Companies, the Trust, and the Holders
. Each of the Trust Companies, the Trust, and the Holders hereby agrees that so
long as this Agreement is in effect:
Neither the Trust Companies, the Trust nor any Holder will create or permit to
exist at any time, and each of them will, at its own cost and expense, promptly
take such action as may be necessary duly to discharge, or to cause to be
discharged, all Lessor Liens on the Property attributable to it; provided,
however, that the Trust Companies, the Trust and the Holders shall not be
required to so discharge any such Lessor Lien while the same is being contested
in good faith by appropriate proceedings diligently prosecuted so long as such
proceedings shall not materially and adversely affect the rights of the Lessee
under the Lease and the other Operative Agreements or involve any material
danger of impairment of the Liens of the Security Documents or of the sale,
forfeiture or loss of, and shall not interfere with the use or disposition of,
the Property or title thereto or any interest therein or the payment of Rent;
Without prejudice to any right under the Trust Agreement of the Trust Companies
to resign (subject to the requirement set forth in the Trust Agreement that such
resignation shall not be effective until a successor shall have agreed to accept
such appointment), or the Holders' rights under the Trust Agreement to remove
the institution acting as the trustee (after consent to such removal by the
Agent as provided in the Trust Agreement), each of the Trust Companies and the
Holders hereby agrees with the Lessee and the Agent (i) not to terminate or
revoke the trust created by the Trust Agreement except as permitted by Article X
of the Trust Agreement, (ii) not to amend, supplement, terminate or revoke or
otherwise modify any provision of the Trust Agreement in such a manner as to
adversely affect the rights of any such party without the prior written consent
of such party and (iii) to comply with all of the terms of the Trust Agreement,
the nonperformance of which would adversely affect such party;
The Trust Companies or any successor may resign or be removed by the Holders as
the trustee, a successor trustee may be appointed and a corporation may become
the trustee under the Trust Agreement, only in accordance with the provisions of
Article X of the Trust Agreement and, with respect to such appointment, with the
consent of the Lessee (so long as there shall be no Lease Event of Default that
shall have occurred and be continuing), which consent shall not be unreasonably
withheld or delayed;
The Trust shall not contract for, create, incur or assume any Indebtedness, or
enter into any business or other activity or enter into any contracts or
agreements, other than pursuant to or under the Operative Agreements;
The Holders will not instruct the Trust Companies or the Trust to take any
action in violation of the terms of any Operative Agreement;
Neither any Holder, the Trust Companies nor the Trust shall (i) commence any
case, proceeding or other action with respect to the Trust under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, arrangement, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (ii) seek
appointment of a receiver, trustee, custodian or other similar official with
respect to the Trust or for all or any substantial benefit of the creditors of
the Trust; and neither any Holder, the Trust Companies nor the Trust shall take
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in this paragraph;
Each Trust Company and the Trust shall give prompt notice to the Lessee, the
Holders and the Agent if such party's principal place of business or chief
executive office, or the office where the records concerning the accounts or
contract rights relating to the Property are kept, shall cease to be located at
the addresses set forth in Section 14.2 hereof, or if any such party shall
change its name; and
The Trust shall take or refrain from taking such actions and grant or refrain
from granting such approvals with respect to the Operative Agreements and/or
relating to the Property in each case as directed in writing by the Agent (until
such time as the Loans are paid in full, and then by the Majority Holders);
provided, however, that notwithstanding the foregoing provisions of this
subparagraph (h) the Trust Companies, the Trust, the Agent, the Lenders and the
Holders each acknowledge, covenant and agree that neither the Trust nor the
Agent shall act or refrain from acting, regarding each Unanimous Vote Matter,
until such party has received the approval of each Lender and each Holder
affected by such matter.
Lessee Covenants, Consent and Acknowledgment
.
Closure of Wells.
Lessee shall, at its sole cost and expense, on or before February 28, 2001,
cause all monitoring wells located on the Property, as more specifically
identified in the Environmental Audit, to be closed in full compliance with all
Environmental Laws, and any state, federal and local rules, regulations or
ordinances applicable thereto.
Information.
The Lessee will deliver to the Lessor and the Agent:
as soon as available and in any event within one hundred (100) days after the
end of each fiscal year of the Lessee a statement of financial position of the
Lessee and its consolidated subsidiaries as of the end of such fiscal year and
the related consolidated statements of income, shareholder's equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by independent accountants
of nationally recognized standing, together with an Officer's Compliance
Certificate, in the form attached as Exhibit E hereto (the "Compliance
Certificate"), from the chief financial officer of the Lessee substantially
containing a computation of, and showing compliance with, each of the financial
ratios and restrictions contained in this Section 9.3 and stating that no
Default or Event of Default has occurred or is continuing or, if any Default or
Event of Default has occurred and is continuing, describing it and the steps, if
any, being taken to cure it;
as soon as available and in any event within fifty (50) days after the end of
each of the first three (3) quarters of each fiscal year of the Lessee, an
unaudited consolidated statement of financial position of the Lessee as of the
end of such period and the related consolidated statements of income,
shareholders' equity and cash flows for such period and for the portion of the
Lessee's fiscal year ended at the end of such period, setting forth in each case
in comparative form the figures for the same period in the previous fiscal year,
together with a Compliance Certificate of the chief financial officer of the
Lessee or other officer responsible for the financial affairs of the Lessee
containing a computation of, and showing compliance with, each of the financial
ratios and restrictions contained in this Section 9.3 and stating that no
Default or Event of Default has occurred or is continuing or, if any Default or
Event of Default has occurred and is continuing, describing it and the steps, if
any, being taken to cure it;
promptly after the filing thereof, if applicable, copies of all reports on Forms
10-K, 10-Q and 8-K (or their equivalents), prospectuses and registration
statements which the Lessee shall have filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended;
if and when any member of the ERISA Group (1) gives or is required to give
notice to the PBGC of any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV or ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (2) receives notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (3) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan, a copy of such notice; (4) applies
for a waiver of the minimum funding standard under Section 412 of the Code, a
copy of such application; (5) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information filed with
the PBGC; (6) gives notice of withdrawal from any Plan pursuant to Section 4063
of ERISA, a copy of such notice; or (7) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit Arrangement which has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial officer or the chief
accounting officer of the Lessee setting forth details as to such occurrence and
action, if any, which the Lessee or applicable member of the ERISA Group is
required or proposes to take;
promptly after the occurrence of any Default or Event of Default, notice thereof
in writing by an authorized officer of the Lessee, together with information
regarding the steps, if any, being taken or proposed to be taken to cure it;
at least ten (10) Business Days prior to the expiration of any policy of
insurance required by Section 14 of the Lease, confirmation of renewal;
within three days of the end of each month during which Lessee is required to
maintain Pledged Collateral pursuant to Section 5.4(a)(ii) hereof, a written
certification of the Chief Financial Officer of Lessee as to Lessee's Cash
Balance at the end of such month; and
from time to time such additional information regarding the Lessee or the
Property as the Lessor or the Agent, at the request of the Lessor or any Lender,
may reasonably request.
Compliance with Laws.
The Lessee will, and will cause its Subsidiaries to, comply in all material
respects with all applicable laws, ordinances, rules, regulations, orders and
requirements of governmental authorities (including, without limitation,
Environmental Laws and ERISA and the rules and regulations thereunder) except
where the necessity of compliance therewith is contested in good faith by
appropriate proceedings and such contest is not reasonably likely to result in a
Material Adverse Effect.
Further Assurances.
The Lessee shall take or cause to be taken from time to time all action
necessary to assure during the Term that title to the Property remains in the
Lessor as contemplated by Section 12.1 of the Lease, that the Lessor holds a
perfected Lien on the Property securing the Lease Balance as contemplated by
Section 7.1 of the Lease, and that the Lessor and the Agent for the benefit of
the Lenders hold a perfected Lien on the Pledged Collateral securing the
Obligations.
Existence; Franchises; Businesses.
Except as otherwise expressly permitted in this Agreement, the Lessee shall, and
shall cause each Subsidiary to (i) maintain in full force and effect its
separate existence and all rights, licenses, leases and franchises reasonably
necessary to the conduct of its business, and (ii) continue doing business as a
whole in the substantially the same types of business in which they were engaged
on the Closing Date.
Books and Records.
The Lessee shall, and shall cause each Subsidiary to, maintain its books and
records in accordance with GAAP, and permit the Lessor and the Agent to make or
cause to be made inspections and audits of any books, records and papers of the
Lessee and its Subsidiaries and to make extracts therefrom at all such
reasonable times and as often as any such Person may reasonably require.
Fundamental Changes.
The Lessee shall not, nor shall it permit any Subsidiary to, enter into any
merger, consolidation or amalgamation, where it is not the surviving entity, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution); convey, sell, assign, transfer or otherwise dispose of all or
substantially all of the property, business or assets of the Lessee and its
Subsidiaries;
provided, however,
that if (i) at least thirty (30) days prior to the consummation of such
transaction the Lessee shall have furnished to the Lessor and the Agent an
Officer's Certificate of the chief financial officer of the Lessee that no
Default or Event of Default shall occur after giving effect thereto, and (ii) no
Default or Event of Default shall have occurred before or after giving effect
thereto, then:
any Subsidiary of the Lessee may be merged or consolidated with or into the
Lessee (provided, however, that the Lessee shall be the continuing or surviving
corporation) or with or into any one or more wholly-owned Subsidiaries of the
Lessee (provided, however, that the wholly-owned Subsidiary or Subsidiaries
shall be the continuing or surviving corporation); and
any wholly-owned Subsidiary may sell, lease, transfer or otherwise dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to the Lessee
or any other wholly-owned Subsidiary of the Lessee.
Liens
. The Lessee shall not create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:
any Lien existing on property of the Lessee on the Funding Date securing
Indebtedness outstanding on such date;
any Lien created under any Operative Agreement;
Liens for taxes, fees, assessments or other governmental charges which are not
delinquent or remain payable without penalty;
carrier's, warehousemen's, mechanics', landlords', materialmen's, repairmen's or
other similar Liens arising in the ordinary course of business which are not
delinquent or remain payable without penalty;
Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits
required in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other social security legislation;
Liens on the property of the Lessee securing (A) the non-delinquent performance
of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, (B) contingent obligations on surety and appeal bonds, and (C)
other non-delinquent obligations of a like nature; in each case, incurred in the
ordinary course of business;
Liens arising solely by virtue of any statutory or common law provisions
relating to banker's liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a depository institution;
provided, however, that (A) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by the
Lessee in excess of those set forth by regulations promulgated by the Board, and
(B) such deposit account is not intended by the Lessee or any Subsidiary to
provide collateral to the depository institution;
Permitted Liens; and
Liens otherwise permitted under the Credit Facility.
Change in Name or Location.
The Lessee hereby covenants and agrees that it shall give prompt notice to the
Agent if the Lessee's principal place of business or chief executive office, or
the office where the records concerning the accounts or contract rights relating
to Property are kept, shall cease to be located at 4650 Cushing Parkway,
Fremont, California 94538, or if it shall change its name.
Financial Covenants of Lessee.
The Lessee and its Subsidiaries shall maintain, on a consolidated basis, all of
the following financial covenants. The Lessee agrees and understands that
(except as expressly provided herein) all covenants under this Section 9.3(j)
shall be subject to compliance as measured as of the last day of each Fiscal
Quarter.
Minimum Quick Ratio.
Maintain a Quick Ratio of not less than 1.35 to 1.0.
Maximum Senior Indebtedness Ratio.
Maintain a Senior Indebtedness Ratio of not greater than 0.25 to 1.0.
Minimum Tangible Net Worth.
Maintain Tangible Net Worth on any date of determination (such date to be
referred to herein as a "
determination date
") which occurs after December 27, 1998 (such date to be referred to herein as
the "
base date
") to be less than the
sum
on such determination date of the following: (A) $350,000,000;
plus
(B) Seventy-five percent (75%) of the sum of the Lessee's consolidated quarterly
net income (ignoring any quarterly losses) for each quarter ending after the
base date through and including the quarter ending immediately prior to the
determination date;
plus
(C) one hundred percent (100%) of the Net Issuance Proceeds of all Equity
Securities issued by the Lessee and its Subsidiaries during the period
commencing on the base date and ending on the determination date;
plus
(D) one hundred percent (100%) of the aggregate decrease in the total
liabilities of the Lessee and its Subsidiaries resulting from conversions of
convertible Subordinated Indebtedness or other liabilities of the Lessee and its
Subsidiaries into Equity Securities of the Lessee and its Subsidiaries during
the period commencing on the base date and ending on the determination date.
Minimum Debt Service Coverage Ratio.
Maintain a Debt Service Coverage Ratio of not less than 3.00 to 1.00
Agent to Act for Lessor.
The Lessor hereby instructs Lessee and Lessee hereby acknowledges and agrees,
that until such time as the Loans and the Holder Advances are paid in full and
the Liens evidenced by the Pledge Agreement, Security Agreement and the Deed of
Trust have been released (i) any and all Rent (excluding Excepted Payments which
shall be payable to each Holder or other Person as appropriate) and any and all
other amounts of any kind or type under any of the Operative Agreements due and
owing or payable to any Person shall instead be paid directly to the Agent
(excluding Excepted Payments which shall be payable to each Holder or other
Person as appropriate) or as the Agent may direct from time to time for
allocation and distribution in accordance with the procedures set forth in
Section 13 hereof, (ii) all rights of the Lessor under the Lease shall be
exercised by the Agent and (iii) Lessee shall cause all notices, certificates,
financial statements, communications and other information which are delivered,
or are required to be delivered, to the Lessor, to also to be delivered at the
same time to the Agent.
Appraisals.
The Lessee hereby covenants and agrees to cause an Appraisal or reappraisal (in
form and substance satisfactory to the Agent and from an appraiser selected by
the Agent) to be issued respecting the Property as requested by the Agent from
time to time (i) at each and every time as such shall be required to satisfy any
regulatory requirements imposed on the Agent, the Lessor, the Trust Company, any
Lender and/or any Holder and (ii) after the occurrence of an Event of Default.
Supplemental Rent.
The Lessee hereby covenants and agrees that, except for amounts payable as Basic
Rent, any and all payment obligations owing from time to time under the
Operative Agreements by any Person to the Agent, any Lender, any Holder or any
other Person shall (without further action) be deemed to be Supplemental Rent
obligations payable by the Lessee. Without limitation, such obligations of the
Lessee shall include the Supplement Rent obligations pursuant to Section 3.3 of
the Lease, arrangement fees, administrative fees, participation fees, commitment
fees, unused fees, prepayment penalties, breakage costs, indemnities, trustee
fees and transaction expenses incurred by the parties hereto in connection with
the transactions contemplated by the Operative Agreements.
Appointment of the Agent by the Lenders, the Holders and the Trust
.
The Holders hereby appoint the Agent to act as collateral agent for the Holders
in connection with the Lien granted by the Security Documents to secure the
Holder Amount and all other amounts due and owing to the Holders. The Lenders
and the Holders acknowledge and agree and direct that the rights and remedies of
the beneficiaries of the Lien of the Security Documents shall be exercised by
the Agent on behalf of the Lenders and the Holders as directed from time to time
by the Majority Secured Parties or, pursuant to Section 14.4, all of the Lenders
and the Holders, as the case may be; provided, in all cases, the Agent shall
allocate payments and other amounts received in accordance with Section 13. The
Agent is further appointed to provide notices under the Operative Agreements on
behalf of the Trust (as determined by the Agent, in its reasonable discretion),
to receive notices under the Operative Agreements on behalf of the Trust and
(subject to Section 10.2) to take such other action under the Operative
Agreements on behalf of the Trust as the Agent shall determine in its reasonable
discretion from time to time. The Agent hereby accepts such appointments. For
purposes hereof, the provisions of Section 7 of the Credit Agreement, together
with such other terms and provisions of the Credit Agreement and the other
Operative Agreements as required for the full interpretation and operation of
Section 7 of the Credit Agreement are hereby incorporated by reference as if
restated herein for the mutual benefit of the Agent and each Holder as if each
Holder were a Lender thereunder. Outstanding Holder Advances and outstanding
Loans shall each be taken into account for purposes of determining Majority
Secured Parties. Further, the Agent shall be entitled to take such action on
behalf of the Trust as is delegated to the Agent under any Operative Agreement
(whether express or implied) as may be reasonably incidental thereto. The
parties hereto hereby agree to the provisions contained in this Section 9.4. Any
appointment of a successor agent under Section 7.9 of the Credit Agreement shall
also be effective as an appointment of a successor agent for purposes of this
Section 9.4.
Release of Properties, etc.
If the Lessee shall at any time purchase any Property pursuant to the Lease or
if any Property shall be sold in accordance with Article XXII of the Lease,
then, upon satisfaction by the Trust of its obligation to prepay the Loans, and
Holder Advances in respect of such Property and all other amounts owing to the
Lenders and the Holders under the Operative Agreements, the Agent is hereby
authorized and directed to release such Property from the Liens created by the
Security Documents to the extent of its interest therein. In addition, upon the
termination of the Commitments and the Holder Commitments and the payment in
full of the Loans, the Holder Advances and all other amounts owing by the Trust
and the Lessee hereunder or under any other Operative Agreement the Agent is
hereby authorized and directed to release such Property from the Liens created
by the Security Documents to the extent of its interest therein. Upon request of
the Trust following any such release, the Agent shall, at the sole cost and
expense of the Lessee, execute and deliver to the Trust and the Lessee such
documents as the Trust or the Lessee shall reasonably request to evidence such
release.
Guaranty.
Guaranty of Payment and Performance
.
Guarantor hereby unconditionally guarantees to each of Agent, Holders and
Lenders (each a "Financing Party") the prompt payment and performance of the
Company Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise) or when such is otherwise to be
performed; provided, notwithstanding the foregoing, the obligations of the
Guarantors under this Section 9.6 (i) shall not constitute a direct guaranty of
the indebtedness of the Borrower evidenced by the Notes but rather a guaranty of
the Company Obligations arising under the Operative Agreements, (ii) shall not
increase the obligations due under the Lease, and (iii) shall, to the extent
paid or performed by Guarantor under this Section 9.6, offset and be fully
credited against Lessee's obligations under the Lease. This Section 9.6 is a
guaranty of payment and performance and not of collection and is a continuing
guaranty and shall apply to all Company Obligations whenever arising. All rights
granted to the Financing Parties under this Section 9.6 shall be subject to the
provisions of Section 9.4.
Obligations Unconditional
.
Guarantor agrees that the obligations of the Guarantor hereunder are absolute
and unconditional, irrespective of the value, genuineness, validity, regularity
or enforceability of any of the Operative Agreements, or any other agreement or
instrument referred to therein, or any substitution, release or exchange of any
other guarantee of or security for any of the Company Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety, guarantor or co-obligor, it being the intent
of this Section 9.6(b) that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances. Guarantor agrees
that this Section 9.6 may be enforced by the Financing Parties without the
necessity at any time of resorting to or exhausting any other security or
collateral and without the necessity at any time of having recourse to the
Notes, the Certificates or any other of the Operative Agreements or any
collateral, if any, hereafter securing the Company Obligations or otherwise and
Guarantor hereby waives the right to require the Financing Parties to proceed
against the Lessee or any other Person (including without limitation a
co-guarantor) or to require the Financing Parties to pursue any other remedy or
enforce any other right. Guarantor further agrees that it hereby waives any and
all right of subrogation, indemnity, reimbursement or contribution against the
Lessee or any other guarantor of the Company Obligations for amounts paid under
this Section 9.6 until such time as the Loans, Holder Advances, accrued but
unpaid interest, accrued but unpaid Holder Yield and all other amounts owing
under the Operative Agreements have been paid in full. Without limiting the
generality of the waiver provisions of this Section 9.6, Guarantor hereby waives
any rights to require the Financing Parties to proceed against the Lessee or any
co- guarantor or to require Lessor to pursue any other remedy or enforce any
other right. Guarantor further agrees that nothing contained herein shall
prevent the Financing Parties from suing on any Operative Agreement or
foreclosing any security interest in or Lien on any collateral, if any, securing
the Company Obligations or from exercising any other rights available to it
under any Operative Agreement, or any other instrument of security, if any, and
the exercise of any of the aforesaid rights and the completion of any
foreclosure proceedings shall not constitute a discharge of Guarantor's
obligations hereunder; it being the purpose and intent of Guarantor that its
obligations hereunder shall be absolute, independent and unconditional under any
and all circumstances; provided that any amounts due under this Section 9.6
which are paid to or for the benefit of any Financing Party shall reduce the
Company Obligations by a corresponding amount (unless required to be rescinded
at a later date). Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Company Obligations and notice of or proof of
reliance by any Financing Party upon this Section 9.6 or acceptance of this
Section 9.6. The Company Obligations shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Section 9.6. All dealings between the Lessee and the
Guarantor, on the one hand, and the Financing Parties, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Section 9.6.
Modifications
.
Guarantor agrees that (a) all or any part of the security now or hereafter held
for the Company Obligations, if any, may be exchanged, compromised or
surrendered from time to time; (b) no Financing Party shall have any obligation
to protect, perfect, secure or insure any such security interests, liens or
encumbrances now or hereafter held, if any, for the Company Obligations or the
properties subject thereto; (c) the time or place of payment of the Company
Obligations may be changed or extended, in whole or in part, to a time certain
or otherwise, and may be renewed or accelerated, in whole or in part; (d) Lessee
and any other party liable for payment under the Operative Agreements may be
granted indulgences generally; (e) any of the provisions of the Notes, the
Certificates or any of the other Operative Agreements may be modified, amended
or waived; (f) any party (including any co-guarantor) liable for the payment
thereof may be granted indulgences or be released; and (g) any deposit balance
for the credit of the Lessee or any other party liable for the payment of the
Company Obligations or liable upon any security therefor may be released, in
whole or in part, at, before or after the due date of the Company Obligations,
all without notice to or further assent by Guarantor, which shall remain bound
thereon, notwithstanding any such exchange, compromise, surrender, extension,
renewal, acceleration, modification, indulgence or release.
Waiver of Rights
.
Guarantor expressly waives to the fullest extent permitted by applicable law:
(a) notice of acceptance of this Section 9.6 by any Financing Party and of all
extensions of credit or other Advances to the Lessor or the Lessee by the
Lenders pursuant to the terms of the Operative Agreements; (b) presentment and
demand for payment or performance of any of the Company Obligations; (c) protest
and notice of dishonor or of default with respect to the Company Obligations or
with respect to any security therefor; (d) notice of any Financing Party
obtaining, amending, substituting for, releasing, waiving or modifying any
security interest, lien or encumbrance, if any, hereafter securing the Company
Obligations, or any Financing Party's subordinating, compromising, discharging
or releasing such security interests, liens or encumbrances, if any; and (e) all
other notices to which Guarantor might otherwise be entitled. Without limiting
the foregoing, Guarantor expressly waives, to the fullest extent permitted by
applicable law, any defense to the enforcement of its obligations hereunder, and
any rights and benefits which might otherwise be available to Guarantor, under
New York law and California Civil Code Sections 2809, 2810, 2819, 2822(a), 2839,
2845, 2848, 2849, 2850, 2899 and 3433. The Guarantor waives all rights and
defenses that the Guarantor may have because the Company Obligations may be
secured by real property. This means, among other things: (1) the creditor may
collect from the Guarantor without first foreclosing on any real or personal
property collateral pledged by the debtor; (2) if a creditor forecloses on any
real property collateral pledged by the debtor: (A) the amount of the debt may
be reduced only by the price for which that collateral is sold at the
foreclosure sale, even if the collateral is worth more than the sale price; (B)
the creditor may collect from the guarantor even if the creditor, by foreclosing
on the real property collateral, has destroyed any right the guarantor may have
to collect from the debtor. This is an unconditional and irrevocable waiver of
any rights and defenses the Guarantor may have because the Company Obligations
may be secured by real property. These rights and defenses include, but are not
limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726
of the California Code of Civil Procedure. Notwithstanding anything to the
contrary herein, Guarantor's payments hereunder shall be due five (5) Business
Days after written demand by the Agent for such payment (unless the Company
Obligations are automatically accelerated pursuant to the applicable provisions
of the Operative Agreements in which case the Guarantor's payments shall be
automatically due).
Reinstatement
.
The obligations of the Guarantors under this Section 9.6 shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of any Person in respect of the Company Obligations is rescinded or must be
otherwise restored by any holder of any of the Company Obligations, whether as a
result of any proceedings in bankruptcy or reorganization or otherwise, and
Guarantor agrees that it will indemnify each Financing Party on demand for all
reasonable costs and expenses (including, without limitation, reasonable fees of
counsel) incurred by any Financing Party in connection with such rescission or
restoration, including without limitation any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law.
Payment of Amounts to the Agent
.
Each Financing Party hereby instructs Guarantor, and Guarantor hereby
acknowledges and agrees, that, until such time as the Loans and the Holder
Advances are paid in full and the Liens evidenced by the Pledge Agreement,
Security Agreement and the Deed of Trust have been released, any and all Rent
(excluding Excepted Payments which shall be payable to each Holder or other
Person as appropriate) and any and all other amounts of any kind or type under
any of the Operative Agreements due and owing or payable to any Person shall
instead be paid directly to the Agent (excluding Excepted Payments which shall
be payable to each Holder or other Person as appropriate) or as the Agent may
direct from time to time for allocation and distribution in accordance with the
procedures set forth in Section 13 hereof.
CREDIT AGREEMENT AND TRUST AGREEMENT
.
Lessee's Credit Agreement Rights
.
Notwithstanding anything to the contrary contained in the Credit Agreement, the
Agent, the Lenders, the Holders, and the Trust hereby agree that, prior to the
occurrence and continuation of any Default or Event of Default, the Lessee shall
have the following rights:
the right to designate an account to which amounts funded under the Operative
Agreements shall be credited pursuant to Section 2.3 of the Credit Agreement;
the right to terminate or reduce the Commitments pursuant to Section 2.4 of the
Credit Agreement;
the right to exercise the conversion and continuation options pursuant to
Section 2.6 of the Credit Agreement;
the right to approve any successor agent pursuant to Section 7.9 of the Credit
Agreement; and
the right to consent to any assignment by a Lender pursuant to the Credit
Agreement, which consent shall not be unreasonably withheld or delayed.
Lessee's Trust Agreement Rights
.
Notwithstanding anything to the contrary contained in the Trust Agreement, the
Trust and the Holders hereby agree that, prior to the occurrence and
continuation of any Default or Event of Default, the Lessee shall have the
following rights:
the right to exercise the removal options contained in Article IX of the Trust
Agreement; provided, however, that no removal of either Trust Company and
appointment of a successor trustee pursuant to such Article IX of the Trust
Agreement shall be made without the prior written consent (not to be
unreasonably withheld or delayed) of the Holders; and
the right to consent to any assignment by a Holder pursuant to the Trust
Agreement, which consent shall not be unreasonably withheld or delayed.
TRANSFER OF INTEREST
.
Restrictions on Transfer
.
Subject to Lessee's rights under Section 10 above, each Lender may participate,
assign or transfer all or a portion of its interest hereunder and under the
other Operative Agreements in accordance with Section 9 of the Credit Agreement.
The Holders may, directly or indirectly, assign, convey or otherwise transfer
any of their right, title or interest in or to the Trust Estate or the Trust
Agreement and in accordance with the terms of Section 11.15 of the Trust
Agreement. The Lessor may, subject to the rights of the Lessee under the Lease
and the other Operative Agreements and to the Lien of the applicable Security
Documents but only with the prior written consent of the Agent (which consent
may be withheld by the Agent in its sole discretion) and (provided, no Default
or Event of Default has occurred and is continuing) with the consent of the
Lessee, directly or indirectly, assign, convey, appoint an agent with respect to
enforcement of, or otherwise transfer any of its right, title or interest in or
to the Property, the Lease, the Trust Agreement and the other Operative
Agreements (including without limitation any right to indemnification
thereunder), or any other document relating to the Property or any interest in
the Property as provided in the Trust Agreement and the Lease. The provisions of
the immediately preceding sentence shall not apply to the obligations of the
Lessor to transfer the Property to the Lessee or a third party purchaser
pursuant to Article XXII of the Lease upon payment for such Property in
accordance with the terms and conditions of the Lease. Lessee may not assign any
of the Operative Agreements or any of its rights or obligations thereunder or
with respect to the Property in whole or in part to any Person without the prior
written consent of the Agent, the Lenders, the Holders and the Lessor. Any
participation, assignment or transfer effected in breach of this Section 11
shall be void.
Effect of Transfer
. From and after any transfer effected in accordance with this Section 11, the
transferor shall be released, to the extent of such transfer, from its liability
hereunder and under the other documents to which it is a party in respect of
obligations to be performed on or after the date of such transfer; provided,
however, that any transferor shall remain liable hereunder and under such other
documents to the extent that the transferee shall not have assumed the
obligations of the transferor thereunder. Upon any transfer by the Lessor, a
Holder or a Lender as above provided, any such transferee shall assume the
obligations of the Lessor, the Holder or the Lender, as the case may be, and
shall be deemed the "Lessor," or a "Holder" or "Lender," as the case may be, for
all purposes of such documents and each reference herein to the transferor shall
thereafter be deemed a reference to such transferee for all purposes, except as
provided in the preceding sentence. Notwithstanding any transfer of all or a
portion of the transferor's interest as provided in this Section 11, the
transferor shall be entitled to all benefits accrued and all rights vested prior
to such transfer including without limitation rights to indemnification under
any such document.
INDEMNIFICATION
.
General Indemnity.
The Lessee, whether or not any of the transactions contemplated hereby shall be
consummated, hereby assumes liability for and agrees to defend, indemnify and
hold harmless each Indemnified Person on an After Tax Basis from and against any
Claims which may be imposed on, incurred by or asserted against an Indemnified
Person in any way relating to or arising or alleged to arise out of (a) the
financing, refinancing, ground lease, purchase, acceptance, rejection,
ownership, design, construction, delivery, acceptance, nondelivery, leasing,
subleasing, possession, use, operation, repair, maintenance, modification,
transportation, condition, operation, sale, return, repossession (whether by
summary proceedings or otherwise), or any other disposition of the Property or
any part thereof, (b) any latent or other defects in any property whether or not
discoverable by an Indemnified Person or the Lessee; (c) a violation of any
Legal Requirement or Requirement of Law, including any violation of
Environmental Laws, the Release, presence or use of Hazardous Substances on, at,
under or emanating from the Property or other loss of or damage relating to the
Property; (d) the Operative Agreements, or any transaction contemplated thereby;
(e) any breach by the Lessee of any of its representations or warranties under
the Operative Agreements or failure by the Lessee to perform or observe any
covenant or agreement to be performed by it under any of the Operative
Agreements; (f) the invalidation of Lessee's insurance policies related to the
Property; (g) personal injury, death or property damage relating to the
Property, including Claims based on strict liability in tort; (h) the existence
of any Lien on or with respect to the Property, the Improvements, the Equipment,
any Basic Rent or Supplemental Rent, title thereto, or any interest therein,
including any Liens which arise out of the possession, use, occupancy,
construction, repair or rebuilding of the Property or by reason of labor or
materials furnished or claimed to have been furnished to the Lessee, the Lessor,
or any of their contractors or agents or by reason of the financing of the
Property or any personally or equipment purchased or leased by the Lessee or
Improvements or Modifications constructed by the Lessee, except Lessor Liens and
Liens in favor of the Agent or the Lessor; and (i) the Transactions contemplated
hereby or by any other Operative Agreement, in respect of the application of
Parts 4 and 5 of Subtitle B of Title I of ERISA and any prohibited transaction
described in Section 4975(c) of the Code; but in any event excluding (x) Claims
to the extent such Claims arise solely out of events occurring after the
expiration of the Term and after the Lessee's discharge of all its obligations
under the Lease and the other Operative Agreements or (y) as to any Indemnified
Person, any Claim to the extent resulting from the willful misconduct or gross
negligence of such Indemnified Person. The Lessee shall be entitled to control,
and shall assume full responsibility for the defense of, any Claim; provided,
however, that any Indemnified Person named in such Claim may retain separate
counsel reasonably acceptable to the Lessee at the expense of the Lessee in the
event of and to the extent of an actual conflict. The Lessee and each
Indemnified Person agree to give each other prompt written notice of any Claim
hereby indemnified against but the giving of any such notice by an Indemnified
Person shall not be a condition to the Lessee's obligations under this Section
12.1, except to the extent failure to give such notice materially prejudices the
Lessee's rights hereunder. After an Indemnified Person has been fully
indemnified for a Claim pursuant to this Section 12.1, and so long as no Event
of Default shall have occurred and be continuing, the Lessee shall be subrogated
to any right of such Indemnified Person with respect to such Claim. None of the
Indemnified Persons shall settle a Claim without the consent of the Lessee,
which consent shall not be unreasonably withheld or delayed.
General Impositions Indemnity.
Indemnification.
The Lessee shall pay and assume liability for, and does hereby agree to
indemnify, protect and defend the Property and all Indemnified Persons, and hold
them harmless against, all Impositions on an After Tax Basis.
Payments.
Subject to the terms of Section 12.2(f), the Lessee shall pay or cause to be
paid all Impositions directly to the taxing authorities where feasible and
otherwise to the Indemnified Person, as appropriate, and the Lessee shall at its
own expense, upon such Indemnified Person's reasonable request, furnish to such
Indemnified Person copies of official receipts or other satisfactory proof
evidencing such payment.
In the case of Impositions for which no contest is conducted pursuant to Section
12.2(f) and which the Lessee pays directly to the taxing authorities, the Lessee
shall pay such Impositions thirty (30) days prior to the latest time permitted
by the relevant taxing authority for timely payment. In the case of Impositions
for which the Lessee reimburses an Indemnified Person, the Lessee shall do so
within twenty (20) days after receipt by the Lessee of demand by such
Indemnified Person describing in reasonable detail the nature of the Imposition
and the basis for the demand (including the computation of the amount payable),
but in no event shall the Lessee be required to pay such reimbursement prior to
thirty (30) days before the latest time permitted by the relevant taxing
authority for timely payment. In the case of Impositions for which a contest is
conducted pursuant to Section 12.2(f), the Lessee shall pay such Impositions or
reimburse such Indemnified Person for such Impositions, to the extent not
previously paid or reimbursed pursuant to subsection (a), thirty (30) days prior
to the latest time permitted by the relevant taxing authority for timely payment
after conclusion of all contests under Section 12.2(f).
Impositions imposed with respect to the Property for a billing period during
which the Lease expires or terminates (unless a Renewal Term is to apply or the
Lessee has exercised the Purchase Option or the Maturity Date Purchase Option
with respect to the Property) shall be adjusted and prorated on a daily basis
between the Lessee and the Lessor, whether or not such Imposition is imposed
before or after such expiration or termination and each party shall pay or
reimburse the other for each party's pro rata share thereof.
At the Lessee's request, the amount of any indemnification payment by the Lessee
pursuant to subsection (a) shall be verified and certified by an independent
public accounting firm mutually acceptable to the Lessee and the Indemnified
Person. The fees and expenses of such independent public accounting firm shall
be paid by the Lessee unless such verification shall result in an adjustment in
the Lessee's favor of 10% or more of the payment as computed by the Indemnified
Person, in which case such fee shall be paid by the Indemnified Person.
Reports and Returns.
(i) The Lessee shall be responsible for preparing and filing any real and
personal property or ad valorem tax returns in respect of the Property. In case
any other report or tax return shall be required to be made with respect to any
obligations of the Lessee under or arising out of subsection (a) and of which
the Lessee has knowledge or should have knowledge, the Lessee, at its sole cost
and expense, shall notify the relevant Indemnified Person of such requirement
and (except if such Indemnified Person notifies the Lessee that such Indemnified
Person intends to file such report or return) (A) to the extent required or
permitted by and consistent with applicable law, make and file in its own name
such return, statement or report; and (B) in the case of any other such return,
statement or report required to be made in the name of such Indemnified Person,
advise such Indemnified Person of such fact and prepare such return, statement
or report for filing by such Indemnified Person or, where such return, statement
or report shall be required to reflect items in addition to any obligations of
the Lessee under or arising out of subsection (a), provide such Indemnified
Person at the Lessee's expense with information sufficient to permit such
return, statement or report to be properly made with respect to any obligations
of the Lessee under or arising out of subsection (a). Such Indemnified Person
shall, upon the Lessee's request and at the Lessee's expense, provide any data
maintained by such Indemnified Person (and not otherwise available to or within
the control of the Lessee) with respect to the Property which the Lessee may
reasonably require to prepare any required tax returns or reports. Each
Indemnified Person agrees to use commercially reasonable efforts to send to the
Lessee a copy of any written request or other notice that the Indemnified Person
receives with respect to any reports or returns required to be filed with
respect to the Property or the transactions contemplated by the Operative
Agreements, it being understood that no Indemnified Person shall have any
liability for failure to provide such copies.
Income Inclusions.
If as a result of the payment or reimbursement by the Lessee of any expenses of
any Lessor or the payment of any Transaction Expenses incurred in connection
with the transactions contemplated by the Operative Agreements, the Lessor or
any Lender shall suffer a net increase in any federal, state or local income tax
liability, the Lessee shall indemnify such Persons (without duplication of any
indemnification required by subsection (a)) on an After Tax Basis for the amount
of such increase. The calculation of any such net increase shall take into
account any current or future tax savings realized or reasonably expected to be
realized by such person in respect thereof, as well as any interest, penalties
and additions to tax payable by the Lessor, the Lender or such Affiliate, in
respect thereof.
Withholding Taxes.
As between the Lessee on one hand, and any Financing Party on the other hand,
the Lessee shall be responsible for, and, subject to the provisions of Sections
12.2(g) and (h), the Lessee shall indemnify and hold harmless the Financing
Parties (without duplication of any indemnification required by subsection (a))
on an After Tax Basis against, any obligation for United States or foreign
withholding taxes imposed in respect of payments with respect to the Lender
Advances or the Lessor Contribution or with respect to Rent payments under the
Lease or payments of the Termination Value or the Purchase Option Price (and, if
any Financing Party receives a demand for such payment from any taxing
authority, the Lessee shall discharge such demand on behalf of such Financing
Party).
Contests of Impositions.
If a written claim is made against any Indemnified Person or if any proceeding
shall be commenced against such Indemnified Person (including a written notice
of such proceeding), for any Impositions, such Indemnified Person shall promptly
notify the Lessee in writing and shall not take action with respect to such
claim or proceeding without the consent of the Lessee for thirty (30) days after
the receipt of such notice by the Lessee; provided, however, that, in the case
of any such claim or proceeding, if action shall be required by law or
regulation to be taken prior to the end of such 30-day period, such Indemnified
Person shall, in such notice to the Lessee, inform the Lessee of such shorter
period, and no action shall be taken with respect to such claim or proceeding
without the consent of the Lessee before two days before the end of such shorter
period; provided, further, that the failure of such Indemnified Person to give
the notices referred to in this sentence shall not diminish the Lessee's
obligation hereunder except to the extent such failure precludes the Lessee from
contesting all or part of such claim.
If, within thirty (30) days of receipt after such notice from the Indemnified
Person (or such shorter period as the Indemnified Person has notified the Lessee
as required by law or regulation for the Indemnified Person to commence such
contest), the Lessee shall request in writing that such Indemnified Person
contest such Imposition, the Indemnified Person shall, at the expense of the
Lessee, in good faith conduct and control such contest (including, without
limitation, by pursuit of appeals) relating to the validity, applicability or
amount of such Impositions (provided, however, that (A) if such contest involves
a tax other than a tax on net income and can be pursued independently from any
other proceeding involving a tax liability of such Indemnified Person, the
Indemnified Person, at the Lessee's request, shall allow the Lessee to conduct
and control such contest and (B) in the case of any contest, the Indemnified
Person may request the Lessee to conduct and control such contest) by, in the
sole discretion of the Person conducting and controlling such contest, (1)
resisting payment thereof, (2) not paying the same except under protest, if
protest is necessary and proper, or (3) if the payment be made, using reasonable
efforts to obtain a refund thereof in appropriate administrative and judicial
proceedings.
The party controlling any contest shall consult in good faith with the
non-controlling party and shall keep the non-controlling party reasonably
informed as to the conduct of such contest; provided, that all decisions
ultimately shall be made in the sole discretion of the controlling party. The
parties agree that an Indemnified Person may at any time decline to take further
action with respect to the contest of any Imposition and may settle such contest
if such Indemnified Person shall waive its rights to any indemnity from the
Lessee that otherwise would be payable in respect of such claim and shall pay to
the Lessee any amount previously paid or advanced by the Lessee pursuant to this
Section 12.2 by way of indemnification or advance for the payment of an
Imposition other than expenses of such contest.
Notwithstanding the foregoing provisions of this Section 12.2, an Indemnified
Person shall not be required to take any action and the Lessee shall not be
permitted to contest any Impositions in its own name or that of the Indemnified
Person unless (A) the Lessee shall have agreed to pay in writing and shall pay
to such Indemnified Person on demand and on an After Tax Basis all reasonable
costs, losses and expenses that such Indemnified Person actually incurs in
connection with contesting such Impositions, including, without limitation, all
reasonable legal, accounting and investigatory fees and disbursements and the
contested claim if ultimately required to be paid, (B) in the case of a claim
that must be pursued in the name of an Indemnified Person (or an Affiliate
thereof), the amount of the potential indemnity exceeds $50,000, (C) the
Indemnified Person shall have reasonably determined that the action to be taken
will not result in any material danger of sale, forfeiture or loss of the
Property or the Pledged Collateral, or any part thereof or interest therein,
will not interfere with the payment of Rent, and will not result in risk of
criminal liability, (D) if such contest shall involve the payment of the
Imposition prior to the contest, the Lessee shall provide to the Indemnified
Person an interest-free advance in an amount equal to the Imposition that the
Indemnified Person is required to pay (with no additional net after-tax cost to
such Indemnified Person), (E) the Lessee shall have provided to such Indemnified
Person an opinion of independent tax counsel selected by the Lessee and
reasonably satisfactory to the Indemnified Person stating that a reasonable
basis exists to contest such claim (or, in the case of an appeal of an adverse
determination, an opinion of such counsel to the effect that the position
asserted in such appeal will more likely than not prevail), and (F) no Event of
Default shall have occurred and be continuing. In no event shall an Indemnified
Person be required to appeal an adverse judicial determination to the United
States Supreme Court. In addition, an Indemnified Person shall not be required
to contest any claim in its name (or that of an Affiliate) if the subject matter
thereof shall be of a continuing nature and shall have previously been decided
adversely by a court of competent jurisdiction pursuant to the contest
provisions of this Section 12.2, unless there shall have been a change in law
(or interpretation thereof) and the Indemnified Person shall have received, at
the Lessee's expense, an opinion of independent tax counsel selected by the
Indemnified Person and reasonably acceptable to the Lessee stating that as a
result of such change in law (or interpretation thereof), it is more likely than
not that the Indemnified Person will prevail in such contest.
Documentation of Withholding Status.
Each Financing Party (or any successor thereto or transferee thereof) that is
organized under the laws of a jurisdiction outside of the United States of
America shall:
on or before the date it becomes a party to any Operative Agreement, deliver to
the Lessee any certificates, documents or other evidence that shall be required
by the Code or Treasury Regulations issued pursuant thereto to establish its
exemption from United States Federal withholding requirements, including (A) two
(2) valid, duly completed, original copies of Internal Revenue Service Form
W-8BEN or successor applicable form, properly and duly executed, certifying in
each case that such party is entitled to receive payments pursuant to the
Operative Agreements without deduction or withholding of United States Federal
income taxes, and (B) a valid, duly completed, original copy of Internal Revenue
Service Form W-8 or Form W-9 or applicable successor form, properly and duly
executed, certifying that such party is entitled to an exemption from United
States of America backup withholding tax; and
or before the date that any such form described above expires or becomes
obsolete, or after the occurrence of any event requiring a change in the most
recent such form previously delivered to the Lessee, deliver to the Lessee two
(2) further valid, duly completed, original copies of any such form or
certification, properly and duly executed.
Limitation on Tax Indemnification.
The Lessee shall not be required to indemnify any Indemnified Person, or to pay
any increased amounts to any Indemnified Person or tax authority with respect to
any Impositions pursuant to this Section 12.2 to the extent that (i) any
obligation to withhold, deduct, or pay amounts with respect to Tax existed on
the date such Indemnified Person became a party to any Operative Agreement (and,
in such case, the Lessee may deduct and withhold such Tax from payments pursuant
to the Operative Agreements), or (ii) such Indemnified Person fails to comply
with the provisions of Section 12.2(g) (and, in such case, the Lessee may deduct
and withhold all Taxes required by law as a result of such noncompliance from
payments made by the Lessee pursuant to the Operative Agreements). With respect
to any transferee of any Financing Party (including a transfer resulting from
any change in the designation of the lending office of a Financing Party), the
transferee shall not be entitled to any greater payment or indemnification under
this Section 12.2 than the transferor would have been entitled to.
LIBOR Lending Unlawful.
Notwithstanding any other provision herein, if the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof occurring
after the Closing Date shall make it unlawful for any Financing Party to make,
continue or maintain LIBOR Loans or LIBOR Holder Advances as contemplated by the
Operative Agreements, (a) such Financing Party shall promptly give written
notice of such circumstances to the Lessee, the Lessor and the Agent (which
notice shall be withdrawn whenever such circumstances no longer exist), (b) such
Financing Party shall undertake reasonable efforts to propose a money rate
comparable to LIBOR (the "
LIBOR Alternative
"), (c) the commitment of such Lender or Holder, as the case may be, hereunder
to make, continue or maintain LIBOR Loans or LIBOR Holder Advances shall
forthwith be canceled and, until such time as it shall no longer be unlawful for
such Financing Party to make, continue or maintain LIBOR Loans or LIBOR Holder
Advances, such Financing Party shall then have a commitment only to make or
maintain Loans or the Holder Advances based on ABR or the LIBOR Alternative, if
any, when a LIBOR Loan or LIBOR Holder Advance is requested and (d) such
Financing Party's Loans and Holder Advances then outstanding as LIBOR Loans or
LIBOR Holder Advances, if any, shall be converted automatically to Loans or
Holder Advances based on ABR or the LIBOR Alternative, if any, on the respective
last days of the then current Interest Periods with respect to such Loans and
Holder Advances or within such earlier period as required by law. If any such
conversion of LIBOR Loans or LIBOR Holder Advances occurs on a day which is not
the last day of the then current Interest Period with respect thereto, the
Lessee shall pay to such Financing Party such amounts, if any, as may be
required pursuant to Section 12.6. In any such case, interest and principal (if
any) shall be payable contemporaneously with the related LIBOR Loans or LIBOR
Holder Advances of the other Financing Parties.
Deposits Unavailable.
If any of the Financing Parties shall have determined that:
Dollar deposits in the relevant amount and for the relevant Interest Period are
not available to the Financing Party in its relevant market; or
by reason of circumstances affecting the Financing Party's relevant market,
adequate means do not exist for ascertaining the interest rate or Yield, as the
case may be, applicable to such Financing Party's LIBOR Loans or LIBOR Holder
Advances;
then, upon notice from such Financing Party to the Lessee and the other
Financing Parties, (x) the obligations of the Financing Parties to make or
continue any Loans or the Holder Advances as, or to convert any Loans or the
Holder Advance into, LIBOR Loans or LIBOR Holder Advances shall be suspended,
and (y) each outstanding LIBOR Loan or LIBOR Holder Advance shall automatically
convert into a Loan or Holder Advance based on ABR or the LIBOR Alternative, if
any, on the last day of the current Interest Period applicable thereto.
Increased Costs, etc.
If the adoption of or any change in a Requirement of Law or in the
interpretation or application thereof applicable to any Financing Party, or
compliance by any Financing Party with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority,
in each case made subsequent to the Closing Date (or, if later, the date on
which such Financing Party becomes a Financing Party):
shall subject such Financing Party to any tax of any kind whatsoever with
respect to any LIBOR Loans or LIBOR Holder Advances made, continued or
maintained by it or its obligation to make, continue or maintain LIBOR Loans or
LIBOR Holder Advances, or change the basis of taxation of payments to such
Financing Party in respect thereof; or
shall impose, modify or hold applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, Loans and the Holder Advances, advances or
other extensions of credit by, or any other acquisition of funds by, any office
of such Financing Party which is not otherwise included in the determination of
the Adjusted LIBOR hereunder; or
shall impose on such Financing Party any other condition (excluding any Tax of
any kind) whatsoever in connection with the Operative Agreements;
and the result of any of the foregoing is to increase the cost to such Financing
Party, by an amount which such Financing Party reasonably deems to be material,
of making, continuing or maintaining LIBOR Advances or LIBOR Holder Advances or
to reduce any amount receivable hereunder in respect thereof, then, in any such
case, upon notice to the Lessee from such Financing Party, through the Lessor or
the Agent, in accordance herewith, the Lessee shall pay such Financing Party any
additional amounts necessary to compensate such Financing Party for such
increased cost or reduced amount receivable; provided, that, in any such case,
the Lessee may elect to convert the LIBOR Loans or LIBOR Holder Advances made by
such Financing Party hereunder to Loans or Holder Advances based on ABR or the
LIBOR Alternative, if any, by giving the Lessor and the Agent at least one
(1) Business Day's notice of such election, in which case the Lessee shall
promptly pay to such Financing Party, upon demand, without duplication, such
amounts, if any, as may be required pursuant to Section 12.6. All payments
required by this Section 12.5 shall be made by the Lessee within ten
(10) Business Days after demand by the affected Financing Party. The Lessee
shall not be obligated to reimburse any Financing Party for any increased cost
or reduced return incurred more than one hundred eighty (180) days after the
date that such Financing Party receives actual notice of such increased cost or
reduced return unless such Financing Party gives notice thereof to the Lessee in
accordance with this Section 12.5 during such one hundred eighty (180) day
period. If any Financing Party becomes entitled to claim any additional amounts
pursuant to this subsection, it shall provide prompt notice thereof to the
Lessee, through the Lessor and Agent, certifying (x) that one of the events
described in this clause (a) has occurred and describing in reasonable detail
the nature of such event, (y) as to the increased cost or reduced amount
resulting from such event, and (z) as to the additional amount demanded by such
Financing Party and a reasonably detailed explanation of the calculation thereof
(including the method by which such Financing Party allocated such amounts to
the Lessee). Such a certificate as to any additional amounts payable pursuant to
this clause submitted by such Financing Party, through the Agent and the Lessor,
to the Lessee shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment of the
Loans and the Holder Advance and all other amounts payable hereunder.
Each Financing Party shall use its reasonable efforts to reduce or eliminate any
claim for compensation pursuant to this Section 12.5, including, without
limitation, a change in the office of such Financing Party at which its
obligations related to this Agreement are maintained if such change will avoid
the need for or reduce the amount of, such compensation and will not, in the
reasonable judgment of such Financing Party, be otherwise disadvantageous to it.
If any such claim for compensation shall not be eliminated or waived, the Lessee
shall have the right to replace the affected Financing Party with a new
financial institution that shall succeed to the rights of such Financing Party
under this Participation Agreement; provided, that such Financing Party shall
not be replaced hereunder until it has been paid in full such claim and all
other amounts owed to it hereunder.
Indemnifications Provided by the Lessor in Favor of the Other Indemnified
Persons
.
To the extent the Indemnity Provider is not obligated to indemnify each
Indemnified Person with respect to the various matters described in this Section
12, the Lessor shall provide such indemnities (but only to the extent amounts
sufficient to pay such indemnity are funded by the Lenders and the Holders) in
favor of each Indemnified Person in accordance with this Section 12.6 and shall
pay all such amounts owed with respect to this Section 12.6 with amounts
advanced by the Lenders and the Holders (a) to the extent, but only to the
extent, amounts are available therefor with respect to the Available Commitments
and the Available Holder Commitments and (b) unless each Lender and each Holder
has declined in writing to fund such amount. Notwithstanding any other provision
in any other Operative Agreement to the contrary, all amounts so advanced shall
be deemed added to the Property Cost.
Whether or not any of the transactions contemplated hereby shall be consummated,
the Trust hereby assumes liability for and agrees to defend, indemnify and hold
harmless each Indemnified Person on an After Tax Basis from and against any
Claims, which may be imposed on, incurred by or asserted against an Indemnified
Person by any third party, including without limitation Claims arising from the
negligence of an Indemnified Person (but not to the extent such Claims arise
from the gross negligence or willful misconduct of such Indemnified Person
itself, as determined by a court of competent jurisdiction, as opposed to gross
negligence or willful misconduct imputed to such Indemnified Person or breach of
such Indemnified Person's obligations under this Agreement, the Lease or any
other Operative Agreement) in any way relating to or arising or alleged to arise
out of the execution, delivery, performance or enforcement of this Agreement,
the Lease or any other Operative Agreement or on or with respect to any Property
or any component thereof, including without limitation Claims in any way
relating to or arising or alleged to arise out of the matters set forth in
Sections 12.1(a) through 12.1(i).
The Trust shall pay and assume liability for, and does hereby agree to
indemnify, protect and defend each Property and all Indemnified Persons, and
hold them harmless against, all Impositions on an After Tax Basis, and all
payments pursuant to the Operative Agreements shall be made free and clear of
and without deduction for any and all present and future Impositions.
Notwithstanding anything to the contrary in this paragraph, the Excluded Taxes
shall be excluded from the indemnity provisions afforded by this paragraph.
DISTRIBUTION
Basic Rent.
Each payment of Basic Rent (and any payment of interest on overdue installments
of Basic Rent) received by the Lessor shall be distributed by the Agent first to
the Lenders
pro rata
for application to the interest then due and payable on the Loans until such
amounts are paid in full, and then to the Lessor in an amount equal to the
Holder Yield then due and payable under the Operative Agreements.
Purchase Payments by the Lessee.
Any payment received by the Lessor as a result of:
the purchase of the Property in connection with the exercise of the Purchase
Option or Maturity Date Purchase Option under Section 20.1 or 20.2 of the Lease;
or
compliance with the obligation to purchase the Property in accordance with
Section 17.2 of the Lease; or
the payment of the Termination Value in accordance with Section 16.1 of the
Lease;
shall be distributed by the Lessor to the Lessor and the Lenders in the
following order of priority:
First, to the Lenders, pro rata, to pay the Lease Balance Debt; and
Second, to the Lessor to pay the Lease Balance Equity.
Payment of Lease Balance Debt.
In accordance with Section 21.1 of the Lease upon the exercise of the
remarketing option, the payment of the Maximum Residual Guarantee Amount
received by the Lessor shall be distributed to the Agent on behalf of the
Lenders for application to pay in full the Lease Balance Debt of each Lender,
pro rata
among the Lenders without priority of one over the other in the proportion that
the Lease Balance Debt of each such Lender bears to the aggregate Lease Balance
Debt of all Lenders.
Sales Proceeds of Remarketing of Property.
Any payments received by the Lessor as proceeds from the sale of the Property
sold pursuant to the exercise of the remarketing option pursuant to
Article 21 of the Lease, together with any payment made as a result of an
appraisal pursuant to Section 21.3 of the Lease, shall be distributed by the
Lessor in the funds so received in the following order of priority:
First, to cover the costs and expenses of such sale;
Second, to the extent not previously paid as required by Section 13.3 hereof, an
amount equal to the amount of the Lease Balance Debt remaining unpaid shall be
distributed to the Lenders, pro rata, as set forth in Section 13.3;
Third, an amount equal to the aggregate Lease Balance Equity shall be
distributed to the Holders, pro rata; and
Fourth, the balance, if any, shall be promptly paid to the Lessee.
Supplemental Rent.
All payments of Supplemental Rent received by the Lessor (excluding any amounts
payable pursuant to the preceding provisions of this Section 13) shall be
distributed promptly by the Lessor upon receipt thereof to the Persons entitled
thereto pursuant to the Operative Agreements.
Distribution of Payments after Event of Default.
During the continuance of an Event of Default and subject to clause (b) below,
all proceeds received by the Lessor from the sale of the Property shall be
distributed by the Lessor in the following order of priority:
First, so much of such payment or amount as shall be required to pay or
reimburse the Lessor and the Agent for any tax, fees, expense, indemnification
or other loss incurred by the Lessor or the Agent (to the extent incurred in
connection with any duties as the Lessor or as the Agent), shall be distributed
to the Lessor for its own account and that of the Agent in accordance with the
amount of such payment or amount payable to such Person;
Second, so much of such payments or amounts as shall be required to pay the
Financing Parties and the Lessor the amounts payable to them pursuant to any
expense reimbursement or indemnification provisions of the Operative Agreements
shall be distributed to each such Financing Party and the Lessor without
priority of one over the other in accordance with the amount of such payment or
payments payable to each such Person;
Third, to the Lenders for application to pay in full the Lease Balance Debt, pro
rata among the Lenders without priority of one over the other in the proportion
that the Lease Balance Debt of each such Lender bears to the aggregate Lease
Balance Debt of all Lenders and, in the case where the amounts so distributed
shall be insufficient to pay in full as aforesaid, then pro rata among the
Lenders without priority of one over the other in the proportion that the Lease
Balance Debt of each such Lender bears to the aggregate Lease Balance Debt of
all Lenders;
Fourth, to the Lessor in an amount equal to the aggregate Lease Balance Equity
for application to pay in full the Lease Balance Equity; and
Fifth, the balance, if any, of such payment or amounts remaining thereafter
shall be promptly distributed to, or as directed by, the Lessee.
All payments received and amounts realized by the Lessor in connection with any
Casualty or Condemnation during the continuance of an Event of Default shall be
distributed by the Lessor as follows:
in the event that the Lessor elects to pay all or a portion of such amounts to
the Lessee for the repair of damage caused by such Casualty or Condemnation,
then such amounts shall be distributed to the Lessee; and
in the event that the Lessor elects to apply all or a portion of such amounts to
the purchase price of the Property, then such amounts shall be distributed in
accordance with clause (a) above.
Other Payments.
Except as otherwise provided in Sections 13.1, 13.2, 13.6 and clause (b) below,
any payment received by the Lessor for which no provision as to the application
thereof is made in the Operative Agreements or elsewhere in this Section 13
(including any balance remaining after the application in full of amounts to
satisfy any expressed provision) shall be distributed pro rata among the Lenders
and the Lessor for the Holders without priority of one over the other, in the
proportion that the Lease Balances of each, as applicable, bears to the
aggregate of all the Lease Balances, as applicable.
Except as otherwise provided in Sections 13.1, 13.2 and 13.6, all payments
received and amounts realized by the Lessor under the Lease or otherwise with
respect to the Property to the extent received or realized at any time after the
indefeasible payment in full of the Lease Balances of all of the Lenders and the
Holders and any other amounts due and owing to the Lenders or the Holders, shall
be distributed forthwith by the Lessor, in the order of priority set forth in
Section 13.6(a).
Except as otherwise provided in Sections 13.1 and 13.2, any payment received by
the Lessor for which provisions as to the application thereof is made in an
Operative Agreement but not elsewhere in this Section 13 shall be distributed
forthwith by the Lessor to the Person and for the purpose for which such payment
was made in accordance with the terms of such Operative Agreement.
Casualty and Condemnation Amounts.
Subject to Section 13.6(b), any amounts payable to and received by the Lessor as
a result of a Casualty or Condemnation pursuant to Section 15.1 of the Lease
shall be distributed as follows:
all amounts payable to and received by the Lessee for the repair of damage
caused by such Casualty or Condemnation in accordance with Section 15.1(a) of
the Lease shall be distributed to the Lessee; and
all amounts that are to be applied to the purchase price of the Property in
accordance with Article 16 of the Lease shall be distributed by the Lessor upon
receipt thereof to the Lenders and the Lessor in the following order of
priority:
First, to the Lenders, pro rata, to pay the Lease Balance Debt; and
Second, to the Lessor to pay the Lease Balance Equity.
Order of Application.
To the extent any payment made to any Lender or the Lessor for any Holder
pursuant to Sections 13.2, 13.3, 13.4, 13.6 or 13.7 is insufficient to pay in
full the Lease Balance of such Lender or Holder, then each such payment shall
first be applied to accrued interest and then to principal on the Loans or the
Holder Advances, as applicable.
MISCELLANEOUS
.
Survival of Agreements
.
The representations, warranties, covenants, indemnities and agreements of the
parties provided for in the Operative Agreements, and the parties' obligations
under any and all thereof, shall survive the execution and delivery of this
Agreement, the transfer of any Property to the Trust, the acquisition of the
Property, any disposition of any interest of the Trust in the Property or any
interest of the Holders in the Trust Estate, the payment of the Notes and any
disposition thereof and shall be and continue in effect notwithstanding any
investigation made by any party and the fact that any party may waive compliance
with any of the other terms, provisions or conditions of any of the Operative
Agreements. Except as otherwise expressly set forth herein or in other Operative
Agreements, the indemnities of the parties provided for in the Operative
Agreements shall survive the expiration or termination of any thereof.
Notices
.
All notices required or permitted to be given under any Operative Agreement
shall be in writing. Notices may be served by certified or registered mail,
postage paid with return receipt requested; by private courier, prepaid; by
telex, facsimile, or other telecommunication device capable of transmitting or
creating a written record; or personally. Mailed notices shall be deemed
delivered five (5) days after mailing, properly addressed. Couriered notices
shall be deemed delivered when delivered as addressed, or if the addressee
refuses delivery, when presented for delivery notwithstanding such refusal.
Telex or telecommunicated notices shall be deemed delivered when receipt is
either confirmed by confirming transmission equipment or acknowledged by the
addressee or its office. Personal delivery shall be effective when accomplished.
Unless a party changes its address by giving notice to the other party as
provided herein, notices shall be delivered to the parties at the following
addresses:
If to the Lessee or the Guarantor, to such entity at the following address:
Lam Research Corporation
4650 Cushing Parkway
Fremont, CA 94538
Attention: Craig Garber, Treasurer
Telephone: (510) 572-1875
Facsimile: (510) 572-1586
If to the Trust, to it at the following address:
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Officer
Telephone: (302) 651-8856
Facsimile: (302) 651-8882
If to Wilmington Trust Company, to it at the following address:
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-8856
Facsimile: (302) 651-8882
If to Wilmington Trust FSB, to it at the following address:
100 Wilshire Boulevard, Suite 1230
Santa Monica, CA 90401
Attention: Daniel Reser, Vice President
Telephone: (310) 899-7022
Facsimile: (310) 899-7005
If to the Holder, to it at the following address:
Scotiabanc Inc.
600 Peachtree Street, Suite 2700
Atlanta, GA 30308
Attention: William Brown, Managing Director
Telephone: (404) 877-1501
Facsimile: (404) 888-8998
If to the Agent, to it at the following address:
The Bank of Nova Scotia
580 California Street, Suite 2100
San Francisco, CA 94104
Attention: Chris Osborn
Telephone: (415) 986-1100
Facsimile: (415) 397-0791
If to any Lender, to it at the address set forth for such Lender in Schedule 2.1
of the Credit Agreement.
From time to time any party may designate additional parties and/or another
address for notice purposes by notice to each of the other parties hereto. Each
notice hereunder shall be effective upon receipt or refusal thereof.
Counterparts
.
This Agreement may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters
.
Each Operative Agreement may be terminated, amended, supplemented, waived or
modified only by an instrument in writing signed by, subject to Article X of the
Trust Agreement regarding termination of the Trust Agreement, the Majority
Secured Parties and the Lessee (to the extent Lessee is a party to such
Operative Agreement, and to the extent Lessee is not a party to such Operative
Agreement but is expressly accorded rights in a particular provision therein,
such provision may be terminated, amended, supplemented, waived or modified only
by an instrument in writing signed by the Majority Secured Parties and Lessee).
In addition, the Unanimous Vote Matters shall require the consent of each Lender
and each Holder affected by such matter.
Notwithstanding the foregoing, no such termination, amendment, supplement,
waiver or modification shall, without the consent of the Agent and, to the
extent affected thereby, each Lender and each Holder (collectively, the
"Unanimous Vote Matters") (i) reduce the amount of any Note or any Certificate,
extend the scheduled date of maturity of any Note, extend the scheduled
Expiration Date, extend any payment date of any Note or Certificate, reduce the
stated rate of interest payable on any Note, reduce the stated Holder Yield
payable on any Certificate (other than as a result of waiving the applicability
of any post- default increase in interest rates or Holder Yields), modify the
priority of or release any Lien in favor of the Agent under any Security
Document, subordinate any obligation owed to any Lender or Holder, elect to
decline the funding of any Transaction Expense with respect to Sections 8.1(a)
or 8.1(b), elect to decline the funding of any indemnity payment by the Trust
with respect to Section 12.8 or increase the amount or extend the expiration
date of any Lender's Commitment or the Holder Commitment of any Holder; or (ii)
terminate, amend, supplement, waive or modify any provision of this Section 14.4
or reduce the percentages specified in the definitions of Majority Lenders,
Majority Holders or Majority Secured Parties, or consent to the assignment or
transfer by the Trust of any of its rights and obligations under any Credit
Document or release a material portion of the Collateral (except in accordance
with Section 9.5) or release Lessee from its obligations under any Operative
Agreement or otherwise alter any payment obligations of Lessee to the Lessor or
any Financing Party under the Operative Agreements; or (iii) terminate, amend,
supplement, waive or modify any provision of Section 9.1 of the Credit Agreement
(which shall also require the consent of the Agent). Any such termination,
amendment, supplement, waiver or modification shall apply equally to each of the
Lenders and the Holders and shall be binding upon all the parties to this
Agreement. In the case of any waiver, each party to this Agreement shall be
restored to its former position and rights under the Operative Agreements, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
If at a time when the conditions precedent set forth in the Operative Agreements
to any Loan are, in the opinion of the Agent, satisfied, any Lender shall fail
to fulfill its obligations to make such Loan (any such Lender, a "Defaulting
Lender") then, for so long as such failure shall continue, the Defaulting Lender
shall (unless the Lessee and the Majority Lenders, determined as if the
Defaulting Lender were not a "Lender," shall otherwise consent in writing) be
deemed for all purposes relating to terminations, amendments, supplements,
waivers or modifications under the Operative Agreements to have no Loans, shall
not be treated as a "Lender" when performing the computation of Majority Lenders
or Majority Secured Parties, and shall have no rights under this Section 14.4;
provided that any action taken pursuant to the second paragraph of this Section
14.4 shall not be effective as against the Defaulting Lender.
If at a time when the conditions precedent set forth in the Operative Agreements
to any Holder Advance are, in the opinion of the Majority Holders, satisfied,
any Holder shall fail to fulfill its obligations to make such Holder Advance
(any such Holder, a "Defaulting Holder") then, for so long as such failure shall
continue, the Defaulting Holder shall (unless the Lessee and the Majority
Holders, determined as if the Defaulting Holder were not a "Holder," shall
otherwise consent in writing) be deemed for all purposes relating to
terminations, amendments, supplements, waivers or modifications under the
Operative Agreements to have no Holder Advances, shall not be treated as a
"Holder" when performing the computation of Majority Holders or Majority Secured
Parties, and shall have no rights under this Section 14.4; provided that any
action taken pursuant to the second paragraph of this Section 14.4 shall not be
effective as against the Defaulting Holder.
Headings, etc.
The Table of Contents and headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof.
Parties in Interest
.
Except as expressly provided herein, none of the provisions of this Agreement
are intended for the benefit of any Person except the parties hereto.
GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; VENUE
.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to this
Agreement or any other Operative Agreement may be brought in the courts of the
State of New York in the City of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this Agreement,
each of the parties to this Agreement hereby irrevocably accepts for itself and
in respect of its property, generally and unconditionally, the nonexclusive
jurisdiction of such courts. Each of the parties to this Agreement 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 it at the address set out for
notices pursuant to Section 14.2, such service to become effective three (3)
days after such mailing. Nothing herein shall affect the right of any party to
serve process in any other manner permitted by Law or to commence legal
proceedings or to otherwise proceed against any party in any other jurisdiction.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO THE FULLEST
EXTENT ALLOWED BY APPLICABLE LAW, WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, ANY OTHER OPERATIVE AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
Each of the parties to this Agreement 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 Operative Agreement brought in the courts referred to in
subsection (a) above and hereby further irrevocably 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.
The Agent on behalf of the Lenders and the Holders shall have the right to
proceed in any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable (i) all rights to foreclose
against any real or personal property or other security by exercising a power of
sale granted under any Operative Agreement or under applicable Law or by
judicial foreclosure and sale, including without limitation a proceeding to
confirm the sale; (ii) all rights of self-help including without limitation
peaceful occupation of real property and collection of rents, set-off and
peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including without limitation injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
The parties to this Agreement and/or any other Operative Agreement agree that
they shall not have a remedy of special, punitive or exemplary damages against
any other party in any Dispute and hereby waive any right or claim to special,
punitive or exemplary damages they have now or which may arise in the future in
connection with any Dispute.
Severability
. Any provision of this Agreement that 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.
Liability Limited
.
The Lenders, the Agent, the Lessee, the Trust Companies, the Trust and the
Holders each acknowledge and agree that the Trust Companies shall not be liable
or accountable under any circumstances whatsoever for or on account of any
statements, representations, warranties, covenants or obligations stated to be
those of the Trust, Borrower or Lessor except for their own gross negligence or
willful misconduct and as otherwise expressly provided herein or in the other
Operative Agreements.
Anything to the contrary contained in this Agreement, the Credit Agreement, the
Notes or in any other Operative Agreement notwithstanding, no Exculpated Person
shall be personally liable in any respect for any liability or obligation
arising hereunder or in any other Operative Agreement including without
limitation the payment of the principal of, or interest on, the Notes, or for
monetary damages for the breach of performance of any of the covenants contained
in the Credit Agreement, the Notes, this Agreement, the Security Documents or
any of the other Operative Agreements. The Lenders, the Holders and the Agent
agree that, in the event any remedies under any Operative Agreement are pursued,
neither the Lenders, the Holders nor the Agent shall have any recourse against
any Exculpated Person, for any deficiency, loss or Claim for monetary damages or
otherwise resulting therefrom and recourse shall be had solely and exclusively
against the Trust Estate (excluding Excepted Payments) and the Lessee and the
Guarantor (with respect to the Lessee's obligations under the Operative
Agreements and the Guarantor's obligations under Section 9.6 hereof); but
nothing contained herein shall be taken to prevent recourse against or the
enforcement of remedies against the Trust Estate (excluding Excepted Payments)
in respect of any and all liabilities, obligations and undertakings contained
herein and/or in any other Operative Agreement. Notwithstanding the provisions
of this Section, nothing in any Operative Agreement shall: (i) constitute a
waiver, release or discharge of any indebtedness or obligation evidenced by the
Notes and/or the Certificates arising under any Operative Agreement or secured
by any Operative Agreement, but the same shall continue until paid or
discharged; (ii) relieve any Exculpated Person from liability and responsibility
for (but only to the extent of the damages arising by reason of): active waste
knowingly committed by any Exculpated Person with respect to any Property, any
fraud, gross negligence or willful misconduct on the part of any Exculpated
Person; (iii) relieve any Exculpated Person from liability and responsibility
for (but only to the extent of the moneys misappropriated, misapplied or not
turned over) (A) except for Excepted Payments, misappropriation or
misapplication by the Lessor (i.e., application in a manner contrary to any of
the Operative Agreements) of any insurance proceeds or condemnation award paid
or delivered to the Lessor by any Person other than the Agent, or (B) except for
Excepted Payments, any rent or other income received by the Lessor from Lessee
that is not turned over to the Agent; or (iv) affect or in any way limit the
Agent's rights and remedies under any Operative Agreement with respect to the
Rents and rights and powers of the Agent under the Operative Agreements or to
obtain a judgment against the Lessee's interest in the Properties or the Agent's
rights and powers to obtain a judgment against the Lessor or the Lessee or
Guarantor (provided, that no deficiency judgment or other money judgment shall
be enforced against any Exculpated Person except to the extent of the Lessor's
interest in the Trust Estate (excluding Excepted Payments) or to the extent the
Lessor may be liable as otherwise contemplated in clauses (ii) and (iii) of this
Section 14.9(b)).
Rights of the Lessee
. If at any time all obligations (i) of the Borrower under the Credit Agreement,
the Security Documents and the other Operative Agreements and (ii) of the Lessee
under the Operative Agreements have in each case been satisfied or discharged in
full, then the Lessee shall be entitled to (a) terminate the Lease and the
Guaranty and (b) receive all amounts then held under the Operative Agreements
and all proceeds with respect to the Property. Upon the termination of the Lease
and Guaranty pursuant to the foregoing clause (a), the Trust shall transfer to
the Lessee all of its right, title and interest free and clear of the Lien of
the Lease, the Lien of the Security Documents and all Lessor Liens in and to the
Property then subject to the Lease and any amounts or proceeds referred to in
the foregoing clause (b) shall be paid over to the Lessee.
Further Assurances
. The parties hereto shall promptly cause to be taken, executed, acknowledged or
delivered, at the sole expense of the Lessee, all such further acts,
conveyances, documents and assurances as the other parties may from time to time
reasonably request in order to carry out and effectuate the intent and purposes
of this Participation Agreement, the other Operative Agreements and the
transactions contemplated hereby and thereby (including without limitation the
preparation, execution and filing of any and all Uniform Commercial Code
financing statements, filings of the Deed of Trust and other filings or
registrations which the parties hereto may from time to time request to be filed
or effected). The Lessee, at its own expense and without need of any prior
request from any other party, shall take such action as may be necessary
(including without limitation any action specified in the preceding sentence),
or (if the Trust shall so request) as so requested, in order to maintain and
protect all security interests provided for hereunder or under any other
Operative Agreement. In addition, in connection with the sale or other
disposition of any Property or any portion thereof, the Lessee agrees to execute
such instruments of conveyance as may be reasonably required in connection
therewith.
Financial Reporting/Tax Characterization
. Lessee agrees to obtain advice from its own accountants and tax counsel
regarding the financial reporting treatment and the tax characterization of the
transactions described in the Operative Agreements. Lessee further agrees that
Lessee shall not rely upon any statement of any Financing Party or any of their
respective Affiliates and/or Subsidiaries regarding any such financial reporting
treatment and/or tax characterization.
Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
RENEWALS.
Extensions of Maturity Date and Expiration Date.
So long as the Lessee has not elected the remarketing option, and no Default or
Event of Default shall then exist, the Lessee may, not earlier than one (1) year
after the Closing Date and not later than one hundred eighty (180) days prior to
the Maturity Date, direct a written request to the Lessor and the Agent that the
Expiration Date then in effect under the Lease be extended on terms mutually
agreeable to Lessor, Agent, Lenders and Lessee. Any renewal term shall be
effective only upon the consent of all Financing Parties and each Financing
Party may grant or deny its consent to a renewal of the Lease in its sole
discretion.
[The signature pages follow.]
In Witness Whereof,
the parties hereto have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized as of the day and year first above
written.
Lessee and Guarantor:
Lam Research Corporation, a Delaware corporation, as the Lessee and as the
Guarantor
By: /s/ Craig Garber
Name: Craig Garber
Title: Vice-President, Corporate Finance and
Treasurer
Trust, Borrower and Lessor:
Cushing 2000 Trust, a Delaware business trust
By: Wilmington Trust FSB, a federal savings bank, not in its individual capacity
but solely as trustee
By: /s/ Daniel M. Reser
Name: Daniel M. Reser
Title: Vice President
The Agent and the
Lenders: The Bank of Nova Scotia, as a Lender and as the Agent
By: /s/ Chris Osborn
Name: Chris Osborn
Title: Director
Fleet National Bank, as a Lender
By: /s/ Wm Rurodl
Name: Wm Rurodl
Title: MD
The
Holders:
Scotiabanc Inc., a Delaware corporation
By: /s/ W.J. Brown
Name: W.J. Brown
Title: Managing Director
With respect to Section 7.1 of the
Participation Agreement only:
The Trust Companies:
Wilmington Trust Company, a banking corporation organized under the laws of the
State of Delaware
By: /s/ Joseph B. Feil
Name: Joseph B. Feil
Title: Senior Financial Services Officer
Wilmington Trust FSB, a federal savings bank
By: /s/ Daniel M. Reser
Name: Daniel M. Reser
Title: Vice President
Schedule 2.1
HOLDER COMMITMENTS AND ADDRESSES
Name and Address of Holder
Amount of Holder Commitment
Scotiabanc Inc. $1,200,000 - 100%
600 Peachtree Street, Suite 2700
Atlanta, GA 30308
Schedule 6.4
AGENT'S PAYMENT ADDRESS
The Bank of Nova Scotia
One Liberty Plaza
New York, NY 10006
Telephone: (404) 877-1500
Facsimile: (404) 888-8998
Attn: Eudia Smith
Schedule 7.3
DISCLOSURE SCHEDULE
1. 4650 Cushing: Lessee recently completed various internal alterations to the
building at 4650 Cushing Parkway. The City of Fremont approved the alterations
on the condition that the Lessee subsequently complete one or more firewall or
other fire suppression measures in order to remain in compliance with the City
of Fremont Building Code. The alternatives Lessee is currently evaluating in
order to meet City requirements are (1) installation of a deluge system over
windows in a firewall that currently exists in the building, (2) installation of
drop shutters over such windows and an upgrade of certain existing sprinkler
lines, or (3) construction of another "functionally equivalent alternative
method" of achieving the same level of fire protection as would be provided by
the traditional firewalls under the Building Code.
2. Varian: In October 1993, Varian Associates, Inc. brought suit against Lessee
in the United States District Court, Northern District of California, seeking
monetary damages and injunctive relief based on Lessee's alleged infringement of
certain patents held by Varian. Lessee has asserted defenses of invalidity and
unenforceability of the patents that are the subject of the lawsuit, as well as
non-infringement of such patents by Lessee's products. A trial date was
tentatively scheduled in the action for March 2000; however, it is likely that
that date will be re-scheduled pending the outcome of certain motions under
consideration by the Court. While litigation is subject to inherent
uncertainties and no assurance can be given that Lessee will prevail in such
litigation, or will obtain a license under such patents on commercially
reasonable terms or at all if such patents are held valid and infringed by
Lessee's products, Lessee believes that the Varian lawsuit will not have a
material adverse effect on Lessee's consolidated financial statements.
3. Tegal Corporation: On September 1, 1999, Tegal Corporation brought suit
against Lessee in the United States District Court for the Eastern District of
Virginia, seeking monetary damages and injunctive relief based on Lessee's
alleged infringement of certain patents held by Tegal. Tegal specifically
identified Lessee's 4520XL and Exelan products as infringing the asserted
patents. By recent court ruling, this action is being transferred to the United
States District Court for the Northern District of California. Lessee has
reviewed the asserted patents and believes they do not apply to Lessee
equipment. While litigation is subject to inherent uncertainties and no
assurance can be given that Lessee will prevail in such litigation, or will
obtain a license under such patents on commercially reasonable terms or at all
if such patents are held valid and infringed by Lessee's products, Lessee
believes that the Tegal lawsuit will not have a material adverse effect on
Lessee's consolidated financial statements.
472718 v02.SF (@4R202!.DOC)
2/6/01 10:10 AM (19594.0012)
Distribution List
The Bank of Nova Scotia, as the Agent and a Lender
Fleet National Bank, as a Lender
Scotiabanc, Inc., as a Holder
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders
The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders
Lam Research Corporation, as the Lessee and the Guarantor
The Cushing 2000 Trust
Wilmington Trust Company
Wilmington Trust FSB
--------------------------------------------------------------------------------
PARTICIPATION AGREEMENT
Dated as of December 6, 2000
among
LAM RESEARCH CORPORATION,
as the Lessee,
CUSHING 2000 TRUST,
as the Lessor,
WILMINGTON TRUST COMPANY,
WILMINGTON TRUST FSB,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Holders,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Lenders,
and
THE BANK OF NOVA SCOTIA,
as the Administrative Agent for the Lenders and the Holders
--------------------------------------------------------------------------------
Table Of Contents
Page
SECTION 1.
THE LOANS
1
SECTION 2.
HOLDER ADVANCES
1
SECTION 3.
SUMMARY OF TRANSACTIONS
2
3.1
Operative Agreements
2
3.2
Property Purchase
2
3.3
Yield on Holder Certificates
3
SECTION 4.
THE CLOSING
4
SECTION 5.
FUNDING OF ADVANCES; PLEDGED COLLATERAL
4
5.1
General
4
5.2
Procedures for Funding
4
5.3
Allocation of Advances Between Land and Improvements
6
5.4
Pledged Collateral
6
SECTION 6.
CONDITIONS OF THE CLOSING AND ADVANCES
7
6.1
General Conditions to the Closing Date
7
6.2
Conditions to Lenders' and Holders' Obligations to Make Loans and Holder
Advances
10
6.3
Restrictions on Liens
11
6.4
Payments
11
SECTION 7.
REPRESENTATIONS AND WARRANTIES
12
7.1
Representations and Warranties of the Trust Companies
12
7.2
Representations and Warranties of the Borrower
13
7.3
Representations and Warranties of the Lessee
15
7.4
Lease Requirements
19
SECTION 8.
PAYMENT OF CERTAIN EXPENSES
19
8.1
Transaction Expenses
19
8.2
Brokers' Fees and Stamp Taxes
20
8.3
Certain Fees and Expenses
20
8.4
Commitment Fee
20
8.5
Other Fees
20
SECTION 9.
OTHER COVENANTS AND AGREEMENTS
20
9.1
Cooperation with the Lessee
20
9.2
Covenants of the Trust Companies, the Trust, and the Holders
21
9.3
Lessee Covenants, Consent and Acknowledgment
22
9.4
Appointment of the Agent by the Lenders, the Holders and the Trust
27
9.5
Release of Properties, etc.
27
9.6
Guaranty
27
SECTION 10.
CREDIT AGREEMENT AND TRUST AGREEMENT
30
10.1
Lessee's Credit Agreement Rights
30
10.2
Lessee's Trust Agreement Rights
31
SECTION 11.
TRANSFER OF INTEREST
31
11.1
Restrictions on Transfer
31
11.2
Effect of Transfer
32
SECTION 12.
INDEMNIFICATION
32
12.1
General Indemnity
32
12.2
General Impositions Indemnity
33
12.3
LIBOR Lending Unlawful
37
12.4
Deposits Unavailable
38
12.5
Increased Costs, etc.
38
12.6
Indemnifications Provided by the Lessor in Favor of the Other Indemnified
Persons
39
SECTION 13.
DISTRIBUTION
40
13.1
Basic Rent
40
13.2
Purchase Payments by the Lessee
40
13.3
Payment of Lease Balance Debt
41
13.4
Sales Proceeds of Remarketing of Property
41
13.5
Supplemental Rent
41
13.6
Distribution of Payments after Event of Default
41
13.7
Other Payments
42
13.8
Casualty and Condemnation Amounts
43
13.9
Order of Application
43
SECTION 14.
MISCELLANEOUS
43
14.1
Survival of Agreements
43
14.2
Notices
43
14.3
Counterparts
45
14.4
Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters
45
14.5
Headings, etc.
46
14.6
Parties in Interest
46
14.7
Governing Law; Submission to Jurisdiction; Waiver of Jury Trial; Venue
46
14.8
Severability
47
14.9
Liability Limited
48
14.10
Rights of the Lessee
49
14.11
Further Assurances
49
14.12
Financial Reporting/Tax Characterization
49
14.13
Successors and Assigns
49
SECTION 15.
RENEWALS
49
15.1
Extensions of Maturity Date and Expiration Date
49
SCHEDULES
2.1 - Holder Commitments and Addresses
6.4 - Agent's Payment Address
7.3 - Disclosure Schedule
EXHIBITS
A - Form of Requisition
B - Form of Officer's Certificate - Section 6.1(h)
C - Form of Secretary's Certificate - Section 6.1(f), (g) and (j)
D- Form of Officer's Certificate - Section 6.1(s)
E - Form of Officer's Compliance Certificate - Section 9.3(b)(i)
Annex A - Rules of Usage and Definitions
--------------------------------------------------------------------------------
|
Exhibit 10.31
June 11, 2001
Ms. Sandra Wrobel
[address]
Re: Notification Under the Worker Adjustment and Retraining Notification Act
(“WARN Act”) and Offer of Severance
Dear Sandy:
This is to inform you in advance that IntraBiotics Pharmaceuticals, Inc. (the
“Company”) is restructuring its workforce at its facilities located at 2021
Stierlin Court, Mountain View, California and 1245 Terra Bella, Mountain View,
California. This restructuring constitutes a “mass layoff” under the WARN Act.
Due to this restructuring, you will be laid off. Your employment termination is
currently scheduled to occur on August 31, 2001 (the “Separation Date”), sixty
days from today. Until the Separation Date, you will remain an employee of the
Company, and you will be paid your current base salary (less all applicable
deductions and withholdings) in accordance with the Company’s normally scheduled
payroll dates. In addition, you will remain eligible for those benefits
provided under the Company’s ERISA benefit plans.
From now until the Separation Date, you are neither expected nor required to
report for work. However, until the Separation Date, the Company reserves the
right to call you back to work either at your present position or at an
equivalent position. If you refuse to report for work after being notified, you
will be subject to discipline up to and including the termination of your
employment and the cessation of any further compensation or benefits. There are
no bumping rights. The layoff is expected to be permanent.
Additionally, if on the Separation Date you sign the general waiver and release
of claims attached hereto as Exhibit A, you will receive an amount equivalent to
sixteen (16) weeks of your current base salary, less all applicable deductions
and withholdings plus a one-time pre-tax payment equal to 10% of your annual
salary or $23,500. In addition, if you timely elect to continue your health
insurance benefits through COBRA coverage, the Company will pay for COBRA
coverage for September, October, November, and December 2001. You will also
receive acceleration of four months vesting of your existing stock options. In
other words, you will get the benefit of any vesting that would have occurred
through December 31, 2001. All other terms of your options, including any
applicable exercise periods continue to be governed by the 2000 Equity Incentive
Plan and the terms of your option agreement thereunder.
If you have any questions, the name and telephone number of the Company’s
official to contact for further information is:
Ray Mendonca
Director, Human Resources
IntraBiotics Pharmaceuticals, Inc.
(650) 567-6650
Pursuant to the Age Discrimination in Employment Act, 29 U.S.C.
Section 626(f)(1)(H), the Company provides disclosures concerning the terms and
eligibility for this termination program in Exhibit B attached hereto.
I want to thank you personally for your contributions to IntraBiotics
Pharmaceuticals, Inc., and wish you luck in your future endeavors.
Sincerely,
IntraBiotics Pharmaceuticals, Inc.
Kenneth Kelley, President & Chief Executive Officer
Exhibit A – General Waiver and Release Agreement
Exhibit B - Disclosure Under 29 U.S.C. § 626(f)(1)(H) |
EXHIBIT NO. 10.3
CHEMICAL FINANCIAL CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
Adopted November 15, 1982, effective for calendar year 1983, and thereafter,
most recently amended December 18, 2000.
A.
Introduction
This plan (the Plan) is a private unfunded non-qualified deferred compensation
arrangement for non-employee Directors of Chemical Financial Corporation (the
Company) or of wholly-owned subsidiaries of the Company which have elected to
participate in the Plan. The Plan will permit Directors, on an individual
election basis, to defer all or one-half of the fees payable for services as a
Director of the Company or of a wholly-owned subsidiary of the Company until
after their retirement from the Board.
B.
Purpose
The purpose of the Plan is to provide Directors with maximum opportunity and
flexibility in the planning of their personal financial resources.
C.
Manner of Deferral of Compensation
Each Director of the Company or any of its participating subsidiaries may elect
on or before December 31 of each calendar year to defer payment of all or
one-half of all fees payable to him for his services as a Director (including
Board Committee fees) during the calendar year following such election. Any
person who shall become a Director during any calendar year may elect to defer
payment of all or one-half of such fees for the remainder of such calendar year
by making such election prior to attending his first meeting of the Board of
Directors or any committee thereof. All elections shall be irrevocable during
the calendar year to which such election pertains, and all elections shall be in
writing and in form acceptable to the Company.
The compensation deferred will be credited on the books of the Company to a
Director's deferred compensation account as of the date it would otherwise have
been payable (the "Payment Date"). The Company shall have no obligation to fund
such account.
Deferral of compensation shall have no effect on compensation related benefits
received by a Director, if any.
--------------------------------------------------------------------------------
D.
Interest on Deferred Compensation Account
The Director's deferred compensation account will be credited with interest at
the rate paid by Chemical Bank and Trust Company on its Chem Sweep Account.
E.
Payment of Deferred Compensation
Payment of a Director's deferred compensation may only be made after the
Director's service on the Board has terminated and, except as described below,
will be made in ten (10) annual installments in cash. For purposes of the Plan,
a Director whose service on the Board terminates, but who immediately thereafter
becomes a Community Bank Advisory Director, shall not be deemed eligible for
payments from the Plan while serving as a Community Bank Advisory Director.
At the time of each election to defer Board Compensation, a Director may
irrevocably elect to have the deferred compensation account covered by the
election paid in less than ten (10) annual installments, or in a single lump
sum. Such installment payments shall commence, or such lump sum payment shall be
made, no later than January 31 of the calendar year following the year in which
such Director's service on the Board terminates, or in such subsequent year as
the director shall have elected.
The amount of the first installment shall be a fraction of the total amount of
the Director's deferred compensation, together with all interest accrued
thereon, as of the date that payments are to commence. The numerator of such
fraction shall be one (1), and the denominator of such fraction shall be the
total number of installments which the Director elected to receive.
Each subsequent installment shall be calculated in the same manner as of the
same date of each subsequent year, except that the denominator shall be reduced
by the number of installments which have been previously paid.
F.
Assignability
No right to receive payment of the Directors' deferred compensation under the
Plan shall be transferable or assignable by a Director except by will or under
the laws of descent and distribution, except that a Director may make a written
designation of beneficiary in form acceptable to the Company, which beneficiary
shall succeed to the Director's rights under the Plan in the event of the
Director's death.
In the event of a Director's death prior to receiving all deferred payments to
which he is entitled, the balance of the Director's deferred compensation,
together with all interest credited thereon to the date of the Director's death,
shall bedetermined and paid in single payment to the Director's estate or
designated beneficiary as soon as reasonably possible.
2
--------------------------------------------------------------------------------
G.
Amendment of Plan
This plan may be amended, suspended or terminated at any time by the Board of
Directors of the Company.
However, no amendment, suspension or termination of the Plan may, without the
consent of a Director, alter or impair any of the rights previously granted
under the Plan.
H.
Acceleration of Payment for Hardship
Upon the written request of a Director to the Compensation Committee of the
Company's Board of Directors, a Director may be permitted to receive all or part
of his deferred compensation under the Plan, including interest credited
thereon, if the Compensation Committee determines that an unforeseeable
emergency exists as the result of an extraordinary and unforeseeable
circumstance which would cause the Director severe financial hardship. The
decision as to whether to grant such a request shall rest in the absolute
discretion of the Compensation Committee. Any such distribution for hardship
shall be limited to the amount needed to meet such emergency.
I.
Administration
The Plan shall be administered by the Compensation Committee of the Company's
Board of Directors. The Compensation Committee shall have authority to adopt
rules for carrying out the Plan, and all interpretations of the Plan's
provisions by the Compensation Committee shall be final.
J.
Unfunded Plan
The benefits payable under the Plan are unfunded. Consequently, no assets shall
be segregated for purposes of the Plan and placed beyond the reach of the
Company's general creditors. The right of any participating Director to receive
future installments under the provisions of the Plan shall be an unsecured claim
against the general assets of the Company.
K.
Business Days
In the event any date specified herein falls on a Saturday, Sunday or legal
holiday, such date shall be deemed to refer to the next business day thereafter.
L.
Continuation of Deferred Payment Method
In order to facilitate the administration of the Plan, participants who elect to
participate in the Plan for more than one year will be assumed to have selected
the same method for payment of the deferred compensation for subsequent years as
was selected in the election form for the first year of participation. This
paragraph, however, shall not be interpreted as an automatic election to
participate in the program for subsequent years.
3
--------------------------------------------------------------------------------
|
EXHIBIT 10.20
AMENDMENT NO. 1 TO FIVE-YEAR CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO FIVE-YEAR CREDIT AGREEMENT (this "Amendment"), dated as
of May 22, 2001, is entered into by and among AUTOZONE, INC., a Nevada
corporation (the "Borrower"), the Lenders identified on the signature pages
hereto and BANK OF AMERICA, N.A., as Administrative Agent for the Lenders (in
such capacity, the "Agent"). Terms used but not otherwise defined herein shall
have the meanings provided in the Amended Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, pursuant to a Five-Year Credit Agreement dated as of May 23, 2000 (the
"Credit Agreement") among the Borrower, the Lenders party thereto and the Agent,
the Lenders have extended commitments to make a revolving credit facility
available to the Borrower; and
WHEREAS, the Borrower, the Required Lenders and the Agent have agreed to amend
the Credit Agreement as set forth herein;
NOW, THEREFORE, in consideration of the agreements herein contained, the parties
hereby agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless otherwise defined herein or the context
otherwise requires, the following terms used in this Amendment, including its
preamble and recitals, have the following meanings: "Amended Credit Agreement"
means the Credit Agreement as amended hereby.
"Amendment Effective Date" as defined in Subpart 3.1.
PART II
AMENDMENTS TO CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment Effective Date,
the Credit Agreement shall be amended in accordance with this Part II. Except as
so amended, the Credit Agreement shall continue in full force and effect.
SUBPART 2.1. Amendment to Section 1.1. Section 1.1 of the Credit Agreement is
hereby amended by deleting the existing definitions of "364-Day Credit
Agreement", "Change of Control", "Commercial Credit Business Arrangement",
"Consolidated Adjusted Debt" and "Interbank Offered Rate" and replacing them
with the following new definitions: (a) "364-Day Credit Agreement" means that
certain Credit Agreement dated as of May 22 2001 by and among the Borrower, the
lenders party thereto, Fleet National Bank, as administrative agent and The
Chase Manhattan Bank, as syndication agent, as amended, modified, restated,
supplemented or replaced from time to time.
(b) "Change of Control" means either (i) a "person" or a "group" (within the
meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of more than 50% of the then outstanding voting stock of
the Borrower or (ii) a majority of the board of directors of the Borrower shall
consist of individuals who are not Continuing Directors. For purposes hereof,
"Continuing Directors" means, as of any date of determination, (i) an individual
who on the date two years prior to such determination date was a member of the
Borrower's board of directors or (ii) (a) any director whose nomination for
election by the Borrower's shareholders was approved by a vote of a majority of
the directors then still in office who either were directors on the date two
years prior to such determination date or whose nomination for election was
previously so approved (or who are Continuing Directors pursuant to clause (b)
below) or (b) any director who was elected by a majority of the directors then
still in office who either were directors on the date two years prior to such
determination date or whose nomination for election was previously so approved
(or who are Continuing Directors pursuant to clause (a) above).
(c) "Commercial Credit Business Arrangement" means any agreement between the
Borrower or any of its Subsidiaries and an entity that purchases such Person's
commercial accounts receivables with only such limited recourse back to such
Person as is customary in factoring arrangements of this type.
(d) "Consolidated Adjusted Debt" means, at any time, the sum of, without
duplication, (i) Consolidated Funded Indebtedness and (ii) the product of
Consolidated Rents multiplied by 6.0.
(e) "Interbank Offered Rate" means, for the Interest Period for each Eurodollar
Loan comprising part of the same borrowing (including conversions, extensions
and renewals), a per annum interest rate (rounded upwards, if necessary, to the
nearest whole multiple of 1/100 of 1%) equal to the rate of interest, determined
by the Administrative Agent on the basis of the offered rates for deposits in
dollars for a period of time corresponding to such Interest Period (and
commencing on the first day of such Interest Period), appearing on Telerate Page
3750 (or, if, for any reason, Telerate Page 3750 is not available, the Reuters
Screen LIBO Page) as of approximately 11:00 A.M. (London time) two (2) Business
Days before the first day of such Interest Period; provided, however, if no such
interest rate for a period of time corresponding to such Interest Period appears
on Telerate Page 3750 or the Reuters Screen LIBO Page, then the applicable
interest rate shall be determined by the Administrative Agent in good faith. As
used herein, "Telerate Page 3750" means the display designated as page 3750 by
Dow Jones Telerate, Inc. (or such other page as may replace such page on that
service for the purpose of displaying the British Bankers Association London
interbank offered rates) and "Reuters Screen LIBO Page" means the display
designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such
other page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks).
SUBPART 2.2. Amendment to Section 2.2(b). Section 2.2(b) of the Credit Agreement
is hereby amended by deleting the following words from the second sentence
therein: "such time as determined by each such Lender in accordance with such
Lender's customary practices (in any event not to be later than" and by deleting
the symbols "))" and substituting ")".
SUBPART 2.3. Amendment to Section 2.2(c). Section 2.2(c) of the Credit Agreement
is hereby amended by deleting the following words from the second sentence
therein: "such time as determined by each such Lender in accordance with such
Lender's customary practices (in any event not to be later than" and by deleting
the symbols "))" and substituting ")".
SUBPART 2.4. Amendment to Section 2.2(d). Section 2.2(d) of the Credit Agreement
is hereby amended by deleting the following words from the first sentence
therein: "such time as determined by each such Lender in accordance with such
Lender's customary practices (in any event until" and by deleting the symbols
"))" and substituting ")".
SUBPART 2.5. Amendment to Section 3.3(b)(ii). Section 3.3(b)(ii) of the Credit
Agreement is hereby deleted in its entirety and is replaced with the following:
"(ii) Debt and Equity Issuances. During any period in which the Borrower has a
senior unsecured (non-credit enhanced) long term debt rating from S&P of below
BBB- and a senior unsecured (non-credit enhanced) long term debt rating from
Moody's of below Baa3, immediately upon receipt by the Borrower or any
Subsidiary of proceeds from any Debt or Equity Issuance (as defined below) the
Borrower shall cause 50% of the net cash proceeds of such Debt or Equity
Issuance to be applied as follows: (A) to prepay the principal amount of any
borrowings outstanding under the Facilities, with such prepayment applied pro
rata to the Facilities (based on outstanding commitments thereunder) to the
extent of outstanding borrowings under each Facility (it being understood that
the aggregate amount of prepayments required to be made by the Borrower under
both Facilities shall not exceed 50% of the net cash proceeds of such Debt or
Equity Issuance); and
(B) to permanently reduce on a Dollar for Dollar basis commitments outstanding
under the Facilities (regardless of whether there are any outstanding borrowings
being prepaid), with such reductions applied pro rata to the Facilities (based
on outstanding commitments thereunder) to the extent of outstanding commitments
under each Facility (it being understood that the aggregate amount of commitment
reductions required to be made by the Borrower under both Facilities shall not
exceed 50% of the net cash proceeds of such Debt or Equity Issuance and that a
commitment reduction under a Facility shall reduce the individual commitments of
the lenders under such facility on a pro rata basis).
Any prepayment made pursuant to this Section 3.3(b)(ii) shall be accompanied by
interest on the principal amount prepaid through the date of prepayment. For
purposes hereof, "Debt or Equity Issuance" means the issuance by the Borrower or
any of its Subsidiaries (to a Person other than the Borrower or any of its
Subsidiaries) of (I) any Indebtedness for borrowed money in the form of publicly
issued or privately placed bonds or other debt securities with a maturity of
three years or greater or (II) any shares of capital stock or other equity
securities." SUBPART 2.6. Amendment to Section 8.1(e)(i)(B). Section
8.1(e)(i)(B) of the Credit Agreement is hereby amended by deleting the phrase
between the word "prior" and the symbol "(ii)" and replacing the phrase with the
following: "to the applicable maturity date, but after the expiration of all
applicable grace periods, and such Indebtedness shall not be repaid when due;
or" SUBPART 2.7. Amendment to Section 8.1(f). Section 8.1(f) of the Credit
Agreement is hereby amended by inserting the following phrase immediately after
the word "thereof" in the last sentence of Section 8.1(f): "or, if longer,
within the applicable appeal period (but in no event for more than 90 days from
the entry thereof)". PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Amendment Effective Date. This Amendment shall be and become
effective as of the date hereof (the "Amendment Effective Date") when all of the
conditions set forth below in this Part III shall have been satisfied.
SUBPART 3.2. Execution of Counterparts of Amendment. The Agent shall have
received counterparts (or other evidence of execution, including telephonic
message, satisfactory to the Agent) of this Amendment, which collectively shall
have been duly executed on behalf of each of the Borrower, the Agent and the
Required Lenders.
SUBPART 3.3. Legal Details, Etc. The Agent, for the benefit of the Lenders, and
its counsel shall have received, and be satisfied with, any supporting
documentation as the Agent may reasonably request.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendment to any Part or
Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
SUBPART 4.2. Instrument Pursuant to Credit Agreement. This Amendment is a Credit
Document executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated therein) be construed, administered and applied in
accordance with the terms and provisions of the Amended Credit Agreement.
SUBPART 4.3. References in Other Credit Documents. At such time as this
Amendment shall become effective pursuant to the terms of Subpart 3.1, all
references in the Credit Documents to the "Credit Agreement" shall be deemed to
refer to the Credit Agreement as amended by this Amendment.
SUBPART 4.4. Representations and Warranties. The Borrower hereby represents and
warrants that: (a) It has taken all necessary action to authorize the execution,
delivery and performance of this Amendment.
(b) This Amendment has been duly executed and delivered by the Borrower and
constitutes the Borrower's legal, valid and binding obligations, enforceable in
accordance with its terms, except as such enforceability may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights generally and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(c) No consent, approval, authorization or order of, or filing, registration or
qualification with, any court or governmental authority or third party is
required in connection with the execution, delivery or performance by the
Borrower of this Amendment.
(d) The representations and warranties set forth in Section 5 of the Amended
Credit Agreement are, subject to the limitations set forth therein, true and
correct in all material respects as of the Amendment Effective Date (except for
those which expressly relate to an earlier date).
(e) Subsequent to the execution and delivery of this Amendment and after giving
effect hereto, no Default or Event of Default exists under the Amended Credit
Agreement or any of the other Credit Documents.
(f) All of the provisions of the Credit Documents, except as amended hereby, are
in full force and effect.
SUBPART 4.5. No Other Changes. Except as expressly modified and amended in this
Amendment, all the terms, provisions and conditions of the Credit Documents
shall remain unchanged and shall continue in full force and effect.
SUBPART 4.6. Counterparts/Telecopy. This Amendment may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement. Delivery of an executed counterpart by telecopy shall be effective as
an original and shall constitute a representation that an original will be
delivered.
SUBPART 4.7. Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SUBPART 4.8. Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
SUBPART 4.9. ENTIRETY. THIS AMENDMENT, THE AMENDED CREDIT AGREEMENT AND THE
OTHER CREDIT DOCUMENTS EMBODY THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND
SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THE
SUBJECT MATTER HEREOF. THESE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
[Signature pages follow]
This Amendment No. 1 to Five-Year Credit Agreement is executed as of the day and
year first written above.
BORROWER:
AUTOZONE, INC.
a Nevada corporation
By: /s/ James A. Cook, III
Name: James Cook
Title: VP & Treasurer
By: /s/ Harry L. Goldsmith
Name: Harry L. Goldsmith
Title:Sr. Vice President, Secretary & General Counsel
LENDERS:
FLEET NATIONAL BANK
By: /s/ Thomas J. Bullard
Name: Thomas J. Bullard
Title: Director
BANK OF AMERICA, N.A.
By: /s/ Timothy H. Spanos
Name: Timothy H. Spanos
Title: Managing Director
THE BANK OF NEW YORK
By: /s/ Howard F. Bascom, Jr.
Name: Howard F. Bascom, Jr.
Title: Vice President
BANK ONE, NA
By: /s/ Catherine A. Muszynski
Name: Catherine A. Muszynski
Title: Vice President
FIFTH THIRD BANK
By: /s/Megan S. Heisel
Name: Megan S. Heisel
Title: Corporate Banking Officer
HIBERNIA NATIONAL BANK
By: /s/ Andrew B. Booth
Name: Andrew B. Booth
Title: Asst Vice President
THE CHASE MANHATTAN BANK
By: /s/ Barry K. Bergman
Name: Barry K. Bergman
Title: Vice President
KEYBANK NATIONAL ASSOCIATION
By: /s/ Mark A. LoSchiavo
Name: Mark A. LoSchiavo
Title: AVP
NATIONAL CITY BANK
By: /s/ James C. Ritchie
Name: James C. Ritchie
Title: Assistant Vice President
SUNTRUST BANK
By: /s/ Bryan W. Ford
Name: Bryan W. Ford
Title: Vice President
UNION PLANTERS N.A.
By: /s/ Keith Hart
Name: Keith Hart
Title: Vice-President
WACHOVIA BANK, N.A.
By: /s/ Anne L. Sayles
Name: Anne L. Sayles
Title: Senior Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Theresa L. Rocha
Name: Theresa L. Rocha
Title: Vice President
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By: /s/ James H. Moore, Jr.
Name: James H. Moore, Jr.
Title: SVP
FIRSTAR BANK, N.A.
By: /s/ Amanda Smith
Name: Amanda Smith
Title: AVP
MERRILL LYNCH BANK USA
By: /s/ D. Kevin Imlay
Name: D. Kevin Imlay
Title: Senior Lending Officer
|
EX-10.2 4 comericanoteex10_2htm.htm RATABLE NOTE AMONG SEITEL AND COMERICA BANK
--------------------------------------------------------------------------------
EXHIBIT 10.2
--------------------------------------------------------------------------------
NOTE
$25,000,000.00
June 29, 2001
Seitel, Inc., a Delaware corporation (the "Borrower"), promises to pay
to the order of Comerica Bank - Texas (the "Lender") the principal amount of
Twenty-Five Million and No/100 Dollars ($25,000,000.00) or, if less, the
aggregate unpaid principal amount of all Loans made by the Lender to the
Borrower pursuant to Article II of the Agreement (as hereinafter defined), in
immediately available funds at the main office of Bank One, NA in Chicago,
Illinois, as Agent, together with interest on the unpaid principal amount hereof
at the rates and on the dates set forth in the Agreement. The Borrower shall pay
the principal of and accrued and unpaid interest on the Loans in full on the
Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Loan and the date and amount of each principal
payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to
the benefits of, the Credit Agreement dated as of June 29, 2001 (which, as it
may be amended or modified and in effect from time to time, is herein called the
"Agreement"), among the Borrower, the lenders party thereto, including the
Lender, and Bank One, NA, as Agent and as the LC Issuer, to which Agreement
reference is hereby made for a statement of the terms and conditions governing
this Note, including the terms and conditions under which this Note may be
prepaid or its maturity date accelerated. This Note is guaranteed pursuant to
the Subsidiary Guaranty, all as more specifically described in the Agreement,
and reference is made thereto for a statement of the terms and provisions
thereof. Capitalized terms used herein and not otherwise defined herein are used
with the meanings attributed to them in the Agreement.
SEITEL, INC.
By:
/s/ Debra D. Valice
Name:
Debra D. Valice
Title:
Chief Financial Officer
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|
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Exhibit 10.39
THE GYMBOREE CORPORATION COMMON
STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this “Agreement”) is made and entered
into as of May __, 2000, by and between The Gymboree Corporation, a Delaware
corporation (the “Company”), and _____________(“Investor”).
1. AGREEMENT TO PURCHASE AND SELL STOCK.
(a) Authorization. The Company’s Board of Directors will, prior to the
Closing, authorize the issuance, pursuant to the terms and conditions of this
Agreement, of shares of Common Stock, in an amount equal to the number of
Purchased Shares (as defined in Section 1(b)).
(b) Agreement to Purchase and Sell Securities. The Company hereby agrees
to issue to the Investor at the Closing (as defined below), and the Investor
hereby agrees to acquire from the Company at the Closing, ___________ shares of
Common Stock (collectively, the “Purchased Shares”) at a purchase price of Two
Dollars Ninety-Seven Cents ($2.97) per share (the “Purchase Price”).
2. CLOSING. The purchase and sale of the Purchased Shares shall take place
at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
650 Page Mill Road, Palo Alto, California, at 10:00 a.m. California time, within
three (3) business days after the conditions set forth in Sections 5 and 6 have
been satisfied, or at such other time and place as the Company and the Investor
mutually agree upon (which time and place are referred to in this Agreement as
the “Closing”). At the Closing, the Company will deliver to each Investor the
certificate representing the Purchased Shares against delivery to the Company by
the Investor of the Purchase Price in cash paid by wire transfer of funds to the
Company. Closing documents may be delivered by facsimile with original signature
pages sent by overnight courier. The date of the Closing is referred to herein
as the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor that the statements in this Section 3
are true and correct, except as set forth in the SEC Documents (as defined
below):
(a) Organization Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all corporate power and authority required to
(a) carry on its business as presently conducted, and (b) enter into this
Agreement and the other agreements, instruments and documents contemplated
hereby, and to consummate the transactions contemplated hereby and thereby. The
Company is qualified to do business and is in good standing in each jurisdiction
in which the failure to so qualify would have a Material Adverse Effect. As used
in this Agreement, “Material Adverse Effect” means a material adverse effect on,
or a material adverse change in, or a group of such effects on or changes in,
the business, operations, financial condition, results of operations, assets or
liabilities of the applicable party and its subsidiaries, taken as a whole.
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(b) Due Authorization. All corporate actions on the part of the Company
necessary for the authorization, execution, delivery of, and the performance of
all obligations of the Company under this Agreement and the authorization,
issuance, reservation for issuance and delivery of all of the Purchased Shares
being sold under this Agreement, and this Agreement constitutes, legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except (a) as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or others laws of general application
relating to or affecting the enforcement of creditors’ rights generally and (ii)
the effect of rules of law governing the availability of equitable remedies and
(b) as rights to indemnity or contribution may be limited under federal or state
securities laws or by principles of public policy thereunder.
(c) Valid Issuance of Stock.
(i) Valid Issuance. The shares of Common Stock to be issued pursuant to
this Agreement, will be, upon payment therefor by the Investor in accordance
with this Agreement, duly authorized, validly issued, fully paid and
non-assessable.
(ii) Compliance with Securities Laws. Assuming the correctness of the
representations made by the Investor in Section 4 hereof, the Purchased Shares
will be issued to the Investor in compliance with applicable exemptions from
(i) the registration and prospectus delivery requirements of the Securities Act
of 1933, as amended (the “Securities Act”) and (ii) the registration and
qualification requirements of all applicable securities laws of the states of
the United States.
(d) Compliance with Law and Charter Documents. The Company is not in
violation or default of any provisions of its Certificate of Incorporation or
Bylaws, both as amended. The Company has complied in all respects and is in
compliance with all applicable statutes, laws, rules, regulations and orders of
the United States of America and all states thereof, foreign countries and other
governmental bodies and agencies having jurisdiction over the Company’s business
or properties, except for any instance of non-compliance that has not had, and
would not reasonably be expected to have, a Material Adverse Effect.
(e) SEC Documents.
(1) Reports. The Company has furnished to the Investor prior to the date
hereof copies of its Annual Report on Form 10-K for the fiscal year ended
January 29, 2000 (“Form 10-K ”), and all other registration statements, reports
and proxy statements filed by the Company with the Securities and Exchange
Commission (“SEC”) on or after January 29, 2000 (the Form 10-K and such
registration statements, reports and proxy statements are collectively referred
to herein as the “SEC Documents”). Each of the SEC Documents, as of the
respective date thereof (or if amended or superseded by a filing prior to the
Closing Date, then on the date of such filing), did not, and each of the
registration statements, reports and proxy statements filed by the Company with
the SEC after the date hereof and prior to the Closing will not, as of the date
thereof (or if amended or superseded by a filing after the date of this
Agreement, then on the date of such filing), contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
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(2) Financial Statements. The Company has provided the Investor with
copies of its audited financial statements (the “Audited Financial Statements”)
for the fiscal year ended January 29, 2000 (the “Balance Sheet Date”). Since the
Balance Sheet Date, the Company has duly filed with the SEC all registration
statements, reports and proxy statements required to be filed by it under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
Securities Act. The audited financial statements of the Company included in the
SEC Documents filed prior to the date hereof fairly present, in conformity with
generally accepted accounting principles (“GAAP”) applied on a consistent basis,
the financial position of the Company as at the dates thereof and the results of
its operations and cash flows for the periods then ended.
(f) Full Disclosure. The information contained in this Agreement and the
SEC Documents with respect to the business, operations, assets, results of
operations and financial condition of the Company, and the transactions
contemplated by this Agreement, are true and complete in all material respects
and do not omit to state any material fact or facts necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE INVESTOR. The
Investor hereby represents and warrants to the Company, and agrees that:
(a) Authorization. The execution of this Agreement has been duly
authorized by all necessary legal action on the part of the Investor. This
Agreement constitutes the Investor’s legal, valid and binding obligations,
enforceable in accordance with their terms, except (a) as may be limited by (i)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors’rights
generally and (ii) the effect of rules of law governing the availability of
equitable remedies and (b) as rights to indemnity or contribution may be limited
under federal or state securities laws or by principles of public policy
thereunder. The Investor has full corporate power and authority to enter into
this Agreement.
(b) Purchase for Own Account. The Purchased Shares are being acquired
for investment for the Investor’s own account, not as a nominee or agent, and
not with a view to the public resale or distribution thereof within the meaning
of the Securities Act, and the Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. The Investor
also represents that it has not been formed for the specific purpose of
acquiring the Purchased Shares.
3
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(c) Investment Experience. The Investor understands that the purchase of
the Purchased Shares involves substantial risk. The Investor has experience as
an investor in securities of companies and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment in the Purchased Shares
and has such knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of this investment in the
Purchased Shares and protecting its own interests in connection with this
investment.
(d) Accredited Investor Status. The Investor is an “accredited
investor”within the meaning of Regulation D promulgated under the Securities
Act.
(e) Restricted Securities. The Investor understands that the Purchased
Shares to be purchased by the Investor hereunder are characterized as
“restricted securities”under the Securities Act, inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under the Securities Act and applicable regulations thereunder such
securities may be resold without registration under the Securities Act only in
certain limited circumstances. The Investor is familiar with Rule 144 of the
SEC, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act and understands that, except as provided in
the Investor Rights Agreement (as defined in section 5(f) hereof), the Company
is under no obligation to register any of the securities sold hereunder.
(f) Legends. The Investor agree that the certificates for the Purchased
Shares shall bear the following legend:
“The securities represented by this certificate have not been registered under
the Securities Act of 1933 or with any state securities commission, and may not
be transferred or disposed of by the holder in the absence of a registration
statement which is effective under the Securities Act of 1933 and applicable
state laws and rules, or, unless, immediately prior to the time set for
transfer, such transfer may be effected without violation of the Securities Act
of 1933 and other applicable state laws and rules.”
In addition, the Investor agree that the Company may place stop transfer orders
with its transfer agents with respect to such certificates. The appropriate
portion of the legend and the stop transfer orders will be removed promptly upon
delivery to the Company of such satisfactory evidence as reasonably may be
required by the Company that such legend or stop orders are not required to
ensure compliance with the Securities Act.
(g) Finder’s Fee. Each Investor neither is nor will be obligated for any
finder’s or broker’s fee or commission in connection with this transaction.
(h) Market Stand-Off. The Investor hereby agrees that from the date of
the Closing to the date that is six (6) months after the Closing, the Investor
shall not, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of any of the Purchased Shares. In order to
enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the Purchased Shares of the Investor (and the
shares or securities of every other person subject to the foregoing restriction)
until the end of such period.
4
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5. CONDITIONS TO THE INVESTOR’S OBLIGATIONS AT CLOSING. The obligations of
the Investor under Sections l and 2 of this Agreement are subject to the
fulfillment or waiver, on or before the Closing, of each of the following
conditions:
(a) Representations and Warranties True. Each of the representations and
warranties of the Company contained in Section 3 shall be true and correct in
all material respects on and as of the date of the Closing, except as set forth
in the SEC Documents, with the same effect as though such representations and
warranties had been made as of the Closing.
(b) Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
(c) Securities Exemptions. The offer and sale of the Purchased Shares to
the Investor pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws.
(d) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investor, and the Investor shall have received all such counterpart originals
and certified or other copies of such documents as it may reasonably request.
(e) Nasdaq Requirements. All requirements of the Nasdaq National Market
in connection with the transactions contemplated by this Agreement shall have
been complied with by the Company.
(f) Investor Rights Agreement. The Company will have executed and
delivered the Investor Rights Agreement substantially in the form attached to
this Agreement as Exhibit A (the “Investor Rights Agreement”).
6. CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING. The obligations of
the Company to the Investor under this Agreement are subject to the fulfillment
or waiver, on or before the Closing, of each of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Investor contained in Section 4 shall be true and correct in
all material respects on and as of the date hereof and on and as of the date of
the Closing with the same effect as though such representations and warranties
had been made as of the Closing.
5
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(b) Performance. The Investor shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
(c) Securities Exemptions. The offer and sale of the Purchased Shares to
the Investor pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws.
(d) Payment of Purchase Price. The Investor shall have delivered to the
Company the Purchase Price as specified in Section 1(b).
(e) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto will be reasonably satisfactory in form and substance to the
Company and to the Company’s legal counsel, and the Company will have received
all such counterpart originals and certified or other copies of such documents
as it may reasonably request.
10. MISCELLANEOUS.
(a) Successors and Assigns. The terms and conditions of this Agreement
will inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties.
(b) Governing Law. This Agreement will be governed by and construed
under the internal laws of the State of California, without reference to
principles of conflict of laws or choice of laws.
(c) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(d) Headings. The headings and captions used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement. All references in this Agreement to sections, paragraphs,
exhibits and schedules will, unless otherwise provided, refer to sections and
paragraphs hereof and exhibits and schedules attached hereto, all of which
exhibits and schedules are incorporated herein by this reference.
6
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(e) Notices. Any notice required or permitted under this Agreement shall
be given in writing, shall be effective when received, and shall in any event be
deemed received and effectively given upon personal delivery to the party to be
notified or three (3) business days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid, or one (1) business
day after deposit with a nationally recognized courier service such as Federal
Express for next business day delivery under circumstances in which such service
guarantees next business day delivery, or one (1) business day after facsimile
with copy delivered by registered or certified mail, in any case, postage
prepaid and addressed to the party to be notified at the address indicated for
such party on the signature page hereof or at such other address as the Investor
or the Company may designate by giving at least ten (10) days advance written
notice pursuant to this Section 10(e).
(f) No Finder’s Fees. The Investor will indemnify and hold harmless the
Company from any liability for any commission or compensation in the nature of a
finders’or broker’s fee for which the Investor or any of its officers, partners,
employees or consultants, or representatives is responsible. The Company will
indemnify and hold harmless the Investor from any liability for any commission
or compensation in the nature of a finder’s or broker’s fee for which the
Company or any of its officers, employees or consultants or representatives is
responsible.
(g) Amendments and Waivers. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor. Any amendment or waiver
effected in accordance with this Section 10(g) will be binding upon the
Investor, the Company and their respective successors and assigns.
(h) Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
(i) Entire Agreement. This Agreement, together with the Investor Rights
Agreement and all exhibits and schedules hereto and thereto constitutes the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings, duties or obligations between the parties with
respect to the subject matter hereof.
(j) Further Assurances. From and after the date of this Agreement upon
the request of the Company or the Investor, the Company and the Investor will
execute and deliver such instruments, documents or other writings, and take such
other actions, as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement.
(k) Meaning of Include and Including. Whenever in this Agreement the
word “include” or “including” is used, it shall be deemed to mean “include,
without limitation” or “including, without limitation,” as the case may be, and
the language following “include” or “including” shall not be deemed to set forth
an exhaustive list.
7
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(l) Fees, Costs and Expenses. All fees, costs and expenses (including
attorneys’ fees and expenses) incurred by either party hereto in connection with
the preparation, negotiation and execution of this Agreement and the Investor
Rights Agreement and the consummation of the transactions contemplated hereby
and thereby (including the costs associated with any filings with, or compliance
with any of the requirements of, any governmental authorities), shall be the
sole and exclusive responsibility of such party.
(p) Stock Splits, Dividends and other Similar Events. The provisions of
this Agreement (including the number of shares of Common Stock and other
securities described herein) shall be appropriately adjusted to reflect any
stock split, stock dividend, reorganization or other similar event that may
occur with respect to the Company after the date hereof.
8
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
THE GYMBOREE CORPORATION
By:
——————————————
Name: Lawrence H. Meyer
Title: Chief Financial Officer
Address: 700 Airport Boulevard
Burlingame, California 94010
Telephone No.: (650) 696-7500
Facsimile No.: (650) 579-1733
with copies to:
Wilson Sonsini Goodrich & Rosati
Attention: Jeffrey D. Saper
650 Page Mill Road
Palo Alto, California 94304-1050
Telephone No.: (650) 320-4626
Facsimile No.: (650) 493-6811
INVESTOR
[NAME OF INVESTOR]
By:
———————————————
Name
——————————————
Title
——————————————
{Signature page to The Gymboree Corporation Common Stock Purchase Agreement}
|
Exhibit 10.17
February 6, 2001
Richard Bibb
3158 Mary Etta Lane
Oak Hill, Virginia 20171
Dear Richard:
I am pleased to inform you that Redback Networks, Inc. Board of
Director's has approved your promotion to Senior Vice President of World Wide
Sales, effective February 9, 2001 with the following terms and conditions:
1. Position. You will serve in a full-time capacity as Senior Vice President of
World Wide Sales of the Company effective February 9, 2001. This position will
report into Vivek Ragavan, President and Chief Executive Officer. 2.
Compensation. A. You will be paid an annual base salary of $200,000
payable in accordance with the Company's standard payroll practices for salaried
employees. This salary will be subject to adjustment pursuant to the Company's
employee compensation policies on a periodic basis. B. You will be
paid commissions on a monthly basis based on your performance and the overall
performance of the Company. Your incentive commissions for FY2001 will be based
on mutually agreed objectives with the Company's President and CEO. The target
commission for FY2001 will be $130,000. C. Redback will provide you
with an Executive Bonus, at target of $50,000 based upon your performance and
the overall performance of the Company's second half of FY2001, as mutually
agreed to by you and the President and Chief Executive Officer. Your
on target earnings for FY2001 will be $380,000.00 3. Stock Options.
Subject to the approval of the Company's Board of Directors, you will be granted
an option to purchase 150,000 shares of the Company's Common Stock. The exercise
price per share will be equal to the fair market value per share on the date the
option is approved by our Board of Directors at the close of the market, at
their scheduled meeting on March 5, 2001. The option will be subject to the
terms and conditions applicable to options granted under the Company's 1999
Stock Plan, as described in that Plan and the applicable stock option agreement.
You will vest in 25% of the option shares after 12 months of service, and the
balance will vest in monthly installments over the next 36 months of service, as
described in the applicable stock option agreement. 4. Relocation. Redback
will provide you with the use of a Corporate Apartment for the period of 12
months from your date of promotion. You will also have the option of relocating
you and your family to the Bay Area. This relocation option is available to you
for a period of 12 months from your date of promotion, with terms and conditions
of the relocation package to be agreed at the time you elect to accept the
benefit. Both the Corporate Apartment and the relocation benefit will be
re-negotiated and the end of 12 months from your date of promotion.
5. Period of Employment. Your employment with the Company will be "at will,"
meaning that either you or the Company will be entitled to terminate your
employment at any time for any reason, with or without cause. Any contrary
representations, which may have been made to you, are superseded by this offer.
Although your job duties, title, compensation and benefits, as well as the
Company's personnel policies and procedures, may change from time to time, the
"at will" nature of your employment may only be changed in an express writing
signed by you and the President of the Company. In the unlikely event that the
company terminates your employment without Cause within the first 12 months of
your employment, you will be provided with no less than six months of salary
continuation. Cause shall be deemed to mean your unauthorized use of disclosure
of the confidential information or trade secrets of Redback, your conviction of
a felony under the laws of the United States or any state thereof or your gross
negligence. 6. Entire Agreement. This letter and all the new compensation
terms of your employment with the Company are in accordance with the terms and
conditions that you agreed to when you accepted employment with Redback
Networks, Inc. 7. Option Acceleration and Severance Package. In the
event a Change In Control occurs (as defined by Redback's Stock Option Plan) and
(ii) within 12 months following such Change In Control, either (A) your service
with Redback is involuntarily terminated without cause or (B) there is an
involuntary reduction in the nature or scope of your service to Redback
(including a material reduction in your employment responsibilities), an
additional 25% of the shares shall become vested, provided that this Option
shall not become vested with respect to more that 100% of the shares. In
addition, the Company shall also continue your base pay (at the rate in effect
at the time of the termination of your employment) for a period of 12 months
following termination of your employment or, if earlier, until you secure new
employment at similar compensation. Cause shall be deemed to mean your
unauthorized use of disclosure of the confidential information or trade secrets
of Redback, your conviction of a felony under the laws of the United States or
any state thereof or your gross negligence.
Richard, you have made a significant contribution to the Company as the Vice
President of Sales for North America and I am looking forward to working with
you in your new capacity as Sr. Vice President of World Wide Sales. You may
indicate your agreement with these terms and accept this promotional opportunity
by signing and dating this letter returning them to me by the end of the day
today, February 6, 2001.
Very truly yours,
Vivek Ragavan
President and Chief Executive Officer
REDBACK NETWORKS, Inc.
AGREED AND ACCEPTED
_______________________.
By
_______________________.
Date
START DATE:
_______________________. |
ACKNOWLEDGMENT, WAIVER AND AMENDMENT
TO
FINANCING AGREEMENT
This ACKNOWLEDGMENT, WAIVER AND AMENDMENT ("Amendment") TO THE
INVENTORY AND WORKING CAPITAL FINANCING AGREEMENT is made as of July 26, 2001 by
and between Datatec Industries, Inc., duly organized under the laws of the State
of Delaware ("Customer") and IBM Credit Corporation, a Delaware corporation
("IBM Credit").
RECITALS:
WHEREAS, Customer and IBM Credit have entered into that certain
Inventory and Working Capital Financing Agreement dated as of November 10, 2000
(as amended, supplemented or otherwise modified from time to time, the
"Agreement");
WHEREAS, Customer (a) is in default of one or more of its financial
covenants contained in the Agreement and (b) has been in default of other terms
and conditions of the Agreement within the previous three (3) months (as more
specifically explained in Section 2 hereof); and
WHEREAS, IBM Credit is willing to waive such defaults subject to the
conditions set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the premises set forth herein,
and for other good and valuable consideration, the value and sufficiency of
which is hereby acknowledged, the parties hereto agree that the Agreement is
amended as follows:
Section 1. Definitions. All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement.
Section 2. Acknowledgment.
Customer acknowledges that the financial covenants set forth in
Attachment A to Agreement are applicable to the financial results of Customer
for the fiscal year ending April 30, 2001, and Customer was required to maintain
such financial covenants at all times. Customer further acknowledges its actual
attainment was as follows:
Covenant Covenant
Covenant Requirement Actual
------------------------------ ---------------------------------- ------
Revenue on an Annual Basis Greater than Zero and
to Working Capital Equal to or Less than 25.0 : 1.0 - 25.5 : 1.0
Section 3. Waivers to Agreement. IBM Credit hereby waives the defaults of
Customer with the terms of the Agreement to the extent such defaults are set
forth in Section 2 hereof.
Section 4. Amendment. The Agreement is hereby amended as follows:
A. Attachment A to the Agreement is hereby amended by deleting such
Attachment A in its entirety and substituting, in lieu thereof, the Attachment A
attached hereto. Such new Attachment A shall be effective as of the date
specified in the new Attachment A. The changes contained in the new Attachment A
include, without limitation, that Customer shall be required to maintain the
following financial percentage(s) and ratio(s) as of the last day of the fiscal
period under review by IBM Credit::
Page 1 of 2
Covenant Requirement
------------------------------------------ -----------
(i) On and after April 30, 2002
Revenue on an Annual Basis to Working Capital Greater than Zero and
Equal to or Less than 25.0 : 1.0
(ii) On and after October 1, 2001
Net Profit after Tax to Revenue Equal to or Greater than 0.10 percent
(iii) On and after October 1, 2001
Tangible Net Worth Equal to or Greater than $2,500,000.00
Section 5. Conditions to Effectiveness of Waiver. The waiver set forth in
Section 3 hereof shall become effective upon the receipt by IBM Credit from
Customer of (i) this Amendment executed by Customer, and (ii) a waiver fee, in
immediately available funds, equal to One Hundred and Seventy - Five Thousand
Dollars ($175,000.00) on or prior to July 26, 2001. Such waiver fee payable to
IBM Credit hereunder shall be nonrefundable and shall be in addition to any
other fees IBM Credit may charge Customer.
Section 6. Additional Requirements. None.
Section 7. Rights and Remedies. Except to the extent specifically waived herein
IBM Credit reserves any and all rights and remedies that IBM Credit now has or
may have in the future with respect to Customer, including any and all rights or
remedies which it may have in the future as a result of Customer's failure to
comply with its financial covenants to IBM Credit. Except to the extent
specifically waived herein neither this Amendment, any of IBM Credit's actions
or IBM Credit's failure to act shall be deemed to be a waiver of any such rights
or remedies.
Section 8. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws which govern the Agreement.
Section 9. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one agreement.
IN WITNESS WHEREOF, this Amendment has been executed by duly
authorized representatives of the undersigned as of the day and year first above
written.
IBM Credit Corporation Datatec Industries, Inc.
IBM Credit Corporation Datatec Industries, Inc.
By: /s/ Stanton Clark By: /s/ Issac Gaon
--------------------------------------- -------------------------------------
Print Name: Stanton Clark Print Name: Issac Gaon
------------------------------- ------------------------------
Title: Region Credit Manager Title: Chairman of the Board/CEO
------------------------------------ ----------------------------------
Date: Date:
------------------------------------ ----------------------------------
Page 2 of 2
|
OPTION AGREEMENT
This agreement is entered into this seventh day of December, 2000, by and
between VICORP Restaurants, Inc. (the Corporation), and Joseph F. Trungale
("Optionee").
WHEREAS, the Corporation has adopted the Amended and Restated 1982 Stock Option
Plan ("Plan"), which Plan is in full force and effect; and
WHEREAS, pursuant to Article VIII of the Plan, the Committee of Non-Employee
Directors is to notify the recipient of the grant of any option in a writing
delivered in duplicate either in person or by mail.
NOW, THEREFORE, the parties hereto acknowledge and agree as follows:
I. GRANT:
Optionee is hereby granted a non-qualified option to purchase under the terms of
the plan 25,000 shares of the Corporation's common stock (par value $0.05 per
share) for an exercise price of $17.8125 per share. The options shall be vested
according to the following schedule:
8,333 shares will vest on December 7, 2000
8,333 shares will vest on December 7, 2001
8,334 shares will vest on December 7, 2002
II. TERM:
Each option granted shall expire ten years from the date of grant, unless
canceled or terminated earlier in accordance with the terms of the Plan.
III. EXERCISE OF OPTIONS:
Only options which are vested may be exercised.
IV. MANNER OF EXERCISE:
(a) Notice to the Corporation: Each exercise of an option shall be made by the
delivery by the Optionee of written notice of such election to the Corporation,
either in person or by mail, stating the number of shares with respect to which
the option is being exercised and specifying a date on which the shares will be
taken and payment made therefor. The date shall be at least fifteen (15) days
after the giving of such notice, unless an earlier date shall have been mutually
agreed upon .
(b) Issuance of Stock: Subject to any law or regulation of the Securities and
Exchange Commission or other body having jurisdiction requiring an action to be
taken in connection with the shares specified in a notice of election before the
shares can be delivered to the Optionee, on the date specified in the notice of
election, the Corporation shall deliver, or cause to be delivered to the
Optionee stock certificates for the number of shares with respect to which the
option is being exercised, against payment therefor (including payment of any
tax required to be withheld). In the event of any failure to take and pay, on
the date stated, for the full number of shares specified in the notice of
election, the option shall become inoperative only as to those shares which are
not taken or paid for, but shall continue with respect to any remaining shares
subject to the option as to which exercise has not yet been made.
V. ASSIGNMENT:
Any option granted under the Plan shall not be assigned, pledged, or
hypothecated in any way, shall not be subject to execution, and shall not be
transferable other than by will or the laws of descent and distribution. Any
attempted assignment or other prohibited disposition shall be null and void.
VI. TERMINATION:
(a) Termination Other Than At Death Or Disability: If the Optionee terminates
his position as an Employee of the Corporation for any reason other than death
or disability, any unexpired and unexercised granted options shall be canceled
three months after the effective date of the Optionee's termination.
(b) Termination At Death Or Disability: In the event of the death of the
Optionee, any option held by him at the time of his death shall be transferred
as provided in his will or by the laws of descent and distribution, and may be
exercised by such transferee at any time within twelve months after the date of
death, to the extent the option is exercisable on the date of death, and
provided it is exercised within the time prescribed in the Plan. In the event of
the disability of the Optionee, any option held by him may be exercised in whole
or in part, by the Optionee or his personal representative at any time within
twelve months after the date of disability, to the extent the option is
exercisable on the date of disability, and provided that it is exercised within
the time prescribed in the Plan. Disability and time of disability shall be
determined by the Committee.
VII. CHANGES IN CAPITAL STRUCTURE:
The number of shares granted to Optionee will be subject to adjustment in the
case of stock splits, combinations, stock dividends, reorganization and similar
events.
VIII. SUBSTITUTION OR CANCELLATION UPON ACQUISITION:
As used in this article, "Acquisition Event" means (1) any sale or other
disposition of all or substantially all of the assets of the Corporation or of
any participating subsidiary pursuant to a plan which provides for the
liquidation of the Corporation or the participating subsidiary, (2) any exchange
by the holders of all of the outstanding shares of Common Stock for securities
issued by another entity, or in whole or in part for cash or other property,
pursuant to a plan of exchange approved by the holders of a majority of such
outstanding shares, or (3) any transaction to which 425(a) of the Internal
Revenue Code of 1954, as amended, applies and to which the Corporation or any
participating subsidiary is a party in connection with any Acquisition Event and
upon such terms and conditions as the Board may establish:
(a) The Committee may waive any limitation applicable to any option or right
granted to the Optionee by this Agreement under the Plan so that such option and
right, from and after a date prior to the Acquisition Event that is specified by
the Committee, shall be exercisable in full.
(b) If the Committee so determines, the Optionee may be given the opportunity to
make a final settlement for the entire unexercised portion of any option and any
right granted by this Agreement under the Plan, including any portion not then
currently exercisable, in any one or more of the following matters:
(i) Surrender such unexercised portion for cancellation in exchange for the
payment in cash of an amount not less than the difference between the value per
share of Common Stock as measured by the value to be received by the holders of
the outstanding shares of Common Stock pursuant to the terms of the Acquisition
Event, as determined by the Committee in its discretion, and the price at which
such option and right is or would become exercisable, multiplied by the number
of shares represented by such unexercised portion.
(ii) Exercise such option and right, including any portion not then otherwise
currently exercisable, prior to the Acquisition Event so that the Optionee would
be entitled, with respect to shares thereby acquired, to participate in the
Acquisition Event as a holder of Common Stock.
(iii) Surrender such option and right for cancellation in exchange for a
substitute option, with or without a related stock appreciation right, providing
substantially equal benefits and granted or to be granted by an employer
corporation, or a parent or subsidiary of such an employer corporation, that
after the Acquisition Event is expected to continue to conduct substantially the
same business as that acquired from the Corporation or a participating
subsidiary pursuant to the Acquisition Event.
If the Optionee is given one or more of such opportunities with respect to the
entire unexercised portion of any option and right granted by this Agreement,
the option and right may be canceled by the Corporation upon the occurrence of
the Acquisition Event and thereafter the Optionee will be entitled only to
receive the appropriate benefit pursuant to clause (i), (ii), or (iii) above,
whichever may be applicable.
The provisions of this article are not intended to be exclusive of any other
arrangements that the Board might approve for settlement of any or all
outstanding options and rights in connection with an Acquisition Event or
otherwise.
IX. ADMINISTRATION:
The Plan is administered by a committee of non-employee directors appointed by
the Board of Directors of the Corporation ("Committee") to whom all
correspondence shall be directed.
X. MISCELLANEOUS:
(a) Interpretation: Any inconsistencies between the provisions of this Option
Agreement and the Plan shall be governed by the terms and provisions of the
Plan. Optionee is referred to the Plan to determine all of his rights and
obligations, only a portion of which have been set forth in this Agreement.
(b) Acknowledgment: By execution of this Agreement, Optionee acknowledges
receipt of a duplicate copy of the same as notification of his grant of options
and that Optionee agrees in consideration of such option he will abide by all
the terms and conditions of the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement as of
the day and year first above-written.
VICORP Restaurants, Inc.
By /s/Charles R. Frederickson
Chairman
/s/Joseph F. Trungale
Optionee
This is Page 4 of a 4-page Option Agreement between VICORP Restaurants, Inc.,
and Joseph F. Trungale dated December 7, 2000. |
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Exhibit F
FORM OF PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is made as of the day of September, 2000, by and
between STAAR Surgical Company (the "Company"), a corporation organized under
the laws of the State of Delaware, with its principal offices at 1911 Walker
Avenue, Monrovia, California 91016, and the purchaser whose name and address is
set forth on the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:
1. Sale and Purchase of the Shares. The Company has authorized the sale of
up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share
(the "Common Stock"), of the Company on the terms and subject to the conditions
set forth in this Agreement. At the Closing (as defined in Section 3), the
Company will sell to the Purchaser, and the Purchaser will buy from the Company,
upon the terms and conditions contained in this Agreement, the number of Shares
specified below such Purchaser's name on the signature page attached hereto at
the price set forth thereto.
2. Other Purchasers. The Company intends to enter into this same form of
purchase agreement with certain other investors (the "Other Purchasers") and
expects to complete sales of the Shares to them. The Purchaser's obligations
hereunder are expressly not subject to or conditioned on the purchase of the
Shares by any or all of the Other Purchasers.
3. Closing; Delivery; Conditions.
3.1 Closing. The purchase and sale of the Shares (the "Closing") shall
occur as soon as practicable after the execution of this Agreement by the
Company and the Purchasers at the time and location (the "Closing Date") agreed
upon by the Company and the Placement Agent (as defined herein). The Placement
Agent will promptly notify the Purchasers of the Closing Date by facsimile
transmission or otherwise.
3.2 Delivery of the Shares. Subject to the satisfaction of the conditions
set forth below, at the Closing, the Company will deliver to each Purchaser one
or more stock certificates, registered in the name of such Purchaser,
representing the number of Shares to be purchased by such Purchaser as set forth
opposite such Purchaser's name on the signature page hereto and bearing an
appropriate legend stating that the Shares have not been registered under the
Securities Act (as defined herein) and cannot be sold unless registered under
the Securities Act, or an exemption from registration is available. Such
deliveries shall be made against payment of the purchase price therefore (the
"Purchase Price") by wire transfers to the respective accounts as designated in
writing by the Company, of immediately available funds in the respective amounts
set forth on the signature page hereto, as the case may be, at least two
business days prior to the Closing. The name(s) in which the stock certificate
are to be registered are set forth in the Stock Certificates Questionnaire
attached hereto as part of Appendix I.
3.3 Closing Conditions.
(a) The Company's respective obligations to complete the purchase and sale
of the Shares and deliver the stock certificates representing the Shares to the
Purchasers at the Closing shall be subject to the following conditions, any one
or more of which may be waived by the Company:
(1) receipt by the Company of same-day funds in the full amount of the
Purchase Price for the Shares being purchased hereunder; and
(2) the accuracy of the representations and warranties made by the
Purchasers and the fulfillment of those obligations of the Purchasers to be
fulfilled prior to the Closing.
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(b) The Purchaser's obligation to accept delivery of such stock
certificate(s) and to pay for the Shares evidenced thereby shall be subject to
the accuracy in all material respects of the representations and warranties made
by the Company herein and the fulfillment in all material respects of those
obligations of the Company to be fulfilled prior to the Closing.
4. Certain Definitions. Unless the context otherwise requires, the terms
defined in this Section 4 shall have the meaning herein specified for purposes
of this Agreement.
"Agreement" means this agreement, including the exhibits and appendices
thereto.
"Agreements" means this Agreement and the agreements executed by the Other
Purchasers, collectively.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended
from time to time.
"Material Adverse Change" means a material adverse change in the condition
(financial or otherwise), properties, business, or results of operations of the
Company and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on the condition
(financial or otherwise), properties, business, or results of operations of the
Company and its Subsidiaries taken as a whole.
"Placement Agent" means CIBC World Markets Corp., and Adams, Harkness &
Hill, Inc.
"Purchasers" means the Purchaser and the Other Purchasers.
"Private Placement Memorandum" means the Confidential Private Placement
Memorandum dated [September XX, 2000], including all exhibits thereto.
"Registration Statement" means the registration statement on Form S-3, as
may be amended, that will be filed pursuant to the Private Placement Memorandum
with the Commission covering the re-sale of the Shares.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
5. Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to, and covenants with, the Purchaser as follows:
5.1 Organization and Qualification. The Company (and each such subsidiary
or other entity controlled directly or indirectly by the Company (the
"Subsidiaries") is a corporation or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization. The Company and each of its subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation (or
other entity) in each jurisdiction in which the nature of the business conducted
by it or location of the assets or properties, owned, leased or licensed by it
requires such qualification, except where failure to so qualify or to be in good
standing would not have a Material Adverse Effect.
5.2 Authorized Capital Stock. The Company had the authorized and
outstanding capital stock set forth under the heading "Capitalization" in the
Private Placement Memorandum, as of the date set forth therein. All of the
issued and outstanding shares of the Company's Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable, have been
issued in compliance in all material respects with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and conform in
all material respects to the description thereof contained in the Private
Placement Memorandum. Except as disclosed in or contemplated by the Private
Placement Memorandum, the Company does not have outstanding any options to
purchase, or any preemptive rights or other rights to subscribe for or to
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purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock.
5.3 Shares. The Shares have been duly authorized and, when issued,
delivered and paid for in the manner set forth in the Agreements, will be duly
authorized, validly issued, fully paid and nonassessable, and will conform in
all material respects to the description thereof set forth in the Private
Placement Memorandum. No preemptive rights or other rights to subscribe for or
purchase exist with respect to the issuance and sale of the Shares by the
Company pursuant to this Agreement. No stockholder of the Company has any right
(which has not been waived or has not expired by reason of lapse of time
following notification of the Company's intent to file the Registration
Statement) to require the Company to register the sale of any shares owned by
such stockholder under the Securities Act in the Registration Statement. No
further approval or authority of the stockholders or the Board of Directors of
the Company will be required for the issuance and sale of the Shares to be sold
by the Company as contemplated herein.
5.4 Corporate Acts and Proceedings. The Company has full legal right,
corporate power and authority to enter into the Agreements and perform the
transactions contemplated hereby and thereby. The Agreements have been duly and
validly authorized, executed and delivered by the Company. The execution,
delivery and performance of the Agreements by the Company or its Subsidiaries
and the consummation of the transactions herein contemplated will not violate
any provision of the organizational documents of the Company and will not result
in the creation of any lien, charge, security interest or encumbrance upon any
assets of the Company pursuant to the terms or provisions of, or will not
conflict with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument to which the Company or the Subsidiaries are a party or by
which the Company or the Subsidiaries or their respective properties may be
bound or affected and in each case which would have a Material Adverse Effect
or, to the Company's knowledge, under any statute or any authorization,
judgment, decree, order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the Company or
its Subsidiaries or their respective properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery of
this Agreement or the consummation of the transactions contemplated by this
Agreement, except for compliance with the Blue Sky laws and federal securities
laws applicable to the offering of the Shares. Upon their execution and
delivery, and assuming the valid execution thereof by the respective Purchasers
and payment of their respective Purchase Price, the Agreements will constitute
valid and binding obligations of the Company, enforceable in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' and contracting parties' rights generally and except
as enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of the Company in Section 9 hereof
may be legally unenforceable.
5.5 Contracts. The contracts described in the Private Placement Memorandum
as being in effect on the date hereof that are material to the Company, are in
full force and effect on the date hereof; and neither the Company nor its
Subsidiaries, nor, to the Company's knowledge, is any other party in breach of
or default under any of such contracts which would have a Material Adverse
Effect.
5.6 No Actions. Other than as described in the Private Placement
Memorandum, there are no legal or governmental actions, suits or proceedings
pending or, to the Company's knowledge, overtly threatened to which the Company
or its Subsidiaries are or may be a party or of which property owned or leased
by the Company or its Subsidiaries are or may be the subject, or related to
environmental or discrimination matters, which actions, suits or proceedings,
individually or in the aggregate, might prevent or might reasonably be expected
to materially and adversely affect the transactions
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contemplated by this Agreement or result in a Material Adverse Change; and no
labor disturbance by the employees of the Company exists, to the Company's
knowledge, or is imminent which might reasonably be expected to have a Material
Adverse Effect. Neither the Company nor its Subsidiaries is a party to or
subject to the provisions of any material injunction, judgment, decree or order
of any court, regulatory body administrative agency or other governmental body.
5.7 Properties. The Company and each of its Subsidiaries has good and
marketable title in fee simple to all real property and good and marketable
title to all personal property reflected as owned by them in the consolidated
financial statements included in the Private Placement Memorandum. Such property
is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind
except (i) those, if any, reflected in such consolidated financial statements
(including the notes thereto), or (ii) those which are not material in amount
and do not adversely affect the use of such property by the Company or its
Subsidiaries. Any property or building held under lease by the Company or its
Subsidiaries is held under valid, existing and enforceable leases, free and
clear of all liens, encumbrances, claims, and defects except such as would not
have a Material Adverse Effect. Except as disclosed in the Private Placement
Memorandum and except for the property referred to in Section 5.8, each of the
Company and its Subsidiaries owns or leases all such properties as are necessary
to its operations as now conducted.
5.8 Proprietary Rights. Except as disclosed in the Private Placement
Memorandum, (i) to the Company's knowledge, the Company has filed for or holds
rights, licenses or options for the inventions, patent applications, patents,
trademarks (both registered and unregistered), trade names, copyrights and trade
secrets necessary for the conduct of the Company's business as currently
conducted (collectively, the "Intellectual Property"); and (ii) to the Company's
knowledge (for each of the following subsections (a) through (e)): (a) there are
no third parties who have any ownership rights to any Intellectual Property that
is owned by, or has been licensed to the Company for the products described in
the Private Placement Memorandum in the case of any business the Company has or
intends to conduct during the year ending December 31, 2000 that would preclude
the Company from conducting its business as currently conducted and as the
Private Placement Memorandum indicates the Company contemplates conducting;
(b) there are currently no sales of any products that would constitute an
infringement by a third party of any Intellectual Property owned, licensed or
optioned by the Company; (c) there is no pending or threatened action, suit,
proceeding or claim by others challenging the rights of the Company in or to any
Intellectual Property owned, licensed or optioned by the Company, other than
claims which would not be reasonably expected to have a Material Adverse Effect;
(d) there is no pending or threatened action, suit, proceeding or claim by
others challenging the validity or scope of any Intellectual Property owned,
licensed or optioned by the Company, other than claims which would not be
reasonably expected to have a Material Adverse Effect; and (e) there is no
pending or threatened action, suit, proceeding or claim by others that the
Company infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary right of others, other than claims which would not
be reasonably expected to have a Material Adverse Effect.
5.9 No Material Adverse Change. Since June 30, 2000, and except as
disclosed in the Private Placement Memorandum, (i) neither the Company nor its
Subsidiaries have incurred any material liabilities or obligations, indirect, or
contingent, or entered into any material verbal or written agreement or other
transaction which is not in the ordinary course of business or which could
reasonably be expected to result in a material reduction in the future earnings
of the Company; (ii) neither the Company nor its Subsidiaries have sustained any
material loss or interference with its businesses or properties from fire,
flood, windstorm, accident or other calamity not covered by insurance;
(iii) neither the Company nor its Subsidiaries have paid or declared any
dividends or other distributions with respect to its capital stock and the
Company and its Subsidiaries are not in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has not been any change
in the capital stock of the Company or its Subsidiaries other than the sale of
the Shares
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hereunder and shares or options issued pursuant to employee equity incentive
plans or purchase plans approved by the Company's or the Subsidiaries' Board of
Directors, as the case may be, or indebtedness material to the Company or its
Subsidiaries (other than in the ordinary course of business); and (v) there has
not been a Material Adverse Change.
5.10 Financial Statement. BDO Seidman, LLP (a) have expressed their
opinion with respect to the consolidated financial statements included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999, (b) have not given the Company any indication that they will not include
such opinion in the Registration Statement and the Prospectus, and (c) have
confirmed to the Company that they are independent accountants as required by
the Securities Act and the rules and regulations promulgated thereunder.
5.11 No Defaults. Except as to defaults, violations and breaches which
individually or in the aggregate would not be material to the Company and its
Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in
violation or default of any provision of their certificate of incorporation or
bylaws, or other organizational documents, or in breach of, or default with
respect to, any provision of any material agreement filed as an exhibit to the
Company's filings with the Commission, any judgment, decree, order, mortgage,
deed of trust, lease, franchise, license, indenture, or permit to which it is a
party or by which it or any of its properties are bound; and there does not
exist any state of fact which, with notice or lapse of time or both, would
constitute an event of breach or default on the part of the Company or the
Subsidiaries as defined in such documents, except such breaches or defaults
which individually or in the aggregate would not be material to the Company and
its Subsidiaries, taken as a whole.
5.12 Compliance. Neither the Company nor its Subsidiaries have been
advised, and neither has any reason to believe, that it is not conducting its
business in compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without limitation,
all applicable local, state and federal environmental laws and regulations;
except where failure to be so in compliance therewith would not have a Material
Adverse Effect.
5.13 Taxes. Each of the Company and its Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns which are
required to be filed, or has received extensions thereof, and has paid or
accrued all taxes shown as due thereon, and neither the Company nor its
Subsidiaries has knowledge of a tax deficiency which has been or might be
asserted or threatened against it which could have a Material Adverse Effect. On
the Closing Date, all stock transfer or other taxes (other than income taxes)
which are required to be paid in connection with the sale and transfer of the
Shares to be sold to the Purchaser hereunder will be, or will have been, fully
paid or provided for by the Company and all laws imposing such taxes will be or
will have been fully complied with.
5.14 Books, Records and Accounts. The books, records and accounts of the
Company and its Subsidiaries accurately and fairly reflect, in reasonable
detail, the transactions in, and dispositions of, the assets of, and the results
of operations of, the Company and its Subsidiaries. The Company and each of its
Subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
5.15 Offering Materials. The Company has not distributed and will not
distribute prior to the Closing Date any offering material in connection with
the offering and sale of the Shares other than the Private Placement Memorandum
or any amendment or supplement thereto. The Company has not in the past nor will
it hereafter take any action independent of the Placement Agent to sell, offer
for
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sale or solicit offers to buy any securities of the Company which would bring
the offer, issuance or sale of the Shares, as contemplated by this Agreement,
within the provisions of Section 5 of the Securities Act, unless such offer,
issuance or sale was or shall be within the exemptions of Section 4 of the
Securities Act.
5.16 Insurance. The Company maintains insurance of the type and in the
amount that the Company reasonably believes is adequate for its business,
including, but not limited to, insurance covering all real and personal property
owned or leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against by similarly situated
companies, all of which insurance is in full force and effect.
5.17 Investment Company. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.
5.18 Contributions. At no time since its incorporation has the Company,
directly or indirectly, (i) used any corporate or other funds for gifts,
entertainment or other unlawful contributions to any candidate for public
office, or failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any federal or state governmental officer or official,
or other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
5.19 Additional Information. The Company represents and warrants that the
information contained in the following documents, which the Placement Agent has
furnished to the Purchaser, or will furnish prior to the Closing, is and will be
true and correct in all material respects as of the respective dates that they
were filed with the Commission, or their final dates, if not filed with the
Commission and does not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999;
(2) the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2000;
(3) the Company's Proxy Statement for the 2000 Annual Meeting of
Stockholders;
(4) the Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2000;
(5) the Registration Statement;
(6) the Private Placement Memorandum, including all addenda and exhibits
thereto (other than the Appendices); and
(7) all other documents, if any, filed by the Company with the Commission
since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.
5.20 Legal Opinions. Prior to the Closing, Pollet & Richardson, counsel to
the Company, will deliver its legal opinion to the Placement Agent (stating that
each of the Purchasers may rely thereon as if directly addressed to each of
them), substantially in such form as such counsel rendering the opinion and the
Placement Agent may agree upon (the "Opinion Letter").
6. Representations, Warranties and Covenants of the Purchaser.
6.1 Investment Intent and Expense. The Purchaser represents and warrants
to, and covenants with, the Company that: (i) the Purchaser is knowledgeable,
sophisticated and experienced in making,
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and is qualified to make, decisions with respect to investments in shares
representing an investment decision like that involved in the purchase of the
Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares; (ii) the Purchaser is
acquiring the number of Shares set forth on the signature page hereto in the
ordinary course of its business and for its own account for investment (as
defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976
and the regulations thereunder) only and with no present intention of
distributing any of such Shares or any arrangement or understanding with any
other persons regarding the distribution of such Shares within the meaning of
Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Shares except in compliance with the Act and the Rules and Regulations; (iv) the
Purchaser has completed or caused to be completed the Registration Statement
Questionnaire and the Stock Certificate Questionnaire, both attached hereto as
Appendix I, for use in preparation of the Registration Statement, and the
answers thereto are true, correct and complete as of the date hereof and will be
true. correct and complete as of the effective date of the Registration
Statement; (v) the Purchaser has, in connection with its decision to purchase
the number of Shares set forth on the signature page hereto, relied solely upon
the Private Placement Memorandum and the documents included therein and the
representations and warranties of the Company contained herein; and (vi) the
Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A
promulgated under the Securities Act.
6.2 Restrictions on Transfer. The Purchaser hereby covenants with the
Company not to make any sale of the Shares without satisfying the prospectus
delivery requirement under the Securities Act, and the Purchaser acknowledges
and agrees that such Shares are not transferable on the books of the Company
unless the certificate submitted to the transfer agent evidencing the Shares is
accompanied by a separate officer's certificate: (i) in the form of Appendix II
hereto, (ii) executed by an officer of, or other authorized person designated
by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in
accordance with the Registration Statement, all federal laws and requirements,
including without limitation the Securities Act and the rules and regulations
promulgated thereunder and any applicable state securities or blue sky laws and
(B) the requirement of delivering a current prospectus has been satisfied. The
Purchaser acknowledges that there may occasionally be times when the Company
determines the use of the prospectus forming a part of the Registration
Statement should be suspended until such time as an amendment or supplement to
the Registration Statement or the Prospectus has been filed by the Company and
any such amendment to the Registration Statement is declared effective by the
Commission, or until such time as the Company has filed an appropriate report
with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants
that it will not sell any Shares pursuant to said prospectus during the period
commencing at the time at which the Company gives the Purchaser written notice
of the suspension of the use of said prospectus and ending at the time the
Company gives the Purchaser written notice that the Purchaser may thereafter
effect sales pursuant to said prospectus and the Purchaser hereby covenants that
it will thereafter solely utilize said amended or supplemented prospectus for
the sale of Shares. The Purchaser further covenants to notify the Company
promptly of the sale of any or all of its Shares.
6.3 Authorization. The Purchaser further represents and warrants to, and
covenants with, the Company that (i) the Purchaser has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and
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except as the indemnification agreements of the Purchaser in Section 9 hereof
may be legally unenforceable.
6.4 Restriction on Sales, Short Sales and Hedging Transactions. Purchaser
represents and agrees that during the period of five business days immediately
prior to the execution of this Agreement by Purchaser, Purchaser did not, and
from such date through the effectiveness of the Registration Statement (as
defined below), Purchaser will not, directly or indirectly, execute or effect or
cause to be executed or effected any short sale, option or equity swap
transactions in or with respect to the Common Stock or any other derivative
security transaction the purpose or effect of which is to hedge or transfer to a
third party all or any part of the risk of loss associated with the ownership of
the Shares by the Purchaser; provided however, that the Purchaser shall be
allowed to effectuate such above described transactions, but only up to the
aggregate number of Shares purchased by such Purchaser hereunder, and then only
in compliance with all applicable state and federal securities laws and the
rules and regulations thereunder.
6.5 No Legal, Tax or Investment Advice. Purchaser understands that nothing
in the Private Placement Memorandum, the Agreement, the Opinion Letter or any
other materials presented to Purchaser in connection with the purchase and sale
of the Shares constitutes legal, tax or investment advice. Purchaser has
consulted such legal, tax and investment advisors as it, in its sole discretion,
has deemed necessary or appropriate in connection with its purchase of the
Shares.
6.6 Further Agreements of Purchaser.
(a) The Purchaser understands that the Shares are being offered and sold to
it in reliance upon specific exemptions from the registration requirements of
the Securities Act, the rules and regulations promulgated thereunder, and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire the Shares.
(b) The Purchaser understands that its investment in the Shares involves a
significant degree of risk and that the market price of the Common Stock has
been volatile and that no representation is being made as to the future value of
the Common Stock. The Purchaser has the knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an
investment in the Shares and has the ability to bear the economic risks of an
investment in the Shares.
(c) The Purchaser understands that no United States federal or state agency
or any other government or governmental agency has passed upon or made any
recommendation or endorsement of the Shares.
(d) The Purchaser understands that, until such time as the Registration
Statement has been declared effective or the Shares may be sold pursuant to
Rule 144 under the Securities Act without any restriction as to the number of
securities as of a particular date that can then be immediately sold, the Shares
will bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for the
Shares):
"The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended. The securities may not be sold,
transferred or assigned in the absence of an effective registration statement
for the securities under said Act, or an opinion of counsel, in form, substance
and scope reasonably acceptable to the Company, that registration is not
required under said Act or unless sold pursuant to Rule 144 under said Act."
(e) The Purchaser's principal executive offices are in the jurisdiction set
forth immediately below the Purchaser's name on the signature pages hereto.
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(f) The Purchaser hereby covenants with the Company not to make any sale of
the Shares under the Registration Statement without effectively causing the
prospectus delivery requirement under the Securities Act to be satisfied, and
the Purchaser acknowledges and agrees that such Shares are not transferable on
the books of the Company unless the certificate submitted to the transfer agent
evidencing the Shares is accompanied by a separate Purchaser's Certificate:
(i) in the form of Appendix II hereto, (ii) executed by an officer of, or other
authorized person designated by, the Purchaser, and (iii) to the effect that
(A) the Shares have been sold in accordance with the Registration Statement, the
Securities Act and any applicable state securities or blue sky laws and (B) the
requirement of delivering a current prospectus has been satisfied. The Purchaser
acknowledges that there may occasionally be times when the Company must suspend
the use of the prospectus forming a part of the Registration Statement until
such time as an amendment to the Registration Statement has been filed by the
Company and declared effective by the Commission, or until such time as the
Company has filed an appropriate report with the Commission pursuant to the
Exchange Act. The Purchaser hereby covenants that it will not sell any Shares
pursuant to said prospectus during the period commencing at the time at which
the Company gives the Purchaser written notice of the suspension of the use of
said prospectus and ending at the time the Company gives the Purchaser written
notice that the Purchaser may thereafter effect sales pursuant to said
prospectus. The Purchaser further covenants to notify the Company promptly of
the sale of any or all of its Shares and the Purchaser hereby covenants that it
will thereafter solely utilize said amended or supplemented prospectus for the
sale of Shares.
(g) Notwithstanding anything to the contrary contained herein, at any time
after the effectiveness of the Registration Statement, the Company may refuse to
permit the Purchaser to resell any Shares pursuant to the Registration Statement
for a period not to exceed ninety (90) days (the "Blackout Period"); provided
however, that to exercise this right, the Company must deliver a certificate in
writing to the Purchaser to the effect that a delay in such sale is necessary
because a sale pursuant to such Registration Statement in its then-current form
would not be in the best interests of the Company and its stockholders due to
disclosure obligations of the Company. Notwithstanding the foregoing, the
Company shall not be entitled to exercise its right to block such sales more
than three (3) times during the effectiveness of the Registration Statement or
more than one (1) time in any four-month period. Each Purchaser hereby covenants
and agrees that it will not sell any Shares pursuant to the Registration
Statement during such Blackout Periods.
7. Survival of Representations, Warranties and Agreements. Notwithstanding
any investigation made by any party to this Agreement or by the Placement Agent,
all covenants, agreements, representations and warranties made by the Company
and the Purchaser herein and in the certificates for the Shares delivered
pursuant hereto shall survive the execution of this Agreement, the delivery to
the Purchaser of the Shares being purchased and the payment therefor.
8. Covenants.
8.1 Registration Procedures and Expenses.
(a) The Company shall:
(1) as soon as practicable after the Closing, but in no event later than two
(2) weeks following the Closing, prepare and file with the Commission the
Registration Statement relating to the sale of the Shares by the Purchaser from
time to time through the automated quotation system of the Nasdaq National
Market or the facilities of any national securities exchange on which the
Company's Common Stock is then traded or in privately-negotiated transactions;
(2) use its reasonable efforts subject to receipt of necessary information
from the Purchasers, to cause the Commission to notify the Company of the
Commission's willingness to declare the
9
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Registration Statement effective within 60 days after the Registration Statement
is filed by the Company;
(3) prepare and file with the Commission such amendments and supplements to
the Registration Statement and the prospectus used in connection therewith as
may be necessary to keep the Registration Statement effective until the earlier
of (i) twenty-four (24) months after the effective date of the Registration
Statement or (ii) the date on which the Shares may be resold by the Purchasers
without registration by reason of Rule 144(k) under the Securities Act or any
other rule of similar effect;
(4) furnish to the Purchaser with respect to the Shares registered under the
Registration Statement (and to each underwriter, if any, of such Shares) such
reasonable number of copies of prospectuses in order to facilitate the public
sale or other disposition of all or any of the Shares by the Purchaser;
provided, however, that the obligation of the Company to deliver copies of
prospectuses to the Purchaser shall be subject to the receipt by the Company of
reasonable assurances from the Purchaser that the Purchaser will comply with the
applicable provisions of the Securities Act and of such other securities or blue
sky laws as may be applicable in connection with any use of such prospectuses;
(5) file documents required of the Company for normal blue sky clearance in
states specified in writing by the Purchaser; provided, however, that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented; and
(6) bear all expenses in connection with the procedures in paragraphs
(1) through (5) of this Section 8.1 and the registration of the Shares pursuant
to the Registration Statement, other than fees and expenses, if any, of counsel
or other advisers to the Purchaser or the Other Purchasers or underwriting
discounts, brokerage fees and commissions incurred by the Purchaser or the Other
Purchasers, if any.
(b) The Company covenants that it will file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Purchaser, make
publicly available other information), and it will take such further action as
any Purchaser may reasonably request, all to the extent required from time to
time to enable such Purchaser to sell the Shares without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such rule may be amended from time to time, or
(ii) any similar rule or regulation hereafter adopted by the Commission. Upon
the request of any Purchaser, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
8.2 Transfer of Shares After Registration. The Purchaser agrees that it
will not effect any disposition of the Shares or its right to purchase the
Shares that would constitute a sale within the meaning of the Securities Act,
except as contemplated in the Registration Statement referred to in Section 8.1,
and that it will promptly notify the Company of any changes in the information
set forth in the Registration Statement regarding the Purchaser or its Plan of
Distribution.
8.3 Termination of Conditions and Obligations. The restrictions imposed by
Section 6 or this Section 8 upon the transferability of the Shares shall cease
and terminate as to any particular number of the Shares upon the passage of
twenty-four months from the effective date of the Registration Statement
covering such Shares or at such time as an opinion of counsel satisfactory in
form and substance to the Company shall have been rendered to the effect that
such conditions are not necessary in order to comply with the Securities Act.
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8.4 Information Available. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser:
(1) upon request, as soon as practicable after available (but in the case of
the Company's Annual Report to Stockholders, within 120 days after the end of
each fiscal year of the Company), one copy of (i) its Annual Report to
Stockholders (which Annual Report shall contain financial statements audited in
accordance with generally accepted accounting principles by a national firm of
certified public accountants), (ii) if not included in substance in the Annual
Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in
substance in its Quarterly Reports to Shareholders, its quarterly reports on
Form 10-Q, and (iv) a full copy of the particular Registration Statement
covering the Shares (the foregoing, in each case, excluding exhibits);
(2) upon the reasonable request of the Purchaser, a reasonable number of
copies of the prospectuses to supply to any other party requiring such
prospectuses;
and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Shares subject to appropriate confidentiality limitations.
9. Indemnification. For the purpose of this Section 9 only:
(1) the term "Purchaser" shall include the Purchaser and any affiliate of
such Purchaser; and the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 8.1.
(2) The Company agrees to indemnify and hold harmless each of the Purchasers
and each person, if any, who controls any Purchaser within the meaning of the
Securities Act, against any and all losses, claims, damages, liabilities or
expenses, joint or several, to which such Purchasers or such controlling person
may become subject, under the Securities Act, the Exchange Act, or any other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, including the
prospectus, financial statements and schedules, and all other documents filed as
a part thereof, as amended at the time of effectiveness of the Registration
Statement (the "Prospectus"), or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in any of them, in light of the circumstances under which they were
made, not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained in
this Agreement, or any failure of the Company to perform in all material
respects its obligations hereunder or under law, and will reimburse each
Purchaser and each such controlling person for any legal and other expenses as
such expenses are reasonably incurred by such Purchaser or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon (i) an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Purchaser expressly for use
therein, or (ii) the failure of such Purchaser to comply with the covenants and
agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the
Shares, or (iii) the inaccuracy of any representations made by such Purchaser
herein or (iv) any statement or
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omission in any Prospectus that is corrected in any subsequent Prospectus that
was delivered to the Purchaser prior to the pertinent sale or sales by the
Purchaser.
(3) Each Purchaser will severally indemnify and hold harmless the Company,
each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Securities Act, against any losses, claims, damages, liabilities or
expenses to which the Company, each of its directors, each of its officers who
signed the Registration Statement or controlling person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser) insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon (i) any failure to comply with the covenants and agreements
contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or
(ii) the inaccuracy of any representation made by such Purchaser herein or
(iii) any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any Purchaser
expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action.
(4) Promptly after receipt by an indemnified party under this Section 9 of
notice of the threat or commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party under
this Section 9 promptly notify the indemnifying party in writing thereof; but
the omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 9 or to
the extent it is not materially prejudiced as a result of such failure. In case
any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party, based upon the
advice of such indemnified party's counsel, the indemnified party shall have
reasonably concluded that there may be a conflict of interest between the
positions of the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 9 for any legal
or other expenses subsequently reasonably incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed such counsel in connection with the assumption of legal defenses in
accordance
12
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with the proviso to the preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by such indemnifying party in the case of
paragraph (2), representing all of the indemnified parties who are parties to
such action) or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of action, in each
of which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party.
(5) If the indemnification provided for in this Section 9 is required by its
terms but is for any reason held to be unavailable to or otherwise insufficient
to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this
Section 9 in respect to any losses, claims, damages, liabilities or expenses
referred to herein, then each applicable indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Purchaser from the placement of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but the relative fault of the Company and the
Purchaser in connection with the statements or omissions or inaccuracies in the
representations and warranties in this Agreement which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company on the one hand and each Purchaser on the other shall be deemed to be in
the same proportion as the amount paid by such Purchaser to the Company pursuant
to this Agreement for the Shares purchased by such Purchaser that were sold
pursuant to the Registration Statement bears to the difference (the
"Difference") between the amount such Purchaser paid for the Shares that were
sold pursuant to the Registration Statement and the amount received by such
Purchaser from such sale. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in paragraph (3) of this
Section 9, any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or claim. The
provisions set forth in paragraph (3) of this Section 9 with respect to the
notice of the threat or commencement of any threat or action shall apply if a
claim for contribution is to be made under this paragraph (5); provided,
however, that no additional notice shall be required with respect to any threat
or action for which notice has been given under paragraph (4) for purposes of
indemnification. The Company and each Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined solely
by pro rata allocation (even if the Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this paragraph. Notwithstanding
the provisions of this Section 9, no Purchaser shall be required to contribute
any amount in excess of the amount by which the Difference exceeds the amount of
any damages that such Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Purchasers'
obligations to contribute pursuant to this Section 9 are several and not joint.
10. Broker's Fee. The Purchaser acknowledges that the Company intends to
pay to the Placement Agent a fee in respect of the sale of the Shares to the
Purchaser. Each of the parties hereto hereby represents that, on the basis of
any actions and agreements by it, there are no other brokers or finders entitled
to compensation in connection with the sale of the Shares to the Purchaser.
13
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11. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first-class registered or
certified airmail, confirmed facsimile or nationally recognized overnight
express courier postage prepaid, and shall be deemed given when so mailed and
shall be delivered as addressed as follows:
(1) if to the Company, to:
Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016
with a copy to:
Pollet & Richardson
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Attention: Andrew F. Pollet, Esq.
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(2) if to the Purchaser, at its address as set forth at the end of this
Agreement, or at such other address or addresses as may have been furnished to
the Company in writing.
12. Changes. This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by an authorized representative of the
Company and the Purchaser.
13. Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
14. Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the conflict
of laws and the federal law of the United States of America.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
STAAR SURGICAL COMPANY
/s/ ANDREW F. POLLET
--------------------------------------------------------------------------------
By: Andrew F. Pollet
Its: Chairman
Pequot Navigator Offshore Fund, Inc.
--------------------------------------------------------------------------------
Name of Purchaser (Individual or
Institution) David J. Malat
Pequot Capital Management, Inc.
Investment Advisor
--------------------------------------------------------------------------------
Name of Individual representing
Purchaser (if an Institution)
Chief Accounting Officer
--------------------------------------------------------------------------------
Title of Individual representing
Purchaser (if an Institution)
/s/ DAVID J. MALAT
--------------------------------------------------------------------------------
Signature of Individual Purchaser or
Individual representing Purchaser
Address: 500 Nyala Farm Rd.
Westport, CT 06880
Telephone: 203 429-2200
--------------------------------------------------------------------------------
Telecopier: 203 429-2430
--------------------------------------------------------------------------------
Number to Be
Purchased
--------------------------------------------------------------------------------
Price Per
Share In
Dollars
--------------------------------------------------------------------------------
Aggregate
Price
--------------------------------------------------------------------------------
5,000 $14.00 $70,000.00
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QuickLinks
Exhibit F FORM OF PURCHASE AGREEMENT
|
Exhibit 10.2
NEITHER THIS CONVERTIBLE NOTE NOR THE UNDERLYING SHARES HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
(AS DEFINED BELOW) MAY NOT TRANSFER THIS CONVERTIBLE NOTE, OR ANY SHARES ISSUED
PURSUANT TO ITS CONVERSION PROVISION, UNLESS (i) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT COVERING SUCH NOTE OR SUCH SHARES UNDER THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS, (ii) THE COMPANY FIRST RECEIVES A
LETTER FROM AN ATTORNEY, ACCEPTABLE TO THE COMPANY OR ITS AGENTS, STATING THAT
IN THE OPINION OF THE ATTORNEY THE PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT AND UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR
(iii) THE TRANSFER IS MADE PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.
EXELIXIS, INC.
5.75% CONVERTIBLE
NOTE DUE MAY 22, 2006
South San Francisco, California
FOR VALUE RECEIVED
, Exelixis, Inc., a Delaware corporation (the "Company"), hereby promises to
pay, subject to the conversion provisions in Section 6 herein, to Protein Design
Labs, Inc., a Delaware corporation, or its permitted transfers and assigns (the
"Lender" or "Holder") the principal sum of THIRTY MILLION DOLLARS ($30,000,000)
plus interest plus enforcement costs (including, but not limited to, reasonable
attorney fees) thereon (collectively, the "Obligations") on the earlier of (i) a
"Change in Control" (as hereinafter defined) of the Company; and (ii) May 22,
2006 (such earlier date being the "Maturity Date"). A "Change in Control" of the
Company would occur if the Company sells, conveys or otherwise disposes of all
or substantially all of its property or business, or merges or consolidates with
any other corporation or business entity (other than a wholly-owned subsidiary
of the Company) or effects any other transaction or series of transactions in
which (I) the members of the Board of Directors of the Company prior to the
transaction or series of transactions constituting the putative Change in
Control event do not constitute a majority of the members of the Board of
Directors of the enterprise following completion of the transaction or series of
transactions constituting the putative Change in Control event (and in any event
excluding from any such calculation any members of the Board of Directors who
prior to such transaction(s) were members of the Board of both the Company and
such other company or entity); and (II) the stockholders of the Company
immediately prior thereto own less than a majority of the outstanding voting
securities of the Company (or its successor or parent) immediately thereafter.
Section 1
. Interest. Interest on the outstanding principal amount shall be cumulative,
accrue at the rate of 5.75% per annum (or, if lower, the maximum rate permitted
by law), and be paid in cash annually in arrears from and after the date hereof
until and including the Maturity Date, unless this convertible note ("Note") is
converted pursuant to Section 6 hereof, in which case accrued interest thereon
(whether or not yet payable) shall be payable in cash to Lender within thirty
(30) days of such date of conversion. Any interest not paid when due shall
accrue interest at a rate of 10% per annum (or, if lower, the maximum rate
permitted by law) and shall be treated as principal for the purposes of
Section 6 hereof until paid.
Section 2. Note Purchase Agreement
. This Note has been issued pursuant to a Note Purchase Agreement (the "Note
Purchase Agreement") dated as of the date hereof by and among the Company and
the Holder. The Company shall keep or cause to be kept at its principal office
appropriate records for the recordation of the name and address of the Holder,
which address may be changed from time to time effective ten (10) days after
receipt of written notice of such change from the Holder.
Section 3.
Default. The occurrence of one or more of the following events shall constitute
an event of default ("Event of Default"):
1. The Company shall fail to pay any of the Obligations when the same shall
have become due and payable.
2. The Company shall fail to pay any of its material debts or other material
obligations (other than the Obligations under this Note) when the same shall
have become due and payable.
3. The entry of a decree or order by a court having jurisdiction adjudging the
Company as bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization arrangement, adjustment, or composition of or in
respect of the Company under the Bankruptcy Act, as amended, or any other
applicable federal or state law, or appointing a receiver, liquidator,
assignee, or trustee of the Company, or any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period
of sixty (60) consecutive days.
4. The institution by the Company of proceedings to be adjudicated as bankrupt
or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under the Bankruptcy Act,
as amended, or any other applicable federal or state law, or the consent by
it to the filing of any such petition or to the appointment of a receiver,
liquidator, assignee, or trustee of the Company, or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by the
Company in furtherance of any such action.
3.5
The Company shall (a) be in breach of any material term or provision of this
Note; (b) be in breach under Section 12.2 of the Collaboration Agreement of even
date herewith ("Collaboration Agreement"), which breach shall remain uncured as
provided thereunder; or (c) be in breach of any material term or provision of
the Note Purchase Agreement.
Section 4.
Acceleration. Upon an Event of Default, all Obligations shall become
immediately due and payable to the Holder without presentment, demand, protest
or other notice of any kind, all of which are expressly waived by the Company.
Section 5. Prepayments.
The Company may not prepay the amounts due hereunder prior to the third
anniversary of this Note. After the third anniversary of this Note, and subject
to Holder's right of conversion under Section 6 herein, the Company shall have
the right to prepay the amounts due hereunder in whole or in part; provided that
the Company meets the following conditions: (a) the Company shall provide the
Holder not less than thirty (30) days prior written notice of each prepayment
("Prepayment Notice"), specifying the principal amount or amounts to be prepaid
and the prepayment date, and (b) the Company shall pay on the prepayment date
the interest accrued to date on the principal amount paid. Any Prepayment Notice
shall be irrevocable and binding on the Company; provided any Prepayment Notice
shall be deemed rescinded upon notice prior to the prepayment date that Holder
intends to exercise its conversion rights.
Section 6
. Conversion.
6.1
The Holder of this Note shall have the right, at the Holder's option, at any
time after the first anniversary of this Note, upon written notice, to convert
all of the principal amounts outstanding from time to time under this Note into
the Company's common stock ("Common Stock") at a price per share ("Original
Conversion Price") equal to the lower of: (x) $28.175; and (y) 110% of the Fair
Market Value (as hereinafter defined) of a share of Common Stock. "Fair Market
Value" of a share of Common Stock means: (i) if the Company's stock is traded on
NASDAQ or a national securities exchange, the average closing price for such
share of Common Stock on such exchange for the twenty (20) trading days
immediately prior to the applicable date of conversion, or (ii) if the Company's
stock is not traded on NASDAQ or a national securities exchange, the fair market
value of the Company's stock on the applicable date of conversion as determined
in good faith by the Company's Board of Directors.
6.2
In the event of an exercise of the Holder's rights of conversion under this
Section 6, the Holder shall irrevocably be obligated to convert all of the
principal amounts then outstanding under this Note and the Company shall, as
promptly as practicable after the surrender, but in no event more than fourteen
(14) days after the delivery of the Note for conversion, deliver to the Holder a
certificate or certificates representing the number of fully paid and
nonassessable shares of Common Stock of the Company into which this Note shall
be converted.
6.3
The number of shares of Common Stock which shall be delivered on conversion of
principal under this Note shall be an amount determined by dividing the
principal under this Note by the Original Conversion Price (or the Conversion
Price (as defined below), as determined in accordance with this Section 6), and
rounding the result down to the nearest share. The conversion price from time to
time specified in Section 6.1 above may be adjusted from time to time as
provided in Section 9, and any adjusted conversion price shall be the
"Conversion Price."
6.4
No fractional shares of stock or scrip shall be issued upon conversion of this
Note. Instead of any fractional shares of stock which would otherwise be
issuable upon conversion of this Note, the Company shall pay in cash an amount
equal to the fractional share multiplied by the Conversion Price in respect of
such fractional interest.
Section 7.
Assignment, Exchange, or Loss of Note. Subject to any transfer restrictions
herein, upon presentation and surrender of this Note to the Company at its
principal office with a duly executed request for assignment and funds
sufficient to pay any transfer tax, the Company shall, without charge, execute
and deliver a new Note in the name of the assignee named in such instrument of
assignment and this Note shall promptly be canceled.
Section 8.
Rights of the Holder. The Holder shall not, by virtue of the provisions in this
Note, be entitled to any rights of a stockholder in the Company, either at law
or equity.
Section 9. Adjustments.
In case the Company shall, after the receipt of notice pursuant to Section
6.1 but prior to the conversion thereunder: (i) pay a dividend or make a
distribution on the Common Stock payable in common shares, (ii) subdivide the
outstanding Common Stock into a greater number of shares, (iii) combine the
outstanding Common Stock into a lesser number of shares, or (iv) issue by
reclassification of the Common Stock any common shares of the Company, the
Holder of this Note shall thereafter be entitled, upon conversion, to receive
the number and kind of shares which, if this Note had been converted immediately
prior to the happening of such event, the Holder would have owned upon such
conversion and been entitled to receive upon such dividend, distribution,
subdivision, combination, or reclassification. Such adjustment shall become
effective on the day next following (x) the record date of such dividend or
distribution or (y) the day upon which such subdivision, combination, or
reclassification shall become effective.
Section 10.
Restrictions on Transfer. This Note has not been registered under the
Securities Act. This Note, or any right hereunder, may not be enforced against
the Company by any Holder, except the original Holder herein, (i) unless there
is an effective registration covering such note or underlying shares under the
Securities Act and applicable state securities laws, (ii) unless the Company
receives an opinion of an attorney acceptable to the Company or its agents, that
the proposed transfer of the Note complies with the requirements of the
Securities Act and any relevant state securities law, or (iii) unless the
transfer is made pursuant to Rule 144 under the Securities Act.
Section 11.
Notices. All notices and other communications required or permitted under this
Note shall be validly given, made, or served if in writing and delivered
personally, via overnight courier or sent by registered mail, to the Company at
the following address:
Exelixis, Inc.
170 Harbor Way
P.O. Box 511
South San Francisco, California 94083-0511
Attn: Chief Executive Officer
With a copy to:
Exelixis, Inc.
170 Harbor Way
P.O. Box 511
South San Francisco, California 94083-0511
Attn: General Counsel
All notices and other communications required or permitted under this Note shall
be validly given, made or served if in writing and delivered personally, via
overnight courier or sent by registered mail, to the Holder at the following
address:
Protein Design Labs, Inc.
34801 Campus Drive
Fremont, California 94555-3606
Attn: Chief Executive Officer
With a copy to:
Protein Design Labs, Inc.
34801 Campus Drive
Fremont, California 94555-3606
Attn: General Counsel
Changes to a party's address information provided herein shall be effected by
notice to the other party as provided herein.
Section 12.
Law Governing. This Note shall be governed by and construed in accordance with
the internal laws of the State of California.
Section 13.
Titles and Captions; Presumption. All section titles or captions contained in
this Note are for convenience only and shall not be deemed part of the context
nor affect the interpretation of this Note. This Note or any section thereof
shall not be construed against any party due to the fact that said Note or any
section thereof was drafted by said party.
Section 14.
Computation of Time. In computing any period of time pursuant to this Note, the
day of the act, event or default from which the designated period of time begins
to run shall be included, unless it is a Saturday, Sunday, or a legal holiday,
in which event the period shall begin to run on the next day which is not a
Saturday, Sunday, or legal holiday, in which event the period shall run until
the end of the next day thereafter which is not a Saturday, Sunday, or legal
holiday.
Section 15. Further Assurances.
The Company shall execute and deliver all documents, provide all information
and take or forbear from all such action as may be necessary or appropriate to
achieve the purposes of the Note.
Section 16.
Parties in Interest. Nothing herein shall be construed to be to the benefit of
any third party, nor is it intended that any provision shall be for the benefit
of any third party.
IN WITNESS WHEREOF
, a duly authorized officer of Exelixis, Inc. has executed this Note to be
effective on this 22nd day of May 2001.
EXELIXIS, INC.
_______________________
George A. Scangos
Chief Executive Officer
--------------------------------------------------------------------------------
|
Exhibit 10(iii)A(4)
Page 36
NATIONAL SERVICE INDUSTRIES, INC.
LONG-TERM ACHIEVEMENT INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT
THIS AGREEMENT, made and entered into as of the 24th day of October, 2000, by
and between NATIONAL SERVICE INDUSTRIES, INC., a Delaware Corporation, (the
"Company") and ("Grantee").
W o I o T o N o E o S o S o E o T o H t o h o a o t:
WHEREAS, the Company maintains the National Service Industries, Inc. Long-Term
Achievement Incentive Plan (the "Plan"), and Grantee has been selected by the
Committee to receive one or more Restricted Stock Awards under the Plan;
NOW, THEREFORE, IT IS AGREED, by and between the Company and Grantee, as
follows:
1. Awards of Restricted Stock
1.1 The Company hereby grants to Grantee an award of Shares of
restricted stock ("Restricted Stock"), subject to, and in accordance with, the
restrictions, terms, and conditions set forth in this Agreement. The grant date
of this award of Restricted Stock is October 24, 2000 (the "Grant Date"), and
the average of the high and low prices of a Share on the New York Stock Exchange
on the Grant Date is $19.25.
1.2 This Agreement (including any appendices) shall be construed in accordance
with, and subject to, the provisions of the Plan (the provisions of which are
incorporated herein by reference) and, except as otherwise expressly set forth
herein, the capitalized terms used in this Agreement shall have the same
definitions as set forth in the Plan.
2. Restrictions
2.1 Subject to Sections 2.3, 2.4, and 2.6 below, the Restricted Stock shall not
begin to vest until the date (the "Vesting Start Date") on which the closing
price of the Company's common stock on the New York Stock Exchange for a
consecutive 30-day period (the "Stock Price Target") equals or exceeds the Stock
Price Target indicated below with respect to the Shares of Restricted Stock;
provided, however, that if the Stock Price Target has not reached the level
provided below on or before the fifth anniversary of the Grant Date, all
corresponding Shares of Restricted Stock for such Stock Price Target shall be
immediately forfeited and shall not be subject to any future vesting.
Exhibit 10(iii)A(4)
Page 37
Number of Shares Stock Price Target
of Restricted Stock for Vesting Start Date
------------------- ----------------------
Target Shares $22.1375
Target Shares $25.0250
Target Shares $27.9125
Target Shares $30.8000
Target Shares $33.6875
2.2 Except as provided in Section 2.3, 2.4, and 2.6 below, once the Vesting
Start Date has been reached for a portion of the Shares of Restricted Stock,
those Shares of Restricted Stock shall vest as follows during Grantee's
employment: on each anniversary of the Vesting Start Date (each such date shall
be a "Vesting Date"), 25% of the Shares of Restricted Stock shall vest such that
on the 4th anniversary of the Vesting Start Date (the "Final Vesting Date") all
of those Shares of Restricted Stock shall be fully vested.
On each Vesting Date, Grantee shall own the Vested Shares of Restricted Stock
free and clear of all restrictions imposed by this Agreement (except those
imposed by Section 3.4 below). The Company shall deliver a certificate(s) for
the Vested Shares of Restricted Stock to Grantee as soon as practical after each
Vesting Date. For purposes of this Agreement, employment with a Subsidiary of
the Company shall be considered employment with the Company.
2.3 In the event, prior to the Final Vesting Date, (i) Grantee dies while
actively employed by the Company, or (ii) Grantee has his employment terminated
by reason of Disability, any Restricted Stock for which the appropriate Stock
Price Target has been reached and a Vesting Start Date has been established
shall become fully vested and nonforfeitable as of the date of Grantee's death
or Disability and all Restricted Stock for which the Stock Price Target has not
been reached shall be immediately forfeited. The Company shall deliver
certificate(s) for the vested Restricted Stock, free and clear of any
restrictions imposed by this Agreement (except for Section 3.4) to Grantee (or,
in the event of death, his surviving spouse or, if none, to his estate) as soon
as practical after his date of death or termination for Disability.
2.4 If Grantee retires from the Company on or after attaining (i) age 65, or
(ii) age 55 with 10 years of service, the vesting of the Restricted Stock
(including the commencement of vesting by establishing a Vesting Start Date upon
reaching a Stock Price Target) shall continue as if Grantee were an active
employee, unless within two (2) years of his date of termination Grantee
violates the Restrictive Covenant (Non-Competition Agreement) attached as
Exhibit "A" hereto, at which time all unvested Shares of Restricted Stock
(whether or not a Vesting Start Date has been established for such Shares) shall
immediately be forfeited. If Grantee dies after retiring under this Section 2.4,
but prior to the Final Vesting Date for any Shares of Restricted Stock, then any
Restricted Stock for which the appropriate Stock Price Target has been reached
Exhibit 10(iii)A(4)
Page 38
and a Vesting Start Date has been established shall become fully vested and
nonforfeitable as of the date of Grantee's death and all Restricted Stock for
which the Stock Price Target has not been reached shall be immediately
forfeited.
2.5 Except for death or Disability as provided in Section 2.3 or retirement as
provided in Section 2.4, if Grantee terminates his employment or if the Company
terminates Grantee prior to the Final Vesting Date, the Restricted Stock shall
cease to vest further, the unvested Shares of Restricted Stock shall be
immediately forfeited, and Grantee shall only be entitled to the Restricted
Stock that is vested as of his date of termination.
2.6 Notwithstanding the other provisions of this Agreement, in the event of a
Change in Control prior to Grantee's Final Vesting Date, all Shares of
Restricted Stock (whether or not the corresponding Stock Price Target had been
attained) shall become fully vested and nonforfeitable as of the date of the
Change in Control. On the date of the Change in Control, the Company shall
deliver to Grantee a certificate(s) for the Restricted Stock, free and clear of
any restrictions imposed by this Agreement.
2.7 The Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered prior to the date Grantee becomes vested in the Restricted
Stock.
3. Stock; Dividends; Voting
3.1 The Restricted Stock shall be registered on the Company's books in the name
of Grantee only as of the respective Vesting Start Date for such Shares of
Restricted Stock. The Company may issue stock certificates or evidence Grantee's
interest by using a book entry account. Physical possession or custody of any
stock certificates that are issued shall be retained by the Company until such
time as the Shares are vested in accordance with Section 2. The Company reserves
the right to place a legend on the stock certificate(s) restricting the
transferability of such certificates and referring to the terms and conditions
(including forfeiture) of this Agreement and the Plan.
3.2 After a Vesting Start Date has occurred with respect to certain Shares of
Restricted Stock, Grantee shall be entitled to receive dividends and/or other
distributions declared on such Restricted Stock and Grantee shall be entitled to
vote such Restricted Stock, provided that these rights shall cease in the event
such Restricted Stock is forfeited.
3.3 In the event of a Change in Capitalization, the number and class of Shares
or other securities that Grantee shall be entitled to, and shall hold, pursuant
to this Agreement shall be appropriately adjusted or changed to reflect the
Change in Capitalization, provided that any such additional Shares or additional
or different shares or securities shall remain subject to the restrictions in
this Agreement.
Exhibit 10(iii)A(4)
Page 39
3.4 Grantee represents and warrants that he is acquiring the Restricted Stock
for investment purposes only, and not with a view to distribution thereof.
Grantee is aware that the Restricted Stock may not be registered under the
federal or any state securities laws and that, in addition to the other
restrictions on the Shares, they will not be able to be transferred unless an
exemption from registration is available or the Shares are registered. By making
this award of Restricted Stock, the Company is not undertaking any obligation to
register the Restricted Stock under any federal or state securities laws.
4. No Right to Continued Employment
Nothing in this Agreement or the Plan shall be interpreted or construed to
confer upon Grantee any right with respect to continuance of employment by the
Company or a subsidiary, nor shall this Agreement or the Plan interfere in any
way with the right of the Company or a Subsidiary to terminate Grantee's
employment at any time.
5. Taxes and Withholding
Grantee shall be responsible for all federal, state, and local income taxes
payable with respect to this award of Restricted Stock. Grantee shall have the
right to make such elections under the Internal Revenue Code of 1986, as
amended, as are available in connection with this award of Restricted Stock. The
Company and Grantee agree to report the value of the Restricted Stock in a
consistent manner for federal income tax purposes. The Company shall have the
right to retain and withhold from any payment of Restricted Stock the amount of
taxes required by any government to be withheld or otherwise deducted and paid
with respect to such payment. At its discretion, the Company may require Grantee
to reimburse the Company for any such taxes required to be withheld and may
withhold any distribution in whole or in part until the Company is so
reimbursed. In lieu thereof, the Company shall have the right to withhold from
any other cash amounts due to Grantee an amount equal to such taxes required to
be withheld or withhold and cancel (in whole or in part) a number of shares of
Restricted Stock having a market value not less than the amount of such taxes.
6. Grantee Bound By The Plan
Grantee hereby acknowledges receipt of a copy of the Plan and the prospectus for
the Plan, and agrees to be bound by all the terms and provisions thereof.
7. Modification of Agreement
This Agreement may be modified, amended, suspended, or terminated, and any terms
or conditions may be waived, but only by a written instrument executed by the
parties hereto.
Exhibit 10(iii)A(4)
Page 40
8. Severability
Should any provision of this Agreement be held by a court of competent
jurisdiction to be unenforceable or invalid for any reason, the remaining
provisions of this Agreement shall not be affected by such holding and shall
continue in full force in accordance with their terms.
9. Governing Law
The validity, interpretation, construction, and performance of this Agreement
shall be governed by the laws of the State of Delaware without giving effect to
the conflicts of laws principles thereof.
10. Successors in Interest
This Agreement shall inure to the benefit of, and be binding upon, the Company
and its successors and assigns, whether by merger, consolidation,
reorganization, sale of assets, or otherwise. This Agreement shall inure to the
benefit of Grantee's legal representatives. All obligations imposed upon Grantee
and all rights granted to the Company under this Agreement shall be final,
binding, and conclusive upon Grantee's heirs, executors, administrators, and
successors.
11. Resolution of Disputes
Any dispute or disagreement which may arise under, or as a result of, or in any
way relate to the interpretation, construction, or application of this Agreement
shall be determined by the Committee. Any determination made hereunder shall be
final, binding, and conclusive on Grantee and the Company for all purposes.
Exhibit 10(iii)A(4)
Page 41
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
ATTEST: NATIONAL SERVICE INDUSTRIES, INC.
____________________________________________ By:__________________________________________________
Helen D. Haines, Secretary James S. Balloun,
Chairman, President, and
Chief Executive Officer
GRANTEE:
---------------------------------------------------
Name
|
Exhibit 10.49
Comerica Bank-California High Technology Banking Group 55 Almaden Boulevard,
2nd Floor San Jose, CA 95113 May 11, 2001
Lee McGrath
Chief Financial Officer
Versant Corporation
6539 Dumbarton Circle
Fremont, CA 94555
Re: Revolving Loan and Security Agreement dated as of May 15, 1997, as modified
from time to time in writing (the "Agreement"), between Versant Corporation
("Borrower") and Comerica Bank — California ("Bank").
Dear Lee,
We have learned of the following breach of the Agreement for the quarter-ending
March 31, 2001 based upon telephone communications with Borrower and subsequent
company prepared financial statements.
Section 6.17 (f) Net Cash provided by Operating Activities, as defined in FASB
95 and 102, equal to or greater than $1,000,000 per quarter for the quarter
ending March 31, 2001.
Section 6.17 (g) Net Income after taxes of at least One dollar per quarter for
the quarter ending March 31, 2001.
Bank has agreed to waive the breaches described above for the period ending
March 31, 2001. Except as specifically set forth in this letter, all other terms
and conditions of the Agreement shall remain in full force and effect. This
waiver is not a waiver of any other, or future breach, of any other term or
conditions of the Agreement.
Sincerely,
Comerica Bank — California
/s/ Elizabeth Wilkerson
Elizabeth Wilkerson, AVP
High Technology Banking Group |
May 24, 2001
Christopher T. Lutes
Chief Financial Officer
Dear Chris:
This letter agreement (the “Agreement”) sets out the terms and conditions of
your resignation from full-time employment with Silicon Valley Bank and Silicon
Valley Bancshares (collectively “SVB”) and your subsequent part-time working
arrangement with SVB:
1. Voluntary Resignation. You’ve informed us that you will voluntarily
resign from your full-time position as SVB’s Chief Financial Officer, effective
June 30, 2001.
2. Term and Cancellation. In exchange and consideration for your
executing the release attached as Exhibit A to this Agreement (the “Release”),
SVB is offering you part-time employment (“Part-time Employment”). Your
part-time employment period will be for twelve (12) months, beginning on July 1,
2001 and ending on June 30, 2002 (the “Part-time Employment Period”). Either
party may terminate this Agreement at any time without cause with 30 days prior
written notice. Sections 4(d), 4(e), 17, 19, 22, 23, 24, 25, 26, 27, 28, and 29
survive any termination of this Agreement by either party without cause. SVB may
terminate this Agreement immediately for cause. Any decision by SVB to
terminate this Agreement prior to June 30, 2002 will be made by Silicon Valley
Bancshares’ Chief Executive Officer (the “CEO”) with the concurrence of the
Board Executive Committee.
3. Duties.
a) Standard Duties. During the Part-time Employment
Period, you will work a maximum of twenty (20) hours per week. Your duties will
include being reasonably available to Ken Wilcox and other executives of SVB to
provide advisory and other services related to the financial operations of SVB.
b) Special Engagements. During the Part-time Employment
Period, SVB may engage you for projects (other than the standard duties
contemplated above). Such an engagement will be on terms (including fees) as
then agreed upon by SVB and you.
4. Compensation.
a) Compensation. You will be paid $87,500.00 during the
Part-time Employment Period, payable bi-weekly on SVB’s normal payroll dates
with all applicable federal and state withholding amounts deducted. If SVB
terminates this Agreement without cause, you will continue to be paid for six
(6) months from the date of the notice of termination (the “Six Month Payment
Period”).
b) Stock Options. Pursuant to the Silicon Valley
Bancshares Stock Option Plans (the “Plans”), your SVB options and/or stock
grants will continue to vest during the Part-time Employment Period.
c) Incentive Compensation. You will be eligible in
February 2002 for an incentive compensation award, in accordance with the
applicable terms of the Bank’s Incentive Compensation Plan, pro rated for your
time spent in 2001 as both a full-time and part-time employee. You will not be
eligible for an incentive award in February 2003 for your time spent as a
part-time employee in 2002. Also, you will not be eligible to receive new
Retention Program allocations under the 2003 Retention Programs.
d) Retention Program. You will be entitled to “Continued
Participation” under the Retention Programs (as defined in SVB’s 1998, 1999,
2000, 2001 and 2002 Retention Programs) during the Part-time Employment Period,
as well for the remainder of the Retention Programs’ terms, provided you: (1)
do not disclose Confidential Information (as defined in Section 8(a) below), (2)
do “not compete” with SVB (as defined in Section 8(b) below), and (3) do not
disparage SVB (as discussed in Section 8(c) below), in each case for three (3)
years following your termination of employment with SVB. Provided you do comply
with the three (3) provisions above for the requisite three (3) year period, you
will thereafter be entitled to Continued Participation without limitation. If
you do breach any of these provisions during this three (3) year period, you
will forfeit any right to then-future distributions under the 1998, 1999, 2000,
2001, and 2002 Retention Programs.
e) Qualified Investors Fund. SVB agrees to waive any
vesting requirements for your interest in the 2000 Qualified Investors Fund.
5. Retirement Benefits. You will be eligible to participate in SVB’s
Money Purchase Plan, the 401(k) and Employee Stock Ownership Plan, and Employee
Stock Purchase Program during the Part-time Employment Period.
6. Group Medical, Vision and Dental Benefits. You will be eligible to
continue your current SVB group health insurance benefits (including group
medical, disability, life insurance, vision and dental benefits) during the
Part-time Employment Period. If SVB terminates this Agreement without cause,
you will continue to be eligible for these benefits for the Six Month Payment
Period.
7. Change in Control Policy. You will continue to be eligible to
receive benefits under SVB’s Change In Control Severance Benefits Policy during
your Part-time Employment Period. However, as you will no longer be a member of
SVB’s Operating Committee, you will be entitled to benefits under such policy
only to the extent provided to employees at Grade 16 level. You will also be
entitled to immediate vesting of Retention Program interests in the event of a
change in control (as that term is defined in SVB’s Change In Control Severance
Benefits Policy).
8. Confidential Information/Competition with SVB
a) Disclosure of Confidential Information. SVB may
immediately terminate the Part-time Employment Period, if you disclose
“Confidential Information.” “Confidential Information” includes all technical
and non-technical information related to the current, future and proposed
services of SVB, including financial information and business forecasts and
strategies.
b) Competition with SVB. SVB may immediately terminate the
Part-time Employment Period, if, during your Part-time Employment Period, you
become employed by, or become a consultant for, any entity that is in
“competition with” SVB, unless you obtain the prior written approval of the CEO
(who shall obtain the concurrence of the Executive Committee of the Board.).
The CEO will use best efforts to respond to your approval request within thirty
(30) days. (While not required, you are encouraged to seek SVB’s approval on any
prospective employment or consulting arrangement so you do not inadvertently
breach this section of the Agreement.) An entity will be deemed “in
competition with” SVB if: (1) the entity is a significant provider of financial
products or services, or other products and services offered by SVB, to
early-stage technology companies, whether nationally or in one or more regions
served by SVB’s offices (with SVB determining in its reasonable discretion
whether in fact an entity is a significant provider of such products or
services); (2) the entity is otherwise a direct competitor of SVB in any of
SVB’s then-substantial lines of business, or (3) the entity has recruited you to
create or build a business line which will be in direct competition with a
substantial line of business of SVB.
Upon notice from SVB that you are in competition with
SVB (the “Notice”), you may, in the sole discretion of the CEO (with the
concurrence of the Board Executive Committee): (1) be provided with up to
thirty (30) days to leave such competing entity (the “Cure Period”); or (2) up
to six (6) months to leave such competing entity, if you had obtained SVB’s
prior written approval for the subject employment or consulting arrangement and
SVB has since become competitive with such employing entity or consulting firm
due to a change in SVB’s substantial line of business (with the length of such
periods to be determined in the reasonable discretion the CEO, with the
concurrence of the Board Executive Committee) (also, the “Cure Period”). If you
leave such competitor within the Cure Period, this Agreement will remain in full
force and effect. If you do not leave such competitor within the Cure Period,
SVB thereafter may immediately terminate this Agreement, with such decision to
be made by the CEO with the concurrence of the Board Executive Committee.
c) Nondisparagement. SVB may immediately terminate the
Part-time Employment Period, if, during your Part-time Employment Period, (1)
you mention to any other person in a business-related context any negative or
disparaging comments or statements about SVB, or any of its officers, agents or
employees, including disparaging or negative comments regarding business
practices, or (2) you communicate to any other person any facts or opinions that
might tend to reflect adversely upon SVB or to harm the reputation of SVB or its
officers, agents or employees in the conduct of their respective personal,
business or professional affairs.
d) Consulting for a Non-Competitor. During your Part-time
Employment Period, prior to accepting a consulting position with a
non-competitor of SVB, you will discuss the proposed consulting position with
the CEO (who will report on the proposed position to the Executive Committee of
the Board). The CEO, in such CEO’s sole discretion, shall determine if you may
pursue the consulting position, considering, among other factors, whether such
consulting position will interfere with your part-time employment
responsibilities.
9. Expense Reimbursement. SVB will reimburse you for reasonable
out-of-pocket expenses related to your SVB employment and incurred during the
Part-time Employment Period, pursuant to SVB’s expense policies and procedures.
10. Investments. During the Part-time Employment Period, you maybuy
(i) stock of any private tech/life sciences company, or (ii) a venture capital
fund, if you first offered the investment opportunity to SVB (and SVB has
invested all that it chooses). You may buy publicly traded stock of a SVB
client.
11. Outside Boards/Outside Employment and Consulting Arrangements.
During the Part-time Employment Period, you may sit on the Board of Directors or
Advisory Board or become an employee or consultant of an outside company with
the approval of the CEO (who will report on the proposed position to the
Executive Committee of the Board). You will be able to retain any compensation
in connection with such role as a director, employee or consultant. You will
play such role in your individual capacity, and specifically, not as a
representative of SVB.
12. Remote Connectivity/Cubicle Space. You will be provided with remote
connectivity to SVB’s computer network and with access to guest cubicle space at
SVB during the Part-time Employment Period. If SVB terminates this Agreement
without cause, SVB, in its sole discretion, may continue to provide these
benefits during the Six Month Payment Period.
13. Payment of Wages Due. You acknowledge and represent that the
consideration for this Agreement is not accrued salary, wages or vacation, and
is in excess of any established severance practice or policy of SVB, and you
further acknowledge that California Labor Code Section 206.5 is not applicable
to this Agreement or to the parties hereto. That section provides in pertinent
part:
No employer shall require the execution of any release of any claim
or
right on account of wages due, or to become due, or made as an
advance
on wages to be earned, unless payment of such wages has been made.
14. No Reliance on Representations. SVB and you represent that each has
had the opportunity to consult with an attorney, and has carefully read and
understand the scope and effect of the provisions of this Agreement. In
entering into this Agreement, SVB and you each rely upon their own judgement and
have not been influenced by any statement made by the other or by any person
representing or employed by the other. You do not waive rights or claims that
arise after the effective date of this Agreement as set forth in Paragraph 15
below. You acknowledge that you were given a period of at least twenty-one (21)
days within which to consider this Agreement and that you have specifically been
advised to consult with an attorney before executing it. In executing this
Agreement, you waive said twenty-one (21) day consideration period. To the
extent that you have taken less than twenty-one (21) days to consider this
Agreement, you acknowledge that you are entering into this Agreement voluntarily
and with knowledge of and a full understanding of its terms.
15. Revocability/Effective Date of this Agreement. For seven (7) days
following the execution of this Agreement, you may revoke it by submitting
written notice of such revocation to SVB on or before the 7th day following the
date of this Agreement. This Agreement shall become effective or enforceable on
the eighth (8th) calendar day after you have signed this Agreement.
16. Non-Insider. During the Part-time Employment Period, you shall not
be deemed an “insider” for purposes of compliance with SVB’s Insider Trading
Policy. Notwithstanding the foregoing, you shall continue to be bound by
applicable provisions of federal and state securities laws, including, without
limitation, (a) Section 16 of the Securities Exchange Act of 1934, (b) Rule 144
promulgated under the Securities Act of 1933, and (c) such laws prohibiting
trading in Silicon Valley Bancshares’ stock while you then are in possession of
material non-public information.
17. Non-Solicitation. During the Part-time Employment Period and for two
(2) years from termination of the Part-time Employment Period, you shall not
directly, or indirectly, cause any party to solicit (other than through a
general solicitation not directed to SVB personnel), offer, engage, or employ
either as an employee or independent contractor, any employee of SVB without the
prior written approval of SVB. This section will not apply if SVB personnel
solicit employment from you (without you first soliciting them). Breach of this
Section, in the discretion of the CEO, may lead to you forfeiting any right to
then-future distributions under the 1998, 1999, 2000, 2001, and 2002 Retention
Programs.
18. Headings. The various headings of this Agreement are inserted for
convenience only and shall not be deemed a part of, or in any manner affect,
this Agreement or any provision thereof.
19. Governing Law. This Agreement shall be governed by the laws of the
State of California.
20. Materiality. This Agreement would not have been agreed upon but for
the inclusion of each and every one of its conditions.
21. Voluntary Execution of this Agreement. You agree you have executed
this Agreement voluntarily and without any duress or undue influence on the part
of or on behalf of SVB with the full intent of releasing all claims. You
acknowledge that: (a) you have read this Agreement; (b) you have been given a
reasonable period of time to consider the legal effects of this Agreement; (c)
you have been given the opportunity to be represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of your own
choice; (d) you understand the terms and consequences of this Agreement and of
the releases it contains; and (e) you are fully aware of the legal and binding
effects of this Agreement.
22. Successors. This Agreement and the respective rights and obligations
of the parties hereunder shall inure to the benefit of, and be binding upon,
their respective successors, assigns and legal representatives. This provision,
with respect to your right of successorship, shall, however, inure only to the
benefit of your estate, executor, administrator, and heirs. You may assign the
economic benefits conferred by this Agreement to a trust. SVB makes no
representations or warranties involving the tax implications of making such an
assignment, and recommends that you consult your personal tax and legal
advisors.
23. Notices. Any notices will be written and delivered by: (i) personal
delivery; (ii) overnight courier; (iii) telecopy or facsimile transmission with
acknowledgment of receipt; or (iv) certified or registered mail, return receipt
requested.
24. Severability. If any provision of this Agreement is illegal, invalid
or unenforceable, the legality, validity and enforceability of the remaining
provisions continue.
25. Waiver. Waiver by SVB of a breach of this Agreement is not a waiver
of any other breach.
26. Entire Agreement. This is the entire Agreement (including Exhibit A
attached hereto) between the parties on this subject and supersedes all prior
and contemporaneous understandings and agreements, whether oral or written.
This Agreement may only be modified in writing signed by you and SVB.
27. Indemnity. You will indemnify and hold harmless SVB against all
liability to third parties (other than liability solely the fault of SVB)
arising from or in connection with this Agreement.
28. Arbitration. Any dispute between the parties arising out of or in
connection with this Agreement shall be submitted to binding arbitration in
Santa Clara County, California in accordance with the Commercial Rules of the
American Arbitration Association and pursuant to then prevailing California
law. The award shall be final and binding upon the parties and judgment for
such award may be entered in any court having jurisdiction.
29. Costs and Attorneys’ Fees. Should any action be brought to enforce
any of the rights or obligations set forth in this Agreement, the prevailing
party shall be entitled to recover all costs and expenses incurred in the
prosecution or defense of that action, including attorneys’ fees.
Chris, let me take this opportunity to thank you for your outstanding years of
service to the Bank. We look forward to continuing to work with you.
Sincerely, SILICON VALLEY BANK /s/ John C. Dean
John C. Dean Chairman of the Board of Directors
Agreed to and Accepted by: /s/
Christopher T. Lutes
--------------------------------------------------------------------------------
Exhibit A
EMPLOYEE AGREEMENT AND RELEASE
Except as otherwise set forth in this Agreement, effective on July
1, 2001 and for any claims pending on that date, I hereby release, acquit and
forever discharge Silicon Valley Bancshares and Silicon Valley Bank
(collectively, the “Company”), its parents and subsidiaries, and its and their
officers, directors, agents, servants, employees, attorneys, shareholders,
successors, assigns and affiliates, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys fees, damages, indemnities
and obligations of every kind and nature, in law, equity, or otherwise, known
and unknown, suspected and unsuspected, disclosed and undisclosed, arising out
of or in any way related to agreements, events, acts or conduct at any time
prior to and including the date this Agreement is signed, including but not
limited to: all such claims and demands directly or indirectly arising out of
or in any way connected with my employment with the Company or the termination
of that employment; claims or demands related to salary, bonuses, commissions,
stock, stock options, or any other ownership interests in the Company, vacation
pay, fringe benefits, expense reimbursements, severance pay, or any other form
of compensation; claims pursuant to any federal, state or local law, statute or
cause of action including, but not limited to, the federal Civil Rights Act of
1964, as amended; the federal Americans with Disabilities Act of 1990; the
California Fair Employment and Housing Act, as amended; tort law; contract law;
wrongful discharge; discrimination; harassment; fraud; defamation; emotional
distress; and breach of the implied covenant of good faith and fair dealing.
In giving this release, which includes claims that may be unknown
to me at present, I acknowledge that I have read and understand Section 1542 of
the California Civil Code which reads as follows: “A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor.” I expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any unknown or
unsuspected claims I may have against the Company.
By:
--------------------------------------------------------------------------------
Christopher T. Lutes Date:
--------------------------------------------------------------------------------
|
Exhibit 10.37(j)
AMENDMENT No. 10 TO PURCHASE AGREEMENT DCT-054/98
This Amendment No. 10 ("Amendment 10") dated as of November 17, 2000 is between
EMBRAER - Empresa Brasileira de Aeronautica S.A. ("EMBRAER") and Continental
Express, Inc. ("BUYER" ), collectively hereinafter referred to as the "PARTIES",
and relates to Purchase Agreement No. DCT-054/98 dated December 23, 1998, as
amended from time to time (together with its Attachments, the Amendments to
Purchase Agreement and Letter Agreements, the EMB-135 Purchase Agreement") for
the purchase of up to fifty (50) new EMB-135 aircraft (the "AIRCRAFT").
This Amendment 10 sets forth the further agreement between EMBRAER and BUYER
relative to the delivery dates for the TWENTY-FIRST (21ST) through
TWENTY-SEVENTH (27TH) AIRCRAFT. All terms defined in the EMB-135 Purchase
Agreement shall have the same meaning when used herein and in case of any
conflict between this Amendment 10 and the EMB-135 Purchase Agreement, this
Amendment 10 shall control.
NOW, THEREFORE, for good and valuable consideration, which is hereby
acknowledged, EMBRAER and BUYER hereby agree as follows:
Item " a " of Article 5 - DELIVERY, of the EMB-135 Purchase Agreement, is hereby
amended to read in its entirely as follows:
AIRCRAFT:
Subject to payment in accordance with Article 4 hereof and compliance with the
conditions of this Agreement, the AIRCRAFT shall be made available for delivery
by EMBRAER to BUYER in F.A.F. (Fly Away Factory) condition, at São José dos
Campos, State of São Paulo, Brazil, according to the following schedule:
Aircraft
Aircraft Contractual
Delivery Dates
Aircraft
Aircraft Contractual
Delivery Dates
1st
July 1999
26th
[CONFIDENTIAL
MATERIAL OMITTED
AND FILED
SEPARATELY WITH
THE SECURITIES AND
EXCHANGE COM-
MISSION PURSUANT
TO A REQUEST FOR
CONFIDENTIAL
TREATMENT]
2nd
August 1999
27th
3rd
September 1999
28th
4th
October 1999
29th
5th
November 1999
30th
6th
December 1999
31st
7th
January 2000
32nd
8th
February 2000
33rd
9th
March 2000
34th
10th
April 2000
35th
11th
May 2000
36th
12th
June 2000
37th
13th
July 2000
38th
14th
August 2000
39th
15th
September 2000
40th
16th
October 2000
41st
17th
October 2000
42nd
18th
November 2000
43rd
19th
January 2001
44th
20th
January 2001
45th
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
2.
All other terms and conditions of the EMB-135 Purchase Agreement, which are not
specifically amended by this Amendment 10, shall remain in full force and effect
without any change.
IN WITNESS WHEREOF, EMBRAER and BUYER, by their duly authorized officers, have
entered into and executed this Amendment 10 to the EMB-135 Purchase Agreement to
be effective as of the date first written above.
EMBRAER - Empresa Brasileira CONTINENTAL EXPRESS, INC.
de Aeronautica S.A.
By : /s/ Frederico Fleury Curado By : /s/ Frederick S. Cromer
Name : Frederico Fleury Curado Name : Frederick S. Cromer
Title : Executive Vice President Title : VP & CFO
Airline Market
By : /s/ Flavio Rivoli
Name : Flavio Rivoli
Title : Director of Contracts
Date: Nov. 17, 2000 Date: 11/10/00
Place : S. J. Campos - Brazil Place : Houston, TX
Witness: /s/ Jose Luis P. Molina Witness: /s/ Amy K. Sedano
Name : Jose Luis P. Molina Name : Amy K. Sedano
|
RESCISSION AGREEMENT
THIS RESCISSION AGREEMENT dated January __, 2001, between and among SKINTEK
LABS, INC., a Florida corporation ("Skintek"), ULTIMATE WARLOCK, INC., a
California corporation ("Ultimate"), and the shareholders of Skintek who have
executed a copy of this Agreement (the "Shareholders").
WITNESSETH:
WHEREAS, on September 13, 2000, and pursuant to an Agreement dated as of
August 15, 2000, as amended by the Amendment to the Agreement, dated September
8, 2000 (the "Agreement") between and among the parties hereto Skintek purchased
1,090,135 of the outstanding capital stock of Ultimate in exchange for the
issuance to the Shareholders of an aggregate of 3,205,916 shares of Common Stock
of Skintek; and
WHEREAS, said stock of Ultimate, which is engaged in the manufacture and
sale of offshore racing boats, was owned by the Shareholders; and
WHEREAS, the premises on which the parties entered into the Agreement were
mistaken and the parties desire to rescind the Agreement and the purchase of
Ultimate shares thereunder; and
WHEREAS, the parties have agreed to such rescission; and
WHEREAS, as a part of such rescission the Shareholders are delivering to
Skintek all common shares of Skintek received by them and receiving all common
shares of Ultimate delivered by them pursuant to the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree to rescind the Agreement and the sale
of Ultimate to Skintek thereunder as follows:
1. The Agreement and all documents executed pursuant thereto or in
connection therewith by the parties hereto are hereby rescinded and shall be
null and void and of no force and effect.
2. Skintek agrees to immediately deliver to Shareholders certificates
representing all of the 1,090,135 shares of Common Stock of Ultimate (the
"Ultimate Shares"), acquired by Skintek under the Agreement, said certificates
to be in due form for transfer and said certificates and the shares represented
thereby to be free and clear of all security interests, liens and encumbrances
whatsoever.
3. Shareholders agree to immediately deliver to Skintek Certificates
aggregating 3,205,916 shares of Common Stock of Skintek (the "Skintek Shares"),
representing all of the shares of Skintek originally issued by Skintek to the
Shareholders under the Agreement, said certificates to be in due form for
transfer and said certificates and the shares represented thereby to be free and
clear of all security interests, liens and encumbrances.
4. Without limiting the generality of paragraph 1 hereof: (i) the
obligations of Skintek under any employment agreements between Skintek and any
of the Shareholders is hereby rescinded, released, canceled and discharged; (ii)
Skintek hereby releases the Shareholders from and against any and all rights and
claims which it may have against any of said persons arising under said
employment agreements; (iii) the Shareholders hereby resign as directors,
officers and employees (if applicable) of Skintek. Immediately prior to the
foregoing, the directors of Skintek shall elect Stacy Kaufman as a director of
Skintek.
5. Ultimate and the Shareholders hereby release and forever discharge
Skintek and any present or former director, officer, employee or agent of
Skintek and any of its subsidiaries from and against any and all claims, rights,
actions, suits, and causes of action which they had, now have, or shall or may
have against Skintek and any of such persons by reason of any matter, cause or
thing whatsoever from the beginning of the world to the date hereof, including
but not limited to any claims, rights, actions, suits, or causes of action
arising under the Agreement or the transactions contemplated thereby but
excluding however any claims, rights, actions, suits, or causes of action
arising from agreements, representations and warranties made by Skintek in this
Rescission Agreement.
6. Skintek hereby releases and forever discharges Ultimate and the
Shareholders and each of them from and against any and all claims, rights,
actions, suits, and causes of action which Skintek had, now has, or shall or may
have against Ultimate or any of the Shareholders, by reason of any matter, cause
or thing whatsoever from the beginning of the world to the date hereof,
including but not limited to claims, rights, actions, suits, and causes of
action arising under the Agreement or the transactions contemplated thereby but
excluding, however, any claims, rights, actions, suits, or causes of action
arising from agreements, representations, and warranties made by Ultimate and
the Shareholders in this Rescission Agreement.
7. Skintek hereby represents and warrants to Ultimate and the
Shareholders as follows:
7.1 The Ultimate Shares are free and clear of any liens or
encumbrances of any character whatsoever and no third parties (except the
parties hereto) have any rights or claims in and to the Ultimate Shares. Upon
the delivery of the Ultimate Shares to Shareholders hereunder, Shareholders will
acquire good and absolute title and ownership thereto, free and clear of any
liens or encumbrances whatsoever.
7.2 All necessary corporate action has been taken by Skintek to
authorize the execution, delivery and consummation by Skintek of this Rescission
Agreement and the transactions contemplated hereby. This Rescission Agreement
has been duly executed and delivered by Skintek and is a valid and enforceable
obligation of Skintek in accordance with its terms. The execution, delivery and
performance of this Rescission Agreement will not violate any provisions of law,
any order of any court or other agency of government, the Certificate of
Incorporation or By-laws of Skintek, any provision of any indenture, agreement
or other instrument to which Skintek is a party, or by which it or any of its
properties or assets is bound, or be in conflict with, result in a breach of or
constitute (with due notice and/or lapse of time) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of Skintek.
7.3 No actions, suits, claims or proceedings have been
instituted, or to the best of Skintek's knowledge, threatened, questioning the
validity or seeking to restrain the completion of the transactions contemplated
hereby. No suits or proceedings have been instituted, nor, to the best of
Skintek's knowledge, threatened, by or against Skintek initiating a proceeding
under the Federal Bankruptcy Act or any state insolvency or similar law. Skintek
does not contemplate the filing of any proceeding under any of said laws.
7.4 During the period commencing with the closing of the
Agreement and ending on the date hereof, Skintek has not entered into any
agreements, commitments, or otherwise incurred any obligations on behalf of
Skintek, nor has Skintek issued any additional shares of Common Stock of Skintek
or any warrants, options or other rights to purchase Common Stock of Skintek.
7.5 Skintek understands and agrees that Ultimate and the
Shareholders have made no representation or warranty as to the tax consequences
to Skintek of this Rescission Agreement and the events and actions contemplated
hereby. Skintek has consulted and relied solely upon its own tax advisors with
respect to all tax matters concerning this transaction.
8. Ultimate hereby represents and warrants to Skintek that:
8.1 Ultimate has authority to take, and has taken, all action
required to be taken to permit it to enter into and carry out this Rescission
Agreement. This Rescission Agreement has been duly executed and delivered by
Ultimate and is valid and enforceable against them in accordance with its terms.
8.2 Ultimate has not incurred any obligations or liabilities on
behalf of Skintek and no third party has any claim against Skintek as a result
of the conduct of the business of Ultimate. Skintek has no liability of any kind
or nature (primary, secondary, contingent, liquidated or unliquidated, or
otherwise) to any past, existing or future creditor, as such, of Ultimate.
8.3 Ultimate has not solicited or obtained any credit or loan in
which Skintek was a co-maker or a guarantor or which was secured by the assets
of Skintek.
8.4 Ultimate understands and agrees that Skintek has made no
representation or warranty as to the tax consequences to Ultimate of this
Rescission Agreement and the events and actions contemplated hereby. Ultimate
has consulted and relied solely upon its own tax advisors with respect to all
tax matters concerning this transaction.
9. Each Shareholder hereby represents and warrants to Skintek that:
9.1 The Shareholder owns all the right, title and interest in
and to the Skintek Shares issued in his or her name, free and clear of any
security interests, liens, claims and encumbrances of any kind whatsoever, and
has full right and power effectively to transfer unencumbered, record and
beneficial ownership of such shares to Skintek pursuant to the terms of this
Rescission Agreement.
9.2 This Rescission Agreement has been duly executed and
delivered by the Shareholder and is valid and enforceable against him or her in
accordance with its terms.
9.3 The Shareholder has not solicited or obtained any credit or
loan in connection with his or her ostensible ownership of Skintek Shares.
9.4 The Shareholder understands and agrees that Skintek has made
no representation or warranty as to the tax consequences to the Shareholder of
this Rescission Agreement and the events and actions contemplated hereby. The
Shareholder has consulted and relied solely upon the Shareholder's own tax
advisors with respect to all tax matters concerning this transaction.
10. Ultimate hereby indemnifies and holds Skintek harmless from and
against any and all liabilities, losses, damages and claims (including
attorney's fees) which may be asserted against Skintek by any past, present or
future creditor of Ultimate, including, without limitation, claims and
liabilities arising from any real or personal property leases with respect to
which Skintek is lessee or otherwise obligated but the benefit of which is
enjoyed by Ultimate, or guaranties, if any, executed by Skintek for the benefit
of Ultimate. The relief afforded hereunder shall be in addition to all other
relief provided by law.
11. Each of Skintek and Ultimate agree to provide, or cause to be
provided to the other, as soon as reasonably practical after written
request therefor, any information, whether in written, oral, electronic or other
form, including reports, records, books, contracts, instruments, or other
materials ("Information") in the possession of such party which the requesting
party reasonably needs (i) to comply with any reporting or disclosure obligation
(including under applicable securities or tax laws) (ii) for use in any
judicial, regulatory, administrative, tax or other proceeding or (iii) in order
to satisfy audit, accounting, claims, regulatory, litigation, tax or other
similar requirements.
12. This Rescission Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their successors and assigns.
13. This Rescission Agreement constitutes the entire agreement and
understanding between Skintek, Ultimate and Shareholders with respect to the
rescission provided for herein.
14. This Rescission Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
15. This Rescission Agreement shall be construed and interpreted in
accordance with the laws of the State of Florida.
16. All representations, warranties, covenants and agreements of any of
the parties hereto made in this Rescission Agreement or in any certificate or
document delivered by it pursuant hereto, shall survive the execution and
delivery hereof and the closing hereunder.
IN WITNESS WHEREOF, Skintek and Ultimate have caused their corporate names
to be hereunto subscribed and the Shareholders have duly signed this Rescission
Agreement all as of the day and year first above written. SKINTEK LABS, INC.
By: ________________________________
ULTIMATE WARLOCK, INC.
By: ________________________________
Carter Read, President
SHAREHOLDERS:
________________________________
Richard Granville
________________________________
Carter Read
EVANSVILLE, LTD.
By:_____________________________
Title:__________________________
_______________________________
Karen Bircher
_______________________________
John Brainard
_______________________________
Farhad Behzadi
______________________________
Stuart Sundlin
|
Exhibit 10.C
INTEROFFICE MEMO
Date: 03/01/2001
To: Selim Bassoul
CC: WFW
From: David B. Baker
--------------------------------------------------------------------------------
Selim,
Below outlines the content of the special executive compensation program that is
offered to you.
1. The term of this program is 3 years. Expiring with the end of fiscal year
2003.
2. The company will transfer to you, at $6.00 per share, 50,000 shares of TMC
common stock.
3. The company will loan you the funds necessary to make the above purchase,
secured by the stock and personally payable by you to the company subject to the
provisions outlined below.
4. This stock will be owned by you, but held by the company.
5. This stock will be restricted and subject to rule 144 as you are an officer
of the company and considered an insider. The holding period of this stock
begins when and as the note is forgiven and the stock is released from the
pledge.
6. Interest on your loan will be calculated at the higher of, the rates paid to
those employees participating in the deferred compensation plan, or, the minimum
IRS rate allowed by law.
7. Any sale of the stock will be for your account and subject to taxes paid
which will be your responsibility.
8. The amount of your loan, plus interest, will be retired by the company
(special bonus) if your performance meets or exceeds the “Earnings Before Taxes”
targets listed below:
Confidential
--------------------------------------------------------------------------------
Interoffice Memo
A: For fiscal year 2001, Earnings Before Taxes, for the corporation, must equal
or exceed $ 1.20 per share.
B: For fiscal year 2002, Earnings Before Taxes, for the corporation, must equal
or exceed $ 1.50 per share.
C: For fiscal year 2003, Earnings Before Taxes, for the corporation, must equal
or exceed $ 1.75 per share
9. Your “special bonus” will be calculated and paid as follows:
a. If you meet or exceed your performance goals in a given year, the company
will retire, 1/3 of the remaining balance of the principal and interest of your
loan in year one, 50% of the remaining balance of your loan in year two, and the
remaining balance of your loan in year three.
b. If you did not meet your objective, but your cumulative actual performance
equaled or exceeded the cumulative objective, the company will retire the
remaining balance of the principal and interest of your loan according to the
schedule in “a” above. If you fail to meet either of these objectives, no
payment will be made.
10. If you leave the company, voluntarily, for any reason, the balance of the
loan becomes due and immediately payable.
11. If you leave the company due to termination (except for cause), the balance
of the loan must be repaid in 24 months.
12. If during the term of the loan, William F. Whitman sells 20% or more of his
personal stock holdings in the company, your loan will be forgiven.
Example: Performance objective: Actual performance: Year 2001 — EBT= $
1.20/share Actual performance = $ 1.30/share Year 2002 — EBT= $ 1.50/share
Actual Performance = $ 1.45/share Year 2003 – EBT= $ 1.75/share Actual
Performance = $ 1.75/share Stock price at purchase $ 6.00/share — Loan value =
$ 300,000 Interest rate 6.00%
01/16/96 Confidential 2
--------------------------------------------------------------------------------
Interoffice Memo
EXAMPLE (CONT.):
January 2002 Loan balance = $300,000 + interest ($18,000) = Total $318,000.
As Actual performance exceeded objective, bonus payment = $106,000
January 2003 Loan balance = $212,000 + interest ($12,720) = Total $224,720
Actual performance did not meet objectives, however cumulative actual equaled
cumulative objective, bonus payment = $112,360
January 2004 Loan balance = $112,360+ interest ($6,742)= Total Actual exceeded
objective, bonus payment = $119,102
Agreed ________________________________________ Dated _________
Selim Bassoul
For the Company ________________________________ Dated __________
David B. Baker – Chief Financial Officer
01/16/96 Confidential 3 |
Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") dated as of
November 15, 1999 between Michael P. Brennan (the "Executive") and Peapod, Inc.,
a Delaware corporation (the "Company").
WHEREAS, the Company desires to continue to employ the Executive as
its Senior Vice_President – Product Management and Marketing_ and the Executive
desires to continue such employment, for the term and upon the other conditions
hereinafter set forth; and
WHEREAS, the Executive and the Company are concurrently entering
into a Severance Agreement (the "Severance Agreement") providing for certain
substantial severance benefits.
NOW, THEREFORE, in consideration of the agreements and covenants
contained herein, the Executive and the Company hereby agree as follows.
ARTICLE I
EMPLOYMENT
Section 1.01. Position and Responsibilities. The Company shall
continue to employ the Executive as its Senior Vice President – Product
Management and Marketing. The Executive's responsibilities shall be as directed
from time to time by the President of the Company. The Executive agrees to be
employed by the Company in such capacity, subject to all the covenants and
conditions hereinafter set forth.
Section 1.02. Performance. During the term of Executive's
employment, the Executive shall perform faithfully the duties assigned to the
Executive hereunder to the best of his or her abilities and devote his or her
full and undivided business time and attention to the transaction of the
Company's business and not engage in any other business activity except with the
approval of the Board. The previous sentence shall not preclude the Executive
from participating in the affairs of any governmental, educational or other
charitable institution so long as the Board does not determine in good faith
that such activities unreasonably interfere with the business of the Company or
the performance of the Executive's duties hereunder.
Section 1.03. Term and Termination. Employment under this
Agreement commenced as of November 19, 1999 (the "Commencement Date") and shall
continue until terminated by written notice by either party, subject to the
rights and obligations set forth in the Severance Agreement.
ARTICLE II
COMPENSATION
Section 2.01. Base Compensation. As compensation for his services
hereunder, the Company shall pay to the Executive an annual salary of $145,000
(the "Base Salary"), less required or authorized deductions, payable in
installments in accordance with the Company's normal payment schedule for senior
management of the Company. The Executive's Base Salary may be reviewed from
time to time for adjustment.
Section 2.02. Bonus Plan. The Executive shall be entitled to
participate in the Company's Executive Bonus Plan as modified by the Board from
time to time. Such plan shall provide for an opportunity for the Executive to
earn an annual cash bonus, of up to 50% of Executive's Base Salary received for
the year as to which such bonus is earned, based on meeting such individual and
Company performance goals as may be set from time to time by the Board in its
absolute discretion.
Section 2.03. Employee Benefits. Upon satisfaction of any
eligibility requirements, the Executive shall be entitled to participate in such
employee benefit plans and to receive such other fringe benefits during
Executive's term of employment as are from time to time made generally available
to the senior management of the Company; provided that, if a severance benefit
is payable to the Executive pursuant to Section 2.06, such benefit shall be paid
in lieu of any benefit otherwise payable to Executive pursuant to any Company
severance plan unless such plan expressly provides that payments thereunder will
be made in addition to the severance payments provided hereunder. Nothing
herein shall be construed to require the Company to establish, or shall preclude
the Company, in its absolute discretion, from changing or amending, in whole or
in part, or revoking, any one or more of such employee benefit plans or programs
without notice. In addition, the Executive shall be entitled to take time off
for vacation or illness in accordance with the Company's policies established
from time to time with respect to the Company's senior executives.
Section 2.04. Expense Reimbursements. The Company shall reimburse
the Executive for all proper expenses incurred by Executive in the performance
of Executive's duties hereunder in accordance with the policies and procedures
established by the Board.
Section 2.05. Severance Benefits. Concurrently herewith, the
Executive and Peapod are entering into the Severance Agreement which provides
certain substantial severance benefits for the Executive in the event of
termination of Executive's employment with the Company. The Executive shall be
entitled to the benefits of such Severance Agreement as if the provisions
thereof were set forth fully herein.
ARTICLE III
NONCOMPETITION; CONFIDENTIAL INFORMATION
Section 3.01. Noncompetition; Non-Solicitation. As a condition to
Executive's employment and to the Company's obligations hereunder, Executive
agrees to enter into, concurrently with Executive's execution of this Agreement,
an Employee Nonsolicitation and Noncompete Agreement in the form attached hereto
as Exhibit A, and the Executive agrees to comply fully with all of the terms and
provisions of such Employee Nonsolicitation and Noncompete Agreement as if such
terms and provisions were fully set forth in this Agreement. The covenants
contained in such Employee Nonsolicitation and Noncompete Agreement shall
survive the termination of this Agreement and the conclusion of the Executive's
employment by the Company.
ARTICLE IV
MISCELLANEOUS
Section 4.01. Notices. All notices and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered or three (3) days after deposit in the United
States mail, certified and return receipt requested, postage prepaid, addressed
(1) if to the Executive, to the Executive's address shown on the Company
records, and if to the Company, to Peapod, Inc., 9933 Woods Drive, Skokie,
Illinois 60077-1031, attention President with a copy to the Secretary, or (2) to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
Section 4.02. Executive's Authority; No Conflict. The Executive
represents and warrants to the Company that the Executive has full right and
authority to execute and deliver this Agreement and to comply with the terms and
provisions hereof and that the execution and delivery of this Agreement and
compliance with the terms and provisions hereof by the Executive will not
conflict with or result in a breach of the terms, conditions or provisions of
any agreement, restriction or obligation by which the Executive is bound.
Section 4.03. Assignment and Succession. The Agreement shall be
binding upon and shall operate for the benefit of the parties hereto and their
respective legal representatives, legatees, distributees, heirs, and successors
and assigns. Executive acknowledges that the services he renders pursuant to
this Agreement are unique and personal. Accordingly, Executive may not assign
any of the Executive's rights contained in this Agreement or delegate any of his
duties hereunder. The Company may assign the Company's rights, duties or
obligations under this Agreement to a purchaser or transferee of all or
substantially all of the Company's assets.
Section 4.04. Headings. The Article, Section paragraph and
subparagraph headings are for convenience of reference only and shall not define
or limit the provisions hereof.
Section 4.05. Applicable Law. This Agreement shall at all times
be governed by and construed, interpreted and enforced in accordance with the
internal laws (as opposed to conflict of laws provisions) of the State of
Illinois.
Section 4.06. Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law. In the event that any provision of this Agreement shall
be held to be void or unenforceable, the remaining provisions of this Agreement
shall continue in full force and effect.
Section 4.07. Waiver, Etc. The waiver of a breach of any
provision of this Agreement shall not operate or be construed to be a waiver of
any other breach. No delay or omission in the exercise of any power, remedy, or
right herein provided or otherwise available to any party shall impair or affect
the right of such party thereafter to exercise the same. Any extension of time
or other indulgence granted to a party hereunder or to any other person shall
not otherwise alter or affect any power, remedy or right of any other party, or
obligations of the party to whom such extension or indulgence is granted except
as specifically waived.
Section 4.08. Dispute Resolution. Any controversy or claim
arising out of or relating to this Agreement, or the breach thereof, shall be
settled by arbitration administered by the American Arbitration Association
("AAA") in accordance with its rules, to the extent not inconsistent with this
provision. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. Such arbitration shall be conducted in
Chicago, Illinois before a single arbitrator. The parties shall select an
arbitrator by mutual agreement from a panel of arbitrators experienced in
arbitrating employment disputes proposed by the AAA. If the parties are unable
to agree on an arbitrator, the AAA shall select an arbitrator in accordance with
its procedures. Nothing herein shall preclude the Company from seeking and/or
obtaining injunctive relief under the Employee Nonsolicitation and Noncompete
Agreement.
Section 4.09. Entire Agreement. This Agreement, together with the
agreements referred to herein, contain the entire agreement of the parties
relating to the subject matter hereof. This Agreement may be modified or
discharged only by an agreement in writing signed by the party against whom
enforcement of any modification or discharge is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
PEAPOD, INC. By: /s/ ANDREW B. PARKINSON
--------------------------------------------------------------------------------
Name: Andrew B. Parkinson Title: Chairman EXECUTIVE:
/s/ MICHAEL P. BRENNAN
--------------------------------------------------------------------------------
Michael P. Brennan
|
EXHIBIT NO. 10-6
AMENDMENT 1
TO THE
NIAGARA MOHAWK POWER CORPORATION
1995 STOCK INCENTIVE PLAN
This sets forth Amendment 1 to the Niagara Mohawk Power Corporation 1995 Stock
Incentive Plan, effective as of December 13, 1995 (“Plan”). This Amendment shall
be effective as of January 1, 1999.
1. The name of the Plan shall be changed from the “Niagara
Mohawk Power Corporation 1995 Stock Incentive Plan” to the “Niagara Mohawk 1995
Stock Incentive Plan.”
2. Section 1.1 of the Plan shall be restated to provide as
follows:
Establishment of the Plan. Niagara Mohawk Power Corporation, a New York
corporation, established an incentive compensation plan, known as the “Niagara
Mohawk Power Corporation 1995 Stock Incentive Plan,” to permit grants of SARs,
Stock Units and Dividend Equivalents. The plan became effective as of December
13, 1995 (“Effective Date”).
Effective as of January 1, 1999, the name of the plan was changed to the
“Niagara Mohawk 1995 Stock Incentive Plan” (“Plan”). The Plan shall remain in
effect as provided in Section 1.3.
3. The definition of “Board” or “Board of Directors” in
Article 2.4 of the Plan shall be restated as follows:
“Board” or “Board of Directors” means, effective March 17, 1999, the Board of
Directors of Niagara Mohawk Holdings, Inc. Prior to March 17, 1999, references
to “Board” mean the Board of Directors of Niagara Mohawk Power Corporation.
4. The first line of Section 2.6(2) of the Plan shall be
amended by deleting the phrase “as of the date hereof,” and by inserting the
phrase “as of April 1, 1999,” in its place.
5. The phrase “the sale or other disposition of all or
substantially all of the assets of the Company,” in clause (ii) of Section
2.6(4) of the Plan shall be deleted
and the following shall be inserted in its place:
the sale or other disposition of all or substantially all of the assets of the
Company or, on or after April 1, 1999, of Niagara Mohawk Power Corporation,
6. The definition of “Company” in Section 2.9 of the Plan shall
be restated as follows: “Company” means Niagara Mohawk Holdings, Inc. (effective
as of March 17, 1999), Niagara Mohawk Power Corporation, and any other separate
employer that participates in this Plan with the consent of the Board (each of
these separate employers, as well as any other separate employer that
participates in this Plan with the consent of the Board, shall hereinafter be
referred to as a “Participating Employer”). Notwithstanding the foregoing, the
term “Company” means Niagara Mohawk Holdings, Inc. for purposes of the
administration of the Plan and for purposes of Section 2.6. The term “Company”
is being used solely for convenience to make the Plan easier to read, and does
not alter the fact that an Employee is employed by the separate Participating
Employer from which the Employee regularly receives his paycheck. With respect
to any Employee, the term “Company” means such separate Participating Employer.
7. The definition of “Shares” in Section 2.21 of the Plan shall
be restated as follows: “Shares” means, through March 17, 1999, the shares of
common stock of Niagara Mohawk Power Corporation, par value $1.00. After March
17, 1999, all references to “Shares” mean the shares of common stock of Niagara
Mohawk Holdings, Inc., par value $1.00.
Executed this 17th day of August 2001.
NIAGARA MOHAWK HOLDINGS, INC.
/s/ David J.
Arrington
David J. Arrington
Senior Vice President and
Chief Administrative Officer |
EXHIBIT 10.3
Severance Agreements have been executed by the Company and the
indicated employees, each substantially identical in all material respects to
the form of Severance Agreement filed as Exhibit 10.6 to the Company's 2000
Annual Report on Form 10-K except as noted below.
EMPLOYEE
--------------------------------------------------------------------------------
POSITION
--------------------------------------------------------------------------------
DATE OF AGREEMENT
--------------------------------------------------------------------------------
Neil M. Bardach
Vice President - Finance
Chief Financial Officer
August 1, 1998
Allen Cheng
Vice President
March 1, 2001
Howard R. Crabtree
Vice President, Organization
and Human Resources
January 1, 1997
Anton Dulski
Chief Operating Officer
January 1, 1997
S. Garrett Gray Vice President, General
Counsel and Secretary
January 1, 1997
Kenneth Massimine
Vice President
March 1, 2001
Paul R. Saueracker
President and
Chief Executive Officer
January 1, 1997
John A. Sorel
Vice President
March 1, 2001
|
EXHIBIT 10.109
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 30th day of June, 1997,
by and between Central Maine Power Company, a Maine corporation with its
principal place of business in Augusta, Maine (hereinafter referred to as the
"Company"), and RAYMOND W. HEPPER of Readfield, Maine (hereinafter
referred to as the "Executive").
WHEREAS, the Company recognizes that the Executive is a valued
employee because of his knowledge of the Company's affairs and his experience
and
leadership capabilities, and desires to encourage his continued employment with
the Company to assure itself of the continuing advantage of that knowledge,
experience and leadership for the benefit of customers and shareholders,
particularly during a period of transition in various aspects of the Company's
business and in the event of a Change of Control of the Company; and
WHEREAS, the Executive desires to serve in the employ of the Company
on
a full-time basis for a period provided in this Employment Agreement
(hereinafter
referred to as the "Agreement") on the terms and conditions hereinafter set
forth;
and
WHEREAS, to these ends the Company desires to provide the Executive
with certain payments and benefits in the event of the termination of his
employment in certain circumstances; and
WHEREAS, the Company and the Executive wish to set forth the terms
and
conditions under which such employment and payments and benefits will occur.
NOW, THEREFORE, in consideration of the continued offer of employment
by the Company and the continued acceptance of employment by the Executive, and
the mutual promises and covenants contained herein, the Company and the
Executive hereby agree as follows:
1. Term of Agreement. a. Term. The term of this Agreement shall
begin
on June 1, 1997 (hereinafter referred to as the "Effective Date") and shall
expire on
May 31, 2000; provided, however, that if a Change of Control occurs during the
period commencing June 1, 1999 and ending May 31, 2000, this Agreement shall be
extended and shall thereafter expire 365 days after the date of said Change of
Control (the "Extended Expiration Date").
b. Expiration. Notwithstanding anything to the contrary in this
Section 1,
except as to vested benefits, this Agreement and all obligations of the Company
hereunder shall terminate on the earliest to occur of (i) the date of the
Executive's
death, (ii) thirty (30) days after the Company gives notice to the Executive
that the
Company is terminating the Executive's employment for reason of Total Disability
or Cause; or (iii) May 31, 2000 (or the Extended Expiration Date specified in
Section
1.a above, if applicable, if a Change of Control occurs during the year prior to
May
31, 2000.)
2. Definitions. The following terms shall have the meanings set
forth
below:
"Affiliate" means a person that directly or indirectly through one or
more
intermediaries controls, is controlled by, or is under common control with the
Company.
"Board" means the Board of Directors of the Company.
"Cause" means any of the following events or occurrences:
(i) Any act of material dishonesty taken by, or committed at the
request of,
the Executive.
(ii) Any illegal or unethical conduct which would impair the
Executive's
ability to perform his duties under this Agreement or would
impair the
business reputation of the Company.
(iii) Conviction of a felony.
(iv) The continued failure of the Executive to perform his
responsibilities
and duties under this Agreement in a satisfactory manner,
after
demand for performance has been delivered in writing to the
Executive
specifying the manner in which the Company believes that the
Executive is not performing.
"Change of Control" means the occurrence of any of the following
events:
(i) Any "person," as such term is used in Sections 13(d) and 14(d)
of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")
(other than the Company or any Affiliate or any trustee or
other
fiduciary holding securities under an employee benefit plan of
the
Company or any Affiliate), is or becomes the beneficial owner,
as defined
in Rule 13d-3 under the Exchange Act, directly or indirectly,
of stock of
the Company representing thirty percent (30%) or more of the
combined
voting power of the Company's then outstanding stock eligible
to vote.
(ii) The stockholders of the Company approve a merger or
consolidation of
the Company with any other corporation, other than a merger or
consolidation which would result in the voting stock of the
Company
outstanding immediately prior thereto continuing to represent
(either by
remaining outstanding or by being converted into voting
securities of the
surviving entity) more than fifty percent (50%) of the
combined voting
power of the outstanding voting stock of the Company or such
surviving
entity immediately after such merger or consolidation;
provided,
however, that a merger or consolidation effected to implement
a
recapitalization of the Company (or similar transaction) in
which no
"person" (as hereinabove defined) acquires more than thirty
percent
(30%) of the combined voting power of the Company's then
outstanding
securities shall not constitute a Change of Control of the
Company.
(iii) The stockholders of the Company approve a plan of complete
liquidation
of the Company or an agreement for the sale, lease, exchange
or other
disposition by the Company of all or substantially all of the
Company's
assets (or any transaction having a similar effect).
"Constructive Discharge" means, so long as no Change of Control has
occurred, any reduction in the Executive's annual base salary in effect as of
the
Effective Date of this Agreement, or as the same may be increased from time to
time, other than any across-the-board base salary reduction for a group or all
of the
executive officers of the Company, and also means, on or after a Change of
Control,
(i) any reduction in the Executive's annual base salary in effect
as of the
Effective Date of this Agreement, or as the same may be
increased from
time to time;
(ii) a substantial reduction in the nature or scope of the
Executive's
responsibilities, duties or authority from those described in
Section 3.c of
this Agreement;
(iii) a material adverse change in the Executive's title or position;
or
(iv) relocation of the Executive's place of employment from the
Company's
principal executive offices to a place more than twenty-five
(25) miles
from Augusta, Maine without the Executive's consent.
"Severance Benefits" means the benefits set forth in Section 5.a or
5.c of this
Agreement.
"Total Disability" means the complete and permanent inability of the
Executive to perform all of his duties under this Agreement on a full-time basis
for
a period of at least six (6) consecutive months, as determined upon the basis of
such
evidence, which may include independent medical reports and data.
3. Employment. a. Position. The Company hereby agrees to continue
its
employment of the Executive in the capacity of General Counsel, and the
Executive
hereby agrees to remain in the employ of the Company for the period beginning on
the Effective Date and ending on the date on which the Executive's employment is
terminated in accordance with this Agreement (the "Employment Period"). This
Agreement shall not restrict in any way the right of the Company to terminate
the
Executive's employment at whatever time and for whatever reason it deems
appropriate, nor shall it limit the right of the Executive to terminate
employment at
any time for whatever reason he deems appropriate.
b. Performance. The Executive agrees that during the Employment
Period
he shall devote substantially all his business attention and time to the
business and
affairs of the Company, and use his best efforts to perform faithfully and
efficiently
the duties and responsibilities of the Executive under this Agreement. It is
expressly understood that (i) the Executive may devote a reasonable amount of
time
to such industry associations and charitable and civic endeavors as shall not
materially interfere with the services that the Executive is required to render
under
this Agreement, and (ii) the Executive may serve as a member of one or more
boards of directors of companies that are not affiliated with the Company and do
not compete with the Company or any of its Affiliates.
c. Job Duties. The following listing of job duties shall represent
the
Executive's primary responsibilities. Such responsibilities may be expanded and,
so
long as no Change of Control has occurred, may be decreased as the business
needs
of the Company require. The Executive's primary job responsibilities shall
include,
but not be limited to, the supervision and coordination of all legal matters
handled
by the General Counsel's in-house staff and adjunct outside counsel and the
representation of the Company in legal matters in regulatory and judicial
forums.
4. Compensation and Benefits. a. During the Employment Period, the
Executive shall be compensated as follows:
(i) Salary. The Executive shall receive an annual base salary, the
amount
of which shall be reviewed regularly and determined from time
to time,
but which shall not be less than $128,500.00. His salary shall
be
payable in accordance with Company payroll practices.
(ii) Participation in Executive Plans. He shall be entitled to
participate in
any and all plans and programs maintained by the Company from
time
to time to provide benefits for its executives, including
without limitation
any short-term or long-term incentive plan or program, in
accordance
with the terms and conditions of any such plan or program or
the
administrative guidelines relating thereto, as may be amended
from
time to time.
(iii) Participation in Salaried Employee Plans. The Executive shall
be
entitled to participate in any and all plans and programs
maintained by
the Company from time to time to provide benefits for its
salaried
employees generally, including without limitation any savings
and
investment, stock purchase or group medical, dental, life,
accident or
disability insurance plan or program, subject to all
eligibility
requirements of general applicability, to the extent that
executives are
not excluded from participation therein under the terms
thereof or
under the terms of any executive plan or program or any
approval or
adoption thereof.
(iv) Other Fringe Benefits. The Executive shall be entitled to all
fringe
benefits generally provided by the Company at any time to its
full-time
salaried employees, including without limitation paid
vacation, holidays
and sick leave but excluding severance pay, in accordance
with
generally applicable Company policies with respect to such
benefits.
b. Retention Bonus. If the Executive is actively employed by the
Company
on the earlier to occur of (i) the date of the sale of the Transmission and
Distribution Business Unit, or (ii) May 31, 2000, the Executive shall be
entitled to
receive a lump sum cash payment of one-half (1/2) of the Executive's annual base
salary then in effect, which shall be paid within fifteen (15) working days
after the
applicable date specified in subsection (i) or (ii) above. If the Executive's
employment is terminated for any reason whatsoever prior to the earlier of such
dates, he shall not be entitled to receive the retention bonus described herein,
although he may be entitled to receive Severance Benefits as provided in Section
5
below.
c. Withholding. All compensation payable under this Section 4 shall
be
subject to normal payroll deductions for withholding income taxes, social
security
taxes and the like.
5. Severance Benefits. a. Change of Control. If, on or after a
Change of
Control, the Executive's employment with the Company is terminated during the
Employment Period by the Company and/or any successor for any reason other than
death, Total Disability or Cause, or by the Executive within twelve (12)
calendar
months of a Constructive Discharge, Severance Benefits shall be provided as
follows:
(i) The Company shall pay the Executive, in one lump sum cash
payment,
within sixty (60) days following the date of termination of
employment
as defined in Section 6 below, an amount equal to 2.0 times
the
Executive's then-current base salary.
(ii) The Company shall provide the Executive with so-called COBRA
medical
continuation coverage paid by the Company for a period up to
eighteen
(18) months, or until the Executive obtains coverage under
another
group medical plan with another employer, whichever occurs
first.
(iii) The Company shall pay a fee to an independent outplacement firm
selected by the Executive for outplacement services in an
amount
equal to the actual fee for such services up to a total of
$10,000.
b. Parachute Provision. Notwithstanding the provisions of Section
5.a
hereof, if, in the opinion of tax counsel selected by the Company's independent
auditors,
(i) the Severance Benefits set forth in said Section 5.a and any
payments or
benefits otherwise payable to the Executive would constitute
"parachute
payments" within the meaning of Section 280G(b)(2) of the
Internal
Revenue Code of 1986, as amended (the "Code") (said Severance
Benefits
and other payments or benefits being hereinafter collectively
referred to
as "Total Payments"), and
(ii) the aggregate present value of the Total Payments would exceed
2.99
times the Executive's base amount, as defined in Section
280G(b)(3) of
the Code,
then, such portion of the Severance Benefits described in Section 5.a hereof as,
in
the opinion of said tax counsel, constitute "parachute payments" shall be
reduced as
directed by tax counsel so that the aggregate present value of the Total
Payments is
equal to 2.99 times the Executive's base amount. The tax counsel selected
pursuant
to this Section 5.b may consult with tax counsel for the Executive, but shall
have
complete, sole and final discretion to determine which Severance Benefits shall
be
reduced and the amounts of the required reductions. For purposes of this Section
5.b, the Executive's base amount and the value of the Total Payments shall be
determined by the Company's independent auditors in accordance with the
principles of Section 280G of the Code and based upon the advice of tax counsel
selected thereby.
c. No Change of Control. If no Change of Control has occurred, and
the
Executive's employment with the Company is terminated during the Employment
Period either (i) by the Company for any reason other than death, Total
Disability
or Cause, or (ii) by the Executive within six (6) calendar months of a
Constructive
Discharge, the Company shall pay the Executive, in one lump sum payment within
sixty (60) days following the date of termination of employment as defined in
Section 6 below, an amount equal to one (1) times the Executive's annual base
salary in effect on the date immediately preceding the date of termination, or
preceding the date of a Constructive Discharge attributable to a base salary
reduction if applicable.
6. Date of Termination. For purposes of this Agreement, the date of
termination of the Executive's employment shall be the date notice is given to
the
Executive by the Company and/or any successor or, in the case of a Constructive
Discharge, the date set forth in a written notice given to the Company by the
Executive, provided that the Executive gives such notice within twelve (12)
calendar months of the Constructive Discharge in the case of a Change of
Control,
and within six (6) calendar months of the Constructive Discharge in other cases,
and specifies therein the event constituting the Constructive Discharge.
7. Taxes. a. Gross-Up Amount. In the event that any portion of
the
Severance Benefits provided in Section 5 is subject to tax under Code § 4999, or
any
successor provision thereto (the "Excise Tax"), the Company shall pay to the
Executive an additional amount (the "Gross-Up Amount") which, after payment of
all federal and State income taxes thereon (assuming the Executive is at the
highest marginal federal and applicable State income tax rate in effect on the
date
of payment of the Gross-Up Amount) and payment of any Excise Tax on the Gross-
Up Amount, is equal to the Excise Tax payable by the Executive on such portion
of
the Severance Benefits. Any Gross-Up Amount payable hereunder shall be paid by
the Company coincident with the payment of the Severance Benefits described in
Section 5.a of this Agreement.
b. Tax Withholding. All amounts payable to the Executive under this
Agreement shall be subject to applicable withholding of income, wage and other
taxes.
8. Non-Competition, Confidentiality and Cooperation. a. The
Executive agrees that:
(i) During the Employment Period and for one (1) year after the
termination
of the Executive's employment with the Company for any reason
other
than a Change of Control, the Executive shall not serve as a
director,
officer, employee, partner or consultant or in any other
capacity in any
business that is a competitor of the Company, or solicit
Company
employees for employment or other participation in any such
business,
or take any other action intended to advance the interests of
such
business; provided, however, that this Section 8.a.(i) shall
not apply after
the termination of the Executive's employment if the Executive
voluntarily terminates employment and is not eligible to
receive a
Severance Benefit under Section 5.c. above.
(ii) During and after the Executive's employment with the Company,
he
shall not divulge or appropriate to his own use or the use of
others any
secret, proprietary or confidential information or knowledge
pertaining
to the business of the Company, or any of its Affiliates,
obtained during
his employment with the Company.
(iii) During the Employment Period, he shall support the Company's
interests and efforts in all regulatory, administrative,
judicial or other
proceedings affecting the Company and, after the termination
of his
employment with the Company, he shall use best efforts to
comply with
all reasonable requests of the Company that he cooperate with
the
Company, whether by giving testimony or otherwise, in
regulatory,
administrative, judicial or other proceedings affecting the
Company
except any proceeding in which he may be in a position adverse
to that of
the Company. After the termination of employment, the Company
shall
reimburse the Executive for his reasonable expenses and his
time, at a
reasonable rate to be determined, for the Executive's
cooperation with
the Company in any such proceeding.
(iv) The term "Company" as used in this Section 8 shall include
Central
Maine Power Company, any Affiliate of Central Maine Power
Company
(determined as of the date of termination), any successor to
the business
or operations of Central Maine Power and any business entity
spun-off,
divested, or distributed to shareholders which shall continue
the
operations of Central Maine Power Company.
The provisions of this Section 8 shall survive the expiration or termination of
this
Agreement. The Executive agrees that the Company shall be entitled to injunctive
relief to prevent any breach or threatened breach of these provisions. In the
event
of a failure to comply with part (i), (ii) or (iii) of this Section 8, the
Executive agrees
that the Company shall have no further obligation to pay the Executive any
Severance Benefits under Section 5.c. of this Agreement.
9. No Mitigation. The Executive shall not be required to mitigate
the
amount of any payment provided for in this Agreement by seeking other
employment.
10. Assignment. This Agreement and the rights and obligations of
the
Company hereunder shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company, including without limitation any
corporation or other entity acquiring all or substantially all of the business
or assets
of the Company whether by operation of law or otherwise. This Agreement and the
rights of the Executive hereunder shall not be assignable by the Executive, and
any
assignment by the Executive shall be null and void.
11. Arbitration. Any dispute or controversy arising under or in
connection
with this Agreement shall be settled exclusively by arbitration in Augusta,
Maine,
in accordance with the rules of the American Arbitration Association then in
effect.
The pendency of any such dispute or controversy shall not affect any rights or
obligations under this Agreement. Judgment may be entered on the arbitrator's
award in any court having jurisdiction.
12. Waiver; Amendment. The failure of either party to enforce, or
any
delay in enforcing, any rights under this Agreement shall not be deemed to be a
waiver of such rights, unless such waiver is an express written waiver which has
been signed by the waiving party. Waiver of any one breach shall not be deemed
to
be a waiver of any other breach of the same or any other provision hereof. This
Agreement can be amended only by written instrument signed by each party hereto
and no course of dealing or practice or failure to enforce or delay in enforcing
any
rights hereunder may be claimed to have effected an amendment of this Agreement.
13. Singular Contract. This Agreement is a singular agreement
between
the Executive and the Company, and is not part of a general "plan" or "program"
for
employees as a group. This Agreement shall, under no circumstances, be deemed to
be an "employee welfare benefit plan" or an "employee pension benefit plan" as
defined in the Employee Retirement Income Security Act of 1974 (hereinafter
referred to as "ERISA"). Notwithstanding, the Company may submit a letter to the
Department of Labor indicating the possible establishment of a so-called
unfunded
"top hat" plan for the benefit of a select group of management and highly
compensated employees to avoid the costs and uncertainties which may occur in
the
event of a Department of Labor audit and challenge relative to compliance with
any
allegedly applicable provisions of ERISA. The Executive specifically
acknowledges
and agrees that the filing of the so-called "top hat" letter notice by the
Company
shall not be construed or interpreted as an admission on the part of the Company
that this Agreement constitutes an ERISA plan, and the Company hereby
categorically states, and the Executive hereby agrees, that this Agreement is an
ad
hoc individual contract with the Executive.
14. Notices. Any notice required or permitted to be given under
this
Agreement shall be sufficient if in writing and sent by first-class, registered
or
certified mail or hand-delivered to the Executive at the last residence address
he
has provided to the Company or, in the case of the Company, at its principal
executive offices to the attention of the Corporate Secretary.
15. Titles and Captions. The section and paragraph titles and
captions
contained herein are for convenience only and shall not be held to explain,
modify,
amplify, or aid in the interpretation, construction or meaning of the provisions
of
this Agreement.
16. Miscellaneous. This Agreement shall be construed and enforced
in
accordance with the laws of the State of Maine. In the event that any provisions
of
this Agreement shall be held to be invalid, the other provisions hereof shall
remain
in full force and effect.
17. Entire Agreement. The terms of this Agreement are intended by
the
parties to be the final expression of their agreement with respect to the
employment
of the Executive by the Company and may not be contradicted by evidence of any
prior or contemporaneous oral or written agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
WITNESS:
_____________________________ /s/ Raymond W. Hepper
Raymond W. Hepper
WITNESS: CENTRAL MAINE POWER COMPANY
_____________________________ /s/ David M. Jagger
By: David M.
Jagger
Chairman of the
Board
of Directors |
June 19,
2000
PERSONAL AND CONFIDENTIAL
Mr. Mike Matte
Texas-New Mexico Power Company
4100 International Plaza
Fort Worth, Texas 76109
Dear Mr. Matte:
We are pleased to offer you the position of Vice President of
Texas-New Mexico Power Company (the "Company") under the terms and conditions
herein indicated. For purposes of this agreement the term "Company" shall also
include any affiliate of Texas-New Mexico Power Company to which you are
transferred during the term of this agreement with your consent.
This agreement is effective as of and only upon the closing (the
"Closing") as defined in the Agreement and Plan of Merger dated as of May 24,
1999 by and among SW Acquisition, L.P., ST Acquisition Corp. and TNP
Enterprises, Inc. The terms and conditions set forth herein shall remain in
effect until the third anniversary of the Closing, except as otherwise noted
herein, provided you remain employed by the Company through such date. This
agreement supersedes all previous agreements relating to your employment with
the Company, including, but not limited to, your Texas-New Mexico Power Company
Executive Agreement for Severance Upon Change in Control dated as of February
16, 1998 and all such agreements will have no further force and effect.
During the term of this agreement, you will be entitled to annual
compensation of not less than $330,000, payable as described below.
1.
Your annual salary will be $279,470, comprised of the following components: an
annual Base Salary of $202,121, which shall be payable in accordance with the
Company's customary payroll practices and an annual Bonus of $77,349, payable to
you in a lump sum on each of the first, second and third anniversaries of the
date hereof, provided that you have not terminated your employment with the
Company as of the day immediately prior to the date of payment of such annual
Bonus.
2.
You will be eligible to receive an annual incentive bonus ranging from 0% to
37.5% of your Base Salary if you remain employed by the Company through the end
of each calendar year during the term of this agreement. The amount of your
annual incentive bonus will be based on the attainment of certain
pre-established financial and operational goals of the Company. Your target
annual incentive bonus shall be equal to 25% of your Base Salary.
3.
You will be eligible to receive an additional annual milestone bonus ranging
from 0 to 150% of $100,000, with a target of $100,000 if you remain employed by
the Company through the end of each calendar year during the term of this
agreement. Payment of the milestone bonus will be based on the attainment of a
pre-established financial and operational goals of the Retail Electric Provider
entity, for which you have primary responsibility. If performance is at the
minimum level the award would be 50% of target level. At the beginning of each
calendar year, or as soon as practical, the milestones will be established and
approved by the Chief Executive Officer of Texas-New Mexico Power Company.
Following year end, the Chief Executive Officer will also determine the extent
to which milestone goals have been accomplished. If during the calendar year,
your employment with the Company is terminated by you for Good Reason (as
defined below) or by the Company for any reason other than for Cause (as defined
below), you shall be entitled to receive a portion of the $100,000, prorated for
the number of months from the anniversary date of this agreement until the date
of such termination. If such termination occurs prior to the anniversary date of
said calendar year, no portion of the $100,000 would be paid under this
paragraph.
4.
In the event that the total compensation you receive during any of the three
succeeding 12-month periods commencing on the date hereof, including your Base
Salary, Bonus and incentive bonus, is less than $330,000, you shall be entitled
to an additional bonus for such 12-month period equal to the amount of such
shortfall, which amount shall be payable as soon as practicable following the
first, second and third anniversaries of the date hereof, as applicable,
provided that you have not terminated your employment with the Company prior to
the completion of such 12-month period.
You will be eligible for all of the Company's benefits, including
major medical, dental, life, and long-term disability insurance, pension plan
participation, excess benefit plan participation, thrift plan participation,
deferred compensation plan participation, holiday pay and vacation pay, in
accordance with the Company's plans and policies as in effect from time to time.
For the purpose of determining vesting service under the Texas-New Mexico Power
Pension Plan, the date your period of employment began is May 11, 1998.
Notwithstanding any other provision of this agreement, in the
event that during the term of this agreement, your employment with the Company
is terminated by you for Good Reason (as defined below) or by the Company for
any reason other than for Cause (as defined below), you shall be entitled to
receive (a) an amount equal to the product of (i) your average annual Base
Salary received under this agreement prior to the date of your termination, and
(ii) a fraction having a numerator equal to the number of months (or portion
thereof) remaining from the date of such termination of employment until the
third anniversary of the date hereof, and a denominator equal to 12; and (b) an
amount equal to the product of (x) $77,349, and (y) a fraction having a
numerator equal to the number of months (or portion thereof) you were employed
by the Company in the year of your termination of employment, and a denominator
equal to 12; and (c) an amount equal to the product of (x) $100,000, and (y) a
fraction having a numerator equal to the number of months (or portion thereof)
remaining from the date of such termination of employment until the third
anniversary of the date hereof, and a denominator equal to 12.
In the event that during the term of this agreement, your
employment with the Company is terminated for Cause, all rights under this
agreement shall cease and you shall not be entitled to any additional
compensation or payments hereunder.
For the purposes of this agreement, Cause shall mean (i) your
willful and continued failure to substantially perform your duties with the
Company (excluding any failure resulting from your disability), subject to any
appeal or grievance procedure set forth in the Company's Personnel Policy
Manual; (ii) your performance of any act or acts constituting a felony involving
moral turpitude and which results or is intended to result in damage or harm to
the Company, whether monetary or otherwise, or which results in or is intended
to result in improper gain or personal enrichment; or (iii) violations of the
Company's Personnel Policy Manual, as constituted at any time prior to the
expiration of this agreement, concerning personal conduct; provided, that the
Company must follow its disciplinary procedures as set forth therein.
For the purposes of this agreement, Good Reason shall mean any of
the following (without your prior express written consent) (i) a material
adverse change in your title, position, duties or responsibilities or you are
assigned any duties or responsibilities materially inconsistent with your duties
or responsibilities immediately prior to the execution of this agreement
(provided, however, that a redesignation of your title, duties or
responsibilities among TNP Enterprises, the Company and its primary affiliates
shall not constitute Good Reason if your overall duties and status among TNP
Enterprises, Inc., the Company and its primary affiliates are not substantially
adversely affected); (ii) your compensation arrangements as provided in this
agreement are decreased by the Company; (iii) your benefits under the employee
benefit plans and programs of the Company are, in the aggregate, materially
decreased; (iv) there is a material adverse change in your reporting rights
and/or obligations; or (v) the Company requires you to relocate to a location
more than sixty-five (65) miles from the location of your office immediately
prior to the execution of this agreement. A termination for Good Reason under
this agreement must occur within thirty (30) days after the event which first
provides a basis for such termination.
The Company's obligation to make the payments provided for in
this agreement and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including without limitation, any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against you or others. In the event that your employment with
the Company is terminated for any reason, other than for Cause, you shall be
under no obligation to seek other employment or take any other action by way of
mitigation of the amounts payable to you under any of the provisions of this
agreement.
In the event that a claim for payment or benefits under this
agreement is disputed, or if the Company commences any proceedings in connection
with your employment, you shall be reimbursed for all attorney fees and expenses
incurred by you in pursuing such claim, provided that you are successful as to
at least part of the disputed claim by reason of litigation, arbitration or
settlement. While such claim or proceeding is pending, the Company will
reimburse you for such attorney fees and expenses on a regular, periodic basis,
within thirty days following receipt by the Company of statements of such
counsel. However, if you are not successful as to at least part of the disputed
claim by reason of litigation, arbitration or settlement, you agree to repay the
Company within 30 days of such determination, an amount equal to the total
amount that the Company has previously reimbursed you for legal fees and
expenses in connection with such claim or proceeding.
The Company shall require any successor to all or substantially
all of its business and/or assets, whether direct or indirect, by purchase,
merger, consolidation, acquisition of stock, or otherwise, to expressly assume
and agree to perform this agreement in the same manner and to the same extent as
the Company would be required to perform if no such succession had taken place.
For purposes of this paragraph, "Company" shall mean both the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this agreement by operation of law
or otherwise.
In the event that during the term of this agreement, your
employment with the Company is terminated by you for Good Reason or by the
Company for any reason other than for Cause, the Company shall pay you an amount
equal to the sum of (i) any excise tax pursuant to Section 4999 of the Internal
Revenue Code of 1988, as amended (the "Code"), incurred by you as a result of
the payment of any amounts under this agreement as a result of your termination
of employment and (ii) any additional federal, state or local income tax
liability (calculated at the highest effective rate applicable to individuals)
and excise tax liability (under Section 4999 of the Code) attributable to
payments made pursuant to this paragraph.
The respective rights and obligations of the parties hereunder
shall survive any termination of this agreement for any reason to the extent
necessary to the intended provision of such rights and the intended performance
of such obligations.
No provisions of this agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by you and the Company. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this agreement.
This agreement shall be governed by and construed in accordance with the laws of
the State of Texas.
If the above terms and conditions meet with your approval, please
so indicate by countersigning this letter in the space provided below, returning
on copy to me. We would be extremely pleased and proud to have you continue as a
member of our TNP team.
Sincerely,
TEXAS-NEW MEXICO POWER COMPANY
By: \s\ Kevern R. Joyce
Agreed to and accepted this 19th day of June, 2000.
\s\ R. Michael Matte
Mike Matte
|
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Exhibit 10.46
GUARANTY
THIS GUARANTY (this "Guaranty") is made as of this 31st day of October, 2001
by FLORIDA GAMING CORPORATION, a Delaware corporation (the "Guarantor"), in
favor of CIB BANK (the "Lender").
R E C I T A L S
A. Pursuant to that certain Loan Agreement (the "Loan Agreement") by and
between Florida Gaming Centers, Inc. and City National Bank of Florida, as
Trustee under Trust Agreement dated January 3, 1979 and known as Trust
No. 5003471 (collectively, the "Borrower"), and Lender dated concurrently
herewith (the "Loan Agreement"), Lender has agreed to make and Borrower has
accepted a loan in the original principal amount of Four Million Six Hundred
Thousand and No/100 Dollars ($4,600,000) (the "Loan"), which Loan is evidenced
by a certain Note dated concurrently herewith and executed by Borrower in favor
of Lender (the "Note"), and is secured by, among other things, certain Mortgages
(collectively, the "Mortgages") dated concurrently herewith and encumbering the
property legally described on Exhibit A attached hereto (the "Property").
B. The Guarantor is financially interested in the Property, through
ownership and control in Borrower, and as a material inducement to Lender to
agree to enter into the Loan Agreement and make the Loan, the Guarantor has
agreed to enter into this Guaranty on the terms and conditions hereinafter set
forth.
C. It will be of substantial economic benefit to the Guarantor for the
Borrower to issue the Note and borrow the principal evidenced thereby, the
Guarantor expecting to receive, directly or indirectly, substantial economic
benefit therefrom and from Borrower's ownership and operation of the Property,
and any and all loans or other financial accommodations made to Borrower by
Lender are made with Lender's full reliance on this Guaranty.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing, Guarantor agrees as
follows:
1. Definitions.
(a) "Borrower's Liabilities": all obligations and liabilities of Borrower to
Lender, including, without limitation, all debts, claims and indebtedness
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable, however evidenced,
created, incurred, acquired or owing and however arising, whether under the Loan
Documents or by oral agreement or operation of law or otherwise, and all terms,
conditions, agreements, representations, warranties, undertakings, covenants,
guaranties and provisions to be performed, observed or discharged by Borrower
under the Loan Documents.
(b) "Guarantor's Liabilities": all of Guarantor's obligations and
liabilities to Lender under this Guaranty.
(c) "Loan Documents": the Loan Agreement, the Note, the Mortgages, and all
agreements, instruments and documents, including, without limitation, promissory
notes, loan and security agreements, guaranties, letters of credit, mortgages,
deeds of trust, pledges, powers of attorney, consents, assignments, contracts,
notices, leases, financing statements and all other written matter heretofore,
now and/or from time to time hereafter executed by and/or on behalf of Borrower
and
Page 76 of 97 Pages
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delivered to Lender and any and all substitutions, replacements, renewals and/or
amendments to and of the aforementioned agreements, instruments and documents.
2. Guaranty.
Guarantor unconditionally and absolutely guarantees to Lender the prompt
performance and payment of all of Borrower's Liabilities when such performance
or payment is due or declared due by Lender.
In addition to the payment and performance of Borrower's Liabilities
specified in the preceding sentence, Guarantor shall additionally be liable for
(a) all interest accruing on Borrower's Liabilities outstanding from time to
time and (b) all of the costs and expenses incurred by Lender as identified in
Section 9 of this Guaranty. The liability under this Guaranty of each of the
individuals and entities executing this Guaranty shall be joint and several.
Lender may elect to enforce this Guaranty against all of the undersigned or any
one or more of the undersigned in its sole discretion. Guarantor agrees that
Guarantor is directly and primarily liable, jointly and severally with Borrower,
for Borrower's Liabilities.
Prior to enforcing its rights under this Guaranty, Lender is not required to
(a) prosecute collection or seek to enforce or resort to any remedies against
Borrower or any other party liable to Lender on account of Borrower's
Liabilities or any guaranty thereof; or (b) seek to enforce or resort to any
remedies with respect to any security interests, liens or encumbrances granted
to Lender by Borrower or any other party to secure the repayment of Borrower's
Liabilities.
Guarantor's Liabilities shall in no way be impaired, affected, reduced or
released by reason of (a) Lender's failure or delay to do or take any of the
actions or things described in this Guaranty; (b) the invalidity or
unenforceability of Borrower's Liabilities or the Loan Documents; (c) any loss
of or change in priority or reduction in or loss of value of any security
interest, lien or encumbrances securing the repayment of Borrower's Liabilities
or (d) any discharge or release of Borrower from Borrower's Liabilities.
3. Representations and Warranties.
Guarantor represents and warrants to Lender that:
(a) The recitals in this Guaranty are true and correct;
(b) Guarantor has the right, power and capacity to enter into, execute,
deliver and perform this Guaranty;
(c) This Guaranty, when duly executed and delivered, will constitute a
legal, valid and binding obligation of Guarantor, enforceable against Guarantor
in accordance with its terms, subject to applicable bankruptcy laws or other
laws affecting creditor's rights generally or the equity powers of the courts;
(d) The execution, delivery and/or performance by Guarantor of this Guaranty
shall not, by the lapse of time, the giving of notice or otherwise, constitute a
violation of any applicable law or a breach of any provision contained in any
agreement or document to which Guarantor is now or hereafter a party or by which
it is or may become bound;
(e) Guarantor is now, and at all times hereafter shall be, solvent and
generally able to pay its debts as such debts become due, and Guarantor now owns
and shall at all times hereafter own property which, at a fair valuation,
exceeds the sum of Guarantor's debts;
(f) Guarantor does not intend to incur or have reason to believe that
Guarantor will incur debts beyond Guarantor's ability to pay as such debts
mature;
Page 77 of 97 Pages
--------------------------------------------------------------------------------
(g) There are no actions or proceedings which are pending or threatened
against Guarantor which might result in any material and adverse change in
Guarantor's financial condition or materially affect Guarantor's ability to
perform Guarantor's Liabilities;
(h) Guarantor has reviewed independently the Loan Documents, and Guarantor
has made an independent determination as to the validity and enforceability
thereof upon the advice of Guarantor's own counsel, and in executing and
delivering the Guaranty to Lender, Guarantor is not in any manner relying upon
Lender as to the validity and/or enforceability of any security interests of any
kind or nature by Borrower to Lender;
(i) Upon written request from Lender, Guarantor agrees to furnish to Lender
all pertinent facts relating to the ability of Borrower to pay and perform
Borrower's Liabilities and all pertinent facts relating to Guarantor's ability
to pay and perform Guarantor's Liabilities. Guarantor agrees to keep informed
with respect to all such facts. Guarantor acknowledges and agrees that
(i) Lender has relied and will continue to rely upon the facts and information
to be furnished to it by Guarantor and (ii) in executing this Guaranty and at
all times hereafter Guarantor has relied and will continue to rely upon
Guarantor's own investigation and upon sources other than Lender for all
information and facts relating to the ability of Borrower to pay and perform
Borrower's Liabilities, and Guarantor has not and will not hereafter rely upon
Lender for any such information or facts; and
(j) Guarantor agrees to furnish to Lender all financial statements and
other information required to be furnished by Guarantor under the Loan Agreement
at the times and in the manner provided in the Loan Agreement.
4. Waivers.
(a) Guarantor waives any and all right to assert against Lender any claims
or defenses based upon any failure of Lender to furnish to Guarantor any
information or facts relating to the ability of Borrower to pay and perform
Borrower's Liabilities.
(b) To the extent permitted by law, Guarantor waives all other defenses,
counterclaims and offsets of any kind or nature in connection with the validity
and/or enforceability of this Guaranty, including, without limitation, (i) those
arising directly or indirectly from the perfection, sufficiency, validity and/or
enforceability of any security interest granted by Borrower to Lender or
acquired by Lender from Borrower and (ii) those based upon the failure or
adequacy of consideration.
(c) Guarantor waives any and all right to assert against Lender any claim or
defense based upon any election of remedies by Lender, which, in any manner
impairs, affects, reduces, releases or extinguishes Guarantor's subrogation
rights or Guarantor's right to proceed against Borrower for reimbursement, or
any other rights of Guarantor against Borrower, or against any other person or
security, including, without limitation, any defense based upon an election of
remedies by Lender under any provision or law or regulation of any state,
governmental entity or country.
(d) Guarantor waives any right to assert against Lender as a defense,
counterclaim, setoff or crossclaim to the payment or performance of Guarantor's
Liabilities, any defense, either legal or equitable, setoff, counterclaim or
claim which Guarantor may now or at any time hereafter have against Borrower or
any other party liable to Lender in any way or manner.
(e) Guarantor hereby waives notice of the following events or occurrences
and agrees that Lender may do any or all of the following in such manner, upon
such terms and at such times as Lender in its sole and absolute discretion deems
advisable without in any way impairing, affecting, reducing or releasing
Guarantor from Guarantor's Liabilities:
(i) Lender's acceptance of this Guaranty;
Page 78 of 97 Pages
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(ii) presentment, demand, notices of default, nonpayment, partial payment
and protest, and all other notices or formalities to which Guarantor may be
entitled;
(iii) Borrower's heretofore, now or from time to time hereafter granting to
Lender security interests, liens or encumbrances in any of Borrower's assets;
(iv) Lender's heretofore, now or from time to time hereafter doing any of
the following:
(A) loaning monies or extending credit to or for the benefit of Borrower,
whether pursuant to the Loan Documents or any amendments, modifications,
additions or substitutions thereto;
(B) substituting for, releasing, waiving or modifying any security
interests, liens or encumbrances in any of Borrower's assets;
(C) obtaining, releasing, waiving or modifying any other party's guaranty of
Borrower's Liabilities or any security interest, lien or encumbrance in any
other party's assets given to Lender to secure such party's guaranty of
Borrower's Liabilities;
(D) obtaining, amending, substituting for, releasing, waiving or modifying
any of the Loan Documents;
(E) granting to Borrower and any other party liable to Lender on account of
Borrower's Liabilities any indulgences or extensions of time of payment of
Borrower's Liabilities; and
(F) accepting from Borrower or any other party any partial payment or
payments on account of Borrower's Liabilities or any collateral securing the
payment thereof or settling, subordinating, compromising, discharging or
releasing the same.
5. Covenants and Agreements.
Guarantor covenants and agrees with Lender that:
(a) all security interests, liens and encumbrances heretofore, now and at
any time hereafter granted by Guarantor to Lender shall secure Guarantor's
Liabilities;
(b) all indebtedness, liability or liabilities now and at any time hereafter
owing by Borrower to Guarantor are hereby subordinated to Borrower's
Liabilities;
(c) all security interests, liens and encumbrances which Guarantor now has
and from time to time hereafter may have upon any of Borrower's assets are
hereby subordinated to all security interests, liens and encumbrances which
Lender now has and from time to time hereafter may have thereon; and
(d) all indebtedness, liability or liabilities now and at any time or times
hereafter owing to Guarantor by any party liable to Lender by reason of any
security interests, liens or encumbrances granted by Borrower to Lender are
hereby subordinated to all indebtedness, liability or liabilities owed by such
party to Lender.
6. Security.
To secure the prompt payment to Lender of the Guarantor's Liabilities and
the prompt, full and faithful performance of Guarantor's Liabilities, Guarantor
grants to Lender a security interest in and lien upon all of Guarantor's now
existing and/or owned and hereafter arising and/or acquired money, reserves,
deposits, deposit accounts and interest or dividends thereon, cash, cash
equivalents and other property now or at any time or times in possession or
under the control of Lender or its bailee for any purpose (individually and
collectively, the "Collateral").
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Guarantor shall execute and/or deliver to Lender, at any time and from time
to time hereafter at the request of Lender, all agreements, instruments,
documents and other written materials that Lender reasonably may request, in a
form and substance acceptable to Lender, to perfect and maintain perfected
Lender's security interest in the Collateral or any other property pledged by
Guarantor to secure Guarantor's Liabilities. Lender shall have no obligation to
protect, secure or insure any of the foregoing security interests, liens or
encumbrances or the properties or interests in properties subject thereto.
Guarantor warrants and represents to and covenants with Lender that
(a) Guarantor has good, indefeasible and merchantable title to the Collateral;
(b) Lender's security interest in and lien upon the Collateral is now, and at
all times hereafter shall be, valid, perfected and have a first priority; and
(c) Guarantor shall not grant a security interest in, or permit a lien, claim or
encumbrance upon, any of the Collateral in favor of any third party.
7. Default.
The occurrence of any of the following events shall, at the election of
Lender, be deemed a default by Guarantor (an "Event of Default") under this
Guaranty:
(a) Guarantor fails to pay any of Guarantor's Liabilities when due and
payable or properly declared due and payable and such payment is not made within
five (5) days of the original due date;
(b) Guarantor fails or neglects to perform, keep or observe any other term,
provision, condition, covenant, warranty or representation contained in this
Guaranty, which is required to be performed, kept or observed by Guarantor and
Guarantor shall fail to remedy such within thirty (30) days of being served with
written notice from Lender, during which time Guarantor shall be diligently
pursuing a cure;
(c) the Collateral or any other of Guarantor's assets are attached, seized,
subjected to a writ of distress warrant, or are levied upon, or become subject
to any lien, or come within the possession of any receiver, conservator,
trustee, custodian or assignee for the benefit of creditors;
(d) Guarantor becomes insolvent or generally fails to pay, or admits its
inability to pay, debts as they become due;
(e) a petition under Title 11 of the United States Code or any similar law
or regulation shall be filed by Guarantor or Guarantor makes an assignment for
the benefit of its creditors or any case or proceeding is filed by Guarantor for
its dissolution or liquidation;
(f) a petition under Title 11 of the United States Code or any similar law
or regulation is filed against Guarantor or a case or proceeding is filed
against Guarantor for its dissolution or liquidation and such proceeding shall
not be dismissed within thirty (30) days of its filing, during which time
Guarantor shall diligently contest such action or proceeding;
(g) Guarantor is enjoined, restrained or in any way prevented by court order
from conducting all or any material part of its business affairs and such
injunction or restraint shall not be voided, removed or dismissed within thirty
(30) days of the court's order, during which time Guarantor shall diligently
contest such action or proceeding;
(h) a notice of lien, levy or assessment is filed of record or given to
Guarantor with respect to all or any of Guarantor's assets by any federal, state
or local government agency;
(i) Guarantor is in default in the payment or performance of any material
obligation, indebtedness or other liability to any third party and such default
is not cured within any cure period specified in any agreement or instrument
governing the same;
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(j) any material statement, report or certificate made or delivered to
Lender by Guarantor is not true and correct;
(k) the occurrence of any material adverse change in Guarantor's financial
condition and the failure of Guarantor to remedy such within ten (10) days of
being served with written notice from Lender;
(l) the occurrence of a default under any other agreement, instrument
and/or document executed and delivered by Guarantor to Lender which is not cured
by Guarantor within any applicable cure period set forth in any such agreement,
instrument and/or document;
(m) the death of the Guarantor or the attempt by Guarantor to cancel, revoke
or disclaim this Guaranty; or
(n) the reasonable insecurity of Lender and the failure by Guarantor to
remedy such insecurity within ten (10) days of being served with written notice
thereof by Lender.
8. Remedies.
Upon the occurrence of an Event of Default, without notice thereof to
Guarantor, Guarantor's Liabilities shall be due and payable and enforceable
against Guarantor, forthwith, at Lender's principal place of business, whether
or not Borrower's Liabilities are then due and payable, and Lender may, in its
sole and absolute discretion, immediately, without notice thereof to Guarantor,
reduce to cash or the like any of Guarantor's assets of any kind or nature in
the possession, control or custody of Lender, and, without notice to Guarantor,
apply the same in reduction or payment of Guarantor's Liabilities. In addition,
upon the occurrence of a default or an Event of Default, Lender may also, upon
written notice thereof to Guarantor, exercise any one or more of the following
remedies which, together with the remedy in the foregoing sentence, are
cumulative and non-exclusive:
(a) proceed to suit against Guarantor if Guarantor's Liabilities are not
immediately paid by Guarantor to Lender at Lender's principal place of business.
At Lender's election, one or more successive or concurrent suits may be brought
hereunder by Lender against Guarantor, whether or not suit has been commenced
against Borrower, and in any such suit Borrower may, but need not, be joined as
a party with Guarantor; and/or
(b) exercise any one or more of the rights and remedies accruing to Lender
under the Loan Documents, the Uniform Commercial Code of the relevant
jurisdiction and any other law applicable upon a default by a debtor.
Guarantor recognizes that in the event Guarantor fails to perform, observe
or discharge any of its obligations or liabilities under this Guaranty, no
remedy at law will provide adequate relief to Lender, and agrees that Lender
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damage.
9. Costs, Fees and Expenses.
If at any time or times hereafter Lender employs counsel for advice or other
representation with respect to this Guaranty or to represent Lender in any
litigation, contest, dispute, suit or proceeding relating to this Guaranty or
Lender's rights thereunder, the costs, fees and expenses incurred by Lender in
any manner or way with respect to the foregoing shall be part of Guarantor's
Liabilities, payable by Guarantor to Lender, on demand. Without limiting the
generality of the foregoing, such costs, fees and expenses shall include
(i) reasonable attorneys' fees, costs and expenses; (ii) court costs and
expenses; (iii) court reporter fees, costs and expenses; (iv) long distance
telephone and facsimile charges and (v) expenses for travel, lodging and food.
Guarantor's liability for all expenses and fees under this Section 9 shall also
extend to the collection of any judgment which shall result from Lender's
enforcement of its rights and remedies hereunder. The obligation of Guarantor
set forth in this
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Guaranty shall be continuing and shall not be merged into any judgment entered
based upon this Guaranty.
10. Miscellaneous.
(a) All payments received by Lender from any source on account of Borrower's
Liabilities shall be applied by Lender in its sole discretion and this Guaranty
shall apply to and secure any ultimate balance which may be owed to Lender on
account of Borrower's Liabilities after Lender's application. Lender's
determination as to how to apply monies so received shall be conclusive upon the
undersigned.
(b) If any provision of this Guaranty or the application thereof to any
party or circumstance is held invalid or unenforceable, the remainder of this
Guaranty and the application of such provision to other parties or circumstances
will not be affected thereby, the provisions of this Guaranty being severable in
any such instance. This Guaranty shall be binding upon Guarantor and inure to
the benefit of Guarantor and Lender and their respective heirs, personal
representatives, successors and assigns.
(c) Notices and other communications provided for in this Guaranty shall be
in writing and shall be delivered personally, sent via facsimile, mailed, by
certified or registered mail, postage prepaid or delivered by overnight courier
addressed:
If to the Lender:
CIB Bank
20527 South LaGrange Road
Frankfort, IL 60423 - 1345
Attention: Joseph J. Pratl
Facsimile: (815) 464-4906
If to Guarantor:
Florida Gaming Corp.
3500 N.W. 37th Ave.
Miami, FL 33142
Attention: W. Bennett Collett
Facsimile: (770) 554-0777
All notices and other communications given to any party hereto in accordance
with the provisions of this Guaranty shall be deemed to have been given on the
date of personal delivery, mailing or facsimile transmission and on the date one
business day after delivery to an overnight courier, in each case addressed to
such party as provided in this paragraph or in accordance with the latest
unrevoked direction from such party.
(d) This Guaranty shall continue in full force and effect until Borrower's
Liabilities are fully paid, performed and discharged and Lender gives Guarantor
written notice thereof. This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment of any of Guarantor's
Liabilities is rescinded or must otherwise be returned by Lender upon the
insolvency, bankruptcy or reorganization of Guarantor or otherwise, all as
though such payment had not been made.
(e) This Guaranty is submitted to Lender at Lender's principal place of
business and shall be deemed to have been made at such address. This Guaranty
shall be governed and controlled as to interpretation, enforcement, validity,
construction, effect and in all other respects by the laws, statutes and
decisions of the State of Illinois. No modification, waiver, estoppel,
amendment, discharge or change of this Guaranty or any related instrument shall
be valid unless the same is in
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writing and signed by the party against which the enforcement of such
modification, waiver, estoppel, amendment, discharge or change is sought.
(f) To the extent that Lender receives any payment on account of Borrower's
Liabilities, or any proceeds of Collateral are applied on account of Borrower's
Liabilities, and any such payment and/or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
subordinated and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy act, state or federal law, common law or equitable
cause, then, to the extent of such payment or proceeds received, Borrower's
Liabilities or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment and/or proceeds had not
been received by Lender and applied on account of Borrower's Liabilities.
Guarantor agrees that Guarantor's Liabilities hereunder shall be revived to the
extent of such revival of Borrower's Liabilities.
(g) Until expressly released in writing by Lender, this Guaranty shall be in
addition to any other guarantees which Guarantor has previously given to Lender
or which Guarantor may, from time to time, hereafter give to Lender relating to
Borrower's Liabilities.
(h) Guarantor warrants and represents to Lender that Guarantor has read this
Guaranty and understands the contents hereof and that this Guaranty is
enforceable against Guarantor in accordance with its terms.
(i) GUARANTOR AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY,
INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS
GUARANTY MAY BE LITIGATED IN COURTS HAVING SITUS WITHIN THE COUNTY OF COOK,
STATE OF ILLINOIS. GUARANTOR CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. GUARANTOR
HEREBY WAIVES ANY RIGHT GUARANTOR MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF
ANY LITIGATION BROUGHT AGAINST GUARANTOR IN ACCORDANCE WITH THIS PARAGRAPH.
(j) GUARANTOR AND LENDER IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN
CONNECTION WITH THIS GUARANTY OR ANY AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR (II) ARISING FROM ANY DISPUTE OR
CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS GUARANTY OR ANY SUCH
AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the day
and year first above written.
GUARANTOR:
ATTEST:
FLORIDA GAMING CORPORATION
By:
/s/ WILLIAM B. COLLETT, JR.
--------------------------------------------------------------------------------
By:
/s/ W. B. COLLETT
--------------------------------------------------------------------------------
Name: /s/ WILLIAM B. COLLETT, JR.
--------------------------------------------------------------------------------
Name: /s/ W. BENNETT COLLETT
--------------------------------------------------------------------------------
Title: Secretary Title: Chairman and CEO
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EXHIBIT A
LEGAL DESCRIPTION
Tract "A" FRONTON HEIGHTS ADDITION, according to the Plat thereof, recorded
in Plat Book 90, Page 20, of the public records of Miami-Dade County, Florida.
PARCEL 5:
LEGAL DESCRIPTION: The South 1/2 of the SW 1/4 of the NW 1/4 of Section 13.
Township 35 South, Range 39 East, St. Lucie County, Florida; EXCEPTING therefrom
the right of way for Kings Highway and ALSO EXCEPTING therefrom the following
described property, to-wit: From the SW corner of said South 1/2 of the SW 1/4
of the NW 1/4 running East 25 feet to the East right of way of Kings Highway for
the Point of Beginning; thence continue East 333.4 feet; thence North 243.0
feet; thence West 333.4 feet to the East right of way of Kings Highway; thence
South along the said East right of way 243 feet to the Point of Beginning, as
delineated on a survey dated March 24, 1972, prepared by A.G. Weatherington and
Associates, Inc., Florida Certificate No. 1859.
The North 1/2 of the NW 1/4 of the SW 1/4 Less the South 150 feet of the
North 300 feet of the East 247 feet, more or less, of the West 272 feet, more or
less, and LESS the West 134 feet of the East 218 feet of the South 165 feet of
the North 337 feet and LESS the East 264 feet of the West 536.4 feet of the
North 334.41 feet; ALSO LESS AND EXCEPTING the right of way for Kings Highway
(State Road 607), all lying and being in Section 13, Township 35 South, Range 39
East, St. Lucie County, Florida, as delineated on a survey dated March 24, 1972,
prepared by A.G. WEATHERINGTON and Associates, Inc., Florida Certificate
No. 1859.
The West 134 feet of the East 218 feet of the South 165 feet of the North
337 feet of the North 1/2 of the NW 1/4 of the SW 1/4 of Section 13, Township 35
South, Range 39 East, St. Lucie County, Florida.
PARCEL 1:
The South one-half of the Northwest one-quarter of the Northwest one-quarter
of Section 13, Township 35 South, Range 39 East, St. Lucie County, Florida; less
and except canal right-of-way.
PARCEL 2:
The North one-half of the Southwest one-quarter of the Northwest one-quarter
of Section 13, Township 35 South, Range 39 East, less rights-of-way for roads
and drainage canals.
PARCEL 3:
PARCEL A: From the NE corner of NW 1/4 of Section 13, Township 35 South,
Range 39 East, run Wly along North line of said Section, 40 feet to West R/W
Copenhaver Road; thence Sly along said West R/W, 685 feet to the POINT OF
BEGINNING; thence continue Sly along West R/W, 264 feet; thence Wly, 292.46
feet; thence Sly parallel with Copenhaver Road, 132 feet; thence Ely, 25 feet;
thence Sly parallel with Copenhaver Road, 132 feet; thence Ely 25 feet; thence
Sly parallel with Copenhaver Road, 132 feet; thence Ely, 242.38 feet to West R/W
of Copenhaver Road; thence Sly along said West R/W 60 feet; thence Wly 282 feet;
thence Sly parallel with Copenhaver Road, 194 feet; thence Ely 282 feet to West
R/W Copenhaver Road; thence Sly along said West R/W, 41.8 feet. M/L to a point
that is 1042 feet North of, and 40 feet Wly of, SE corner of aforesaid NW 1/4;
thence Wly 399 feet; thence Sly parallel with Copenhaver Road, 888 feet; thence
Ely 272.93 feet; thence Sly parallel with Copenhaver Road, 154 feet to the South
line of aforesaid NW 1/4; thence Wly along South line of aforesaid NW 1/4;
1159.29 feet; to the SW corner of SE 1/4 of aforesaid NW 1/4; thence Nly along
West line of said SE 1/4 of NW 1/4, 1339.76 plus or minus feet. M/L to NW corner
of said SE 1/4 of NW 1/4; thence Ely along North line of said SE 1/4 of NW 1/4;
662.91 feet. M/K to SE corner of SW 1/4 of NE 1/4 of NW 1/4; thence Nly along
East line of said SW 1/4 654.95 plus or minus feet. M/L to a point that is
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685 feet South of North line of Section; thence Ely 662.83 plus or minus feet.
M/L to West R/W Copenhaver Road and the POINT OF BEGINNING.
PARCEL B: Beginning at the SW corner of the NE 1/4 of Section 13, Township
35 South, Range 39 East, St. Lucie County, Florida; thence North 746 feet for
Point of Beginning; thence West 439 feet; thence North 296 feet; thence East 439
feet; thence South to Point of Beginning. LESS AND EXCEPTING right-of-way of
Copenhaver Road.
PARCEL 4:
The East 1288.06 feet of the West 1313.06 feet of the South One-Half (1/2)
of the Northwest One-Quarter (1/4) of the Southwest One-Quarter (1/4) of
Section 13, Township 35 South, Range 39 East, recorded in the Public Records of
St. Lucie County, Florida, LESS and EXCEPTING therefrom the South 40.00 feet for
Graham Road right-of-way.
PARCEL 6:
Starting at the Southwest corner of the Northwest 1/4 of Section 13,
Township 35 South, Range 39 East, St. Lucie County, Florida, run East to the
East right-of-way of Kings Highway; thence run North along said East
right-of-way, a distance of 143 feet to the Point of Beginning; thence continue
along said East right of way, a distance of 100 feet; thence run East, a
Distance of 333.4 feet; thence run South, a distance of 100 feet; thence run
West, a distance of 333.4 feet to the Point of Beginning.
PARCEL 7:
From the Southwest corner of the Northwest 1/4 of Section 13, Township 35
South, Range 39 East, St. Lucie County, Florida, run East along the East-West
one-quarter section line to the East right-of-way of Kings Highway for Point of
Beginning; thence continue East along said one-quarter section line a distance
of 333.4 feet; thence run North, parallel with the West line of said Section a
distance of 143 feet; thence run West, a distance of 333.4 feet to a point on
the East right-of-way line of said Kings Highway which is 143 feet North of the
Point of Beginning; thence run South to the Point of Beginning.
Page 93 of 97 Pages
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QuickLinks
GUARANTY
EXHIBIT A
LEGAL DESCRIPTION
|
EXHIBIT 10.7
GARDENBURGER, INC.
2001 STOCK INCENTIVE PLAN
As Amended and Restated
Effective June 1, 2001
TABLE OF CONTENTS
ARTICLE 1 ESTABLISHMENT AND PURPOSE 1.1 Establishment; Amendment and
Restatement 1.2 Purpose ARTICLE 2 DEFINITIONS 2.1
Defined Terms 2.2 Gender and Number ARTICLE 3 ADMINISTRATION
3.1 Authority of the Board 3.2 General 3.3 Authority
of the Committee 3.4 Action by the Committee 3.5 Liability
of Board and Committee Members 3.6 Costs of Plan ARTICLE 4
DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN 4.1 Duration of
the Plan 4.2 Shares Subject to the Plan ARTICLE 5 ELIGIBILITY
ARTICLE 6 AWARDS 6.1 Types of Awards 6.2 General
6.3 Nonuniform Determinations 6.4 Award Agreements 6.5
Provisions Governing All Awards 6.6 Tax Withholding 6.7
Annulment of Awards 6.8 Engaging in Competition With the Corporation
ARTICLE 7 OPTIONS 7.1 Types of Options
7.2 General 7.3 Option Price 7.4 Option Term 7.5
Time of Exercise 7.6 Special Rules for Incentive Stock Options
7.7 Restricted Shares 7.8 Deferred Compensation Options
7.9 Reload Options 7.10 Limitation on Number of Shares Subject to
Options ARTICLE 8 STOCK APPRECIATION RIGHTS 8.1 General
8.2 Nature of Stock Appreciation Right 8.3 Exercise 8.4
Limitation on Number of Stock Appreciation Rights ARTICLE 9 RESTRICTED
AWARDS 9.1 Types of Restricted Awards 9.2 General
9.3 Restriction Period 9.4 Forfeiture 9.5 Settlement of
Restricted Awards 9.6 Rights as a Shareholder ARTICLE 10
PERFORMANCE AWARDS 10.1 General 10.2 Nature of Performance
Awards 10.3 Performance Cycles 10.4 Performance Goals
10.5 Determination of Awards 10.6 Performance Goals for Executive
Officers ARTICLE 11 OTHER STOCK BASED AND COMBINATION AWARDS
11.1 Other Stock–Based Awards 11.2 Combination Awards
ARTICLE 12 DEFERRAL ELECTIONS ARTICLE 13 DIVIDEND EQUIVALENTS
ARTICLE 14 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC. 14.1 Plan
Does Not Restrict Corporation 14.2 Adjustments by the Committee
14.3 Change in Control ARTICLE 15 AMENDMENT AND TERMINATION
ARTICLE 16 MISCELLANEOUS 16.1 Unfunded Plan 16.2 Payments to
Trust 16.3 Other Corporation Benefit and Compensation Programs
16.4 Securities Law Restrictions 16.5 Governing Law ARTICLE
17 SHAREHOLDER APPROVAL
GARDENBURGER, INC.
2001 STOCK INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 Establishment; Amendment and Restatement. Gardenburger,
Inc., an Oregon corporation ("Corporation"), hereby establishes the
Gardenburger, Inc. 2001 Stock Incentive Plan (the "Plan") effective February 13,
2001, subject to shareholder approval as provided in Article 17. Effective
June 1, 2001, the Plan was amended and restated in the form of this document.
1.2 Purpose. The purpose of the Plan is to promote and
advance the interests of Corporation and its shareholders by enabling
Corporation to attract, retain, and reward key employees, directors, and outside
consultants of Corporation and its subsidiaries. The Plan also is intended to
strengthen the mutuality of interests between such employees, directors, and
consultants and Corporation's shareholders. The Plan is designed to serve these
purposes by offering stock options and other equity–based incentive awards,
thereby providing a proprietary interest in pursuing the long–term growth,
profitability, and financial success of Corporation.
1.3 Prior Plan. The Plan will be separate from the
Gardenburger 1992 Combination Stock Option Plan (the "Prior Plan"). The
adoption and operation of the Plan will neither affect nor be affected by the
continued existence of the Prior Plan except that:
(a) After the effective date of the Plan, no further stock
options will be granted under the Prior Plan; and
(b) The number of Shares which may be made subject to Awards
under the Plan will be adjusted pursuant to Section 4.2 to reflect cancellation,
termination, or expiration of stock options previously granted under the Prior
Plan.
ARTICLE 2
DEFINITIONS
2.1 Defined Terms. For purposes of the Plan, the following
terms have the meanings set forth below:
"Award" means an award or grant made to a Participant
of Options, Stock Appreciation Rights, Restricted Awards, Performance Awards, or
Other Stock–Based Awards pursuant to the Plan.
"Award Agreement" means an agreement as described in
Section 6.4.
"Board" means the Board of Directors of Corporation.
"Code" means the Internal Revenue Code of 1986, as
amended and in effect from time to time, or any successor thereto, together with
rules, regulations, and interpretations promulgated thereunder. Where the
context so requires, any reference to a particular Code section will be
construed to refer to the successor provision to such Code section.
"Committee" means the committee to which
administration of the Plan may be delegated by the Board pursuant to
Section 3.2.
"Common Stock" means the no par value common stock of
Corporation or any security of Corporation issued in substitution, exchange, or
lieu of such common stock.
"Consultant" means any consultant or adviser to
Corporation or a Subsidiary selected by the Committee, who is neither an
employee of Corporation or a Subsidiary nor a Non–Employee Director.
"Continuing Restriction" means a Restriction
contained in Sections 6.7, 6.8, and 16.4 of the Plan and any other Restrictions
expressly designated by the Committee in an Award Agreement as a Continuing
Restriction.
"Corporation" means Gardenburger, Inc., an Oregon
corporation, or any successor corporation.
"Deferred Compensation Option" means a Nonqualified
Option granted in lieu of a specified amount of other compensation pursuant to
Section 7.8 of the Plan.
"Disability" means the condition of being permanently
"disabled" within the meaning of Section 22(e)(3) of the Code, namely being
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months. However, the Committee may change the foregoing
definition of "Disability" or may adopt a different definition for purposes of
specific Awards.
"Exchange Act" means the Securities Exchange Act of
1934, as amended and in effect from time to time, or any successor statute.
Where the context so requires, any reference to a particular section of the
Exchange Act, or to any rule promulgated under the Exchange Act, will be
construed to refer to successor provisions to such section or rule.
"Fair Market Value" means on any given date, the fair
market value per share of the Common Stock determined as follows:
(a) If the Common Stock is traded on an
established securities exchange, the mean between the reported high and low sale
prices of Common Stock as reported for such day by the principal exchange on
which Common Stock is traded (as determined by the Committee) or, if Common
Stock was not traded on such date, on the next preceding day on which Common
Stock was traded;
(b) If trading activity in Common Stock is
reported in the NASDAQ National Market System, the mean between the reported
high and low sale prices of Common Stock as reported for such day by the NASDAQ
or, if Common Stock trades were not reported on such date, on the next preceding
day on which Common Stock trades were reported by the NASDAQ;
(c) If trading activity in Common Stock is
reported in the NASDAQ Bid and Asked Quotations, the mean between the bid price
and asked price quote for such day as reported by the NASDAQ or, if there are no
such quotes for Common Stock for such date, on the next preceding day for which
bid and asked price quotes for Common Stock were reported by NASDAQ; or
(d) If there is no market for Common Stock or
if trading activities for Common Stock are not reported in one of the manners
described above, the fair market value will be as determined by the Committee
after taking into consideration all factors that the Committee deems
appropriate.
"Incentive Stock Option" or "ISO" means any Option
granted pursuant to the Plan that is intended to be and is specifically
designated in its Award Agreement as an "incentive stock option" within the
meaning of Section 422 of the Code.
"Non-Employee Director" means a member of the Board
who is not an employee of Corporation or any Subsidiary.
"Nonqualified Option" or "NQO" means any Option,
including a Deferred Compensation Option, granted pursuant to the Plan that is
not an Incentive Stock Option.
"Option" means an ISO or an NQO (including a Deferred
Compensation Option).
"Other Stock–Based Award" means an Award as defined
in Section 11.1.
"Participant" means an employee or a Consultant of
Corporation or a Subsidiary, or a Non–Employee Director who is granted an Award
under the Plan.
"Performance Award" means an Award granted pursuant
to the provisions of Article 10 of the Plan, the Vesting of which is contingent
on performance attainment.
"Performance Cycle" means a designated performance
period pursuant to the provisions of Section 10.3 of the Plan.
"Performance Goal" means a designated performance
objective pursuant to the provisions of Section 10.4 of the Plan.
"Plan" means this Gardenburger, Inc. 2001 Stock
Incentive Plan, as set forth in this Plan document and as it may be amended from
time to time.
"Reporting Person" means a Participant who is subject
to the reporting requirements of Section 16(a) of the Exchange Act.
"Restricted Award" means a Restricted Share or a
Restricted Unit granted pursuant to Article 9 of the Plan.
"Restricted Share" means an Award described in
Section 9.1(a) of the Plan.
"Restricted Unit" means an Award of units
representing Shares described in Section 9.1(b) of the Plan.
"Restriction" means a provision in the Plan or in an
Award Agreement which limits the exercisability or transferability, or which
governs the forfeiture, of an Award or the Shares, cash, or other property
payable pursuant to an Award.
"Retirement" means:
(a) For Participants who are employees,
retirement from active employment with Corporation and its Subsidiaries on or
after age 65, or such earlier retirement date as approved by the Committee for
purposes of the Plan;
(b) For Participants who are Non-Employee
Directors, ceasing to serve as a member of the Board after (1) serving at least
5 years on the Board, and (2) attaining a retirement age specified by the Board
for purposes of an Award to such Non–Employee Director; or
(c) For Participants who are Consultants,
termination of service as a Consultant after attaining a retirement age
specified by the Committee for purposes of an Award to such Consultant.
However, the Committee may change the foregoing
definition of "Retirement" or may adopt a different definition for purposes of
specific Awards.
"Share" means a share of Common Stock.
"Stock Appreciation Right" or "SAR" means an Award to
benefit from the appreciation of Common Stock granted pursuant to the provisions
of Article 8 of the Plan.
"Subsidiary" means a "subsidiary corporation" of
Corporation, within the meaning of Section 425 of the Code, namely any
corporation in which Corporation directly or indirectly controls 50 percent or
more of the total combined voting power of all classes of stock having voting
power.
"Vest" or "Vested" means:
(a) In the case of an Award that requires
exercise, to be or to become immediately and fully exercisable and free of all
Restrictions (other than Continuing Restrictions);
(b) In the case of an Award that is subject to
forfeiture, to be or to become nonforfeitable, freely transferable, and free of
all Restrictions (other than Continuing Restrictions);
(c) In the case of an Award that is required
to be earned by attaining specified Performance Goals, to be or to become earned
and nonforfeitable, freely transferable, and free of all Restrictions (other
than Continuing Restrictions); or
(d) In the case of any other Award as to which
payment is not dependent solely upon the exercise of a right, election,
exercise, or option, to be or to become immediately payable and free of all
Restrictions (except Continuing Restrictions).
2.2 Gender and Number. Except where otherwise indicated by
the context, any masculine or feminine terminology used in the Plan will also
include the opposite gender; and the definition of any term in Section 2.1 in
the singular will also include the plural, and vice versa.
ARTICLE 3
ADMINISTRATION
3.1 Authority of the Board. The Board retains exclusive
authority with respect to Awards granted to Non–Employee Directors, including
the authority to:
(a) Select the Non–Employee Directors who
will be granted Awards; and
(b) With respect to all Awards to Participants
who are Non–Employee Directors, to determine:
(i) The number and types of Awards to be
granted to each Participant;
(ii) The number of Shares, or Share
equivalents, to be subject to each Award;
(iii) The option price, purchase price, base
price, or similar feature;
(iv) All the terms and conditions of all Award
Agreements, consistent with the requirements of the Plan.
References in the Plan to the authority or discretion of the Committee will also
apply to the Board for purposes of Awards granted to Non–Employee Directors.
Members of the Board who either (i) are eligible to receive Awards pursuant to
the Plan or (ii) have been granted Awards may vote on any matters affecting the
administration of the Plan or the grant of any Awards pursuant to the Plan,
except that no such member shall act upon the granting of Awards to himself or
herself, but any such member may be counted in determining the existence of a
quorum at any meeting of the Board during which action is taken with respect to
the granting to such member of Awards.
3.2 General. Except as provided in Section 3.1, the Plan
will be administered by the Board or by the Committee, which shall consist of
two or more "outside directors" (as that term is defined in applicable
regulations promulgated under Code Section 162(m)).
3.3 Authority of the Committee. Except as provided in
Section 3.1, the Committee has full power and authority (subject to such orders
or resolutions as may be issued or adopted from time to time by the Board) to
administer the Plan in its sole discretion, including the authority to:
(a) Construe and interpret the Plan and any
Award Agreement;
(b) Promulgate, amend, and rescind rules and
procedures relating to the implementation of the Plan;
(c) Select the employees and Consultants who
will be granted Awards;
(d) Determine the number and types of Awards
to be granted to each such Participant;
(e) Determine the number of Shares, or Share
equivalents, to be subject to each Award;
(f) Determine the option price, purchase
price, base price, or similar feature for any Award; and
(g) Determine all the terms and conditions of
all Award Agreements, consistent with the requirements of the Plan.
Decisions of the Committee, or any delegate as permitted by the
Plan, will be final, conclusive, and binding on all Participants.
3.4 Action by the Committee. A majority of the members of
the Committee will constitute a quorum for the transaction of business. Action
approved by a majority of the members present at any meeting at which a quorum
is present, or action in writing by a majority of the members of the Committee,
will be the valid acts of the Committee.
3.5 Liability of Board and Committee Members. No member
either of the Board or the Committee will be liable for any action or
determination made in good faith with respect to the Plan, any Award, or any
Participant.
3.6 Costs of Plan. The costs and expenses of administering
the Plan will be borne by Corporation.
ARTICLE 4
DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN
4.1 Duration of the Plan. The Plan is effective
February 13, 2001, subject to approval by Corporation's shareholders as provided
in Article 17. The Plan will remain in effect until Awards have been granted
covering all the available Shares or the Plan is otherwise terminated by the
Board. Termination of the Plan will not affect outstanding Awards.
4.2 Shares Subject to the Plan. The shares which may be
made subject to Awards under the Plan are Shares of Common Stock, which may be
either authorized and unissued Shares or reacquired Shares. No fractional
Shares may be issued under the Plan. Subject to adjustment pursuant to Article
14, the maximum number of Shares for which Awards may be granted under the Plan
(the "Reserved Shares") is 1,400,000, plus the number of Shares that remain
available for the grant of stock options under the Prior Plan described in
Section 1.3 as of the effective date of the Plan. If an Award under the Plan
(or any option previously granted under the Prior Plan) is canceled or expires
for any reason prior to having been fully Vested or exercised by a Participant
or is settled in cash in lieu of Shares or is exchanged for other Awards, all
Shares covered by such Awards will be added back into the Reserved Shares and
made available for future Awards under the Plan.
ARTICLE 5
ELIGIBILITY
Officers and other key employees of Corporation and its
Subsidiaries (including employees who may also be directors of Corporation or a
Subsidiary), Consultants, and Non–Employee Directors who are designated by the
Committee will be eligible to receive Awards under the Plan.
ARTICLE 6
AWARDS
6.1 Types of Awards. The types of Awards that may be
granted under the Plan are:
(a) Options governed by Article 7 of the
Plan;
(b) Stock Appreciation Rights governed by
Article 8 of the Plan;
(c) Restricted Awards governed by Article 9
of the Plan;
(d) Performance Awards governed by Article 10
of the Plan; and
(e) Other Stock–Based Awards or combination
awards governed by Article 11 of the Plan.
In the discretion of the Committee, any Award may be granted alone, in addition
to, or in tandem with other Awards under the Plan.
6.2 General. Subject to the limitations of the Plan, the
Committee may cause Corporation to grant Awards to such Participants, at such
times, of such types, in such amounts, for such periods, with such option
prices, purchase prices, or base prices, and subject to such terms, conditions,
limitations, and restrictions as the Committee, in its discretion, deems
appropriate. Awards may be granted as additional compensation to a Participant
or in lieu of other compensation to such Participant. A Participant may receive
more than one Award and more than one type of Award under the Plan.
6.3 Nonuniform Determinations. The Committee's
determinations under the Plan or under one or more Award Agreements, including
without limitation, (a) the selection of Participants to receive Awards, (b) the
type, form, amount, and timing of Awards, (c) the terms of specific Award
Agreements, and (d) elections and determinations made by the Committee with
respect to exercise or payments of Awards, need not be uniform and may be made
by the Committee selectively among Participants and Awards, whether or not
Participants are similarly situated.
6.4 Award Agreements. Each Award will be evidenced by a
written Award Agreement between Corporation and the Participant. Award
Agreements may, subject to the provisions of the Plan, contain any provision
approved by the Committee.
6.5 Provisions Governing All Awards. All Awards will be
subject to the following provisions:
(a) Alternative Awards. If any Awards are
designated in their Award Agreements as alternative to each other, the exercise
of all or part of one Award automatically will cause an immediate equal (or pro
rata) corresponding termination of the alternative Award or Awards.
(b) Rights as Shareholders. No Participant
will have any rights of a shareholder with respect to Shares subject to an Award
until such Shares are issued in the name of the Participant.
(c) Employment Rights. Neither the adoption
of the Plan, the granting of any Award, nor the entering into any Award
Agreement will confer on any person the right to continued employment with
Corporation or any Subsidiary or the right to remain as a director of
Corporation or a Consultant to Corporation or any Subsidiary, as the case may
be, nor will it interfere in any way with the right of Corporation or a
Subsidiary to terminate such person's employment or to remove such person as a
Consultant or as a director at any time for any reason, with or without cause.
(d) Restriction on Transfer. Unless otherwise
expressly provided in an individual Award Agreement, each Award (other than
Restricted Shares after they Vest) will not be transferable otherwise than by
will or the laws of descent and distribution and will be exercisable (if
exercise is required), during the lifetime of the Participant, only by the
Participant or, in the event the Participant becomes legally incompetent, by the
Participant's guardian or legal representative. Notwithstanding the foregoing,
the Committee, in its discretion, may provide in any Award Agreement that the
Award:
• May be fully transferred;
• May be freely transferred to a class of
transferees specified in the Award Agreement; or
• May be transferred, but only subject to
any terms and conditions specified in the Award Agreement (including, without
limitation, a condition that an Award may only be transferred without payment of
consideration).
Furthermore, notwithstanding the foregoing, any Award may be surrendered to
Corporation pursuant to Section 6.5(h) in connection with the payment of the
purchase or option price of another Award or the payment of the Participant's
federal, state, or local tax, or tax withholding obligation with respect to the
exercise or payment of another Award.
(e) Termination Of Employment. The terms and
conditions under which an Award may be exercised or may continue to become
Vested, if at all, after a Participant's termination of employment or service as
a Non-Employee Director or a Consultant will be determined by the Committee and
specified in the applicable Award Agreement.
(f) Change in Control. The Committee, in its
discretion, may provide in any Award Agreement that in the event of a change in
control of Corporation (as the Committee may define such term in that Award
Agreement), as of the date of such change in control (or as of a specified event
following a change in control):
(i) All, or a specified portion of, Awards
requiring exercise will become fully and immediately exercisable,
notwithstanding any other limitations on exercise;
(ii) All, or a specified portion of, Awards
subject to Restrictions will become fully Vested; and
(iii) All, or a specified portion of, Awards
subject to Performance Goals will be deemed to have been fully earned.
Unless the Committee specifically provides otherwise in the change in control
provision for a specific Award Agreement, Awards will become exercisable, become
Vested, or become earned as of a change in control date (or as of a specified
event following a change in control) only if, or to the extent, such
acceleration in the exercisability, Vesting, or becoming earned of the Awards
does not result in an "excess parachute payment" within the meaning of
Section 280G(b) of the Code. The Committee, in its discretion, may include
change in control provisions in some Award Agreements and not in others, may
include different change in control provisions in different Award Agreements,
and may include change in control provisions for some Awards or some
Participants and not for others.
(g) Conditioning or Accelerating Benefits.
The Committee, in its discretion, may include in any Award Agreement a provision
conditioning or accelerating the Vesting of an Award or the receipt of benefits
pursuant to an Award, either automatically or in the discretion of the
Committee, upon the occurrence of specified events including, without
limitation, a change in control of Corporation (subject to the foregoing
paragraph (f)), a sale of all or substantially all the property and assets of
Corporation, or an event of the type described in Article 14 of this Plan.
Furthermore, whether or not specified in any Award Agreement (unless an Award
Agreement expressly provides otherwise), the Committee may at any time, in its
discretion, accelerate the Vesting of any or all Awards.
(h) Payment of Purchase Price and
Withholding. The Committee, in its discretion, may include in any Award
Agreement a provision permitting the Participant to pay the purchase or option
price, if any, for the Shares or other property issuable pursuant to the Award,
the Participant's federal, state, or local tax, or tax withholding, obligation
with respect to such issuance, or both, in whole or in part by any one or more
of the following:
(i) By delivering previously owned Shares
(including Restricted Shares, whether or not vested);
(ii) By surrendering other outstanding Vested
Awards under the Plan denominated in Shares or in Share equivalent units;
(iii) By reducing the number of Shares or
other property otherwise Vested and issuable pursuant to the Award;
(iv) By delivering to Corporation a promissory
note payable on such terms and over such period as the Committee determines;
(v) By delivery (in a form approved by the
Committee) of an irrevocable direction to a securities broker acceptable to the
Committee:
(A) To sell Shares subject to the Option and to
deliver all or a part of the sales proceeds to Corporation in payment of all or
a part of the option price and taxes or withholding taxes attributable to the
issuance; or
(B) To pledge Shares subject to the Option to
the broker as security for a loan and to deliver all or a part of the loan
proceeds to Corporation in payment of all or a part of the option price and
taxes or withholding taxes attributable to the issuance; or
(vi) In any combination of the foregoing or in
any other form approved by the Committee.
If Restricted Shares are surrendered in full or partial payment of the purchase
or option price of Shares issuable under an Award, a corresponding number of the
Shares issued upon exercise of the Award will be Restricted Shares subject to
the same Restrictions as the surrendered Restricted Shares. Shares withheld or
surrendered as described above will be valued based on their Fair Market Value
on the date of the transaction. Any Shares withheld or surrendered with respect
to a Reporting Person will be subject to such additional conditions and
limitations as the Committee may impose to comply with the requirements of the
Exchange Act.
(i) Reporting Persons. With respect to all
Awards granted to Reporting Persons:
(i) Awards requiring exercise will not be
exercisable until at least six months after the date the Award was granted,
except in the case of the death or Disability of the Participant; and
(ii) Shares issued pursuant to any other
Award may not be sold by the Participant for at least six months after
acquisition, except in the case of the death or Disability of the Participant;
provided, however, that (unless an Award Agreement provides otherwise) the
limitation of this Section 6.5(i) will apply only if or to the extent required
by Rule 16b–3 under the Exchange Act. Award Agreements for Awards to Reporting
Persons will also comply with any future restrictions imposed by such
Rule 16b–3.
(j) Service Periods. At the time of
granting Awards, the Committee may specify, by resolution or in the Award
Agreement, the period or periods of service performed or to be performed by the
Participant in connection with the grant of the Award.
(k) Form of Payment upon Settlement of
Awards. Payment to a Participant upon settlement of an Award may be in Shares,
cash (either in a lump sum or in installment payments, with or without interest,
over a period specified in the Award Agreement), by issuance of a Deferred
Compensation Option, or in any combination of the above, or in any other form
the Committee determines.
6.6 Tax Withholding. Corporation will have the right to
deduct from any settlement of any Award under the Plan, including the delivery
or vesting of Shares, any federal, state, or local taxes of any kind required by
law to be withheld with respect to such payments or to take such other action as
may be necessary in the opinion of Corporation to satisfy all obligations for
the payment of such taxes. The recipient of any payment or distribution under
the Plan must make arrangements satisfactory to Corporation for the satisfaction
of any such withholding tax obligations. Corporation will not be required to
make any such payment or distribution under the Plan until such obligations are
satisfied.
6.7 Annulment of Awards. Any Award Agreement may, in the
Committee's discretion, provide that the grant of an Award payable in cash is
revocable until cash is paid in settlement of the Award or that the grant of an
Award payable in Shares is revocable until the Participant becomes entitled to a
stock certificate in settlement of the Award. In the event the employment (or
service as a Non–Employee Director or a Consultant) of a Participant is
terminated for cause (as defined below), any Award which is revocable will be
annulled as of the date of such termination for cause. For the purpose of this
Section 6.7, the term "for cause" will have the meaning set forth in the
Participant's employment agreement, if any, or otherwise means any discharge (or
removal) for material or flagrant violation of the policies and procedures of
Corporation or for other job performance or conduct which is materially
detrimental to the best interests of Corporation, as determined by the
Committee.
6.8 Engaging in Competition With the Corporation. Any Award
Agreement may, in the Committee's discretion, provide that if a Participant
terminates employment (or service as a Non–Employee Director or a Consultant)
with Corporation or a Subsidiary for any reason whatsoever, and within a period
of time (as specified in the Award Agreement) after the date of such termination
accepts employment with any competitor of (or otherwise engages in competition
with) Corporation, the Committee, in its sole discretion, may require such
Participant to return to Corporation the economic value of any Award that was
realized or obtained (measured at the date of exercise, Vesting, or payment) by
such Participant at any time during the period beginning on the date that is six
months prior to the date of such Participant's termination of employment (or
service as a Non–Employee Director or a Consultant) with Corporation.
ARTICLE 7
OPTIONS
7.1 Types of Options. Options granted under the Plan may be
in the form of Incentive Stock Options or Nonqualified Options (including
Deferred Compensation Options). The grant of each Option and the Award
Agreement governing each Option will identify the Option as an ISO or an NQO.
In the event the Code is amended to provide for tax–favored forms of stock
options other than or in addition to Incentive Stock Options, the Committee may
grant Options under the Plan meeting the requirements of such forms of options.
7.2 General. Options will be subject to the terms and
conditions set forth in Article 6 and this Article 7 and Award Agreements
governing Options may contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee deems
desirable.
7.3 Option Price. Each Award Agreement for Options will
state the option exercise price per Share of Common Stock purchasable under the
Option, which may not be less than:
(a) 25 percent of the Fair Market Value of a
Share on the date of grant in the case of a Deferred Compensation Option;
(b) 75 percent of the Fair Market Value of a
Share on the date of grant for all other Nonqualified Options; or
(c) 100 percent of the Fair Market Value of a
Share on the date of grant for all Incentive Stock Options.
7.4 Option Term. The Award Agreement for each Option will
specify the term of each Option, which may be unlimited or may have a specified
period during which the Option may be exercised, as determined by the Committee.
7.5 Time of Exercise. The Award Agreement for each Option
will specify, as determined by the Committee:
(a) The time or times when the Option becomes
exercisable and whether the Option becomes exercisable in full or in graduated
amounts based on: (i) continuation of employment over a period specified in the
Award Agreement, (ii) satisfaction of performance goals or criteria specified in
the Award Agreement, or (iii) a combination of continuation of employment and
satisfaction of performance goals or criteria;
(b) Such other terms, conditions, and
restrictions as to when the Option may be exercised as determined by the
Committee; and
(c) The extent, if any, that the Option will
remain exercisable after the Participant ceases to be an employee, Consultant,
or director of Corporation or a Subsidiary.
An Award Agreement for an Option may, in the discretion of the Committee,
provide whether, and to what extent, the time when an Option becomes exercisable
will be accelerated or otherwise modified (i) in the event of the death,
Disability, or Retirement of the Participant, or (ii) upon the occurrence of a
change in control of Corporation. The Committee may, at any time in its
discretion, accelerate the time when all or any portion of an outstanding Option
becomes exercisable.
7.6 Special Rules for Incentive Stock Options. In the case
of an Option designated as an Incentive Stock Option, the terms of the Option
and the Award Agreement will conform with the statutory and regulatory
requirements specified pursuant to Section 422 of the Code, as in effect on the
date such ISO is granted. ISOs may be granted only to employees of Corporation
or a Subsidiary. ISOs may not be granted under the Plan after ten years
following the date specified in Section 4.1, unless the ten–year limitation of
Section 422(b)(2) of the Code is removed or extended. Without limiting the
foregoing, all ISO Awards will be subject to the following terms and conditions
(unless the Committee determines that such restrictions are no longer necessary
in order for an Award to meet ISO requirements):
(a) The term of the ISO may not exceed 10
years from the date the ISO is granted (and may not exceed 5 years for ISOs
granted to an employee who, as of the date of the grant, owns stock possessing
more than 10 percent of the total combined voting power of all classes of stock
of Corporation (a "10 Percent Shareholder"));
(b) The option exercise price for an ISO may
not be lower than 100 percent of the Fair Market Value of a Share as of the date
the ISO is granted (and may not be lower than 110 percent of such Fair Market
Value for an ISO granted to a 10 Percent Shareholder); and
(c) The aggregate Fair Market Value
(determined as of the date an Option is granted) of the Shares subject to all
ISOs granted to any Participant under the Plan and any other plans maintained by
Corporation with respect to which the ISOs first become exercisable during any
calendar year may not exceed $100,000 (the "$100,000 Limitation"). If and to
the extent an Option granted under the Plan that is otherwise designated as or
intended to be an ISO exceeds the $100,000 Limitation, the Option will be
treated as two Options granted under the Plan, an ISO with respect to the
portion of the Option that satisfies the $100,000 Limitation, and a separate
Nonqualified Option with respect to the portion of the Option that exceeds the
$100,000 Limitation.
7.7 Restricted Shares. In the discretion of the Committee,
the Shares issuable upon exercise of an Option may be Restricted Shares if so
provided in the Award Agreement for the Option.
7.8 Deferred Compensation Options. The Committee may, in
its discretion, grant Deferred Compensation Options with an option price less
than Fair Market Value to provide a means for deferral to future dates of
compensation otherwise payable to a Participant. The option price will be
determined by the Committee subject to Section 7.3(a) of the Plan. The number
of Shares subject to a Deferred Compensation Option will be determined by the
Committee, in its discretion, by dividing the amount of compensation to be
deferred by the difference between the Fair Market Value of a Share on the date
of grant and the option price of the Deferred Compensation Option. Amounts of
compensation deferred with Deferred Compensation Options may include amounts
payable under Awards granted under the Plan or under any other compensation
program or arrangement of Corporation as permitted by the Committee. The
Committee may grant Deferred Compensation Options only if it reasonably
determines that the recipient of such an Option is not likely to be deemed to be
in constructive receipt for income tax purposes of the income being deferred.
7.9 Reload Options. The Committee, in its discretion, may
provide in an Award Agreement for an Option that in the event all or a portion
of the Option is exercised by the Participant using previously acquired Shares,
the Participant will automatically be granted (subject to the available pool of
Shares subject to grants of Awards as specified in Section 4.2 of the Plan) a
replacement Option (with an option price equal to the Fair Market Value of a
Share on the date of such exercise) for a number of Shares equal to (or equal to
a portion specified in the original Award Agreement of) the number of shares
surrendered upon exercise of the Option. Such reload Option features may be
subject to such terms and conditions as the Committee determines, including
without limitation, a condition that the Participant retain the Shares issued
upon exercise of the Option for a specified period of time.
7.10 Limitation on Number of Shares Subject to Options. In no
event may Options be granted under the Plan for more than 150,000 Shares to any
individual during any one calendar year period.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1 General. Stock Appreciation Rights will be subject to
the terms and conditions set forth in Article 6 and this Article 8 and Award
Agreements governing Stock Appreciation Rights may contain such additional terms
and conditions, not inconsistent with the express terms of the Plan, as the
Committee deems desirable.
8.2 Nature of Stock Appreciation Right. A Stock
Appreciation Right is an Award entitling a Participant to receive an amount
equal to the excess (or, if the Committee so specifies in the Award Agreement, a
portion of the excess) of the Fair Market Value of a Share of Common Stock on
the date of exercise of the SAR over the base price, as described below, on the
date of grant of the SAR, multiplied by the number of Shares with respect to
which the SAR will have been exercised. The base price will be designated by
the Committee in the Award Agreement for the SAR and may be the Fair Market
Value of a Share on the grant date of the SAR or such other higher or lower
price as the Committee determines.
8.3 Exercise. A Stock Appreciation Right may be exercised
by a Participant in accordance with procedures established by the Committee.
The Committee may also provide that a SAR will be automatically exercised on one
or more specified dates or upon the satisfaction of one or more specified
conditions. In the case of SARs granted to Reporting Persons, exercise of the
SAR will be limited by the Committee to the extent required to comply with the
applicable requirements of Rule 16b–3 under the Exchange Act.
8.4 Limitation on Number of Stock Appreciation Rights. In
no event may more than 10,000 Stock Appreciation Rights be granted to any
individual under the Plan during any one calendar year period.
ARTICLE 9
RESTRICTED AWARDS
9.1 Types of Restricted Awards. Restricted Awards granted
under the Plan may be in the form of either Restricted Shares or Restricted
Units.
(a) Nature of Restricted Shares. A
Restricted Share is an Award of Shares transferred to a Participant subject to
such terms and conditions as the Committee deems appropriate, including, without
limitation, restrictions on the sale, assignment, transfer, or other disposition
of such Restricted Shares and may include a requirement that the Participant
forfeit such Restricted Shares back to Corporation upon termination of
Participant's employment (or service as a Non-Employee Director or a Consultant)
for specified reasons within a specified period of time or upon other
conditions, as set forth in the Award Agreement for such Restricted Shares.
Each Participant receiving Restricted Shares will be issued a stock certificate
in respect of such Shares, registered in the name of such Participant, and will
be required to execute a stock power in blank with respect to the Shares
evidenced by such certificate. The certificate evidencing such Restricted
Shares and the stock power will be held in custody by Corporation until the
Restrictions on those Shares have lapsed.
(b) Nature of Restricted Units. A Restricted
Unit is an Award of units (with each unit having a value equivalent to one
Share) granted to a Participant subject to such terms and conditions as the
Committee deems appropriate, and may include a requirement that the Participant
forfeit such Restricted Units upon termination of Participant's employment (or
service as a Non–Employee Director or a Consultant) for specified reasons within
a specified period of time or upon other conditions, as set forth in the Award
Agreement for such Restricted Units.
9.2 General. Restricted Awards will be subject to the terms
and conditions of Article 6 and this Article 9 and Award Agreements governing
Restricted Awards may contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee deems
desirable.
9.3 Restriction Period. Award Agreements for Restricted
Awards will provide that Restricted Awards, and the Shares subject to Restricted
Awards, may not be transferred, and may provide that, in order for a Participant
to Vest in such Restricted Awards, the Participant must remain in the employment
(or remain as a Non–Employee Director or a Consultant) of Corporation or its
Subsidiaries, subject to relief for reasons specified in the Award Agreement,
for a period commencing on the grant date of the Award and ending on such later
date or dates as the Committee designates in the Award Agreement (the
"Restriction Period"). During the Restriction Period, a Participant may not
sell, assign, transfer, pledge, encumber, or otherwise dispose of Shares
received under or governed by a Restricted Award grant. The Committee, in its
sole discretion, may provide for the lapse of restrictions in installments
during the Restriction Period. Upon expiration of the applicable Restriction
Period (or lapse of Restrictions during the Restriction Period where the
Restrictions lapse in installments) the Participant will be entitled to
settlement of the Restricted Award or portion thereof, as the case may be.
Although Restricted Awards will usually Vest based on continued employment (or
service as a Non–Employee Director or a Consultant) and Performance Awards under
Article 10 will usually Vest based on attainment of Performance Goals, the
Committee, in its discretion, may condition Vesting of Restricted Awards on
attainment of Performance Goals as well as continued employment (or service as a
Non–Employee Director or a Consultant). In such case, the Restriction Period
for such a Restricted Award will include the period prior to satisfaction of the
Performance Goals.
9.4 Forfeiture. If a Participant ceases to be an employee
(or Consultant or Non–Employee Director) of Corporation or a Subsidiary during
the Restriction Period for any reason other than reasons which may be specified
in an Award Agreement (such as death, Disability, or Retirement) the Award
Agreement may require that all non–Vested Restricted Awards previously granted
to the Participant be forfeited and returned to Corporation.
9.5 Settlement of Restricted Awards.
(a) Restricted Shares. Upon Vesting of a
Restricted Share Award, the legend on such Shares will be removed and the
Participant's stock power will be returned and the Shares will no longer be
Restricted Shares. The Committee may also, in its discretion, permit a
Participant to receive, in lieu of unrestricted Shares at the conclusion of the
Restriction Period, payment in any form described in Section 6.5(k).
(b) Restricted Units. Upon Vesting of a
Restricted Unit Award, a Participant will be entitled to receive payment for
Restricted Units in an amount equal to the aggregate Fair Market Value of the
Shares covered by such Restricted Units at the expiration of the Applicable
Restriction Period. Payment in settlement of a Restricted Unit in any form
described in Section 6.5(k) will be made as soon as practicable following the
conclusion of the applicable Restriction Period.
9.6 Rights as a Shareholder. A Participant will have, with
respect to unforfeited Shares received under a grant of Restricted Shares, all
the rights of a shareholder of Corporation, including the right to vote the
shares, and the right to receive any cash dividends. Stock dividends issued
with respect to Restricted Shares will be treated as additional Shares covered
by the grant of Restricted Shares and will be subject to the same Restrictions.
ARTICLE 10
PERFORMANCE AWARDS
10.1 General. Performance Awards will be subject to the terms
and conditions set forth in Article 6 and this Article 10 and Award Agreements
governing Performance Awards may contain such other terms and conditions not
inconsistent with the express provisions of the Plan, as the Committee deems
desirable.
10.2 Nature of Performance Awards. A Performance Award is an
Award of units (with each unit having a value equivalent to one Share) granted
to a Participant subject to such terms and conditions as the Committee deems
appropriate, including, without limitation, the requirement that the Participant
forfeit all or a portion of such Performance Award in the event specified
performance criteria are not met within a designated period of time.
10.3 Performance Cycles. For each Performance Award, the
Committee will designate a performance period (the "Performance Cycle") with a
duration to be determined by the Committee in its discretion within which
specified Performance Goals are to be attained. There may be several
Performance Cycles in existence at any one time and the duration of Performance
Cycles may differ from each other.
10.4 Performance Goals. The Committee will establish
Performance Goals for each Performance Cycle on the basis of such criteria and
to accomplish such objectives as the Committee may from time to time select.
Performance Goals may be based on (i) performance criteria for Corporation, a
Subsidiary, or an operating group, (ii) a Participant's individual performance,
or (iii) a combination of both. Performance Goals may include objective and
subjective criteria. During any Performance Cycle, the Committee may adjust the
Performance Goals for such Performance Cycle as it deems equitable in
recognition of unusual or nonrecurring events affecting Corporation, changes in
applicable tax laws or accounting principles, or such other factors as the
Committee may determine.
10.5 Determination of Awards. As soon as practicable after
the end of a Performance Cycle, the Committee will determine the extent to which
Performance Awards have been earned on the basis of performance in relation to
the established Performance Goals. Settlement of earned Performance Awards will
be made to the Participant as soon as practicable after the expiration of the
Performance Cycle and the Committee's determination under this Section 10.5, in
any form described in Section 6.5(k).
10.6 Performance Goals for Executive Officers. The
performance goals for Performance Awards granted to executive officers of
Corporation may relate to corporate performance, business unit performance, or a
combination of both.
• Corporate performance goals will be
based on financial performance goals related to the performance of Corporation
as a whole and may include one or more measures related to earnings,
profitability, efficiency, or return to stockholders such as earnings per share,
operating profit, stock price, costs of production, or other measures.
• Business unit performance goals will be
based on a combination of financial goals and strategic goals related to the
performance of an identified business unit for which a Participant has
responsibility. Strategic goals for a business unit may include one or a
combination of objective factors relating to success in implementing strategic
plans or initiatives, introductory products, constructing facilities, or other
identifiable objectives. Financial goals for a business unit may include the
degree to which the business unit achieves one or more objective measures
related to its revenues, earnings, profitability, efficiency, operating profit,
costs of production, or other measures.
• Any corporate or business unit goals may
be expressed as absolute amounts or as ratios or percentages. Success may be
measured against various standards, including budget targets, improvement over
prior periods, and performance relative to other companies, business units, or
industry groups.
10.7 Award Limitations. The maximum number of Shares issuable
with respect to Performance Awards granted to any individual executive officer
may not exceed 10,000 Shares for any one calendar year period.
ARTICLE 11
OTHER STOCK BASED AND COMBINATION AWARDS
11.1 Other Stock–Based Awards. The Committee may grant other
Awards under the Plan pursuant to which Shares are or may in the future be
acquired, or Awards denominated in or measured by Share equivalent units,
including Awards valued using measures other than the market value of Shares.
Other Stock-Based Awards are not restricted to any specified form or structure
and may include, without limitation, Share purchase warrants, other rights to
acquire Shares, and securities convertible into or redeemable for Shares. Such
Other Stock–Based Awards may be granted either alone, in addition to, or in
tandem with, any other type of Award granted under the Plan.
11.2 Combination Awards. The Committee may also grant Awards
under the Plan in tandem or combination with other Awards or in exchange of
Awards, or in tandem or combination with, or as alternatives to, grants or
rights under any other employee plan of Corporation, including the plan of any
acquired entity. No action authorized by this Section 11.2 will reduce the
amount of any existing benefits or change the terms and conditions thereof
without the Participant's consent.
ARTICLE 12
DEFERRAL ELECTIONS
The Committee may permit a Participant to elect to defer receipt of
the payment of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of the exercise, earn out, or Vesting of an Award
made under the Plan. If any such election is permitted, the Committee will
establish rules and procedures for such payment deferrals, including, but not
limited to: (a) payment or crediting of reasonable interest or other growth or
earnings factor on such deferred amounts credited in cash, (b) the payment or
crediting of dividend equivalents in respect of deferrals credited in Share
equivalent units, or (c) granting of Deferred Compensation Options.
ARTICLE 13
DIVIDEND EQUIVALENTS
Any Awards may, at the discretion of the Committee, earn dividend
equivalents. In respect of any such Award which is outstanding on a dividend
record date for Common Stock, the Participant may be credited with an amount
equal to the amount of cash or stock dividends that would have been paid on the
Shares covered by such Award, had such covered Shares been issued and
outstanding on such dividend record date. The Committee will establish such
rules and procedures governing the crediting of dividend equivalents, including
the timing, form of payment, and payment contingencies of such dividend
equivalents, as it deems appropriate or necessary.
ARTICLE 14
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.
14.1 Plan Does Not Restrict Corporation. The existence of the
Plan and the Awards granted under the Plan do not affect or restrict in any way
the right or power of the Board or the shareholders of Corporation to make or
authorize any adjustment, recapitalization, reorganization, or other change in
Corporation's capital structure or its business, any merger or consolidation of
the Corporation, any issue of bonds, debentures, preferred or prior preference
stocks ahead of or affecting Corporation's capital stock or the rights thereof,
the dissolution or liquidation of Corporation or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding.
14.2 Adjustments by the Committee. In the event of any change
in capitalization affecting the Common Stock of Corporation, such as a stock
dividend, stock split, recapitalization, merger, consolidation, split–up,
combination or exchange of shares or other form of reorganization, or any other
change affecting the Common Stock, such proportionate adjustments, if any, as
the Committee, in its sole discretion, may deem appropriate to reflect such
change, will be made with respect to the aggregate number of Shares for which
Awards may be granted under the Plan, the maximum number of Shares which may be
sold or awarded to any Participant, the number of Shares covered by each
outstanding Award, and the base price or purchase price per Share in respect of
outstanding Awards. The Committee may also make such adjustments in the number
of Shares covered by, and price or other value of any outstanding Awards in the
event of a spin–off or other distribution (other than normal cash dividends), of
Corporation assets to shareholders.
14.3 Change in Control. Except as otherwise expressly
provided in an Award Agreement, in the event of a change in control of
Corporation (as determined by the Committee), the Committee may, in its sole
discretion and without liability to any person, take such actions, if any, (as
of the date of the consummation of the change in control) with respect to
outstanding Awards as the Committee deems equitable and necessary or desirable,
including without limitation (1) the acceleration of the Vesting of any Awards,
(2) the payment of a cash amount in exchange for the cancellation of any Awards,
and/or (3) requiring the issuance of substitute awards that will substantially
preserve the value, rights, and benefits of any Awards.
ARTICLE 15
AMENDMENT AND TERMINATION
The Board may amend, suspend, or terminate the Plan or any portion
of the Plan at any time, provided no amendment may be made without shareholder
approval if such approval is required by applicable law or the requirements of
an applicable stock exchange or over the counter stock trading system.
ARTICLE 16
MISCELLANEOUS
16.1 Unfunded Plan. The Plan is unfunded and Corporation will
not be required to segregate any assets that may at any time be represented by
Awards under the Plan. Any liability of Corporation to any person with respect
to any Award under the Plan will be based solely upon any contractual
obligations that may be effected pursuant to the Plan. No such obligation of
Corporation will be deemed to be secured by any pledge of or other encumbrance
on any property of Corporation.
16.2 Payments to Trust. The Committee is authorized (but not
obligated) to cause to be established a trust agreement or several trust
agreements under which the Committee may make payments of amounts due or to
become due to Participants in the Plan.
16.3 Other Corporation Benefit and Compensation Programs.
Payments and other benefits received by a Participant under an Award made
pursuant to the Plan will not be deemed a part of a Participant's regular,
recurring compensation for purposes of the termination indemnity or severance
pay law of any state or country and will not be included in, or have any effect
on, the determination of benefits under any other employee benefit plan or
similar arrangement provided by Corporation or a Subsidiary unless expressly so
provided by such other plan or arrangements, or except where the Committee
expressly determines that an Award or portion of an Award should be included to
accurately reflect competitive compensation practices or to recognize that an
Award has been made in lieu of a portion of cash compensation. Awards under the
Plan may be made in combination with or in tandem with, or as alternatives to,
grants, awards, or payments under any other Corporation or Subsidiary plans,
arrangements, or programs. The Plan notwithstanding, Corporation or any
Subsidiary may adopt such other compensation programs and additional
compensation arrangements as it deems necessary to attract, retain, and reward
employees and directors for their service with Corporation and its Subsidiaries.
16.4 Securities Law Restrictions. No Shares may be issued
under the Plan unless counsel for Corporation is satisfied that such issuance
will be in compliance with applicable federal and state securities laws.
Certificates for Shares delivered under the Plan may be subject to such
stop–transfer orders and other restrictions as the Committee deems advisable
under the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law. The Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
16.5 Governing Law. Except with respect to references to the
Code or federal securities laws, the Plan and all actions taken thereunder will
be governed by and construed in accordance with the laws of the state of Oregon.
ARTICLE 17
SHAREHOLDER APPROVAL
The adoption of the Plan and the grant of Awards under the Plan are
expressly subject to the approval of the Plan by (a) the holders of the
outstanding shares of Corporation's capital stock in accordance with Oregon law
and (b) the affirmative vote of the holders of at least a majority of the
outstanding shares of Corporation's Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock, voting as a single voting group. |
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EXHIBIT 10.1
TIMOTHY DENNEY BALDWIN
MINISTER FOR RACING, GAMING AND LICENSING
DIAMOND LEISURE PTY. LIMITED
ACN 009 624 417
MGM GRAND AUSTRALIA PTY LTD
ACN 069 214 473
CASINO OPERATOR'S AGREEMENT
MINTER ELLISON
Lawyers
Waterfront Place
1 Eagle Street
BRISBANE QLD 4000
DX 102 Brisbane
Telephone (07) 3226 6333
Facsimile (07) 3229 1066
NPW 1101575
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TABLE OF CONTENTS
1. INTERPRETATION 3
2.
TERM AND FORMER AGREEMENT
7
3.
CORPORATE STRUCTURE
7
4.
LAND AND LEASE
15
5.
CONDUCT OF THE CASINO
16
6.
CASINO LICENCE
20
7.
CANCELLATION, SUSPENSION AND VARIATION OF LICENCE AND ENFORCEMENT OF SECURITIES
22
8.
CASINO TAX
25
9.
NT KENO
32
10.
COSTS
34
11.
NOTICES
35
12.
GENERAL
36
13.
DISCLOSURE
37
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CASINO OPERATOR'S AGREEMENT
AGREEMENT dated March 12th 2001
BETWEEN TIMOTHY DENNEY BALDWIN, the Minister for Racing, Gaming and Licensing,
in his capacity as minister responsible for the administration of the Gaming
Control Act 1993 ("the Minister" which expression includes his predecessors and
successors in office)
DIAMOND LEISURE PTY. LIMITED ACN 009 624 417 a company incorporated in the
Northern Territory of Australia and having its registered office at Level 3 MGM
Grand Casino, Gilruth Avenue, Darwin, NT, 0800 ("Diamond Leisure")
MGM GRAND AUSTRALIA PTY LTD ACN 069 214 473 a company incorporated in the
Northern Territory of Australia and having its registered office at Level 3 MGM
Grand Casino, Gilruth Avenue, Darwin, NT, 0800 ("MGM Grand Australia")
RECITALS
A.Diamond Leisure holds a casino licence;
B.The Minister, Diamond Leisure and MGM Grand Australia have agreed to terminate
the former agreement and to enter into this agreement under subsection 17(1A) of
the Control Act in substitution for the former agreement; and
C.The Minister has agreed to amend the licence under subsection 18(1A) of the
Control Act upon the terms and conditions contained in this agreement.
AGREEMENT
1. INTERPRETATION
1.1 Definitions
In this agreement, including the recitals, unless the context otherwise
requires:
"approved game" means a game approved by the Minister under the Control Act as a
game that may be played in the casino;
"approved gaming area" means a part or parts of the casino in which games may be
played or conducted by virtue of the Director's approval under clause 5.7;
"assets or undertaking" in relation to Diamond Leisure and MGM Grand Australia
includes the benefit of, or any rights under, this agreement or the licence;
"business day" means any of the days from Monday to Friday inclusive other than
a day which is a public holiday in the Northern Territory;
"casino" means the place or places approved by the Minister under subsection
18(3) of the Control Act from time to time at which the Operator may conduct the
business of playing of casino games under the licence; the term does not include
any place, other than the Land, specified in a permit granted to the Operator
under the Control Act or a notice under subsection 54(2) of the Control Act;
"casino games" means approved games and permitted games;
"casino licence" has the same meaning as in the Control Act;
"casino tax" means tax payable under subsection 25(1) of the Control Act and
clauses 8 and 9;
"chief operating officer" means a natural person for the time being approved as
chief operating officer pursuant to clause 5.4;
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"casino profitability" means actual operational profits of the Operator's casino
business operations, other than NT keno, permitted under this agreement, the
licence and any permit, licence, notice or approval given from time to time
under the Control Act, being earnings before interest, taxation, depreciation
and amortisation calculated according to Australian Accounting Standards, and
includes the capacity of the Operator to generate such profits; for the
avoidance of doubt, neither:
(a)the profits of any business conducted on or from the Land, or on or from any
other place approved from time to time under subsection 18(3) of the Control
Act, other than the conduct of casino games; nor
(b)the profits derived from any internet gaming operations which may be
conducted by the Operator under a separate internet gaming licence;
will be taken into account in determining casino profitability.
"competition law" means the Competition Principles Agreement and any other
agreement concerning Australian National Competition Policy to which the
Territory is a party from time to time, and any legislation, determination,
ruling, policy or practice introduced or implemented in accordance with, or in
order to comply with the Territory's obligations under, such agreements;
"Control Act" means the Gaming Control Act;
"Diamond Darwin" means Diamond Darwin Pty. Limited ACN 009 641 089;
"Director" means the Director within the meaning of the Control Act, and whether
appointed and acting before or after the effective date;
"director of security and surveillance" means a natural person for the time
being approved as director of security and surveillance pursuant to clause 5.4;
"effective date" means first day of the month following the date on which this
agreement is signed;
"event of default" means any breach of a term or condition of this agreement,
the Control Act or any term or condition of the licence, or any failure by the
Operator to comply with any of its obligations under this agreement, the Control
Act or the licence;
"former agreement" means the agreement between Barry Francis Coulter in his
capacity as Minister responsible for the Control Act, Diamond Leisure and MGM
Grand Australia dated 7 September 1995 as amended by a Variation Agreement made
between Darryl Manzie in his capacity as Minister responsible for the
administration of the Control Act, Diamond Leisure and MGM Grand Australia dated
30 November 1998, and by a further Variation Agreement made between Timothy
Denney Baldwin in his capacity as Minister responsible for the administration of
the Control Act, Diamond Leisure and MGM Grand Australia dated 29 November 1999;
"gaming" means the organisation, playing or conduct or operation of any casino
games;
"gross profit" means:
(a)in relation to table games, the total amount received or receivable in
respect of gaming on table games in the casino in any given period, less the
amount paid out as winnings in respect of that gaming during that period, plus
net chip movement for that gaming during that period;
(b)in relation to poker machines, the total amount received or receivable in
respect of poker machine gaming in the casino in any given period, less the
amount paid out as winnings in respect of poker machine gaming during that
period;
(c)in relation to in-house keno, the total amount received or receivable in
respect of keno gaming with patrons present at the casino or at Lasseter's
casino in any given period, less the amount paid out as winnings in respect of
that gaming during that period; and
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(d)in relation to NT keno, the total amount received or receivable in respect of
NT keno gaming in any given period, less the amount paid out as winnings in
respect of NT keno during that period, but excluding amounts received or
receivable, and winnings in respect of, in-house keno and referred to in
paragraph (c) of this definition;
and in each case the total amount received or receivable is inclusive of GST;
"GST" has the meaning given in clause 8.10;
"GST Act" means the Act defined in clause 8.10;
"in-house keno" means the casino game known as "keno" approved under subsection
26(1) of the Control Act and played, with patrons present at the casino or at
Lasseter's casino, in accordance with rules, procedures and equipment approved
under subsection 26(2) of the Control Act;
"key licence holder" means a person to whom the Director has granted a key
licence pursuant to the Gaming Control (Licensing) Regulations;
"Land" means all that piece or parcel of land known as Lot 5244 Town of Darwin
in the Northern Territory of Australia being the whole of the land contained in
Certificate of Title Volume 122 Folio 48;
"licence" means the Operator's casino licence as amended under sub
section 18(1A) of the Control Act as contemplated by clause 6;
"licence term" means the terms specified in clause 2.2;
"manager" means a natural person for the time being appointed as manager of
gaming under clause 5.4;
"MGM MIRAGE" means MGM MIRAGE, a corporation duly incorporated in the State of
Delaware in the United States of America, the principal executive office of
which is situate at 3600 Las Vegas Boulevard South, Las Vegas, Nevada, USA;
"MGM Grand Diamond" means MGM Grand Diamond, Inc. a corporation duly
incorporated in the state of Nevada in the United States of America, the
principal executive office of which is situate at 3600 Las Vegas Boulevard
South, Las Vegas, Nevada, USA;
"national arrangement" means any agreement or understanding reached between the
Territory and the government or a regulatory body of the Commonwealth, or
between the Territory and the governments or any regulatory bodies of a majority
of the other States and Territory of Australia or a law convention or policy
passed or adopted by the Territory and the government or any regulatory body of
the Commonwealth, or by the Territory and the governments or any regulatory
bodies of a majority of the other States and Territory of Australia;
"net chip movement" means the difference between the value in dollars of the
casino chip suspense at the beginning of any given period and the value in
dollars of the casino chip suspense at the end of that period;
"Northern Division" means Darwin and other land in the Northern Territory of
Australia which is north of the parallel of latitude which is 18 degrees south
of the equator and any part of that land;
"NT keno" means the casino game known as "keno" approved under subsection 26(1)
of the Control Act and established and operated by the Operator under
arrangements which, subject to section 54 of the Control Act, enable patrons at
venues other than the Land to participate, and in accordance with rules,
procedures and equipment approved under subsection 26(2) of the Control Act;
"the Operator" means Diamond Leisure, but shall, if the licence is assigned to
MGM Grand Australia under section 22 of the Control Act, be read as a reference
to MGM Grand Australia;
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"permitted game" means a game in respect of which consent has been given by the
Director under clause 5.13 or a game deemed to be a permitted game by virtue of
clause 1.2(b);
"poker machine gaming" means the casino game of poker machine gaming approved
under subsection 26(1) of the Control Act and played in accordance with rules,
procedures and equipment approved under subsection 26(2) of the Control Act;
"relevant companies" means Diamond Leisure, Diamond Darwin, the Trustee, MGM
Grand Australia, MGM Grand Diamond and MGM MIRAGE;
"table games" means all casino games other than keno, NT keno and poker machine
gaming;
"Territory" means the Northern Territory of Australia;
"Tracinda" means Tracinda Corporation, a corporation duly incorporated in the
state of Delaware in the United States of America, of Suite 250, 150 South Rodeo
Drive, Beverley Hills, California, USA;
"the Trust" means the Territory Property Trust constituted under a deed of trust
dated 28 September 1984 entered into by the Trustee and Abington Pty Ltd (later
known as Investnorth Management Pty Ltd) ACN 009 626 253;
"the Trustee" means Fernbank Pty Ltd ACN 009 622 262;
"year" means a consecutive period of 12 calendar months commencing on January 1
in any calendar year.
1.2 Approved games and permitted games
(a)For the avoidance of doubt, if at any time during the term of this agreement
a game which has been dealt with by the parties on the understanding that it was
an unlawful game is found to be a lawful game, that game is not included in any
reference in this agreement to an approved game or approved games.
(b)A game referred to in paragraph (a) which is found to be a lawful game shall
be deemed to be a permitted game, and any rules, procedures and equipment
purportedly approved by the Director pursuant to section 26 of the Control Act
shall be deemed to be rules, procedures and equipment approved pursuant to
clause 5.13.
1.3 General
In this agreement, including the recitals, unless the context otherwise
requires:
(a)a reference to any legislation or legislative provision includes any
statutory modification or re-enactment of, or legislative provision substituted
for, and any statutory instrument issued under, that legislation or legislative
provision;
(b)a word denoting the singular number includes the plural number and vice
versa;
(c)a word denoting an individual or person includes a corporation, firm,
authority, government or governmental authority and vice versa;
(d)a word denoting a gender includes all genders;
(e)a reference to a recital, clause, schedule or annexure is to a recital,
clause, schedule or annexure of or to this agreement;
(f)a reference to any agreement or document is to that agreement or document
(and, where applicable, any of its provisions) as amended, novated, supplemented
or replaced from time to time;
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(g)a reference to any party to this agreement, or any other document or
arrangement, includes that party's executors, administrators, substitutes,
successors and permitted assigns; and
(h)a reference to "dollars" or "$" is to an amount in Australian currency.
1.4 Headings and parts of speech
In this agreement, including the recitals:
(a)headings are for convenience of reference only and do not affect
interpretation; and
(b)where an expression is defined, another part of speech or grammatical form of
that expression has a corresponding meaning.
2. TERM AND FORMER AGREEMENT
2.1 Termination of former agreement
With effect on and from the effective date, the former agreement is terminated
by mutual consent but:
(a)without affecting any obligation of the Operator to pay casino tax in respect
of any period before the effective date; and
(b)subject to the provisions of clause 8.9.
2.2 Term
This agreement shall commence on the effective date and shall expire on 30
June 2015 unless the licence is sooner surrendered or cancelled, in which case
this agreement shall expire on the date of surrender or cancellation.
3. CORPORATE STRUCTURE
3.1 Diamond Leisure
It is a condition of this agreement and the licence that:
(a)on the effective date the directors of Diamond Leisure shall be:
James Joseph Murren
Daniel M. Wade
David Steinhardt
(b)on the effective date the secretaries of Diamond Leisure shall be David
Steinhardt and Scott Langsner;
(c)on the effective date 100% of the issued share capital of Diamond Leisure
shall be held both legally and beneficially by Diamond Darwin;
(d)subject to paragraph (h), after the effective date no director or secretary
of Diamond Leisure shall be appointed without the consent in writing of the
Minister (which consent may be granted or withheld by the Minister in his
absolute discretion);
(e)subject to paragraph (h), after the effective date no person other than MGM
Grand Australia shall become entitled either legally or beneficially to any
share in the capital of Diamond Leisure without the consent in writing of the
Minister (which consent may be granted or withheld by the Minister in his
absolute discretion);
(f)subject to paragraph (h), after the effective date Diamond Leisure shall not
mortgage, charge or otherwise encumber any of the assets or undertaking of
Diamond Leisure (except where
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such mortgage, charge or encumbrance is given in favour of BA Australia Limited
ACN 004 617 341 or the Australia and New Zealand Banking Group Limited, or where
in mortgaging, charging or otherwise encumbering such asset or undertaking no
right is granted or purportedly granted to the mortgagee, chargee or
encumbrancee or any other person to take effective control of Diamond Leisure)
without the consent in writing of the Minister (which consent may be granted or
withheld by the Minister in his absolute discretion);
(g)after the effective date the Operator shall notify the Minister of any change
to the constitution of Diamond Leisure within 14 days of such change;
(h)upon:
(i)a director or secretary of Diamond Leisure being appointed;
(ii)a person other than MGM Grand Australia becoming entitled either legally or
beneficially to any share in the capital of Diamond Leisure; or
(iii)Diamond Leisure mortgaging, charging or otherwise encumbering any of the
assets or undertakings of Diamond Leisure contrary to paragraph (f);
there shall be a period of 14 days during which the Operator shall make
application to the Minister for his consent for the purposes of paragraph (d),
(e) or (f) as the case may be. During that period of 14 days the Operator shall
not be in breach of this agreement nor shall there be an event of default by
reason of the lack of the Minister's consent for the purposes of paragraph (d),
(e) or (f) as the case may be. Should application for consent be made within the
14 day period specified the Operator shall not be in breach of this agreement
nor shall there be an event of default by reason of lack of the Minister's
consent for the purposes of paragraph (d), (e) or (f) as the case may be until
the Minister has notified the Operator of his decision to withhold consent and
the Operator has not, within 10 days after such notification, notified the
Minster that the action to which the Minister has withheld consent has been
reversed or rescinded;
(i)after the effective date the Operator shall, when requested by the Minister,
procure and make available to the Minister all information in respect of the
Operator's Diamond Leisure's shareholders, directors or corporate structure and
all minutes of meetings of shareholders and directors and other records of or in
relation to the Operator Diamond Leisure so far as they are relevant to the
provisions of this subclause;
(j)the Operator shall notify the Minister within 14 days of the acquisition by
MGM Grand Australia of any share in the capital of Diamond Leisure.
3.2 The Trustee
It is a condition of this agreement and the licence that:
(a)on the effective date the directors of the Trustee shall be:
James Joseph Murren
Daniel M. Wade
David Steinhardt
(b)on the effective date the secretaries of the Trustee shall be David
Steinhardt and Scott Langsner;
(c)on the effective date 100% of the issued share capital of the Trustee shall
be held both legally and beneficially by Diamond Darwin;
(d)subject to paragraph (h), after the effective date no director or secretary
of the Trustee shall be appointed without the consent in writing of the Minister
(which consent may be granted or withheld by the Minister in his absolute
discretion);
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(e)subject to paragraph (h), after the effective date no person other than MGM
Grand Australia shall become entitled either legally or beneficially to any
share in the capital of the Trustee without the consent in writing of the
Minister (which consent may be granted or withheld by the Minister in his
absolute discretion);
(f)subject to paragraph (h), after the effective date the Trustee shall not
mortgage, charge or otherwise encumber any of the assets or undertaking of the
Trustee (except where such mortgage, charge or encumbrance is given in favour of
BA Australia Limited ACN 004 617 341 or the Australia and New Zealand Banking
Group Limited, or where in mortgaging, charging or otherwise encumbering such
asset or undertaking no right is granted or purportedly granted to the
mortgagee, chargee or encumbrancee or any other person to take effective control
of the Trustee) without the consent in writing of the Minister (which consent
may be granted or withheld by the Minister in his absolute discretion);
(g)after the effective date the Operator shall notify the Minister of any change
to the memorandum or articles of association of the Trustee within 14 days of
such change;
(h)upon:
(i)a director or secretary of the Trustee being appointed;
(ii)a person other than MGM Grand Australia becoming entitled either legally or
beneficially to any share in the capital of the Trustee; or
(iii)the Trustee mortgaging, charging or otherwise encumbering any of the assets
or undertakings of the Trustee contrary to paragraph (f);
there shall be a period of 14 days during which the Operator shall make
application to the Minister for his consent for the purposes of paragraph (d),
(e) or (f) as the case may be. During that period of 14 days the Operator shall
not be in breach of this agreement nor shall there be an event of default by
reason of the lack of the Minister's consent for the purposes of paragraph (d),
(e) or (f) as the case may be. Should application for consent be made within the
14 day period specified the Operator shall not be in breach of this agreement
nor shall there be an event of default by reason of lack of the Minister's
consent for the purposes of paragraph (d), (e) or (f) as the case may be until
the Minister has notified the Operator of his decision to withhold consent and
the Operator has not, within 10 days after such notification, notified the
Minster that the action to which the Minister has withheld consent has been
reversed or rescinded;
(i)after the effective date the Operator shall, when requested by the Minister,
procure and make available to the Minister all information in respect of the
Trustee's shareholders, directors or corporate structure and all minutes of
meetings of shareholders and directors and other records of or in relation to
the Trustee so far as they are relevant to the provisions of this subclause;
(j)the Operator shall notify the Minister within 14 days of the acquisition by
MGM Grand Australia of any share in the capital of the Trustee.
3.3 Diamond Darwin
It is condition of this agreement and the licence that:
(a)on the effective date the directors of Diamond Darwin shall be:
Daniel M. Wade
David Steinhardt
James Joseph Murren;
(b)on the effective date the secretaries of Diamond Darwin shall be David
Steinhardt and Scott Langsner;
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(c)on the effective date 100% of the issued share capital of Diamond Darwin
shall be held both legally and beneficially by MGM Grand Australia;
(d)subject to paragraph (h), after the effective date no director or secretary
of Diamond Darwin shall be appointed without the consent in writing of the
Minister (which consent may be granted or withheld by the Minister in his
absolute discretion);
(e)subject to paragraph (h), after the effective date no person other than MGM
Grand Australia shall become entitled either legally or beneficially to any
share in the capital of Diamond Darwin without the consent in writing of the
Minister (which consent may be granted or withheld by the Minister in his
absolute discretion);
(f)subject to paragraph (h), after the effective date Diamond Darwin shall not
mortgage, charge or otherwise encumber any of the assets or undertaking of
Diamond Darwin (except where such mortgage, charge or encumbrance is given in
favour of BA Australia Limited ACN 004 617 341 or the Australia and New Zealand
Banking Group Limited, or where in mortgaging, charging or otherwise encumbering
such asset or undertaking no right is granted or purportedly granted to the
mortgagee, chargee or encumbrancee or any other person to take effective control
of Diamond Darwin) without the consent in writing of the Minister (which consent
may be granted or withheld by the Minister in his absolute discretion);
(g)after the effective date the Operator shall notify the Minister of any change
to the constitution of Diamond Darwin within 14 days of such change;
(h)upon:
(i)a director or secretary of Diamond Darwin being appointed;
(ii)a person other than MGM Grand Australia becoming entitled either legally or
beneficially to any share in the capital of Diamond Darwin; or
(iii)Diamond Darwin mortgaging, charging or otherwise encumbering any of the
assets or undertakings of Diamond Darwin contrary to paragraph (f);
there shall be a period of 14 days during which the Operator shall make
application to the Minister for his consent for the purposes of paragraph (d),
(e) or (f) as the case may be. During that period of 14 days the Operator shall
not be in breach of this agreement nor shall there be an event of default by
reason of the lack of the Minister's consent for the purposes of paragraph (d),
(e) or (f) as the case may be. Should application for consent be made within the
14 day period specified the Operator shall not be in breach of this agreement
nor shall there be an event of default by reason of lack of the Minister's
consent for the purposes of paragraph (d), (e) or (f) as the case may be until
the Minister has notified the Operator of his decision to withhold consent and
the Operator has not, within 10 days after such notification, notified the
Minster that the action to which the Minister has withheld consent has been
reversed or rescinded;
(i)after the effective date the Operator shall, when requested by the Minister,
procure and make available to the Minister all information in respect of Diamond
Darwin's shareholders, directors or corporate structure and all minutes of
meetings of shareholders and directors and other records of or in relation to
Diamond Darwin so far as they are relevant to the provisions of this subclause;
(j)the Operator shall notify the Minister within 14 days of the acquisition by
MGM Grand Australia of any share in the capital of Diamond Darwin.
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3.4 MGM Grand Australia
It is condition of this agreement and the licence that:
(a)on the effective date the directors of MGM Grand Australia shall be:
James Joseph Murren
Daniel M. Wade
Neville John Walker
(b)on the effective date the secretaries of MGM Grand Australia shall be David
Steinhardt and Scott Langsner;
(c)on the effective date 100% of the issued share capital of MGM Grand Australia
shall be held beneficially by MGM Grand Diamond, all but one share of the issued
share capital shall be held legally by MGM Grand Diamond, and one share of the
issued share capital shall be held legally by MGM MIRAGE as nominee for MGM
Grand Diamond;
(d)subject to paragraph (h), after the effective date no director or secretary
of MGM Grand Australia shall be appointed without the consent in writing of the
Minister (which consent may be granted or withheld by the Minister in his
absolute discretion);
(e)subject to paragraph (h), after the effective date no person other than MGM
Grand Diamond shall become entitled either legally or beneficially to any share
in the capital of MGM Grand Australia without the consent in writing of the
Minister (which consent may be granted or withheld by the Minister in his
absolute discretion);
(f)subject to paragraph (h), after the effective date MGM Grand Australia shall
not mortgage, charge or otherwise encumber any of the assets or undertaking of
MGM Grand Australia (except where such mortgage, charge or encumbrance is given
in favour of BA Australia Limited ACN 004 617 341 or the Australia and New
Zealand Banking Group Limited, or where in mortgaging, charging or otherwise
encumbering such asset or undertaking no right is granted or purportedly granted
to the mortgagee, chargee or encumbrancee or any other person to take effective
control of MGM Grand Australia) without the consent in writing of the Minister
(which consent may be granted or withheld by the Minister in his absolute
discretion);
(g)after the effective date the Operator shall notify the Minister of any change
to the constitution of MGM Grand Australia within 14 days of such change;
(h)upon:
(i)a director or secretary of MGM Grand Australia being appointed;
(ii)a person other than MGM Grand Diamond becoming entitled either legally or
beneficially to any share in the capital of MGM Grand Australia; or
(iii)MGM Grand Australia mortgaging, charging or otherwise encumbering any of
the assets or undertakings of MGM Grand Australia contrary to paragraph (f);
there shall be a period of 14 days during which the Operator shall make
application to the Minister for his consent for the purposes of paragraph (d),
(e) or (f) as the case may be. During that period of 14 days the Operator shall
not be in breach of this agreement nor shall there be an event of default by
reason of the lack of the Minister's consent for the purposes of paragraph (d),
(e) or (f) as the case may be. Should application for consent be made within the
14 day period specified the Operator shall not be in breach of this agreement
nor shall there be an event of default by reason of lack of the Minister's
consent for the purposes of paragraph (d), (e) or (f) as the case may be until
the Minister has notified the Operator of his decision to withhold consent and
the Operator has not, within 10 days after such notification,
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notified the Minster that the action to which the Minister has withheld consent
has been reversed or rescinded;
(i)after the effective date the Operator shall, when requested by the Minister,
procure and make available to the Minister all information in respect of MGM
Grand Australia's shareholders, directors or corporate structure and all minutes
of meetings of shareholders and directors and other records of or in relation to
MGM Grand Australia so far as they are relevant to the provisions of this
subclause;
(j)the Operator shall notify the Minister within 14 days of the acquisition by
MGM Grand Diamond of any share in the capital of MGM Grand Australia.
3.5 MGM Grand Diamond
It is condition of this agreement and the licence that:
(a)on the effective date the directors of MGM Grand Diamond shall be:
James Joseph Murren
John Redmond
Daniel M. Wade
(b)on the effective date the secretary of MGM Grand Diamond shall be Scott
Langsner;
(c)on the effective date 100% of the issued share capital of MGM Grand Diamond
shall be held both legally and beneficially by MGM MIRAGE;
(d)subject to paragraph (h), after the effective date no director or secretary
of MGM Grand Diamond shall be appointed without the consent in writing of the
Minister (which consent may be granted or withheld by the Minister in his
absolute discretion);
(e)subject to paragraph (h), after the effective date no person other than MGM
MIRAGE shall become entitled either legally or beneficially to any share in the
capital of MGM Grand Diamond without the consent in writing of the Minister
(which consent may be granted or withheld by the Minister in his absolute
discretion);
(f)subject to paragraph (h), after the effective date MGM Grand Diamond shall
not mortgage, charge or otherwise encumber any of the assets or undertaking of
MGM Grand Diamond (except where such mortgage, charge or encumbrance is given in
favour BA Australia Limited ACN 004 617 341 or the Australia and New Zealand
Banking Group Limited, or where in mortgaging, charging or otherwise encumbering
such asset or undertaking no right is granted or purportedly granted to the
mortgagee, chargee or encumbrancee or any other person to take effective control
of MGM Grand Diamond) without the consent in writing of the Minister (which
consent may be granted or withheld by the Minister in his absolute discretion);
(g)after the effective date the Operator shall notify the Minister of any change
to the constitution of MGM Grand Diamond within 14 days of such change;
(h)upon:
(i)a director or secretary of MGM Grand Diamond being appointed;
(ii)a person other than MGM MIRAGE becoming entitled either legally or
beneficially to any share in the capital of MGM Grand Diamond; or
(iii)MGM Grand Diamond mortgaging, charging or otherwise encumbering any of the
assets or undertakings of MGM Grand Diamond contrary to paragraph (f);
there shall be a period of 14 days during which the Operator shall make
application to the Minister for his consent for the purposes of paragraph (d),
(e) or (f) as the case may be.
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During that period of 14 days the Operator shall not be in breach of this
agreement nor shall there be an event of default by reason of the lack of the
Minister's consent for the purposes of paragraph (d), (e) or (f) as the case may
be. Should application for consent be made within the 14 day period specified
the Operator shall not be in breach of this agreement nor shall there be an
event of default by reason of lack of the Minister's consent for the purposes of
paragraph (d), (e) or (f) as the case may be until the Minister has notified the
Operator of his decision to withhold consent and the Operator has not, within
10 days after such notification, notified the Minster that the action to which
the Minister has withheld consent has been reversed or rescinded;
(i)after the effective date the Operator shall, when requested by the Minister,
procure and make available to the Minister all information in respect of MGM
Grand Diamond's shareholders, directors or corporate structure and all minutes
of meetings of shareholders and directors and other records of or in relation to
MGM Grand Diamond so far as they are relevant to the provisions of this
subclause;
(j)the Operator shall notify the Minister within 14 days of the acquisition by
MGM MIRAGE of any share in the capital of MGM Grand Diamond.
3.6 MGM MIRAGE
It is condition of this agreement and the licence that:
(a)on the effective date the directors of MGM MIRAGE shall be:
J. Terrence Lanni
Fred Benninger
James D. Aljian
Terry N. Christensen
Glenn C. Cramer
Willie D. Davis
Alexander M. Haig, Jr.
Kirk Kerkorian
Walter M. Sharp
Alejandro Yemenidijian
Robert H. Baldwin
Gary N. Jacobs
George J. Mason
James Joseph Murren
Ronald M. Popeil
John Redmond
Daniel M. Wade
Daniel B. Wayson
Melvin B. Wolzinger
Jerome B. York
(b)on the effective date the secretary of MGM MIRAGE shall be Scott Langsner;
(c)on the effective date MGM MIRAGE shall be a publicly traded company subject
to the securities and exchange laws in force in the United States of America, in
particular but without limiting the generality of the foregoing, The Securities
Act of 1933 and The Securities Exchange Act of 1934; and
(d)on the effective date Tracinda shall be the registered owner of a controlling
interest in the capital of MGM MIRAGE;
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(e)subject to paragraph (g), after the effective date no director or secretary
of MGM MIRAGE shall be appointed without the consent in writing of the Minister
(which consent may be granted or withheld by the Minister in his absolute
discretion);
(f)after the effective date MGM MIRAGE shall notify the Minister of the issue of
any share in its capital within 14 days of such issue;
(g)upon a director or secretary of MGM MIRAGE being appointed there shall be a
period of 14 days during which the Operator shall make application to the
Minister for his consent for the purposes of paragraph (e). During that period
of 14 days the Operator shall not be in breach of this agreement nor shall there
be an event of default by reason of the lack of the Minister's consent for the
purposes of paragraph (e). Should application for consent be made within the
14 day period specified the Operator shall not be in breach of this agreement
nor shall there be an event of default by reason of lack of the Minister's
consent for the purposes of paragraph (e) until the Minister has notified the
Operator of his decision to withhold consent and the Operator has not, within
10 days after such notification, notified the Minster that the action to which
the Minister has withheld consent has been reversed or rescinded;
(h)within 14 days of:
(i)MGM MIRAGE becoming obliged to file with the Nevada Gaming Control Board or
any other regulatory authority notification of a person becoming legally or
beneficially entitled to, or otherwise gain effective control of, 10% or more of
the issued share capital of MGM MIRAGE; or
(ii)MGM MIRAGE becoming aware that a person is legally or beneficially entitled
to, or otherwise has effective control of, 10% or more of the issued share
capital of MGM MIRAGE;
the Operator shall notify the Minister of such occurrence;
(i)where the Minister:
(i)receives notification under paragraph (f) or otherwise becomes aware that a
person has become entitled to a legal or beneficial interest, or has otherwise
gained effective control of 10% or more of the issued capital of MGM MIRAGE, the
Minister may carry out, or cause to be carried out, such investigations and
inquiries as the Minister considers necessary to determine whether the person or
an associate of the person is a suitable person to hold or effectively control
such interest;
(ii)in his absolute discretion determines that the person is not a suitable
person to hold or effectively control such an interest the Minister shall notify
the Operator of his determination, and without limiting the meaning of the term
"event of default" under this agreement, if the person the subject of the
Minister's determination remains entitled legally or beneficially to, or
otherwise has effective control of, 10% or more of the issued share capital of
MGM MIRAGE 30 days after notification to the Operator of the Minister's
determination, there shall be for the purposes of clause 7 an event of default;
(j)after the effective date the Operator shall, when requested by the Minister,
procure and make available to the Minister all information in respect of the MGM
MIRAGE's shareholders, directors or corporate structure and all minutes of
meeting of shareholders and directors and other records of MGM MIRAGE so far as
they are relevant to the provisions of this subclause;
(k)during the term of this agreement the operator shall file with the Director
copies of all documents filed or required to be filed by MGM MIRAGE or any of
its subsidiaries with the Nevada Gaming Control Board or any other body with
responsibility for regulation or supervision of gambling activities in Nevada
USA, if the documents relate in any way
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whatsoever to the casino, the Operator's conduct of the casino, or the Land, and
in any other case will file with the Director copies of such documents as the
Director requests.
3.7 The Trust
It is a condition of this agreement and the licence that:
(a)on the effective date the number of units in the Trust on issue shall be
29,000,010;
(b)on the effective date:
Diamond Darwin shall hold and beneficially own 24,000,010 units in the Trust;
and
MGM Grand Australia shall hold and beneficially own 5,000,000 units in the
Trust;
(c)subject to paragraph (d), after the effective date no unit in the Trust shall
be transferred or otherwise dealt with, and no person shall become entitled
either legally or beneficially to any unit in the Trust without the consent in
writing of the Minister;
(d)the consent of the Minister shall not be required for the transfer of any
units in the Trust to a relevant company provided that the Operator shall notify
the Minister within 14 days of any such transfer.
4. LAND AND LEASE
4.1 The Land
It is a condition of this agreement and the licence that:
(a)at the effective date the Trustee shall be registered as the proprietor of an
estate in fee simple in the Land;
(b)subject to paragraphs (c) and (d), after the effective date the Trustee shall
not transfer, assign, mortgage, encumber, lease, licence or otherwise deal with
the Land without the consent in writing of the Minister;
(c)the consent of the Minister is not required for any transfer or lease of the
Land to a relevant company provided that the Operator shall notify the Minister
within 14 days of such transfer or lease;
(d)the consent of the Minister is not required for any mortgage or encumbrance
of the Land in favour of BA Australia Limited ACN 004 617 341 or the Australia
and New Zealand Banking Group Limited.
4.2 The Lease
It is a condition of this agreement and the licence that:
(a)at the effective date the Operator shall be registered or entitled to be
registered as the lessee of the Land from the Trustee under a registrable lease
approved in writing by the Minister;
(b)subject to paragraphs (c) and (d), after the effective date the Operator
shall not transfer, assign, surrender, mortgage, encumber, sublease, licence or
otherwise deal with its interest in the Land without the consent in writing of
the Minister;
(c)the consent of the Minister is not required for any surrender, transfer,
assignment, sublease or licence of the interest of the Operator in the Land to a
relevant company provided that the Operator shall notify the Minister within
14 days of such surrender, transfer, assignment, sublease or licence;
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(d)the consent of the Minister is not required for any mortgage or encumbrance
of the interest of the Operator in the Land in favour BA Australia Limited ACN
004 617 341 or the Australia and New Zealand Banking Group Limited.
4.3 Other interests
It is a condition of this agreement and the licence that no person shall become
entitled either legally or beneficially to any interest in the Land except as
expressly permitted pursuant to this clause or clause 3.7, or as consented to by
the Minister pursuant to this clause or clause 3.7.
4.4 Other places for the conduct of the Casino business
The parties acknowledge that the Operator may after the effective date apply to
the Minister to have approval given under subsection 18(3) of the Control Act
for an additional place in Darwin to be approved as a place at which the
Operator may conduct the casino business. The terms of any agreement covering
the playing of games or the operation of machines for the purpose of gaming at
that or any other location, other than the Land, shall not be inconsistent with
this agreement and shall contain parallel tax rates and licence term, but the
issues of whether, and in what manner if at all, the gross profits from gaming
at any approved additional locations are to be taken into consideration for the
purposes of clause 8.4 of this agreement are to be determined by agreement
between the Minister and the Operator at the time of any approval of additional
locations. Nothing in this clause fetters the discretion of the Minister under
subsection 18(3) of the Control Act.
5. CONDUCT OF THE CASINO
5.1 Fundamental objectives
The Operator and the Minister acknowledge that it is their fundamental, joint,
agreed objective that the Operator is to conduct its casino business at a world
class standard of excellence and integrity, and to provide at the casino a full
and comprehensive range of casino games throughout the licence term, to the
intent that—
(a)the residents of the Northern Division and its visitors have available to
them such range and variety of casino games and facilities as will maintain
Australian best practice in casino operations; and
(b)the Operator adequately advertises and promotes the casino business within
Australia and overseas.
5.2 Further explanation of fundamental objectives
Without limiting the operation of clause 5.1, the Operator must throughout the
licence term ensure that—
(a)it conducts business at the casino in a high class reputable manner;
(b)its range of casino games on offer at the effective date is constantly
reviewed and benchmarked against other major casinos in Australia and overseas,
so that the range, including the overall range of table games taken as a whole,
is not diminished but continues to develop and expand to meet customer
expectations;
(c)it makes or causes to be made such capital improvements to the casino from
time to time as it believes, using commercially reasonable business judgments,
will enhance its attractiveness;
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(d)it keeps the casino (both interior and exterior) and all its fixtures and
plant, equipment and chattels in substantial repair and good condition and well
and sufficiently repairs, replaces and cleans them, or causes those things to be
done; and
(e)in all material respects it complies with, and ensures that all other persons
involved in the operation of the casino comply with:
(i)all the terms and conditions of this agreement;
(ii)the Control Act;
(iii)all rules procedures, directions and guidelines approved or given under the
Control Act;
(iv)the terms and conditions, if any, attached to any approval or permit given
or issued under the Control Act; and
(v)all of the laws of the Territory including, without limitation, the Liquor
Act.
5.3 Information for the Minister
The Operator must provide to the Minister from time to time as he may require,
information about budgets and expenditure on capital improvements and marketing
and promotion, and its planning for these items, to satisfy the Minister of the
Operator's commitment to the objectives in clauses 5.1 and 5.2.
5.4 Responsible personnel
(a)(i) The Operator shall during the term of this agreement nominate to the
Minister for approval by the Minister in his absolute discretion a chief
operating officer (who need not be resident in Darwin), of the casino. The
Minister's approval may be subject to conditions, and the approval and
conditions may be varied or revoked or replaced at any time.
(ii)The Operator shall ensure that no person shall act as chief operating
officer except with the approval of the Minister granted pursuant to this
subclause, and except in accordance with any terms and conditions of such
approval.
(b)(i) The Operator shall during the term of this agreement nominate to the
Minister for approval by the Minister in his absolute discretion a director of
security and surveillance (who need not be a resident of Darwin). The Minister's
approval may be subject to conditions, and the approval and conditions may be
varied or revoked or replaced at any time.
(ii)The Operator shall ensure that no person shall act as director of security
and surveillance except with the approval of the Minister granted pursuant to
this subclause, and except in accordance with any terms and conditions of such
approval.
(c)(i) The Operator shall during the term of this agreement appoint a manager
(who shall be resident in Darwin) of the casino. Any manager so appointed shall
first be approved by the Minister in his absolute discretion, and the Minister's
approval may be subject to conditions and the approval and conditions may be
varied or revoked or replaced at any time. Any approval granted by the Minister
in respect of the current manager of the casino shall continue in force,
notwithstanding the amendment of the licence as contemplated by this agreement.
(ii)The manager shall be personally responsible in all respects for the conduct
of all of the Operator's operations and business within the casino.
(iii)The Operator shall ensure that no person shall act as manager except with
the approval of the Minister granted pursuant to this subclause, and except in
accordance with any terms and conditions of such approval.
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(iv)Without limiting the responsibility of the manager pursuant to subparagraph
(ii):
•in relation to all matters other than security and surveillance, the manager
may be subject to the directions of the chief operating officer and such other
persons as may be approved by the Minister in his absolute discretion, which
approval may be subject to conditions, and which approval and conditions may be
varied or replaced at any time; and
•in relation to security and surveillance the manager may be subject to the
directions of the director of security and surveillance and such other persons
as may be approved by the Minister in his absolute discretion, which approval
may be subject to conditions, and which approval and conditions may be varied or
replaced at any time;
PROVIDED that no person shall be approved as a person who may give directions to
the manager both in relation to security and surveillance and matters other than
security and surveillance.
(v)No person shall give any directions to the manager in respect of the conduct
of the Operator's operations and business within the casino other than a person
approved pursuant to this subclause as chief operating officer or director of
security and surveillance or otherwise to give directions to the manager as
allowed by subparagraph (iv).
(d)The Operator shall ensure that at all times during the term of this agreement
it employs at the casino personnel who are approved under paragraphs (a),
(b) and (c) in the positions described in those paragraphs.
(e)The Operator shall ensure that at all times whilst any activity in any way
related to gaming is being carried out at the casino there shall be at least one
key licence holder present at the casino and on duty.
(f)If the Operator provisionally appoints and employs casino personnel subject
to approval under paragraphs (a), (b) or (c) and it has duly submitted details
about such personnel for the Minister's approval, the Operator shall not be in
breach of this agreement for the period during which the Minister is considering
whether to approve or disapprove of such appointment.
5.5 Other Persons to be approved
The Operator shall ensure that no person other than a director of the Operator
or a person approved by the Director in the Director's absolute discretion
(which approval may be subject to conditions, and to variation or revocation at
any time), shall provide advice to the manager in respect of the operations or
business of the Operator within the casino. Where approval is granted subject to
conditions the Operator shall ensure that the person approved does not act
except in accordance with such conditions.
5.6 Gaming Control (Licensing) Regulations
For the removal of doubt, nothing in clauses 5.4 and 5.5 relieves a person from
the requirements of the Gaming Control (Licensing) Regulations.
5.7 Approved Gaming Areas
The Operator shall not organise, play or conduct, nor allow to be organised,
played or conducted, any approved game except within those parts of the casino
approved in writing for that purpose from time to time by the Director. The
Operator shall not organise, play or conduct any permitted
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game except within those parts of the casino approved in writing for that
purpose from time to time by the Director.
5.8 Conditions and Directions
The Operator shall at all times during the licence term comply with the
Director's conditions and directions in relation to, but not limited to, the
following matters:
(a)rules, procedures and equipment for the operation and playing of approved
games;
(b)rules, procedures and equipment for the operation and playing of permitted
games;
(c)those areas of the casino within which games may be organised, played or
conducted;
(d)the times during which and the manner in which the Operator's operations and
business within the casino shall be conducted;
(e)the manner in which accounts of the Operator's operations and business within
the casino shall be kept;
(f)the manner and the extent of the supervision and control of the Operator's
operations and business and the installation of equipment as specified by the
Director from time to time for that purpose;
(g)production from time to time of such information in relation to the conduct
of the Operator's operations and business within the casino as the Director may
think fit;
(h)the minimum standard approved by the Director for security and surveillance
systems in the casino; and
(i)the manner and extent of monitoring poker machine gaming and the
installation, connection with and use of equipment, including equipment outside
the casino, as specified by the Director from time to time for that purpose or,
if the Director has not so specified, as approved by the Director on application
by the Operator.
5.9 Approvals to remain in force
All approvals granted in respect of any of the matters specified in clause 5.8,
and all other approvals, consents, rules and directions issued or given in
respect of the casino, and the terms and conditions, if any, on which they were
issued or given, during the currency of the former agreement shall continue in
full force and effect until varied or replaced pursuant to the Control Act or
clause 5.8, and the Operator shall at all times comply with them.
5.10 New approved games
If at any time the Operator desires to extend its operations in the casino to
the organisation or playing of any game not previously approved by the Minister
under section 26 of the Control Act, but capable of being so approved, it will
submit an application to the Minister requesting approval together with proposed
rules, procedures and equipment for the operation and playing of such game. If
the game becomes an approved game, the Operator must not organise or play the
game unless and until, the Director has approved rules, procedures and equipment
for the game.
5.11 Conduct of games
During the licence term the Operator shall not organise, play or conduct at the
casino any game other than an approved game or a permitted game and shall not
organise, play or conduct a game at the casino otherwise than in accordance with
rules and procedures, and with equipment, approved by the Director.
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5.12 Application for consent to conduct of game
If the Operator wishes to organise, play or conduct a game within the casino
which is not an approved game or a game capable of becoming an approved game, it
shall submit to the Director an application for consent to the organisation,
playing and conduct of the game together with proposed rules, procedures and
equipment for the operation and playing of the game.
5.13 Consent of Director
If the Director sees fit, upon an application made under clause 5.12, the
Director may consent to the organisation, playing and conduct of the game the
subject of the application, and may approve the rules, procedures and equipment
for the operation and playing of the game.
5.14 Placement of facilities
The Operator shall not vary the placement of the count rooms, cages or other
associated facilities within an approved gaming area in a manner which
interferes with or is in any way prejudicial to the ability of the Director to
monitor the area through any security or surveillance system operated in respect
of that area.
5.15 Disputed gaming wins
(a)Any dispute between the Operator and a patron as to the validity or otherwise
of a gaming win shall be referred to the Director for resolution. The Director's
decision shall be final, and for the purposes of clause 7.2(n) once the
Director's decision has been made and notified to the Operator, the validity or
otherwise of the gaming win shall be deemed not to be in dispute.
(b)For the purposes of paragraph (a) only, "dispute" means a dispute which has
not been resolved to the satisfaction of both the Operator and the patron within
24 hours of arising, or a dispute which has been requested by the patron
involved to be referred to the Director. The Operator shall ensure that upon any
dispute arising the patron involved shall be informed immediately that the
patron has the right to refer the dispute to the Director.
(c)So far as reasonably practicable the Operator shall ensure that the
provisions of paragraphs (a) and (b) are incorporated in its contracts with all
patrons, to the intent that those provisions bind the patrons to the same extent
as the Operator.
6. CASINO LICENCE
6.1 Amendment of licence
The Minister shall forthwith under subsection 18(1A) of the Control Act amend
the licence to accord with this agreement. Without limiting that provision, the
terms and conditions of the licence on and from the effective date shall be the
terms and conditions of this agreement.
6.2 No internet gaming business
For the removal of doubt, the licence is not a licence to conduct an internet
gaming business.
6.3 Other permits
Nothing in this agreement or the licence relieves the Operator from the
requirement to obtain and maintain any other permit or licence required by law
for the operation of its business, other than a permit referred to in
clause 9.2.
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6.4 Licence term
The licence shall continue in force until 30 June 2015 unless surrendered or
cancelled in accordance with the Control Act.
6.5 Exclusivity
Subject to clause 6.6, during the licence term the Minister shall not without
the consent of the Operator, which consent may be granted or withheld by the
Operator in its absolute discretion, cause or suffer or permit any person, firm,
association, authority or entity other than the Operator to be granted a casino
licence applicable to the Northern Division or otherwise legally to organise and
run approved games, other than gaming machines (as that term is defined in the
Gaming Machine Act), in the Northern Division.
6.6 Extent of exclusivity—specific limitations
For the removal of doubt, clause 6.5—
(a)does not give exclusivity in relation to the organisation and running of
approved games conducted in any internet gaming business authorised by another
licence granted to any person before or after the effective date;
(b)does not give the Operator any exclusivity in respect of keno in any area
other than the Northern Division, despite any approval or permit given to the
Operator in respect of NT keno; and
(c)gives the Operator exclusivity in respect of two-up in the Northern Division
except to the extent that it may be played lawfully under subsection 54(4) of
the Control Act.
6.7 Extent of exclusivity
The exclusivity under clause 6.5 ceases to apply if, at any time after 30
June 2005, it is inconsistent with competition law to the extent of the
inconsistency.
6.8 Minister's undertaking
The Minister undertakes that, subject to the Territory's obligations under
competition law, the Territory will use its best endeavours to maintain
exclusivity arrangements for casino licences and to preserve the Operator's
exclusivity under this agreement.
6.9 Minister may require compliance with national arrangements or competition
law
If at any time during the licence term but after 30 June 2005 a national
arrangement or competition law results or would result directly or indirectly in
any aspect of the conduct of the Operator's business under the licence, or any
term or condition of this agreement which relates to that business, being or
becoming unlawful or contrary to the national arrangement or to competition law,
the Minister may by notice in writing to the Operator:
(a)require the Operator forthwith to discontinue that aspect of its business, or
to change the conduct of its business; or
(b)require the Operator to enter into a further agreement with the Minister to
amend this agreement;
so that it is not unlawful or contrary to the national arrangement or
competition law, and the Operator must comply with the notice. For the purposes
of this clause 6.9, the Operator's business does not include the operation of NT
keno.
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6.10 Impact of clauses 6.7 and 6.9
If the operation of clause 6.7 or the giving of a notice under clause 6.9 has a
material adverse impact on casino profitability the Minister will at the request
of the Operator act reasonably to determine if the rates of casino tax under
clause 8.1 should be reduced, and will have regard to:
(a)the situation in the other States and Territory of Australia where similar
issues to the impact of clause 6.7 or the giving of the Minister's notice have
occurred;
(b)the casino's position relative to that of those other States and Territory
and any ways in which the casino's position is different; and
(c)the Operator's capacity to pay the casino tax imposed under clause 8.1, as a
result of the impact of clause 6.7 or the giving of the Minister's notice.
The Operator will, before requesting the Minister to act under this clause 6.10:
(d)take steps to mitigate its loss, and the Operator acknowledges that the
Minister expects the mitigating steps to include commercially reasonable
initiatives to enhance the casino business in accordance with the provisions of
clauses 5.1 and 5.2; and
(e)provide information to the Minister about the Operator's capacity to pay the
casino tax under clause 8.1 and about casino profitability.
7. CANCELLATION, SUSPENSION AND VARIATION OF LICENCE AND ENFORCEMENT OF
SECURITIES
7.1 No compensation
No compensation or damages shall be payable by the Territory, the Minister or
any government or regulatory authority if:
(a)the licence is cancelled, suspended or varied by the Minister under the
Control Act by reason of the Operator being in default under this agreement;
(b)any condition of this agreement and the licence, including without limitation
clause 6.9 and clause 9.5, operates at any time to restrict or diminish the
extent of the Operator's business; or
(c)the exclusivity under clause 6.5 ceases to apply in accordance with
clause 6.7.
The provisions of this clause 7.1 do not affect the obligations of the Minister
under clauses 6.8 and 6.10.
7.2 Further conditions
Without limiting the power of the Minister to cancel, suspend or vary the
licence under section 20 of the Control Act, this agreement may be terminated by
notice in writing from the Minister to the Operator if:
(a)an event of default occurs, and the Operator fails to comply with a notice
under clause 7.3;
(b)an order is made for the winding up or dissolution without winding up or an
effective resolution is passed for the winding up of any of the relevant
companies or the Trust unless the winding up or dissolution is for the purposes
of reconstruction or amalgamation and the scheme for reconstruction or
amalgamation with or without modification has first been approved by the
Minister in his absolute discretion;
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(c)the name of any of the relevant companies is struck off the Register of
Companies pursuant to section 572 of the Corporations Law or any corresponding
legislative provision applying to that relevant company;
(d)a receiver is appointed of the assets or undertaking or any part thereof of
any of the relevant companies or of the Trust or the holder of any encumbrance
takes possession of such assets or undertaking or any part thereof;
(e)any distress or execution is levied or enforced by or with the authority of
an order or decision of a court in any jurisdiction upon or against any of the
assets or property of any of the relevant companies or of the Trust in respect
of an amount greater than $125,000 and is not stayed or discharged within
21 days. The amount of $125,000 shall, during the term of this agreement, be
increased in direct proportion to increases from time to time in the Consumer
Price Index (All Groups) for the City of Darwin as determined by the Australian
Bureau of Statistics after the date of the former agreement;
(f)any of the relevant companies enters into any arrangement or composition with
its creditors generally;
(g)any of the relevant companies is placed under official management or causes a
meeting of its creditors to be summoned for the purpose of placing it under
official management;
(h)any governmental registration, licence, authorisation, consent or approval
necessary to enable any of the relevant companies to comply with any of its
obligations under this agreement is revoked, withdrawn, withheld, terminated,
cancelled or modified by reason of the failure of any of the relevant companies
to comply with this agreement or any applicable laws, so as to prevent
performance of its obligations under this agreement in a material respect;
(i)any of the relevant companies is convicted of any indictable offence or
offence under any law relating to gaming and wagering which in the reasonable
opinion of the Minister is of such a serious nature as to jeopardise the good
standing of any of the casino operations;
(j)any of the respective directors of any of the relevant companies or a manager
or person approved pursuant to clause 5.4 is convicted of any indictable offence
or offence under any law relating to gaming and wagering which in the reasonable
opinion of the Minister renders him unfit to be engaged in or to manage the
business of a casino or which may jeopardise the good standing of any of the
casino operations and is not immediately removed from his office or position
upon such factor or event being drawn to the attention of the Operator by the
Minister;
(k)a manager, chief operating officer, director of security and surveillance or
person approved pursuant to clause 5.4 commits an act of bankruptcy or is
declared bankrupt or his estate is dealt with for the benefit of creditors or he
becomes of unsound mind (or in the reasonable opinion of the Minister)
physically or mentally unfit to manage a casino and is not immediately removed
from his office or position upon such fact or event being drawn to the attention
of the Operator by the Minister;
(l)a non-restricted gaming licence held by MGM MIRAGE or any of its subsidiaries
under the Gaming Control Act of Nevada is suspended terminated or cancelled;
(m)any event occurs which, under the law of any relevant jurisdiction, has an
analogous or equivalent effect to any of the events specified in this clause;
(n)the Operator fails to pay forthwith to any patron of the Casino any gaming
win by that patron the validity of which is not in dispute;
(o)a casino licence is granted to a mortgagee pursuant to clause 7.6: or
(p)the licence is cancelled or surrendered.
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7.3 Notice before termination
The Minister will not terminate this agreement until he has first given a notice
to the Operator specifying the event of default and requiring the Operator,
within a reasonable period as specified in the notice, being not less than
14 days, to either:
(a)remedy the default; or
(b)in the case of a non-material event of default which is not capable of being
remedied, pay to the Territory an amount acceptable to the Minister in the
exercise of reasonable judgment by way of compensation for the default;
and the Operator has failed within the time specified in the notice, or such
further time as the Minister may agree, to comply with the notice. For the
interpretation of this clause, an event of default is non-material if and only
if it does not involve:
(c)a failure to pay casino tax;
(d)a failure to pay any other amount of money, including without limitation
compensation under paragraph 7.3(b);
(e)a breach of clause 5.1 or clause 5.2; or
(f)a matter of probity, security or surveillance.
7.4 Notice to Mortgagee
If the Minister proposes to cancel the licence and the Operator has mortgaged
the licence and/or its rights and benefits under this agreement ("the mortgaged
property"), the Minister agrees not to cancel the licence unless:
(a)the Minister has given notice in writing to the mortgagee stating that he has
become entitled to cancel the licence and stating the reason or reasons he has
become so entitled;
(b)a period of 14 days has elapsed following the giving of that notice;
(c)the mortgagee has not within that period of 14 days by notice in writing to
the Minister agreed and undertaken to rectify the defaults or matters by reasons
of which the Minister has become so entitled;
(d)if the mortgagee has agreed and undertaken to rectify the defaults or matters
by reason of which the Minister has become entitled to cancel the licence, the
mortgagee has not within a further period of 14 days after that period of
14 days (or such longer period as may be allowed by the Minister) rectified the
defaults or other matters by reason of which the Minister has become so
entitled; and
(e)the mortgagee has not (if the Minister so directs by notice in writing to the
mortgagee) appointed a receiver and manager or receivers and managers of the
mortgaged property (but this paragraph (e) shall not if the mortgagee has on a
previous occasion appointed a receiver and manager or receivers and managers
whose appointment has not been terminated).
This clause 7.4 shall not apply if on more than one previous occasion in any
period of 3 years after the Operator has mortgaged the licence and/or its rights
and benefits under this agreement the Minister has become entitled to cancel the
licence.
7.5 Appointment of Receivers and Managers
If the mortgagee wishes to enforce its security in respect of the mortgaged
property by appointing a receiver and manager or receivers and managers that
mortgagee shall by notice in writing to the Minister request the Minister to
nominate at least 4 persons who are qualified under the
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Corporations Law to act as receivers and managers and each of whom would be
acceptable to the Minister as a receiver and manager of the mortgage property.
The Minister may, within 14 days of receiving notice from the mortgagee making
that request, nominate at least 4 persons by notice in writing to the mortgagee.
If the Minister makes a nomination in accordance with the foregoing, no person
shall be appointed as receiver and manager other than a person so nominated.
7.6 Application by Mortgagee
If any mortgagee wishes to enforce its security in respect of the mortgaged
property by taking possession itself and not by appointing a receiver and
manager or receivers and managers the mortgagee may, upon becoming entitled to
enforce its security in respect of the mortgage property, make application to
the Minister under the Control Act for the grant of a casino licence in respect
of the casino. Upon such application the Minister shall grant a casino licence
in respect of the casino subject to any reasonable conditions imposed by the
Minister, and upon the grant of such casino licence to the applicant, the
Minister shall terminate the licence held by the Operator.
7.7 Operator's obligation to notify events of default
The Operator must immediately give notice to the Director if it becomes aware
that an event of default or any other event listed in clause 7.2 has occurred.
8. CASINO TAX
8.1 Casino tax rates
For the period from the effective date until 30 June 2015, the Operator shall
pay casino tax calculated using the tax rates, expressed as percentages of gross
profit derived from gaming on categories of casino games as set out in
clause 8.2, but subject to clauses 8.3, 8.4, 8.5, 8.8 and 8.9.
8.2 Schedules of tax rates
The tax rates until 30 June 2015 are:
(a)from the effective date to 30 June 2001:
Category
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Tax rate on gross profit
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Poker machines 20% Table games 12% In-house keno 12%
(b)from 1 July 2001 to 30 June 2005:
Category
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Tax rate on gross profit
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Poker machines 22.5% Table games 12% In-house keno 12%
(c)from 1 July 2005 to 30 June 2015, but subject to clause 8.3 for the period
from 1 July 2010 to 30 June 2015:
Category
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Tax rate on gross profit
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Poker machines 20% Table games 12% In-house keno 12%
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8.3 Casino tax revision for the period 1 July 2010 to 30 June 2015
Subject to clause 8.4, the Minister is entitled to revise the tax rates in
clause 8.2(c) and determine that other tax rates will apply for the period from
1 July 2010 until 30 June 2015. The Minister will conduct the revision and make
his determination during the period 1 July 2010 to 31 August 2010, and according
to the following principles:
(a)the overall average rate of tax set on casino games will not be greater than
the rate which the Minister, acting reasonably, believes to be 2 percentage
points below the average rate of tax then currently applying to interstate
casinos of most similar size and scope in Australia;
(b)in determining the average rate of tax applying to such casinos in Australia,
the Minister will:
(i)include consideration of all payments made to government by such casinos in
Australia such as licence fees or premiums, and will consider, if appropriate,
the term over which those payments are made and whether and to what extent any
allowance should be made for amortisation, and
(ii)have regard to variations in game mix;
(c)the Minister will have regard to:
(i)whether and to what extent the Operator has complied with the principles and
requirements in clauses 5.1 and 5.2,
(ii)the then current rate of GST,
(iii)the then current rates of gaming taxes applicable around Australia,
(iv)the proportion of player loss on approved games to total player loss at the
casino throughout the licence term, and
(v)such other material issues as the Minister, acting reasonably, considers
necessary or proper to be taken into account.
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8.4 No casino tax revision where forward projections are met
The Minister is not entitled to make a determination under clause 8.3 where the
aggregated actual gross profit is equal to or exceeds the aggregated projected
gross profit, both terms being defined and calculated as follows:
(a)aggregated actual gross profit means gross profit in relation to table games,
poker machines and in-house keno, aggregated for the years ending 31
December 2001 to 31 December 2009 both inclusive ("the relevant years");
(b)aggregated projected gross profit means the aggregate of the projected gross
profit, calculated under this clause 8.4, for each of the relevant years;
(c)the projected gross profit for each of the relevant years is calculated
according to the following formula:
Projected gross profit year X = projected gross profit year (X-1) +
(projected gross profit year (X-1) × real per capita growth year X);
where:
(i) real per capita growth year X = calendar CPI year X × calendar
population growth year X;
(ii)
calendar CPI year X
=
the difference between the Darwin All Groups Consumer Price Index as published
by the Australian Bureau of Statistics (Publication No. 6401.0) ("CPI") for the
December quarter in year X and the CPI for the December quarter immediately
preceding;
(iii)
calendar population growth year X
=
the change in the total population of the Northern Territory for the year X over
the year X-1, (as published as a percentage in Australian Demographic
Statistics, December Quarter year X (published by the Australian Bureau of
Statistics in June year (X+1) publication no. 3101.0));
(d)for the purpose of calculating the projected gross profit for the year ending
31 December 2001, the figure to be used for projected gross profit year (X-1) is
$43 million;
(e)for the purpose of the calculations under paragraph 8.4(c), a reference to
"year X" is a reference to the number of a year, for example 2001, so that a
reference to year (X+1) in that case would be a reference to year 2002, and a
reference to year (X-1) would be a reference to year 2000;
(f)an example of the operation of paragraph 8.4(c) is contained in the schedule
to this agreement.
The Minister will, at the request of the Operator, provide the calculations of
projected gross profit for a relevant year, within a reasonable time after the
information is available to make that calculation.
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8.5 Implementing new casino tax rates
If the Minister makes a determination under clause 8.3, the revised casino tax
rates as so determined will apply as from 1 July 2010 (regardless of the date of
the determination). The Minister will give written notice to the Operator:
(a)specifying the casino tax rates under the determination and the date or
respective dates on which the Operator is to commence payment at the revised
rates, being a date or dates not earlier than 90 days after the date of the
notice, and
(b)requiring the Operator to enter into and execute, and cause any other parties
to this agreement at the relevant time to enter into and execute, a variation of
this agreement to accord with the Minister's determination, within the time
referred to in paragraph (a).
The Operator will commence paying casino tax at the revised tax rates at the
commencement of the first calendar month after the expiration of 90 days from
the date of the Minister's notice under this clause 8.5. The Operator will make
an adjustment in respect of casino tax payable at the revised rates for the
period from 1 July 2010 until it commences paying the revised tax rates, in the
month in which it provides to the Minister a statement under paragraph 8.13(a)
for the month of December 2010.
8.6 Casino tax for NT Keno
The tax rates for casino tax relating to NT keno are set out in clause 9 of this
agreement.
8.7 Amendment of licence
The Minister will amend the licence under subsection 18(1A) of the Control Act
to accord with any variations in the casino tax rates under this agreement from
time to time.
8.8 Amount payable for casino tax
The Minister and the Operator acknowledge that the amount of casino tax
calculated in accordance with clauses 8.1 and 9.4 for any period is to be
reduced by an amount equal to the global GST amount, as determined under
section 126-10 of the GST Act, in respect of the Operator's operations under the
licence during that period, provided that the Operator has paid the net amount,
as determined under section 126-5 of the GST Act, payable by it by reference to
that global GST amount.
8.9 Community machine allowance
The amount the Operator pays to the Territory on account of casino tax, as
contemplated in clause 8.8 ("the Territory amount") in any year or part thereof
shall be reduced by an amount equal to 22% of player loss (being the difference
between the amount gambled by players and the amount returned to players as
winnings) on gaming machines (as that term is defined in the Gaming Machine Act)
outside the casino and within the Northern Division ("external machines") during
the same period ("the community machine allowance"), subject to the following:
(a)the community machine allowance is to be reduced where the actual number of
external machines in operation during the relevant period exceeds 500, and by a
factor proportionate to the number of external machines operating on the last
day of the relevant period in excess of 500; for example—
(i)if there are 600 external machines, the community machine allowance is
500/600 × 22% of player loss on 600 external machines, and
(ii)if there are 490 external machines, the community machine allowance is 22%
of player loss on 490 external machines;
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(b)subject to paragraphs 8.9(c) and 8.9(d), if the community machine allowance
in any year is greater than the Territory amount for that year, the Territory
amount payable for that year shall be nil and the difference between the
community machine allowance and the Territory amount for that year shall be
carried forward and added to the community machine allowance for the next year
for the purposes of calculating the reduction of the Territory amount in the
next year;
(c)no community machine allowance will be applicable after 30 June 2005, but any
community machine allowance adjustment under paragraph 8.9(b) for the period up
to 30 June 2005 will be carried forward after 30 June 2005 until it is
extinguished;
(d)if there is any entitlement at the effective date to a community machine
allowance under the former agreement in respect of any period before the
effective date, the amount of that community machine allowance shall be carried
forward and deducted from the Territory amount in accordance with
paragraph 8.9(b);
(e)if the licence is surrendered or cancelled, or this agreement is terminated,
for any reason and there is at the time of the surrender, cancellation or
termination any entitlement to a community machine allowance which has not been
extinguished under this clause 8.9, the Territory will pay the amount of that
entitlement to the Operator, provided that the Territory is not required to make
a payment until the later of six months after the date of surrender,
cancellation or termination and the date on which the Territory and Operator
agree in writing that all claims between them arising out of this agreement have
been resolved;
(f)except as provided in this clause 8.9 all claims in relation to any community
machine allowance under the former agreement are extinguished by the termination
of the former agreement;
(g)if during the licence term:
(i)the number of external machines permitted in a licensed club exceeds 45 in
any case up to 30 June 2005 and thereafter exceeds 55 in any case up to 30
June 2015, or the date of earlier termination of the licence term;
(ii)the number of external machines permitted in a licensed hotel exceeds 10 in
any case up to 30 June 2015, or the date of earlier termination of the licence
term;
(iii)the number of new club premises with external machines within the casino
area exceeds one for each 5% by which the population in the casino area
increases over 5845;
then, unless paragraph 8.9(j) applies, the Territory will give the Operator
reasonable compensation, whether in cash, by way of reduction in casino tax
rates under clause 8.1, or otherwise as agreed by the parties;
(h)for the purposes of paragraph 8.9(g):
(i)"casino area" means the area within a radius of 1.5 kilometres of the Land;
(ii)"licensed club" means a club holding any licence, permit or other authority
necessary to establish an entitlement to apply to have external machines;
(iii)"new club premises" means premises used or proposed to be used as a club,
after the effective date and not in existence, or not so used, at the effective
date;
(iv)the club premises in existence in the casino area at the effective date are
Darwin Bowls and Social Club, Ski Club and RAOB Club, and the Waratah Sports
Club premises to be located at Gardens Hill oval are deemed to be in existence;
and
(v)increases in population in the casino area at any time are to be determined
on the basis of the most recently published Australian Bureau of Statistics CD
derived population by 500 metre radii from the Land using MapInfo and Estimated
Resident Population as at
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30 June 1999 as published in Australian Bureau of Statistics publication 3235.7
Population by Age and Sex, Northern Territory (updated annually in June);
(i)for the removal of doubt, nothing in paragraph 8.9(g), other than
paragraph 8.9(g)(i), relates to the number of external machines installed in any
clubs in existence at the effective date, whether or not there are any external
machines in that club at the effective date, and whether or not the club is a
licensed club at the effective date;
(j)if as a result of the operation of a national arrangement or competition law
any matter referred to in paragraph (i), (ii) or (iii) of paragraph 8.9(g)
occurs during the licence term so as to have a material adverse impact on casino
profitability, the Minister will at the request of the Operator, act reasonably
to determine if the casino tax imposed under clause 8.1 should be reduced and
will have regard to;
(i)the situation in the other States and Territory of Australia, if applicable,
where similar situations have occurred;
(ii)the casino's position relative to that of those other States and Territory
and any ways in which the casino's position is different;
(iii)the extent to which the Operator has demonstrated that the matter referred
to in paragraph (i), (ii) or (iii) of paragraph 8.9(g), as the case may be, has
a material adverse impact on casino profitability; and
(iv)the Operator's capacity to pay the casino tax imposed under clause 8.1 as a
result of matters demonstrated under paragraph 8.9(j)(iii);
the Operator will, before requesting the Minister to act under this
paragraph 8.9(j);
(v)take steps to mitigate its loss, and the Operator acknowledges that the
Minister expects the mitigating steps to include commercially reasonable
initiatives to enhance the casino business in accordance with the provisions of
clauses 5.1 and 5.2; and
(vi)provide information to the Minister about the Operator's capacity to pay the
casino tax under clause 8.1 and about casino profitability.
8.10 Goods and services tax definitions
For the purposes of clauses 8.10 and 8.11:
(a)"Act" means the New Tax System (Goods and Services Tax) Act 1999;
(b)"ATO" means the Australian Taxation Office;
(c)"community machine allowance" has the meaning given in clause 8.9;
(d)"determination" means the ATO's Recipient Created Tax Invoice (No.1) 2000
determination under the Act;
(e)"GST" means any tax imposed on supply by or through the Act or any related
tax imposition legislation;
(f)"Supplier" means the Operator;
(g)"Recipient" means the Northern Territory of Australia through its agency the
Department of Industries and Business;
(h)"RCTI" means Recipient Created Tax Invoice under the determination;
(i)terms used in clauses 8.10 and 8.11 which are defined in the Act have the
meanings assigned to them in the Act.
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8.11 GST
(a)The Supplier and the Recipient acknowledge that the community machine
allowance has been set without including GST.
(b)The Supplier and the Recipient agree that the community machine allowance
will be increased by an amount equal to the GST payable on the supply calculated
in accordance with the Act and on the value stipulated in the Act in relation to
the supply.
(c)The RCTI process established by the parties for the purposes of the
determination is:
(i)the relevant supply is the consideration given for the community machine
allowance;
(ii)the Supplier and the Recipient are or will be registered for GST when an
invoice is issued and the RCTI must show the Supplier's ABN;
(iii)the Supplier and the Recipient must reasonably comply with their
obligations under the Act and any rulings or determinations issued by the ATO;
(iv)the Supplier agrees that the Recipient can issue tax invoices in respect of
the supplies;
(v)the Supplier will not issue tax invoices in respect of the supplies;
(vi)the Supplier will notify the Recipient if it ceases to be registered for
GST;
(vii)the Recipient will notify the Supplier if it ceases to be registered for
GST or if it ceases to satisfy any of the requirements of the determination.
(d)The Minister and the Operator acknowledge that the Commonwealth Treasurer has
determined for the purposes of Division 81 of the Act that the casino tax is not
consideration for a supply and therefore is not subject to GST.
(e)The default tax rate under clause 8.12 is set inclusive of GST and on receipt
of monies for the default tax rate the Minster shall provide the Operator with a
complying tax invoice.
8.12 Default Tax
If at any time there has occurred any event of default, or any other event
giving rise to a right of termination on the part of the Minister under
clause 7.2, which has not been remedied or rectified within 14 days of receipt
by the Operator of written notice of the event from the Director, the Operator
shall pay tax in addition to the tax otherwise provided for in this agreement at
the rate of ten thousand dollars ($10,000) per day or part thereof from the date
after the expiration of 14 days as specified in the Director's notice until the
event has been remedied or rectified.
8.13 Financial statements
(a)By no later than the tenth business day of each month:
(i)the Operator shall provide to the Minister a statement setting out the gross
profit derived from gaming on casino games, showing separately the gross profit
from each casino game, in the immediately preceding month; and
(ii)subject to clause 8.8, the Operator shall pay to the Territory on account of
the casino tax payable by the Operator in respect of the year in which the
immediately preceding month falls an amount equal to the casino tax payable in
respect of the period from the commencement of the year in question to the
expiration of the immediately preceding month less any amount or amounts already
paid during the year in question on account of the casino tax payable in respect
of that year.
(b)If, at the date of presentation of any statement under paragraph (a), the
amount already paid by the Operator on account of the casino tax payable in
respect of the year in question exceeds the casino tax calculated to be so
payable in respect of the period from the
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commencement of that year to the expiration of the immediately preceding month,
the excess shall be carried forward and credited against any further payments to
be made by the Operator on account of the casino tax payable in respect of that
year (but not in respect of any further year);
(c)(i) Within ninety (90) days of the expiration of each year and of the
expiration or sooner determination of this agreement, the Operator shall furnish
to the Minister a certificate by or on behalf of an independent auditor or firm
of auditors appointed by the Operator and approved by the Director of the gross
profit derived from gaming in the Casino, showing separately the gross profit
from each casino game, in the preceding year or portion thereof and the total
casino tax payable in respect thereof, together with a cheque in payment of the
balance (if any) of the casino tax so payable. Where the casino tax already paid
by the Operator to the Minister in respect of such year, or portion thereof,
exceeds the casino tax so certified as payable, the Minister shall forthwith on
receipt of such certificate repay to the Operator the amount of such excess;
(ii)Where the Operator fails to furnish to the Minister the certificate referred
to in paragraph (i) within the time period specified in that paragraph, the
Minister may have that certificate prepared on the Operator's behalf and at the
expense of the Operator by an auditor selected by the Minister and the Operator
shall promptly furnish to that auditor all books of account and records
requested by the auditor for the purpose of preparing that certificate. The
Operator shall, upon production to it by the Minister of such certificate, pay
to the Minister the balance (if any) of the casino tax payable by the Operator
in respect of the period to which that certificate relates.
The Operator must provide to the Minister within 4 months of the end of each
financial year for each relevant company, the audited annual financial
statements (including the profit and loss statement and balance sheet and notes
to them) of each relevant company.
8.14 Unclaimed Prizes
By no later than the tenth business day of each month, or such later date as the
Director may approve from time to time on the application of the Operator in a
particular case, and in the case of keno by such later date as the Director and
the Operator agree having regard to the capacity of the technology to produce
the relevant information, the Operator shall pay to the Territory all prizes
legitimately won but unclaimed by the public during the immediately preceding
month.
9. NT KENO
9.1 Requirement for permit
The parties acknowledge that the Operator requires a permit under subsection
54(2) of the Control Act to play NT keno at venues outside the casino, and that
the Operator currently holds permits issued on various dates prior to the date
of this agreement, and expiring on 30 June 2005.
9.2 Extended permit
If the Operator agrees to cancellation of the permits referred to in clause 9.1,
the Minister will grant to the Operator a permit under subsection 54(2) of the
Control Act to play NT keno at venues outside the casino for the whole of the
licence term.
9.3 Terms and conditions of permits
The terms and conditions of the permit referred to in clause 9.2 will include
the following:
(a)playing of NT keno will be limited to the sale of tickets, and the payment of
winnings, in NT keno conducted by the Operator in accordance with this
agreement;
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(b)NT keno is to be played and conducted in accordance with the approved rules
in force under this agreement from time to time in respect of NT keno;
(c)the Operator must obtain the approval of the Director to the terms and
conditions of any agreement it enters into with an agent or other person
responsible for the conduct of NT keno at each venue outside the casino where NT
keno is conducted and the agency operating manual provided by the Operator to
each such agent or other person;
(d)amounts received and payments of winnings in respect of NT keno constitute
amounts received in respect of gaming and amounts paid out as winnings for the
purpose of the definition of "gross profit" in this agreement; and
(e)the Operator must notify the Director forthwith when any venue is added to or
removed from the list of venues where NT Keno is played.
9.4 Casino tax for NT keno
(a)The Operator shall pay casino tax calculated at the tax rate of 20 percent of
gross profit derived from NT keno, for the period from the effective date until
30 June 2005 and thereafter at the tax rates determined for each succeeding
period of 5 years by the Minister. The Minister will not increase the tax rates
when making that determination for a 5 year period unless the Territory's
average annual tax collections (calculated on the average of five financial
years expressed in year 2000 dollars, through reference to the Darwin All Groups
Consumer Price Index ("CPI")) from NT keno and similar products:
(i)from financial years 2000/01 to 2004/05; or
(ii)from financial years 2005/06 to 2009/10;
is lower than $11.9 million (which is expressed in year 2000 dollars).
Example
Year
--------------------------------------------------------------------------------
Territory Tax Collections from NT
keno and similar products ($M)
--------------------------------------------------------------------------------
Darwin All Groups
CPI (%)
--------------------------------------------------------------------------------
Tax Collected in Year
2000 dollars
--------------------------------------------------------------------------------
2000/01 12.2 6.3 % 11.4 2001/02 11.9 1.6 % 11.0 2002/03 12.3 1.4 %
11.2 2003/04 12.5 3.4 % 10.9 2004/05 12.5 2.5 % 10.6 Average N/A N/A
11.0 As the average is less than $11.9 million, the Minister could increase NT
keno tax rates from 1 July 2005.
(b)The Minister will act reasonably in determining the tax rate for a 5 year
period and will consider
(i)submissions made by the Operator; and
(ii)such other material issues as the Minister considers necessary or proper to
be taken into account.
(c)The Minister will, at the request of the Operator, provide information in
relation to the Territory's annual tax collections from NT keno and similar
products for a financial year, and the calculations contemplated by
paragraph 9.4(a), within a reasonable time after all the information is
available to make the calculations.
--------------------------------------------------------------------------------
9.5 Minister may require compliance with national arrangements or competition
law
If at any time during the term of a permit issued to the Operator under
subsection 54(2) of the Control Act a national arrangement or competition law
results or would result directly or indirectly in any aspect of the conduct of
the Operator's NT keno business under the licence and permit, or any term or
condition of this agreement as it relates to NT keno, being or becoming unlawful
or contrary to the national arrangement or to competition law, the Minister may
by notice in writing to the Operator:
(a)require the Operator forthwith to discontinue that aspect of its NT keno
business, or to change the conduct of its NT keno business; or
(b)require the Operator to enter into a further agreement with the Minister to
amend this agreement;
so that it is not unlawful or contrary to the national arrangement or
competition law, and the Operator must comply with the notice.
9.6 Inconsistency
To the extent that there is at any time any inconsistency between the terms of a
permit issued to the Operator under subsection 54(2) of the Control Act, and the
terms and conditions of this agreement, the latter shall prevail.
10. COSTS
10.1 Costs generally
Except to the extent specified in clauses 10.2 and 10.3, each party must bear
and is responsible for its own costs in connection with the preparation,
execution, completion and carrying into effect of this agreement.
10.2 Stamp duty generally
The Operator must bear and is responsible for all stamp duty on or in respect
of:
(a)this agreement; and
(b)any instrument or transaction contemplated by this agreement.
10.3 Operator to pay costs
The Operator shall pay the reasonable legal and other costs of the Territory and
its instrumentalities of and incidental to the giving of any consents or
approvals required or permitted to be given pursuant to or for the purposes of
this agreement, and of and incidental to any default action, including any
necessary investigation of whether default has occurred, taken under this
agreement.
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11. NOTICES
11.1 Giving of Notices
All notices, demands, consents, elections or other communications (individually
and collectively referred to as "a communication") of any nature whatsoever
required to be served given or made in terms of or arising out of this
agreement:
(a)shall in order to be valid be in writing;
(b)shall be deemed to have been served, given to or made in relation to a party
if it is:
(i)left at the address of that party (or, as the case may be, the Director) set
out below (or at such other address as may be notified in writing by that party
to the other party from time to time):
Addresses:
The Operator:
MGM Grand Darwin
Level 1
1 Gilruth Avenue
DARWIN NT 0800
Attention: The General Manager
Fax: + 61 8 8981 7753
The Minister:
C/- The Director of Licensing
Department of Industries and Business
Enterprise House
Cnr Knuckey and Woods Streets
DARWIN NT 0800
Fax: + 61 8 8999 1888
The Director:
The Director of Licensing
As above
(ii)posted by prepaid post in an envelope addressed to that party at such
address; or
(iii)sent by facsimile to the machine situated at such address, the number of
which is set out above.
(c)shall be sufficient if:
(i)executed under the common seal of the party giving, serving or making the
same; or
(ii)signed on behalf of the party giving, serving or making the same by, or in
the case of telex or facsimile, purporting to come from any attorney, director,
secretary, agent or other fully authorised officer of such party.
(d)shall:
(i)if sent by prepaid post, be received on the date of actual receipt;
(ii)if delivered by hand, be deemed to be received on the date of delivery;
(iii)if sent by facsimile and a correct and complete transmission report for
that transmission is obtained by the sender, upon transmission if transmission
takes place on a business
--------------------------------------------------------------------------------
days before 4.00pm in the place to which the communication is transmitted and in
any other case on the business day next following the day of transmission.
11.2 Duplicates
(a)Duplicates of any notice sent to the Operator shall be sent to MGM MIRAGE
addressed as set out below:
MGM MIRAGE
3600 Las Vegas Boulevard South
Las Vegas
NEVADA USA
Attention: The President
Fax: + 1 702 693 7628
12. GENERAL
12.1 Amendment
No variation or waiver of, or any consent to any departure by a party from, a
provision of this agreement is of any force or effect unless it is confirmed in
writing signed by the parties and then that variation, waiver or consent is
effective only to the extent for which it is made or given.
12.2 Waiver
The failure, delay, relaxation or indulgence on the part of any party in
exercising any power or right conferred upon that party by this agreement does
not operate as a waiver of that power or right, nor does any single exercise of
any power or right preclude any other or further exercise of any power of right
under this agreement.
12.3 Liability of parties
If any party to this agreement consists of more than one person then the
liability of those persons in all respects under this agreement is a joint
liability of all those persons and a separate liability of each of those
persons.
12.4 Entire agreement
This agreement constitutes the sole and entire agreement between the parties and
a warranty, representation, guarantee or other term of condition of any nature
not contained or recorded on this agreement is of no force or effect.
12.5 Severance
If any provision of this agreement is invalid and not enforceable in accordance
with its terms, other provisions which are self sustaining and capable of
separate enforcement with regard to the invalid provision, are and continue to
be valid and enforceable in accordance with their terms.
12.6 Counterparts
This agreement may be executed by any number of counterparts and all of these
counterparts taken together with one and the same instrument.
--------------------------------------------------------------------------------
12.7 Attorneys
Where this agreement is executed on behalf of a party by an attorney, that
attorney by executing declares that the attorney has no notice of the revocation
of the power of attorney under the authority of which the attorney executes the
agreement on behalf of that party.
12.8 Governing law and jurisdiction
This agreement is governed by, and is to be construed in accordance with, the
law of the Northern Territory of Australia and the parties submit to the
non-exclusive jurisdiction of the courts of the Northern Territory of Australia
and any court hearing appeals from those courts.
12.9 Onus of proof
In any dispute arising out of or in respect of this agreement or the licence,
and without limiting the generality of the foregoing, where any question arises
as to whether there has been any event of default, or whether any other event
giving rise to a right of termination on the part of the Minister has occurred,
the onus of proof shall rest with the Operator.
12.10 Assignment
At the request of the Operator, the Minister will consent to the assignment of
this agreement to a person approved under the Control Act as assignee of the
licence.
12.11 Provision of information
The Operator must provide to the Minister from time to time at his request such
information, additional to the information otherwise expressly referred to in
this agreement, as the Minister may require in relation to the operation and
conduct of the casino and casino games, including without limitation any
information segmented by reference to specific casino games and/or player losses
on specific casino games.
13. DISCLOSURE
13.1 General principles
The Operator acknowledges that in the performance of his duties as a Minister of
the Crown the Minister may be obliged to disclose publicly information in
relation to the casino and casino operations.
13.2 Representations by the Operator
If the Operator believes that the disclosure of information of the kind referred
to in clause 13.5 will irreparably damage its business, it may make
representations to the Minister at the time that the information is provided to
the Minister and the Minister undertakes to give good faith consideration to
those representations, having regard to his duties and responsibilities as a
Minister of the Crown.
13.3 Consultation
The Minister will consult, or cause consultation to be undertaken, with the
Operator, before disclosing information of the kind referred to in clause 13.5.
--------------------------------------------------------------------------------
13.4 Disclosable information
The Operator consents to the disclosure by the Minister of detailed casino
information including the number of machines, table games, disputes, key
licences, keno venues and similar matters, casino tax rates and casino tax
collections, unclaimed prizes, the amount of the community benefit levy and
community machine allowances and casino profitability percentages, through the
annual report of the Department of Industries and Business, and to the
governments and government agencies and departments of the other States and
Territory of Australia and of the Commonwealth and to research groups including
but not limited to the Australian Gambling Statistics publication and the
Productivity Commission.
13.5 Additional information
Subject to clauses 13.2 and 13.3 the Operator consents to the disclosure by the
Minister, in the manner contemplated in clause 13.4 of any information about the
casino and its operations, in addition to the information referred to in that
clause, if it is information of the kind released by government agencies and
departments in the other States and Territory of Australia or of the
Commonwealth in order to facilitate research into problem gambling and to ensure
a sound gaming policy is developed in the Territory and throughout Australia.
--------------------------------------------------------------------------------
The Schedule
(Example of calculation of projected gross profit under paragraph 8.4(c)).
Projected gross profit year X = projected gross profit year (X-1) + (projected
gross
profit year (X-1) × real per
capita growth year X)
If by way of example year X = 1999 then
•Real per capita growth 1999 = CPI for 1999 × population growth for 1999
•Projected gross profit year (X-1) = projected gross profit for 1998.
•CPI for 1999 = 0.7% (refer ABS Publication 6401.0, December Quarter 1999)
•Population growth for 1999 = 1.5% (refer ABS Publication 3101.0, December
Quarter 1999).
Assuming projected gross profit for 1998 is $40 million then
Projected gross profit 1999 = 40 + (40 × (0.7% × 1.5%))
Projected gross profit 1999 = 40 + (40 × 1.05%)
Projected gross profit 1999 = $40.42 million
--------------------------------------------------------------------------------
IN WITNESS WHEREOF the parties hereto have executed this agreement on the day
and year first hereinbefore written.
SIGNED by MICHAEL ANTHONY REED the ) Treasurer and Minister acting for and
on ) behalf of the Minister for Racing, Gaming ) and Licensing
pursuant to an authorisation ) under section 46(1)(a) of the )
Interpretation Act in the presence of )
/s/ KENNETH BRUCE CLARKE
--------------------------------------------------------------------------------
/s/ MICHAEL ANTHONY REED
--------------------------------------------------------------------------------
Signature of witness
Kenneth Bruce Clarke
--------------------------------------------------------------------------------
Name of witness (print)
THE COMMON SEAL of DIAMOND
)
LEISURE PTY LIMITED ) ACN 009 624 417 was hereunto ) [Common Seal
Stamp] affixed in accordance with its ) constitution in the presence of
/s/ JAMES J. MURREN
--------------------------------------------------------------------------------
Signature of Director
/s/ DAVE STEINHARDT
--------------------------------------------------------------------------------
Director/Secretary
THE COMMON SEAL of MGM GRAND
)
AUSTRALIA PTY LTD ) ACN 069 214 473 was hereunto ) [Common Seal
Stamp] affixed in accordance with its ) constitution in the presence of
/s/ JAMES J. MURREN
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Signature of Director
/s/ NEVILLE WALKER
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Director/Secretary
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QuickLinks
EXHIBIT 10.1
MINTER ELLISON Lawyers Waterfront Place 1 Eagle Street BRISBANE QLD 4000 DX 102
Brisbane Telephone (07) 3226 6333 Facsimile (07) 3229 1066 NPW 1101575
TABLE OF CONTENTS
CASINO OPERATOR'S AGREEMENT
The Schedule
|
CREDIT AGREEMENT
DATED AS OF JULY 10, 2001
AMONG
FRANKLIN COVEY CO.,
THE LENDERS,
BANK ONE, NA
AS AGENT AND LC ISSUER
ZIONS FIRST NATIONAL BANK
AS SWING LINE LENDER
BANC ONE CAPITAL MARKETS, INC.
AS LEAD ARRANGER AND SOLE BOOK RUNNER
CREDIT AGREEMENT
This Agreement, dated as of July 10, 2001, is among FRANKLIN COVEY CO.,
a Utah corporation, the Lenders, BANK ONE, NA, a national banking association
having its principal office in Chicago, Illinois ("Bank One"), acting in the
capacity as Agent for the Lenders, BANK ONE, acting in the capacity as LC
Issuer, and ZIONS FIRST NATIONAL BANK ("Zions"), acting in the capacity as Swing
Line Lender. The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Account Debtor" means, collectively and severally, the obligor or
obligors on an account receivable.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or limited liability
company, or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority (by percentage
or voting power) of the outstanding ownership interests of a partnership or
limited liability company.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means Bank One in its capacity as contractual representative of
the Lenders pursuant to Article X, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article X.
"Aggregate Available Revolving Credit Commitment" means at any date the
Aggregate Revolving Credit Commitment on such date minus the Swing Line Sublimit
on such date.
"Aggregate Outstanding Combined Credit Exposure" means at any date the
aggregate of the Outstanding Combined Credit Exposure of all the Lenders.
"Aggregate Outstanding Revolving Credit Exposure" means at any date the
aggregate of the Outstanding Revolving Credit Exposure of all the Lenders.
"Aggregate Revolving Credit Commitment" means the aggregate of the
Revolving Credit Commitments of all the Lenders, as reduced from time to time
pursuant to the terms hereof, with the "Aggregate Revolving Credit Commitment"
on the Effective Date being $45,000,000.
"Agreement" means this credit agreement, as it may be amended or
modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.4.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the
Federal Funds Effective Rate for such day plus 1/2% per annum.
"Annex" refers to an annex to this Agreement, unless another document is
specifically referenced.
"Applicable Fee Rate" means, at any time, the percentage rate per annum
at which commitment fees are accruing on the unused portion of the Aggregate
Revolving Credit Commitment at such time as set forth in the Pricing Schedule.
"Applicable Margin" means, with respect to Loans of any Type at any
time, the percentage rate per annum which is applicable at such time with
respect to Loans of such Type as set forth in the Pricing Schedule.
"Applicable Percentage" means for purposes of calculating the mandatory
prepayment required pursuant to Section 2.7(iv)(c) for any fiscal year: (i) if
on the last day of such fiscal year the outstanding principal balance of the
Term Loan exceeded 50% of the original principal balance of the Term Loan, 75%,
and (ii) if on the last day of such fiscal year the outstanding principal
balance of the Term Loan did not exceed 50% of the original principal balance of
the Term Loan, 50%.
"Arranger" means Banc One Capital Markets, Inc., a Delaware corporation,
and its successors, in its capacity as Lead Arranger and Sole Book Runner.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the following Persons during such time
as they are officers of the Borrower: Robert Whitman, Richard R. Putnam, Val
John Christensen, J. Scott Nielsen or Steve Young, acting singly.
"Bank One" means Bank One, NA, a national banking association having its
principal office in Chicago, Illinois, in its individual capacity, and its
successors.
"Borrower" means Franklin Covey Co., a Utah corporation, and its
successors and assigns.
"Borrower Collateral Documents" means, collectively, the Borrower
Security Agreement, all Real Property Collateral Documents to which the Borrower
is party and all other documents, instruments and agreements required to be
delivered by the Borrower from time to time pursuant to Section 2.20, as the
same may be amended or modified and in effect from time to time.
"Borrower-Owned Pledged Shares" is defined in the Borrower Security
Agreement.
"Borrower Security Agreement" means a pledge and security agreement in
the form of that attached hereto as Exhibit A or such other form as may be
acceptable to the Agent, as the same may be amended or modified and in effect
from time to time.
"Borrowing Base" means on any date all Eligible Accounts and Eligible
Inventory in which the Agent holds for the benefit of the Credit Providers a
first priority, perfected Lien.
"Borrowing Base Certificate" means a report in the form of that attached
hereto as Exhibit B or such other form as is acceptable to the Agent, duly
certified by a Responsible Officer.
"Borrowing Date" means a date on which a Loan is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Loans, a day (other than a Saturday or Sunday) on which
banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago for the conduct of substantially all of their commercial lending
activities and interbank wire transfers can be made on the Fedwire system.
"Capital Expenditures" means, without duplication, any expenditures for
any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with Agreement Accounting Principles
excluding (i) the cost of assets acquired with Capitalized Lease Obligations,
and (ii) expenditures of insurance proceeds to rebuild or replace any asset
after a casualty loss.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Cash Equivalent Investments" means (i) short-term obligations of, or
fully guaranteed by, the United States of America, (ii) commercial paper rated
A-1 or better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts
maintained in the ordinary course of business, and (iv) certificates of deposit
issued by and time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000; provided in each case that
the same provides for payment of both principal and interest (and not principal
alone or interest alone) and is not subject to any contingency regarding the
payment of principal or interest.
"Change in Control" means: (i) with respect to the Borrower, the
acquisition by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of 20% or more of
the outstanding shares of voting stock of the Borrower, and (ii) with respect to
any Material Subsidiary, if such Subsidiary shall cease to be a Wholly-Owned
Subsidiary of the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means, collectively and severally, all property and assets
of the Borrower and its Subsidiaries which are at any time subject to a Lien in
favor of the Agent for the benefit of the Credit Providers under the Collateral
Documents.
"Collateral Shortfall Amount" is defined in Section 8.1.
"Collateral Documents" means, collectively, the Borrower Collateral
Documents and the Guarantor Collateral Documents.
"Collateral Value of the Borrowing Base" means at any date:
(i) During the period from the Effective Date to and including November 30,
2001, $45,000,000; and
(ii) At all times thereafter, the sum of:
(a) 80% of the outstanding principal balance of Eligible Accounts included in
the Borrowing Base at such date; plus
(b) 25% of the book value of Eligible Inventory consisting of tabs, forms and
other supplies and 35% of the book value of all other Eligible Inventory
included in the Borrowing Base at such date, in all cases determined in
accordance with Agreement Accounting Principles (not to exceed 50% of the
aggregate Collateral Value of the Borrowing Base at such date).
"Commitment Schedule" means on any date a schedule setting forth the
then current Aggregate Revolving Credit Commitment, the Swing Line Sublimit and,
for each Lender, such Lender's current Revolving Credit Commitment, as such
amount may be modified from time to time pursuant to the terms hereof, with the
Commitment Schedule in effect at the date of this Agreement attached hereto as
Annex 1.
"Compliance Certificate" means a certificate in the form of that
attached hereto as Exhibit C, duly executed by the chief financial officer of
the Borrower.
"Consolidated Capital Expenditures" means, with reference to any period,
the Capital Expenditures of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated EBITDA" means Consolidated Net Income plus, to the extent
deducted from revenues in determining Consolidated Net Income, (i) Consolidated
Interest Expense, (ii) expenses for taxes paid or accrued, (iii) depreciation,
(iv) amortization, (v) extraordinary losses incurred other than in the ordinary
course of business, and (vi) non-cash expenses relating to write downs, reserves
and charges with respect to employee notes receivable held by the Borrower
associated with executive compensation plans, minus, to the extent included in
Consolidated Net Income, (y) extraordinary gains realized other than in the
ordinary course of business and (ii) non-cash income relating to write downs,
reserves and charges with respect to employee notes receivable held by the
Borrower associated with executive compensation plans, all calculated for the
Borrower and its Subsidiaries on a consolidated basis.
"Consolidated Funded Indebtedness" means at any time the aggregate
dollar amount of Consolidated Indebtedness which has actually been funded and is
outstanding at such time, whether or not such amount is due or payable at such
time.
"Consolidated Indebtedness" means at any time the Indebtedness of the
Borrower and its Subsidiaries calculated on a consolidated basis as of such
time.
"Consolidated Interest Expense" means, with reference to any period, the
interest expense of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) before preferred dividends of the Borrower and its Subsidiaries
calculated on a consolidated basis for such period.
"Consolidated Net Worth" means at any time the consolidated
stockholders' equity of the Borrower and its Subsidiaries calculated on a
consolidated basis as of such time.
"Consolidated Rent Expense" means, with reference to any period, the
Rentals of the Borrower and its Subsidiaries calculated on a consolidated basis
for such period.
"Consolidated Working Capital" means on any date: (i) the sum of (a)
accounts receivable plus the book value of inventory of the Borrower and its
Subsidiaries, as shown on the consolidated balance sheet of the Borrower,
determined in accordance with Agreement Accounting Principles, minus (ii)
accounts payable of the Borrower and its Subsidiaries, as shown on the
consolidated balance sheet of the Borrower, determined in accordance with
Agreement Accounting Principles.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or the obligations of any such Person as general
partner of a partnership with respect to the liabilities of the partnership.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or businesses (whether or
not incorporated) under common control which, together with the Borrower or any
of its Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"Credit Extension" means the funding of a Loan or the issuance of a
Facility LC hereunder.
"Credit Extension Date" means the Borrowing Date for a Loan or the
issuance date for a Facility LC.
"Credit Providers" means, collectively and severally: (i) the Lenders
from time to time party hereto, and (ii) the Agent and the LC Issuer in their
capacities as such hereunder.
"Default" means an event described in Article VII.
"Domestic Subsidiary" means a Subsidiary of the Borrower incorporated
under the laws of a jurisdiction of the United States and which maintains its
chief executive office in the United States.
"Effective Date" means the date upon which this Agreement has been
executed by all parties hereto and all conditions precedent to the first Credit
Extension hereunder set forth in Section 4.1 have been satisfied.
"Eligible Account" means at any date the gross amount, less discounts,
credits or offsets of any nature and less accrued finance charges and
delinquency charges, of the accounts receivable owing to the Borrower or a
Guarantor by Account Debtors for which each of the following statements is
accurate and complete (and the Borrower, by including such account receivable in
any computation of the Collateral Value of the Borrowing Base, shall be deemed
to represent and warrant to the Agent and the Lenders the accuracy and
completeness of such statements):
(i) Said account receivable is a binding and valid obligation of the Account
Debtor thereon, in full force and effect and enforceable in accordance with its
terms;
(ii) Said account receivable is genuine, in all respects as appearing on its
face or as represented in the books and records of the Borrower, and all
material information set forth therein is true and correct;
(iii) Said account receivable is free of all material default of any party
thereto, counterclaims, offsets and defenses and from any rescission,
cancellation or avoidance, and all right thereof, whether by operation of law or
otherwise;
(iv) The payment of said account receivable is not more than 60 days from the
due date thereof;
(v) Said account receivable is free of material concessions or understandings
with the Account Debtor thereon of any kind not disclosed to and approved by the
Lender in writing;
(vi) Said account receivable is, and at all times will be, free and clear of
all liens, encumbrances, charges, rights and interests of any kind, except in
favor of the Agent for the benefit of the Credit Providers;
(vii) Said account receivable is derived from sales made or services rendered
to the Account Debtor in the ordinary course of the Borrower’s business;
(viii) The Account Debtor on said account receivable (a) is located within the
United Sates of America or the District of Columbia or Canada or, if not so
located, is covered by Eximbank insurance or a letter of credit in form and
substance acceptable to the Agent, which letter of credit names the Agent for
the benefit of the Credit Providers as the beneficiary or which, if issued in
favor of the Borrower has been assigned to the Agent for the benefit of the
Credit Providers; (b) is not the subject of any bankruptcy or insolvency
proceeding, nor has a trustee or receiver been appointed for all or a
substantial part of its property, nor has said Account Debtor made an assignment
for the benefit of creditors, admitted its inability to pay its debts as they
mature or suspended its business; (c) is not a state or federal governmental
department, commission, board, bureau or agency ; and (d) is not affiliated,
directly or indirectly, with the Borrower, whether as an Affiliate, employee or
otherwise;
(ix) Said account receivable did not arise from sales to an Account Debtor as
to whom 25% or more of the total accounts receivable owing by such Account
Debtor to the Borrower and the Guarantors are delinquent more than 60 days from
the due date thereof;
(x) Said account receivable did not arise from sales to an Account Debtor who
is located in a jurisdiction in which the Borrower or the Guarantor generating
such receivable is not qualified to do business and in good standing or where
there exist other legal restrictions on the right of the Borrower or the
Guarantor, as applicable, to pursue legal remedies in such jurisdiction against
such Account Debtor with respect to such account receivable;
(xi) The Account Debtor on said account receivable has not delivered a check
or other form of payment on account thereof which payment is being “held” by the
Borrower or the Guarantors for later application against said account
receivable; and
(xii) Said account receivable is otherwise satisfactory to the Agent, in its
sole discretion.
"Eligible Inventory" means at any date all inventory as defined in the
New York Uniform Commercial Code for which each of the following statements is
accurate and complete (and the Borrower, by including such inventory in any
computation of the Collateral Value of the Borrowing Base, shall be deemed to
represent and warrant to the Agent and the Lenders the accuracy and completeness
of such statements):
(i) Said inventory is owned by the Borrower or a Guarantor free and clear of
all security interest, liens, encumbrances and claims of any third party other
than Agent for the benefit of the Credit Providers;
(ii) Said inventory: (a) is located in the States described on Annex 2, as
such may be amended from time to time by mutual written consent of the Borrower
and the Agent, (b) is not located at the home of any employee of the Borrower or
any Guarantor, and (c) is not in transit (other than in transit between
warehouses and retail stores);
(iii) Said inventory does not consist of raw materials, work-in-process or
inventory which the Agent, in its reasonable discretion, deems to be obsolete,
unsalable, slow moving, damaged, defective or unfit for further processing; and
(iv) Except as otherwise agreed by the Agent, in its sole discretion, there
has been executed and delivered to the Agent such consents to removal of
property, bailee letters and consents of third parties as the Agent shall have
required and, if said inventory is held by a third party which has issued a
negotiable warehouse receipt or other evidence of title thereof, such evidence
of title shall have been delivered to the Agent.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to (i) the
protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or land, or (iv)
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Escrow Holder" means First American Title Insurance Company, Utah
Division, at its offices at 830 East 400 South, Salt Lake City, Utah 84111.
"Escrow Instructions" means escrow instructions delivered to the Escrow
Holder in connection with the closing of the transactions contemplated hereby in
form and substance acceptable to the Agent.
"Eurodollar Base Rate" means, with respect to a Eurodollar Loan for the
relevant Interest Period, the applicable British Bankers' Association Interest
Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as
of 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, and having a maturity equal to such Interest Period, provided
that, (i) if Reuters Screen FRBD is not available to the Agent for any reason,
the applicable Eurodollar Base Rate for the relevant Interest Period shall
instead be the applicable British Bankers' Association Interest Settlement Rate
for deposits in U.S. dollars as reported by any other generally recognized
financial information service as of 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, and having a maturity equal to
such Interest Period, and (ii) if no such British Bankers' Association Interest
Settlement Rate is available to the Agent, the applicable Eurodollar Base Rate
for the relevant Interest Period shall instead be the rate determined by the
Agent to be the rate at which Bank One or one of its Affiliate banks offers to
place deposits in U.S. dollars with first-class banks in the London interbank
market at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period, in the approximate amount of Bank One's
relevant Eurodollar Loan and having a maturity equal to such Interest Period.
"Eurodollar Loan" means a Loan which, except as otherwise provided in
Section 2.11, bears interest at the applicable Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Loan for the
relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base
Rate applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable Margin.
"Excess Cash Flow" means for any fiscal year of the Borrower: (i)
Consolidated EBITDA minus (ii) the sum of: (a) Consolidated Capital
Expenditures, (b) principal payments made on Consolidated Indebtedness for
borrowed money (exclusive of mandatory prepayments made pursuant to Section
2.7(iv)(c) during such fiscal year on account of Excess Cash Flow for the
preceding fiscal year), (c) cash interest payments, and (d) cash tax payments,
and plus or minus, as applicable (iii) the increase or decrease, as of the last
day of such fiscal year from the last day of the immediately preceding fiscal
year, in Consolidated Working Capital.
"Excluded Taxes" means, in the case of each Lender or applicable Lending
Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of which
such Lender or the Agent is incorporated or organized or (ii) the jurisdiction
in which the Agent's or such Lender's principal executive office or such
Lender's applicable Lending Installation is located.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.
"Existing Credit Agreement" means that certain Credit Agreement dated as
of October 8, 1999 by and among the Borrower, the lenders party thereto, Bank
One as the Agent for the lenders, Bank One and Zions as the Co-Agents, and Banc
One Capital Markets, Inc. as the Lead Arranger and Sole Book Runner, as amended.
"Existing LCs" means those Letters of Credit issued and on the Effective
Date outstanding under the Existing Credit Agreement, which Letters of Credit
are described on Annex 3.
"Existing Premier Agendas Facility" means that certain credit facility
evidenced by that certain Business Loan Agreement dated as of March 27, 2000
between Premier Agendas and Bank of America, N.A. and the documents, instruments
and agreements executed by Premier Agendas in connection therewith, as amended
from time to time.
"Facility LC" is defined in Section 2.19.1.
"Facility LC Application" is defined in Section 2.19.3.
"Facility LC Collateral Account" is defined in Section 2.19.11.
"Facility Termination Date" means May 30, 2004 or any earlier date on
which the Aggregate Revolving Credit Commitment is reduced to zero or otherwise
terminated pursuant to the terms hereof.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Final Installment" is defined in Section 2.2(iv).
"Floating Rate" means, for any day, a rate per annum equal to: (i) the
Alternate Base Rate for such day plus (ii) the Applicable Margin, in each case
changing when and as the Alternate Base Rate changes.
"Floating Rate Loan" means a Loan which, except as otherwise provided in
Section 2.11, bears interest at the Floating Rate.
"Foreign Subsidiary" means a Subsidiary of the Borrower which is not
incorporated under the laws of a jurisdiction of the United States and which
does not maintain its chief executive office in the United States.
"Guarantor" means each of the Initial Guarantors and each other
Wholly-Owned Domestic Subsidiary of the Borrower required to execute and deliver
a Guaranty and Guarantor Collateral Documents following the Effective Date
pursuant to Section 2.20, and its successors and assigns.
"Guarantor Collateral Documents" means, collectively, the Guarantor
Security Agreements, the Real Property Collateral Documents to which the
Guarantors or any of them are party and all other documents, instruments and
agreements required to be delivered by the Guarantors from time to time pursuant
to Section 2.20, as the same may be amended or modified and in effect from time
to time.
"Guarantor-Owned Pledged Shares" is defined with respect to each
Guarantor in such Guarantor's Guarantor Security Agreement.
"Guarantor Security Agreement" means a pledge and security agreement in
the form of that attached hereto as Exhibit D or such other form as may be
acceptable to the Agent, as it may be amended or modified and in effect from
time to time.
"Guaranty" means a guaranty in the form of that attached hereto as
Exhibit E executed by a Guarantor in favor of the Agent, for the ratable benefit
of the Credit Providers, or such other form as may be acceptable to the Agent,
as it may be amended or modified and in effect from time to time.
"Indebtedness" of a Person means such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from Property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) obligations of such Person to purchase securities or other
Property arising out of or in connection with the sale of the same or
substantially similar securities or Property, (vi) Capitalized Lease
Obligations, (vii) any liabilities for accrued and unpaid earnout or similar
obligations associated with Acquisitions, (viii) Contingent Obligations, (ix)
the dollar amount of any revolving securitization of trade or notes receivable,
and (x) any other obligation for borrowed money or other financial accommodation
which in accordance with Agreement Accounting Principles would be shown as a
liability on the consolidated balance sheet of such Person.
"Initial Guarantors" means those Wholly-Owned Domestic Subsidiaries of
the Borrower described on Annex 4.
"Initial Installment" is defined in Section 2.2(i).
"Intellectual Property Collateral" is defined: (i) as to the Borrower,
in the Borrower Security Agreement, and (ii) as to each Guarantor, in such
Guarantor's respective Guarantor Security Agreement.
"Interest Period" means, with respect to a Eurodollar Loan, a period of
one, two, three or six months commencing on a Business Day selected by the
Borrower pursuant to this Agreement. Such Interest Period shall end on the day
which corresponds numerically to such date one, two, three or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"Interim Equal Installments" is defined in Section 2.2(ii).
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade) or
contribution of capital by such Person; stocks, bonds, mutual funds, partnership
interests, notes, debentures or other securities owned by such Person; any
deposit accounts and certificate of deposit owned by such Person; and structured
notes, derivative financial instruments and other similar instruments or
contracts owned by such Person.
"LC Fee" is defined in Section 2.19.4.
"LC Issuer" means Bank One, in its capacity as issuer of Facility LCs
hereunder and, to the extent relevant to the Existing Letters of Credit, Zions,
in its capacity as the issuer thereof under the Existing Credit Agreement.
"LC Obligations" means, at any time, the sum, without duplication, of:
(i) the aggregate undrawn stated amount under all Facility LCs outstanding at
such time plus (ii) the aggregate unpaid amount at such time of all
Reimbursement Obligations.
"LC Payment Date" is defined in Section 2.19.5.
"Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns and shall include,
unless otherwise specified, the Swing Line Lender in its capacity as such.
"Lending Installation" means, with respect to a Lender or the Agent, the
office, branch, subsidiary or affiliate of such Lender or the Agent listed on
the signature pages hereof or on a Schedule or otherwise selected by such Lender
or the Agent pursuant to Section 2.17.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Leverage Ratio" means the ratio calculated pursuant to Section 6.23.2.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means each Revolving Loan made pursuant to Section 2.1, the Term
Loan or portions thereof outstanding as different Types made pursuant to Section
2.2 and each Swing Line Loan made pursuant to Section 2.3, and shall include any
conversion or continuation of any Revolving Loan or portion of the Term Loan
held by such Lender to another Type.
"Loan Documents" means this Agreement and any Notes issued pursuant to
Section 2.13, the Facility LC Applications, the Borrower Collateral Documents,
the Guaranties, the Guarantor Collateral Documents and all documents,
instruments and agreements evidencing the Rate Management Obligations.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents to
which it is a party, (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Agent, the LC Issuer or the Lenders
thereunder, or (iv) the perfection or priority of the Agent's Lien for the
benefit of the Credit Providers in the Collateral.
"Material Subsidiary" means a Wholly-Owned Subsidiary of the Borrower
which the Agent, in its sole and absolute discretion, determines from time to
time bears a material relationship to the business, operations, affairs,
financial condition, assets, properties or prospects of the Borrower and its
Subsidiaries taken as a whole.
"Modify" and "Modification" are defined in Section 2.19.1.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Net Cash Proceeds" means with respect the to sale or other disposition
of any Property or the issuance of any debt or equity securities, the gross cash
proceeds received less reasonable and customary transaction costs (including any
taxes due as a result of any gain on the sale or other disposition of such
Property).
"Non-U.S. Lender" is defined in Section 3.5(iv).
"Note" is defined in Section 2.13.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Loans, all Reimbursement Obligations, all accrued and unpaid
fees and all expenses, reimbursements, indemnities and other obligations of the
Borrower to the Lenders or to any Lender, the Agent, the LC Issuer or any
indemnified party arising under the Loan Documents, including, without
limitation, all Rate Management Obligations of the Borrower or any Guarantor to
any Lender.
"Off-Balance Sheet Liability" of a Person means (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any liability under any Sale and Leaseback
Transaction which is not a Capitalized Lease, (iii) any liability under any
so-called "synthetic lease" transaction entered into by such Person, or (iv) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheets of such Person, but excluding from this clause
(iv) Operating Leases.
"Operating Lease" of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.
"Other Taxes" is defined in Section 3.5(ii).
"Outstanding Combined Credit Exposure" means for any Lender at any date
the sum of: (i) such Lender's Outstanding Revolving Credit Exposure, plus (ii)
an amount equal to such Lender's Pro Rata Share of the outstanding principal
balance of the Term Loan.
"Outstanding Revolving Credit Exposure" means for any Lender at any date
the sum of: (i) such Lender's Pro Rata Share of Revolving Loans outstanding,
plus (ii) an amount equal to such Lender's Pro Rata Share of the LC Obligations
and plus (iii) an amount equal to such Lender's Pro Rata Share of Swing Line
Loans outstanding.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each calendar month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Real Property Encumbrances" means Liens permitted under
subsections (i), (ii) and (iv) of Section 6.15 and other Liens that the Agent
has agreed will be acceptable to be listed as exceptions to title in the
lender's title policies to be issued to the Agent insuring the deeds of trust
and other security instruments covering the Real Properties, as set forth in the
Escrow Instructions.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
"Premier Agendas" means Premier Agendas, Inc., a direct, Wholly-Owned
Subsidiary of the Borrower.
"Pricing Schedule" means Annex 5 attached hereto, as the same may be
amended from time to time.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Bank One or its parent (which is not necessarily
the lowest rate charged to any customer), changing when and as said prime rate
changes.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"Pro Rata Share" shall mean for any Lender, the ratio, expressed as a
percentage, which such Lender's Outstanding Combined Credit Exposure bears to
the Aggregate Outstanding Combined Credit Exposure; provided, however, that
following the occurrence of an Event of Default and acceleration of the
Obligations, the term "Pro Rata Share" shall mean for any Lender, the ratio,
expressed as a percentage, which such Lender's Outstanding Combined Credit
Exposure plus all Rate Management Obligations held by such Lender included in
the "Obligations" bears to the Aggregate Outstanding Combined Credit Exposure
plus all Rate Management Obligations held by all Lenders included in the
"Obligations".
"Purchasers" is defined in Section 12.3.1.
"Rate Management Transaction" means any transaction (including an
agreement with respect thereto) now existing or hereafter entered into between
the Borrower and any Lender or Affiliate thereof which is a rate swap, basis
swap, forward rate transaction, commodity swap, commodity option, equity or
equity index swap, equity or equity index option, bond option, interest rate
option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions) or any combination
thereof, whether linked to one or more interest rates, foreign currencies,
commodity prices, equity prices or other financial measures.
"Rate Management Obligations" of a Person means any and all obligations
of such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.
"Real Property" means, collectively, each fee owned and leasehold parcel
of real property pledged from time to time to the Agent for the benefit of the
Credit Providers for the Obligations.
"Real Property Collateral Documents" means all deeds of trust,
mortgages, security deeds and other documents of encumbrance covering Real
Property and all other documents, instruments and agreements, including, without
limitation, environmental indemnities, estoppel certificates, attornment
agreements, subordination agreements, title policies (with acceptable
endorsements and reinsurance coverage) and consents and acknowledgments of third
parties is deemed necessary or desirable by the Agent to obtain for the Agent
for the benefit of the Credit Providers a Lien on the Real Property subject only
to Permitted Real Property Encumbrances.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Reimbursement Obligations" means at any date the aggregate of all
obligations of the Borrower then outstanding under Section 2.19 to reimburse the
LC Issuer for amounts paid by the LC Issuer in respect of any one or more
drawings under Facility LCs.
"Rentals" of a Person means the aggregate fixed amounts payable by such
Person under any Operating Lease.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Reports" is defined in Section 9.6.
"Required Lenders" means Lenders in the aggregate having at least
66-2/3% of the Aggregate Outstanding Combined Credit Exposure.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Response Date" is defined in Section 2.19.
"Revolving Credit Commitment" means, for each Lender on any date, the
obligation of such Lender to make Revolving Loans and participate in Swing Line
Loans and Facility LCs in an aggregate dollar amount not exceeding the amount
set forth on the then current Commitment Schedule, as it may be modified as a
result of any assignment that has become effective pursuant to Section 12.3.2 or
as otherwise modified from time to time pursuant to the terms hereof.
"Revolving Loan" is defined in Section 2.1.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"Schedule" refers to a specific schedule to this Agreement, unless
another document is specifically referenced.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Subordinated Indebtedness" of a Person means any Indebtedness of such
Person the payment of which is subordinated to payment of the Obligations to the
written satisfaction of the Agent.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (i) represents more than 10% of
the consolidated assets of the Borrower and its Subsidiaries as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries as
at the beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Borrower and its
Subsidiaries as reflected in the financial statements referred to in clause (i)
above.
"Swing Line Lender" means Zions, in its capacity as the funding agent
for Swing Line Loans made pursuant to Section 2.3, or such other Lender as may
succeed to its rights and obligations as the Swing Line Lender pursuant to the
terms of this Agreement.
"Swing Line Borrowing Notice" is defined in Section 2.3.2.
"Swing Line Loan" is defined in Section 2.3.1.
"Swing Line Sublimit" $10,000,000, as such amount may be permanently
reduced from time to time as provided in Section 2.3.2.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes and Other Taxes.
"Term Loan" is defined in Section 2.2.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Revolving Loan and the Term Loan and
portions thereof, its nature as a Floating Rate Loan or a Eurodollar Loan, and
with respect to any Swing Line Loan, its nature as a Floating Rate Loan.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled.
"Year 3 Balloon Payment" is defined in Section 2.2(iii).
"Zions" means Zions First National Bank, a national banking association
having its principal office in Salt Lake City, Utah, in its individual capacity,
and its successors.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Revolving Credit Facility; Required Payments. From and
including the Effective Date and prior to the Facility Termination Date, each of
the Lenders severally agrees, on the terms and conditions set forth in this
Agreement, to advance loans (each a "Revolving Loan"), pro rata in accordance
with their respective Pro Rata Shares, in an amount not to exceed the lesser of:
(i) The Aggregate Available Revolving Credit Commitment less the LC
Obligations outstanding on such date, and
(ii) The Collateral Value of the Borrowing Base less the LC Obligations
outstanding on such date and Swing Line Loans outstanding on such date (other
than Swing Line Loans which will be repaid with Revolving Loans to be funded on
such date);
provided, however, that in no event shall any Lender be required to make any
advance hereunder if upon the funding thereof such Lender’s Outstanding
Revolving Credit Exposure would exceed its Revolving Credit Commitment. Subject
to the terms of this Agreement, the Borrower may borrow, repay and reborrow
Revolving Loans at any time prior to the Facility Termination Date. The
Revolving Credit Commitments of all Lenders shall expire on the Facility
Termination Date and any and all Revolving Loans then outstanding and interest
accrued and unpaid thereon shall be due and payable on the Facility Termination
Date.
2.2. Term Loan Facility; Required Payments. On the Effective
Date, each of the Lenders severally agrees, on the terms and conditions set
forth in this Agreement, to advance a loan (the "Term Loan"), pro rata in
accordance with their respective Pro Rata Shares, in an amount requested by the
Company (not to exceed $69,000,000). Following the Effective Date, the Borrower
shall have no further right to borrow under this Section 2.2, it being
acknowledged and agreed that the Term Loan must be disbursed in a single
disbursement on such date. The principal amount of the Term Loan shall be
payable in installments in accordance with the following amortization schedule:
(i) On November 30, 2001, one installment of $15,000,000 (the "Initial
Installment");
(ii) On the last day of each February, May, August and November, commencing
February 28, 2002 to and including May 31, 2004, 10 consecutive equal
installments each in the amount of $2,000,000 (the “Interim Equal
Installments”);
(iii) On June 30, 2004, one installment in an amount equal to: (1) $36,000,000
minus (2) the aggregate dollar amount of payments made on account of principal
outstanding under the Term Loan prior to such date (the “Year 3 Balloon
Payment”); and
(iv) On March 31, 2005, such amount as is necessary to repay the Term Loan and
interest accrued and unpaid thereon in full (the “Final Installment”).
Principal amounts paid on account of the Term Loan, whether regularly scheduled
payments or prepayments permitted or required pursuant to Section 2.7 may not be
reborrowed.
2.3. Swing Line Facility; Required Payments; Participation of
Lenders.
2.3.1 Swing Line Credit Lending Limit. From and including the
Effective Date and prior to the Facility Termination Date, the Swing Line Lender
agrees, on the terms and conditions set forth in this Agreement, to make credit
extensions to the Borrower in the form of overdrafts permitted under accounts of
the Borrower maintained with the Swing Line Lender (each a "Swing Line Loan") in
an aggregate amount not to exceed at any date outstanding the lesser of:
(i) The Aggregate Revolving Credit Commitment less the aggregate dollar amount
of Revolving Loans outstanding and less the LC Obligations on such date;
(ii) The Collateral Value of the Borrowing Base less the aggregate dollar
amount of Revolving Loans outstanding and less the LC Obligations on such date;
and
(iii) The Swing Line Sublimit;
provided, however, that in no event shall the Swing Line Lender make any Swing
Line Loan hereunder if upon the creation thereof the Swing Line Lender’s
Outstanding Revolving Credit Exposure would exceed its Revolving Credit
Commitment. Subject to the terms of this Agreement, the Borrower may borrow,
repay and reborrow Swing Line Loans at any time prior to the Facility
Termination Date.
2.3.2 Permanent Reductions of Swing Line Sublimit. The Borrower
may on any date, in its sole and absolute discretion, elect to permanently
reduce the Swing Line Sublimit to zero or in increments of $1,000,000 by
delivering written notice (which may be by facsimile transmission) of such
election to the Agent and the Swing Line Lender, such reduction to be effective
on the third Business Day following the delivery of such notice. On the
effective date of any reduction of the Swing Line Sublimit, the Borrower shall
pay to the Swing Line Lender the full amount of Swing Line Loans outstanding in
excess of the Swing Line Sublimit after giving effect to such reduction.
2.3.3 Interest on Swing Line Loans. Each Swing Line Loan shall
bear interest at the Floating Rate.
2.3.4 Repayment of Swing Line Loans. Subject to the payment
requirement set forth in Section 2.3.2 above upon any permanent reduction of the
Swing Line Sublimit, Swing Line Loans outstanding shall be paid in full by the
Borrower upon the earlier to occur of: (i) the Business Day immediately
following the date demand therefor is made by the Swing Line Lender, in its sole
and absolute discretion (which demand may be telephonic), and (ii) the Facility
Termination Date.
2.3.5 Absolute Obligation to Refund. Each Lender's obligation to
make Revolving Loans pursuant to Section 2.5.4 the proceeds of which will be
utilized to repay Swing Line Loans shall be unconditional, continuing,
irrevocable and absolute and shall not be affected by any circumstances,
including, without limitation, (i) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against the Agent, the Swing
Line Lender or any other Person, (ii) the occurrence or continuance of a Default
or Unmatured Default, (iii) any adverse change in the condition (financial or
otherwise) of the Borrower, or (iv) any other circumstances, happening or event
whatsoever; provided, however, that the obligation of the Lenders to advance
Revolving Loans to repay Swing Line Loans made by the Swing Line Lender on any
date on which the Swing Line Lender's personnel responsible for administering
the credit facility hereunder had actual knowledge of the existence of a
Default, shall be limited to those Swing Line Loans made on such date with the
consent (which may be telephonic) of those Lenders with the authority to waive
such Default. In the event that any Lender fails to make payment to the Agent of
any amount required by it under this Section 2.3.5, the Agent shall be entitled
to receive, retain and apply against such obligation the principal and interest
otherwise payable to such Lender hereunder until the Agent receives such payment
from such Lender or such obligation is otherwise fully satisfied. In addition to
the foregoing, if for any reason any Lender fails to make payment to the Agent
of any amount required by it under this Section 2.3.5, such Lender shall be
deemed, at the option of the Agent, to have unconditionally and irrevocably
purchased from the Swing Line Lender, without recourse or warranty, an undivided
interest and participation in the applicable Swing Line Loan in the amount of
such Lender's Pro Rata Share thereof, and such interest and participation may be
recovered from such Lender together with interest thereon at the Federal Funds
Effective Rate for each day during the period commencing on the date of demand
and ending on the date such amount is received.
2.4 Types of Loans. Revolving Loans and portions of the Term Loan
outstanding from time to time may be Floating Rate Loans or Eurodollar Loans, or
a combination thereof, selected by the Borrower in accordance with Sections 2.8
and 2.9.
2.5 Facility Fee; Reductions in Aggregate Revolving Credit
Commitment. The Borrower agrees to pay to the Agent for the account of each
Lender a facility fee at a per annum rate equal to the Applicable Fee Rate on
the daily average of such Lender's Commitment from the Effective Date to and
including the Facility Termination Date, payable on last day of each fiscal
quarter, commencing August 31, 2001, and on the Facility Termination Date. The
Borrower may permanently reduce the Aggregate Revolving Credit Commitment in
whole, or in part ratably among the Lenders in integral multiples of $5,000,000,
upon at least five Business Days' written notice to the Agent, which notice
shall specify the amount of any such reduction, provided, however, that the
amount of the Aggregate Revolving Credit Commitment may not be reduced below the
aggregate principal amount of the Aggregate Outstanding Revolving Credit
Exposure. All accrued commitment fees shall be payable on the effective date of
any termination of the obligations of the Lenders to make Credit Extensions
hereunder.
2.6 Minimum Amount of Each Loan. Each Eurodollar Loan shall be in
the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess
thereof), and each Floating Rate Loan (other than a Revolving Loan to repay
Swing Line Loans) shall be in the minimum amount of $1,000,000 (and in multiples
of $100,000 if in excess thereof), provided, however, that any Floating Rate
Loan may be in the amount of the unused Aggregate Revolving Credit Commitment.
2.7 Optional and Mandatory Prepayments.
(i) The Borrower may from time to time pay, without penalty or premium, all
outstanding Floating Rate Loans (other than Swing Line Loans), or, in a minimum
aggregate amount of $1,000,000, any portion of the outstanding Floating Rate
Loans upon two Business Days' prior notice to the Agent. The Borrower may at any
time pay, without penalty or premium, all outstanding Swing Line Loans, or, in a
minimum amount of $100,000 and increments of $50,000 in excess thereof, any
portion of the outstanding Swing Line Loans, with notice to the Agent and the
Swing Line Lender by 11:00 a.m. (Chicago time) on the date of repayment.
(ii) The Borrower may from time to time pay, subject to the payment of any
funding indemnification amounts required by Section 3.4 but without penalty or
premium, all outstanding Eurodollar Loans, or, in a minimum aggregate amount of
$5,000,000 or any integral multiple of $1,000,000 in excess thereof, any portion
of the outstanding Eurodollar Loans upon three Business Days' prior notice to
the Agent.
(iii) The Borrower shall prepay outstanding Revolving Loans on any date upon
which the Aggregate Outstanding Revolving Credit Exposure shall exceed the
Collateral Value of the Borrowing Base by the full amount of such excess.
(iv) In addition to and not in lieu of regularly scheduled installments of
principal on the Term Loan (other than as specifically provided in subsections
(1), (2) and (3) below) required pursuant to Section 2.2, the Term Loan shall be
subject to mandatory prepayment as follows:
(a) Upon the sale, transfer or other disposition of any Property of the
Borrower or any of its Subsidiaries for total consideration in excess of
$1,000,000 during any consecutive 12-month period, commencing July 1, 2001
(excluding sales of inventory of the Borrower and its Subsidiaries in the
ordinary course of business), the Borrower shall remit to the Agent for
disbursement to the Lenders in accordance with their Pro Rata Shares 100% of the
Net Cash Proceeds thereof;
(b) Upon the issuance of debt or equity securities of the Borrower or any of
its Subsidiaries (other than securities issued: (1) as payment in kind for cash
amounts otherwise payable on account of outstanding debt or equity securities or
(2) in non-cash transactions in connection with the exercise of outstanding
options), the Borrower shall remit to the Agent for disbursement to the Lenders
in accordance with their Pro Rata Shares 100%, in the case of debt securities,
and 75%, in the case of equity securities, of the Net Cash Proceeds thereof;
(c) On or before January 31 of each calendar year (or, if the Borrower shall
change its fiscal year following the Effective Date, on or before such date as
may be mutually agreed by the Borrower and the Agent (but in no event later than
the last day of the fifth month following the last day of each fiscal year)),
the Borrower shall remit to the Agent for disbursement to the Lenders in
accordance with their respective Pro Rata Shares: (1) Excess Cash Flow for the
most recently ended fiscal year, multiplied by (2) the Applicable Percentage;
(d) No later than 10 days following the end of each calendar month, the
Borrower shall remit to the Agent for disbursement to the Lenders in accordance
with their Pro Rata Shares 100% of amounts paid or recovered on account of
employee notes receivable held by the Issuer associated with executive
compensation plans during the previous month; and
(e) No later than 30 days following the receipt thereof, the Borrower shall
remit to the Agent for disbursement to the Lenders in accordance with their Pro
Rata Shares 100% of Net Cash Proceeds received under any casualty or property
damage insurance covering any Property of the Borrower and its Subsidiaries to
the extent such proceeds are not used, as provided in the Collateral Documents,
to reimburse the costs and expenses of the owner of the related Property or to
replace or restore the property damaged or destroyed and 100% of all proceeds of
any condemnation or other taking of Property of the Borrower and its
Subsidiaries.
All prepayments remitted as mandatory prepayments on account of the Term Loan
pursuant to this Section 2.7(iv) shall be applied as follows:
(1) First, to the Initial Installment until the Initial Installment shall have
been paid in full;
(2) Then, against the Interim Equal Installments and the Year 3 Balloon
Installment, pro rata in an amount equal to the amount of such prepayment
divided by the number of Interim Equal Installments remaining plus the Year 3
Balloon Installment until the Interim Equal Installments and the Year 3 Balloon
Installment shall have been paid in full; and
(3) Then, to the Final Installment.
2.8 Method of Selecting Types and Interest Periods for Loans.
The Borrower shall select the Type of Loan and, in the case of each Eurodollar
Loan, the Interest Period applicable thereto from time to time. With respect to
the Term Loan and each Revolving Loan to be funded on the Effective Date and,
thereafter, with respect to each Revolving Loan, the Borrower shall give the
Agent irrevocable notice (a "Borrowing Notice") not later than 10:00 a.m.
(Chicago time) at least one Business Day before the Borrowing Date of each
Floating Rate Loan (other than a Swing Line Loan) and three Business Days before
the Borrowing Date for each Eurodollar Loan, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such Loan,
(ii) the aggregate amount of such Loan,
(iii) the Type selected, and
(iv) in the case of each Eurodollar Loan, the Interest Period applicable
thereto.
Not later than noon (Chicago time) on each Borrowing Date, each Lender shall
make available its Pro Rata Share of such Loan or Loans in funds immediately
available in Chicago to the Agent at its address specified pursuant to Article
XIII. The Agent will make the funds so received from the Lenders available to
the Borrower at the Agent’s aforesaid address.
2.9 Conversion and Continuation of Outstanding Loans. Floating
Rate Loans (other than Swing Line Loans) shall continue as Floating Rate Loans
unless and until such Floating Rate Loans are converted into Eurodollar Loans
pursuant to this Section 2.9 or are paid or prepaid, as permitted or required
hereunder. Each Eurodollar Loan shall continue as a Eurodollar Loan until the
end of the then applicable Interest Period therefor, at which time such
Eurodollar Loan shall be automatically converted into a Floating Rate Loan
unless (x) such Eurodollar Loan is or was repaid in accordance with Section 2.7
or (y) the Borrower shall have given the Agent a Conversion/Continuation Notice
(as defined below) requesting that, at the end of such Interest Period, such
Eurodollar Loan continue as a Eurodollar Loan for the same or another Interest
Period. Subject to the terms of Section 2.6, the Borrower may elect from time to
time to convert all or any part of a Floating Rate Loan (other than a Swing Line
Loan) into a Eurodollar Loan. The Borrower shall give the Agent irrevocable
notice (a "Conversion/Continuation Notice") of each conversion of a Floating
Rate Loan into a Eurodollar Loan or continuation of a Eurodollar Loan not later
than 10:00 a.m. (Chicago time) at least three Business Days prior to the date of
the requested conversion or continuation, specifying:
(i) the requested date, which shall be a Business Day, of such conversion or
continuation,
(ii) the aggregate amount and Type of the Loan which is to be converted or
continued, and
(iii) the amount of such Loan which is to be converted into or continued as a
Eurodollar Loan and the duration of the Interest Period applicable thereto.
2.10 Changes in Interest Rate, Etc. Each Floating Rate Loan
(other than a Swing Line Loan) shall bear interest on the outstanding principal
amount thereof, for each day from and including the date such Loan is made or is
automatically converted from a Eurodollar Loan into a Floating Rate Loan
pursuant to Section 2.9, to but excluding the date it is paid or is converted
into a Eurodollar Loan pursuant to Section 2.9 hereof, at a rate per annum equal
to the Floating Rate for such day. Each Swing Line Loan shall bear interest on
the outstanding principal amount thereof for each day from and including the day
such Swing Line Loan is made to but excluding the date it is paid, at a rate per
annum equal to the Floating Rate for such day. Changes in the rate of interest
on that portion of any Loan maintained as a Floating Rate Loan will take effect
simultaneously with each change in the Alternate Base Rate. Each Eurodollar Loan
shall bear interest on the outstanding principal amount thereof from and
including the first day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest rate determined
by the Agent as applicable to such Eurodollar Loan based upon the Borrower's
selections under Sections 2.8 and 2.9 and otherwise in accordance with the terms
hereof. No Interest Period may end after the Facility Termination Date. The
Borrower shall select Interest Periods applicable to portions of the Term Loan
being maintained as Eurodollar Loans so that it is not necessary to repay any
portion of a Eurodollar Loan prior to the last day of the applicable Interest
Period in order to make a regularly scheduled payment required pursuant to
Section 2.2.
2.11 Rates Applicable After Default. Notwithstanding anything to
the contrary contained in Section 2.8 or 2.9, during the continuance of a
Default or Unmatured Default the Required Lenders may, at their option, by
notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that no
Loan may be made as, converted into or continued as a Eurodollar Loan. During
the continuance of a Default the Required Lenders may, at their option, by
notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that (i)
each Eurodollar Loan shall bear interest for the remainder of the applicable
Interest Period at the rate otherwise applicable to such Interest Period plus 2%
per annum, (ii) each Floating Rate Loan shall bear interest at a rate per annum
equal to the Floating Rate in effect from time to time plus 2% per annum, and
(iii) the LC Fee shall be increased by 2% per annum, provided that, during the
continuance of a Default under Section 7.6 or 7.7, the interest rates set forth
in clauses (i) and (ii) above and the increase in the LC Fee set forth in clause
(iii) above shall be applicable to all Credit Extensions without any election or
action on the part of the Agent or any Lender.
2.12 Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XIII, or at any other Lending Installation of the Agent specified in
writing by the Agent to the Borrower, by noon (local time) on the date when due
and shall (except in the case of Reimbursement Obligations for which the LC
Issuer has not been fully indemnified by the Lenders or as otherwise
specifically required hereunder and except with respect to repayments of Swing
Line Loans) be applied ratably by the Agent among the Lenders. Each payment
delivered to the Agent for the account of any Lender shall be delivered promptly
by the Agent to such Lender in the same type of funds that the Agent received at
its address specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Agent from such Lender. The Agent is
hereby authorized to charge the account of the Borrower maintained with Bank One
for each payment of principal, interest and fees as it becomes due hereunder.
2.13 Noteless Agreement; Evidence of Indebtedness. (i) Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(ii) The Agent shall also maintain accounts in which it will record (a) the
amount of each Loan made hereunder, the Type thereof and the Interest Period
with respect thereto, (b) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder,
(c) the original statement amount of each Facility LC and the amount of LC
Obligations outstanding at any time, and (d) the amount of any sum received by
the Agent hereunder from the Borrower and each Lender's share thereof.
(iii) The entries maintained in the accounts maintained pursuant to paragraphs
(i) and (ii) above shall be prima facie evidence of the existence and amounts of
the Obligations therein recorded; provided, however, that the failure of the
Agent or any Lender to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Obligations in
accordance with their terms.
(iv) Any Lender may request that its Pro Rata Share of Loans be evidenced by a
promissory note in substantially the form of, in the case of Revolving Loans,
Exhibit F-1 , in the case of the Term Loan, Exhibit F-2 , and, in the case of
Swing Line Loans, Exhibit F-3 (each, a "Note"). In such event, the Borrower
shall prepare, execute and deliver to such Lender such Note or Notes payable to
the order of such Lender. Thereafter, the Lender's Pro Rata Share of Loans
evidenced by such Note and interest thereon shall at all times (including after
any assignment pursuant to Section 12.3) be represented by one or more Notes
payable to the order of the payee named therein or any assignee pursuant to
Section 12.3, except to the extent that any such Lender or assignee subsequently
returns any such Note for cancellation and requests that such Loans once again
be evidenced as described in paragraphs (i) and (ii) above.
2.14 Telephonic Notices. The Borrower hereby authorizes the
Lenders and the Agent to extend, convert or continue Loans, effect selections of
Types of Loans and to transfer funds based on telephonic notices made by any
person or persons the Agent or any Lender in good faith believes to be acting on
behalf of the Borrower, it being understood that the foregoing authorization is
specifically intended to allow Borrowing Notices and Conversion/Continuation
Notices to be given telephonically. The Borrower agrees to deliver promptly to
the Agent a written confirmation, if such confirmation is requested by the Agent
or any Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Agent and the Lenders, the records of the Agent and the Lenders shall govern
absent manifest error.
2.15 Interest Payment Dates; Interest and Fee Basis. Interest
accrued on each Floating Rate Loan shall be payable in arrears on each Payment
Date, commencing with the first such date to occur after the Effective Date
hereof, on any date on which the Floating Rate Loan is prepaid, whether due to
acceleration or otherwise, and at maturity. Interest accrued on that portion of
the outstanding principal amount of any Floating Rate Loan converted into a
Eurodollar Loan on a day other than a Payment Date shall be payable on the date
of conversion. Interest accrued on each Eurodollar Loan shall be payable on the
last day of its applicable Interest Period, on any date on which the Eurodollar
Loan is prepaid, whether by acceleration or otherwise, and at maturity. Interest
accrued on each Eurodollar Loan having an Interest Period longer than three
months shall also be payable on the last day of each three-month interval during
such Interest Period. Interest on Eurodollar Loans, commitment fees and LC Fees
shall be calculated for actual days elapsed on the basis of a 360-day year.
Interest on Floating Rate Loans shall be calculated for actual days elapsed on
the basis of a 365, or when appropriate 366, day year. Interest shall be payable
for the day a Loan is made but not for the day of any payment on the amount paid
if payment is received prior to noon (local time) at the place of payment. If
any payment of principal of or interest on a Loan shall become due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
shall be included in computing interest in connection with such payment.
2.16 Notification of Loans, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Aggregate Revolving Credit Commitment
reduction notice, Borrowing Notice, Swing Line Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder.
Promptly after notice from the LC Issuer, the Agent will notify each Lender of
the contents of each request for issuance of a Facility LC hereunder. The Agent
will notify each Lender of the interest rate applicable to each Eurodollar Loan
promptly upon determination of such interest rate and will give each Lender
prompt notice of each change in the Alternate Base Rate.
2.17 Lending Installations. Each Lender may book its Pro Rata
Share of Loans and the LC Issuer may book the Facility LCs at any Lending
Installation selected by such Lender or the LC Issuer, as the case may be, and
may change its Lending Installation from time to time. All terms of this
Agreement shall apply to any such Lending Installation and the Loans, Facility
LCs, participations in the LC Obligations and any Notes issued hereunder shall
be deemed held by each Lender or the LC Issuer , as the case may be, for the
benefit of any such Lending Installation. Each Lender and the LC Issuer may, by
written notice to the Agent and the Borrower in accordance with Article XIII,
designate replacement or additional Lending Installations through which Loans
will be made by it or Facility LCs will be issued by it and for whose account
Loan payments or payments with respect to Facility LCs are to be made.
2.18 Non-Receipt of Funds by the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day for the first three days and,
thereafter, the interest rate applicable to the relevant Loan or (y) in the case
of payment by the Borrower, the interest rate applicable to the relevant Loan.
2.19 Facility LCs.
2.19.1 Issuance. The LC Issuer hereby agrees, on the terms and
conditions set forth in this Agreement, to issue standby and commercial letters
of credit (each, a "Facility LC") and to renew, extend, increase, decrease or
otherwise modify each Facility LC ("Modify," and each such action a
"Modification"), from time to time from and including the date of this Agreement
and prior to the Facility Termination Date upon the request of the Borrower;
provided that immediately after each such Facility LC is issued or Modified, (i)
the aggregate amount of the outstanding LC Obligations shall not exceed the
lesser of: (a) $5,000,000, and (b) the Collateral Value of the Borrowing Base
minus the amount of all Revolving Loans and Swing Line Loans outstanding, and
(ii) the Aggregate Outstanding Revolving Credit Exposure shall not exceed the
Aggregate Revolving Credit Commitment. No Facility LC shall have an expiry date
later than the earlier of (x) the fifth Business Day prior to the Facility
Termination Date and (y) one year after its issuance. Under the Existing Credit
Agreement, Zions, as the "LC Issuer" (as defined therein) issued the Existing
Letters of Credit. Effective as of the Effective Date, the Existing Letters of
Credit shall be deemed "Facility LCs for all purposes of this Agreement and the
other Loan Documents. All issuance fees paid to the "Lenders" under (and as
defined in) the Existing Credit Agreement with respect to the Existing Letters
of Credit shall be pro rated as of the Effective Date and the Lenders hereunder
allocated their respective Pro Rata Shares thereof by those of the Lenders which
were "Lenders" under the Existing Credit Agreement..
2.19.2 Participations. Effective upon the Effective Date with
respect to the Existing Letters of Credit and following the Effective Date upon
the issuance or Modification by the LC Issuer of a Facility LC in accordance
with this Section 2.19, the LC Issuer shall be deemed, without further action by
any party hereto, to have unconditionally and irrevocably sold to each Lender,
and each Lender shall be deemed, without further action by any party hereto, to
have unconditionally and irrevocably purchased from the LC Issuer, a
participation in such Facility LC (and each Modification thereof) and the
related LC Obligations in proportion to its Pro Rata Share.
2.19.3 Notice. Subject to Section 2.19.1, the Borrower shall
give the LC Issuer notice prior to 10:00 a.m. (Chicago time) at least five
Business Days prior to the proposed date of issuance or Modification of each
Facility LC, specifying the beneficiary, the proposed date of issuance (or
Modification) and the expiry date of such Facility LC, and describing the
proposed terms of such Facility LC and the nature of the transactions proposed
to be supported thereby. Upon receipt of such notice, the LC Issuer shall
promptly notify the Agent, and the Agent shall promptly notify each Lender, of
the contents thereof and of the amount of such Lender's participation in such
proposed Facility LC. The issuance or Modification by the LC Issuer of any
Facility LC shall, in addition to the conditions precedent set forth in Article
IV (the satisfaction of which the LC Issuer shall have no duty to ascertain), be
subject to the conditions precedent that such Facility LC shall be satisfactory
to the LC Issuer and that the Borrower shall have executed and delivered such
application agreement and/or such other instruments and agreements relating to
such Facility LC as the LC Issuer shall have reasonably requested (each, a
"Facility LC Application"). In the event of any conflict between the terms of
this Agreement and the terms of any Facility LC Application, the terms of this
Agreement shall control.
2.19.4 LC Fees. The Borrower shall pay to the Agent, for the
account of the Lenders ratably in accordance with their respective Pro Rata
Shares, (i) with respect to each standby Facility LC, a letter of credit fee
computed at a per annum rate equal to the Applicable Margin for Eurodollar Loans
in effect from time to time on the average daily undrawn stated amount under
such standby Facility LC, such fee to be payable in arrears on the last Business
Day of each fiscal quarter and on the Facility Termination Date, and (ii) with
respect to each commercial Facility LC, a one-time letter of credit fee in an
amount equal to such percentage of the initial stated amount (or, with respect
to a Modification of any such commercial Facility LC which increases the stated
amount thereof, such increase in the stated amount) as the LC Issuer may require
consistent with its customary practices for similar letters of credit, such fee
to be payable on the date of such issuance or increase (each such fee described
in this sentence an "LC Fee"). The Borrower shall also pay to the LC Issuer for
its own account (x) at the time of issuance of each Facility LC, a fronting fee
equal to 0.15% of the stated amount of such Facility LC, and (y) documentary and
processing charges in connection with the issuance or Modification of and draws
under Facility LCs in accordance with the LC Issuer's standard schedule for such
charges as in effect from time to time.
2.19.5 Administration; Reimbursement by Lenders. Upon receipt
from the beneficiary of any Facility LC of any demand for payment under such
Facility LC, the LC Issuer shall notify the Agent and the Agent shall promptly
notify the Borrower and each other Lender as to the amount to be paid by the LC
Issuer as a result of such demand and the proposed payment date (the "LC Payment
Date"). The responsibility of the LC Issuer to the Borrower and each Lender
shall be only to determine that the documents (including each demand for
payment) delivered under each Facility LC in connection with such presentment
shall be in conformity in all material respects with such Facility LC. The LC
Issuer shall endeavor to exercise the same care in the issuance and
administration of the Facility LCs as it does with respect to letters of credit
in which no participations are granted, it being understood that in the absence
of any gross negligence or willful misconduct by the LC Issuer, each Lender
shall be unconditionally and irrevocably liable without regard to the occurrence
of any Default or any condition precedent whatsoever, to reimburse the LC Issuer
on demand for (i) such Lender's Pro Rata Share of the amount of each payment
made by the LC Issuer under each Facility LC to the extent such amount is not
reimbursed by the Borrower pursuant to Section 2.19.6 below, plus (ii) interest
on the foregoing amount to be reimbursed by such Lender, for each day from the
date of the LC Issuer's demand for such reimbursement (or, if such demand is
made after 11:00 a.m. (Chicago time) on such date, from the next succeeding
Business Day) to the date on which such Lender pays the amount to be reimbursed
by it, at a rate of interest per annum equal to the Federal Funds Effective Rate
for the first three days and, thereafter, at a rate of interest equal to the
rate applicable to Floating Rate Loans.
2.19.6 Reimbursement by Borrower. The Borrower shall be
irrevocably and unconditionally obligated to reimburse the LC Issuer on or
before the applicable LC Payment Date for any amounts to be paid by the LC
Issuer upon any drawing under any Facility LC, without presentment, demand,
protest or other formalities of any kind; provided that neither the Borrower nor
any Lender shall hereby be precluded from asserting any claim for direct (but
not consequential) damages suffered by the Borrower or such Lender to the
extent, but only to the extent, caused by (i) the willful misconduct or gross
negligence of the LC Issuer in determining whether a request presented under any
Facility LC issued by it complied with the terms of such Facility LC or (ii) the
LC Issuer's failure to pay under any Facility LC issued by it after the
presentation to it of a request strictly complying with the terms and conditions
of such Facility LC. All such amounts paid by the LC Issuer and remaining unpaid
by the Borrower shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to (x) the rate applicable to Floating Rate Loans for
such day if such day falls on or before the applicable LC Payment Date and (y)
the sum of 2% plus the rate applicable to Floating Rate Loans for such day if
such day falls after such LC Payment Date. The LC Issuer will pay to each Lender
ratably in accordance with its Pro Rata Share all amounts received by it from
the Borrower for application in payment, in whole or in part, of the
Reimbursement Obligation in respect of any Facility LC issued by the LC Issuer,
but only to the extent such Lender has made payment to the LC Issuer in respect
of such Facility LC pursuant to Section 2.19.5. Subject to the terms and
conditions of this Agreement (including without limitation the submission of a
Borrowing Notice in compliance with Section 2.8 and the satisfaction of the
applicable conditions precedent set forth in Article IV), the Borrower may
request a Revolving Loan hereunder for the purpose of satisfying any
Reimbursement Obligation.
2.19.7 Obligations Absolute. The Borrower's obligations under
this Section 2.19 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the LC Issuer, any Lender or any
beneficiary of a Facility LC. The Borrower further agrees with the LC Issuer and
the Lenders that the LC Issuer and the Lenders shall not be responsible for, and
the Borrower's Reimbursement Obligation in respect of any Facility LC shall not
be affected by, among other things, the validity or genuineness of documents or
of any endorsements thereon, even if such documents should in fact prove to be
in any or all respects invalid, fraudulent or forged, or any dispute between or
among the Borrower, any of its Affiliates, the beneficiary of any Facility LC or
any financing institution or other party to whom any Facility LC may be
transferred or any claims or defenses whatsoever of the Borrower or of any of
its Affiliates against the beneficiary of any Facility LC or any such
transferee. The LC Issuer shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Facility LC. The Borrower
agrees that any action taken or omitted by the LC Issuer or any Lender under or
in connection with each Facility LC and the related drafts and documents, if
done without gross negligence or willful misconduct, shall be binding upon the
Borrower and shall not put the LC Issuer or any Lender under any liability to
the Borrower. Nothing in this Section 2.19.7 is intended to limit the right of
the Borrower to make a claim against the LC Issuer for damages as contemplated
by the proviso to the first sentence of Section 2.19.6.
2.19.8 Actions of LC Issuer. The LC Issuer shall be entitled to
rely, and shall be fully protected in relying, upon any Facility LC, draft,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the LC Issuer.
The LC Issuer shall be fully justified in failing or refusing to take any action
under this Agreement unless it shall first have received such advice or
concurrence of the Required Lenders as it reasonably deems appropriate or it
shall first be indemnified to its reasonable satisfaction by the Lenders against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. Notwithstanding any other
provision of this Section 2.19, the LC Issuer shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon the
Lenders and any future holders of a participation in any Facility LC.
2.19.9 Indemnification. The Borrower hereby agrees to indemnify
and hold harmless each Lender, the LC Issuer and the Agent, and their respective
directors, officers, agents and employees from and against any and all claims
and damages, losses, liabilities, costs or expenses which such Lender, the LC
Issuer or the Agent may incur (or which may be claimed against such Lender, the
LC Issuer or the Agent by any Person whatsoever) by reason of or in connection
with the issuance, execution and delivery or transfer of or payment or failure
to pay under any Facility LC or any actual or proposed use of any Facility LC,
including, without limitation, any claims, damages, losses, liabilities, costs
or expenses which the LC Issuer may incur by reason of or in connection with (i)
the failure of any other Lender to fulfill or comply with its obligations to the
LC Issuer hereunder (but nothing herein contained shall affect any rights the
Borrower may have against any defaulting Lender) or (ii) by reason of or on
account of the LC Issuer issuing any Facility LC which specifies that the term
"Beneficiary" included therein includes any successor by operation of law of the
named Beneficiary, but which Facility LC does not require that any drawing by
any such successor Beneficiary be accompanied by a copy of a legal document,
satisfactory to the LC Issuer, evidencing the appointment of such successor
Beneficiary; provided that the Borrower shall not be required to indemnify any
Lender, the LC Issuer or the Agent for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by (x) the
willful misconduct or gross negligence of the LC Issuer in determining whether a
request presented under any Facility LC complied with the terms of such Facility
LC or (y) the LC Issuer's failure to pay under any Facility LC after the
presentation to it of a request strictly complying with the terms and conditions
of such Facility LC. Nothing in this Section 2.19.9 is intended to limit the
obligations of the Borrower under any other provision of this Agreement.
2.19.10 Lenders' Indemnification. Each Lender shall, ratably in
accordance with its Pro Rata Share, indemnify the LC Issuer, its affiliates and
their respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees' gross negligence or willful
misconduct or the LC Issuer's failure to pay under any Facility LC after the
presentation to it of a request strictly complying with the terms and conditions
of the Facility LC) that such indemnitees may suffer or incur in connection with
this Section 2.19 or any action taken or omitted by such indemnitees hereunder.
2.19.11 Facility LC Collateral Account. The Borrower agrees that
it will, upon the request of the Required Lenders and until the final expiration
date of any Facility LC and thereafter as long as any amount is payable to the
LC Issuer or the Lenders in respect of any Facility LC, maintain a special
collateral account pursuant to arrangements satisfactory to the Agent (the
"Facility LC Collateral Account") at the Agent's office at the address specified
pursuant to Article XIII, in the name of such Borrower but under the sole
dominion and control of the Agent, for the benefit of the Lenders and in which
such Borrower shall have no interest other than as set forth in Section 8.1. The
Borrower hereby pledges, assigns and grants to the Agent, on behalf of and for
the ratable benefit of the Lenders and the LC Issuer, a security interest in all
of the Borrower's right, title and interest in and to all funds which may from
time to time be on deposit in the Facility LC Collateral Account to secure the
prompt and complete payment and performance of the Obligations. The Agent will
invest any funds on deposit from time to time in the Facility LC Collateral
Account in certificates of deposit of Bank One having a maturity not exceeding
30 days. Nothing in this Section 2.19.11 shall either obligate the Agent to
require the Borrower to deposit any funds in the Facility LC Collateral Account
or limit the right of the Agent to release any funds held in the Facility LC
Collateral Account in each case other than as required by Section 8.1.
2.19.12 Rights as a Lender. In its capacity as a Lender, the LC
Issuer shall have the same rights and obligations as any other Lender.
2.20 Collateral and Other Credit Support. As collateral and
other credit support for the payment and performance of the Obligations:
(i) On or before the Effective Date the Borrower shall execute and deliver and
shall cause to be executed and delivered to the Agent for the benefit of the
Credit Providers:
(a) The Borrower Security Agreement;
(b) The Borrower-Owned Pledged Shares accompanied by blank stock transfer
powers or such other documents, instruments and agreements as are deemed
necessary or desirable by the Agent to effect transfer of the ownership of the
Borrower-Owned Pledged Shares following the occurrence of an Default and
acceleration of the Obligations;
(c) The Real Property Collateral for all Real Property in which the Borrower
has an interest;
(d) Supplemental security agreements covering all federally registered
Intellectual Property Collateral in which the Borrower has an interest in form
acceptable for filing in the Patent and Trademark Office and the U.S. Copyright
Office, accompanied by irrevocable power of attorney in favor of the Agent in
form and substance acceptable to the Agent;
(e) Such UCC-1 financing statements as the Agent may reasonably require; and
(f) Such other documents, instruments and agreements as the Agent may
reasonably require.
(ii) On or before the Effective Date the Borrower shall cause to be executed
and delivered to the Agent for the benefit of the Credit Providers from each of
the Initial Guarantors:
(a) A Guarantor Security Agreement;
(b) The Guarantor-Owned Pledged Shares of such Initial Guarantor accompanied
by blank stock transfer powers or such other documents, instruments and
agreements as are deemed necessary or desirable by the Agent to effect transfer
of the ownership of such Guarantor-Owned Pledged Shares following the occurrence
of an Default and acceleration of the Obligations;
(c) The Real Property Collateral for all Real Property in which such Initial
Guarantor has an interest;
(d) Supplemental security agreements covering all federally registered
Intellectual Property Collateral in which such Initial Guarantor has an interest
in form acceptable for filing in the U.S. Patent and Trademark Office and the
U.S. Copyright Office, accompanied by irrevocable power of attorney in favor of
the Agent in form and substance acceptable to the Agent;
(e) Such UCC-1 financing statements as the Agent may require; and
(f) Such other documents, instruments and agreements as the Agent may
reasonably require.
(iii) Upon the earlier to occur of: (a) December 1, 2001 and (b) the date upon
which the Existing Premier Agendas Facility shall have terminated, from Premier
Agendas each of the documents, instruments and agreements delivered by the
Initial Guarantors pursuant to subsection (ii) above, which shall include,
without limitation, consents to removal of property from each of the printers at
whose locations Premier Agendas inventory is from time to time located.
(iv) From time to time following the Effective Date the Borrower shall cause
to be executed and delivered to the Agent for the benefit of the Credit
Providers from each Material Subsidiary formed or acquired following the
Effective Date or which existed on the Effective Date and which the Agent has
determined constitutes a Material Subsidiary notwithstanding that such
Subsidiary as not included in the Initial Guarantors (other than Premier
Agendas, as to which the requirements of subsection (iii) above shall supersede
this subsection (iv)), the documents, instruments and agreements provided by
each of the Initial Guarantors as a condition precedent to the Effective Date,
including, without limitation, corporate authorizations and opinions of counsel.
(v) From time to time following the Effective Date the Borrower shall execute
and deliver and shall cause to be executed and delivered to the Agent for the
benefit of the Credit Providers such additional documents, instruments and
agreements as are in the Agent's judgment necessary or desirable to obtain and
maintain for the Agent for the benefit of the Credit Providers the benefit of
the Collateral and the Loan Documents.
ARTICLE III
YIELD PROTECTION; TAXES
2.19.10 Yield Protection. If, on or after the date of this
Agreement, the adoption of any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any change in the interpretation or administration thereof by
any governmental or quasi-governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender or applicable Lending Installation or the LC Issuer with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency:
(i) subjects any Lender or any applicable Lending Installation or the LC
Issuer to any Taxes, or changes the basis of taxation of payments (other than
with respect to Excluded Taxes) to any Lender or the LC Issuer in respect of its
Eurodollar Loans, Facility LCs or participations therein, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation or the LC Issuer (other than reserves and
assessments taken into account in determining the interest rate applicable to
Eurodollar Loans), or
(iii) imposes any other condition the result of which is to increase the cost
to any Lender or the LC Issuer or any applicable Lending Installation of making,
funding or maintaining its Eurodollar Loans or of issuing or participating in
Facility LCs, or reduces any amount receivable by any Lender or any applicable
Lending Installation or the LC Issuer in connection with its Eurodollar Loans,
Facility LCs or participations therein, or requires any Lender or any applicable
Lending Installation or the LC Issuer to make any payment calculated by
reference to the amount of Eurodollar Loans, Facility LCs or participations
therein held or interest or LC Fees received by it, by an amount deemed material
by such Lender or the LC Issuer, as the case may be,
and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation or the LC Issuer of making or maintaining its
Eurodollar Loans or Revolving Credit Commitment or of issuing or participating
in Facility LCs or to reduce the return received by such Lender or applicable
Lending Installation or the LC Issuer, as the case may be, in connection with
such Eurodollar Loans, Revolving Credit Commitment, Facility LCs or
participations therein, then, within 15 days of demand by such Lender or the LC
Issuer, as the case may be, the Borrower shall pay such Lender or the LC Issuer,
as the case may be, such additional amount or amounts as will compensate such
Lender or the LC Issuer, as the case may be, for such increased cost or
reduction in amount received.
3.2 Changes in Capital Adequacy Regulations. If a Lender or the
LC Issuer determines the amount of capital required or expected to be maintained
by such Lender or the LC Issuer, any Lending Installation of such Lender or the
LC Issuer or any corporation controlling such Lender or the LC Issuer is
increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender or the LC Issuer the amount necessary
to compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender or the LC Issuer reasonably determines is
attributable to this Agreement, its Loans, its Outstanding Revolving Credit
Exposure, its Pro Rata Share of the Term Loan outstanding, its Revolving Credit
Commitment to make Loans or to issue or participate in Facility LCs, as the case
may be, hereunder (after taking into account such Lender's or the LC Issuer's
policies as to capital adequacy). "Change" means (i) any change after the date
of this Agreement in the Risk-Based Capital Guidelines, or (ii) any adoption of
or change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or the LC Issuer or any
Lending Installation or any corporation controlling any Lender or the LC Issuer.
"Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in
effect in the United States on the date of this Agreement, including transition
rules, and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of the
Basle Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
3.3 Availability of Types of Loans. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (i) deposits
of a type and maturity appropriate to match fund Eurodollar Loans are not
available or (ii) the interest rate applicable to Eurodollar Loans does not
accurately reflect the cost of making or maintaining Eurodollar Loans, then the
Agent shall suspend the availability of Eurodollar Loans and require any
affected Eurodollar Loans to be repaid or converted to Floating Rate Loans,
subject to the payment of any funding indemnification amounts required by
Section 3.4.
3.4 Funding Indemnification. If any payment of a Eurodollar Loan
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Eurodollar Loan
is not made on the date specified by the Borrower for any reason other than
default by the Lenders, the Borrower will indemnify each Lender for any loss or
cost incurred by it resulting therefrom, including, without limitation, any loss
or cost in liquidating or employing deposits acquired to fund or maintain such
Eurodollar Loan.
3.5 Taxes. (i) All payments by the Borrower to or for the
account of any Lender, the LC Issuer or the Agent hereunder or under any Note or
Facility LC Application shall be made free and clear of and without deduction
for any and all Taxes. If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to any Lender, the LC
Issuer or the Agent, (a) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.5) such Lender, the LC Issuer or
the Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (b) the Borrower shall make such
deductions, (c) the Borrower shall pay the full amount deducted to the relevant
authority in accordance with applicable law and (d) the Borrower shall furnish
to the Agent the original copy of a receipt evidencing payment thereof within 30
days after such payment is made.
(ii) In addition, the Borrower hereby agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any Note or
Facility LC Application or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note or Facility LC Application ("Other
Taxes").
(iii) The Borrower hereby agrees to indemnify the Agent, the LC Issuer and
each Lender for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed on amounts payable under this
Section 3.5) paid by the Agent, the LC Issuer or such Lender and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. Payments due under this indemnification shall be made within 30 days of
the date the Agent, the LC Issuer or such Lender makes demand therefor pursuant
to Section 3.6.
(iv) Each Lender that is not incorporated under the laws of the United States
of America or a state thereof (each a "Non-U.S. Lender") agrees that it will,
not more than ten Business Days after the date of this Agreement, (i) deliver to
each of the Borrower and the Agent two duly completed copies of United States
Internal Revenue Service Form W-8BEN or W-8ECI, certifying in either case that
such Lender is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, and (ii)
deliver to each of the Borrower and the Agent a United States Internal Revenue
Form W-8 or W-9, as the case may be, and certify that it is entitled to an
exemption from United States backup withholding tax. Each Non-U.S. Lender
further undertakes to deliver to each of the Borrower and the Agent (x) renewals
or additional copies of such form (or any successor form) on or before the date
that such form expires or becomes obsolete, and (y) after the occurrence of any
event requiring a change in the most recent forms so delivered by it, such
additional forms or amendments thereto as may be reasonably requested by the
Borrower or the Agent. All forms or amendments described in the preceding
sentence shall certify that such Lender is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form or amendment with respect to it and such Lender advises the Borrower and
the Agent that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax.
(v) For any period during which a Non-U.S. Lender has failed to provide the
Borrower with an appropriate form pursuant to clause (iv), above (unless such
failure is due to a change in treaty, law or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Lender shall not be entitled to indemnification under
this Section 3.5 with respect to Taxes imposed by the United States; provided
that, should a Non-U.S. Lender which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to Taxes because of its failure
to deliver a form required under clause (iv), above, the Borrower shall take
such steps as such Non-U.S. Lender shall reasonably request to assist such
Non-U.S. Lender to recover such Taxes.
(vi) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty shall deliver to
the Borrower (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at
a reduced rate.
(vii) If the U.S. Internal Revenue Service or any other governmental authority
of the United States or any other country or any political subdivision thereof
asserts a claim that the Agent did not properly withhold tax from amounts paid
to or for the account of any Lender (because the appropriate form was not
delivered or properly completed, because such Lender failed to notify the Agent
of a change in circumstances which rendered its exemption from withholding
ineffective, or for any other reason), such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax,
withholding therefor, or otherwise, including penalties and interest, and
including taxes imposed by any jurisdiction on amounts payable to the Agent
under this subsection, together with all costs and expenses related thereto
(including attorneys fees and time charges of attorneys for the Agent, which
attorneys may be employees of the Agent). The obligations of the Lenders under
this Section 3.5(vii) shall survive the payment of the Obligations and
termination of this Agreement.
3.6 Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Eurodollar Loans to reduce any liability of the
Borrower to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid the
unavailability of Eurodollar Loans under Section 3.3, so long as such
designation is not, in the judgment of such Lender, disadvantageous to such
Lender. Each Lender shall deliver a written statement of such Lender to the
Borrower (with a copy to the Agent) as to the amount due, if any, under Section
3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in reasonable
detail the calculations upon which such Lender determined such amount and shall
be final, conclusive and binding on the Borrower in the absence of manifest
error. Determination of amounts payable under such Sections in connection with a
Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar
Loan through the purchase of a deposit of the type and maturity corresponding to
the deposit used as a reference in determining the Eurodollar Rate applicable to
such Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of any Lender shall be
payable on demand after receipt by the Borrower of such written statement. The
obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive
payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Initial Credit Extension. The Lenders shall not be required
to make the initial Credit Extension hereunder unless the Borrower has furnished
to the Agent with sufficient copies for the Lenders, duly certified, executed by
the parties thereto, acknowledged and in recordable form, as applicable:
(i) Copies of the Articles or certificate of incorporation of the Borrower and
each of the Initial Guarantors, together with all amendments, and a certificate
of good standing, each certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(ii) For the Borrower and each of the Initial Guarantors, copies, certified by
the Secretary or Assistant Secretary of such Person, of its by-laws and of its
Board of Directors’ resolutions and of resolutions or actions of any other body
authorizing the execution of the Loan Documents to which such Person is a party.
(iii) For the Borrower and each of the Initial Guarantors, an incumbency
certificate, executed by the Secretary or Assistant Secretary of such Person,
which shall identify by name and title and bear the signatures of the officers
of the such Person authorized to sign the Loan Documents to which such Person is
a party, upon which certificate the Agent and the Lenders shall be entitled to
rely until informed of any change in writing by the Borrower.
(iv) A certificate, signed by the chief financial officer of the Borrower,
stating that on the initial Credit Extension Date no Default or Unmatured
Default has occurred and is continuing.
(v) A written opinion of Parr Waddoups Brown Gee & Loveless, PC, counsel to
the Borrower and the Initial Guarantors, addressed to the Agent and the Lenders
in substantially the form of Exhibit G.
(vi) Any Notes requested by a Lender pursuant to Section 2.13 payable to the
order of each such requesting Lender.
(vii) Written money transfer instructions, in substantially the form of
Exhibit H, addressed to the Agent and signed by an Authorized Officer, together
with such other related money transfer authorizations as the Agent may have
reasonably requested.
(viii) From the Borrower, the documents, instruments and agreements required
pursuant to Section 2.20(i).
(ix) From each of the Initial Guarantors, the documents, instruments and
agreements required pursuant to Section 2.20(ii).
(x) From EDS Information Services, LLC, such consents to assignment,
attornment and other agreements as the Agent shall require.
(xi) The insurance certificate described in Section 5.20 accompanied by
certificates of the issuers of the insurance described therein evidencing that
the Agent for the benefit of the Credit Providers is named as a loss payee and
additional insured, as applicable, thereunder.
(xii) Acknowledgment copies of all UCC-1 financing statements required by the
Agent to be filed hereunder prior to the initial Credit Extension, each
accompanied by a UCC search showing such financing statement as duly filed and
evidencing the first priority of the security interest of the Agent for the
benefit of the Credit Providers perfected thereby.
(xiii) An appraisal of the Real Property in form and detail satisfactory to
the Agent prepared on the basis of methodology and by the Agent or an
independent MAI appraiser acceptable to the Agent and which appraisal has been
reviewed and approved by the Agent.
(xiv) Evidence reasonably satisfactory to the Agent that a title insurance
company acceptable to the Agent is irrevocably and unconditionally committed to
issue a title insurance policy or policies acceptable to the Agent covering the
Real Property on the American Land Title Association Loan Policy (with extended
coverage), Form 1970, Amended 10-17-70 showing fee title vested in the Borrower
or a Guarantor, with reinsurance as required by the Agent under an ALTA
Facultative Reinsurance Agreement with Direct Access, modified as required by
the Agent, with an aggregate liability limit acceptable to the Agent, insuring
that each deed of trust or other security document encumbering the Real Property
constitutes a valid, fully perfected Lien on the fee or leasehold and
appurtenant easement interests in the Real Property, subject only to Permitted
Collateral Exceptions, and which contains: (a) full coverage against claims of
mechanics’ lienors, (b) no exceptions or conditions other than exceptions and
conditions approved in writing by the Agent, and (c) endorsements and such other
coverage and affirmative statements as the Agent or its counsel may reasonably
require.
(xv) Copies of recorded and/or filed releases, reconveyances and terminations
of all prior liens, mechanic lien foreclosures and/or lis pendens which appear
of record against the Real Property within one hundred twenty (120) days of the
Effective Date, and evidence satisfactory to the Agent that all such items have
been released or reconveyed prior to the Effective Date (it being expressly
agreed and understood that, except as expressly agreed to by the Agent prior to
the Effective Date, no liens will be permitted to remain by means of
indemnification or by delayed reconveyance).
(xvi) With respect to any Real Property which is leased or subleased by the
Borrower or any Guarantor to another Person, a rent roll, certified by a
responsible officer of the Borrower as accurate and complete and setting forth
such information regarding the leases and other occupancy agreements to which
such Real Property is subject as the Agent may reasonably request.
(xvii) Level I environmental reports evidencing an environmental audit of the
Real Property performed by an environmental consulting firm acceptable to the
Agent to identify the presence of any environmental hazards, including asbestos
and other waste, and which audit shall have included (a) a site visit and visual
inspection of the Real Property and adjacent properties by a trained
professional, (b) a review of applicable historical information about the Real
Property and adjacent properties, (c) appropriate inquiries with federal, state
and local environmental agencies and/or building departments, and (d) an
asbestos survey in which samples were taken and tested of suspected materials.
(xviii) Such other information, documents and certifications concerning the
Real Property as the Agent may reasonably request, including, without
limitation, soils and geological reports, the permanent certificate of occupancy
for the Real Property and all interior space therein, any applicable
building/zoning code ordinances and zoning maps, and certified engineering
reports.
(xix) A solvency certificate in form and substance acceptable to the Agent
duly executed by a responsible financial officer of the Company.
(xx) Evidence satisfactory to the Agent that all fees, costs and expenses
which are payable on or before the Effective Date have been, or will on the
Effective Date be, paid in full.
(xxi) Evidence reasonably satisfactory to the Agent that all acts and
conditions and things (including, without limitation, the obtaining of any
necessary regulatory approvals and the making of any required filings,
recordings or registrations) required to be done and performed and to have
happened precedent to the execution, delivery and performance of the Loan
Documents and to constitute the same legal, valid and binding obligations of the
parties thereto, enforceable in accordance with their respective terms, shall
have been done and performed and shall have happened in compliance with all
applicable laws.
(xxii) Evidence satisfactory to the Agent that on the Effective Date and after
giving effect to the funding of the initial Loans hereunder: (a) all
“Obligations” of the Borrower under (and as the term “Obligations” is defined
in) the Existing Credit Agreement (other than the “Obligations” with respect to
the Existing Letters of Credit) have been paid in full and the credit facility
evidenced thereby has been terminated, (b) all “Obligations” of the Borrower
under (and as the term “Obligations” is defined in) that certain Business Loan
Agreement dated March 8, 2001 and the related Promissory Note dated March 2,
2001 between the Borrower and Zions have been paid in full and the credit
facility evidenced thereby has been terminated, and (c) such other Indebtedness
and Contingent Obligations of the Borrower and its Subsidiaries as the Agent may
designate have been paid in full and the credit facilities evidenced thereby
have been terminated.
(xxiii) A Borrowing Base Certificate dated no earlier than the last day of the
calendar month immediately preceding the month in which the Effective Date shall
occur.
(xxiv) Such other documents as any Lender or its counsel may have reasonably
requested.
Notwithstanding anything contained herein, in the event the Borrower is unable
to timely deliver any of the items required pursuant to this Section 4.1, the
Required Lenders may, in their sole and absolute discretion, agree to waive such
requirements as a condition to the first Credit Extension hereunder, subject to
such conditions as the Required Lenders may elect to impose, including, without
limitation, that the Borrower shall deliver the same by a date certain and with
the acknowledgement and agreement of the Borrower that the failure of the
Borrower to so deliver such items shall be a Default and there shall be no
further cure period with respect thereto.
4.2 Each Loan. The Lenders shall not (except as otherwise set
forth in Section 2.3.5 with respect to Revolving Loans for the purpose of
repaying Swing Line Loans) be required to make any Credit Extension unless on
the applicable Credit Extension Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are true and
correct as of such Credit Extension Date except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall have been true and correct on
and as of such earlier date.
(iii) All legal matters incident to the making of such Credit Extension shall
be reasonably satisfactory to the Lenders, the LC Issuer and their counsel.
(iv) Upon the funding of the subject Loan or issuance of the requested
Facility LC, the Aggregate Outstanding Revolving Credit Exposure will not exceed
the Collateral Value of the Borrowing Base (it being agreed and understood that
in making such determination the Agent shall be entitled to rely on the
Borrowing Base Certificate most recently provided to the Agent by the Borrower).
Each Borrowing Notice or Swing Line Borrowing Notice, as the case may be, or
request for issuance of a Facility LC with respect to each such Credit Extension
shall constitute a representation and warranty by the Borrower that the
conditions contained in Sections 4.2(i), (ii) and (iv) have been satisfied. Any
Lender may require a duly completed Compliance Certificate as a condition to
making a Loan.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1 Existence and Standing. Each of the Borrower and its
Subsidiaries is a corporation, partnership (in the case of Subsidiaries only) or
limited liability company duly and properly incorporated or organized, as the
case may be, validly existing and (to the extent such concept applies to such
entity) in good standing under the laws of its jurisdiction of incorporation or
organization and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
5.2 Authorization and Validity. The Borrower and each of the
Guarantors has the power and authority and legal right to execute and deliver
the Loan Documents to which it is a party and to perform its obligations
thereunder. The execution and delivery by the Borrower and each of the
Guarantors of the Loan Documents to which it is a party and the performance of
its obligations thereunder have been duly authorized by proper corporate
proceedings, and the Loan Documents to which such Person is a party constitute
legal, valid and binding obligations of such Person enforceable against such
Person in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
5.3 No Conflict; Government Consent. Neither the execution and
delivery by the Borrower nor any of the Guarantors of the Loan Documents to
which it is a party, nor the consummation of the transactions therein
contemplated, nor compliance with the provisions thereof will violate (i) to the
best of the Borrower's knowledge in the orderly conduct of its business, any
law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Borrower or any of its Subsidiaries or (ii) the Borrower's or any
Subsidiary's articles or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization, by-laws, or
operating or other management agreement, as the case may be, or (iii) the
provisions of any indenture, instrument or agreement to which the Borrower or
any of its Subsidiaries is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any Lien in, of or on the
Property of the Borrower or a Subsidiary pursuant to the terms of any such
indenture, instrument or agreement. No order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of any governmental or public
body or authority, or any subdivision thereof, which has not been obtained by
the Borrower or any of its Subsidiaries, is required to be obtained by the
Borrower or any of its Subsidiaries in connection with the execution and
delivery of the Loan Documents, the borrowings under this Agreement, the payment
and performance by the Borrower of the Obligations or the legality, validity,
binding effect or enforceability of any of the Loan Documents.
5.4 Financial Statements; Projections. The February 24, 2001
consolidated financial statements of the Borrower and its Subsidiaries
heretofore delivered to the Lenders were prepared in accordance with generally
accepted accounting principles in effect on the date such statements were
prepared and fairly present the consolidated financial condition and operations
of the Borrower and its Subsidiaries at such date and the consolidated results
of their operations for the period then ended. The projections dated July 5,
2001 prepared by the Borrower and delivered pursuant to the Existing Credit
Agreement remain accurate and complete in all material respects and the Borrower
is not aware of any facts and circumstances arising since the date of such
projections which could reasonably be expected to affect the information set
forth therein in any material respect.
5.5 Material Adverse Change. Since February 24, 2001 there has
been no change in the business, Property, prospects, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect.
5.6 Taxes. To the best of the Borrower's knowledge in the orderly
conduct of its business, the Borrower and its Subsidiaries have filed all United
States federal tax returns and all other tax returns which are required to be
filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided in accordance with Agreement Accounting Principles
and as to which no Lien exists. The United States income tax returns of the
Borrower and its Subsidiaries have been audited by the Internal Revenue Service
through the fiscal year ended August 31, 1994. No tax liens have been filed and
no claims are being asserted with respect to any such taxes. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of any taxes or other governmental charges are adequate.
5.7 Litigation and Contingent Obligations. Except as set forth on
Schedule 5.7, there is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the knowledge of the chief executive
officer of the Borrower or any of the Authorized Officers, threatened against or
affecting the Borrower or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect or which seeks to prevent, enjoin or
delay the making of any Credit Extension. Other than any liability incident to
any litigation, arbitration or proceeding which could not reasonably be expected
to have a Material Adverse Effect, neither the Borrower nor any Subsidiary has
any material Contingent Obligations not provided for or disclosed in the
financial statements referred to in Section 5.4.
5.8 Subsidiaries. Schedule 5.8 contains an accurate list of all
Subsidiaries of the Borrower as of the date of this Agreement, setting forth
their respective jurisdictions of organization and the percentage of their
respective capital stock or other ownership interests owned by the Borrower or
other Subsidiaries. All of the issued and outstanding shares of capital stock or
other ownership interests of such Subsidiaries have been (to the extent such
concepts are relevant with respect to such ownership interests) duly authorized
and issued and are fully paid and non-assessable.
5.9 There are no Unfunded Liabilities under any Single Employer
Plans. Neither the Borrower nor any other member of the Controlled Group has
incurred, or is reasonably expected to incur, any withdrawal liability to
Multiemployer Plans. Each Plan complies in all material respects with all
applicable requirements of law and regulations, no Reportable Event has occurred
with respect to any Plan, neither the Borrower nor any other member of the
Controlled Group has withdrawn from any Plan or initiated steps to do so, and no
steps have been taken to reorganize or terminate any Plan.
5.10 Accuracy of Information. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein not
misleading (other than such as have been expressly corrected in writing prior to
the Effective Date).
5.11 Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of the value of those assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.
5.12 Material Agreements. Neither the Borrower nor any Subsidiary
is a party to any agreement or instrument or subject ------------------- to any
charter or other corporate restriction which could reasonably be expected to
have a Material Adverse Effect. Neither the Borrower nor any Subsidiary is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in (i) any agreement to which it is a party,
which default could reasonably be expected to have a Material Adverse Effect or
(ii) any agreement or instrument evidencing or governing Indebtedness.
5.13 Compliance With Laws. To the best knowledge of the Borrower
in the orderly conduct of its business, the Borrower and its Subsidiaries have
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property.
5.14 Ownership of Properties. Except as set forth on Schedule
5.14, on the date of this Agreement, the Borrower and its Subsidiaries will have
good title, free of all Liens other than those permitted by Section 6.15, to all
of the Property and assets reflected in the Borrower's most recent consolidated
financial statements provided to the Agent as owned by the Borrower and its
Subsidiaries.
5.15 Plan Assets; Prohibited Transactions. The Borrower is not an
entity deemed to hold "plan assets" within the meaning of 29 C.F.R.ss.2510.3-101
of an employee benefit plan (as defined in Section 3(3) of ERISA) which is
subject to Title I of ERISA or any plan (within the meaning of Section 4975 of
the Code), and neither the execution of this Agreement nor the making of Credit
Extensions hereunder gives rise to a prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Code.
5.16 Environmental Matters. In the ordinary course of its
business, the officers of the Borrower consider the effect of Environmental Laws
on the business of the Borrower and its Subsidiaries, in the course of which
they identify and evaluate potential risks and liabilities accruing to the
Borrower due to Environmental Laws. On the basis of this consideration, the
Borrower has concluded that Environmental Laws cannot reasonably be expected to
have a Material Adverse Effect. Neither the Borrower nor any Subsidiary has
received any notice to the effect that its operations are not in material
compliance with any of the requirements of applicable Environmental Laws or are
the subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which non-compliance or remedial action
could reasonably be expected to have a Material Adverse Effect.
5.17 Investment Company Act. Neither the Borrower nor any
Subsidiary 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 Subsidiary 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 Subordinated Indebtedness. The Obligations constitute senior
indebtedness which is entitled to the benefits of the subordination provisions
of all outstanding Subordinated Indebtedness.
5.20 Insurance. The certificate signed by an Authorized Officer
reasonably acceptable to the Agent, that attests to the existence and adequacy
of, and summarizes, the property and casualty insurance program carried by the
Borrower with respect to itself and its Subsidiaries and that has been furnished
by the Borrower to the Agent and the Lenders, is complete and accurate. This
summary includes the insurer's or insurers' name(s), policy number(s),
expiration date(s), amount(s) of coverage, type(s) of coverage, exclusion(s),
and deductibles. This summary also includes similar information, and describes
any reserves, relating to any self-insurance program that is in effect. The
Agent for the benefit of the Credit Providers has been named as loss payee or
co-insured, as applicable, on all such insurance.
5.21 Solvency.
(i) Immediately after the consummation of the transactions to occur on the
date hereof and immediately following the making of each Credit Extension made
on the Effective Date and after giving effect to the application of the proceeds
of such Credit Extension, (a) the fair value of the assets of the Borrower and
its Subsidiaries on a consolidated basis, at a fair valuation, will exceed the
debts and liabilities, subordinated, contingent or otherwise, of the Borrower
and its Subsidiaries on a consolidated basis; (b) the present fair saleable
value of the Property of the Borrower and its Subsidiaries on a consolidated
basis will be greater than the amount that will be required to pay the probable
liability of the Borrower and its Subsidiaries on a consolidated basis on their
debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and matured; (c) the Borrower and
its Subsidiaries on a consolidated basis will be able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) the Borrower and its
Subsidiaries on a consolidated basis will not have unreasonably small capital
with which to conduct the businesses in which they are engaged as such
businesses are now conducted and are proposed to be conducted after the date
hereof.
(ii) The Borrower does not intend to, or to permit any of its Subsidiaries to,
and does not believe that it or any of its Subsidiaries will, incur debts beyond
its ability to pay such debts as they mature, taking into account the timing of
and amounts of cash to be received by it or any such Subsidiary and the timing
of the amounts of cash to be payable on or in respect of its Indebtedness or the
Indebtedness of any such Subsidiary.
5.22 Real Property. With respect to each parcel of Real Property:
(i) The Real Property is in good condition, reasonable wear and tear excepted,
and, to the best of the Borrower’s knowledge in the orderly conduct of its
business, is in compliance in all material respects with all applicable laws and
regulations, including, without limitation, all building codes and
environmental, zoning and land use laws, and with all applicable building
permits, restrictions of record and any agreements affecting the Real Property
and any judgment, order or decree.
(ii) The Real Property is insured against damage, destruction and loss in
accordance with the requirements of the Loan Documents.
(iii) All contracts, agreements, licenses, permits, variances, commitments,
undertakings and arrangements necessary for the continued operation of the Real
Property in the manner in which the same is being operated at the Effective Date
are in full force and effect.
(iv) All water, sewer, gas, electric, telephone, and drainage facilities and
all other utilities required by law or by the normal use and operation of the
Real Property are installed to the property lines of the Real Property, are
connected pursuant to valid permits, and are adequate to service the Real
Property and to permit full compliance with all requirements of law and normal
usage of the Real Property.
(v) No condemnation proceeding involving the Real Property or any portion
thereof has been commenced or, to the Borrower’s knowledge, is contemplated by
any governmental authority, nor has any portion of the Real Property been
damaged due to fire or other casualty, except as disclosed to the Agent in
writing.
(vi) The Borrower or the Subsidiary, as applicable, has obtained all easements
and rights of way necessary for the normal use and operation of the Real
Property and to insure vehicular and pedestrian ingress to and egress from the
Real Property.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself
and each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Lenders:
(i) Within 90 days after the close of each of its fiscal years, an unqualified
audit report certified by independent certified public accountants acceptable to
the Lenders, prepared in accordance with Agreement Accounting Principles on a
consolidated and consolidating basis (consolidating statements need not be
certified by such accountants) for itself and its Subsidiaries, including
balance sheets as of the end of such period, related profit and loss and
reconciliation of changes in shareholders’ equity statements, and a statement of
cash flows, accompanied by (a) any management letter prepared by said
accountants, and (b) a certificate of said accountants that, in the course of
their examination necessary for their certification of the foregoing, they have
obtained no knowledge of any Default or Unmatured Default, or if, in the opinion
of such accountants, any Default or Unmatured Default shall exist, stating the
nature and status thereof.
(ii) Within 45 days after the close of the first three quarterly periods of
each of its fiscal years, for itself and its Subsidiaries, consolidated and
consolidating unaudited balance sheets as at the close of each such period and
consolidated and consolidating profit and loss and reconciliation of changes in
shareholders’ equity statements and a statement of cash flows for the period
from the beginning of such fiscal year to the end of such quarter, all certified
by an Authorized Officer reasonably acceptable to the Agent.
(iii) Together with the financial statements required under Sections 6.1(i)
and (ii), a Compliance Certificate signed by an Authorized Officer reasonably
acceptable to the Agent showing the calculations necessary to determine
compliance with this Agreement and stating that no Default or Unmatured Default
exists, or if any Default or Unmatured Default exists, stating the nature and
status thereof.
(iv) No later than the fifteenth day of each calendar month (or if such
fifteenth day is not a Business Day, the next succeeding Business Day), as of
the end of the immediately preceding calendar month, a Borrowing Base
Certificate.
(v) Within 270 days after the close of each fiscal year, a statement of the
Unfunded Liabilities of each Single Employer Plan, certified as correct by an
actuary enrolled under ERISA.
(vi) As soon as possible and in any event within 10 days after the Borrower
knows that any Reportable Event has occurred with respect to any Plan, a
statement, signed by an Authorized Officer reasonably acceptable to the Agent,
describing said Reportable Event and the action which the Borrower proposes to
take with respect thereto.
(vii) As soon as possible and in any event within 10 days after receipt by the
Borrower, a copy of (a) any notice or claim to the effect that the Borrower or
any of its Subsidiaries is or may be liable to any Person as a result of the
release by the Borrower, any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or substance into the environment, and (b) any notice
alleging any violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any of its Subsidiaries, which, in
either case, could reasonably be expected to have a Material Adverse Effect.
(viii) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy statements so
furnished.
(ix) Promptly upon the filing thereof, copies of all registration statements
and annual, quarterly, monthly or other regular reports which the Borrower or
any of its Subsidiaries files with the Securities and Exchange Commission.
(x) As soon as available, but in any event within 90 days after the beginning
of each fiscal year of the Borrower, a copy of the plan and forecast (including
a projected consolidated and consolidating balance sheet, income statement and
funds flow statement) of the Borrower for such fiscal year, broken down on a
fiscal quarter by fiscal quarter basis.
(xi) Such other information (including non-financial information) as the Agent
or any Lender may from time to time reasonably request.
6.2. Use of Proceeds. The Borrower will use the proceeds of the
Credit Extensions for general corporate purposes The Borrower will not, nor will
it permit any Subsidiary to, use any of the proceeds of the Advances to purchase
or carry any "margin stock" (as defined in Regulation U).
6.3. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence of
any Default or Unmatured Default and of any other development, financial or
otherwise which could reasonably be expected to have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and do all things necessary to remain duly incorporated or organized,
validly existing and (to the extent such concept applies to such entity) in good
standing as a domestic corporation, partnership or limited liability company in
its jurisdiction of incorporation or organization, as the case may be, and
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States federal and applicable foreign,
state and local tax returns required by law and pay when due all taxes,
assessments and governmental charges and levies upon it or its income, profits
or Property, except those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside in
accordance with Agreement Accounting Principles.
6.6. Insurance. The Borrower will, and will cause each Subsidiary
to, maintain with financially sound and reputable insurance companies insurance
on all their Property in such amounts and covering such risks as is consistent
with sound business practice, and the Borrower will furnish to any Lender upon
request full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject including,
without limitation, all Environmental Laws.
6.8. Maintenance of Properties. The Borrower will, and will cause
each Subsidiary to, do all things necessary to maintain, preserve, protect and
keep its Property in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each
Subsidiary to, upon reasonable notice to the Borrower so long as there has not
occurred a Default or an Unmatured Default, permit the Agent and the Lenders, by
their respective representatives and agents, to inspect any of the Property,
books and financial records of the Borrower and each Subsidiary, to examine and
make copies of the books of accounts and other financial records of the Borrower
and each Subsidiary, to conduct inventory inspections and audits and other
valuations of the Collateral and to discuss the affairs, finances and accounts
of the Borrower and each Subsidiary with, and to be advised as to the same by,
their respective officers at such reasonable times and intervals as the Agent or
any Lender may designate.
6.10. Limitations on Dividends and Stock Repurchases. The
Borrower will not, nor will it permit any Subsidiary to:
(i) Declare or pay any dividends or make any distributions on its capital
stock (other than dividends payable in its own capital stock), except that: (a)
any Subsidiary may declare and pay dividends or make distributions to the
Borrower or to a Wholly-Owned Subsidiary, and (b) so long as there does not
exist a Default or an Unmatured Default and the same would not exist following
the making of such payment or distribution, the Borrower may pay dividends on
preferred stock outstanding on the Effective Date; provided, however, that all
such dividends shall be made “in kind” and not as cash payments until the later
to occur of: (y) the end of the period under which such “in kind” payments are
permitted to be made on account of such preferred stock pursuant to the terms
thereof, and (z) July 31, 2002; or
(ii) Redeem, repurchase or otherwise acquire or retire any of its capital
stock at any time outstanding, except that so long as there does not exist a
Default or an Unmatured Default and the same would not exist following the
making of such redemption, repurchase, acquisition or retirement the Borrower
may reacquire, in non-cash transactions (as opposed to cash or deferred payment
transactions), from current and former employees of the Borrower and its
Subsidiaries shares of its capital stock with a fair market value at the time of
such reacquisition not to exceed $4,000,000 from the Effective Date to and
including the date the Obligations are paid and performed in full and any
commitment of the Lenders to make Loans or issue Facility LCs has terminated.
6.11 Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(i) The Loans and the Reimbursement Obligations.
(ii) Indebtedness existing on the date hereof and described in Schedule 6.11
(which Schedule shall not include Indebtedness existing on the date hereof which
will be repaid in full and the credit facilities evidenced thereby terminated on
the Effective Date after giving effect to the funding of Loans hereunder on such
date).
(iii) Indebtedness arising under Rate Management Transactions related to the
Loans entered into with any of the Lenders.
(iv) Indebtedness consisting of Contingent Obligations permitted pursuant to
Section 6.22 below.
(v) Other Indebtedness in an aggregate amount not to exceed $2,000,000
outstanding at any date.
6.12 Merger. The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person, except that a
Subsidiary may merge into the Borrower or a Wholly-Owned Subsidiary.
6.13 Sale of Assets. The Borrower will not, nor will it permit
any Subsidiary to, lease, sell or otherwise dispose of its Property to any other
Person, except:
(i) Sales of inventory in the ordinary course of business.
(ii) Leases, sales or other dispositions of its Property that, together with
all other Property of the Borrower and its Subsidiaries previously leased, sold
or disposed of (other than inventory in the ordinary course of business) as
permitted by this Section during the twelve-month period ending with the month
in which any such lease, sale or other disposition occurs, have an aggregate
fair market value not to exceed $1,000,000.
(iii) The sale of certain of the real property pursuant to the Purchase
Agreement dated June 26, 2001 between Franklin Development Corporation and CB
Richard Ellis Investors, L.L.C. and the Purchase Agreement dated May 9, 2001
between Franklin Development Corporation and Martin C. Shelley, subject in the
case of each such sale to receipt of the mandatory prepayment required with
respect thereto pursuant to Section 2.7(iv)(a) above and, to the extent such
real property is Real Property, to satisfaction of standard and customary
release conditions (such as assurance of ingress and egress and no violation of
applicable subdivision laws) as set forth in the related Collateral Documents.
(iv) Other sales consented to in writing by the Required Lenders from time to
time in their sole and absolute discretion.
6.14 Investments and Acquisitions. The Borrower will not, nor
will it permit any Subsidiary to, make or suffer to exist any Investments
(including without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, or to create any Subsidiary or to become
or remain a partner in any partnership or joint venture, or to make any
Acquisition of any Person, except:
(i) Cash Equivalent Investments.
(ii) Existing Investments in Subsidiaries described in Schedule 5.8 and other
Investments in existence on the date hereof and described in Schedule 6.14.
(iii) Other Investments and Acquisitions made during any consecutive
twelve-month period, tested as of the end of each fiscal quarter, for a total
consideration not to exceed $1,000,000.
6.15 Liens. The Borrower will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the
Property of the Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies on its
Property if the same shall not at the time be delinquent or thereafter can be
paid without penalty, or are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with Agreement
Accounting Principles shall have been set aside on its books.
(ii) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’
liens and other similar liens arising in the ordinary course of business which
secure payment of obligations not more than 60 days past due or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker’s compensation
laws, unemployment insurance, old age pensions, or other social security or
retirement benefits, or similar legislation.
(iv) Utility easements, building restrictions and such other encumbrances or
charges against real property as are of a nature generally existing with respect
to properties of a similar character and which do not in any material way affect
the marketability of the same or interfere with the use thereof in the business
of the Borrower or its Subsidiaries.
(v) Liens existing on the date hereof and described in Schedule 5.14.
6.16 Capital Expenditures. The Borrower will not, nor will it
permit any Subsidiary to, expend, or be committed to expend, for Consolidated
Capital Expenditures in excess of during any fiscal year (on a non-cumulative
basis) the lesser of 40% of the prior fiscal year's Consolidated EBITDA and
$28,000,000.
6.17 Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arms-length transaction.
6.18 Restriction on Negative Pledges. The Borrower will not, and
will not permit any Subsidiary to, enter into, assume or become subject to any
agreement prohibiting or otherwise restricting the creation or assumption of any
Lien upon its Properties, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligations if security is given for some
other obligation, except pursuant to this Agreement and the other Loan
Documents, the Existing Premier Agendas Facility and the mortgage facilities
described on Annex 6.
6.19 Subordinated Indebtedness. The Borrower will not, and will
not permit any Subsidiary to, make any amendment or modification to the
indenture, note or other agreement evidencing or governing any Subordinated
Indebtedness, or directly or indirectly voluntarily prepay, defease or in
substance defease, purchase, redeem, retire or otherwise acquire, any
Subordinated Indebtedness.
6.20 Sale of Accounts. The Borrower will not, nor will it permit
any Subsidiary to, sell or otherwise dispose of any notes receivable or accounts
receivable, with or without recourse.
6.21 Sale and Leaseback Transactions and other Off-Balance Sheet
Liabilities. Except as otherwise consented to in writing by the Required
Lenders in their sole and absolute discretion, the Borrower will not, nor will
it permit any Subsidiary to, enter into or suffer to exist any (i) Sale and
Leaseback Transaction or (ii) any other transaction pursuant to which it incurs
or has incurred Off-Balance Sheet Liabilities. The Lenders hereby consent to the
execution, delivery and performance of the obligations under the Agreement for
Information Technology Services dated April 1, 2001, as amended prior to the
Effective Date, between the Borrower, Electronic Data Systems Corporation and
EDS Information Services, L.L.C.
6.22 Contingent Obligations. The Borrower will not, nor will it
permit any Subsidiary to, make or suffer to exist any Contingent Obligation
(including, without limitation, any Contingent Obligation with respect to the
obligations of a Subsidiary), except (i) by endorsement of instruments for
deposit or collection in the ordinary course of business, (ii) the Reimbursement
Obligations and (iii) Contingent Obligations set forth on Schedule 6.22 hereto.
6.23 Financial Covenants.
6.24 Fixed Charge Coverage Ratio. The Borrower will not permit
the ratio, determined as of the end of each of its fiscal quarters for the then
most-recently ended four fiscal quarters, of (i) Consolidated EBITDA plus
Consolidated Rent Expense to (ii) Consolidated Interest Expense, plus
Consolidated Rent Expense, plus current maturities of Indebtedness (including
the principal portion of Capitalized Lease Obligations and any current
maturities of Loans hereunder but excluding, in any event, the Initial
Installment (to the extent paid on or prior to November 30, 2001) and excluding
all amounts paid during the calculation period on account of principal
outstanding under the Existing Premier Agendas Facility (to the extent such
payments permanently reduce the commitment of Bank of America, N.A.
thereunder)), plus expenses for taxes paid in cash, plus dividends paid in cash,
all calculated for the Borrower and its Subsidiaries on a consolidated basis, to
be less than: (a) for the fiscal quarter ending May 26, 2001, 1.15:1.00, (b) for
the last fiscal quarter of fiscal year 2001, 1.25:1.00, (c) for the first fiscal
quarter of fiscal year 2002, 1.25:1.00, (d) for the second and third fiscal
quarters of fiscal year 2002, 1.40:1.00, (e) for the fourth fiscal quarter of
fiscal year 2002 and for the first, second and third fiscal quarters of fiscal
year 2003, 1.50:1.00, and (f) for each fiscal quarter thereafter, 1.75 to 1.0.
6.25 Leverage Ratio. The Borrower will not permit its ratio,
determined as of the end of each of its fiscal quarters, of (i) Consolidated
Funded Indebtedness plus the amount available for drawing under all outstanding
Letters of Credit to (ii) Consolidated EBITDA for the then most-recently ended
four fiscal quarters to be greater than: (a) for the fiscal quarter ending May
26, 2001, 3.00:1.00, (b) for the last fiscal quarter of fiscal year 2001,
2.75:1.00, and (c) for each fiscal quarter thereafter, 2.00:1.00.
6.26 Minimum Net Worth. The Borrower will at all times maintain
Consolidated Net Worth of not less than the sum of (i) $295,000,000, plus (ii)
75% of Consolidated Net Income earned in each fiscal quarter beginning with the
fiscal quarter ending May 26, 2001 (without deduction for losses), and plus
(iii) 90% of the Net Cash Proceeds of any equity offering consummated after the
last day of fiscal year 2000.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1 Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries to the Lenders, the LC Issuer
or the Agent under or in connection with this Agreement, any Credit Extension,
or any certificate or information delivered in connection with this Agreement or
any other Loan Document shall be materially false on the date as of which made;
provided, however that the inaccuracy or incompleteness of any representation
and warranty made or deemed made that an account receivable is an "Eligible
Account" or that an item of inventory is "Eligible Inventory" shall not
constitute a Default hereunder, it being the intention of the parties that the
inaccuracy or incompleteness of any such representation or warranty will
disqualify such account receivable or item of inventory from inclusion in the
calculation of the Collateral Value of the Borrowing Base.
7.2 Nonpayment of principal of any Loan when due, nonpayment of
any Reimbursement Obligation within one Business Day after the same becomes due
or nonpayment of interest upon any Loan or of any commitment fee, LC Fee or
other obligations under any of the Loan Documents within five days after the
same becomes due.
7.3 The breach by the Borrower of any of the terms or provisions
of Sections 6.2 or 6.10 through 6.23 of Article VI.
7.4 The breach by the Borrower (other than a breach which
constitutes a Default under another Section of this Article VII) of any of the
terms or provisions of this Agreement which is not remedied within ten days
after written notice from the Agent or any Lender.
7.5 Failure of the Borrower or any of its Subsidiaries to pay when
due any Indebtedness under the Existing Premier Agendas Facility or to pay when
due any other Indebtedness aggregating in excess of $1,000,000 ("Material
Indebtedness") or the default by the Borrower or any of its Subsidiaries in the
performance (beyond the applicable grace period with respect thereto, if any) of
any term, provision or condition contained in any agreement under the Existing
Premier Agendas Facility or under which any such Material Indebtedness was
created or is governed, or any other event shall occur or condition exist, the
effect of which default or event is to cause, or to permit the holder or holders
of such Indebtedness to cause, the Existing Premier Agendas Facility or such
Material Indebtedness to become due prior to its stated maturity; or any
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable or required to be prepaid or repurchased (other than by a
regularly scheduled payment) prior to the stated maturity thereof; or the
Borrower or any of its Subsidiaries shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.
7.6 The Borrower or any of its Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate or partnership action to authorize or
effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail
to contest in good faith any appointment or proceeding described in Section 7.7.
7.7 Without the application, approval or consent of the Borrower
or any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in Section
7.6(iv) shall be instituted against the Borrower or any of its Subsidiaries and
such appointment continues undischarged or such proceeding continues undismissed
or unstayed for a period of 60 consecutive days.
7.8 Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of, all or any
portion of the Property of the Borrower and its Subsidiaries which, when taken
together with all other Property of the Borrower and its Subsidiaries so
condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such action occurs,
constitutes a Substantial Portion.
7.9 The Borrower or any of its Subsidiaries shall fail within 30
days to pay, bond or otherwise discharge one or more (i) judgments or orders for
the payment of money in excess of $5,000,000 (or the equivalent thereof in
currencies other than U.S. Dollars) in the aggregate, or (ii) nonmonetary
judgments or orders which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, which judgment(s), in any such case,
is/are not stayed on appeal or otherwise being appropriately contested in good
faith.
7.10 There shall exist any Unfunded Liabilities under any Single
Employer Plans or any Reportable Event shall occur in connection with any Plan.
7.11 The Borrower or any other member of the Controlled Group
shall have been notified by the sponsor of a Multiemployer Plan that it has
incurred withdrawal liability to such Multiemployer Plan in an amount which,
when aggregated with all other amounts required to be paid to Multiemployer
Plans by the Borrower or any other member of the Controlled Group as withdrawal
liability (determined as of the date of such notification), exceeds $1,000,000.
7.12 The Borrower or any other member of the Controlled Group
shall have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Borrower and the other
members of the Controlled Group (taken as a whole) to all Multiemployer Plans
which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding the
plan year in which the reorganization or termination occurs by an amount
exceeding $1,000,000
7.13 The Borrower or any of its Subsidiaries shall (i) be the
subject of any proceeding or investigation pertaining to the release by the
Borrower, any of its Subsidiaries or any other Person of any toxic or hazardous
waste or substance into the environment, or (ii) violate any Environmental Law,
which, in the case of an event described in clause (i) or clause (ii), could
reasonably be expected to have a Material Adverse Effect.
7.14 Any Change in Control shall occur.
7.15 Nonpayment by the Borrower or any Subsidiary of any Rate
Management Obligation when due or the breach by the Borrower or any Subsidiary
of any term, provision or condition contained in any Rate Management
Transaction.
7.16 Any Guaranty shall fail to remain in full force or effect or
any action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Guaranty, or any Guarantor shall fail to comply with any
of the terms or provisions of any Guaranty or any Guarantor Collateral Document
to which it is a party, or any Guarantor shall deny that it has any further
liability under any Guaranty to which it is a party, or shall give notice to
such effect.
7.17 Any Collateral Document shall for any reason fail to create a
valid and perfected first priority security interest in any Collateral purported
to be covered thereby, except as permitted by the terms of any Collateral
Document or otherwise agreed by the Agent in writing, or any Collateral Document
shall fail to remain in full force or effect or any action shall be taken to
discontinue or to assert the invalidity or unenforceability of any Collateral
Document.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1 Acceleration; Facility LCs Collateral Account.
(i) If any Default described in Section 7.6 or 7.7 occurs with respect to the
Borrower, the obligations of the Lenders to make Loans hereunder and the
obligation and power of the LC Issuer to issue Facility LCs shall automatically
terminate and the Obligations shall immediately become due and payable without
any election or action on the part of the Agent, the LC Issuer or any Lender and
the Borrower will be and become thereby unconditionally obligated, without any
further notice, act or demand, to pay to the Agent an amount in immediately
available funds, which funds shall be held in the Facility LC Collateral
Account, equal to the difference of (x) the amount of LC Obligations at such
time, less (y) the amount on deposit in the Facility LC Collateral Account at
such time which is free and clear of all rights and claims of third parties and
has not been applied against the Obligations (such difference, the “Collateral
Shortfall Amount”). If any other Default occurs, the Required Lenders (or the
Agent with the consent of the Required Lenders) may (a) terminate or suspend the
obligations of the Lenders to make Loans hereunder and the obligation and power
of the LC Issuer to issue Facility LCs, or declare the Obligations to be due and
payable, or both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which the Borrower hereby expressly waives, and (b) upon notice to the Borrower
and in addition to the continuing right to demand payment of all amounts payable
under this Agreement, make demand on the Borrower to pay, and the Borrower will,
forthwith upon such demand and without any further notice or act, pay to the
Agent the Collateral Shortfall Amount, which funds shall be deposited in the
Facility LC Collateral Account.
(ii) If at any time while any Default is continuing, the Agent determines that
the Collateral Shortfall Amount at such time is greater than zero, the Agent may
make demand on the Borrower to pay, and the Borrower will, forthwith upon such
demand and without any further notice or act, pay to the Agent the Collateral
Shortfall Amount, which funds shall be deposited in the Facility LC Collateral
Account.
(iii) The Agent may at any time or from time to time after funds are deposited
in the Facility LC Collateral Account, apply such funds to the payment of the
Obligations and any other amounts as shall from time to time have become due and
payable by the Borrower to the Lenders or the LC Issuer under the Loan
Documents.
(iv) At any time while any Default is continuing, neither the Borrower nor any
Person claiming on behalf of or through the Borrower shall have any right to
withdraw any of the funds held in the Facility LC Collateral Account. After all
of the Obligations have been indefeasibly paid in full and the Aggregate
Commitment has been terminated, any funds remaining in the Facility LC
Collateral Account shall be returned by the Agent to the Borrower or paid to
whomever may be legally entitled thereto at such time.
(v) If, within 30 days after acceleration of the maturity of the Obligations
or termination of the obligations of the Lenders to make Loans and the
obligation and power of the LC Issuer to issue Facility LCs hereunder as a
result of any Default (other than any Default as described in Section 7.6 or 7.7
with respect to the Borrower) and before any judgment or decree for the payment
of the Obligations due shall have been obtained or entered, the Required Lenders
(in their sole discretion) shall so direct, the Agent shall, by notice to the
Borrower, rescind and annul such acceleration and/or termination.
8.2 Amendments. Subject to the provisions of this Article VIII,
the Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of 100% of the Lenders:
(i) Extend the final maturity of any Loan, or extend the expiry date of any
Facility LC to a date after the Facility Termination Date or postpone any
regularly scheduled payment of principal of any Loan or forgive all or any
portion of the principal amount thereof or any Reimbursement Obligation related
thereto, or reduce the rate or extend the time of payment of interest or fees
thereon or Reimbursement Obligations related thereto.
(ii) Reduce the percentage specified in the definition of Required Lenders.
(iii) Extend the Facility Termination Date or reduce the amount or extend the
payment date for, the mandatory payments required under Section 2.2, or increase
the amount of the Aggregate Revolving Credit Commitment, the Revolving Credit
Commitment of any Lender hereunder or the commitment to issue Facility LCs, or
permit the Borrower to assign its rights under this Agreement.
(iv) Release any Guarantor or release all or substantially all of any
Collateral except as expressly permitted pursuant to the Loan Documents.
(v) Amend this Section 8.2.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent, no amendment of any
provision of this Agreement relating to the Swing Line Lender or any Swing Line
Loans shall be effective without the written consent of the Swing Line Lender
and no amendment of any provision relating to the LC Issuer shall be effective
without the written consent of the LC Issuer. The Agent may waive payment of the
fee required under Section 12.3.2 without obtaining the consent of any other
party to this Agreement.
8.3 Preservation of Rights. No delay or omission of the Lenders,
the LC Issuer or the Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Credit Extension notwithstanding the
existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Credit Extension shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Lenders required pursuant to Section 8.2, and then only to the
extent in such writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be available
to the Agent, the LC Issuer and the Lenders until the Obligations have been paid
in full.
ARTICLE IX
GENERAL PROVISIONS
9.1 PSurvival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall survive the making
of the Credit Extensions herein contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, neither the LC Issuer nor any Lender shall be
obligated to extend credit to the Borrower in violation of any limitation or
prohibition provided by any applicable statute or regulation.
9.3 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.4 Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent, the LC Issuer and the
Lenders and supersede all prior agreements and understandings among the
Borrower, the Agent, the LC Issuer and the Lenders relating to the subject
matter thereof other than any fee letter described in Section 10.13.
9.5 Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and not joint and no
Lender shall be the partner or agent of any other (except to the extent to which
the Agent is authorized to act as such). The failure of any Lender to perform
any of its obligations hereunder shall not relieve any other Lender from any of
its obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
and their respective successors and assigns, provided, however, that the parties
hereto expressly agree that the Arranger shall enjoy the benefits of the
provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth
therein and shall have the right to enforce such provisions on its own behalf
and in its own name to the same extent as if it were a party to this Agreement.
9.6 Expenses; Indemnification..
(i) The Borrower shall reimburse the Agent and the Arranger for any costs,
internal charges and out-of-pocket expenses (including attorneys’ fees and time
charges of attorneys for the Agent, which attorneys may be employees of the
Agent) paid or incurred by the Agent or the Arranger in connection with the
preparation, negotiation, execution, delivery, syndication, review, amendment,
modification, and administration of the Loan Documents, including, without
limitation, in connection with inspections, audits and valuations of the
Collateral (collectively “Collateral Audits”); provided, however, that so long
as there has not occurred a Default or an Unmatured Default the Borrower shall
not be obligated to reimburse the Agent or the Arranger for more than one
Collateral Audit conducted during any consecutive 12-month period. The Borrower
also agrees to reimburse the Agent, the Arranger, the LC Issuer and the Lenders
for any costs, internal charges and out-of-pocket expenses (including attorneys’
fees and time charges of attorneys for the Agent, the Arranger, the LC Issuer
and the Lenders, which attorneys may be employees of the Agent, the Arranger,
the LC Issuer or the Lenders) paid or incurred by the Agent, the Arranger, the
LC Issuer or any Lender in connection with the collection and enforcement of the
Loan Documents. Expenses being reimbursed by the Borrower under this Section
include, without limitation, costs and expenses incurred in connection with the
Reports described in the following sentence. The Borrower acknowledges that from
time to time Bank One may prepare and may distribute to the Lenders (but shall
have no obligation or duty to prepare or to distribute to the Lenders) certain
audit reports (the “Reports”) pertaining to the Borrower’s assets for internal
use by Bank One from information furnished to it by or on behalf of the
Borrower, after Bank One has exercised its rights of inspection pursuant to this
Agreement.
(ii) The Borrower hereby further agrees to indemnify the Agent, the Arranger,
the LC Issuer, each Lender, their respective affiliates, and each of their
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the Agent, the
Arranger, the LC Issuer or any Lender is a party thereto) which any of them may
pay or incur arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Credit Extension
hereunder except to the extent that they are determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the party seeking
indemnification. The obligations of the Borrower under this Section 9.6 shall
survive the termination of this Agreement.
9.7 Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.
9.8 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.9 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.10 Nonliability of Lenders. The relationship between the
Borrower on the one hand and the Lenders, the LC Issuer and the Agent on the
other hand shall be solely that of borrower and lender. Neither the Agent, the
Arranger, the LC Issuer nor any Lender shall have any fiduciary responsibilities
to the Borrower. Neither the Agent, the Arranger, the LC Issuer nor any Lender
undertakes any responsibility to the Borrower to review or inform the Borrower
of any matter in connection with any phase of the Borrower's business or
operations. The Borrower agrees that neither the Agent, the Arranger, the LC
Issuer nor any Lender shall have liability to the Borrower (whether sounding in
tort, contract or otherwise) for losses suffered by the Borrower in connection
with, arising out of, or in any way related to, the transactions contemplated
and the relationship established by the Loan Documents, or any act, omission or
event occurring in connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the party from which
recovery is sought. Neither the Agent, the Arranger, the LC Issuer nor any
Lender shall have any liability with respect to, and the Borrower hereby waives,
releases and agrees not to sue for, any special, indirect or consequential
damages suffered by the Borrower in connection with, arising out of, or in any
way related to the Loan Documents or the transactions contemplated thereby.
9.11 Confidentiality. Each Lender agrees to hold any
confidential information which it may receive from the Borrower pursuant to this
Agreement in confidence, except for disclosure (i) to its Affiliates and to
other Lenders and their respective Affiliates, (ii) to legal counsel,
accountants, and other professional advisors to such Lender or to a Transferee,
(iii) to regulatory officials, (iv) to any Person as requested pursuant to or as
required by law, regulation, or legal process, (v) to any Person in connection
with any legal proceeding to which such Lender is a party, (vi) to such Lender's
direct or indirect contractual counterparties in swap agreements or to legal
counsel, accountants and other professional advisors to such counterparties,
(vii) to rating agencies if requested or required by such agencies in connection
with a rating relating to the Advances hereunder and (viii) permitted by Section
12.4.
9.12 Nonreliance. Each Lender hereby represents that it is not
relying on or looking to any margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System) for the repayment of the
Credit Extensions provided for herein.
9.13 Disclosure. The Borrower and each Lender hereby (i)
acknowledge and agree that Bank One and/or its Affiliates from time to time may
hold investments in, make other loans to or have other relationships with the
Borrower and its Affiliates, and (ii) waive any liability of Bank One or such
Affiliate of Bank One to the Borrower or any Lender, respectively, arising out
of or resulting from such investments, loans or relationships other than
liabilities arising out of the gross negligence or willful misconduct of Bank
One or its Affiliates.
ARTICLE X
THE AGENT
10.1 Appointment; Nature of Relationship. Bank One, NA is hereby
appointed by each of the Lenders as its contractual representative (herein
referred to as the "Agent") hereunder and under each other Loan Document, and
each of the Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this Article
X. Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the contractual representative
of the Lenders with only those duties as are expressly set forth in this
Agreement and the other Loan Documents. In its capacity as the Lenders'
contractual representative, the Agent (i) does not hereby assume any fiduciary
duties to any of the Lenders, (ii) is a "representative" of the Lenders within
the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting
as an independent contractor, the rights and duties of which are limited to
those expressly set forth in this Agreement and the other Loan Documents. Each
of the Lenders hereby agrees to assert no claim against the Agent on any agency
theory or any other theory of liability for breach of fiduciary duty, all of
which claims each Lender hereby waives.
19.2 Powers. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by the terms
of each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
10.3 General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Borrower, the
Lenders or any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith except to the extent such action or inaction is determined in a final
non-appealable judgment by a court of competent jurisdiction to have arisen from
the gross negligence or willful misconduct of such Person.
10.4 No Responsibility for Loans, Recitals, etc. Neither the
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (a) any
statement, warranty or representation made in connection with any Loan Document
or any borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information directly
to each Lender; (c) the satisfaction of any condition specified in Article IV,
except receipt of items required to be delivered solely to the Agent; (d) the
existence or possible existence of any Default or Unmatured Default; (e) the
validity, enforceability, effectiveness, sufficiency or genuineness of any Loan
Document or any other instrument or writing furnished in connection therewith;
(f) the value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of the Borrower or any
guarantor of any of the Obligations or of any of the Borrower's or any such
guarantor's respective Subsidiaries. The Agent shall have no duty to disclose to
the Lenders information that is not required to be furnished by the Borrower to
the Agent at such time, but is voluntarily furnished by the Borrower to the
Agent (either in its capacity as Agent or in its individual capacity).
10.5 Action on Instructions of Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions signed by
the Required Lenders, and such instructions and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby
acknowledge that the Agent shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
or any other Loan Document unless it shall be requested in writing to do so by
the Required Lenders. The Agent shall be fully justified in failing or refusing
to take any action hereunder and under any other Loan Document unless it shall
first be indemnified to its satisfaction by the Lenders pro rata against any and
all liability, cost and expense that it may incur by reason of taking or
continuing to take any such action.
10.6 Employment of Agents and Counsel. The Agent may execute any
of its duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the Lenders
and all matters pertaining to the Agent's duties hereunder and under any other
Loan Document.
10.7 Reliance on Documents; Counsel. The Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.
10.8 Agent's Reimbursement and Indemnification. The Lenders agree
to reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by the Borrower for which the Agent is entitled to reimbursement by
the Borrower under the Loan Documents, (ii) for any other expenses incurred by
the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents
(including, without limitation, for any expenses incurred by the Agent in
connection with any dispute between the Agent and any Lender or between two or
more of the Lenders) and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith or the
transactions contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against the Agent in connection with any dispute
between the Agent and any Lender or between two or more of the Lenders), or the
enforcement of any of the terms of the Loan Documents or of any such other
documents, provided that (i) no Lender shall be liable for any of the foregoing
to the extent any of the foregoing is found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the Agent and (ii) any indemnification required
pursuant to Section 3.5(vii) shall, notwithstanding the provisions of this
Section 10.8, be paid by the relevant Lender in accordance with the provisions
thereof. The obligations of the Lenders under this Section 10.8 shall survive
payment of the Obligations and termination of this Agreement.
10.9 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Agent has received written notice from a Lender or the
Borrower referring to this Agreement describing such Default or Unmatured
Default and stating that such notice is a "notice of default". In the event that
the Agent receives such a notice, the Agent shall give prompt notice thereof to
the Lenders.
10.10 Rights as a Lender. In the event the Agent is a Lender, the
Agent shall have the same rights and powers hereunder and under any other Loan
Document with respect to its Commitment and its Loans as any Lender and may
exercise the same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, at any time when the Agent is a Lender, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent and
its Affiliates may accept deposits from, lend money to, and generally engage in
any kind of trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Borrower or
any of its Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person.
10.11 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Agent, the Arranger or any
other Lender and based on the financial statements prepared by the Borrower and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent, the Arranger or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.
10.12 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or without cause
by written notice received by the Agent from the Required Lenders, such removal
to be effective on the date specified by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on
behalf of the Borrower and the Lenders, a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders within thirty days after
the resigning Agent's giving notice of its intention to resign, then the
resigning Agent may appoint, on behalf of the Borrower and the Lenders, a
successor Agent. Notwithstanding the previous sentence, the Agent may at any
time without the consent of the Borrower or any Lender, appoint any of its
Affiliates which is a commercial bank as a successor Agent hereunder. If the
Agent has resigned or been removed and no successor Agent has been appointed,
the Lenders may perform all the duties of the Agent hereunder and the Borrower
shall make all payments in respect of the Obligations to the applicable Lender
and for all other purposes shall deal directly with the Lenders. No successor
Agent shall be deemed to be appointed hereunder until such successor Agent has
accepted the appointment. Any such successor Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning or removed Agent. Upon
the effectiveness of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its duties and obligations hereunder and
under the Loan Documents. After the effectiveness of the resignation or removal
of an Agent, the provisions of this Article X shall continue in effect for the
benefit of such Agent in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent hereunder and under the other Loan
Documents. In the event that there is a successor to the Agent by merger, or the
Agent assigns its duties and obligations to an Affiliate pursuant to this
Section 10.12, then the term "Prime Rate" as used in this Agreement shall mean
the prime rate, base rate or other analogous rate of the new Agent.
10.13 Agent and Arranger Fees. The Borrower agrees to pay to the
Agent and the Arranger, for their respective accounts, the fees agreed to by the
Borrower, the Agent and the Arranger pursuant to those certain letter agreements
dated June 15, 2001 or as otherwise agreed from time to time.
10.14 Delegation to Affiliates. The Borrower and the Lenders
agree that the Agent may delegate any of its duties under this Agreement to any
of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers,
agents and employees) which performs duties in connection with this Agreement
shall be entitled to the same benefits of the indemnification, waiver and other
protective provisions to which the Agent is entitled under Articles IX and X.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1 Setoff. In addition to, and without limitation of, any
rights of the Lenders under applicable law, if the Borrower becomes insolvent,
however evidenced, or any Default occurs, any and all deposits (including all
account balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by any Lender or
any Affiliate of any Lender to or for the credit or account of the Borrower may
be offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part thereof, shall then be due;
provided, however, that so long as any Obligations are secured by Real Property,
no Lender will exercise any right of offset against deposits of the Borrower or
any Guarantor maintained with it without prior notice to and the consent of the
Agent.
11.2 Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Credit Extensions (other than
payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater
proportion than that received by any other Lender, such Lender agrees, promptly
upon demand, to purchase a portion of the Aggregate Outstanding Combined Credit
Exposure with interest accrued and unpaid thereon held by the other Lenders so
that after such purchase each Lender will hold its Pro Rata Share of the
Aggregate Combined Outstanding Credit Exposure. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their Loans. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall
be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with Section 12.3. The parties to this Agreement acknowledge that clause (ii) of
this Section 12.1 relates only to absolute assignments and does not prohibit
assignments creating security interests, including, without limitation, (x) any
pledge or assignment by any Lender of all or any portion of its rights under
this Agreement and any Note to a Federal Reserve Bank or (y) in the case of a
Lender which is a fund, any pledge or assignment of all or any portion of its
rights under this Agreement and any Note to its trustee in support of its
obligations to its trustee; provided, however, that no such pledge or assignment
creating a security interest shall release the transferor Lender from its
obligations hereunder unless and until the parties thereto have complied with
the provisions of Section 12.3. The Agent may treat the Person which made any
Loan or which holds any Note as the owner thereof for all purposes hereof unless
and until such Person complies with Section 12.3; provided, however, that the
Agent may in its discretion (but shall not be required to) follow instructions
from the Person which made any Loan or which holds any Note to direct payments
relating to such Loan or Note to another Person. Any assignee of the rights to
any Loan or any Note agrees by acceptance of such assignment to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the owner of the rights to any Loan (whether or not a
Note has been issued in evidence thereof), shall be conclusive and binding on
any subsequent holder or assignee of the rights to such Loan.
12.2 Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities (“Participants”) participating
interests in any Outstanding Combined Credit Exposure of such Lender, any Note
held by such Lender, any Revolving Credit Commitment of such Lender or any other
interest of such Lender under the Loan Documents. In the event of any such sale
by a Lender of participating interests to a Participant, such Lender’s
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the owner of its Outstanding Combined
Credit Exposure and the holder of any Note issued to it in evidence thereof for
all purposes under the Loan Documents, all amounts payable by the Borrower under
this Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under the Loan Documents.
12.2.2 Voting Rights. Each Lender shall retain the sole right
to approve, without the consent of any Participant, any amendment, modification
or waiver of any provision of the Loan Documents other than any amendment,
modification or waiver with respect to any Credit Extension or the Revolving
Credit Commitment in which such Participant has an interest which would require
consent of all of the Lenders pursuant to the terms of Section 8.2 or of any
other Loan Document.
12.2.3 Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in Section 11.1
in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under the Loan Documents, provided that each
Lender shall retain the right of setoff provided in Section 11.1 with respect to
the amount of participating interests sold to each Participant. The Lenders
agree to share with each Participant, and each Participant, by exercising the
right of setoff provided in Section 11.1, agrees to share with each Lender, any
amount received pursuant to the exercise of its right of setoff, such amounts to
be shared in accordance with Section 11.2 as if each Participant were a Lender.
12.3 Assignments.
12.3.1 Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities (“Purchasers”) all or any part of its
rights and obligations under the Loan Documents. Such assignment shall be
substantially in the form of Exhibit I or in such other form as may be agreed to
by the parties thereto. The consent of the Borrower, the Agent and the LC Issuer
shall be required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender or an Affiliate thereof; provided, however, that
if a Default has occurred and is continuing, the consent of the Borrower shall
not be required. Such consent shall not be unreasonably withheld or delayed.
Each such assignment with respect to a Purchaser which is not a Lender or an
Affiliate thereof shall (unless each of the Borrower, the Agent and the LC
Issuer otherwise consents) be in an amount not less than the lesser of (i)
$5,000,000 or (ii) the remaining amount of the assigning Lender’s Commitment
(calculated as at the date of such assignment) or outstanding Loans (if the
applicable Commitment has been terminated) and shall be pro rata as to the
Revolving Loans, Facility LCs and the Term Loan.
12.3. Effect; Effective Date. Upon (i) delivery to the Agent of
an assignment, together with any consents required by Section 12.3.1, and (ii)
payment of a $3,500 fee to the Agent for processing such assignment (unless such
fee is waived by the Agent), such assignment shall become effective on the
effective date specified in such assignment. The assignment shall contain a
representation by the Purchaser to the effect that none of the consideration
used to make the purchase of the Outstanding Combined Credit Exposure, the
Revolving Credit Commitment and Loans under the applicable assignment agreement
constitutes “plan assets” as defined under ERISA and that the rights and
interests of the Purchaser in and under the Loan Documents will not be “plan
assets” under ERISA. On and after the effective date of such assignment, such
Purchaser shall for all purposes be a Lender party to this Agreement and any
other Loan Document executed by or on behalf of the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and no further consent or action
by the Borrower, the Lenders or the Agent shall be required to release the
transferor Lender with respect to the percentage of the Aggregate Revolving
Credit Commitment and Loans assigned to such Purchaser. Upon the consummation of
any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor
Lender, the Agent and the Borrower shall, if the transferor Lender or the
Purchaser desires that its Loans be evidenced by Notes, make appropriate
arrangements so that new Notes or, as appropriate, replacement Notes are issued
to such transferor Lender and new Notes or, as appropriate, replacement Notes,
are issued to such Purchaser, in each case in principal amounts reflecting their
respective Revolving Credit Commitments, as adjusted pursuant to such
assignment.
12.4 Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person acquiring
an interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries, including
without limitation any information contained in any Reports; provided that each
Transferee and prospective Transferee agrees to be bound by Section 9.11 of this
Agreement.
12.5 Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 3.5(iv).
ARTICLE XIII
NOTICES
13.1 Notices. Except as otherwise permitted by Section 2.14 with
respect to borrowing notices, all notices, requests and other communications to
any party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party: (w)
in the case of the Borrower or the Agent, at its address or facsimile number set
forth on the signature pages hereof, (x) in the case of any Guarantor, in care
of the Borrower at its address and facsimile number set forth on the signature
pages hereof, (y) in the case of any Lender, at its address or facsimile number
set forth in its administrative questionnaire or (z) in the case of any party,
at such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the Agent and the Borrower in accordance with the
provisions of this Section 13.1. Each such notice, request or other
communication shall be effective (i) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and confirmation
of receipt is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered (or, in the case
of electronic transmission, received) at the address specified in this Section;
provided that notices to the Agent under Article II shall not be effective until
received.
13.2 Change of Address. The Borrower, the Agent and any Lender
may each change the address for service of notice upon it by a notice in writing
to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower, the
Agent and the Lenders and each party has notified the Agent by facsimile
transmission or telephone that it has taken such action.
ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
15.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
15.2 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY
AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
15.3 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
[SIGNATURE PAGES FOLLOWING]
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed this
Agreement as of the date first above written.
FRANKLIN COVEY CO.
By: /s/ J. Scott Nielsen
--------------------------------------------------------------------------------
J. Scott Nielsen, Senior Vice President - Finance
Address: 2200 West Parkway Boulevard
Salt Lake City, UT 84119
Attention: J. Scott Nielsen, Senior Vice President - Finance
Telephone: (801) 817-7102
FAX: (801) 817-4291
BANK ONE, NA, as Agent, LC Issuer and a Lender
By: /s/ Stephen M. Flynn
--------------------------------------------------------------------------------
Stephen M. Flynn, First Vice President
Address: 777 South Figueroa Street,4th Floor, IL1-4001
Los Angeles, CA 90017
Attention: Stephen M. Flynn, First Vice President
Telephone: (213) 683-4932
FAX: (213) 683-4999
ZIONS FIRST NATIONAL BANK, as Swing Line Lender and a Lender
By: /s/ David Mathis
--------------------------------------------------------------------------------
David Mathis, Vice President
Address: 10 East South Temple, Suite 200
Salt Lake City, Utah 84133
Attention: David Mathis, Vice President
Telephone: (801)524-4822
FAX: (801)524-2136
LIST OF ANNEXES, EXHIBITS AND SCHEDULES
ANNEXES:
ANNEX 1: Initial Commitment Schedule
ANNEX 2: Schedule of States in Which Eligible Inventory May Be
Located
ANNEX 3: Schedule of Existing Letters of Credit
ANNEX 4: Schedule of Initial Guarantors
ANNEX 5: Pricing Schedule
ANNEX 6: Existing Mortgage Facilities
EXHIBITS:
EXHIBIT A: Form of Borrower Security Agreement
EXHIBIT B: Form of Borrowing Base Certificate
EXHIBIT C: Form of Compliance Certificate
EXHIBIT D: Form of Guarantor Security Agreement
EXHIBIT E: Form of Guaranty
EXHIBIT F-1: Form of Revolving Loans Note
EXHIBIT F-2: Form of Term Loan Note
EXHIBIT F-3: Form of Swing Line Loans Note
EXHIBIT G: Form of Opinion of Counsel to Borrower and Guarantors
EXHIBIT H: Form of Money Transfer Instructions
EXHIBIT I: Form of Assignment Agreement
SCHEDULES:
SCHEDULE 5.7: Litigation Disclosure
SCHEDULE 5.8: Schedule of Subsidiaries, Ownership, Investment, Etc.
SCHEDULE 5.14: Schedule of Existing Liens
SCHEDULE 6.11: Schedule of Indebtedness
SCHEDULE 6.14: Schedule of Existing Investments (Other than in Subsidiaries)
SCHEDULE 6.22: Contingent Obligations
ANNEX 1: COMMITMENT SCHEDULE
(as of July 6, 2001)
Aggregate Revolving Credit Commitment: $45,000,000
Swing Line Sublimit: $10,000,000
Lender Revolving Credit Commitment Pro Rata Share
Bank One, NA $22,500,000 50%
Zions First National Bank $22,500,000 50%
ANNEX 2: LOCATIONS OF ELIGIBLE INVENTORY
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Nebraska
Nevada
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
Tennessee
Texas
Utah
Virginia
Washington
Washington, D.C.
Wisconsin
ANNEX 3: EXISTING LETTERS OF CREDIT
LC Number Beneficiary Expiration Date Face Amount
--------- ----------- --------------- -----------
6683 Knoxville Utilities Board 10/7/2001 $1,700.00
7514 Airlines Reporting 3/27/2002 $20,000.00
Corporation
8950 Royal Indemnity Company 1/1/2002 $264,000.00
SB-800146 Banca Serafin, S.A. 5/25/2002 $50,000.00
TOTAL EXISTING LETTERS OF CREDIT: $335,700.00
ANNEX 4: INITIAL GUARANTORS
--------------------------------------------------------------------------------
GUARANTOR NAME JURISDICTION OF BORROWER'S PERCENTAGE
ORGANIZATION OWNERSHIP
--------------------------------------------------------------------------------
Franklin Covey Argentina, Inc. Utah 100%
--------------------------------------------------------------------------------
Franklin Covey Asia, Inc. Utah 100%
--------------------------------------------------------------------------------
Franklin Covey Brazil, Inc. Utah 100%
--------------------------------------------------------------------------------
Franklin Covey Catalog Sales, Inc. Utah 100%
--------------------------------------------------------------------------------
Franklin Covey Client Sales, Inc. Utah 100%
--------------------------------------------------------------------------------
Franklin Covey International, Inc. Utah 100%
--------------------------------------------------------------------------------
Franklin Covey Marketing, Ltd. Utah 0%
--------------------------------------------------------------------------------
Franklin Covey Mexico, Inc. Utah 100%
--------------------------------------------------------------------------------
Franklin Covey Printing, Inc. Utah 100%
--------------------------------------------------------------------------------
Franklin Covey Product Sales, Inc. Utah 100%
--------------------------------------------------------------------------------
Franklin Covey Services, LLC Utah 100%
--------------------------------------------------------------------------------
Franklin Covey Travel, Inc. Utah 100%
--------------------------------------------------------------------------------
Franklin Development Corporation Utah 100%
--------------------------------------------------------------------------------
McCulley-Cuppan, LLC Utah 100%
--------------------------------------------------------------------------------
ANNEX 5: PRICING SCHEDULE
===================== ================= ================== ====================
APPLICABLE MARGIN LEVEL I STATUS LEVEL II STATUS LEVEL III STATUS
--------------------- ----------------- ------------------ --------------------
Eurodollar Rate 2.125% 2.50% 2.75%
--------------------- ----------------- ------------------ --------------------
Floating Rate 1.25% 1.75% 2.00%
===================== ================= ================== ====================
APPLICABLE FEE RATE LEVEL I STATUS LEVEL II STATUS LEVEL III STATUS
--------------------- ----------------- ------------------ --------------------
Facility Fee 0.375% 0.50% 0.50%
===================== ================= ================== ====================
For the purposes of this Schedule, the following terms have the following
meanings, subject to the penultimate paragraph of this Schedule:
"Financials" means the annual or quarterly financial statements of the
Borrower delivered pursuant to Section 6.1(i) or (ii).
"Level I Status" exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, the Leverage
Ratio is less than .1.00 to 1.00.
"Level II Status" exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, (i) the
Borrower has not qualified for Level I Status and (ii) the Leverage Ratio
is less than .2.00 to 1.00.
"Level III Status" exists at any date if the Borrower has not qualified for
Level I Status or Level II Status.
"Status" means either Level I Status, Level II Status or Level III Status.
The Applicable Margin and Applicable Fee Rate shall be determined in
accordance with the foregoing table based on the Borrower's Status as reflected
in the then most recent Financials. Adjustments, if any, to the Applicable
Margin or Applicable Fee Rate shall be effective five Business Days after the
Agent has received the applicable Financials. If the Borrower fails to deliver
the Financials to the Agent at the time required pursuant to Section 6.1, then
the Applicable Margin and Applicable Fee Rate shall be the highest Applicable
Margin and Applicable Fee Rate set forth in the foregoing table until five days
after such Financials are so delivered.
NOTE: From the Effective Date until five days following delivery of the
Borrower's financial statements for fiscal year end 2002, the Status which shall
be deemed to apply shall be no lower than Level II.
ANNEX 6: EXISTING MORTGAGE FACILITIES
Those five loans secured by deeds of trust on certain parcels of the Real
Property and evidenced by the Promissory Notes described below:
1. Promissory Note dated August 1, 1989 in the amount of $563,550 issued by
SBWWR, Inc. and The Franklin International Institute, Inc. and payable to the
order of Gary P. Cox, trustee, Mountain States Bindery Profit Sharing Plan.
2. Promissory Note dated September 21, 1989 in the amount of $275,000 issued by
SBWWR, Inc. and payable to the order of Zions First National Bank.
3. Promissory Note dated September 27, 1989 in the amount of $840,000 issued by
SBWWR, Inc. and payable to the order of United of Omaha Life Insurance Company.
4. Promissory Note dated August 16, 1991 in the amount of $2,600,000 issued by
Franklin Development Company and payable to the order of United of Omaha Life
Insurance Company.
5. Promissory Note (Construction Loan) dated as of September 17, 1991 in the
amount of $2,925,000 issued by Franklin Development Company payable to the order
of Zions First National Bank.
EXHIBIT A: FORM OF
BORROWER SECURITY AGREEMENT
THIS BORROWER SECURITY AGREEMENT (the “Borrower Security Agreement”) is
made and dated as of 10th day of July, 2001, by and among FRANKLIN COVEY CO., a
Utah corporation (“Borrower”), and BANK ONE, NA (“Bank One”), as agent (in such
capacity, the “Agent”) for itself and the other Credit Providers (as that term
and capitalized terms not otherwise defined herein are defined in) that certain
Credit Agreement dated of even date herewith by and among Borrower, the Lenders
from time to time party thereto and the Agent, Bank One, as the LC Issuer, and
Zions First National Bank, as the Swing Line Lender (as amended, extended and
replaced from time to time, the “Credit Agreement”)).
RECITALS
A. Pursuant to the Credit Agreement, the Lenders have agreed to
extend credit to Borrower from time to time.
B. As a condition precedent to the Lenders’ obligation to extend
credit under the Credit Agreement and for certain of the Lenders to enter into
Rate Management Transactions with Borrower and as collateral security for the
payment and performance by Borrower of the Obligations, Borrower is required to
execute and deliver this Borrower Security Agreement, and to grant to the Agent
and to create a security interest for the benefit of the Collateral Providers in
certain property of Borrower, as hereinafter provided.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Appointment of Agent. Pursuant to the Credit Agreement, each of
the Credit Providers has appointed the Agent as its agent under the Loan
Documents, including, without limitation, under this Borrower Security
Agreement, and the Agent has accepted such appointment. The Agent agrees to act
as secured party, agent, bailee and custodian for the exclusive benefit of the
Credit Providers with respect to the Personal Property Collateral (as defined in
Paragraph 3 below). The Agent agrees that the Agent will act with respect to the
Personal Property Collateral for the exclusive benefit of the Credit Providers
and is not, and shall not at any time in the future be, subject with respect to
the Personal Property Collateral, in any manner or to any extent, to the
direction or control of Borrower except as expressly permitted hereunder, under
the other Loan Documents or as required by law.
2. Grant of Security Interest. Borrower hereby pledges, assigns and
grants to the Agent, for the pro rata, pari passu benefit of the Credit
Providers, and to each of the Credit Providers individually, a security interest
in the Personal Property Collateral to secure payment and performance of the
Obligations.
3. Personal Property Collateral. The Personal Property Collateral
shall consist of all right, title and interest of Borrower in and to the
following:
(a) All now existing and hereafter arising accounts, chattel
paper, documents, instruments, letter-of-credit rights, commercial tort claims
and general intangibles (as those terms are defined in the New York Uniform
Commercial Code as in effect from time to time) of Borrower, whether or not
arising out of or in connection with the sale or lease of goods or the rendering
of services, and all rights of Borrower now and hereafter arising in and to all
security agreements, guaranties, leases and other writings securing or otherwise
relating to any such accounts, chattel paper, documents, instruments,
letter-of-credit rights, commercial tort claims and general intangibles;
(b) All inventory of Borrower, now owned and hereafter
acquired, wherever located, including, without limitation, all merchandise,
goods and other personal property which are held for sale or leased by Borrower,
all raw materials, work in process, materials used or consumed in Borrower's
business and finished goods, all goods in which Borrower has an interest in mass
or a joint or other interest or gifts of any kind (including goods in which
Borrower has an interest or right as consignee), and all goods which are
returned to or repossessed by Borrower, together with all additions and
accessions thereto and replacements therefor and products thereof and documents
therefor;
(c) All equipment of Borrower, now owned and hereafter
acquired, wherever located, and all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and therefor,
including, without limitation, all machinery, tools, dies, blueprints,
catalogues, computer hardware and software, furniture, furnishings and fixtures;
(d) All now existing and hereafter acquired Computer Hardware
and Software Collateral, Copyright Collateral, Patent Collateral, Trademark
Collateral and Trade Secrets Collateral (as those terms are defined in Paragraph
17 below) (collectively, the "Intellectual Property Collateral");
(e) All shares of capital stock, now owned or hereafter
acquired by Borrower, of each now existing and hereafter formed or acquired
Wholly-Owned Domestic Subsidiary of Borrower and sixty six percent (66%) of the
shares of capital stock of each now existing and hereafter formed or acquired
Wholly-Owned Foreign Subsidiary of Borrower, together with all new, substituted
and additional securities at any time issued with respect thereto (collectively
and severally, the "Pledged Shares"), with the Pledged Shares existing on the
date of this Borrower Security Agreement being described on Schedule 1 attached
hereto;
(f) All now existing and hereafter arising rights of the
holder of Pledged Shares with respect thereto, including, without limitation,
all voting rights and all rights to cash and noncash dividends and other
distributions on account thereof;
(g) All deposit accounts, now existing and hereafter arising
or established, maintained in Borrower's name with any financial institution,
including, without limitation, those accounts described more particularly on
Schedule 2 attached hereto, and any and all funds at any time held therein and
all certificates, instruments and other writings, if any, from time to time
representing, evidencing or deposited into such accounts, and all interest,
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the foregoing;
(h) All now existing and hereafter acquired books, records,
writings, data bases, information and other property relating to, used or useful
in connection with, embodying, incorporating or referring to, any of the
foregoing Personal Property Collateral;
(i) All other property of Borrower now or hereafter in the
possession, custody or control of the Agent, and all property of Borrower in
which the Agent now has or hereafter acquires a security interest for the
benefit of the Credit Providers;
(j) All now existing and hereafter acquired cash and cash
equivalents held by Borrower not otherwise included in the foregoing Personal
Property Collateral; and
(k) All products and proceeds of the foregoing Personal
Property Collateral. For purposes of this Borrower Security Agreement, the term
"proceeds" includes whatever is receivable or received when Personal Property
Collateral or proceeds thereof is sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes,
without limitation, all rights to payment, including return premiums, with
respect to any insurance relating thereto.
4. Obligations. The obligations secured by this Borrower Security
Agreement shall consist of all Obligations, including in all cases, whether
heretofore, now, or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, absolute or contingent, liquidated or
unliquidated, determined or undetermined, whether or not such Obligations are
from time to time reduced, or extinguished and thereafter increased or incurred,
whether Borrower may be liable individually or jointly with others, whether or
not recovery upon such Obligations may be or hereafter become barred by any
statute of limitations, and whether or not such Obligations may be or hereafter
become otherwise unenforceable.
5. Representations and Warranties. In addition to all
representations and warranties of Borrower set forth in the other Loan
Documents, which are incorporated herein by this reference, Borrower hereby
represents and warrants that:
(a) Borrower is the sole owner of and has good and marketable
title to the Personal Property Collateral (or, in the case of after-acquired
Personal Property Collateral, at the time Borrower acquires rights in the
Personal Property Collateral).
(b) Except as permitted pursuant to the Credit Agreement, no
Person has (or, in the case of after-acquired Personal Property Collateral, at
the time Borrower acquires rights therein, will have) any right, title, claim or
interest (by way of security interest or other Lien or charge) in, against or to
the Personal Property Collateral.
(c) All information heretofore, herein or hereafter supplied
to the Agent or any Credit Provider by or on behalf of Borrower with respect to
the Personal Property Collateral is accurate and complete in all material
respects.
(d) Borrower has delivered to the Agent all instruments,
chattel paper and other items of Personal Property Collateral requested to be
delivered by the Agent in which a security interest is or may be perfected by
possession, together with such additional writings, including, without
limitation, stock transfer powers and assignments, with respect thereto as the
Agent shall request.
6. Covenants and Agreements of Borrower. In addition to all
covenants and agreements of Borrower set forth in the other Loan Documents,
which are incorporated herein by this reference, Borrower hereby agrees, at no
cost or expense to the Agent or any of the Credit Providers:
(a) To do all commercially reasonable acts (other than acts
which are required to be done by the Agent) that may be necessary to maintain,
preserve and protect the Personal Property Collateral and, to the extent such
actions are required to be taken by Borrower, the first priority, perfected
security interest of the Agent for the benefit of the Credit Providers therein.
(b) Not to use or permit any Personal Property Collateral to
be used unlawfully or in violation of any provision of this Borrower Security
Agreement, any other agreement with the Agent and/or the Credit Providers
related hereto, or any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on Borrower or affecting any of the Personal Property
Collateral or any contractual obligation affecting any of the Personal Property
Collateral.
(c) To pay promptly when due all taxes, assessments, charges,
encumbrances and Liens now or hereafter imposed upon or affecting any Personal
Property Collateral.
(d) To appear in and defend any action or proceeding which may
affect its title to or the Agent's interest on behalf of the Credit Providers in
the Personal Property Collateral.
(e) Not to surrender or lose possession of (other than to the
Agent), sell, encumber, lease, rent, or otherwise dispose of or transfer any
Personal Property Collateral or right or interest therein except as expressly
provided herein and in the other Loan Documents, and to keep the Personal
Property Collateral free of all levies and security interests or other Liens or
charges except those permitted under the Credit Agreement or otherwise approved
in writing by the Agent; provided, however, that, unless a Default shall have
occurred and be continuing, Borrower may, in the ordinary course of business,
sell or lease any Personal Property Collateral consisting of inventory.
(f) To account fully for and promptly deliver to the Agent, in
the form received, all documents, chattel paper, instruments and agreements
constituting Personal Property Collateral hereunder, including, without
limitation, all stock certificates evidencing Pledged Shares, and all following
the occurrence of a Default proceeds of the Personal Property Collateral
received, all endorsed to the Agent or in blank, as requested by the Agent, and
accompanied by such stock powers as may be required by the Agent and until so
delivered all such documents, instruments, agreements and proceeds shall be held
by Borrower in trust for the Agent for the benefit of the Credit Providers,
separate from all other property of Borrower.
(g) To keep separate, accurate and complete records of the
Personal Property Collateral and to provide the Agent and each of the Credit
Providers with such records and such other reports and information relating to
the Personal Property Collateral as the Agent or any Credit Provider may
reasonably request from time to time.
(h) To give the Agent thirty (30) days prior written notice of
any change in Borrower's chief place of business or legal name or trade name(s)
or style(s) referred to in Paragraph 12 below.
(i) To keep the records concerning the Personal Property
Collateral at the location(s) referred to in Paragraph 12 below and not to
remove such records from such location(s) without the prior written consent of
the Agent.
(j) To keep the Personal Property Collateral at the
location(s) referred to in Paragraph 11 below and not to remove the Personal
Property Collateral from such location(s) without the prior written consent of
the Agent.
(k) To keep the Personal Property Collateral in good condition
and repair and not to cause or permit any waste or unusual or unreasonable
depreciation of the Personal Property Collateral.
7. Authorized Action by Secured Party. Borrower hereby agrees that
following the occurrence and during the continuance of a Default, without
presentment, notice or demand, and without affecting or impairing in any way the
rights of the Agent with respect to the Personal Property Collateral, the
obligations of Borrower hereunder or the Obligations, the Agent may, but shall
not be obligated to and shall incur no liability to Borrower, any Credit
Provider or any third party for failure to, take any action which Borrower is
obligated by this Borrower Security Agreement to do and to exercise such rights
and powers as Borrower might exercise with respect to the Personal Property
Collateral, and Borrower hereby irrevocably appoints the Agent as its
attorney-in-fact to exercise such rights and powers, including without
limitation, to:
(a) Collect by legal proceedings or otherwise and endorse,
receive and receipt for all dividends, interest, payments, proceeds and other
sums and property now or hereafter payable on or on account of the Personal
Property Collateral.
(b) Enter into any extension, reorganization, deposit, merger,
consolidation or other agreement pertaining to, or deposit, surrender, accept,
hold or apply other property in exchange for the Personal Property Collateral.
(c) Insure, process and preserve the Personal Property
Collateral.
(d) Transfer the Personal Property Collateral to its own or
its nominee's name.
(e) Make any compromise or settlement, and take any action it
deems advisable, with respect to the Personal Property Collateral.
(f) Subject to the provisions of Paragraph 8 below, notify any
obligor on any Personal Property Collateral to make payment directly to the
Agent.
Borrower hereby grants to the Agent for the benefit of the Credit Providers an
exclusive, irrevocable power of attorney, with full power and authority in the
place and stead of Borrower to take all such action permitted under this
Paragraph 7; provided, however, that the Agent agrees that it shall not exercise
such power of attorney unless there shall have occurred and is continuing a
Default. Borrower agrees to reimburse the Agent upon demand for any costs and
expenses, including, without limitation, attorneys’ fees, the Agent may incur
while acting as Borrower’s attorney-in-fact hereunder, all of which costs and
expenses are included in the Obligations secured hereby. It is further agreed
and understood between the parties hereto that such care as the Agent gives to
the safekeeping of its own property of like kind shall constitute reasonable
care of the Personal Property Collateral when in the Agent’s possession;
provided, however, that the Agent shall not be required to make any presentment,
demand or protest, or give any notice and need not take any action to preserve
any rights against any prior party or any other person in connection with the
Obligations or with respect to the Personal Property Collateral.
8. Collection of Personal Property Collateral Payments.
(a) Borrower shall, at its sole cost and expense, endeavor to
obtain payment, when due and payable, of all sums due or to become due with
respect to any Personal Property Collateral ("Personal Property Collateral
Payments" or a "Personal Property Collateral Payment"), including, without
limitation, the taking of such action with respect thereto as the Agent or any
Credit Provider may reasonably request, or, in the absence of such request, as
Borrower may reasonably deem advisable; provided, however, that Borrower shall
not, without the prior written consent of the Agent and the Credit Providers,
grant or agree to any rebate, refund, compromise or extension with respect to
any Personal Property Collateral Payment or accept any prepayment on account
thereof other than in the ordinary course of Borrower's business. Upon the
request of the Agent at the direction of all the Credit Providers following the
occurrence of a Default, Borrower will notify and direct any party who is or
might become obligated to make any Personal Property Collateral Payment, to make
payment thereof to such accounts as the Agent may direct in writing and to
execute all instruments and take all action required by the Agent to ensure the
rights of the Agent for the benefit of the Credit Providers in any Personal
Property Collateral subject to the Federal Assignment of Claims Act of 1940, as
amended.
(b) Upon the request of the Agent following the occurrence of
a Default, Borrower will, forthwith upon receipt, transmit and deliver to the
Agent, in the form received, all cash, checks, drafts and other instruments for
the payment of money (properly endorsed where required so that such items may be
collected by the Agent) which may be received by Borrower at any time as payment
on account of any Personal Property Collateral Payment and if such request shall
be made, until delivery to the Agent, such items will be held in trust for the
Agent and the Credit Providers and will not be commingled by Borrower with any
of its other funds or property. Thereafter, the Agent is hereby authorized and
empowered to endorse the name of Borrower on any check, draft or other
instrument for the payment of money received by the Agent on account of any
Personal Property Collateral Payment if the Agent believes such endorsement is
necessary or desirable for purposes of collection.
(c) Borrower will indemnify and save harmless the Agent from
and against all reasonable liabilities and expenses on account of any adverse
claim asserted against the Agent relating to any moneys received by the Agent on
account of any Personal Property Collateral Payment and such obligation of
Borrower shall continue in effect after and notwithstanding the discharge of the
Obligations and the release of the security interest granted in Paragraph 2
above.
9. Additional Covenants Regarding Intellectual Property Collateral.
(a) Borrower shall not, unless it shall either reasonably and
in good faith determine that such Personal Property Collateral is of negligible
economic value to Borrower or that there is a valid purpose to do otherwise:
(1) Permit any Patent Collateral to lapse or become
abandoned or dedicated to the public or otherwise be unenforceable;
(2) (i) Fail to continue to use any of the Trademark
Collateral in order to maintain all of the Trademark Collateral in full force
free from any claim of abandonment for non-use, (ii) fail to maintain as in the
past the quality of products and services offered under all of the Trademark
Collateral, (iii) fail to employ all of the Trademark Collateral registered with
any Federal or state or foreign authority with an appropriate notice of such
registration, (iv) adopt or use any other Trademark which is confusingly similar
or a colorable imitation of any of the Trademark Collateral, (v) use any of the
Trademark Collateral registered with any Federal or state or foreign authority
except for the uses for which registration or application for registration of
all of the Trademark Collateral has been made, or (vi) do or permit any act or
knowingly omit to do any act whereby any of the Trademark Collateral may lapse
or become invalid or unenforceable;
(3) Do or permit any act or knowingly omit to do any
act whereby any of the Copyright Collateral or any of the Trade Secrets
Collateral may lapse or become invalid or unenforceable or placed in the public
domain except upon expiration of the end of an unrenewable term of a
registration thereof.
(b) Borrower shall notify the Agent immediately if it knows,
or has reason to know, that any application or registration relating to any
material item of the Intellectual Property Collateral may become abandoned or
dedicated to the public or placed in the public domain or invalid or
unenforceable, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any foreign counterpart thereof or any court) regarding Borrower's
ownership of any of the Intellectual Property Collateral, its right to register
the same or to keep and maintain and enforce the same.
(c) In no event shall Borrower or any of its agents,
employees, designees or licensees file an application for the registration of
any Intellectual Property Collateral with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, unless it promptly
informs the Agent, and upon request of the Agent, executes and delivers any and
all agreements, instruments, documents and papers as the Agent may reasonably
request to evidence the Agent's security interest in such Intellectual Property
Collateral and the goodwill and general intangibles of Borrower relating thereto
or represented thereby.
(d) Borrower shall, contemporaneously herewith, execute and
deliver to the Agent such supplemental agreements for filing in the Patent and
Trademark Office as the Agent may require and shall execute and deliver to the
Agent any other document required to acknowledge or register or perfect the
Agent's interest in any part of the Intellectual Property Collateral.
10. Remedies. Upon the occurrence of a Default, the Agent may,
without notice to or demand on Borrower and in addition to all rights and
remedies available to the Agent and the Credit Providers with respect to the
Obligations, at law, in equity or otherwise, do any one or more of the
following:
(a) Foreclose or otherwise enforce the Agent's security
interest in any manner permitted by law or provided for in this Borrower
Security Agreement.
(b) Sell, lease or otherwise dispose of any Personal Property
Collateral at one or more public or private sales at the Agent's place of
business or any other place or places, including, without limitation, any
broker's board or securities exchange, whether or not such Personal Property
Collateral is present at the place of sale, for cash or credit or future
delivery, on such terms and in such manner as the Agent may determine.
(c) Recover from Borrower all costs and expenses, including,
without limitation, reasonable attorneys' fees (including the allocated cost of
internal counsel), incurred or paid by the Agent or any Credit Provider in
exercising any right, power or remedy provided by this Borrower Security
Agreement.
(d) Require Borrower to assemble the Personal Property
Collateral and make it available to the Agent at a place to be designated by the
Agent.
(e) Enter onto property where any Personal Property Collateral
is located and take possession thereof with or without judicial process.
(f) Prior to the disposition of the Personal Property
Collateral, store, process, repair or recondition it or otherwise prepare it for
disposition in any manner and to the extent the Agent deems appropriate and in
connection with such preparation and disposition, without charge, use any
trademark, tradename, copyright, patent or technical process used by Borrower.
Borrower shall be given five (5) Business Days’ prior notice of the time and
place of any public sale or of the time after which any private sale or other
intended disposition of Personal Property Collateral is to be made, which notice
Borrower hereby agrees shall be deemed reasonable notice thereof. Upon any sale
or other disposition pursuant to this Borrower Security Agreement, the Agent
shall have the right to deliver, assign and transfer to the purchaser thereof
the Personal Property Collateral or portion thereof so sold or disposed of. Each
purchaser at any such sale or other disposition (including the Agent) shall hold
the Personal Property Collateral free from any claim or right of whatever kind,
including any equity or right of redemption of Borrower and Borrower
specifically waives (to the extent permitted by law) all rights of redemption,
stay or appraisal which it has or may have under any rule of law or statute now
existing or hereafter adopted.
11. Administration of the Pledged Shares. In addition to any
provisions of this Borrower Security Agreement which govern the administration
of the Personal Property Collateral generally, the following provisions shall
govern the administration of the Pledged Shares:
(a) Until there shall have occurred and be continuing a
Default, Borrower shall be entitled to vote or consent with respect to the
Pledged Shares in any manner not inconsistent with this Borrower Security
Agreement or any document or instrument delivered or to be delivered pursuant to
or in connection with any thereof and to receive all dividends paid with respect
to the Pledged Shares. If there shall have occurred and be continuing a Default
and the Agent shall have notified Borrower that the Agent desires to exercise
its proxy rights with respect to all or a portion of the Pledged Shares,
Borrower hereby grants to the Agent an irrevocable proxy for the Pledged Shares
pursuant to which proxy the Agent shall be entitled to vote or consent, in its
discretion, and in such event Borrower agrees to deliver to the Agent such
further evidence of the grant of such proxy as the Agent may request.
(b) In the event that at any time or from time to time after
the date hereof, Borrower, as record and beneficial owner of the Pledged Shares,
shall receive or shall become entitled to receive, any dividend or any other
distribution whether in securities or property by way of stock split, spin-off,
split-up or reclassification, combination of shares or the like, or in case of
any reorganization, consolidation or merger, and Borrower, as record and
beneficial owner of the Pledged Shares, shall thereby be entitled to receive
securities or property in respect of such Pledged Shares, then and in each such
case, Borrower shall deliver to the Agent and the Agent shall be entitled to
receive and retain all such securities or property as part of the Pledged Shares
as security for the payment and performance of the Obligations; provided,
however, that until there shall have occurred a Default, Borrower shall be
entitled to retain any cash dividends paid on account of the Pledged Shares.
(c) Upon the occurrence of a Default, the Agent is authorized
to sell the Pledged Shares and, at any such sale of any of the Pledged Shares,
if it deems it advisable to do so, to restrict the prospective bidders or
purchasers to persons or entities who (1) will represent and agree that they are
purchasing for their own account, for investment, and not with a view to the
distribution or sale of any of the Pledged Shares; and (2) satisfy the offeree
and purchaser requirements for a valid private placement transaction under
Section 4(2) of the Securities Act of 1933, as amended (the "Act"), and under
Securities and Exchange Commission Release Nos. 33-6383; 34-18524; 35-22407;
39-700; IC-12264; AS-306, or under any similar statute, rule or regulation.
Borrower agrees that disposition of the Pledged Shares pursuant to any private
sale made as provided above may be at prices and on other terms less favorable
than if the Pledged Shares were sold at public sale, and that the Agent has no
obligation to delay the sale of any Pledged Shares for public sale under the
Act. Borrower agrees that a private sale or sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner. In the event that the Agent elects to sell the Pledged Shares, or part
of them, and there is a public market for the Pledged Shares, in a public sale
Borrower shall use its best efforts to register and qualify the Pledged Shares,
or applicable part thereof, under the Act and all state Blue Sky or securities
laws required by the proposed terms of sale and all expenses thereof shall be
payable by Borrower, including, but not limited to, all costs of (i)
registration or qualification of, under the Act or any state Blue Sky or
securities laws or pursuant to any applicable rule or regulation issued pursuant
thereto, any Pledged Shares, and (ii) sale of such Pledged Shares, including,
but not limited to, brokers' or underwriters' commissions, fees or discounts,
accounting and legal fees, costs of printing and other expenses of transfer and
sale.
(d) If any consent, approval or authorization of any state,
municipal or other governmental department, agency or authority should be
necessary to effectuate any sale or other disposition of the Pledged Shares, or
any part thereof, Borrower will execute such applications and other instruments
as may be required in connection with securing any such consent, approval or
authorization, and will otherwise use its best efforts to secure the same.
(e) Nothing contained in this Paragraph 11 shall be deemed to
limit the other obligations of Borrower contained in this Borrower Security
Agreement or the other Loan Documents and the rights of the Agent and the Credit
Providers hereunder or thereunder.
12. Place of Business; Personal Property Collateral Location; Records
Location. Borrower represents that its chief place of business is as set forth
on Schedule 3 attached hereto; that the only trade name(s) or style(s) used by
Borrower are set forth on said Schedule 3; and that, except as otherwise
disclosed to the Agent in writing prior to the date hereof, the Personal
Property Collateral and Borrower’s records concerning the Personal Property
Collateral are located at its chief place of business.
13. Waiver of Hearing. Borrower expressly waives to the extent
permitted under applicable law any constitutional or other right to a judicial
hearing prior to the time the Agent takes possession or disposes of the Personal
Property Collateral upon the occurrence of a Default.
14. Cumulative Rights. The rights, powers and remedies of the Agent
and any of the Credit Providers under this Borrower Security Agreement shall be
in addition to all rights, powers and remedies given to the Agent and any of the
Credit Providers by virtue of any statute or rule of law, the Loan Documents or
any other agreement, all of which rights, powers and remedies shall be
cumulative and may be exercised successively or concurrently without impairing
the Agent’s and any of the Credit Providers’ security interest in the Personal
Property Collateral.
15. Waiver. Any forbearance or failure or delay by the Agent in
exercising any right, power or remedy shall not preclude the further exercise
thereof, and every right, power or remedy of the Agent or any of the Credit
Providers shall continue in full force and effect until such right, power or
remedy is specifically waived in a writing executed by the Agent or such other
Secured Party, as applicable. Borrower waives any right to require any Secured
Party to proceed against any person or to exhaust any Personal Property
Collateral or to pursue any remedy in such Secured Party’s power.
16. Setoff. Borrower agrees that, as between the Borrower, on the
one hand, and the Agent and the Credit Providers, on the other hand, the Agent
and each Credit Provider may exercise its rights of setoff with respect to the
Obligations in the same manner as if the Obligations were unsecured.
17. Intellectual Property Collateral. For purposes of this Borrower
Security Agreement, the following capitalized terms shall have the following
meanings:
"Computer Hardware and Software Collateral" means all of
Borrower's right, title and interest in all now existing and hereafter created
or acquired:
(a) Computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units, display
terminals, printers, features, computer elements, card readers, tape drives,
hard and soft disk drives, cables, electrical supply hardware, generators, power
equalizers, accessories and all peripheral devices and other related computer
hardware;
(b) Software programs (including both source code, object code
and all related applications and data files), whether owned, licensed or leased,
designed for use on the computers and electronic data processing hardware
described in subparagraph (a) above;
(c) All firmware associated therewith;
(d) All documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware, software and
firmware described in subparagraph (a) through (c) above; and
(e) All rights with respect to all of the foregoing,
including, without limitation, any and all of Borrower's copyrights, licenses,
options, warranties, service contracts, program services, test rights, renewal
rights and indemnifications and any substitutions, replacements, additions or
model conversions of any of the foregoing.
"Copyright Collateral" means copyrights and all semi-conductor
chip product mask works of Borrower, whether statutory or common law, registered
or unregistered, now or hereafter in force throughout the world including,
without limitation, all of Borrower's right, title and interest in and to all
copyrights and mask works registered in the United States Copyright Office or
anywhere else in the world, and all applications for registration thereof,
whether pending or in preparation, all copyright and mask work licenses, the
right of Borrower to sue for past, present and future infringements of any
thereof, all rights of Borrower corresponding thereto throughout the world, all
extensions and renewals of any thereof and all proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims
damages and proceeds of suit.
"Patent Collateral" means:
(a) All of Borrower's letters patent and applications for
letters patent throughout the world, including all of Borrower's patent
applications in preparation for filing anywhere in the world and with the United
States Patent and Trademark Office;
(b) All of Borrower's patent licenses;
(c) All reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any of the
items described in clauses (a) and (b); and
(d) All proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringements suits), the right of
Borrower to sue third parties for past, present or future infringements of any
patent or patent application of Borrower, and for breach of enforcement of any
patent license, and all rights corresponding thereto throughout the world.
"Trademark Collateral" means:
(a) All of Borrower's trademarks, trade names, corporate
names, business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of a like nature (all of the foregoing
items in this clause (a) being collectively called a "Trademark"), now existing
anywhere in the world or hereafter adopted or acquired, whether currently in use
or not, all registrations and recordings thereof and all applications in
connection therewith, whether pending or in preparation for filing, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any office or agency of the United States of America or
any State thereof or any foreign country;
(b) All of Borrower's Trademark licenses;
(c) All reissues, extensions or renewals of any of the items
described in clauses (a) and (b);
(d) All of the goodwill of the business of Borrower connected
with the use of, and symbolized by the items described in, clauses (a) and (b),
and
(e) All proceeds of, and rights of Borrower associated with,
the foregoing, including any claim by Borrower against third parties for past,
present or future infringement or dilution of any Trademark, Trademark
registration or Trademark license, or for any injury to the goodwill associated
with the use of any such Trademark or for breach or enforcement of any Trademark
license.
"Trade Secrets Collateral" means common law and statutory trade
secrets and all other confidential or proprietary or useful information and all
know-how obtained by or used in or contemplated at any time for use in the
business of Borrower (all of the foregoing being collectively called a "Trade
Secret"), whether or not such Trade Secret has been reduced to a writing or
other tangible form including all documents and things embodying, incorporating
or referring in any way to such Trade Secret, all Trade Secret licenses,
including the right to sue for and to enjoin and to collect damages for the
actual or threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.
[Signature page following]
EXECUTED as of the day and year first above written.
FRANKLIN COVEY CO.
By: J. SCOTT NIELSEN
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Name: J. SCOTT NIELSEN
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Title: Senior Vice President - Finance
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BANK ONE, NA, as Agent
By: STEPHEN M. FLYNN
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Name: STEPHEN M. FLYNN
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Title: First Vice President
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1 Initial Pledged Shares
Schedule 2 Existing Deposit Accounts
Schedule 3 Locations of Equipment, Inventory, Places of Business, Chief
Executive Office, and Books and Records and Tradenames
Schedule 1
to Borrower Security Agreement
INITIAL PLEDGED SHARES
(AS OF THE EFFECTIVE DATE)
[BORROWER TO PROVIDE]
Schedule 2
to Borrower Security Agreement
DEPOSIT ACCOUNTS
(AS OF THE EFFECTIVE DATE)
Institution where Account Number
Account is Held
[BORROWER TO PROVIDE]
Schedule 3
to Borrower Security Agreement
LOCATIONS OF EQUIPMENT, INVENTORY, PLACES OF BUSINESS,
CHIEF EXECUTIVE OFFICE AND BOOKS AND RECORDS AND TRADENAMES
[BORROWER TO PROVIDE]
EXHIBIT B: FORM OF
BORROWING BASE CERTIFICATE
FRANKLIN COVEY CO.
BORROWING BASE CERTIFICATE
DATED AS OF
To: BANK ONE, NA ("Bank One"),as Agent, and the Lenders Party to the Credit
Agreement Described Below
Reference is hereby made to that certain Credit Agreement dated as of July 10,
2001 by and among FRANKLIN COVEY CO. (the “Borrower”), the Lenders from time to
time party thereto, Bank One, as the Agent for the Lenders, Bank One, as the LC
Issuer, and Zions First National Bank, as the Swing Line Lender (as amended,
extended and replaced from time to time, the “Credit Agreement”). Capitalized
terms used herein and not otherwise defined shall have the meanings given such
terms in the Credit Agreement.
The undersigned, being the [chief financial officer] of the Borrower,
hereby certifies that:
1. The attached Borrowing Base Certificate is complete, true and
correct and fairly presents the data necessary for, and demonstrates, the
computation of the Collateral Value of the Borrowing Base as of _________ (the
“Calculation Date”).
2. Since the Calculation Date there has not occurred any event or
circumstance which would make the computation of the Collateral Value of the
Borrowing Base as set forth therein inaccurate or incomplete in any material
event if this Borrowing Base Certificate were prepared as of the date hereof.
--------------------------------------------------------------------------------
, the
of FRANKLIN COVEY, CO.
FORM OF CALCULATION OF COLLATERAL VALUE OF THE BORROWING BASE
[TO BE PROVIDED BY THE AGENT]
EXHIBIT C: FORM OF COMPLIANCE CERTIFICATE
To: BANK ONE, NA ("Bank One"), as Agent
and the Lenders party to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of July 10, 2001 among FRANKLIN COVEY CO. (the “Borrower”),
the Lenders from time to time party thereto, Bank One, as the Agent for the
Lenders, Bank One, as the LC Issuer, and Zions First National Bank, as the Swing
Line Lender (as amended, extended and replaced from time to time, the “Credit
Agreement”). Capitalized terms used herein and not otherwise defined shall have
the meanings given such terms in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have caused to
be made under my supervision, a detailed review of the transactions and
conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements;
3. The examinations described in Paragraph 2 did not disclose, and I have no
knowledge of, the existence of any condition or event which constitutes a
Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower’s compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct.
5. Schedule II hereto sets forth the determination of the interest rates to be
paid for Loans and the commitment fee rates commencing on the fifth day
following the delivery hereof.
6. Schedule III attached hereto sets forth the various reports and deliveries
which are required at this time under the Credit Agreement and the other Loan
Documents and the status of compliance.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The foregoing certifications, together with the computations set forth
in Schedule I **[and Schedule II]** hereto and the financial statements
delivered with this Certificate in support hereof, are made and delivered this
day of ,
--------------------------------------------------------------------------------
SCHEDULE I TO COMPLIANCE CERTIFICATE
COMPLIANCE AS OF , WITH
PROVISIONS OF AND OF
THE AGREEMENT
SCHEDULE II TO COMPLIANCE CERTIFICATE
BORROWER'S APPLICABLE MARGIN CALCULATION
SCHEDULE III TO COMPLIANCE CERTIFICATE
REPORTS AND DELIVERIES CURRENTLY DUE
EXHIBIT D: FORM OF
GUARANTOR SECURITY AGREEMENT
THIS GUARANTOR SECURITY AGREEMENT (the “Guarantor Security Agreement”)
is made and dated as of 10th day of July, 2001, by and among , a
corporation (“Guarantor”), and BANK ONE, NA (“Bank One”), as collateral agent
(in such capacity, the “Agent”) for itself and the other Credit Providers (as
that term and capitalized terms not otherwise defined herein are defined in)
that certain Credit Agreement dated of even date herewith by and among Franklin
Covey Co. (“Borrower”), Bank One and the other Lenders from time to time party
thereto, Bank One, as the Agent for the Lenders, Bank One, as the LC Issuer, and
Zions First National Bank, as the Swing Line Lender (as amended, extended and
replaced from time to time, the “Credit Agreement”)).
RECITALS
A. Pursuant to the Credit Agreement the Lenders have agreed to
extend credit to Borrower from time to time.
B. As a condition precedent to the Lenders’ obligation to
extend credit under the Credit Agreement and for certain of the Lenders to enter
into Rate Management Transactions with Borrower, the Guarantor is required to
execute and deliver to the Agent for the benefit of the Credit Providers that
certain Guaranty dated concurrently herewith and, as collateral security for the
payment and performance by Guarantor of the Guarantor Obligations (as defined in
Paragraph 4 below), Guarantor is required to execute and deliver this Guarantor
Security Agreement, and to grant to the Agent and to create a security interest
for the benefit of the Collateral Providers in certain property of Guarantor, as
hereinafter provided.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Appointment of Agent. Pursuant to the Credit Agreement,
each of the Credit Providers has appointed the Agent as its agent under the Loan
Documents, including, without limitation, under this Guarantor Security
Agreement, and the Agent has accepted such appointment. The Agent agrees to act
as secured party, agent, bailee and custodian for the exclusive benefit of the
Credit Providers with respect to the Personal Property Collateral (as defined in
Paragraph 3 below). The Agent agrees that the Agent will act with respect to the
Personal Property Collateral for the exclusive benefit of the Credit Providers
and is not, and shall not at any time in the future be, subject with respect to
the Personal Property Collateral, in any manner or to any extent, to the
direction or control of Borrower except as expressly permitted hereunder, under
the other Loan Documents or as required by law.
2. Grant of Security Interest. Borrower hereby pledges,
assigns and grants to the Agent, for the pro rata, pari passu benefit of the
Credit Providers, and to each of the Credit Providers individually, a security
interest in the Personal Property Collateral to secure payment and performance
of the Guarantor Obligations.
3. Personal Property Collateral. The Personal Property
Collateral shall consist of all right, title and interest of Guarantor in and to
the following:
(a) All now existing and hereafter arising accounts,
chattel paper, documents, instruments, letter-of-credit rights, commercial tort
claims and general intangibles (as those terms are defined in the New York
Uniform Commercial Code as in effect from time to time) of Guarantor, whether or
not arising out of or in connection with the sale or lease of goods or the
rendering of services, and all rights of Guarantor now and hereafter arising in
and to all security agreements, guaranties, leases and other writings securing
or otherwise relating to any such accounts, chattel paper, documents,
instruments, letter-of-credit rights, commercial tort claims and general
intangibles;
(b) All inventory of Guarantor, now owned and hereafter
acquired, wherever located, including, without limitation, all merchandise,
goods and other personal property which are held for sale or leased by
Guarantor, all raw materials, work in process, materials used or consumed in
Guarantor's business and finished goods, all goods in which Guarantor has an
interest in mass or a joint or other interest or gifts of any kind (including
goods in which Guarantor has an interest or right as consignee), and all goods
which are returned to or repossessed by Guarantor, together with all additions
and accessions thereto and replacements therefor and products thereof and
documents therefor;
(c) All equipment of Guarantor, now owned and hereafter
acquired, wherever located, and all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and therefor,
including, without limitation, all machinery, tools, dies, blueprints,
catalogues, computer hardware and software, furniture, furnishings and fixtures;
(c) All now existing and hereafter acquired Computer
Hardware and Software Collateral, Copyright Collateral, Patent Collateral,
Trademark Collateral and Trade Secrets Collateral (as those terms are defined in
Paragraph 17 below) (collectively, the "Intellectual Property Collateral");
(e) All shares of capital stock, now owned or hereafter
acquired by Guarantor, of each now existing and hereafter formed or acquired
Wholly-Owned Domestic Subsidiary of Guarantor and sixty six percent (66%) of the
shares of capital stock of each now existing and hereafter formed or acquired
Wholly-Owned Foreign Subsidiary of Guarantor, together with all new, substituted
and additional securities at any time issued with respect thereto (collectively
and severally, the "Pledged Shares"), with the Pledged Shares existing on the
date of this Guarantor Security Agreement being described on Schedule 1 attached
hereto;
(f) All now existing and hereafter arising rights of the
holder of Pledged Shares with respect thereto, including, without limitation,
all voting rights and all rights to cash and noncash dividends and other
distributions on account thereof;
(g) All deposit accounts, now existing and hereafter arising
or established, maintained in Guarantor's name with any financial institution,
including, without limitation, those accounts described more particularly on
Schedule 2 attached hereto, and any and all funds at any time held therein and
all certificates, instruments and other writings, if any, from time to time
representing, evidencing or deposited into such accounts, and all interest,
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the foregoing;
(h) All now existing and hereafter acquired books, records,
writings, data bases, information and other property relating to, used or useful
in connection with, embodying, incorporating or referring to, any of the
foregoing Personal Property Collateral;
(i) All other property of Guarantor now or hereafter in the
possession, custody or control of the Agent, and all property of Guarantor in
which the Agent now has or hereafter acquires a security interest for the
benefit of the Credit Providers;
(j) All now existing and hereafter acquired cash and cash
equivalents held by Guarantor not otherwise included in the foregoing Personal
Property Collateral; and
(k) All products and proceeds of the foregoing Personal
Property Collateral. For purposes of this Guarantor Security Agreement, the term
"proceeds" includes whatever is receivable or received when Personal Property
Collateral or proceeds thereof is sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes,
without limitation, all rights to payment, including return premiums, with
respect to any insurance relating thereto.
4. Obligations. The obligations secured by this Guarantor
Security Agreement (collectively, the “Guarantor Obligations”) shall consist of
all payment and performance obligations of Guarantor under the Guaranty and
under this Guarantor Security Agreement, whether heretofore, now, or hereafter
made, incurred or created, whether voluntary or involuntary and however arising,
absolute or contingent, liquidated or unliquidated, determined or undetermined,
whether or not such Guarantor Obligations are from time to time reduced, or
extinguished and thereafter increased or incurred, whether Guarantor may be
liable individually or jointly with others, whether or not recovery upon such
Guarantor Obligations may be or hereafter become barred by any statute of
limitations, and whether or not such Guarantor Obligations may be or hereafter
become otherwise unenforceable.
5. Representations and Warranties. Documents, which are
incorporated herein by this reference, Guarantor hereby represents and warrants
that:
(a) Guarantor is the sole owner of and has good and
marketable title to the Personal Property Collateral (or, in the case of
after-acquired Personal Property Collateral, at the time Guarantor acquires
rights in the Personal Property Collateral).
(b) Except as permitted pursuant to the Credit Agreement, no
Person has (or, in the case of after-acquired Personal Property Collateral, at
the time Guarantor acquires rights therein, will have) any right, title, claim
or interest (by way of security interest or other Lien or charge) in, against or
to the Personal Property Collateral.
(c) All information heretofore, herein or hereafter supplied
to the Agent or any Credit Provider by or on behalf of Guarantor with respect to
the Personal Property Collateral is accurate and complete in all material
respects.
(d) Guarantor has delivered to the Agent all instruments,
chattel paper and other items of Personal Property Collateral requested to be
delivered by the Agent in which a security interest is or may be perfected by
possession, together with such additional writings, including, without
limitation, stock transfer powers and assignments, with respect thereto as the
Agent shall request.
6. Covenants and Agreements of Guarantor. In addition to all
covenants and agreements of Guarantor set forth in the other Loan Documents,
which are incorporated herein by this reference, Guarantor hereby agrees, at no
cost or expense to the Agent or any of the Credit Providers:
(a) To do all commercially reasonable acts (other than acts
which are required to be done by the Agent) that may be necessary to maintain,
preserve and protect the Personal Property Collateral and, to the extent such
actions are required to be taken by Guarantor, the first priority, perfected
security interest of the Agent for the benefit of the Credit Providers therein.
(b) Not to use or permit any Personal Property Collateral to
be used unlawfully or in violation of any provision of this Guarantor Security
Agreement, any other agreement with the Agent and/or the Credit Providers
related hereto, or any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on Guarantor or affecting any of the Personal Property
Collateral or any contractual obligation affecting any of the Personal Property
Collateral.
(c) To pay promptly when due all taxes, assessments,
charges, encumbrances and Liens now or hereafter imposed upon or affecting any
Personal Property Collateral.
(d) To appear in and defend any action or proceeding which
may affect its title to or the Agent's interest on behalf of the Credit
Providers in the Personal Property Collateral.
(e) Not to surrender or lose possession of (other than to
the Agent), sell, encumber, lease, rent, or otherwise dispose of or transfer any
Personal Property Collateral or right or interest therein except as expressly
provided herein and in the other Loan Documents, and to keep the Personal
Property Collateral free of all levies and security interests or other Liens or
charges except those permitted under the Credit Agreement or otherwise approved
in writing by the Agent; provided, however, that, unless a Default shall have
occurred and be continuing, Guarantor may, in the ordinary course of business,
sell or lease any Personal Property Collateral consisting of inventory.
(f) To account fully for and promptly deliver to the Agent,
in the form received, all documents, chattel paper, instruments and agreements
constituting Personal Property Collateral hereunder, including, without
limitation, all stock certificates evidencing Pledged Shares, and all following
the occurrence of a Default proceeds of the Personal Property Collateral
received, all endorsed to the Agent or in blank, as requested by the Agent, and
accompanied by such stock powers as may be required by the Agent and until so
delivered all such documents, instruments, agreements and proceeds shall be held
by Guarantor in trust for the Agent for the benefit of the Credit Providers,
separate from all other property of Guarantor.
(g) To keep separate, accurate and complete records of the
Personal Property Collateral and to provide the Agent and each of the Credit
Providers with such records and such other reports and information relating to
the Personal Property Collateral as the Agent or any Credit Provider may
reasonably request from time to time.
(h) To give the Agent thirty (30) days prior written notice
of any change in Guarantor's chief place of business or legal name or trade
name(s) or style(s) referred to in Paragraph 12 below.
(i) To keep the records concerning the Personal Property
Collateral at the location(s) referred to in Paragraph 12 below and not to
remove such records from such location(s) without the prior written consent of
the Agent.
(j) To keep the Personal Property Collateral at the
location(s) referred to in Paragraph 11 below and not to remove the Personal
Property Collateral from such location(s) without the prior written consent of
the Agent.
(k) To keep the Personal Property Collateral in good
condition and repair and not to cause or permit any waste or unusual or
unreasonable depreciation of the Personal Property Collateral.
7. Authorized Action by Secured Party. Guarantor hereby agrees
that following the occurrence and during the continuance of a Guarantor Default
(as defined in Paragraph 10 below), without presentment, notice or demand, and
without affecting or impairing in any way the rights of the Agent with respect
to the Personal Property Collateral, the obligations of Guarantor hereunder or
under the Guaranty or any other Loan Document, the Agent may, but shall not be
obligated to and shall incur no liability to Guarantor, any Credit Provider or
any third party for failure to, take any action which Guarantor is obligated by
this Guarantor Security Agreement to do and to exercise such rights and powers
as Guarantor might exercise with respect to the Personal Property Collateral,
and Guarantor hereby irrevocably appoints the Agent as its attorney-in-fact to
exercise such rights and powers, including without limitation, to:
(a) Collect by legal proceedings or otherwise and endorse,
receive and receipt for all dividends, interest, payments, proceeds and other
sums and property now or hereafter payable on or on account of the Personal
Property Collateral.
(b) Enter into any extension, reorganization, deposit,
merger, consolidation or other agreement pertaining to, or deposit, surrender,
accept, hold or apply other property in exchange for the Personal Property
Collateral.
(c) Insure, process and preserve the Personal Property
Collateral.
(d) Transfer the Personal Property Collateral to its own or
its nominee's name.
(e) Make any compromise or settlement, and take any action
it deems advisable, with respect to the Personal Property Collateral.
(f) Subject to the provisions of Paragraph 8 below, notify
any obligor on any Personal Property Collateral to make payment directly to the
Agent.
Guarantor hereby grants to the Agent for the benefit of the Credit Providers an
exclusive, irrevocable power of attorney, with full power and authority in the
place and stead of Guarantor to take all such action permitted under this
Paragraph 7; provided, however, that the Agent agrees that it shall not exercise
such power of attorney unless there shall have occurred and is continuing a
Guarantor Default. Guarantor agrees to reimburse the Agent upon demand for any
costs and expenses, including, without limitation, attorneys’ fees, the Agent
may incur while acting as Guarantor’s attorney-in-fact hereunder, all of which
costs and expenses are included in the Obligations secured hereby. It is further
agreed and understood between the parties hereto that such care as the Agent
gives to the safekeeping of its own property of like kind shall constitute
reasonable care of the Personal Property Collateral when in the Agent’s
possession; provided, however, that the Agent shall not be required to make any
presentment, demand or protest, or give any notice and need not take any action
to preserve any rights against any prior party or any other person in connection
with the Obligations or with respect to the Personal Property Collateral.
8. Collection of Personal Property Collateral Payments.
(a) Guarantor shall, at its sole cost and expense, endeavor
to obtain payment, when due and payable, of all sums due or to become due with
respect to any Personal Property Collateral ("Personal Property Collateral
Payments" or a "Personal Property Collateral Payment"), including, without
limitation, the taking of such action with respect thereto as the Agent or any
Credit Provider may reasonably request, or, in the absence of such request, as
Guarantor may reasonably deem advisable; provided, however, that Guarantor shall
not, without the prior written consent of the Agent and the Credit Providers,
grant or agree to any rebate, refund, compromise or extension with respect to
any Personal Property Collateral Payment or accept any prepayment on account
thereof other than in the ordinary course of Guarantor's business. Upon the
request of the Agent at the direction of all the Credit Providers following the
occurrence of a Guarantor Default, Guarantor will notify and direct any party
who is or might become obligated to make any Personal Property Collateral
Payment, to make payment thereof to such accounts as the Agent may direct in
writing and to execute all instruments and take all action required by the Agent
to ensure the rights of the Agent for the benefit of the Credit Providers in any
Personal Property Collateral subject to the Federal Assignment of Claims Act of
1940, as amended.
(b) Upon the request of the Agent following the occurrence
of a Guarantor Default, Guarantor will, forthwith upon receipt, transmit and
deliver to the Agent, in the form received, all cash, checks, drafts and other
instruments for the payment of money (properly endorsed where required so that
such items may be collected by the Agent) which may be received by Guarantor at
any time as payment on account of any Personal Property Collateral Payment and
if such request shall be made, until delivery to the Agent, such items will be
held in trust for the Agent and the Credit Providers and will not be commingled
by Guarantor with any of its other funds or property. Thereafter, the Agent is
hereby authorized and empowered to endorse the name of Guarantor on any check,
draft or other instrument for the payment of money received by the Agent on
account of any Personal Property Collateral Payment if the Agent believes such
endorsement is necessary or desirable for purposes of collection.
(c) Guarantor will indemnify and save harmless the Agent
from and against all reasonable liabilities and expenses on account of any
adverse claim asserted against the Agent relating to any moneys received by the
Agent on account of any Personal Property Collateral Payment and such obligation
of Guarantor shall continue in effect after and notwithstanding the discharge of
the Obligations and the release of the security interest granted in Paragraph 2
above.
9. Additional Covenants Regarding Intellectual Property
Collateral.
(a) Guarantor shall not, unless it shall either reasonably
and in good faith determine that such Personal Property Collateral is of
negligible economic value to Guarantor or that there is a valid purpose to do
otherwise:
(1) Permit any Patent Collateral to lapse
or become abandoned or dedicated to the public or otherwise be unenforceable;
(2) (i) Fail to continue to use any of
the Trademark Collateral in order to maintain all of the Trademark Collateral in
full force free from any claim of abandonment for non-use, (ii) fail to maintain
as in the past the quality of products and services offered under all of the
Trademark Collateral, (iii) fail to employ all of the Trademark Collateral
registered with any Federal or state or foreign authority with an appropriate
notice of such registration, (iv) adopt or use any other Trademark which is
confusingly similar or a colorable imitation of any of the Trademark Collateral,
(v) use any of the Trademark Collateral registered with any Federal or state or
foreign authority except for the uses for which registration or application for
registration of all of the Trademark Collateral has been made, or (vi) do or
permit any act or knowingly omit to do any act whereby any of the Trademark
Collateral may lapse or become invalid or unenforceable;
(3) Do or permit any act or knowingly
omit to do any act whereby any of the Copyright Collateral or any of the Trade
Secrets Collateral may lapse or become invalid or unenforceable or placed in the
public domain except upon expiration of the end of an unrenewable term of a
registration thereof.
(b) Guarantor shall notify the Agent immediately if it
knows, or has reason to know, that any application or registration relating to
any material item of the Intellectual Property Collateral may become abandoned
or dedicated to the public or placed in the public domain or invalid or
unenforceable, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any foreign counterpart thereof or any court) regarding Guarantor's
ownership of any of the Intellectual Property Collateral, its right to register
the same or to keep and maintain and enforce the same.
(c) In no event shall Guarantor or any of its agents,
employees, designees or licensees file an application for the registration of
any Intellectual Property Collateral with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, unless it promptly
informs the Agent, and upon request of the Agent, executes and delivers any and
all agreements, instruments, documents and papers as the Agent may reasonably
request to evidence the Agent's security interest in such Intellectual Property
Collateral and the goodwill and general intangibles of Guarantor relating
thereto or represented thereby.
(d) Guarantor shall, contemporaneously herewith, execute and
deliver to the Agent such supplemental agreements for filing in the Patent and
Trademark Office as the Agent may require and shall execute and deliver to the
Agent any other document required to acknowledge or register or perfect the
Agent's interest in any part of the Intellectual Property Collateral.
10. Guarantor Default; Remedies. Upon the occurrence of any of
the following (each, a "Guarantor Default"):
(a) There shall occur a Default under Sections 7.6 or 7.7 of
the Credit Agreement; or
(b) There shall occur a Default under Section 7.16 relating
to the Guaranty or any Guarantor Loan Document executed by Guarantor; or
(c) There shall occur any other Default and the Obligations
shall be declared immediately due and payable;
THEN:
the Agent may, without notice to or demand on Guarantor and in addition to all
rights and remedies available to the Agent and the Credit Providers with respect
to the Obligations, at law, in equity or otherwise, do any one or more of the
following:
(1) Foreclose or otherwise enforce the
Agent's security interest in any manner permitted by law or provided for in this
Guarantor Security Agreement.
(2) Sell, lease or otherwise dispose of
any Personal Property Collateral at one or more public or private sales at the
Agent's place of business or any other place or places, including, without
limitation, any broker's board or securities exchange, whether or not such
Personal Property Collateral is present at the place of sale, for cash or credit
or future delivery, on such terms and in such manner as the Agent may determine.
(3) Recover from Guarantor all costs and
expenses, including, without limitation, reasonable attorneys' fees (including
the allocated cost of internal counsel), incurred or paid by the Agent or any
Credit Provider in exercising any right, power or remedy provided by this
Guarantor Security Agreement.
(4) Require Guarantor to assemble the
Personal Property Collateral and make it available to the Agent at a place to be
designated by the Agent.
(5) Enter onto property where any
Personal Property Collateral is located and take possession thereof with or
without judicial process.
(6) Prior to the disposition of the
Personal Property Collateral, store, process, repair or recondition it or
otherwise prepare it for disposition in any manner and to the extent the Agent
deems appropriate and in connection with such preparation and disposition,
without charge, use any trademark, tradename, copyright, patent or technical
process used by Guarantor.
Guarantor shall be given five (5) Business Days’ prior notice of the time and
place of any public sale or of the time after which any private sale or other
intended disposition of Personal Property Collateral is to be made, which notice
Guarantor hereby agrees shall be deemed reasonable notice thereof. Upon any sale
or other disposition pursuant to this Guarantor Security Agreement, the Agent
shall have the right to deliver, assign and transfer to the purchaser thereof
the Personal Property Collateral or portion thereof so sold or disposed of. Each
purchaser at any such sale or other disposition (including the Agent) shall hold
the Personal Property Collateral free from any claim or right of whatever kind,
including any equity or right of redemption of Guarantor and Guarantor
specifically waives (to the extent permitted by law) all rights of redemption,
stay or appraisal which it has or may have under any rule of law or statute now
existing or hereafter adopted.
11. Administration of the Pledged Shares. In addition to any
provisions of this Guarantor Security Agreement which govern the administration
of the Personal Property Collateral generally, the following provisions shall
govern the administration of the Pledged Shares:
(a) Until there shall have occurred and be continuing a
Guarantor Default, Guarantor shall be entitled to vote or consent with respect
to the Pledged Shares in any manner not inconsistent with this Guarantor
Security Agreement or any document or instrument delivered or to be delivered
pursuant to or in connection with any thereof and to receive all dividends paid
with respect to the Pledged Shares. If there shall have occurred and be
continuing a Guarantor Default and the Agent shall have notified Guarantor that
the Agent desires to exercise its proxy rights with respect to all or a portion
of the Pledged Shares, Guarantor hereby grants to the Agent an irrevocable proxy
for the Pledged Shares pursuant to which proxy the Agent shall be entitled to
vote or consent, in its discretion, and in such event Guarantor agrees to
deliver to the Agent such further evidence of the grant of such proxy as the
Agent may request.
(b) In the event that at any time or from time to time after
the date hereof, Guarantor, as record and beneficial owner of the Pledged
Shares, shall receive or shall become entitled to receive, any dividend or any
other distribution whether in securities or property by way of stock split,
spin-off, split-up or reclassification, combination of shares or the like, or in
case of any reorganization, consolidation or merger, and Guarantor, as record
and beneficial owner of the Pledged Shares, shall thereby be entitled to receive
securities or property in respect of such Pledged Shares, then and in each such
case, Guarantor shall deliver to the Agent and the Agent shall be entitled to
receive and retain all such securities or property as part of the Pledged Shares
as security for the payment and performance of the Obligations; provided,
however, that until there shall have occurred a Guarantor Default, Guarantor
shall be entitled to retain any cash dividends paid on account of the Pledged
Shares.
(c) Upon the occurrence of a Guarantor Default, the Agent is
authorized to sell the Pledged Shares and, at any such sale of any of the
Pledged Shares, if it deems it advisable to do so, to restrict the prospective
bidders or purchasers to persons or entities who (1) will represent and agree
that they are purchasing for their own account, for investment, and not with a
view to the distribution or sale of any of the Pledged Shares; and (2) satisfy
the offeree and purchaser requirements for a valid private placement transaction
under Section 4(2) of the Securities Act of 1933, as amended (the "Act"), and
under Securities and Exchange Commission Release Nos. 33-6383; 34-18524;
35-22407; 39-700; IC-12264; AS-306, or under any similar statute, rule or
regulation. Guarantor agrees that disposition of the Pledged Shares pursuant to
any private sale made as provided above may be at prices and on other terms less
favorable than if the Pledged Shares were sold at public sale, and that the
Agent has no obligation to delay the sale of any Pledged Shares for public sale
under the Act. Guarantor agrees that a private sale or sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner. In the event that the Agent elects to sell the Pledged
Shares, or part of them, and there is a public market for the Pledged Shares, in
a public sale Guarantor shall use its best efforts to register and qualify the
Pledged Shares, or applicable part thereof, under the Act and all state Blue Sky
or securities laws required by the proposed terms of sale and all expenses
thereof shall be payable by Guarantor, including, but not limited to, all costs
of (i) registration or qualification of, under the Act or any state Blue Sky or
securities laws or pursuant to any applicable rule or regulation issued pursuant
thereto, any Pledged Shares, and (ii) sale of such Pledged Shares, including,
but not limited to, brokers' or underwriters' commissions, fees or discounts,
accounting and legal fees, costs of printing and other expenses of transfer and
sale.
(d) If any consent, approval or authorization of any state,
municipal or other governmental department, agency or authority should be
necessary to effectuate any sale or other disposition of the Pledged Shares, or
any part thereof, Guarantor will execute such applications and other instruments
as may be required in connection with securing any such consent, approval or
authorization, and will otherwise use its best efforts to secure the same.
(e) Nothing contained in this Paragraph 11 shall be deemed
to limit the other obligations of Guarantor contained in this Guarantor Security
Agreement or the other Loan Documents and the rights of the Agent and the Credit
Providers hereunder or thereunder.
12. Place of Business; Personal Property Collateral Location;
Records Location. Guarantor represents that its chief place of business is as
set forth on Schedule 3 attached hereto; that the only trade name(s) or style(s)
used by Guarantor are set forth on said Schedule 3; and that, except as
otherwise disclosed to the Agent in writing prior to the date hereof, the
Personal Property Collateral and Guarantor’s records concerning the Personal
Property Collateral are located at its chief place of business.
13. Waiver of Hearing. Guarantor expressly waives to the
extent permitted under applicable law any constitutional or other right to a
judicial hearing prior to the time the Agent takes possession or disposes of the
Personal Property Collateral upon the occurrence of a Guarantor Default.
14. Cumulative Rights. The rights, powers and remedies of the
Agent and any of the Credit Providers under this Guarantor Security Agreement
shall be in addition to all rights, powers and remedies given to the Agent and
any of the Credit Providers by virtue of any statute or rule of law, the Loan
Documents or any other agreement, all of which rights, powers and remedies shall
be cumulative and may be exercised successively or concurrently without
impairing the Agent’s and any of the Credit Providers’ security interest in the
Personal Property Collateral.
15. Waiver. Any forbearance or failure or delay by the Agent
in exercising any right, power or remedy shall not preclude the further exercise
thereof, and every right, power or remedy of the Agent or any of the Credit
Providers shall continue in full force and effect until such right, power or
remedy is specifically waived in a writing executed by the Agent or such other
Secured Party, as applicable. Guarantor waives any right to require any Secured
Party to proceed against any person or to exhaust any Personal Property
Collateral or to pursue any remedy in such Secured Party’s power.
16. Setoff. Guarantor agrees that, as between the Guarantor, on
the one hand, and the Agent and the Credit Providers, on the other hand, the
Agent and each Credit Provider may exercise its rights of setoff with respect to
the Obligations in the same manner as if the Obligations were unsecured.
17. Intellectual Property Collateral. For purposes of this
Guarantor Security Agreement, the following capitalized terms shall have the
following meanings:
"Computer Hardware and Software Collateral" means all of
Guarantor's right, title and interest in all now existing and hereafter created
or acquired:
(a) Computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units, display
terminals, printers, features, computer elements, card readers, tape drives,
hard and soft disk drives, cables, electrical supply hardware, generators, power
equalizers, accessories and all peripheral devices and other related computer
hardware;
(b) Software programs (including both source code, object
code and all related applications and data files), whether owned, licensed or
leased, designed for use on the computers and electronic data processing
hardware described in subparagraph (a) above;
(c) All firmware associated therewith;
(d) All documentation (including flow charts, logic
diagrams, manuals, guides and specifications) with respect to such hardware,
software and firmware described in subparagraph (a) through (c) above; and
(e) All rights with respect to all of the foregoing,
including, without limitation, any and all of Guarantor's copyrights, licenses,
options, warranties, service contracts, program services, test rights, renewal
rights and indemnifications and any substitutions, replacements, additions or
model conversions of any of the foregoing.
"Copyright Collateral" means copyrights and all
semi-conductor chip product mask works of Guarantor, whether statutory or common
law, registered or unregistered, now or hereafter in force throughout the world
including, without limitation, all of Guarantor's right, title and interest in
and to all copyrights and mask works registered in the United States Copyright
Office or anywhere else in the world, and all applications for registration
thereof, whether pending or in preparation, all copyright and mask work
licenses, the right of Guarantor to sue for past, present and future
infringements of any thereof, all rights of Guarantor corresponding thereto
throughout the world, all extensions and renewals of any thereof and all
proceeds of the foregoing, including, without limitation, licenses, royalties,
income, payments, claims damages and proceeds of suit.
"Patent Collateral" means:
(a) All of Guarantor's letters patent and applications for
letters patent throughout the world, including all of Guarantor's patent
applications in preparation for filing anywhere in the world and with the United
States Patent and Trademark Office;
(b) All of Guarantor's patent licenses;
(c) All reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any of the
items described in clauses (a) and (b); and
(d) All proceeds of, and rights associated with, the
foregoing (including license royalties and proceeds of infringements suits), the
right of Guarantor to sue third parties for past, present or future
infringements of any patent or patent application of Guarantor, and for breach
of enforcement of any patent license, and all rights corresponding thereto
throughout the world.
"Trademark Collateral" means:
(a) All of Guarantor's trademarks, trade names, corporate
names, business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of a like nature (all of the foregoing
items in this clause (a) being collectively called a "Trademark"), now existing
anywhere in the world or hereafter adopted or acquired, whether currently in use
or not, all registrations and recordings thereof and all applications in
connection therewith, whether pending or in preparation for filing, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any office or agency of the United States of America or
any State thereof or any foreign country;
(b) All of Guarantor's Trademark licenses;
(c) All reissues, extensions or renewals of any of the items
described in clauses (a) and (b);
(d) All of the goodwill of the business of Guarantor
connected with the use of, and symbolized by the items described in, clauses (a)
and (b, and
(e) All proceeds of, and rights of Guarantor associated
with, the foregoing, including any claim by Guarantor against third parties for
past, present or future infringement or dilution of any Trademark, Trademark
registration or Trademark license, or for any injury to the goodwill associated
with the use of any such Trademark or for breach or enforcement of any Trademark
license.
"Trade Secrets Collateral" means common law and
statutory trade secrets and all other confidential or proprietary or useful
information and all know-how obtained by or used in or contemplated at any time
for use in the business of Guarantor (all of the foregoing being collectively
called a "Trade Secret"), whether or not such Trade Secret has been reduced to a
writing or other tangible form including all documents and things embodying,
incorporating or referring in any way to such Trade Secret, all Trade Secret
licenses, including the right to sue for and to enjoin and to collect damages
for the actual or threatened misappropriation of any Trade Secret and for the
breach or enforcement of any such Trade Secret license.
[Signature Page Following]
EXECUTED as of the day and year first above written.
FRANKLIN COVEY CO.
By:
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Name:
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Title:
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BANK ONE, NA, as Agent
By:
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Name:
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Title:
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1 Initial Pledged Shares
Schedule 2 Existing Deposit Accounts
Schedule 3 Locations of Equipment, Inventory, Places of Business, Chief
Executive Office, and Books and Records and Tradenames
Schedule 1
to Guarantor Security Agreement
INITIAL PLEDGED SHARES
(AS OF THE EFFECTIVE DATE)
COMPANY NAME NO. OF SHARES PERCENTAGE OWNERSHIP INTEREST
[Borrower to provide]
Schedule 2
to Guarantor Security Agreement
DEPOSIT ACCOUNTS
(AS OF THE EFFECTIVE DATE)
Institution where Account is Held Account Number
[Borrower to provide]
Schedule 3
to Guarantor Security Agreement
LOCATIONS OF EQUIPMENT, INVENTORY, PLACES OF BUSINESS, CHIEF EXECUTIVE OFFICE
AND BOOKS AND RECORDS AND TRADENAMES
[BORROWER TO PROVIDE]
EXHIBIT E: FORM OF
GUARANTY
THIS GUARANTY (the “Guaranty”) is made and dated as of 10th day of July,
2001, by ________________________, a______________ corporation (“Guarantor”), in
favor of BANK ONE, NA (“Bank One”), as agent (in such capacity, the “Agent”) for
itself and the other Credit Providers (as that term and capitalized terms not
otherwise defined herein are defined in) that certain Credit Agreement dated of
even date herewith by and among Franklin Covey Co. (“Borrower”), the Lenders
from time to time party thereto, Bank One, as the Agent for the Lenders, Bank
One, as the LC Issuer, and Zions First National Bank, as the Swing Line Lender
(as amended, extended and replaced from time to time, the “Credit Agreement”)).
RECITALS
A. Pursuant to the Credit Agreement the Lenders have agreed to extend
credit to Borrower from time to time.
B. As a condition precedent to the Lenders’ obligation to extend
credit under the Credit Agreement and for certain of the Lenders to enter into
Rate Management Transactions with Borrower, the Guarantor is required to execute
and deliver to the Agent for the benefit of the Credit Providers this Guaranty
and, as collateral security for the payment and performance by Guarantor of its
obligations hereunder, Guarantor is required to execute and deliver that certain
Guarantor Security Agreement of even date herewith, and to grant to the Agent
and to create a security interest for the benefit of the Collateral Providers in
certain property of Guarantor, as hereinafter provided.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor hereby agrees as follows:
AGREEMENT
1. Guarantor hereby absolutely and unconditionally guarantees the
payment when due, upon maturity, acceleration or otherwise, of all Obligations,
including in all cases, whether heretofore, now, or hereafter made, incurred or
created, whether voluntary or involuntary and however arising, absolute or
contingent, liquidated or unliquidated, determined or undetermined, whether or
not such Obligations are from time to time reduced, or extinguished and
thereafter increased or incurred, whether the Company may be liable individually
or jointly with others, whether or not recovery upon such Obligations may be or
hereafter become barred by any statute of limitations, and whether or not such
Obligations may be or hereafter become otherwise unenforceable.
2. Guarantor hereby absolutely and unconditionally guarantees the
payment of the Obligations, whether or not due or payable by the Company, upon:
(a) the dissolution, insolvency or business failure of, or any assignment for
benefit of creditors by, or commencement of any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceedings by or against, either
the Company or Guarantor, or (b) the appointment of a receiver for, or the
attachment, restraint of or making or levying of any order of court or legal
process affecting, the property of either the Company or Guarantor, and
unconditionally promises to pay such Obligations to the Agent for the benefit of
Credit Providers, or order, on demand, in lawful money of the United States.
3. The liability of Guarantor hereunder is exclusive and independent
of any security for or other guaranty of the Obligations, whether executed by
Guarantor or by any other party, and the liability of Guarantor hereunder is not
affected or impaired by (a) any direction of application of payment by the
Company or by any other party, or (b) any other guaranty, undertaking or maximum
liability of Guarantor or of any other party as to the Obligations, or (c) any
payment on or in reduction of any such other guaranty or undertaking, or (d) any
revocation or release of any obligations of any other guarantor of the
Obligations, or (e) any dissolution, termination or increase, decrease or change
in personnel of Guarantor, or (f) any payment made to the Agent or any Credit
Provider on the Obligations which the Agent or any Credit Provider repays to the
Company pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and Guarantor waives any right to
the deferral or modification of Guarantor’s obligations hereunder by reason of
any such proceeding.
4. (a) The obligations of Guarantor hereunder are independent of
the obligations of the Company with respect to the Obligations, and a separate
action or actions may be brought and prosecuted against Guarantor whether or not
action is brought against the Company and whether or not the Company be joined
in any such action or actions. Guarantor waives, to the fullest extent permitted
by law, the benefit of any statute of limitations affecting its liability
hereunder or the enforcement thereof. Any payment by the Company or other
circumstance which operates to toll any statute of limitations as to the Company
shall operate to toll the statute of limitations as to Guarantor.
(b) All payments made by Guarantor under this Guaranty shall
be made without set-off or counterclaim and free and clear of and without
deductions for any present or future taxes, fees, withholdings or conditions of
any nature (“Taxes”). Guarantor shall pay any such Taxes, including Taxes on any
amounts so paid, and will promptly furnish any Credit Provider copies of any tax
receipts or such other evidence of payment as such Credit Provider may require.
5. Guarantor authorizes the Agent and Credit Providers (whether or
not after termination of this Guaranty), without notice or demand (except as
shall be required by applicable statute and cannot be waived), and without
affecting or impairing its liability hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate or otherwise change the time for
payment of, or otherwise change the terms of Obligations or any part thereof,
including increase or decrease of the rate of interest thereon; (b) take and
hold security for the payment of this Guaranty or the Obligations and exchange,
enforce, waive and release any such security; (c) apply such security and direct
the order or manner of sale thereof as the Agent and Credit Providers in their
discretion may determine; and (d) release or substitute any one or more
endorsers, guarantors, the Company or other obligors. The Agent and Credit
Providers may, without notice to or the further consent of the Company or
Guarantor, assign this Guaranty in whole or in part to any person acquiring an
interest in the Obligations.
6. It is not necessary for the Agent or any Credit Provider to
inquire into the capacity or power of the Company or the officers acting or
purporting to act on their behalf, and Obligations made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.
7. Guarantor waives any right to require the Agent or any Credit
Provider to (a) proceed against the Company or any other party; (b) proceed
against or exhaust any security held from the Company; or (c) pursue any other
remedy whatsoever. Guarantor waives any personal defense based on or arising out
of any personal defense of the Company other than payment in full of the
Obligations, including, without limitation, any defense based on or arising out
of the disability of either the Company, or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Company other than payment in full of the Obligations.
The Agent and Credit Providers may, at their election, foreclose on any security
held for the Obligations by one or more judicial or nonjudicial sales, or
exercise any other right or remedy they may have against the Company, or any
security, without affecting or impairing in any way the liability of Guarantor
hereunder except to the extent the Obligations have been paid. Guarantor waives
all rights and defenses arising out of an election of remedies, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for a guaranteed obligation, has destroyed Guarantor’s rights of subrogation and
reimbursement against the principal.
8. Guarantor hereby waives any claim or other rights which Guarantor
may now have or may hereafter acquire against the Company or any other guarantor
of all or any of the Obligations that arise from the existence or performance of
Guarantor’s obligations under this Guaranty or any other of the Loan Documents
(all such claims and rights being referred to as the “Guarantor’s Conditional
Rights”), including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, or indemnification, any right to
participate in any claim or remedy which the Agent or any Credit Provider has
against the Company or any collateral which the Agent or any Credit Provider now
has or hereafter acquires for the Obligations, whether or not such claim, remedy
or right arises in equity or under contract, statute or common law, by any
payment made hereunder or otherwise, including, without limitation, the right to
take or receive from the Company, directly or indirectly, in cash or other
property or by setoff or in any other manner, payment or security on account of
such claim or other rights. If, notwithstanding the foregoing provisions, any
amount shall be paid to Guarantor on account of Guarantor’s Conditional Rights
and either (a) such amount is paid to Guarantor at any time when the Obligations
shall not have been paid or performed in full, or (b) regardless of when such
amount is paid to Guarantor any payment made by the Company to the Agent or any
Credit Provider is at any time determined to be a preferential payment, then
such amount paid to Guarantor shall be deemed to be held in trust for the
benefit of Credit Providers and shall forthwith be paid to the Agent for the
benefit of Credit Providers to be credited and applied upon the Obligations,
whether matured or unmatured, in such order and manner as Credit Providers, in
their sole discretion, shall determine. To the extent that any of the provisions
of this Paragraph 8 shall not be enforceable, Guarantor agrees that until such
time as the Obligations have been paid and performed in full and the period of
time has expired during which any payment made by the Company or Guarantor may
be determined to be a preferential payment, Guarantor’s Conditional Rights to
the extent not validly waived shall be subordinate to the Credit Providers’
right to full payment and performance of the Obligations and Guarantor shall not
seek to enforce Guarantor’s Conditional Rights during such period.
9. 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
Obligations. Guarantor assumes all responsibility for being and keeping itself
informed of either the Company’s financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Obligations and
the nature, scope and extent of the risks which Guarantor assumes and incurs
hereunder, and agrees that neither the Agent nor any Credit Provider shall have
a duty to advise Guarantor of information known to it regarding such
circumstances or risks.
10. In addition to the Obligations, Guarantor agrees to pay
reasonable attorneys' fees and all other reasonable costs and expenses incurred
by the Agent and Credit Providers in enforcing this Guaranty in any action or
proceeding arising out of or relating to this Guaranty.
11. Guarantor hereby represents and warrants to the Agent and each
Credit Provider that:
(a) Guarantor has reviewed and approved the Credit Agreement
and the other Loan Documents.
(b) All representations and warranties relating to Guarantor
set forth in the Credit Agreement are accurate and complete in all respects.
12. Guarantor hereby covenants and agrees with the Agent and the
Credit Providers that it will cooperate with the Company to facilitate the
Company’s compliance with all the covenants set forth in the Credit Agreement.
Guarantor further agrees to execute any and all further documents, instruments
and agreements as the Agent from time to time reasonably requests to evidence
Guarantor’s obligations hereunder.
13. This Guaranty shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to its choice of
law rules.
14. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY
BE BROUGHT IN THE COURTS OF THE UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN NEW YORK NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY,
GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. GUARANTOR IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
GUARANTY. GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
15. GUARANTOR, AND BY ACCEPTING THIS GUARANTY THE COLLATERAL AGENT
FOR ITSELF AND ON BEHALF OF THE CREDIT PROVIDERS, WAIVES ITS RIGHTS TO A TRIAL
BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED
TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST ANY
OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
GUARANTOR AND THE AGENT FOR ITSELF AND ON BEHALF OF THE CREDIT PROVIDERS AGREES
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, GUARANTOR FURTHER AGREES THAT ITS RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY.
[Signature page following]
IN WITNESS WHEREOF, this Guaranty has been executed as of the date
first above written.
FRANKLIN COVEY CO., a Utah Corporation
By: J. SCOTT NIELSEN
--------------------------------------------------------------------------------
Name: J. SCOTT NIELSEN
--------------------------------------------------------------------------------
Title: Senior Vice President - Finance
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EXHIBIT F-1: FORM OF
REVOLVING LOANS NOTE
[Date]
FRANKLIN COVEY CO., a Utah corporation (the "Borrower"), promises to
pay to the order of ____________________________________ (the “Lender”) the
Lender’s Pro Rata Share of the aggregate unpaid principal amount of all
Revolving Loans made to the Borrower pursuant to Article II of the Agreement (as
hereinafter defined), in immediately available funds at the main office of Bank
One, NA in Chicago, Illinois, as Agent, together with interest on the unpaid
principal amount hereof at the rates and on the dates set forth in the
Agreement. The Borrower shall pay the principal of and accrued and unpaid
interest on the Revolving Loans in full on the Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of Lender's Pro Rata Share of each Revolving Loan and the
date and amount of each principal payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Credit Agreement dated as of July 10, 2001 (which, as it may be
amended or modified and in effect from time to time, is herein called the
“Agreement”), among the Borrower, the lenders party thereto, including the
Lender, the LC Issuer, the Swing Line Lender and Bank One, NA, as Agent, to
which Agreement reference is hereby made for a statement of the terms and
conditions governing this Note, including the terms and conditions under which
this Note may or must be prepaid or its maturity date accelerated. This Note is
secured pursuant to the Loan Documents and guaranteed pursuant to the
Guaranties, all as more specifically described in the Agreement, and reference
is made thereto for a statement of the terms and provisions thereof. Capitalized
terms used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
FRANKLIN COVEY CO., a Utah Corporation
By: J. SCOTT NIELSEN
--------------------------------------------------------------------------------
Name: J. SCOTT NIELSEN
--------------------------------------------------------------------------------
Title: Senior Vice President - Finance
--------------------------------------------------------------------------------
SCHEDULE OF REVOLVING LOANS AND PAYMENTS OF PRINCIPAL
TO
REVOLVING LOANS NOTE OF FRANKLIN COVEY CO.
DATED ,
Pro Rata Share of
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Revolving Loan Period Paid Balance
----------------------------------------------------------------------------------------------------------------
EXHIBIT F-2: FORM OF
TERM LOAN NOTE
[Date]
FRANKLIN COVEY CO., a Utah corporation_ (the "Borrower"), promises to
pay to the order of ___________________________________ (the “Lender”) the
Lender’s Pro Rata Share of the unpaid principal amount of the Term Loan made to
the Borrower pursuant to Article II of the Agreement (as hereinafter defined),
in immediately available funds at the main office of Bank One, NA in Chicago,
Illinois, as Agent, together with interest on the unpaid principal amount hereof
at the rates and on the dates set forth in the Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of Lender's Pro Rata Share of the Term Loan and the date and
amount of each principal payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Credit Agreement dated as of July 10, 2001 (which, as it may be
amended or modified and in effect from time to time, is herein called the
“Agreement”), among the Borrower, the lenders party thereto, including the
Lender, the LC Issuer, the Swing Line Lender and Bank One, NA, as Agent, to
which Agreement reference is hereby made for a statement of the terms and
conditions governing this Note, including the terms and conditions under which
this Note may or must be prepaid or its maturity date accelerated. This Note is
secured pursuant to the Loan Documents and guaranteed pursuant to the
Guaranties, all as more specifically described in the Agreement, and reference
is made thereto for a statement of the terms and provisions thereof. Capitalized
terms used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
FRANKLIN COVEY CO., a Utah Corporation
By: J. SCOTT NIELSEN
--------------------------------------------------------------------------------
Name: J. SCOTT NIELSEN
--------------------------------------------------------------------------------
Title: Senior Vice President - Finance
--------------------------------------------------------------------------------
SCHEDULE OF PAYMENTS OF TERM LOAN PRINCIPAL
TO
TERM LOAN NOTE OF FRANKLIN COVEY CO.
DATED ,
Pro Rata Share of
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Term Loan Period Paid Balance
----------------------------------------------------------------------------------------------------------------
EXHIBIT F-3: FORM OF
SWING LINE LOANS NOTE
[Date]
FRANKLIN COVEY CO., a Utah corporation_ (the "Borrower"), promises to
pay to the order of ____________________________________ (the “Swing Line
Lender”) the aggregate unpaid principal amount of all Swing Line Loans made by
the Swing Line Lender to the Borrower pursuant to Article II of the Agreement
(as hereinafter defined), in immediately available funds at the main office of
Bank One, NA in Chicago, Illinois, as Agent, together with interest on the
unpaid principal amount hereof at the rates and on the dates set forth in the
Agreement. The Borrower shall pay the principal of and accrued and unpaid
interest on the Swing Line Loans in full on the Facility Termination Date.
The Swing Line Lender shall, and is hereby authorized to, record on the
schedule attached hereto, or to otherwise record in accordance with its usual
practice, the date and amount of each Swing Line Loan and the date and amount of
each principal payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Credit Agreement dated as of July 10, 2001 (which, as it may be
amended or modified and in effect from time to time, is herein called the
“Agreement”), among the Borrower, the lenders party thereto, including the Swing
Line Lender, the LC Issuer, the Swing Line Lender and Bank One, NA, as Agent, to
which Agreement reference is hereby made for a statement of the terms and
conditions governing this Note, including the terms and conditions under which
this Note may or must be prepaid or its maturity date accelerated. This Note is
secured pursuant to the Loan Documents and guaranteed pursuant to the
Guaranties, all as more specifically described in the Agreement, and reference
is made thereto for a statement of the terms and provisions thereof. Capitalized
terms used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
FRANKLIN COVEY CO., a Utah Corporation
By: J. SCOTT NIELSEN
--------------------------------------------------------------------------------
Name: J. SCOTT NIELSEN
--------------------------------------------------------------------------------
Title: Senior Vice President - Finance
--------------------------------------------------------------------------------
SCHEDULE OF SWING LINE LOANS AND PAYMENTS OF PRINCIPAL
TO
SWING LINE LOANS NOTE OF FRANKLIN COVEY CO.
DATED ,
Principal Principal
Amount of Amount Interest Unpaid
Date Swing Line Loan Paid Paid Balance
----------------------------------------------------------------------------------------------------------------
EXHIBIT G: FORM OF OPINION OF COUNSEL TO BORROWER AND GUARANTORS
,
The Agent and the Lenders who are parties to the Credit Agreement described
below.
Gentlemen/Ladies:
We are counsel for FRANKLIN COVEY CO., a Utah corporation (the
“Borrower”), and each of the Initial Guarantors under (and as the term “Initial
Guarantors” and other capitalized terms used herein and not otherwise defined
herein are defined in) that certain Credit Agreement dated as of July 10, 2001
among the Borrower, Bank One, NA (“Bank One”) and the other Lenders from time to
time party thereto, Bank One, as the Agent for the Lenders, Bank One, as the LC
Issuer, and Zions First National Bank, as the Swing Line Lender, and have
represented the Borrower and the Initial Guarantors (collectively and severally,
the “Credit Parties”) in connection with its execution and delivery of the
Credit Agreement and the other Loan Documents and providing for Revolving Loans
and Facility LCs in an aggregate principal amount not exceeding $70,000,000 at
any one time outstanding and a Term Loan in an amount not to exceed $30,000,000.
All capitalized terms used in this opinion and not otherwise defined herein
shall have the meanings attributed to them in the Agreement.
We have examined each of the Credit Parties’ **[describe constitutive
documents of each of the Credit Parties and appropriate evidence of authority to
enter into the transaction]**, the Loan Documents and such other matters of fact
and law which we deem necessary in order to render this opinion. Based upon the
foregoing, it is our opinion that:
l. Each of the Borrower and its Subsidiaries is a corporation,
partnership or limited liability company duly and properly incorporated or
organized, as the case may be, validly existing and (to the extent such concept
applies to such entity) in good standing under the laws of its jurisdiction of
incorporation or organization and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted.
2. The execution and delivery by each of the Credit Parties of the
Loan Documents to which it is a party and the performance by such Credit Party
of its obligations thereunder have been duly authorized by proper corporate
proceedings on the part of such Credit Party and will not:
(a) require any consent of such Credit Party's shareholders
or members (other than any such consent as has already been given and remains in
full force and effect);
(b) violate (i) any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Borrower or any of its
Subsidiaries or (ii) the Borrower's or any Subsidiary's articles or certificate
of incorporation, partnership agreement, certificate of partnership, articles or
certificate of organization, by-laws, or operating or other management
agreement, as the case may be, or (iii) the provisions of any indenture,
instrument or agreement to which the Borrower or any of its Subsidiaries is a
party or is subject, or by which it, or its Property, is bound, or conflict with
or constitute a default thereunder; or
(c) result in, or require, the creation or imposition of any
Lien in, of or on the Property of the Borrower or a Subsidiary pursuant to the
terms of any indenture, instrument or agreement binding upon the Borrower or any
of its Subsidiaries (other than Liens created in favor of the Agent for the
benefit of the Credit Providers under the Loan Documents).
3. The Loan Documents to which each of the Credit Parties is a party
have been duly executed and delivered by such Credit Party and constitute legal,
valid and binding obligations of such Credit Party enforceable against such
Credit Party in accordance with their terms except to the extent the enforcement
thereof may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally and subject also to the availability
of equitable remedies if equitable remedies are sought.
4. There is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the best of our knowledge after due
inquiry, threatened against the Borrower or any of its Subsidiaries which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect.
5. No order, consent, adjudication, approval, license, authorization,
or validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by the Borrower or any of its
Subsidiaries, is required to be obtained by any of the Credit Parties in
connection with the execution and delivery of the Loan Documents to which it is
party, the borrowings under the Credit Agreement, the payment and performance by
such Credit Party of its obligations under the Loan Documents to which it is
party, or the legality, validity, binding effect or enforceability of any of the
Loan Documents.
6. The provisions of the Loan Documents are sufficient to create in
favor of the Agent for the benefit of the Credit Providers, a security interest
in all right, title and interest of the Credit Parties executing such Loan
Documents in those items and types of collateral described in the Loan Documents
in which a security interest may be created under Article 9 of the Uniform
Commercial Code as in effect on the date hereof in all applicable jurisdictions.
Financing statements on Form UCC-1‘s have been duly executed by each of the
Credit Parties and have been duly filed in each filing office indicated in
Exhibit A hereto under the Uniform Commercial Code in effect in each state in
which said filing offices are located. The description of the collateral set
forth in said financing statements is sufficient to perfect a security interest
in the items and types of collateral described therein in which a security
interest may be perfected by the filing of a financing statement under the
Uniform Commercial Code as in effect in such states. Such filings are sufficient
to perfect the security interest created by the Loan Documents in all right,
title and interest of the Credit Parties in those items and types of collateral
described in the Loan Documents in which a security interest may be perfected by
the filing of a financing statement under the Uniform Commercial Code in such
states, except that we express no opinion as to personal property affixed to
real property in such manner as to become a fixture under the laws of any state
in which the collateral may be located and we call your attention to the fact
that the security interest granted under the Loan Documents in certain of such
collateral may not be perfected by filing financing statements under the Uniform
Commercial Code.
6. This opinion may be relied upon by the Agent, the LC Issuer, the
Swing Line Lender, the Lenders and their participants, assignees and other
transferees.
Very truly yours,
EXHIBIT H: FORM OF MONEY TRANSFER INSTRUCTIONS
To Bank One, NA,
as Agent (the "Agent") under the Credit Agreement
Described Below.
Re: Credit Agreement, dated as of July 10, 2001 (as the same may be amended or
modified, the “Credit Agreement”), among Franklin Covey Co. (the “Borrower”),
the Lenders named therein and the Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned thereto in the Credit
Agreement.
The Agent is specifically authorized and directed to act upon the
following standing money transfer instructions with respect to the proceeds of
Loans or other extensions of credit from time to time until receipt by the Agent
of a specific written revocation of such instructions by the Borrower, provided,
however, that the Agent may otherwise transfer funds as hereafter directed in
writing by the Borrower in accordance with Section 13.1 of the Credit Agreement
or based on any telephonic notice made in accordance with Section 2.14 of the
Credit Agreement.
Facility Identification Number(s): 8998248
Customer/Account Name: Franklin Covey Co.
Transfer Funds To: Zions First National Bank--Commercial Banking Division
10 E. South Temple, Suite 200
Salt Lake City, Utah 84133
For Account No. 024-17362-7
Reference/Attention To Kathy Stark/ Jim C. Stanchfield
Authorized Officer (Customer Representative) Date
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(Please Print)
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Signature
Bank Officer Name
--------------------------------------------------------------------------------
Date
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(Please Print)
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Signature
(Deliver Completed Form to Credit Support Staff For Immediate Processing)
EXHIBIT I: FORM OF ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
(the "Assignor") and (the "Assignee") is dated
as of , 20 . The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, modified, renewed or extended from time
to time is herein called the "Credit Agreement") described in Item 1 of Schedule
1 attached hereto ("Schedule 1"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to them in the
Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns
to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor’s rights and obligations under the
Credit Agreement and the other Loan Documents, such that after giving effect to
such assignment the Assignee shall have purchased pursuant to this Assignment
Agreement the percentage interest specified in Item 3 of Schedule 1 of all
outstanding rights and obligations under the Credit Agreement and the other Loan
Documents relating to the facilities listed in Item 3 of Schedule 1. The
aggregate Commitment (or Loans, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in Item 4 of
Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
(the “Effective Date”) shall be the later of the date specified in Item 5 of
Schedule 1 or two Business Days (or such shorter period agreed to by the Agent)
after this Assignment Agreement, together with any consents required under the
Credit Agreement, are delivered to the Agent. In no event will the Effective
Date occur if the payments required to be made by the Assignee to the Assignor
on the Effective Date are not made on the proposed Effective Date.
4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment
of Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date,
the amount agreed to by the Assignor and the Assignee. On and after the
Effective Date, the Assignee shall be entitled to receive from the Agent all
payments of principal, interest and fees with respect to the interest assigned
hereby. The Assignee will promptly remit to the Assignor any interest on Loans
and fees received from the Agent which relate to the portion of the Commitment
or Loans assigned to the Assignee hereunder for periods prior to the Effective
Date and not previously paid by the Assignee to the Assignor. In the event that
either party hereto receives any payment to which the other party hereto is
entitled under this Assignment Agreement, then the party receiving such amount
shall promptly remit it to the other party hereto.
5. RECORDATION FEE. The Assignor and Assignee each agree to pay
one-half of the recordation fee required to be paid to the Agent in connection
with this Assignment Agreement unless otherwise specified in Item 6 of Schedule
1.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR’S
LIABILITY. The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder, (ii) such
interest is free and clear of any adverse claim created by the Assignor and
(iii) the execution and delivery of this Assignment Agreement by the Assignor is
duly authorized. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor makes
no other representation or warranty of any kind to the Assignee. Neither the
Assignor nor any of its officers, directors, employees, agents or attorneys
shall be responsible for (i) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectability of any Loan Document,
including without limitation, documents granting the Assignor and the other
Lenders a security interest in assets of the Borrower or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower or any guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting any of the
property, books or records of the Borrower, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee
(i) confirms that it has received a copy of the Credit Agreement, together with
copies of the financial statements requested by the Assignee and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment Agreement, (ii) agrees that
it will, independently and without reliance upon the Agent, the Assignor or any
other Lender and based on such documents and information at it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, (iii) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, (iv) confirms
that the execution and delivery of this Assignment Agreement by the Assignee is
duly authorized, (v) agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Loan Documents are required to
be performed by it as a Lender, (vi) agrees that its payment instructions and
notice instructions are as set forth in the attachment to Schedule 1, (vii)
confirms that none of the funds, monies, assets or other consideration being
used to make the purchase and assumption hereunder are “plan assets” as defined
under ERISA and that its rights, benefits and interests in and under the Loan
Documents will not be “plan assets” under ERISA, (viii) agrees to indemnify and
hold the Assignor harmless against all losses, costs and expenses (including,
without limitation, reasonable attorneys’ fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee’s
non-performance of the obligations assumed under this Assignment Agreement, and
(ix) if applicable, attaches the forms prescribed by the Internal Revenue
Service of the United States certifying that the Assignee is entitled to receive
payments under the Loan Documents without deduction or withholding of any United
States federal income taxes.
8. GOVERNING LAW. This Assignment Agreement shall be governed by
the internal law, and not the law of conflicts, of the State of Illinois.
9. NOTICES. Notices shall be given under this Assignment Agreement
in the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth in the attachment to Schedule 1.
10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement
may be executed in counterparts. Transmission by facsimile of an executed
counterpart of this Assignment Agreement shall be deemed to constitute due and
sufficient delivery of such counterpart and such facsimile shall be deemed to be
an original counterpart of this Assignment Agreement.
IN WITNESS WHEREOF, the duly authorized officers of the parties
hereto have executed this Assignment Agreement by executing Schedule 1 hereto as
of the date first above written.
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
2. Date of Assignment Agreement: , 200_
------------- --
3. Amounts (As of Date of Item 2 above):
Facility Facility Facility Facility
1* 2* 3* 4*
-------- --------- --------- --------
a. Assignee's percentage
of each Facility purchased
under the Assignment
Agreement** % % % %
-------- -------- --------- -------- -
b. Amount of
each Facility
purchased
under the Assignment
Agreement*** $ $ $
-------- -------- --------
$
---------
4. Assignee's Commitment (or Loans
with respect to terminated
Commitments) purchased
hereunder: $
-----------------
5. Proposed Effective Date:
---------------------------
6. Non-standard Recordation Fee
Arrangement N/A***
[Assignor/Assignee
to pay 100% of fee]
[Fee waived by Agent]
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
------------------------------------------------- -------------------------------------------------
Title: Title:
---------------------------------------------- ----------------------------------------------
ACCEPTED AND CONSENTED TO**** BY ACCEPTED AND CONSENTED TO**** BY
[NAME OF BORROWER] [NAME OF AGENT]
By: By:
------------------------------------------------- -------------------------------------------------
Title: Title:
---------------------------------------------- ----------------------------------------------
* Insert specific facility names per Credit Agreement
** Percentage taken to 10 decimal places
*** If fee is split 50-50, pick N/A as option
**** Delete if not required by Credit Agreement
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
ADMINISTRATIVE INFORMATION SHEET
--------------------------------
Attach Assignor's Administrative Information Sheet, which must
include notice addresses for the Assignor and the Assignee
(Sample form shown below)
ASSIGNOR INFORMATION
--------------------
Contact:
-------
Name: Telephone No.:
------------------------------------------------ -----------------------------
Fax No.: Telex No.:
-------------------------------------------- ------------------------------------------
Answerback:
-----------------------------------------
Payment Information:
--------------------
Name & ABA # of Destination Bank:
-------------------------------------------------------------
Account Name & Number for Wire Transfer:
-----------------------------------------------------
Other Instructions:
------------------------------------------------------------------------------------------------
Address for Notices for Assignor:
-------------------------------- ----------------------------------------------------------------------
ASSIGNEE INFORMATION
--------------------
Credit Contact:
--------------
Name: Telephone No.:
------------------------------------------------ -----------------------------
Fax No.: Telex No.:
-------------------------------------------- ------------------------------------------
Answerback:
-----------------------------------------
Key Operations Contacts:
-----------------------
Booking Installation: Booking Installation:
-------------------------------- --------------------------------
Name: Name:
------------------------------------------------ ------------------------------------------------
Telephone No.: Telephone No.:
------------------------------ ------------------------------
Fax No.: Fax No.:
-------------------------------------------- ------------------------------------
Telex No.: Telex No.:
------------------------------------------ -------------------------------------------
Answerback: Answerback:
------------------------------------------ ------------------------------------------
Payment Information:
--------------------
Name & ABA # of Destination Bank:
-------------------------------------------------------------
Account Name & Number for Wire Transfer:
-----------------------------------------------------
Other Instructions:
------------------------------------------------------------------------------------------------
Address for Notices for Assignee:
-------------------------------- ----------------------------------------------------------------------
BANK ONE INFORMATION
--------------------
Assignee will be called promptly upon receipt of the signed agreement.
Initial Funding Contact: Subsequent Operations Contact:
----------------------- -----------------------------
Name: Name:
-------------------------- --------------------------------------
Telephone No.: (312) Telephone No.: (312)
--------------------- -----------------------------
Fax No.: (312) Fax No.: (312)
--------------------------- -----------------------------------
Bank One Telex No.: 190201 (Answerback: FNBC UT)
------------------------------
Initial Funding Standards:
-------------------------
Libor - Fund 2 days after rates are set.
Bank One Wire Instructions: Bank One, NA, ABA # 071000013
--------------------------
LS2 Incoming Account # 481152860000
Ref:________________
Address for Notices for Bank One: 1 Bank One Plaza, Chicago, IL 60670
--------------------------------
Attn: Agency Compliance Division, Suite IL1-0353
Fax No. (312) 732-2038 or (312) 732-4339
SCHEDULE 5.7: LITIGATION DISCLOSURE
NONE.
SCHEDULE 5.8: SUBSIDIARIES, OWNERSHIP, INVESTMENT, ETC.
-----------------------------------------------------------------------------------------------------------------
SUBSIDIARY NAME JURISDICTION OF BORROWER'S PERCENTAGE NAME AND PERCENTAGE OWNERSHIP OF
ORGANIZATION OWNERSHIP OTHER OWNERS
-----------------------------------------------------------------------------------------------------------------
DOMESTIC
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Argentina, Utah 100%
Inc.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Asia, Inc. Utah 100%
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Brazil, Inc. Utah 100%
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Catalog Utah 100%
Sales, Inc.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Client Utah 100%
Sales, Inc.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Coaching, LLC Delaware Franklin Covey Client Sales, Inc. -
50% AMS - 50%
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Utah 100%
International, Inc.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Marketing, Utah 0% Franklin Covey Services, L.L.C. - 99%
Ltd. Franklin Development Corporation - 1%
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Mexico, Inc. Utah 100%
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Printing, Utah 100%
Inc.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Product Utah 100%
Sales, Inc.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Services, Utah 0% Franklin Covey Client Sales, Inc. -
L.L.C. 99% Franklin Development Corporation
- 1%
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Travel, Inc. Utah 100%
-----------------------------------------------------------------------------------------------------------------
Franklin Development Utah 100%
Corporation
-----------------------------------------------------------------------------------------------------------------
Franklin Planner.com, Inc. Utah 90% Michael Barlow - 5%; Scot Robinson -
5%
-----------------------------------------------------------------------------------------------------------------
McCulley/Cuppan LLC Utah 100%
-----------------------------------------------------------------------------------------------------------------
Premier Agendas, Inc. Washington 100%
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
FOREIGN
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Brasil, Ltda. Brazil 100%
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Canada, Ltd. Canada 100%
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Cayman British West Indies 100%
Islands, Ltd.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey de Mexico S. Mexico 100%
de R.L. de C.V.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Europe, Ltd. United Kingdom 100%
-----------------------------------------------------------------------------------------------------------------
Franklin Covey France France (applied) 100%
S.A.R.L.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Germany Germany 100%
G.m.b.H.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Japan Co. Japan 100%
Ltd.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Ltd. New Zealand 100%
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Middle East, Bahrain 100%
WLL
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Netherlands Netherlands 100%
B.V.
-----------------------------------------------------------------------------------------------------------------
Franklin Covey Pty Ltd. Australia 100%
-----------------------------------------------------------------------------------------------------------------
P.E.A.K. Canada 0% Premier Agendas, Inc. - 100%
-----------------------------------------------------------------------------------------------------------------
Premier School Agendas, Ltd. Canada 0% Franklin Covey Canada, Ltd. - 100%
-----------------------------------------------------------------------------------------------------------------
SCHEDULE 5.14: EXISTING LIENS
----------------------------------------------------------------------------------------------------------------------------
REAL PROPERTY LIENS
----------------------------------------------------------------------------------------------------------------------------
Property Address/Property Location Lien Holder
--------- ------------------------- -----------
Description
-----------
----------------------------------------------------------------------------------------------------------------------------
1. Hancock 2620 S. Decker Lake Blvd., SLC, UT United of Omaha (Loan # 80-002021-5); CB Richards Ellis
Building, SL (Purchase Agreement dated June 26, 2001); Electronic Data
Campus Systems Corporation (Lease dated 6/29/01)
------------------------------------------------------------
Madison 2580 S. Decker Lake Blvd., SLC, UT
Building, SL
Campus
----------------------------------------------------------------------------------------------------------------------------
2. Patrick Henry 2607 S. Decker Lake Blvd., SLC, UT United of Omaha (Loan # 80-001999-8); Approx. 1,000 square
Building, SL feet under Lease w/ Franklin Covey Coaching, LLC for mail room
Campus (which will be moved to Item 1 above in a few months)
----------------------------------------------------------------------------------------------------------------------------
3. Washington/Jeff2200nWest Parkway Blvd., SLC, UT Zions Bank (Loan Acct #3424774-4001)
Building
----------------------------------------------------------------------------------------------------------------------------
4. Franklin 2650 S. Decker Lake Blvd., SLC, UT Franklin Covey Coaching, LLC (Lease dated 9/1/00)
Building, SL
Campus
(approx.
27,903 square
feet
----------------------------------------------------------------------------------------------------------------------------
5. Riverwoods I 360 W. 4800 N., Provo, UT MyFamily.com (Sublease dated 2/18/00)
----------------------------------------------------------------------------------------------------------------------------
Riverwoods II 466 W. 4800 N., Provo, UT MyFamily.com (Sublease dated 2/18/00)
----------------------------------------------------------------------------------------------------------------------------
6. Publishers 1900 West 2300 South, SLC, UT Publishers Press, Inc. (Lease dated 2/28/00)
Press
----------------------------------------------------------------------------------------------------------------------------
7. Raw Land 2097 West Parkway Blvd., SLC, UT Marlin Shelley (Purchase Agreement dated 5/9/01)
----------------------------------------------------------------------------------------------------------------------------
PERSONAL PROPERTY LIENS
----------------------------------------------------------------------------------------------------------------------------
Property Address/Property Location Lien Holder
------------------------- -----------
Description
-----------
-------------------------------------------------------------------------------------------------------------------------
1. All accounts, Premier Business Addresses Bank of America, N.A.
chattel
paper,
general
intangibles,
inventory and
equipment of
Premier
Agendas, Inc.
----------------------------------------------------------------------------------------------------------------------------
2000 Kentucky Ave., Bellingham, WA
----------------------------------------------------------------------------------------------------------------------------
2007 Iowa Street, Bellingham, WA
----------------------------------------------------------------------------------------------------------------------------
1600 Kentucky St., Bellingham, WA
----------------------------------------------------------------------------------------------------------------------------
1936 Grant St., Bellingham, WA
----------------------------------------------------------------------------------------------------------------------------
1919 Grant St., Bellingham, WA
----------------------------------------------------------------------------------------------------------------------------
2001 Iowa St., Bellingham, WA
----------------------------------------------------------------------------------------------------------------------------
2081 Business Center Dr., #180,
Irvine, CA
----------------------------------------------------------------------------------------------------------------------------
5440 Beaumont Business Center Blvd., #635, Tampa, FL
----------------------------------------------------------------------------------------------------------------------------
W. Eighth Street, #320, Bloomington, IN
----------------------------------------------------------------------------------------------------------------------------
616 28th St., #11, Grand Rapids, MI
----------------------------------------------------------------------------------------------------------------------------
490 Center Rd., East Aurora, NY
----------------------------------------------------------------------------------------------------------------------------
2108 DeKalb Pike, East Norriton, PA
----------------------------------------------------------------------------------------------------------------------------
16815 Royal Crest, #150, Houston, TX
----------------------------------------------------------------------------------------------------------------------------
Premier Print Partners
----------------------
Carr Printing, Bountiful Utah
----------------------------------------------------------------------------------------------------------------------------
Guest Printing Co., Inc., Athens, GA
----------------------------------------------------------------------------------------------------------------------------
Harris Litho, Stone Mountain, GA
----------------------------------------------------------------------------------------------------------------------------
Heuss Printing, Inc., Ames, IA
----------------------------------------------------------------------------------------------------------------------------
Knight Printing, Fargo, ND
----------------------------------------------------------------------------------------------------------------------------
Lewiscolor, Statesboro, GA
----------------------------------------------------------------------------------------------------------------------------
Premier Bindery, BC, Langley, BC
----------------------------------------------------------------------------------------------------------------------------
Premier Graphics, Bellingham, WA
----------------------------------------------------------------------------------------------------------------------------
Premier Impressions, Grimsby, ON
----------------------------------------------------------------------------------------------------------------------------
Premier Printing, Winnepeg, MB
----------------------------------------------------------------------------------------------------------------------------
PrintComm, Flint, MI
----------------------------------------------------------------------------------------------------------------------------
Printing Enterprises, New Brighton, MN
----------------------------------------------------------------------------------------------------------------------------
Rome Printing Co., Rome, GA
----------------------------------------------------------------------------------------------------------------------------
Sentinel Printing, Inc., St. Cloud, MN
----------------------------------------------------------------------------------------------------------------------------
Spangler Printers, Kansas City, KS
----------------------------------------------------------------------------------------------------------------------------
2. Warehouse/distr2620iS. Decker Lake Blvd., SLC, UT Electronic Data Systems Corporation (Pursuant to Services
equipment Agreement effective 6/30/01, EDS has the right to use said
property, but has no ownership or control over the property)
----------------------------------------------------------------------------------------------------------------------------
2580 S. Decker Lake Blvd., SLC, UT
----------------------------------------------------------------------------------------------------------------------------
3. Printing Press 2000 Kentucky Avenue, Bellingham, WA Concord Bank
----------------------------------------------------------------------------------------------------------------------------
4. Printing Press 2000 Kentucky Avenue, Bellingham, WA Frontier Bank
----------------------------------------------------------------------------------------------------------------------------
5. Franklin Covey and one or more of its subsidiaries has entered into license agreements with individuals and entities
for the use of software, source code, and intellectual property used in the operation in the ordinary course of their
businesses.
----------------------------------------------------------------------------------------------------------------------------
6. Franklin Covey and its subsidiaries typically take title of ownership upon receipt of goods, with payment for the
same made 30-60 days thereafter. Liens may exist on certain items of inventory until such time as payment in full is
made.
----------------------------------------------------------------------------------------------------------------------------
7. One or more of Franklin Covey's or one of its subsidiary's real property leases may include a provision which grants
a lien to the landlord against Franklin Covey's or its subsidiary's inventory, equipment and personal property
located on the leased premises.
----------------------------------------------------------------------------------------------------------------------------
CAPITAL LEASE LIENS
----------------------------------------------------------------------------------------------------------------------------
1. First Security Leasing Company - Lease no. 002-3003253 for office equipment; $255,228 outstanding as of May 26, 2001
----------------------------------------------------------------------------------------------------------------------------
2. First Security Leasing Company - Lease no. 002-3003039 for office equipment; $263,296 outstanding as of May 26, 2001
----------------------------------------------------------------------------------------------------------------------------
OTHER LIENS
----------------------------------------------------------------------------------------------------------------------------
1. Liens may exist pursuant to the contingency obligations set forth on Schedule 6.22 to the Credit Agreement, which by
this reference is incorporated herein.
----------------------------------------------------------------------------------------------------------------------------
SCHEDULE 6.11: EXISTING INDEBTEDNESS (OTHER THAN CONTINGENT OBLIGATIONS)
SCHEDULE 6.11
----------------------------------------------------------------------------------------------------------------------------------
EXISTING
INDEBTEDNESS
----------------------------------------------------------------------------------------------------------------------------------
FRANKLIN COVEY
----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED
DEBT SCHEDULE
----------------------------------------------------------------------------------------------------------------------------------
BALANCE ADDITIONS/ PAYMENTS/ ENDING BAL.
----------------------------------------------------------------------------------------------------------------------------------
AUG 31, 2000 CURRENCY CURRENCY MAY 26, 2001 Atch # Notes
--------
----------------------------------------------------------------------------------------------------------------------------------
FRANKLIN CORE
----------------------------------------------------------------------------------------------------------------------------------
SPORTS CAREERS (45,499) A 19,500 paid in Q3
CURRENT PORTION 78,000 32,501
----------------------------------------------------------------------------------------------------------------------------------
SPORTS CAREERS (13,000)
(Act. 2704) 13,000 -
----------------------------------------------------------------------------------------------------------------------------------
ORACLE (1,679,541) B Credit will be adjusted in
SOFTWARECURRENT 1,679,040 (500) June
PORTION
----------------------------------------------------------------------------------------------------------------------------------
DAYTRACKER.COM 3,000,000
PURCHASE 3,000,000
----------------------------------------------------------------------------------------------------------------------------------
DAYTRACKER.COM (3,000,000) 0 Amount paid in Q2
PURCHASE (Act. 3,000,000
2702)
----------------------------------------------------------------------------------------------------------------------------------
JACK PHILLIPS 40,000 (40,000) 0 C Paid in Q3
NOTES PAYABLE
(2605)
----------------------------------------------------------------------------------------------------------------------------------
TOTAL (4,778,041)
7,770,041 40,000 3,032,000.11
-----------------===================-=============-=====================-==============-------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
FRANKLIN
DEVELOPMENT
CORP
----------------------------------------------------------------------------------------------------------------------------------
REPUBLIC MRTG (63,110) E $21,484 paid in Q3
- HANCOCK 1,618,736 1,555,626
----------------------------------------------------------------------------------------------------------------------------------
REPUBLIC MRTG (17,601) E $6,012 paid in Q3
- PATRICK HENRY 688,651 671,050
----------------------------------------------------------------------------------------------------------------------------------
ZIONS LOAN (211,354) E $70,452 paid in Q3
#4001 - FRANK 587,062 375,708
& JEFF
----------------------------------------------------------------------------------------------------------------------------------
0 (292,066) 2,602,384
2,894,450
-----------------===================-=============-=====================-==============-------------------------------------------
INTERNATIONAL
----------------------------------------------------------------------------------------------------------------------------------
LONG TERM DEBT 213 F
CUR. PORT - 40,801 41,014
Canada
----------------------------------------------------------------------------------------------------------------------------------
LONG TERM DEBT (76,619) F
- Canada 956,122 879,503
----------------------------------------------------------------------------------------------------------------------------------
UK F See 'F' section for note
53,778 53,778
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
TOTAL 53,778 (76,619) 974,295
996,923
-----------------===================-=============-=====================-==============-------------------------------------------
PREMIER AGENDAS
----------------------------------------------------------------------------------------------------------------------------------
LONG TERM DEBT (48,937) G
- CURR PORTION 1,685,709 1,636,772
----------------------------------------------------------------------------------------------------------------------------------
LONG TERM DEBT (186,564) G
651,212 464,648
----------------------------------------------------------------------------------------------------------------------------------
TOTAL 0 (235,501) 2,101,420
2,336,921
-----------------===================-=============-=====================-==============-------------------------------------------
LONG TERM DEBT (5,382,227)
TOTALS 13,998,335 93,778 8,710,099
----------------------------------------------------------------------------------------------------------------------------------
LINE OF CREDITS
----------------------------------------------------------------------------------------------------------------------------------
$17.0* million
current line
of credit with
interest at
LIBOR plus
1.5% (8.1% at
August 31,
2000), secured
by inventory
and accounts 1,000,000
receivable 11,725,000
----------------------------------------------------------------------------------------------------------------------------------
*the line of credit will terminate on November 30, 2001, and the outstanding amounts under the line of credit will be paid in
full on or before termination
----------------------------------------------------------------------------------------------------------------------------------
LETTERS OF
CREDIT
Beneficiary Maturity Face Value
- ------------ - --------- ------------
Knoxville 10/7/2001 $ 1,700.00
Utilities Board
----------------------------------------------------------------------------------------------------------------------------------
Airlines 3/27/2002 $
Reporting 20,000.00
Corporation
----------------------------------------------------------------------------------------------------------------------------------
Royal 1/1/2002 $
Indemnity 264,000.00
Company
----------------------------------------------------------------------------------------------------------------------------------
Banca Serafin, 5/25/2002 $
S.A. 50,000.00
----------------------------------------------------------------------------------------------------------------------------------
TOTAL $
335,700.00
----------------------------------------------------------------------------------------------------------------------------------
CAPITAL LEASES
----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDING
AUGUST 31, (in thousands)
----------------------------------------------------------------------------------------------------------------------------------
2001 $592
----------------------------------------------------------------------------------------------------------------------------------
2002 392
----------------------------------------------------------------------------------------------------------------------------------
Total future 984
minimum lease
payments
----------------------------------------------------------------------------------------------------------------------------------
Less amount -64
representing
interest
----------------------------------------------------------------------------------------------------------------------------------
Present value of future minimum
lease payments
-----------------------------------------------------------------------------------------------------------------
920
----------------------------------------------------------------------------------------------------------------------------------
Less current -540
portion
----------------------------------------------------------------------------------------------------------------------------------
$380
----------------------------------------------------------------------------------------------------------------------------------
*May 26, 2001, total capital lease
obligation: $518.
----------------------------------------------------------------------------------------------------------------------------------
Total assets held by the Company under capital lease arrangements were $4.0 million with accumulated amortization of $2.2
million as of August 31, 2000. Amortization of capital lease assets is included in depreciation and amortization expense in the
accompanying consolidated income statements.
SCHEDULE 6.14: EXISTING INVESTMENTS (OTHER THAN SUBSIDIARIES)
Franklin Covey Coaching, L.L.C.
-------------------------------
Effective September 1, 2000, Franklin Covey contributed all of its right, title and interest in and to its assets, properties, and
rights, that were incorporated in, associated with, integral to or otherwise used primarily in the conduct of Franklin Covey's
personal coaching division (the "Business"), including, without limitation, the following:
(a) all accounts and notes receivable set forth on the Closing Balance Sheet;
(b) all office furniture and equipment, computer and telephone equipment, trade fixtures and other equipment, together
with all parts, tools and accessories and the like relating thereto;
(c) all inventory and supplies reflected on the Latest Balance Sheet;
(d) all client, customer, and supplier goodwill directly incident to or directly associated with the Business as a going
concern, all mailing lists, customer lists, inquiry lists and all other information and data relating to the customers, potential
customers, or suppliers of the Business, and all Related Marketing Rights and all trademarks, trade names, service marks, copyrights,
computer programs and software (including, without limitation, all data mining and analysis systems and coaching scheduling systems),
domain names, web page content, trade secrets, processes, know how, engineering drawings, plans and product specifications,
promotional displays and materials, marketing scripts, coaching manuals, and all other proprietary rights and Intellectual Property
and any applications related thereto;
(e) all contracts, purchase orders, employment contracts and other agreements;
(f) all assignable business and operating Permits;
(g) all mailing lists, databases and other information concerning past and present customers of the Business, all
customer prospects and lead and inquiry lists, and all other data, books, files and records of the Business;
(h) all deposits, refunds, prepaid service payments, and other prepaid assets to the extent reflected on the Latest
Balance Sheet; and catalog, packaging, promotional, trade show, advertising and royalty expenses and unbilled charges and credits;
(i) all claims, warranties, chooses of action, causes in action, rights of recovery and rights of set-off relating to
the Purchased Assets, the Assumed Liabilities and/or the Business; and
(j) the right to receive and retain mail and other communications relating directly to the Purchased Assets, the Assumed
Liabilities and/or the Business.
Conita
------
Franklin Covey entered into an agreement with Conita Technologies, Inc. ("Conita") on January 30, 2001, for the license, installation
and configuration of Conita's proprietary Personal Virtual Assistant ("PVA") software on Franklin Covey's corporate Microsoft
Exchange Server, for a total of $344,160.00. The PVA software enables Franklin Covey Associates to access and manipulate personal
email, calendar, contact and task information stored on the corporate Exchange Server over the phone.
Further, Franklin Covey provided Conita a bridge loan of $250,000.00 convertible to stock, with a maturity date of June 30, 2001.
Conita has requested an extension for repayment of the loan to December 31, 2001. Franklin Covey and Conita are working together to
provide the Conita PVA technology to FranklinPlanner.com or Franklin Planner software users.
SCHEDULE 6.22: EXISTING CONTINGENT OBLIGATIONS
Lines of Credit
---------------
The amounts outstanding under the Company guaranty of existing lines of credit consisted of the following at August 31, 2000 (in
thousands):
August 31, 2000 May 26, 2001
Balances Balances
--------------------- ---------------------
$20.0 million* current line of credit with
interest at LIBOR plus 1.5% (8.1% at August
31, 2000), secured by inventory and accounts
receivable 11,725 1,000
*as of May 26, 2001, $14.0 million is available under this line of credit.
Capital Leases
Future minimum lease payments for equipment held under capital lease arrangements as of August 31, 2000 were as follows (in
thousands):*
YEAR ENDING
AUGUST 31,
-------------------------------------------- -- --------------
2001 $ 592
2002 392
--------------
Total future minimum lease
payments 984
Less amount representing interest (64)
--------------
Present value of future minimum lease
payments 920
Less current portion (540)
--------------
$ 380
--------------
*May 26, 2001, total capital lease obligation: $518.
Total assets held by the Company under capital lease arrangements were $4.0 million with accumulated amortization of $2.2 million as
of August 31, 2000. Amortization of capital lease assets is included in depreciation and amortization expense in the accompanying
consolidated income statements.
Operating Leases
The Company leases certain retail store and office locations under noncancelable operating lease agreements with remaining terms of
one to ten years. The following table summarizes future minimum lease payments under operating leases at August 31, 2000 (in
thousands):
YEAR ENDING
AUGUST 31,
-------------------------------------------- -- --------------
2001 $ 12,702
2002 11,032
2003 10,231
2004 8,672
2005 5,610
Thereafter 13,980
--------------
$ 62,227
--------------
Total rental expense for leases under operating lease agreements was $17.4 million, $17.6 million, and $16.8 million, for the years
ended August 31, 2000, 1999, and 1998, respectively.
As part of its restructuring plan, the Company exited certain leased office space in Provo, Utah during fiscal 2000. In connection
with leaving the office space, the Company obtained a noncancelable sublease agreement for the majority of the Company's remaining
lease term on the buildings. Future minimum lease payments due to the Company from the subleasee as of August 31, 2000 were as
follows:
YEAR ENDING
AUGUST 31,
-------------------------------------------- -- --------------
2001 $ 1,792
2002 1,845
2003 1,901
2004 1,958
2005 2,017
Thereafter 3,309
--------------
$ 12,822
--------------
Purchase Commitments
At August 31, 2000, the Company had contracts with various builders, totaling $3.2 million, for construction related to new and
remodeled retail stores.
The Company also has various purchase commitments for materials, supplies, and other items incident to the ordinary conduct of
business. In aggregate, such commitments are immaterial to the Company's operations.
Pursuant to the EDS Information Technology Services Agreement (which encompasses the outsourcing of [1] Information Technology
Services; [2] Call Center Services, and [3] Distribution and Warehouse Services, including EDS' lease of approximately 406,000 square
feet of the Company's warehouse and distribution facilities) (the "IT Agreement") Franklin Covey has certain obligations related to
termination of the IT Agreement. As to termination for convenience of either the Information Technology Services or the Call Center
Services, Franklin Covey and EDS have agreed to termination fees based on the year in which Franklin Covey terminates the IT
Agreement or any portion thereof. However, in the event that Franklin Covey encounters a significant change in its business such
that Franklin Covey no longer requires the delivery of Distribution and Warehouse Services, EDS and Franklin Covey have agreed to
negotiate in good faith an alternate services agreement, for alternate services sufficient to replace, for EDS, service fees related
to the Distribution and Warehouse Services. In the event that EDS and Franklin Covey are unable to negotiate an alternate services
agreement, EDS and Franklin Covey have agreed to negotiate a termination fee that covers EDS' unamortized costs and shutdown expenses
related to the Distribution and Warehouse Services and takes into account, among other factors, EDS' lost profits, and remaining
lease and sublease expenses for the Salt Lake City distribution facility.
Legal Matters
The Company is the subject of certain legal actions, which it considers routine to its business activities. As of August 31, 2000,
management believes that, after discussion with its legal counsel, any potential liability to the Company under such actions will not
materially affect the Company's financial position or results of operations.
Management Common Stock Loan Program
During fiscal 2000, the Company announced the implementation of an incentive-based compensation program that includes a loan program
from external lenders to certain managers for the purpose of purchasing shares of the Company's common stock. The program gives
management of the Company the opportunity to purchase shares of the Company's common stock on the open market, and from shares
purchased by the Company, by borrowing on a full-recourse basis from the external lenders. The Company has facilitated the loans by
providing a guarantee to the lenders. The program will total approximately $33.0 million and the Company has facilitated the
purchase of open-market shares to ensure compliance with appropriate SEC trading rules and regulations. As of August 31, 2000, the
Company had facilitated the purchase of 3,559,000 shares at a cost of $30.00 million for the loan program.
|
Exhibit 10(d)
[TRW LOGO]
Transferable Nonqualified Stock Option Agreement
TERMS AND CONDITIONS
1. Purchase Rights
This option cannot be exercised before the first anniversary of the date of
grant. After that you will be entitled to purchase up to 33-1/3% of the shares
covered by this option, rounded down to the nearest whole share for each of the
first two years, for each full year of your continuous employment with TRW Inc.
(“TRW”) after the date of grant. The purchase rights accumulate as shown in the
following table.
Cumulative Maximum Percentage of Number of Full Years of Continuous
Optioned Shares That May Be Service After Date of Grant Purchased
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1
2
3 33-1/3%
66-2/3%
100%
Notwithstanding the foregoing, this option will immediately become exercisable
in respect of all of the shares covered by this grant in the event of the
termination of your employment in the following circumstances:
(a) your death;
(b) your disability for a period of more than twelve months (as defined in the
TRW U.S. Long-Term Disability Plan); or
(c) on or after the first anniversary of the date of grant of this option, (i)
your retirement at age 60 or over or (ii) a divestiture of the business or
product line in which you are employed provided you are then age 60 or over and
eligible for retirement.
This option will also become immediately exercisable in respect of all the
shares covered by this grant upon a change of control of TRW Inc. For purposes
of this agreement, a change in control is defined in resolutions adopted by the
Compensation Committee of the Directors of TRW on July 26, 1989, which, in
summary, provide that a change in control is a change occurring (a) by virtue of
TRW’s merger, consolidation or reorganization into or with, or transfer of
assets to, another corporation or (b) by virtue of a change in the majority of
the Directors of TRW during any two-year period unless the election of each new
Director was approved by a two-thirds vote of the Directors in office at the
beginning of such period or (c) through the acquisition of shares representing
20% or more of the voting power of TRW or (d) through any other change in
control reported in any filing with the Securities and Exchange Commission;
provided, however, that no change in control is deemed to have occurred by the
acquisition of shares, or any report of such acquisition, by TRW, a subsidiary
of TRW or a TRW-sponsored employee benefit plan. The language of the resolutions
controls over this summary language.
2. Exercise in Whole or Part
To the extent this option has become exercisable, you may purchase on any date
or dates all or any part of the shares which you are then entitled to purchase.
However, no fractional shares may be purchased.
3. Term of Option
To the extent this option has become exercisable in accordance with Section 1
above, it may be exercised by you at any time during the 10-year period
beginning on the date of grant. To the extent this option remains unexercised,
your unexercised purchase rights will terminate upon the first to occur of
(i) the end of such ten-year period or (ii) three months after the date on which
your employment with TRW terminates. Notwithstanding the foregoing, in the
following cases your unexercised purchase rights will terminate at the times set
forth in the following clauses:
(a) If the Directors of TRW find that you intentionally committed an act,
which act is inimical to the interests of TRW or a subsidiary, your unexercised
purchase rights will terminate as of the time you committed such act, as
determined by the Directors. (b) In the event of a change in control of TRW
(as defined in Section 1 hereof), your unexercised purchase rights will not
under any circumstances be subject to termination before the end of the ten-year
period beginning on the date of grant. (c) If your employment is terminated
by your death or by your disability for a period of more than twelve months (as
defined in the TRW U.S. Long-Term Disability Plan), your unexercised purchase
rights will continue for the remainder of the 10-year period. (d) If your
employment is terminated by your retirement at age 55 or over, your unexercised
purchase rights will continue for the remainder of the 10-year period. (e)
If your employment with TRW terminates due to a divestiture of the business or
product line in which you are employed, your unexercised purchase rights will
terminate 12 months after the date your employment terminates. (f) If you
are age 55 or over and your employment is involuntarily terminated, your
unexercised purchase rights will continue for the remainder of the 10-year
period, notwithstanding clause (e) above.
Nothing contained in this agreement shall extend this option beyond a 10-year
period or shall limit whatever right TRW or a subsidiary might otherwise have to
terminate your employment at any time.
4. Payment of Option Price
The option price shall be payable at the time of exercise. The option price
shall be paid at the Office of Secretary at TRW’s corporate headquarters or at
any other place designated by the Secretary. The option price may be paid in
cash, by delivery of full shares of TRW Common, by a cashless exercise, or in
any combination of the foregoing, in accordance with such procedures and subject
to such further conditions as the Secretary of TRW may establish from time to
time. Notwithstanding the foregoing, the Compensation Committee of TRW at any
time may suspend or terminate your right to pay any or all of the option price
in shares of TRW Common.
Cash payments shall be made in United States dollars.
Shares delivered in payment of the option price shall be valued at their fair
market value on the date of exercise. For purposes of this option, “fair market
value” is the average of the high and low sales prices of a share of TRW Common
on the date of exercise on the New York Stock Exchange Composite Transactions
Listing as reported by the New York Stock Exchange or such other source as may
be approved by resolution of the Compensation Committee of TRW (or if there are
no sales on such date, then the closing sale price on such Listing on the
nearest date
--------------------------------------------------------------------------------
before the date of exercise) or such other method or procedure for determining
fair market value as the Compensation Committee of TRW in its sole discretion
may determine. For purposes of this option, the “date of exercise” is the date
on which written notice, accompanied by the option price, is received by the
Secretary of TRW or his designee that you have elected to exercise all or part
of this option.
5. Taxes
Upon any exercise of this option, TRW may withhold delivery of certificates for
the purchased shares until you make arrangements satisfactory to TRW to pay any
withholding, transfer or other taxes due as a result of such exercise. You may
elect, in accordance with applicable regulations of the Compensation Committee
of TRW, to pay a portion or all of the amount of required withholding taxes in
cash, through a cashless exercise or in shares of TRW Common, either by
delivering to TRW previously held shares of TRW Common or by having shares of
TRW Common withheld from the shares purchased hereunder.
6. Securities Laws
This option shall not be exercisable if such exercise would violate any federal
or state securities law. TRW will use its best efforts to make such filings and
initiate such proceedings as may be necessary to prevent such violations unless
the Directors of TRW determine, in their sole discretion, that such filings or
proceedings would result in undue expense or hardship for TRW. TRW may place
appropriate legends on the certificates for the optioned shares, give
stop-transfer instructions to its transfer agents or take any other action to
achieve compliance with those laws in connection with any exercise of this
option or your resale of the optioned shares.
7. Transferability
This option is not transferable except (a) by will or the laws of descent and
distribution, or (b) by gift to any member of your immediate family, to a trust
for the benefit of an immediate family member, or to a partnership whose
beneficiaries are members of your immediate family; provided, however, that
there may be no consideration for any such transfer. For purposes of this
agreement, “immediate family member” shall mean your spouse, children and
grandchildren. Notwithstanding any transfer of this option pursuant to clause
(b) of this Section 7, you will continue to be solely responsible for the taxes
described in Section 5 of this agreement. Any option transferred pursuant to the
terms of this Section 7 shall continue to be subject to the same terms and
conditions as were applicable immediately prior to the transfer.
8. Leaves of Absence
If you take a leave of absence for illness, military or governmental service or
other reasons, and such leave has been specifically approved by the Chairman of
the Board or the President of TRW for purposes of this option, then such leave
will not be treated as an interruption of your employment.
9. Adjustments
The Compensation Committee of TRW may make such adjustments in the option price
and in the number or kind of shares of TRW Common or other securities covered by
this option as it in its sole discretion may determine are equitably required to
prevent dilution or enlargement of your rights that would otherwise result from
any stock dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of TRW, merger, consolidation,
reorganization, partial or complete liquidation or other corporate transaction
or event having an effect similar to any of the foregoing.
10. Certain Definitions
For purposes of this option, employment with a subsidiary will be treated as
equivalent to employment with TRW itself, and your continuous employment will
not be deemed to be interrupted by reason of your transfer among TRW and its
subsidiaries. “Subsidiary” means a corporation or other entity in an unbroken
chain of entities beginning with TRW if each of the entities other than the last
entity in the unbroken chain owns stock or other ownership interests possessing
50% or more of the total outstanding combined voting power of all classes of
stock or other interests in the next entity in the chain. “Subsidiary” also
means, if not covered by the definition of subsidiary in the preceding sentence
and if specifically approved by the Chairman of the Board of TRW with respect to
this option, a corporation or other entity in which TRW has a direct or indirect
ownership interest.
11. Miscellaneous
By participating in the TRW stock option program, you understand and agree to
the following conditions:
(a) This stock option is subject to all the terms and conditions of the TRW plan
pursuant to which it is granted. The Compensation Committee of TRW has authority
to interpret and construe any provision of this instrument and the TRW plan
pursuant to which this stock option is granted, and any such interpretation and
construction shall be binding and conclusive. Any reference in this option to
the Directors of TRW includes the Executive Committee of the Directors.
(b) The program is discretionary and TRW can cancel or terminate it at any time.
As such, the program does not create any contractual or other right to receive
options or benefits in lieu of options in the future. Any future option grants,
including but not limited to the timing of any grant, number of options, vesting
provisions, and the exercise price, will be in TRW’s sole discretion.
(c) Your participation in the TRW stock option program is completely voluntary
and is not a condition or right of your employment.
(d) The value of your TRW stock option is an extraordinary item of compensation
outside the scope of your employment contract, if any. As such, your option is
not part of normal or expected compensation for purposes of calculating any
severance, resignation, redundancy, end of service payments, bonuses,
long-service awards, social insurance contributions (except where local law
specifically provides otherwise), pension or retirement benefits, or similar
payments.
(e) Your vesting progress will end if your employment terminates before three
years after the grant date for reasons other than those set forth in Section 1
hereof.
(f) The future value of the TRW stock is unknown and cannot be predicted with
any certainty. If the TRW stock does not increase in value, the option will have
no value.
(g) You authorize your manager to furnish TRW (and any agent of TRW
administering the program or providing program recordkeeping services) with such
information and data as it shall request in order to facilitate the grant of
options and administration of the program. You also waive any data privacy
rights you might have with respect to such information about you, which is
needed to issue your TRW stock option grant.
(h) Your TRW stock option may not be assigned, sold, encumbered, or in any way
transferred or alienated, except as otherwise explicitly provided in the Stock
Option Agreement.
(i) The TRW stock option program is governed by and subject to U.S. law.
Interpretation of the program and your rights thereunder will be governed by
provisions of U. S. law.
|
POINT WEST CAPITAL CORPORATION
Incentive Stock Option Agreement
INCENTIVE STOCK OPTION AGREEMENT, dated as of November 7,
2000 (this "Agreement"), between __________ ("Optionee") and Point West Capital
Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Optionee is an employee of the Company;
WHEREAS, the execution of an incentive stock option
agreement in the form hereof has been duly authorized by a resolution of the
Compensation Committee (the "Committee") of the Board of Directors ("the Board")
of the Company duly adopted (i) at a regular or special meeting of the Committee
held on, or (ii) by the unanimous written consent of the members of the
Committee effective on, November 7, 2000 (the "Date of Grant") and incorporated
herein by reference; and
WHEREAS, the option granted hereunder is intended to be an
"incentive stock option" within the meaning of that term under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements herein contained, the parties hereto hereby agree as follows:
1. (a) Option. Pursuant to the Company's Amended and
Restated 1995 Stock Option Plan (the "Plan"), the Company hereby grants to
Optionee an option (the "Option") to purchase 75,000 shares (the "Option
Shares") of the Company's Common Stock, par value $.01 per share ("Common
Shares"), at the price of $2.13125 per share (the "Option Price"), which is 110%
of the fair market value of the Common Shares (as determined by the Committee)
on the Date of Grant, and agrees to cause certificates for any Common Shares
purchased hereunder to be delivered to Optionee upon payment in full of the
Option Price, subject to the applicable terms and conditions of the Plan and the
terms and conditions hereinafter set forth.
> > 2. Vesting of Option Shares.
(a) Unless and until terminated as hereinafter provided, the
Option shall become exercisable to the extent of 25% of the Option Shares on the
first anniversary of the Date of Grant and to the extent of an additional 25% on
each of the second through the fourth anniversary of the Date of Grant so long
as Optionee has remained in the continuous employ of the Company or a Subsidiary
from the date hereof through such date. For the purposes of this Agreement, the
continuous employment of Optionee with the Company or a Subsidiary shall not be
deemed to have been interrupted, and Optionee shall not be deemed to have ceased
to be an employee of the Company or a Subsidiary, by reason of (i) the transfer
of Optionee's employment among the Company and its Subsidiaries or (ii) a leave
of absence approved by the Board of not more than 90 days, unless Optionee has a
statutory or contractual right to reemployment with the Company or a Subsidiary
following an approved leave of absence of more than 90 days. To the extent that
the Option shall have so become exercisable, it may be exercised in whole or in
part from time to time.
(b) Notwithstanding the provisions of paragraph 2(a) above,
the Option shall become immediately exercisable to the extent of 100% of the
Option Shares upon the occurrence of a Change in Control. If any event or series
of events constituting a Change in Control shall be abandoned, the effect
thereof shall be null and of no further force and effect and the provisions of
Section 2(a) shall be reinstated but without prejudice to any exercise of the
Option that may have occurred prior to such nullification.
(c) Notwithstanding the provisions of paragraph 2(a) above,
the Option shall become immediately exercisable to the extent of 100% of the
Option Shares upon the death or Disability of Optionee.
3. Exercises.
(a) This Option, to the extent exercisable as provided in
Section 2, may be exercised by Optionee by delivery to the Company of (i) an
Exercise Notice in the form attached to this Agreement as Annex A, appropriately
completed and duly executed and dated by Optionee, (ii) payment in full of the
Option Price for the number of Option Shares which Optionee is purchasing
hereunder, and (iii) payment in full to the Company of any amounts required to
be paid pursuant to Section 3(c).
(b) The Option Price shall be payable (a) in cash or check
acceptable to the Company, (b) by transfer to the Company of Common Shares that
have been owned by Optionee for (i) more than one year prior to the date of
exercise and for more than two years from the date on which the option was
granted, if they were originally acquired by Optionee pursuant to the exercise
of an incentive stock option, or (ii) more than six months prior to the date of
exercise, if they were originally acquired by Optionee other than pursuant to
the exercise of an incentive stock option, or (c) by a combination of any of the
foregoing methods of payment. The requirement of payment in cash shall be deemed
satisfied if Optionee shall have made arrangements satisfactory to the Company
with a broker who is a member of the National Association of Securities Dealers,
Inc. to sell on the date of exercise a sufficient number of the Common Shares
being purchased so that the net proceeds of the sale transaction will at least
equal the aggregate Option Price, plus interest at the applicable federal rate
for the period from the date of exercise to the date of payment, and pursuant to
which the broker undertakes to deliver the aggregate Option Price, plus such
interest, to the Company not later than the date on which the sale transaction
will settle in the ordinary course of business.
(c) If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with an exercise of the
Option, it shall be a condition to the exercise that Optionee pay the tax or
make provisions that are satisfactory to the Company for the payment thereof.
4. Termination of Option.
The Option shall terminate on the earliest of the following
dates:
> > (a) The date on which Optionee ceases to be an employee of the Company or a
> > Subsidiary unless he ceases to be such an employee in a manner described in
> > (b) or (c) below.
> >
> > (b) 90 days after Optionee ceases to be an employee of the Company or any
> > Subsidiary if (A) Optionee retires from employment with the Company or any
> > Subsidiary after reaching the age of 65 years, or (B) Optionee's employment
> > is terminated under circumstances determined by the Committee to be for the
> > convenience of the Company.
> > (c) One year after the date on which Optionee's employment is terminated as
> > a result of Optionee's death or Disability (as hereinafter defined).
> >
> > (d) Five years from the Date of Grant.
In the event that Optionee commits an act that the Board determines to have been
intentionally committed and materially inimical to the interests of the Company,
the Option shall terminate as of the time of the commission of that act,
notwithstanding any other provision of this Agreement. In the event that
Optionee's employment is terminated by the Company for Cause, the Option shall
terminate as of the time Optionee's employment is terminated, notwithstanding
any other provision of this Agreement.
5. No Transfer of Option.
The Option may not be transferred except by will or the laws of descent and
distribution and may not be exercised during the lifetime of Optionee except by
Optionee or Optionee's guardian or legal representative acting on behalf of
Optionee in a fiduciary capacity under state law and court supervision.
6. Limitations on Exercise of Option.
Notwithstanding any other provision of this agreement, the Option shall not be
exercisable if the exercise would involve a violation of any applicable federal
or state securities law, and the Company shall make reasonable efforts to comply
with all such laws.
7. Adjustments.
(a) The Committee may make or provide for such adjustments
in the number and kind of Option Shares (including shares of another issuer) and
in the Option Price, as the Committee may in good faith determine to be
equitably required in order to prevent dilution or expansion of the rights of
Optionee that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, or (b) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization, partial or complete liquidation or other distribution
of assets, issuance of warrants or other rights to purchase securities or any
other corporate transaction or event having an effect similar to the foregoing.
(b) In the event of any such transaction or event, the
Committee may provide in substitution for the Option such alternative
consideration as it may in good faith determine to be equitable under the
circumstances and may require in connection therewith the surrender of the
Option.
8. No Right to Employment.
No provision of this agreement shall limit in any way
whatsoever any right that the Company or a Subsidiary may otherwise have to
terminate the employment of Optionee at any time.
9. Rights as a Stockholder.
The holder of this Option shall not be, nor have any of the rights or privileges
of, a holder of Common Shares in respect of any Option Shares unless and until
certificates representing such shares have been issued by the Company to such
holder.
10. Limitation on Incentive Stock Options.
Notwithstanding the intent that the Option be an "incentive stock option" within
the meaning of that term under Section 422 of the Code, the option will be
treated as a non-qualified stock option to the extent that the fair market value
of the shares with respect to which any incentive stock options are exercisable
for the first time by Optionee during any calendar year (under all of the
Company's plans and those of any of its subsidiaries) exceed $100,000. This rule
shall be applied by taking any options into account in the order in which they
were granted.
> > 11. Required Holding Period.
Notwithstanding the provisions of Section 2(b), to the extent necessary for the
Option, its exercise or the sale of Option Shares acquired thereunder to be
exempt from Section 16(b) of the Exchange Act of 1934, as amended, (i) except in
the case of Optionee's death or Disability, Optionee shall not be entitled to
exercise the Option until the expiration of the six-month period following the
Date of Grant, or (ii) at least six months shall elapse from the Date of Grant
to the date of disposition of the Option Shares acquired upon exercise of the
Option.
12. Definitions.
For the purposes of this Agreement, the following terms have the following
meanings:
(a) "Cause" means (i) the commission by Optionee of an act
of fraud or embezzlement against the Company or an act which the Optionee knew
to be in gross violation of Optionee's duties to the Company (including the
unauthorized disclosure of confidential information), (ii) Optionee's continual
failure to render services to the Company, which failure (A) amounts to gross
neglect of Optionee's duties to the Company and (B) is not remedied within 10
days after notice thereof by the Company, or (iii) Optionee's conviction of a
felony.
(b) "Change in Control" means the occurrence of any of the
following events:
> > (i) The execution by the Company of an agreement for the merger,
> > consolidation or reorganization into or with another corporation or other
> > legal person; provided, however, that no such merger, consolidation or
> > reorganization shall constitute a Change in Control if as a result of such
> > merger, consolidation or reorganization not less than a majority of the
> > combined voting power of the then-outstanding securities of such corporation
> > or person immediately after such transaction are held in the aggregate by
> > the holders of securities of the Company entitled to vote generally in the
> > election of Directors ("Voting Stock") immediately prior to such
> > transaction;
> >
> > (ii) The execution by the Company of an agreement for the sale or other
> > transfer of all or substantially all of its assets to another corporation or
> > other legal person; provided, however, that no such sale or other transfer
> > shall constitute a Change in Control if as a result of such sale or transfer
> > not less than a majority of the combined voting power of the
> > then-outstanding securities of such corporation or person immediately after
> > such sale or transfer is held in the aggregate by the holders of Voting
> > Stock immediately prior to such sale or transfer.
> >
> > (iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any
> > successor schedule, form or report), each as promulgated pursuant to the
> > Exchange Act disclosing that any person (as the term "person" is used in
> > Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) (other than any of
> > Bradley N. Rotter, Alan B. Perper or John Ward Rotter or any of their
> > respective family members or affiliates) has or intends to become the
> > beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3
> > or any successor rule or regulation promulgated under the Exchange Act) of
> > securities representing 20% or more of the combined voting power of the
> > then-outstanding Voting Stock, including, without limitation, pursuant to a
> > tender offer or exchange offer;
> >
> > (iv) If, during any period of two consecutive years, individuals who at the
> > beginning of any such period constitute the directors of the Company cease
> > for any reason to constitute at least a majority thereof; provided, however,
> > that for purposes of this subsection (iv) each director who is first
> > elected, or first nominated for election by the Company's stockholders, by a
> > vote of at least two-thirds of the directors of the Company (or a committee
> > thereof) then still in office who were directors of the Company at the
> > beginning of any such period shall be deemed to have been a director of the
> > Company at the beginning of such period; or
> >
> > (v) except pursuant to a transaction described in the proviso to
> > subsection (i) of this Section 12(b), the Company adopts a plan for the
> > liquidation or dissolution of the Company.
(c) "Disability" means, as of any date, becoming disabled
within the meaning of such term in Section 22(e)(3) of the Code.
(d) "Subsidiary" means any corporation in which the Company
directly or indirectly owns or controls more than 50 percent of the total
combined voting power of all classes of stock issued by the corporation.
13. Severability.
In the event that one or more of the provisions of this agreement shall be
invalidated for any reason by a court of competent jurisdiction, any provision
so invalidated shall be deemed to be separable from the other provisions hereof,
and the remaining provisions hereof shall continue to be valid and fully
enforceable.
14. Governing Law.
This agreement is made under, and shall be construed in
accordance with, the laws of the State of Delaware.
This Agreement is executed by the Company as of the 7th day
of November, 2000.
> > > > > POINT WEST CAPITAL CORPORATION
> > > > > > >
> > > > > > > Name:_____________________________
>
> > > > > > >
> > > > > > > Title:_________________________________
The undersigned Optionee hereby acknowledges receipt of an
executed original of this Incentive Stock Option Agreement and the Plan and
accepts the Option subject to the applicable terms and conditions of the Plan
and the terms and conditions hereinabove set forth.
> > > > > > > > > >
> > > > > > > > > >
> > > > > > > > > > _____________________________________
Optionee
(Signature)
Name:
__________________________
Dated as of
_______________________
ANNEX A
to
Incentive Stock Option Agreement
Form of Exercise Notice
Pursuant to the Incentive Stock Option Agreement dated as of
November 7, 2000 between the undersigned and Point West Capital Corporation (the
"Company"), the undersigned hereby elects to exercise his option as follows:
(a) Number of shares purchased: _______________________
(b) Total purchase price ((a) x Option Price): $
____________
Please issue a single certificate for the shares being
purchased in the name of the undersigned. The registered address on such
certificate should be:
____________________________
____________________________
The undersigned's social security number is: _________________________.
Date:________________________
________________________
> > > > > > > > > > > > > > Optionee |
Exhibit 10.38
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of June 20, 2001 (this
“Agreement”), is made by and among AVI BIOPHARMA, an Oregon corporation (the
“Company”), and MEDTRONIC ASSET MANAGEMENT, INC., a Minnesota corporation
(“Investor”).
RECITALS:
A. This Agreement is made in connection with the Investment
Agreement dated as of May 22, 2001 between Investor and the Company (the
“Investment Agreement”).
B. In order to induce Investor to execute and deliver the
Investment Agreement, the Company has agreed to provide certain registration
rights under the Securities Act and applicable state securities laws with
respect to the shares of Company Common Stock, $0.0001 par value per share
(“Common Stock”) to be purchased by Investor pursuant to the Investment
Agreement, the Warrant and the shares of Common Stock issuable upon exercise
thereof.
In consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Investor hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used and not otherwise defined herein have the
respective meanings given them set forth in the Investment Agreement. In
addition, as used in this Agreement, the following terms have the following
meanings:
1.1 “Holder” means Investor and any of its transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Article 9 hereof.
1.2 “Registrable Securities” means the Purchased Securities,
including the Purchased Shares, Warrant and Warrant Shares as defined in the
Investment Agreement and any shares of capital stock issued or issuable from
time to time (with any adjustments) in exchange for or otherwise with respect to
the Purchased Shares.
1.3 “Registration Period” means the period between the date
of this Agreement and the earlier of (i) the date on which all of the
Registrable Securities have been sold by Investor and no further Registrable
Securities may be issued in the future, (ii) the date on which all the
Registrable Securities (in the opinion of the Company’s counsel, which opinion
is reasonably acceptable to Investor and its counsel) may be immediately sold by
Investor without registration and without restriction (including without
limitation as to volume by each holder thereof) as to the number of Registrable
Securities to be sold, pursuant to Rule 144(k), or (iii) December 31, 2011.
1.4 “Registration Statement” means a Registration Statement
of the Company filed under the Securities Act.
1.5 The terms “register,” “registered,” and “registration”
refer to a registration effected by preparing and filing a Registration
Statement or statements in compliance with the Securities Act and pursuant to
Rule 415 and the declaration or ordering of effectiveness of such Registration
Statement by the SEC.
1.6 “Rule 415” means Rule 415 under the Securities Act, or
any successor Rule providing for offering securities on a continuous basis, and
applicable rules and regulations thereunder.
ARTICLE 2
REGISTRATION
2.1 Mandatory Registration. The Company will use best
efforts to file with the SEC a Registration Statement on Form S-3 (or any
successor form thereto, “Form S-3”) registering the Registrable Securities for
resale. Investor shall have the right to request in writing any number of
registrations on Form S-3 for any or all Registrable Securities held by the
Investor, which notice shall specify the number of Registrable Securities to be
so registered; provided that each such demand shall include a request for
registration of at least $1,000,000 in Registrable Securities. The Company
shall use its best efforts to effect promptly, and in any event within sixty
(60) days after request, the registration of such Registrable Securities and to
maintain such registration for at least one hundred eighty (180) days. If Form
S-3 is not available at that time, then the Company will file a Registration
Statement on such form as is then available to effect a registration of the
Registrable Securities, subject to the consent of Investor, which consent will
not be unreasonably withheld; provided, the Company shall not be required to
effect more than two registrations on Form S-1 or other form of general
registration.
2.2 Effectiveness of the Registration Statement. The
Company will use its best efforts to cause each Registration Statement to be
declared effective by the SEC as soon as practicable after filing. The
Company’s best efforts will include, but will not be limited to, promptly
responding to all comments received from the staff of the SEC. If the Company
receives notification from the SEC that the Registration Statement will receive
no action or review from the SEC, then the Company will cause the Registration
Statement to become effective within five business days after such SEC
notification. Once the Registration Statement is declared effective by the SEC,
the Company will cause the Registration Statement to remain effective throughout
the period set forth in Section 2.1, except as permitted under Section 3.
2.3 Piggyback Registrations.
(a) If, at any time prior to the expiration of the
Registration Period, a Registration Statement is not effective with respect to
all of the Registrable Securities and the Company decides to register any of its
securities for its own account or for the account of others, then the Company
will promptly give Investor written notice thereof and will use its best efforts
to include in such registration all or any part of the Registrable Securities
requested by such Investor to be included therein (excluding any Registrable
Securities previously included in a Registration Statement). This requirement
does not apply to Company registrations on Form S-4 or S-8 or their equivalents
relating to equity securities to be issued solely in connection with an
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans. Investor must
give its request for registration under this paragraph to the Company in writing
within 20 days after receipt from the Company of notice of such pending
registration. If the registration for which the Company gives notice is a
public offering involving an underwriting, the Company will so advise Investor
as part of the above-described written notice. In that event, if the managing
underwriter(s) of the public offering impose a limitation on the number of
shares of Common Stock that may be included in the Registration Statement
because, in such
underwriter(s)’ judgment, such limitation would be necessary to effect an
orderly public distribution, then the Company will be obligated to include only
such limited portion, if any, of the Registrable Securities with respect to
which Investor has requested inclusion hereunder. Subject to provisions for
existing holders of preferred or preferential piggyback rights pursuant to
agreements dated prior to the date hereof, any exclusion of Registrable
Securities will be made pro rata among all holders of the Company’s securities
seeking to include shares of Common Stock in proportion to the number of shares
of Common Stock sought to be included by those holders. The Company may grant
similar piggyback registration rights on a priority with those granted herein to
others (“Additional Holders”) in connection with financings and/or acquisition
of stock, assets or technology rights. However, the Company will not exclude
any Registrable Securities unless the Company has first excluded all outstanding
securities the holders of which are not entitled by prior right (pursuant to an
agreement dated prior to the date hereof) or as Additional Holders to inclusion
of securities in such Registration Statement or are not entitled to pro rata
inclusion with the Registrable Securities.
(b) No right to registration of Registrable Securities under
this Section 2.3 limits in any way the registration required under Section 2.1
above. The obligations of the Company under this Section 2.3 with respect to
any particular Registrable Securities expire upon the earlier of (i) the
effectiveness of a Registration Statement filed pursuant to Section 2.1 above
with respect to such Registrable Securities; (ii) after the Company has afforded
the opportunity for Investor to exercise registration rights under this Section
2.3 with respect to such Registrable Securities for two registrations (provided,
however, that if Investor has had any Registrable Securities excluded from any
Registration Statement in accordance with this Section 2.3, Investor may include
in any additional Registration Statement filed by the Company the Registrable
Securities so excluded), (iii) when all of the Registrable Securities held by
Investor may be sold by Investor under Rule 144(k) without being subject to any
volume restrictions, or (iv) December 31, 2011.
2.4 Reporting Status; Eligibility to Use Form S-3. The
Company represents and warrants that its Common Stock is registered under
Section 12 of the Exchange Act. Throughout the Registration Period, the Company
will timely file all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC under the reporting requirements of the
Exchange Act, and will not terminate its status as an issuer required to file
reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination. The Company currently
meets, and will take all reasonably necessary action to continue to meet, the
“registrant eligibility” requirements set forth in the general instructions to
Form S-3 to enable the registration of the Registrable Securities.
ARTICLE 3
ADDITIONAL OBLIGATIONS OF THE COMPANY
3.1 Continued Effectiveness of Registration Statement.
Subject to the limitations set forth in Section 3.6, the Company will use its
best efforts to keep the Registration Statement covering the Registrable
Securities effective for one hundred eighty (180) days. In the event that the
number of shares available under a Registration Statement filed pursuant to this
Agreement is insufficient to cover all of the Registrable Securities issued, the
Company will (if permitted) amend the Registration Statement or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities. The Company will file
such amendment or new Registration Statement as soon as practicable, but in no
event later than 30 business days after the necessity therefor arises (based
upon the market price of the Common Stock and other relevant factors on which
the Company reasonably elects to rely). The Company will use its best efforts
to cause such amendment or new Registration Statement to become effective as
soon as is practicable after the filing thereof, but in no event later than 90
days after the date on which the Company reasonably first determines (or
reasonably should have determined) the need therefor.
3.2 Accuracy of Registration Statement. Any Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) filed by the Company covering Registrable Securities will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading. The Company
will prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be necessary to permit
sales pursuant to the Registration Statement at all times during the
Registration Period, and, during such period, will comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
of the Company covered by the Registration Statement until the termination of
the Registration Period, or if earlier, until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by Investor as set forth in the Registration Statement.
3.3 Furnishing Documentation. The Company will furnish to
Investor or to its legal counsel, (a) promptly after each document is prepared
and publicly distributed, filed with the SEC or received by the Company, one
copy of any Registration Statement filed pursuant to this Agreement and any
amendments thereto, each preliminary prospectus and final prospectus and each
amendment or supplement thereto; and (b) a number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto,
and such other documents as Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities. The Company will
immediately notify by facsimile Investor of the effectiveness of the
Registration Statement and any post-effective amendment.
3.4 Additional Obligations. The Company will use its best
efforts to (a) register and qualify the Registrable Securities covered by a
Registration Statement under such other securities or blue sky laws of such
jurisdictions as Investor reasonably requests, (b) prepare and file in those
jurisdictions any amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain their effectiveness during the Registration Period, (c) take any other
actions necessary to maintain such registrations and qualifications in effect at
all times during the Registration Period, and (d) take any other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions. Notwithstanding the foregoing, the Company is not
required, in connection such obligations, to (i) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3.4, (ii) subject itself to general taxation in any such jurisdiction,
(iii) file a general consent to service of process in any such jurisdiction
where it has not so consented, (iv) provide any undertakings that cause material
expense or burden to the Company, or (v) make any change in its charter or
bylaws, which in each case the Board of Directors of the Company determines to
be contrary to the best interests of the Company and its stockholders.
3.5 Underwritten Offerings. If Investor selects
underwriters reasonably acceptable to the Company for the offering of
Registrable Securities pursuant to a Registration Statement, the Company will
enter into and perform its obligations under an underwriting agreement in usual
and customary form including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering.
3.6 Suspension of Registration.
(a) The Company will notify (by telephone and also by
facsimile and reputable overnight courier) Investor of the happening of any
event of which the Company has knowledge as a result of which the prospectus
included in the Registration Statement as then in effect includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company will make
such notification as promptly as practicable after the Company becomes aware of
the event , will promptly (but in no event more than ten business days) prepare
a supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and will deliver a number of copies of such supplement or
amendment to Investor as Investor may reasonably request.
(b) Notwithstanding the obligations under Section 3.6(a), if
in the good faith judgment of the Company, following consultation with legal
counsel, it would be detrimental to the Company and its stockholders for resales
of Registrable Securities to be made pursuant to the Registration Statement due
to (i) the existence of a material development involving the Company which the
Company would be obligated to disclose in the Registration Statement, which
disclosure would be premature or otherwise inadvisable at such time or would
have a Material Adverse Effect upon the Company and its stockholders, or (ii) in
the good faith judgment of the Company’s Board of Directors, it would adversely
affect or require premature disclosure of the filing of a Company-initiated
registration of any class of its equity securities, the Company will have the
right to suspend the use of the Registration Statement for a period of not more
than 60 days, provided, however, that the Company may so defer or suspend the
use of the Registration Statement no more than one time in any twelve-month
period, and provided, further, that after deferring or suspending the use of the
Registration Statement, the Company may not again defer or suspend the use of
the Registration Statement until a period of thirty days has elapsed after
resumption of the use of the Registration Statement.
(c) Subject to the Company’s rights under this Section 3,
the Company will use its best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of a Registration Statement and, if such an
order is issued, will use its best efforts to obtain the withdrawal of such
order at the earliest possible time and to notify Investor (or, in the event of
an underwritten offering, the managing underwriters) of the issuance of such
order and the resolution thereof.
(d) Notwithstanding anything to the contrary contained
herein or in the Investment Agreement, if the use of the Registration Statement
is suspended by the Company, the Company will promptly give notice of the
suspension to Investor and will promptly notify Investor as soon as the use of
the Registration Statement may be resumed.
3.7 Review by Investor. The Company will permit legal
counsel, designated by Investor, to review the Registration Statement and all
amendments and supplements thereto (as well as all requests for acceleration or
effectiveness thereof) a reasonable period of time prior to their filing with
the SEC, and will not file any document in a form to which such counsel
reasonably objects, unless otherwise required by law in the opinion of the
Company’s counsel. The sections of any such Registration Statement including
information with respect to Investor, Investor’s beneficial ownership of
securities of the Company or Investor’s intended method of disposition of
Registrable Securities must conform to the information provided to the Company
by Investor.
3.8 Comfort Letter; Legal Opinion. At the request of
Investor and on the date that Registrable Securities are delivered to an
underwriter for sale in connection with the Registration Statement, the Company
will furnish to Investor and the underwriters (i) a letter, dated such date,
from the Company’s independent certified public accountants, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters;
and (ii) an opinion, dated such date, from counsel representing the Company for
purposes of the Registration Statement, in form and substance as is customarily
given in an underwritten public offering, addressed to the underwriters and
Investor.
3.9 Due Diligence; Confidentiality.
(a) The Company will make available for inspection by
Investor, any underwriter participating in any disposition pursuant to the
Registration Statement, and any attorney, accountant or other agent retained by
Investor or underwriter (collectively, the “Inspectors”), all pertinent
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the “Records”), as each Inspector reasonably deems
necessary to enable the Inspector to exercise its due diligence responsibility.
The Company will cause its officers, directors and employees to supply all
information that any Inspector may reasonably request for purposes of performing
such due diligence.
(b) Each Inspector will hold in confidence, and will not
make any disclosure (except to another Inspector) of, any Records or other
information that the Company determines in good faith to be confidential, and of
which determination the Inspectors are so notified, unless (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court or government body of competent
jurisdiction, (iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement (to the knowledge of the relevant Inspector), (iv) the Records
or other information was developed independently by an Inspector without breach
of this Agreement, (v) the information was known to the Inspector before receipt
of such information from the Company, or (vi) the information was disclosed to
the Inspector by a third party without restriction. The Company is not required
to disclose any confidential information in the Records to any Inspector unless
and until such Inspector has entered into a confidentiality agreement (in form
and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 3.9. Investor will, upon
learning that disclosure of Records containing confidential information is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company, at
the Company’s expense, to undertake appropriate action to prevent disclosure of,
or to obtain a protective order for, the Records deemed confidential. Nothing
herein will be deemed to limit Investor’s ability to sell Registrable Securities
in a manner that is otherwise consistent with applicable laws and regulations.
(c) The Company will hold in confidence, and will not make
any disclosure of, information concerning Investor provided to the Company under
this Agreement unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction, (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement (v) the information was disclosed to the Company by a third party
without restriction or (vi) Investor consents to the form and content of any
such disclosure. If the Company learns that disclosure of such information
concerning Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, the Company will give prompt notice to
Investor prior to making such disclosure and allow Investor, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
3.10 Listing. The Company will (i) cause all of the
Registrable Securities covered by each Registration Statement to be listed on
each national securities exchange on which Common Stock of the Company is then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (ii) to the extent the Common Stock is not
then listed on a national securities exchange, secure the designation and
quotation of all of the Registrable Securities covered by each Registration
Statement on Nasdaq and, without limiting the generality of the foregoing,
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. as such with respect to such Registrable Securities.
3.11 Transfer Agent; Registrar. The Company will provide a
transfer agent and registrar, which may be a single entity, for the Registrable
Securities not later than the effective date of the Registration Statement.
3.12 Share Certificates. The Company will cooperate with
Investor and with the managing underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing Registrable Securities to be offered pursuant to a Registration
Statement and will enable such certificates to be in such denominations or
amounts as the case may be, and registered in such names as Investor or the
managing underwriter(s), if any, may reasonably request.
3.13 Unrestricted Securities. If, (a) the Purchased Shares
represented by a certificate have been registered under an effective
Registration Statement filed under the Securities Act and sold under such
Registration Statement, (b) Investor provides the Company and it’s transfer
agent with reasonable assurances that such shares can be sold under Rule 144, or
(c) the Purchased Shares represented by a certificate can be sold without
restriction as to the number of securities sold under Rule 144(k), the Company
will permit the transfer of such securities, and will instruct its transfer
agent to issue one or more certificates, free from any restrictive legend, in
such name and in such denominations as specified by Investor. Notwithstanding
anything herein to the contrary, the Purchased Shares may be pledged as
collateral in connection with a bona fide margin account or other lending
arrangement; provided that such pledge will not alter the provisions of this
section with respect to the removal of restrictive legends.
3.14 Plan of Distribution. At the request of Investor, the
Company will promptly prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement, and
the prospectus used in connection with the Registration Statement, as may be
necessary in order to change the plan of distribution set forth in such
Registration Statement.
3.15 Securities Laws Compliance. The Company will comply with
all applicable laws related to any Registration Statement relating to the sale
of Registrable Securities and to offering and sale of securities and with all
applicable rules and regulations of governmental authorities in connection
therewith (including, without limitation, the Securities Act, the Exchange Act
and the rules and regulations promulgated by the SEC).
3.16 Further Assurances. The Company will take all other
reasonable actions as Investor or the underwriters, if any, may reasonably
request to expedite and facilitate disposition by Investor of the Registrable
Securities pursuant to the Registration Statement.
ARTICLE 4
OBLIGATIONS OF INVESTOR
4.1 Information. As a condition to the obligations of the
Company to complete any registration pursuant to this Agreement with respect to
the Registrable Securities of Investor, Investor will furnish to the Company
such information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as is
reasonably required by the Company to effect the registration of the Registrable
Securities. At least 15 business days prior to the first anticipated filing
date of a Registration Statement for any registration under this Agreement, the
Company will notify Investor of the information the Company requires from
Investor if Investor elects to have any of its Registrable Securities included
in the Registration Statement. If, within three business days prior to the
filing date, the Company has not received the requested information from
Investor, then the Company may file the Registration Statement without including
Registrable Securities of Investor.
4.2 Further Assurances. Investor will cooperate with the
Company, as reasonably requested by the Company, in connection with the
preparation and filing of any Registration Statement hereunder, unless Investor
has notified the Company in writing of Investor’s election to exclude all of
Investor’s Registrable Securities from the Registration Statement.
4.3 Suspension of Sales. Upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3.6,
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until it receives copies of the supplemented or amended prospectus contemplated
by Section 3.6. If so directed by the Company, Investor will deliver to the
Company (at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in Investor’s possession (other than a
limited number of file copies) of the prospectus covering such Registrable
Securities that is current at the time of receipt of such notice.
ARTICLE 5
EXPENSES OF REGISTRATION
The Company will bear all reasonable expenses, other than
underwriting discounts and commissions, and transfer taxes, if any, incurred in
connection with registrations, filings or qualifications pursuant to Articles 2
and 3 of this Agreement, including, without limitation, all registration,
listing and qualifications fees, printers and accounting fees, the fees and
disbursements of counsel for the Company, and the reasonable fees and
disbursements of Investor’s legal counsel.
ARTICLE 6
INDEMNIFICATION
In the event that any Registrable Securities are included in a
Registration Statement under this Agreement:
6.1 To the extent permitted by law, the Company will
indemnify and hold harmless Investor, any underwriter(as defined in the
Securities Act) for Investor, any directors or officers of Investor or such
underwriter and any person who controls Investor or such underwriter within the
meaning of the Securities Act or the Exchange Act (each, an “Indemnified
Person”) against any losses, claims, damages, expenses or liabilities (joint or
several) (collectively, and together with actions, proceedings or inquiries by
any regulatory or self-regulatory organization, whether commenced or threatened
in respect thereof, “Claims”) to which any of them become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims arise out
of or are based upon any of the following statements, omissions or violations in
a Registration Statement (including any exhibits or schedules thereto) filed
pursuant to this Agreement, any amendment or supplement thereof or any
prospectus (preliminary or final) included therein:(a) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment or supplement thereof or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (b) any untrue
statement or alleged untrue statement of a material fact contained in the
prospectus (as it may be amended or supplemented) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading, or (c) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any other law, including
without limitation any state securities law or any rule or regulation thereunder
(the matters in the foregoing clauses (a) through (c) being, collectively,
“Violations”). Subject to the restrictions set forth in Section 6.3 with
respect to the number of legal counsel, the Company will reimburse Investor and
each such underwriter or controlling person and each such other Indemnified
Person, promptly as such expenses are incurred and are due and payable, for any
legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6.1
(i) does not apply to a Claim arising out of or based upon a violation that
occurs in reliance upon and in conformity with information furnished in writing
to the Company by any Indemnified Person expressly for use in connection with
the preparation of the Registration Statement (including any exhibits or
schedules thereto) or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3.3
hereof; and (ii) does not apply to amounts paid in settlement of any Claim if
such settlement is made without the prior written consent of the Company, which
consent will not be unreasonably withheld. This indemnity obligation will
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Persons and will survive the transfer of the
Registrable Securities by Investor under Article 9 of this Agreement.
6.2 In connection with any Registration Statement in which
Investor is participating, Investor will indemnify and hold harmless, to the
same extent and in the same manner set forth in Section 6.1 above, the Company,
each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act, and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder within the meaning of the
Securities Act or the Exchange Act (each an “Indemnified Person”) against any
Claim to which any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim arises out of or is based upon
any Violation, in each case to the extent (and only to the extent) that such
violation occurs in reliance upon and in conformity with written information
furnished to the Company by Investor expressly for use in connection with such
Registration Statement. Subject to the restrictions set forth in Section 6.3,
Investor will promptly reimburse any legal or other expenses (promptly as such
expenses are incurred and due and payable) reasonably incurred by them in
connection with investigating or defending any such Claim. However, the
indemnity agreement contained in this Section 6.2 does not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of Investor, which consent will not be unreasonably withheld,
and Investor will not be liable under this Agreement (including this Section 6.2
and Article 7) for the amount of any Claim that exceeds the net proceeds
actually received by Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. This indemnity will remain in full
force and effect regardless of any investigation made by or on behalf of an
Indemnified Party and will survive the transfer of the Registrable Securities by
Investor under Article 9 of this Agreement.
6.3 Promptly after receipt by an Indemnified Person under
this Article 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person will, if a Claim in respect
thereof is to be made against any indemnifying party under this Article 6,
deliver to the indemnifying party a written notice of the commencement thereof.
The indemnifying party may participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly given
notice, assume control of the defense thereof with counsel mutually satisfactory
to the indemnifying parties and the Indemnified Person. In that case, the
indemnifying party will diligently pursue such defense. If, in the reasonable
opinion of counsel retained by the indemnifying party, the representation by
such counsel of the Indemnified Person and the indemnifying party would be
inappropriate due to actual or potential conflicts of interest between the
Indemnified Person and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action including the Indemnified Person, and any such Indemnified Person
reasonably determines that there may be legal defenses available to such
Indemnified Person that are different from or in addition to those available to
the indemnifying party, then the Indemnified Person is entitled to assume such
defense and may retain its own counsel, with the fees and expenses to be paid by
the indemnifying party. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action does not relieve an indemnifying party of any liability to an Indemnified
Person under this Article 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action. The indemnification required
by this Article 6 will be made by periodic payments of the amount thereof during
the course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
ARTICLE 7
CONTRIBUTION
To the extent that any indemnification provided for herein is
prohibited or limited by law, the indemnifying party will make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Article 6 to the fullest extent permitted by law. However, (a) no
contribution will be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Article
6, and (b) Investor’s contribution (together with any indemnification or other
obligations under this Agreement) will be limited in amount to the net amount of
proceeds received by Investor from the sale of such Registrable Securities.
ARTICLE 8
EXCHANGE ACT REPORTING
In order to make available to Investor the benefits of Rule 144 or
any similar rule or regulation of the SEC that may at any time permit Investor
to sell securities of the Company to the public without registration, the
Company will:
(a) File with the SEC in a timely manner, and make and keep
available, all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein limits the Company’s
obligations under Section 5.2 of the Investment Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
(b) Furnish to Investor, so long as Investor holds
Registrable Securities, promptly upon Investor’s request, (i) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents filed by the Company with the SEC and (iii) such other information as
may be reasonably requested to permit Investor to sell such securities pursuant
to Rule 144 without registration.
ARTICLE 9
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of Investor hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, will be
automatically assigned by Investor to transferees or assignees of all or any
portion of the Registrable Securities, but only if (a) Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being transferred or assigned, (c) after such transferor
assignment, the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and applicable state securities
laws, and (d) at or before the time the Company received the written notice
contemplated by clause (b) of this sentence, the transferee or assignee agrees
in writing with the Company to be bound by all of the provisions contained
herein.
ARTICLE 10
AMENDMENT OF REGISTRATION RIGHTS
This Agreement may be amended and the obligations hereunder may be
waived (either generally or in a particular instance, and either retroactively
or prospectively) only with the written consent of the Company and Investor.
Any amendment or waiver effected in accordance with this Article 10 is binding
upon Investor and the Company.
ARTICLE 11
MISCELLANEOUS
11.1 Conflicting Instructions. A person or entity is deemed
to be a holder of Registrable Securities whenever such person or entity owns of
record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities with
respect to the same Registrable Securities, the Company will act upon the basis
of instructions, notice or election received from the registered owner of such
Registrable Securities.
11.2 Notices. Any notices required or permitted to be given
under the terms of this Agreement will be given as set forth in the Investment
Agreement.
11.3 Waiver. Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in exercising such
right or remedy, does not operate as a waiver thereof.
11.4 Governing Law. The formation, legality, validity,
enforceability and interpretation of this Agreement shall be governed by the
laws of the State of Minnesota, without giving effect to the principles of
conflict of laws; provided, however, that nothing in Minnesota procedural law
shall be deemed to alter or affect the applicability of the Federal Arbitration
Act as governing arbitration of disputes as provided in Section 11.14 and,
provided further, that no Minnesota laws or rules of arbitration shall be
applicable. Subject to Section 11.14 hereof, if arbitration is sought by
Investor, such arbitration shall be in Multnomah County, Oregon; and, if sought
by AVI, such arbitration shall be in Hennepin County, Minnesota; and in each
such case, the parties hereto hereby submit to the exclusive jurisdiction of the
United States federal and state courts located in such county with respect to
any dispute arising under this Agreement, the agreements entered into in
connection herewith or the transactions contemplated hereby or thereby, and
irrevocably consent to the exclusive jurisdiction and venue of such courts and
waive any objections they may have at any time to such exclusive jurisdiction
and venue.
11.5 Severability. If any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision will be deemed modified in order to conform with such statute or rule
of law. Any provision hereof that may prove invalid or unenforceable under any
law will not affect the validity or enforceability of any other provision
hereof.
11.6 Entire Agreement. This Agreement and the Investment
Agreement (including all schedules and exhibits hereto and thereto) constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein, with
respect to the subject matter hereof and thereof. This Agreement supersedes all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof.
11.7 Successors and Assigns. Subject to the requirements of
Article 9 hereof, this Agreement inures to the benefit of and is binding upon
the successors and assigns of each of the parties hereto. Notwithstanding
anything to the contrary herein, including, without limitation, Article 9,
Investor’s rights hereunder are assignable to and exercisable by a bona fide
pledge of the Registrable Securities in connection with an Investor’s margin or
brokerage accounts.
11.8 Use of Pronouns. All pronouns refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
11.9 Headings. The headings of this Agreement are for
convenience of reference only, are not part of this Agreement and do not affect
its interpretation.
11.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which is deemed an original but all of which
constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by facsimile transmission, and
facsimile signatures are binding on the parties hereto.
11.11 Further Assurances. Each party will do and perform, or
cause to be done and performed, all such further acts and things, and will
execute and deliver all other agreements, certificates, instruments and
documents, as another party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
11.12 Consents. All consents and other determinations to be
made by Investor pursuant to this Agreement will be made by Investor.
11.13 No Strict Construction. The language used in this
Agreement is deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied against any
party.
11.14 Arbitration. Any dispute arising out of or relating to
this Agreement, including the formation, interpretation or alleged breach
hereof, shall be settled in accordance with Exhibit E to the Investment
Agreement. The results of such arbitration proceedings shall be binding upon
the parties hereto, and judgment may be entered upon the arbitration award in
any court having jurisdiction thereof. Notwithstanding the foregoing, either
party may seek interim injunctive relief from any court of competent
jurisdiction.
IN WITNESS WHEREOF, Investor and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first above
written.
AVI BIOPHARMA, INC. By: /s/ Denis Burger
--------------------------------------------------------------------------------
Its: CEO
--------------------------------------------------------------------------------
MEDTRONIC ASSET MANAGEMENT, INC. By: /s/ Michael D. Ellwein
--------------------------------------------------------------------------------
Its: VP
--------------------------------------------------------------------------------
|
EXHIBIT 10.4
MANATRON, INC. EMPLOYEE STOCK OWNERSHIP
AND SALARY DEFERRAL PLAN
(Amended and Restated Effective January 1, 1995)
Warner Norcross & Judd LLP
900 Old Kent Building
111 Lyon Street, N.W.
Grand Rapids, Michigan 49503-2489
--------------------------------------------------------------------------------
MANATRON, INC. EMPLOYEE STOCK OWNERSHIP
AND SALARY DEFERRAL PLAN
TABLE OF CONTENTS
Page
ARTICLE 1 - Establishment of Plan and Trust
1
1.1
Establishment of Plan
1
(a)
Employer
(b)
Plan History
1
(c)
Adoption by Another Employer
1
1.2
Declaration of Trust
1
1.3
Compliance With Law
2
1.4
Effective Dates of Plan Provisions
2
1.5
Application to Inactive and Former Participants
2
ARTICLE 2 - Definitions
2
Table of Definitions
xiii
2.1
Break in Service
2
2.2
Employer Contributions
3
2.3
5% Owner
3
(a)
Corporation
3
(b)
Partnership
3
(c)
Proprietorship
3
2.4
Highly Compensated Employee
3
(a)
Definition
3
(b)
HCE Compensation
4
(c)
Determination Rules
4
2.5
Hour of Service
5
(a)
Back Pay
5
(b)
No Duties Performed
5
(c)
Qualified Maternity or Paternity Absence
6
(d)
Military Service
6
(e)
No Duplication
6
(f)
Non-Covered Employment
6
(g)
Periods Credited
6
(h)
Additional Hours
7
(i)
Predecessor Plan
7
(j)
Equivalency
7
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Page
2.6
Person
7
2.7
Plan Year
7
2.8
Related Employer
7
2.9
Valuation Date
8
ARTICLE 3 - Eligibility to Participate
8
3.1
Eligibility Requirements
8
(a)
Employee
8
(b)
Entry Date
8
(c)
Year of Eligibility Service
8
(d)
Eligibility Period
8
(e)
Breaks in Service
9
3.2
Requirement of Covered Employment
9
3.3
Participation Rules
9
(a)
Termination of Participation
9
(b)
Cancellation of Years of Eligibility Service
9
(c)
Resumption of Participation
9
3.4
Leased Employee
9
(a)
One-Year Period
10
(b)
Full-Time Basis
10
(c)
Conditions
10
ARTICLE 4 - Contributions, Rallovers, and Transfers to Plan
11
4.1
Contributions
11
(a)
Elective Contributions
11
(b)
Discretionary Employer Contributions
11
(c)
Restoration of Forfeiture
11
4.2
Elective Contributions
11
(a)
Payroll Deductions
12
(b)
Limits on Elective Contributions
12
(c)
Prevention of Excess Deferrals and Excess Contributions
14
(d)
Correction of Excess Deferral and Excess Contribution
14
4.3
Nonelective Contribution
15
4.4
Qualified Matching Contribution
15
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Page
4.5
Additional 401(k) Rules
16
(a)
Deadline for Inclusion in Tests
16
(b)
Plan Aggregation Rules
16
(c)
Family Aggregation
17
(d)
Order of Correction
17
(e)
Attributable Income or Loss
17
(f)
Ordering of Excess Amounts
18
(g)
Allocation of Correction Among Multiple Plans
18
(h)
Deadline for Correction
18
(i)
Taxation of Distribution
18
(j)
Penalties
19
(k)
Calendar Year/Taxable Year
19
4.6
ESOP Contribution
19
4.7
Profit-Sharing Contribution
19
4.8
Limits on Employer Contributions
20
(a)
Deduction
20
(b)
Annual Additions
20
4.9
Return of Employer Contributions
20
(a)
Mistake of Fact
20
(b)
Nondeductibility
20
(c)
Amount
20
4.1
Reduction of Employer Contribution for Leased Employees
21
4.11
Timing of Contributions
21
4.12
Rollovers and Direct Transfers
21
(a)
Permitted Transfer
21
(b)
Return of Improper Rollover
21
4.13
Multiple Adopting Employer Rules
22
(a)
Allocation Among Participating Employers
22
(b)
Contribution for Member of Affiliated Group of Corporations
22
.
ARTICLE 5 - Allocations
22
5.1
Accounts
22
(a)
Specific Accounts
22
(b)
Accounting Only
23
(c)
Consolidation
23
-iii-
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Page
5.2
Allocations
24
(a)
ESOP Contribution
24
(b)
Elective Contributions
26
(c)
Nonelective Contribution
26
(d)
Qualified Matching Contribution
26
(e)
Profit-Sharing Contribution
27
Restoration of Forfeiture
27
5.3
Stock Dividends on Employer Stock, Stock Splits, Etc
27
5.4
Forfeitures
27
(a)
Timing
27
(b)
Annual Addition Limitation
27
(c)
Investment Experience
28
(d)
Limitation on Allocation
28
5.5
Allocation of Earnings, Losses, and Expenses; Revaluation of Assets
28
(a)
Earnings, Losses, and Expenses
28
(b)
Revaluation of Trust
28
(c)
No Earnings on Distributions
29
5.6
Sale or Purchase of Employer Stock
29
(a)
Sale of Employer Stock
29
(b)
Purchase of Employer Stock
29
5.7
Limitation on Annual Additions
30
(a)
Annual Additions
30
(b)
Defined Contribution Dollar Limit
30
(c)
Percentage Limit
31
(d)
ESOP Exceptions
31
(e)
Section 415 Compensation
31
(f)
Limitation Year
32
(g)
Related Employer Aggregation
32
5.8
Excess Additions
32
(a)
Before Contribution
32
(b)
After Contribution
32
(c)
No Distribution
33
5.9
Limitation on Total Retirement Benefits
33
(a)
Defined Contribution Plan Fraction
33
(b)
Defined Benefit Plan Fraction
34
(c)
Benefit Accrual Reduction
35
(d)
Application of Limitations
35
(e)
Maximum Limitations
35
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Page
7.2
Valuation for Distribution
42
7.3
Methods and Form of Distribution
42
(a)
Method of Distribution/ESOP Account
42
(b)
Methods of Distribution/Other Accounts
42
(c)
Form of Distribution/Accounts Holding Employer Stock
45
(d)
Form of Distribution/Other Accounts
46
7.4
Minimum Distribution
46
(a)
Vested Account Balance
46
(b)
Applicable Divisor
47
(c)
Life Expectancy
47
(d)
Deferred Distribution Date
47
7.5
Time of Distribution
47
(a)
Immediate Distribution
48
(b)
Normal Distribution Date
48
(c)
Required Distribution
49
(d)
Delay
49
7.6
Death of Participant
49
(a)
Death Before Required Beginning Date
50
(b)
Death After Required Beginning Date
50
(c)
Beneficiary is Minor Child
7.7
Waiver of QJSA or QPSA; Election of Method and Tim e of Distribution
51
(a)
Waiver of QJSA
51
(b)
Waiver of QPSP
51
(c)
Spousal Consent
52
(d)
Permitted Elections
53
(e)
Required Consent
53
(f)
Exception to Waiver and Consent Requirements
53
(g)
Election Requirements
53
(h)
Failure to Elect
54
(i)
Additional Information
54
j)
No Reduction or Delay of Distribution
54
(k)
Limited Application
54
7.8
Designation of Beneficiary
54
(a)
Beneficiary
54
(b)
Spousal Consent
54
(c)
Failure to Designate
55
(d)
Death of Beneficiary
55
(e)
No Beneficiary
56
(f)
Determination
56
-vi-
--------------------------------------------------------------------------------
Page
(f)
1982 Transitional Rule
35
(g)
Reduction of Limits
35
ARTICLE 6 - Determination of Vested Percentage
36
6.1
Year of Vesting Service
36
6.2
Vested Percentage
36
(a)
100% Vesting
36
(b)
Vesting Schedule
36
(c)
Normal Retirement Date, Death, or Disability
36
6.3
Cashout
37
(a)
Partial Vesting
37
(b)
Zero Vesting
37
6.4
Five Breaks in Service
37
(a)
Cancellation of Vesting Service
37
(b)
Forfeiture of Nonvested Amount
37
6.5
Death After Termination/Lost Recipient
37
(a)
Death After Termination
37
(b)
Lost Recipient
38
6.6
Vested Account Balance and Nonvested Amount
38
(a)
Vested Amount
38
(b)
Nonvested Amount
38
(c)
Partial Distribution of Vested Account Balance
38
ARTICLE 7 - Distributions
38
7.1
Distributive Events
38
(a)
Normal Retirement Date
38
(b)
Death
39
(c)
Total Disability
39
(d)
Other Termination of Employment
39
(e)
Attainment of Age 70 1/2
39
(f)
QDRO
39
(g)
Plan Termination; Partial Termination
40
(h)
In-Service Withdrawal
40
(i)
Hardship Withdrawal
40
(j)
Additional 401(k) Distributive Events
41
(k)
Withdrawal of Rollover Account
41
-v-
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Page
7.9
Facility of Payment
56
(a)
Incapacity
56
(b)
Legal Representative
56
(c)
Determination
56
7.10
Notice of Penalties
56
(a)
Distribution Before Age 59 1/2
57
(b)
Excess Distributions
57
(c)
Failure to Receive a Minimum Distribution
57
7.11
Special Rules--Distribution of Employer Stock
57
(a)
Distributee's Option to Sell Benefit Shares
57
(b)
Right of First Refusal
58
(c)
Terms of Purchase
59
(d)
Securities Law
60
(e)
Stock Certificate Legend
60
ARTICLE 8 - Administration of the Plan
60
8.1
Duties, Powers, and Responsibilities of the Employer
60
(a)
Required
60
(b)
Discretionary
61
8.2
Employer Action
62
8.3
Plan Administrator
62
8.4
Administrative Committee
62
(a)
Appointment
62
(b)
Agent; Powers and Duties
62
(c)
Not Fiduciary
62
(d)
Membership
63
(e)
Records
63
(f)
Actions
63
(g)
Report to Administrator
63
(h)
Compensation
63
(i)
Conflict of Interest
63
8.5
Duties, Powers, and Responsibilities of the Administrator
63
(a)
Plan Interpretation
63
(b)
Participant Rights
63
(c)
Limits; Nondiscrimination Tests; Top-Heavy Tests
64
(d)
Allocations and Vesting
64
(e)
Errors in Participants' Accounts
64
-vii-
--------------------------------------------------------------------------------
Page
(f)
Claims and Elections
64
(g)
Benefit Payments
64
(h)
QDRO Determination
64
(i)
Administration Information
64
(j)
Recordkeeping
64
(k)
Reporting and Disclosure
64
(1)
Penalties; Excise Taxes
65
(m)
Advisers
65
(n)
Expenses, Fees, and Charges
65
(o)
Nondiscrimination
65
(p)
Bonding
65
(q)
Other Powers and Duties
65
8.6
Delegation of Administrative Duties
65
(a)
In Writing
65
(b)
Acceptance of Responsibility
65
(c)
Conflict
66
8.7
Interrelationship of Fiduciaries; Discretionary Authority
66
(a)
Performance of Duties
66
(b)
Reliance on Others
66
(c)
Discretionary Authority of Fiduciaries
66
8.8
Compensation; Indemnification
66
8.9
Fiduciary Standards
67
(a)
Prudence
67
(b)
Exclusive Purpose
67
(c)
Prohibited Transaction
67
8.10
Claims Procedure
67
(a)
Initial Determination
67
(b)
Method
67
(c)
Further Review
67
(d)
Redetermination
67
8.11
Participant's Responsibilities
68
ARTICLE 9 - Investment of Funds
68
9.1
Investment Responsibility
68
9.2
Authorized Investments
68
(a)
Specific Investments
68
(b)
Unallocated Funds
69
(c)
Right of Trustee To Hold Cash
-viii-
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Page
9.3
Commingled Investment
69
9.4
Investments--Employer Stock
69
(a)
Acquisition Limit
69
(b)
Adequate Consideration
69
(c)
No Commissions
70
(d)
Indebtedness
70
(e)
Securities Acquisition Loan
70
(f)
Unallocated and Pledged Employer Stock
70
(g)
No Recourse
70
(h)
Repayment of Loan
70
(i)
Release of Pledged Employer Stock
70
(j)
Pending Investment
71
9.5
Purchase From Stockholder
71
9.6
Stock Dividends, Stock Splits, Etc
72
9.7
Voting of Employer Stock
72
(a)
Participant Direction
72
(b)
Notification
72
(c)
Proxy Solicitation
72
(d)
Unallocated Shares
72
(e)
Confidentiality
72
9.8
Diversification of Investments
73
(a)
Available Employer Stock
73
(b)
Timing of Direction
73
(c)
Determination of Number of Shares To Be Liquidated and Reinvested
73
(d)
Qualified Election Period
73
(e)
Value of Shares to Be Liquidated and Reinvested
73
(f)
No Reinvestment in Employer Stock
74
9.9
Participant Investment Direction
74
(a)
Accounts
74
(b)
Choices
74
(c)
Commingling
74
(d)
Written Direction
74
(e)
Additional Terms and Conditions
74
(f)
Limitation of Trustee's Responsibilities
74
9.10
Loans
75
(a)
Separate Investment
75
(b)
Fees and Charges
75
(c)
Promissory Note
75
-ix-
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Page
(d)
Amount
75
(e)
Security
76
(f)
Default
76
(g)
Early Due Date
76
(h)
Limitation on Loan Availability
76
9.11
Tender Offer
76
(a)
Participant Direction
77
(b)
Trustee's Response - Valid Directions
77
(c)
Invalid Directions or No Directions
77
(d)
Unallocated Shares
77
(e)
Allocation of Proceeds
77
(f)
Confidentiality
77
ARTICLE 10 - Administration of the Trust
78
10.1
Duties and Powers of the Trustee
78
(a)
Duties of the Trustee
78
(b)
Powers of the Trustee
78
(c)
Limitation on Duties and Powers of the Trustee
80
10.2
Accounting
81
(a)
Report
81
(b)
Judicial Settlement
81
10.3
Appointment, Resignation, and Removal of Trustee
81
(a)
Resignation
81
(b)
Removal
81
(c)
Successor Trustee
82
(d)
Effective Date of Resignation or Removal
82
(e)
Procedure Upon Transfer
82
(f)
Earlier Transfer
82
(g)
Final Transfer
82
(h)
In Kind Transfer
82
(i)
Limitation on Liability of Successor
82
10.4
Trustee Action
82
10.5
Exculpation of Nonfiduciary
83
10.6
Co-Trustees
83
10.7
Multiple Trusts
83
(a)
Establishment of Additional Trusts
83
(b)
One Fund
83
-x-
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Page
(c)
Separate Trust Agreement
83
(d)
Contributions; Transfer of Funds; Termination
84
(e)
Named Fiduciaries; Allocation of Duties and Responsibilities
84
ARTICLE 1 1 - Amendment, Mergers, Successor Employer
84
11.1
Amendment
84
(a)
Exclude Participant
84
(b)
Reduce Participant's Account
85
(c)
Reduce Vested Percentage
85
(d)
Vesting Schedule
85
(e)
Elimination of Protected Benefits
85
(f)
Alter Trustee's Duties
85
11.2
Merger of Plans
85
(a)
Preservation of Account Balance
85
(b)
Authorization
85
11.3
Successor Employer
85
ARTICLE 12 - Termination
86
12.1
Right to Terminate or Discontinue Contributions
86
12.2
Automatic Termination
86
12.3
Discontinuance of Contributions
86
12.4
Effect of Termination or Partial Termination
86
(a)
Nonforfeitability
86
(b)
Distribution
86
12.5
No Reversion of Assets
87
ARTICLE 13 - General Provisions
87
13.1
Spendthrift Provision
87
(a)
Not Security
87
(b)
Attempts Void
87
13.2
Effect Upon Employment Relationship
87
13.3
No Interest in Employer Assets
88
13.4
Construction
88
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Page
13.5
Severability
88
13.6
Governing Law
88
13.7
Nondiversion
88
ARTICLE 14 - Top-Heavy Plan Provisions
89
14.1
Top-Heavy/Super Top-Heavy Determination
89
(a)
Top-Heavy Plan
89
(b)
Super Top-Heavy Plan
89
(c)
Calculation
89
14.2
Top-Heavy Definitions
go
(a)
Top-Heavy Ratio
go
(b)
Present Value of Accrued Benefits
go
(c)
Required Aggregation Group
91
(d)
Permissive Aggregation Group
91
(e)
Determination Date
91
(f)
Key Employee
91
(g)
Top-Heavy Valuation Date
92
14.3
Minimum Allocation
92
14.4
Vesting Schedule
92
(a)
Cessation
93
(b)
Vesting Schedule Change
93
14.5
Plan Modifications
93
SCHEDULE A
-xii-
--------------------------------------------------------------------------------
TABLE OF DEFINITIONS
Defined Terms
Term
Location
Administrator
8.3
ADP
4.2(b)(ii)(B)
ADP Compensation
4.2(b)(ii)(E)
ADP Contributions
4.2(b)(ii)(D)
ADP Limit
4.2(b)(ii)
Annual Additions
5.7(a)
Annual Compensation Limit
5.1(a)(iii)(B)(1)
Available Employer Stock
9.8(a)
Beneficiary
7.8(a)
Benefit Shares
7.11 (a)
Benefit Starting Date
7.7(e)(ii)
Break in Service
2.1
Code
1.3
Compensation
5.2(a)(iii)(B)
Covered Employment
3.2
Current Obligations
4.6
Deferral Percentage
4.2(b)(ii)(C)
Defined Benefit Dollar Limit
5.9(b)(ii)
Defined Benefit Plan Fraction
5.9(b)
Defined Contribution Dollar Limit
5.7(b)
Defined Contribution Plan Fraction
5.9(a)
Determination Date
14.2(e)
Earliest Distribution Date
7.5(a)(i)
Effective Date
1.4
Elective Contributions
4.2
Elective Contributions Account
5. 1 (a) (ii)
Elective Deferral Limit
4.2(b)(i)(A)
Elective Deferrals
4.2(b)(i)(B)
Eligibility Period
3.1 (d)
Employee
3.1 (a)
-xiii-
--------------------------------------------------------------------------------
Term
Location
Employer
1. 1 (a)
Employer Contributions
2.2
Employer Stock
5. 1 (a) (i) (C)
Employer Stock Account
5. 1 (a) (i) (A)
Entry Date
3. 1 (b)
ERISA
1.3
ESOP Account
5. 1 (a) (i)
ESOP Contribution
4.6
Excess Contribution
4.2(d)(ii)(A)
Excess Deferral
4.2(d)(i)(A)
Exempt Loan
9.4(d)
Fair Market Value
7.11 (c)(iv)
5% Owner
2.3
HCE Compensation
2.4(b)
Highly Compensated Employee
2.4(a)
Hour of Service
2.5
Investment Manager
8.1(b)(i)(B)
Key Employee
14.2(f)
Leased Employee
3.4
Limitation Year
5.7(f)
Look-Back Year
2.4(a)(i)
Minimum Distribution
7.4
Nonelective Contribution
4.3
Nonelective Contributions Account
5.1 (a)(iii)
Normal Retirement Date
7. 1 (a)
Other Investments Account
5.1(a)(i)(B)
Participant
3.1
Participating Compensation
5.2(a)(iii)(A)
Percentage Limit
5.7(c)
Permissive Aggregation Group
14.2(d)
-xiv-
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Term
Location
Person
2.6
Plan Year
2.7
Present Value of Accrued Benefits
14.2(b)(i)
Pro Rata Portion
9.4(i)
Profit-Sharing Contribution
4.7
Profit-Sharing Contributions Account
5.1(a)(v)
Projected Annual Benefit
5.9(b)(i)
QDRO
7.1(f)
QJSA
7.3(b)(i)(A)
QPSA
7.3(b)(ii)(A)
Qualified Election Period
9. 8 (d)
Qualified Matching Contribution
4.4
Qualified Matching Contributions
Account
5.1 (a)(iv)
Qualified Maternity or
Paternity Absence
2.5(c)(i)
Regulations
1.3
Related Employer
2.8
Required Aggregation Group
14.2(c)
Required Beginning Date
7.5(c)(i).
Rollover Account
5.1 (a)(vi)
Section 415 Compensation
5.7(e)
Securities Acquisition Loan
9.4(e)
Spouse
7.8(b)(ii)
Super Top-Heavy Plan
14.1 (b)
Tender Offer
9.11
Top-Heavy Plan
14.1 (a)
Top-Heavy Ratio
14.2(a)
Top-Heavy Valuation Date
14.2(g)
Total Disability
7. 1 (c)
Transfer Account
5.1 (a)(vii)
Trustee
1.2
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Term
Location
Valuation Date
2.9
Vested Account Balance
6.6(a)
Vesting Period
6.1
Year of Eligibility Service
3.1 (c)
Year of Vesting Service
6.1
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MANATRON, INC. EMPLOYEE STOCK OWNERSHIP
AND SALARY DEFERRAL PLAN
Manatron, Inc., a Michigan corporation, amends and restates the
Manatron, Inc. Employee Stock Ownership and Salary Deferral Plan (formerly the
Manatron, Inc. Profit-Sharing and Salary Deferral Plan).
ARTICLE 1
Establishment of Plan and Trust
1.1 Establishment of Plan.
This defined contribution plan is established by the Employer for the
exclusive benefit of eligible Employees and their beneficiaries.
(a) Employer. "Employer" means Manatron, Inc. and any other
employer that has adopted or later adopts this plan.
(b) Plan History. A schedule that states the effective date
of this plan and certain amendments may be attached.
(c) Adoption by Another Employer. Adoption of this plan by
another employer shall be effective as of the date approved and specified in
writing by Manatron, Inc. and by the adopting employer. Manatron, Inc. and the
adopting employer shall specify any special eligibility rules (including an
earlier entry date) or prior service credits for affected employees of the
adopting employer. Adoption of this plan by an employer other than Manatron,
Inc. shall not create a separate plan.
For purposes of administration of this plan, "Employer" means only
Manatron, Inc.
1.2 Declaration of Trust.
The "Trustee" (Paul R. Sylvester for the ESOP; and Comerica Bank; or a
successor Trustee) declares that plan assets delivered to it will be held in
trust and administered under the terms of this plan and trust. The Employer may
establish one or more trusts under which plan assets shall be held and invested
by one or more Trustees. The trusts are established and shall be operated for
the exclusive benefit of Participants and their beneficiaries. The trusts shall
not be diverted to other purposes, except that trust assets may be used to pay
reasonable expenses of administration.
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1.3 Compliance With Law.
This benefit program is intended to continue a qualified retirement
plan and trust under the Internal Revenue Code of 1986 ("Code") and the Employee
Retirement Income Security Act of 1974 ("ERISA"), as amended, and all
Regulations issued under the Code and ERISA ("Regulations").
1.4 Effective Dates of Plan Provisions.
"Effective Date" of this restated plan means January 1, 1995, unless a
provision specifies a different effective date. Each plan provision applies from
its effective date until the effective date of an amendment.
1.5 Application to Inactive and Former Participants.
An amendment to this plan shall apply to former Participants and to
Participants not employed in Covered Employment on the effective date of the
amendment only if it amends a provision of the plan that continues to apply to
those Participants or only to the extent it expressly states that it is
applicable. Except as specified in the preceding sentence, if a Participant is
not employed in Covered Employment on the effective date of an amendment, the
amendment shall not become applicable to the Participant unless the Participant
has an Hour of Service in Covered Employment after the effective date of the
amendment.
ARTICLE 2
Definitions
Except for the following general definitions, defined terms are
located at or near the first major use of the term in this plan. A table showing
the location of all definitions appears immediately after the table of contents.
When used as defined, the first letter of each defined term is capitalized.
2.1 Break in Service.
"Break in Service" means an Employee's failure to complete more than
500 Hours of Service during a 12-consecutive-month period.
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2.2 Employer Contributions.
"Employer Contributions" means ESOP Contributions, Elective
Contributions, Nonelective Contributions, Qualified Matching Contributions, and
Profit-Sharing Contributions.
2.3 5% Owner.
"5% Owner" means:
(a) Corporation. An individual who owns (or is considered to
own under Code Section 318) either more than 5% of the outstanding stock of a
corporate Employer or Related Employer, or stock possessing more than 5% of the
total combined voting power of all stock of a corporate Employer or Related
Employer;
(b) Partnership. A partner who owns more than 5% of the
capital or profits interest in an Employer or Related Employer that is a
partnership; or
(c) Proprietorship. An Employer or Related Employer that is a
sole proprietor.
Notwithstanding aggregation of the Employer and all Related Employers
as required by Code Sections 414(b), (c) and (m), the percentage of ownership
for purposes of this definition shall be determined separately for each entity
that is an Employer or Related Employer.
2.4 Highly Compensated Employee.
(a) Definition. "Highly Compensated Employee" for a Plan Year
means any Employee who:
(i) 5% Owner. Was a 5% Owner at any time during the
current Plan Year or the 12-month period immediately preceding the current Plan
Year ("Look-Back Year"); or
(ii) Other. Is described in (A), (B), or (C), and
is one of the 100 Employees paid the most compensation during the current Plan
Year, or was described in (A), (B), or (C) during the Look-Back Year.
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(A) Compensation. Received HCE Compensation in
excess of $75,000 (as adjusted under Code Section 415(d));
(B) Top-Paid 20%. Received HCE Compensation in
excess of $50,000 (as adjusted under Code Section 415(d)) and was among the
top-paid 20% of Employees for the Plan Year when ranked by HCE Compensation; or
(C) Officers. Was an officer and received HCE
Compensation in excess of 50% of the defined benefit dollar limit under Code
Section 415(b)(1)(A) (as adjusted under Code Section 415(d)) or, if the Employer
or a Related Employer has no officer described in the preceding phrase, is the
highest paid officer of the Employer or the Related Employer for the Plan Year.
(b) HCE Compensation. "HCE Compensation" means Section 415
Compensation plus elective contributions that are excluded from gross income by
Code Sections 125, 402(a)(8), 402(h), or 403(b).
(c) Determination Rules. The determination of who is a Highly
Compensated Employee shall be made under Code Section 414(q) and Regulations,
including the following rules:
(i) Officers. The number of Employees considered to be
officers shall be limited to 50 or, if less, the greater of three Employees or
10% of all Employees.
(ii) Top-Paid 20%. The following Employees are excluded
before determining the top-paid 20% of Employees:
(A) Age and Service. Employees who have not
attained age 21 or completed six months of service by the last day of the
current Plan Year or Look-Back Year;
(B) Part-Time/Seasonal. Employees who normally work
less than 17 1/2 hours per week or normally work six months or less in any Plan
Year;
(C) Nonresident Aliens. Employees who are
nonresident aliens receiving no earned income from sources within the United
States; and
(D) Collective Bargaining Employees. Employees
covered by a collective bargaining agreement if more than 90% of all Employees
are covered by a collective bargaining agreement and this plan excludes them.
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(iii) Family Aggregation. If, during the current
Plan Year or the Look-Back Year, a Participant is a spouse, lineal ancestor or
descendant, or spouse of a lineal ancestor or descendant, of a Participant who
is either a 5% Owner or a Highly Compensated Employee among the 10 Highly
Compensated Employees paid the most compensation for the current Plan Year or
Look-Back Year, the Participants shall be treated as one Highly Compensated
Employee.
(iv) Former Employees. A former Employee who was a
Highly Compensated Employee at termination of employment or at any time after
attaining age 55 shall be a Highly Compensated Employee at all times thereafter.
(v) Look-Back Year Election. In accordance with the
Regulations, the Employer may elect to designate the calendar year ending with
or within a Plan Year as the Look-Back Year for that Plan Year.
2.5 Hour of Service.
"Hour of Service" means each hour that an Employee is directly or
indirectly paid or entitled to be paid by the Employer for the performance of
duties during the applicable period. These hours will be credited for the period
in which the duties are performed.
(a) Back Pay. Hours of Service include each hour for which
back pay, irrespective of mitigation of damages, is awarded or agreed to by the
Employer. Back pay hours shall be credited to the Employee for the period or
periods to which the award or agreement pertains.
(b) No Duties Performed. For all purposes under this plan, an
Employee shall be credited with the first 501 Hours of Service for which the
Employee is directly or indirectly paid or entitled to be paid by the Employer
(including back pay) for each single period of absence from work, even if no
duties are performed due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military service, or leave of absence, even if
employment terminates. However, an Employee is not required to be credited with
Hours of Service for periods in which no duties are performed if the Employee is
compensated solely as required by worker's compensation, unemployment
compensation, or disability insurance laws. Hours described in this subsection
(b) shall be credited to the Employee for the period in which payment is made or
amounts payable to the Employee become due.
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(c) Qualified Maternity or Paternity Absence. Only for
purposes of determining whether the Employee has a Break in Service, an Employee
shall be credited with the first 501 Hours of Service during a Qualified
Maternity or Paternity Absence.
(i) Definition. A "Qualified Maternity or Paternity
Absence" means an absence from work due to pregnancy of the Employee, birth of a
child of the Employee, placement of a child with the Employee in connection with
adoption of the child, or caring for a child immediately after the birth or
placement of the child with the Employee.
(ii) Credit. If necessary to avoid a Break in
Service, Hours of Service shall be credited for the period in which the absence
begins. If the hours are not necessary to prevent a Break in Service for that
period, the hours shall be credited for the next period. Hours of Service are
credited at the rate the Employee normally would have earned Hours of Service.
If these hours cannot be determined, the hours shall be credited at the rate of
eight hours per day of absence.
(d) Military Service. If employment terminates due to active
service in the armed forces of the United States, the Employee shall be credited
with Hours of Service for the hours the Employee would have been scheduled to
work during each month of the period of active service. The Employee must apply
for, and be able to resume, employment with the Employer within the time limits
established by federal law for protection of veterans' reemployment rights.
(e) No Duplication. There shall be no duplication in the
crediting of Hours of Service. An Employee shall not be credited with more than
one Hour of Service for each hour paid at a premium rate.
(f) Non-Covered Employment. Hours of Service earned in
employment with the Employer or a Related Employer that is not Covered
Employment count toward Years of Eligibility Service and Years of Vesting
Service, but not toward determining eligibility for a share of the Employer
Contribution.
(g) Periods Credited. Generally, Hours of Service shall be
credited as provided in Section 2530.200b of the ERISA Regulations. Hours of
Service under (b) above shall be credited under the rules of this section and as
provided in Section 2530.200b-2(b) of those Regulations. Hours of Service shall
be credited to appropriate periods determined under the rules set forth in
Section 2530.200b-2(c) of those Regulations.
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(h) Additional Hours. The Administrator may adopt additional
written, uniform, and nondiscriminatory rules that credit more Hours of Service
than those required under the rules set forth in this section.
(i) Predecessor Plan. If this plan is required to be treated
as a continuation of the plan of a predecessor employer under Code Section
414(a), an Employee shall be credited with all Hours of Service credited to the
Employee under the predecessor's plan.
(j) Equivalency. If an Employee is not paid on an hourly
basis and records of hours worked are not maintained, Hours of Service shall be
credited at the rate of 10 hours per day for each day that the Employee would be
credited with at least one Hour of Service under this section.
2.6 Person.
"Person" means an individual, committee, proprietorship, partnership,
corporation, trust, estate, association, organization, or similar entity.
2.7 Plan Year.
"Plan Year" means the 12-month period beginning each January 1.
2.8 Related Employer.
"Related Employer" means (i) each corporation, other than the
Employer, that is a member of a controlled group of corporations, as defined in
Code Section 414(b), of which the Employer is a member, (ii) each trade or
business, other than the Employer, whether or not incorporated, under common
control of or with the Employer under Code Section 414(c); (iii) each member,
other than the Employer, of an affiliated service group, as defined in Code
Section 414(m), of which the Employer is a member; and (iv) any other entity
required to be aggregated with the Employer by Regulations under Code Section
414(o). An entity shall not be considered a Related Employer for any purpose
under this plan during any period it does not satisfy (i), (ii), (iii), or (iv)
in the preceding sentence.
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2.9 Valuation Date.
"Valuation Date" means the last day of the Plan Year and any other
date specified as a Valuation Date by the Administrator.
ARTICLE 3
Eligibility to Participate
3.1 Eligibility Requirements.
The eligibility requirements for participation in this plan are
attainment of age 21 and completion of one Year of Eligibility Service. An
Employee in Covered Employment shall become a Participant ("Participant") on the
first Entry Date following the date the Employee satisfies the eligibility
requirements. An Employee who was a Participant in the ATEK Information
Services, Inc. Retirement Savings Plan on December 31, 1994, shall continue to
participate under the terms of this plan.
(a) Employee. "Employee" means an individual who is employed
by the Employer or a Related Employer and who receives compensation for personal
services to the Employer or Related Employer that is subject to withholding for
federal income tax purposes.
(b) Entry Date. "Entry Date" means each January 1 and July 1.
(c) Year of Eligibility Service. "Year of Eligibility
Service" means completion of at least 1,000 Hours of Service during an
Eligibility Period. A Year of Eligibility Service is credited only at the end of
the Eligibility Period.
An Employee who is credited with at least 1,000 Hours of Service in
both the initial Eligibility Period and the second Eligibility Period (the Plan
Year beginning during the initial Eligibility Period) shall be credited with two
Years of Eligibility Service.
(d) Eligibility Period. The initial "Eligibility Period"
means the 12-month period beginning on the date the Employee first has an Hour
of Service. For an Employee who has a Break in Service due to termination of
employment before completing the eligibility requirements, the initial
Eligibility Period begins on the date the Employee has an Hour of Service due to
reemployment. The second "Eligibility Period" means the Plan Year beginning
within the initial Eligibility Period. Each later Eligibility Period shall
coincide with each later Plan Year.
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(e) Breaks in Service. Breaks in Service under this article
shall be determined on the basis of Eligibility Periods.
3.2 Requirement of Covered Employment.
If an eligible Employee is not employed in Covered Employment on the
applicable Entry Date and the Employee's Years of Eligibility Service are not
canceled under Section 3.3(b), the Employee shall become a Participant on the
first subsequent day on which the Employee has an Hour of Service in Covered
Employment.
"Covered Employment" means all employment with the Employer except
employment with a Related Employer that has not adopted this plan, employment as
a Leased Employee, employment in a unit of employees covered by a collective
bargaining agreement under which the Employer has engaged in good faith
negotiations about retirement benefits, or employment as a nonresident alien
receiving no earned income from sources within the United States.
3.3 Participation Rules.
(a) Termination of Participation. Participation shall
terminate upon the earlier of the date the Participant is not an Employee and
has been paid the full amount due under this plan, the date of the Participant's
death, or the date the Participant's Years of Eligibility Service are canceled
under (b) below.
(b) Cancellation of Years of Eligibility Service. An
Employee's Years of Eligibility Service shall be canceled if the Employee's
vested percentage is zero and the Employee has at least five consecutive Breaks
in Service.
(c) Resumption of Participation. If an Employee's Years of
Eligibility Service are canceled under (b) above, the Employee must satisfy the
eligibility requirements of Section 3.1 again to participate or to resume
participation in this plan. If the Years of Eligibility Service of a former
Participant are not canceled, the former Participant shall resume participation
immediately upon completion of an Hour of Service in Covered Employment.
3.4 Leased Employee.
"Leased Employee" means an individual described in and required to be
treated as an Employee under Code Sections 414(n) and 414(o) and Regulations.
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For purposes of this definition, the Employer or any Related Employer for whom a
Leased Employee performs services is referred to as the recipient.
A Leased Employee under Code Section 414(n) is an individual who is
not an Employee (except by reason of this definition) but who performs services
for the recipient of a type historically performed by employees in the
recipient's business field, pursuant to an agreement between the recipient and a
leasing organization, on a full-time basis for at least a one-year period.
(a) One-Year Period. For purposes of this definition, a
one-year period is the individual's initial 12-month period of performing
services for the recipient or any Plan Year beginning during or after that
initial 12-month period.
(b) Full-Time Basis. An individual is considered to be
employed on a full-time basis if the individual completes the lesser of 1,500
Hours of Service or 75% of the median number of Hours of Service credited to
Employees who perform similar services for the recipient. If no Employees
perform similar services during the current period, the median shall be based on
the performance of similar services by Employees during a prior Plan Year. An
individual is not considered employed on a full-time basis unless the individual
completes at least 1,000 Hours of Service.
(c) Conditions. A Leased Employee shall be treated as an
Employee unless:
(i) 20% of Non-Highly Compensated Work Force.
Leased Employees do not constitute more than 20% of the recipient's non-highly
compensated work force, and
(ii) Covered by Plan Described in Code Section
414(n). The Leased Employee is covered by a money purchase pension plan
described in Code Section 414(n) with a nonintegrated employer contribution rate
of at least 10% of HCE Compensation, immediate participation, and full and
immediate vesting. Immediate participation shall not be required for a Leased
Employee who received less than $1,000 in compensation from the leasing
organization in each Plan Year during the four-year period ending with the
current Plan Year.
A Leased Employee includes a leased owner or a leased manager
determined to be a Leased Employee under Code Section 414(o) and the
Regulations.
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ARTICLE 4
Contributions, Rollovers,
and Transfers to Plan
4.1 Contributions.
The following contributions are permitted or required for a Plan Year.
(a) Elective Contributions. A Participant shall determine
whether to have an Elective Contribution made for the Participant and the amount
of the Elective Contribution.
(b) Discretionary Employer Contributions. The Employer shall
determine the amount of the following discretionary contributions for each Plan
Year:
(i) Nonelective Contribution. A Nonelective
Contribution;
(ii) Qualified Matching Contribution. A Qualified
Matching Contribution;
(iii) ESOP Contribution. An ESOP Contribution; and
(iv) Profit-Sharing Contribution. A Profit-Sharing
Contribution.
The Employer may determine that no discretionary contribution will be
made for a Plan Year. A decision by the Employer to make a discretionary
contribution is not a commitment or obligation to make any type of contribution
for a subsequent Plan Year.
(c) Restoration of Forfeiture. When restoration of a
forfeiture is required under Article 6 and current forfeitures and trust
earnings applied for that purpose are insufficient, the Employer shall
contribute the necessary additional amount.
4.2 Elective Contributions.
A Participant may elect to reduce the Participant's Compensation by
pretax pay-roll deductions. The amount shall be a fixed dollar amount or in a
percentage, not less than 1% nor more than 15%. The Employer shall contribute a
corresponding
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amount to the trust on behalf of the Participant. Employer Contributions
corresponding to a Participant's pretax payroll deductions are "Elective
Contributions."
(a) Payroll Deductions. The Administrator shall adopt rules
for payroll deductions and shall specify any applicable minimum or maximum rates
or amounts. Absent specific rules, any election to authorize, modify, suspend,
or resume payroll deductions shall be in writing and signed by the Participant
and shall be subject to the following:
(i) Timing. The election shall be made within a
reasonable time before the election is to be effective.
(ii) When Effective. A Participant may make a new
election or change a prior election as of the first day of any calendar quarter.
The election shall continue in effect until modified or suspended. A Participant
may suspend payroll deductions at any time. The election shall be effective for
the first administratively feasible payroll period following the election.
(b) Limits on Elective Contributions. Elective Contributions
are subject to the following limits:
(i) Elective Deferral Limit. A Participant's
Elective Deferrals for a calendar year shall not exceed the Elective Deferral
Limit .
(A) Amount of Limit. "Elective Deferral
Limit" means $7,000 (the dollar amount under Code Section 402(g)), adjusted
under Code Section 415(d) as of the beginning of the calendar year. The limit
shall be reduced when required by the hardship withdrawal provisions of Article
7.
(B) Elective Deferrals. "Elective
Deferrals" means the Elective Contributions made for the Participant and any
other portion of the Participant's income deferred and excluded from current
taxation under Code Sections 402(e)(3) (a cash or deferred 401(k) profit-sharing
plan); 402(h) (a simplified employee pension plan); or 403(b) (a tax-sheltered
annuity). In applying the limit, all of the Participant's Elective Deferrals for
the calendar year shall be aggregated.
(ii) ADP Limit. "ADP Limit" means the maximum ADP
for Highly Compensated Employees determined as follows:
(A) Amount of Limit. For Plan Years
beginning after December 31, 1986, the ADP for Highly Compensated Employees for
each Plan Year shall not exceed the greater of:
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(1) 125% Limit. 125% of the ADP
for all Participants who are not Highly Compensated Employees, or
(2) 200%/2% Limit. 200% of the
ADP for all Participants who are not Highly Compensated Employees or, if less,
the ADP for all Participants who are not Highly Compensated Employees plus two
percentage points.
(B) ADP. "ADP" means the average of the
Deferral Percentages determined by dividing the sum of all Deferral Percentages
of all eligible Participants in the applicable group by the number of eligible
Participants in that group. An eligible Participant is a Participant who is
directly or indirectly eligible to make or receive an allocation of an ADP
Contribution.
(C) Deferral Percentage. "Deferral
Percentage" means a percentage determined by dividing the Participant's ADP
Contributions for the Plan Year by the Participant's ADP Compensation. If ADP
Contributions are not made for the Participant, the Participant's Deferral
Percentage is zero.
(D) ADP Contributions. "ADP
Contributions" means the sum of the following for the Plan Year:
(1) Elective Contributions.
Elective Contributions made for the Participant; and
(2) Other Contributions Treated
As Elective Contributions. Qualified Matching and Nonelective Contributions
treated as Elective Contributions for a Plan Year to the extent permitted under
Regulations Section 1.401(k)(1)(b)(5).
(E) ADP Compensation. "ADP Compensation"
means the Employee's compensation for the Plan Year as defined in Code Section
414(s) and Regulations. ADP Compensation is determined only for the portion of
the Plan Year that the Employee is a Participant employed in Covered Employment.
ADP Compensation shall not exceed the Annual Compensation Limit, adjusted and
applied as specified in Section 5.2(a)(iii)(B).
(F) Aggregation With Other Plans. This
plan and any plan aggregated with this plan under the plan aggregation rules of
Section 4.5 shall be treated as a single plan for testing compliance with the
ADP Limit.
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(G) Additional Rules. In determining
compliance with the ADP Limit, the testing coordination, plan aggregation,
family aggregation, correction, and other rules in Section 4.5 apply.
(c) Prevention of Excess Deferrals and Excess Contributions.
If the Administrator determines that the Elective Deferral Limit or the ADP
Limit may be exceeded, the Administrator may reduce or suspend Elective
Contributions for individual Highly Compensated Employees as necessary.
(d) Correction of Excess Deferral and Excess Contribution.
(i) Excess Deferral. Upon written notification, an
Excess Deferral, plus attributable income or loss, shall be distributed to the
Participant.
(A) Definition. "Excess Deferral" means a
Participant's Elective Deferrals that exceed the Elective Deferral Limit.
(B) Written Notification. If the Excess
Deferral for a Participant occurs within one or more plans of the Employer and
any Related Employer, the Employer must notify the Trustee of the amount of the
Excess Deferral to be distributed from this plan. If the Excess Deferral for a
Participant occurs under this plan and one or more plans of unrelated employers,
the Participant must notify the Administrator of the amount of the Excess
Deferral to be distributed from this plan. The notification should be given no
later than February 15 following the calendar year for which the Excess Deferral
was contributed. The notification must specify the amount of Excess Deferral to
be distributed and contain an acknowledgment that the amount to be distributed
exceeds the Elective Deferral Limit.
(C) Time of Distribution. If the written
notification is timely, the distribution shall be made by April 15 following
receipt of the request. If not, any Excess Deferral shall be retained in this
plan and distributed under Article 7.
(D) Application to ADP Limit. An amount
distributed to a Highly Compensated Employee to correct an Excess Deferral
(whether it occurs under plans of unrelated employers or under a plan or plans
of the Employer and any Related Employer) shall be included in determining
compliance with the ADP Limit as if not distributed. An amount distributed to a
Participant who is not a Highly Compensated Employee to correct an Excess
Deferral that occurs within one or more plans of the Employer and any Related
Employer shall not be included in determining compliance with the ADP Limit.
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(ii) Excess Contribution. An Excess Contribution,
plus any attributable income or loss, shall be deducted from each affected
Participant's Elective Contributions Account, Qualified Matching Contributions
Account, and Nonelective Contributions Account.
(A) Definition. "Excess Contribution"
means the ADP Contributions of Highly Compensated Employees that cause the ADP
to exceed the ADP Limit, reduced by the amount of any Excess Deferral
distributed under (d)(i) above.
(B) Method. Correction of the Excess
Contribution first shall be made by deducting the Participant's Elective
Contributions that are not eligible to be matched. If further deduction is
necessary, it shall be applied proportionately to the Participant's remaining
Elective Contributions and Qualified Matching Contributions. Finally, if
necessary because the Participant's Elective Contributions and Qualified
Matching Contributions have been exhausted, any remaining Excess Contribution
shall be deducted from the Participant's Nonelective Contributions.
Elective Contributions and Nonelective
Contributions deducted to correct an Excess Contribution shall be distributed to
the Participant. Qualified Matching Contributions deducted to correct an Excess
Contribution shall be treated as a forfeiture as of the date of deduction.
4.3 Nonelective Contribution.
The Employer may make a Nonelective Contribution for a Plan Year
("Nonelective Contribution") for any or all Participants. The Employer shall
determine whether the Nonelective Contribution for a Plan Year shall be
contributed for all Participants or only for a nondiscriminatory group of
Participants. The Employer may specify a minimum or maximum amount to be
contributed for each eligible Participant.
4.4 Qualified Matching Contribution.
The Employer may make a Qualified Matching Contribution for all or any
part of a Plan Year for each Participant credited with Elective Contributions
for the applicable portion of the Plan Year ("Qualified Matching Contribution").
The amount of the Qualified Matching Contribution for each eligible Participant
may be based on the Participant's Elective Contributions made during the entire
Plan Year or, if specified by the Employer, each segment of the Plan Year such
as each payroll period or each quarterly period. Qualified Matching
Contributions shall not be based on Elective
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Contributions that are Excess Deferrals or Excess Contributions. The Employer
may specify a minimum or maximum amount to be contributed for each eligible
Participant. The Employer shall determine whether the Qualified Matching
Contribution for any part of the Plan Year shall be contributed for all
Participants or only for a nondiscriminatory group of Participants.
The amount of the Qualified Matching Contribution shall be 25% of the
Elective Contributions made for each eligible Participant up to a maximum
Qualified Matching Contribution of 1 1/4% of the Participating Compensation for
each eligible Participant for the Plan Year. The Employer shall have the right
to change the level of the Qualified Matching Contribution at any time for all
or any part of a Plan Year.
4.5 Additional 401(k) Rules.
The following additional rules apply to the contributions subject to
the Elective Deferral and ADP Limits:
(a) Deadline for Inclusion in Tests. To be included for
testing compliance with the ADP Limit for a Plan Year, contributions must be
paid to the trust by the end of the twelfth month after the end of that Plan
Year and must be allocated to the Participant's accounts as of a date during the
Plan Year.
(b) Plan Aggregation Rules.
(i) HCE Required Aggregation. Unless prohibited by
the Regulations, if the same Highly Compensated Employee is eligible to
participate in two or more plans of the Employer or a Related Employer, the
plans shall be treated as a single plan for determining compliance with the ADP
Limit. If the plans have different plan years, they shall be treated as a single
plan with respect to the plan years ending within the same calendar year.
(ii) Required Aggregation. If this plan and any
other qualified retirement plan of the Employer or a Related Employer are
required to be treated as a single plan for compliance with Code Section 410(b)
(other than Code Section 410(b)(2)(A)(ii)), compliance with the ADP Limit shall
be determined as if the plans were a single plan.
(iii) Permissive Aggregation. If this plan and any
other qualified retirement plan of the Employer or a Related Employer are
treated as a single plan when permitted but not required by Code Section 410(b)
and Regulations, the aggregated plans must comply with the ADP Limit and must
also meet the
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requirements of Code Sections 401 (a)(4) and 410(b) as if the plans were a
single plan. For Plan Years beginning after December 31, 1989, plans may be
aggregated permissively only if they have the same plan year.
(iv) Prohibited Aggregation. Plans that may be
aggregated under Code Section 410(b) but are not actually aggregated for a Plan
Year for purposes of Code Section 410(b) (other than Code Section
410(b)(2)(A)(ii)) may not be aggregated for purposes of compliance with the ADP
Limit.
(c) Family Aggregation. Family members aggregated under
Section 2.4(c)(iii) shall be treated as a single fictitious Highly Compensated
Employee for testing compliance with the ADP Limit. The Deferral Percentage for
the fictitious Highly Compensated Employee shall be the amount determined by
combining the ADP Contributions and combining the ADP Compensation of all family
group members. The fictitious Highly Compensated Employee shall represent the
entire family group in the ADP test and none of the individual family members or
their respective Deferral Percentages shall be separately included in the tests.
(d) Order of Correction.
(i) Order. Excess Contributions shall be corrected
by reducing the Deferral Percentages of Highly Compensated Employees, beginning
with those at the highest Deferral Percentage, to the next lower Deferral
Percentage level for Highly Compensated Employees or, if greater, a percentage
that results in compliance with the ADP Limit. If further reduction is required
to satisfy the ADP Limit, the amount of correction shall be determined by
continuing the process until the ADP Limit is not exceeded. The amount by which
the Deferral Percentage is reduced shall be deducted from each affected Highly
Compensated Employee as specified in Section 4.2(d).
(ii) Family Aggregation Group. The amount of Excess
Contributions attributable to the fictitious Highly Compensated Employee shall
be allocated among the members of the family aggregation group in proportion to
the ADP Contributions combined to determine the Deferral Percentage of the
fictitious Highly Compensated Employee.
(e) Attributable Income or Loss. Any deduction from a
Participant's account to correct or in conjunction with correction of an Excess
Deferral or Excess Contribution shall include the attributable income or loss
for the applicable period and for the period between the last day of the
applicable period and the date of distribution. The applicable period for an
Excess Deferral is the calendar year. The applicable period for an Excess
Contribution is the Plan Year.
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(i) Method of Determination, The Employer may
determine the attributable income or loss for the applicable period and for the
period between the last day of the applicable period and the date of
distribution using any reasonable method that does not result in discrimination
under Code Section 401(a)(4). The method must be used consistently for all
Participants and for all corrective distributions for the Plan Year and must be
the method used for allocating earnings or losses to the Participants' accounts
for that year.
(ii) Alternative Method of Determination. If the
attributable income or loss is not determined under (i) above, the income or
loss shall be determined by multiplying the income or loss attributable to the
account from which the correcting deduction is made for the applicable period
for which the excess is determined by a fraction. The numerator of the fraction
is the excess amount. The denominator is the balance in the account as of the
first day of the applicable period, plus contributions allocated as of the last
day of the period.
In addition, income credited for the period between the last
day of the applicable period and the date of distribution shall be equal to 10%
of the income determined under the preceding paragraph multiplied by the number
of full months between the last day of the applicable period and the date of
distribution. A month shall be considered a full month if the payment is made
after the 15th day of that month.
(f) Ordering of Excess Amounts. Excess Deferrals shall be
determined and corrected before Excess Contributions.
(g) Allocation of Correction Among Multiple Plans. If the
Employer maintains another plan that must be aggregated with this plan for
testing compliance with the ADP Limit, the Employer shall specify the plan from
which corrections are to be made.
(h) Deadline for Correction. To correct an Excess
Contribution, a distribution shall be made not later than the last day of the
Plan Year after the Plan Year for which the excess was contributed.
(i) Taxation of Distribution.
(i) Excess Deferral. The Excess Deferral is
included in the Participant's income for the calendar year for which
contributed. The attributable income or loss is included for the calendar year
of distribution.
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(ii) Excess Contribution. If made within the
two-and-one-half-month period after the end of the Plan Year for which the
excess was contributed, an amount distributed to correct an Excess Contribution
shall be included in the Participant's income for the calendar year for which it
was contributed. A later distribution to correct an Excess Contribution shall be
included in the Participant's income for the calendar year in which it is
distributed.
(j) Penalties. Distribution of an Excess Deferral or an
Excess Contribution does not subject the Participant to the 10% penalty on an
early withdrawal under Code Section 72(t). The Employer shall be liable for a
10% excise tax under Code Section 4979 on the Excess Contributions distributed
after the two-and-one-half-month period following the end of the Plan Year for
which they were contributed.
(k) Calendar Year/Taxable Year. The term calendar year with
reference to an individual means the taxable year for any individual whose
taxable year is not the calendar year.
4.6 ESOP Contribution.
The Employer may make an "ESOP Contribution" for a Plan Year on behalf
of all eligible Employees. Subject to the restrictions of this plan, the ESOP
Contribution shall be sufficient to meet the Current Obligations of this plan to
the extent the Current Obligations are not paid with cash dividends. To the
extent the ESOP Contribution is made in cash, the ESOP Contribution shall be
used to repay an Exempt Loan used to purchase Employer Stock for this plan. An
ESOP Contribution is not subject to the ADP Limit.
"Current Obligations" means trust financial obligations arising from
an Exempt Loan to the trust, and payable in cash within one year from the date
an Employer Contribution is due.
4.7 Profit-Sharing Contribution.
The Employer may, but shall not be required to, make a Profit-Sharing
Contribution for a Plan Year. A "Profit-Sharing Contribution" is an Employer
Contribution made at the discretion of the Employer that is not subject to the
ADP Limit.
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4.8 Limits on Employer Contributions.
Employer Contributions are subject to the following limits:
(a) Deduction. Employer Contributions for a Plan Year shall
not exceed the amount allowable as a deduction under Code Section 404. The
deduction generally may not exceed 15% of the Section 415 Compensation of all
Participants. If there are unused deductible amounts from taxable years
beginning before January 1, 1987, the contribution may be increased but shall
not exceed the lesser of 15% of the Section 415 Compensation of all Participants
plus the unused deductible amount or 25% of the Section 415 Compensation of all
Participants. A nondeductible contribution may be subject to a 10% excise tax.
(b) Annual Additions. Employer Contributions are subject to
the limit on Annual Additions stated in Article 5.
4.9 Return of Employer Contributions.
(a) Mistake of Fact. Part or all of any Employer Contribution
made by mistake of fact shall be returned to the Employer, upon demand, within
one year after payment of the contribution.
(b) Nondeductibility. Each Employer Contribution is
conditioned on its deductibility under Code Section 404. A nondeductible
Employer Contribution shall be returned to the Employer, upon demand, before the
due date for the Employers federal income tax return for the taxable year for
which the contribution was made. The portion of the contribution to be returned
shall not exceed the amount determined to be nondeductible.
(c) Amount. The amount that may be returned shall be
determined as of the Valuation Date coinciding with or most recently preceding
the date of repayment. The amount shall be the excess of the amount contributed
over the amount that is deductible or the amount that would have been deductible
if the mistake of fact had not occurred. Earnings attributable to the excess
amount shall not be returned. Losses attributable to the excess amount shall
reduce the amount returned. The amount returned shall not reduce a Participant's
account to less than the account balance would have been on the applicable
Valuation Date had the excess amount not been contributed.
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4.10 Reduction of Employer Contribution for Leased Employees.
If a Leased Employee becomes a Participant in this plan, any Employer
Contribution which would be made for and allocated to the Leased Employee (other
than an Elective Contribution) shall be reduced by any contribution made by the
leasing organization for the Participant to a qualified retirement plan for
services performed by the Leased Employee for the Employer.
4.11 Timing of Contributions.
Any Employer Contribution (other than an Elective Contribution) shall
be paid to the Trustee on or before the date prescribed by law (including
extensions) for filing the Employer's federal income tax return for the taxable
year. The Employer also shall identify the type and amount of each contribution
for a Plan Year by written communication to the Trustee on or before the date
final allocations are performed under Article 5. If property other than cash is
contributed, the property shall be valued at fair market value at the time of
contribution. Any amount withheld from a Participant's Compensation for
contribution to this plan shall be paid to the Trustee as soon as
administratively feasible after the amounts are withheld from Participants'
Compensation and not later than the time described above for filing the
Employer's federal income tax return.
4.12 Rollovers and Direct Transfers.
The Trustee may accept, administer, and distribute an amount that is
either a rollover or a direct transfer from another qualified retirement plan.
(a) Permitted Transfer. The transfer must be either
(i) Direct Transfer. A direct plan-to-plan transfer
of funds held under another qualified retirement plan or trust for a Participant
that is not a qualifying rollover, or
(ii) Qualifying Rollover. A rollover amount within
the meaning of Code Sections 402(a)(5) or 408(d)(3) that the Participant
certifies in writing is a qualifying rollover.
(b) Return of Improper Rollover. If a rollover amount is
determined not to be a qualifying rollover or constitutes a prohibited transfer,
the amount, plus any earnings and minus any losses, shall be distributed to the
Participant immediately.
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4.13 Multiple Adopting Employer Rules.
(a) Allocation Among Participating Employers. The Employer
Contribution shall be allocated among the Employers adopting this plan based on
the level of ESOP Contributions, Profit-Sharing Contributions, or Qualified
Matching Contributions and in proportion to the Participating Compensation and
Elective Contributions of the Participants employed by each adopting Employer
during the Plan Year for which the contributions are made.
(b) Contribution for Member of Affiliated Group of
Corporations. If this plan is adopted by more than one corporation and the
adopting corporations comprise an affiliated group of corporations, a member or
members of the adopting group of corporations may make and deduct contributions,
as permitted under Code Section 404, for and on behalf of an adopting member
corporation which is unable to or prevented from making a contribution as
permitted in Code Section 404.
ARTICLE 5
Allocations
5.1 Accounts.
The Administrator shall maintain the necessary number of accounts for
each Participant. The Administrator shall maintain the accounts described in (a)
below:
(a) Specific Accounts.
(i) ESOP Account. "ESOP Account" means a separate
account for a Participant that is credited with shares of Employer Stock. The
ESOP Account shall consist of subaccounts known as Employer Stock Accounts and,
if applicable, Other Investments Accounts.
(A) Employer Stock Account. "Employer
Stock Account" means the portion of a Participant's ESOP Account that is
credited with shares of Employer Stock. There shall be a separate Employer Stock
Account for Employer Stock purchased with each Exempt Loan, and a separate
Employer Stock Account for Employer Stock purchased by the trust without an
Exempt Loan. An Employer Stock Account shall include stock dividends paid on
Employer Stock allocated to such account and Employer Stock purchased with cash
dividends to the extent those dividends were not used to repay an Exempt Loan or
distributed to Participants.
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(B) Other Investments Account. "Other
Investments Account" means the portion of a Participant's ESOP Account credited
with cash or the Participant's share of the net income (or loss) on investments
of a permanent nature. An Other Investments Account shall not be required to be
maintained unless, and until, investments of a permanent nature, other than
Employer Stock, are held in a Participant's ESOP Account.
(C) Employer Stock. "Employer Stock"
means Employer securities within the meaning of Code Section 409(l).
(ii) Elective Contributions Account. "Elective
Contributions Account" means a separate account for a Participant that is
credited with the Elective Contributions made on behalf of the Participant.
(iii) Nonelective Contributions Account.
"Nonelective Contributions Account" means a separate account for a Participant
that is credited with the Nonelective Contributions allocated to the
Participant.
(iv) Qualified Matching Contributions Account.
"Qualified Matching Contributions Account" means a separate account for a
Participant that is credited with the Qualified Matching Contributions allocated
to the Participant.
(v) Profit-Sharing Contributions Account.
"Profit-Sharing Contributions Account" means a separate account for a
Participant that is credited with the Profit-Sharing Contributions allocated to
the Participant.
(vi) Rollover Account. "Rollover Account" means a
separate account for a Participant who has voluntarily rolled over an
amount to this plan pursuant to Section 4.12(a)(ii).
(vii) Transfer Account. "Transfer Account" means a
separate account for a Participant who involuntarily has had assets directly
transferred to this plan on behalf of the Participant pursuant to Section
4.12(a)(i).
(b) Accounting Only. Separate accounts shall be maintained
for accounting purposes only and shall not require segregated investment of
amounts allocated to separate accounts except as specified in Article 9.
(c) Consolidation. Separate accounts shall not be required if
(i) the separation is not necessary for compliance with any requirement
of the Code, ERISA, and Regulations, (ii) the consolidation would not deprive a
Participant of any tax or transfer
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opportunity, and (iii) the accounts are subject to the same vesting schedule or
are fully vested.
5.2 Allocations.
As of each applicable Valuation Date, the contributions to this plan
and/or Employer Stock released under Section 9.4(i) shall be allocated to each
Participant's accounts as follows:
(a) ESOP Contribution.
(i) Eligibility. A Participant shall be eligible
for a share of the ESOP Contribution or Employer Stock allocated as a result of
the ESOP Contribution for each Plan Year in which (A) the Participant is
employed in Covered Employment on the last day of the Plan Year and completes at
least 1,000 Hours of Service, or (B) the Participant's employment terminates on
or after the Participant's Normal Retirement Date or due to death or Total
Disability. Each Participant with an Employer Stock Account at the payment date
for cash dividends (payable with respect to Employer Stock held in the
Participant's accounts) shall be eligible for the allocation of cash dividends
on that Employer Stock.
(ii) Allocation.
(A) Cash Dividends and Cash
Contributions. Subject to (D) below, all cash dividends paid to the trust, plus
earnings, with respect to Employer Stock purchased with an Exempt Loan, may be
used to pay Current Obligations with respect to the Exempt Loan, or to prepay
that Exempt Loan to the extent prepayment would not violate the terms of the
Exempt Loan. If cash dividends are not used to pay or prepay an Exempt Loan, the
cash dividends shall be treated as plan earnings and allocated in the manner
described in (D)(1) below. Subject to (D) below, cash contributions by the
Employer, plus earnings, shall be used to pay Current Obligations or to prepay
an Exempt Loan to the extent prepayment would not violate the terms of the
Exempt Loan. If cash contributions are not used to pay or prepay an Exempt Loan,
they shall be allocated in the manner described in (D)(2) below. Employer Stock
released for allocation under Section 9.4(i) as a result of the payments made on
an Exempt Loan shall be allocated in accordance with (B) below.
(B) Employer Stock. Employer Stock
released under Section 9.4(i) shall be allocated as of the end of the Plan Year
to the applicable account of each Participant as follows:
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(1) Cash Dividends Value.
First, released Employer Stock with respect to an Exempt Loan which has a Fair
Market Value equal to the cash dividends paid to the trust (and used to pay or
prepay an Exempt Loan) during the Plan Year with respect to Employer Stock
allocated to each Participant's applicable Employer Stock Account shall be
allocated to that Participant's applicable account.
(2) Proportionate Allocation.
Second, if additional Employer Stock remains to be allocated, released Employer
Stock with respect to an Exempt Loan shall be allocated to each Participant's
applicable Employer Stock Account in the proportion that the Participating
Compensation of each eligible Participant bears to the Participating
Compensation of all eligible Participants.
Special Employer Contribution or
Employer Stock Release. Notwithstanding any provision of this plan to the
contrary, to the extent necessary to meet the required allocation of Employer
Stock under (ii)(B)(1) above, the Employer, in its sole discretion, may
contribute additional Employer Stock or cash to the trust for purposes of
completing such allocation. If sufficient Employer Contributions are not made
for such purpose, then additional shares of Employer Stock shall be released
under Section 9.4(i) for purposes of completing such allocation.
(D) No Exempt Loan. If this plan has no
Exempt Loan with respect to a Participant's Employer Stock Account,
(1) Cash Dividends. Cash
dividends paid with respect to the Participant's Employer Stock Account shall be
allocated to the Participant's Other Investments Account;
(2) Cash Contributions. Cash
contributions shall be allocated to eligible Participants' Other Investments
Accounts in the proportion described in (B)(2) above; and
(3) Employer Stock
Contributions. Contributions in Employer Stock shall be allocated or eligible
Participants' Employer Stock Accounts in the proportion described in (B)(2)
above.
(E) Employer Stock Allocation in Numbers
of Shares. Allocation of Employer Stock and accountings with respect to Employer
Stock Account shall be in numbers of whole and fractional shares.
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(iii) Definitions.
(A) Participating Compensation.
"Participating Compensation" means the Participant's Compensation for services
while a Participant in Covered Employment during the Plan Year.
(B) Compensation. "Compensation" means an
Employee's W-2 wages as provided in Regulations under Code Section 415 plus
Elective Deferrals and any amount that is excluded from gross income pursuant to
Code Section 125.
(1) Adjusted Annual
Compensation Limit. Compensation for any Plan Year may not exceed the Annual
Compensation Limit. "Annual Compensation Limit" means $150,000 (as adjusted
under Code Section 401(a)(17)(B)).
(2) Family Aggregation of Most
Highly Compensated. One Annual Compensation Limit shall apply in the aggregate
to each group consisting of a Participant who is either a 5% Owner or a Highly
Compensated Employee among the 10 Highly Compensated Employees paid the most HCE
Compensation and that Participant's Spouse and descendants who have not attained
age 19 before the end of the Plan Year. The maximum amount of Compensation shall
be allocated among the 5% Owner or other Highly Compensated Employee and family
members who are Participants in proportion to each individual's Compensation for
the Plan Year before application of the limit.
(b) Elective Contributions. The Elective Contributions made
on behalf of a Participant shall be allocated to the Participant's Elective
Contributions Account.
(c) Nonelective Contribution. The Nonelective Contribution
shall be allocated to the Nonelective Contributions Account of each eligible
Participant who would be eligible for a share of the ESOP Contribution. The
Nonelective Contribution shall be allocated in the specific dollar amount
contributed or in the proportion that the Participating Compensation of the
Participant bears to the Participating Compensation of all eligible
Participants, subject to any maximum limit specified by the Employer.
(d) Qualified Matching Contribution. The Qualified Matching
Contribution shall be allocated to the Qualified Matching Contributions Account
of each eligible Participant for whom Elective Contributions are made in the
amount determined under Article 4.
Elective Contributions that are Excess Deferrals or Excess
Contributions shall not be considered in determining the amount of the Qualified
Matching Contribution to be allocated to the Participant for the Plan Year. If a
Qualified Matching
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Contribution is credited to the Participant before an Excess (Deferral or Excess
Contribution is determined for the Plan Year, the portion based on an Excess
Deferral or Excess Contribution shall be deducted, with any attributable income
or loss, and treated as a forfeiture as of the date of the deduction.
(e) Profit-Sharing Contribution. The Profit-Sharing
Contribution shall be allocated to the Profit-Sharing Contributions Account of
each eligible Participant who would be eligible for a share of the ESOP
Contribution. The Profit-Sharing Contribution shall be allocated in the
proportion that the Participating Compensation of the Participant bears to the
Participating Compensation of all eligible Participants.
(f) Restoration of Forfeiture. If a forfeited amount is
required to be restored under Article 6, that amount shall be allocated to the
account from which the amount was forfeited.
5.3 Stock Dividends on Employer Stock, Stock Splits, Etc.
Each Participant's Employer Stock Account will be credited with the
Participant's share of Employer Stock (including fractional shares) representing
(i) stock dividends paid on Employer Stock, (ii) a stock split, or (iii) stock
received by the Trustee as a result of a reorganization or other
recapitalization of the Employer. However, stock dividends or other Employer
Stock received with respect to Employer Stock that is encumbered, or held in a
suspense account, pursuant to Section 9.4 shall be added to the encumbrance or
suspense account, and shall be released and allocated as provided in Section 9.4
and Section 5.2.
5.4 Forfeitures.
Forfeitures shall be allocated first to restore any forfeited amounts
that are required to be restored under Article 6. Any remaining forfeitures
shall be allocated as an additional Employer Contribution.
(a) Timing. Forfeitures shall occur as of the dates specified
in Articles 4 and 6. Forfeitures that occur during a Plan Year shall be
allocated as of the end of that Plan Year.
(b) Annual Addition Limitation. Any forfeitures that cannot
be allocated under (a) due to the limitation on Annual Additions shall be held
and applied pursuant to Section 5.8.
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(c) Investment Experience. Any forfeiture that occurs during
a Plan Year shall not share in the investment experience of the trust for the
period from the preceding Valuation Date through the date as of which the
forfeiture is allocated.
(d) Limitation on Allocation. Forfeitures shall not be
allocated to the account of any forfeiting Participant.
5.5 Allocation of Earnings, Losses, and Expenses; Revaluation of
Assets.
(a) Earnings, Losses, and Expenses. As soon as
administratively feasible after each Valuation Date, the Trustee shall credit
each Participant's accounts other than Employer Stock Accounts with the
proportion of the net earnings of such accounts and of the net gain from the
disposition of assets of such accounts since the last Valuation Date, as the
balance of each such account bears to the aggregate balances of all such
accounts before allocations of contributions and forfeitures; and shall charge
each such account with any net loss suffered by the trust since the last
Valuation Date, and any expenses paid from the trust since the last Valuation
Date, and any expenses paid from the trust, in the same proportion and manner as
earnings and gains are credited to those accounts. The Administrator may choose
to take into account particular types of contributions after the preceding
Valuation Date on a uniform, nondiscriminatory basis. Interest paid under an
installment contract for the purchase of Employer Stock or on an Exempt Loan
used to purchase Employer Stock shall not be deemed an expense under this
provision. Cash dividends payable with respect to Employer Stock held in a
Participant's account (other than Employer Stock purchased with an Exempt Loan)
shall be allocated to the Participant as specified in Section 5.2.
(b) Revaluation of Trust.
(i) Employer Stock. As soon as administratively
feasible after each Valuation Date, the Administrator shall determine Fair
Market Value of the Employer Stock and shall certify to the Trustee the Fair
Market Value. The Trustee shall thereupon adjust its records to reflect Fair
Market Value. Determination of Fair Market Value shall be made in good faith and
in accordance with this plan and with Regulations under ERISA Section 3(18). For
purposes of this provision, Fair Market Value of Employer Stock that is readily
tradeable on an established securities market shall be the daily closing price
for Employer Stock, as reported on a national securities exchange, as of the
last business day coinciding with or immediately preceding the Valuation Date.
Fair Market Value of Employer Stock that is not readily tradeable on an
established securities market shall be determined annually by an independent
appraiser selected by the Administrator, meeting requirements similar to those
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described in Code Section 170(a)(1), in accordance with Code Section 401(a)(28)
and Regulations. The Employer shall cooperate with, and allow access to and
furnish relevant information to, the independent appraiser for purposes of
performing the valuation of Employer Stock.
(ii) Other Accounts. After the allocations
described in (a) above, the Trustee shall revalue, at fair market value, the
assets of the trust other than the Employer Stock held in the Employer Stock
Accounts. The amount in each account other than the Employer Stock Account shall
be adjusted as of the Valuation Date so that the ratio of the adjusted amount in
each such account to the total assets of all such accounts equals the ratio of
the amount in the account before adjustment to the total assets of all such
accounts before adjustment.
(c) No Earnings on Distributions. A Participant's accounts
shall not be credited with any interest or earnings for the period between the
last Valuation Date preceding the date of distribution and the date of
distribution.
5.6 Sale or Purchase of Employer Stock.
Each Participant's Employer Stock Account and Other Investments
Account will be adjusted as of the applicable Valuation Date as follows:
(a) Sale of Employer Stock. Each Participant's Employer Stock
Account will be debited with the Participant's share of Employer Stock
(including fractional shares) sold by the trust from that account for any
reason. The proceeds received from the sale shall be credited directly to the
Participant's Other Investments Account. If unallocated Employer Stock is said,
the proceeds, as necessary, shall be used to repay, or prepay, the Exempt Loan
by which such stock was purchased. After payment of the Exempt Loan, if
additional proceeds from the sale of such Employer Stock remain, the proceeds
shall be considered earnings and gains of the trust on ESOP Accounts, and shall
be allocated in the proportion that the Employer Stock in the Participant's
Employer Stock Account with respect to that Exempt Loan bears to the aggregate
Employer Stock in all Participant's Employer Stock Accounts with respect to that
Exempt Loan .
(b) Purchase of Employer Stock. If the Trustee purchases
Employer Stock with cash rather than with the proceeds of an Exempt Loan, each
Participants Other Investments Account will be debited with the Participant's
share of the purchase price for Employer Stock purchased by the trust, and the
shares purchased (including fractional shares) shall be credited directly to the
Participant's Employer Stock Account.
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5.7 Limitation on Annual Additions.
The total Annual Additions for a Participant for any Limitation Year
shall not exceed the lesser of the Percentage Limit or the Defined Contribution
Dollar Limit.
(a) Annual Additions. For Limitation Years beginning after
December 31, 1986, "Annual Additions" for a Participant for a Limitation Year
means the sum of:
(i) Employer Contributions and Forfeitures. The
Participant's share of the Employer's contributions and forfeitures;
(ii) After-Tax Employee Contributions. The
Participant's after-tax employee contributions;
(iii) Post-Retirement Medical Benefits Account. For
purposes of the Defined Contribution Dollar Limit and for Limitation Years
beginning after December 31, 1985, amounts allocated to the separate
post-retirement medical benefits account of a Key Employee, as defined in Code
Section 419A(d)(3), under a welfare benefit fund, as defined in Code Section
419(e);
(iv) Individual Medical Benefit Account. For
purposes of the Defined Contribution Dollar Limit, contributions allocated for
Limitation Years beginning after March 31, 1984, to an individual medical
benefit account in a pension or annuity plan, as defined in Code Section
415(l)(2);
(v) Excess Deferrals. For the Limitation Years
during which these amounts were contributed, Excess Deferrals that are not
distributed to a Participant by the first April 15th following the end of the
Participant's taxable year;
(vi) Excess Contributions and Excess Aggregate
Contributions. For the Limitation Years during which these amounts were
contributed, Excess Contributions and excess aggregate contributions whether or
not distributed to a Participant-, and
(vii) Excess Annual Addition Applied. An excess
Annual Addition from the preceding Limitation Year applied to reduce the
Employer Contributions for the current Plan Year.
(b) Defined Contribution Dollar Limit. For Limitation Years
beginning after December 31, 1986, "Defined Contribution Dollar Limit" means
$30,000 (or 25% of the defined benefit dollar limit under Code Section
415(b)(1)(A), if greater).
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(c) Percentage Limit. "Percentage Limit" means 25% of the
Participant's Section 415 Compensation from the Employer for the Limitation
Year.
(d) ESOP Exceptions. If no more than one-third of the Annual
Addition under this plan for a Plan Year is allocated to the accounts of Highly
Compensated Employees, the following special rules shall apply:
(i) Certain Forfeitures Not Annual Additions.
Forfeitures of Employer Stock acquired by this plan with a loan described in
Code Section 404(a)(9)(A) and allocated to a Participant's account shall not be
deemed an Annual Addition.
(ii) Employer Contribution To Pay Interest Not
Annual Addition. The Employer Contribution for a Plan Year deductible under Code
Section 404(a)(9)(B) and not allocated to a Participant's account shall not be
deemed an Annual Addition.
(e) Section 415 Compensation. "Section 415 Compensation"
means a Participant's earned income, wages, salaries, and fees for professional
services and other amounts received for personal services actually rendered in
the course of employment with the Employer (including, but not limited to,
commissions paid to salesmen, compensation for services based on a percentage of
profits, commissions on insurance premiums, tips, bonuses, fringe benefits,
reimbursements, and expense allowances) actually paid (or accrued for Limitation
Years beginning before January 1, 1992) and includable in gross income for the
Limitation Year.
(i) Exclusions. Section 415 Compensation excludes:
(A) Contributions. Contributions
(including Elective Deferrals) to a plan of deferred compensation that are not
includable in the Employee's gross income for the taxable year in which
contributed, or contributions under a simplified employee pension plan to the
extent the contributions are deductible by the Employee, or any distributions
from a plan of deferred compensation;
(B) Nonqualified Stock Option. Amounts
realized from the exercise of a nonqualified stock option, or when restricted
stock (or property) held by the Employee either becomes freely transferable or
is no longer subject to substantial risk of forfeiture;
(C) Qualified Stock Option. Amounts
realized from the sale, exchange, or other disposition of stock acquired under a
qualified stock option;
(D) Other Amounts. Other amounts that
received special tax benefits (including any amount that is excluded from gross
income under Code
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Section 125), or contributions made by the Employer (whether or not under a
salary reduction agreement) toward the purchase of an annuity described in Code
Section 403(b) (whether or not the amounts are actually excludable from the
gross income of the Employee); and
(E) Adjusted Annual Compensation Limit.
Amounts in excess of the Annual Compensation Limit.
(ii) Estimation. Until Section 415 Compensation is
actually determinable, the Employer may use a reasonable estimate of Section 415
Compensation. As soon as administratively feasible, actual Section 415
Compensation shall be determined.
(f) Limitation Year. "Limitation Year" means the Plan Year.
(i) Change. If the Limitation Year is amended to a
different 12-month period, the new Limitation Year must begin on a date within
the Limitation Year in which the amendment is made.
(ii) Short Limitation Year. If a short Limitation
Year is created by an amendment, the maximum Annual Addition shall not exceed
the Defined Contribution Dollar Limit multiplied by a fraction. The numerator of
the fraction is the number of months in the short Limitation Year and the
denominator is 12.
(g) Related Employer Aggregation. All plans maintained by the
Employer and any Related Employer, all contributions under those plans, and
Section 415 Compensation from the Employer and any Related Employer shall be
aggregated for purposes of applying this section and the remainder of this
article.
5.8 Excess Additions.
(a) Before Contribution. If the Annual Additions limitation
will be exceeded for a Participant, the Employer Contribution for the Plan Year
may be reduced before payment to the Trustee to the maximum amount permitted
under Section 5.7.
(b) After Contribution. If the Annual Additions limitation
would be exceeded for a Participant as a result of an allocation of forfeitures,
a reasonable error in estimating a Participant's annual Section 415
Compensation, a reasonable error in determining the amount of Elective Deferrals
permissible under the limits of Code Section 415, or other facts and
circumstances permitted by the Commissioner of Internal Revenue, the excess
amount shall be eliminated by.
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(i) Elective Contributions. First, returning the
Participant's Elective Contributions together with attributable earnings for the
Plan Year; and
(ii) Reallocate. Then, reallocating the remaining
excess to the accounts of all other Participants for whom the additional
allocation would not exceed the Annual Additions limitation.
(A) Suspense Account. If reallocation of
the excess would cause ail Participants to exceed the Annual Additions
limitation, the remaining excess shall be held in a suspense account.
(B) Reduce Employer Contribution. The
amount in the suspense account shall be used to reduce an Employer Contribution
for the next Plan Year and shall be allocated before other Annual Additions are
allocated.
(C) Plan Termination. If this plan is
terminated or contributions to this plan are discontinued while there is a
suspense account, the allocation shall be made as of the end of the next Plan
Year or, if earlier, as of the date of termination or discontinuance.
(D) No Investment Experience. No
investment experience shall be allocated to a suspense account.
(c) No Distribution. Excess Annual Additions held in a
suspense account may not be distributed to Participants or former Participants.
5.9 Limitation on Total Retirement Benefits.
If a Participant is, or was, a Participant in both a defined
contribution plan and a defined benefit plan maintained by the Employer or a
Related Employer, the sum of the Participant's Defined Contribution Plan
Fraction and Defined Benefit Plan Fraction may not exceed 1.0 in a Limitation
Year.
(a) Defined Contribution Plan Fraction. "Defined Contribution
Plan Fraction" means a fraction. The numerator of the fraction is the sum of the
Annual Additions to the Participant's account under all defined contribution
plans (whether or not terminated) maintained by the Employer or a Related
Employer for the current and all prior Limitation Years, and the denominator is
the sum of the lesser of the following amounts determined for the Limitation
Year and each prior Limitation Year of service with the Employer or a Related
Employer: (i) 125% of the Defined Contribution Dollar
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Limit in effect for each Limitation Year, or (ii) 35% of the Participant's
Section 415 Compensation.
If the Participant was a participant as of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more defined
contribution plans maintained by the Employer or a Related Employer that were in
existence on May 6, 1986, the numerator of the fraction will be adjusted if the
sum of the fraction and the Defined Benefit Plan Fraction would otherwise exceed
1.0 under the terms of this plan. Under the adjustment, an amount equal to the
product of (i) the excess of the sum of the fractions over 1.0 times (ii) the
denominator of this fraction, will be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the fractions as they would
be computed as of the end of the last Limitation Year beginning before January
1, 1987, and disregarding any change in the terms and conditions of the plan
made after May 5, 1986, but using the Code Section 415 limitations applicable to
the first Limitation Year beginning on or after January 1, 1987.
(b) Defined Benefit Plan Fraction. "Defined Benefit Plan
Fraction" means a fraction. The numerator-of the fraction is the sum of the
Participant's Projected Annual Benefits under all defined benefit plans (whether
or not terminated) maintained by the Employer or a Related Employer, and the
denominator is the lesser of 125% of the Defined Benefit Dollar Limit in effect
for the Limitation Year or 140% of the average of the Participant's Section 415
Compensation for the three consecutive calendar years of plan participation that
produce the highest average.
If the Participant was a participant as of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more defined
benefit plans maintained by the Employer or a Related Employer that were in
existence on May 6, 1986, the denominator of the fraction will not be less than
125% of the sum of the annual benefits under those defined benefit plans that
the Participant had accrued as of the close of the last Limitation Year
beginning before January 1, 1987, disregarding any change in the terms and
conditions of the plan after May 5, 1986. The preceding sentence applies only if
the defined benefit plans individually and in the aggregate satisfied the
requirements of Section 415 for all Limitation Years beginning before January 1,
1987.
(i) Projected Annual Benefit. "Projected Annual Benefit"
means the Participant's annualized accrued benefit at Normal Retirement Date (or
current date, if later) determined as if the Participant continued employment
and the Participant's Compensation for the Limitation Year and all other
relevant factors used to determine such benefit remained constant until Normal
Retirement Date (or current date, if later).
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(ii) Defined Benefit Dollar Limit. "Defined Benefit
Dollar Limit" means the applicable limitation on annual benefits payable at the
social security retirement age, including all adjustments, set forth in Code
Section 415(b)(1)(A) (as adjusted under Code Section 415(d)). As of January 1,
1995, the Defined Benefit Dollar Limit is $120,000.
(c) Benefit Accrual Reduction. If, in a Limitation Year, the
sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan
Fraction will exceed 1.0, the rate of benefit accrual under this plan will be
reduced so that the sum of the fractions equals 1.0.
(d) Application of Limitations. These limitations shall be
determined with respect to the aggregate benefits and/or contributions under all
plans to which they are applicable with respect to a Participant as provided in
the Regulations under Code Section 415 as in effect at the time the limitation
is applied.
(e) Maximum Limitations. These limitations are intended to be
not less than the maximum limitations that apply to a Participant at the time of
application under Code Section 415, ERISA Section 2004, Section 235(g) of the
Tax Equity and Fiscal Responsibility Act of 1982, Section 1106 of the Tax Reform
Act of 1986, any subsequent legislation, and Regulations under the acts,
including all effective dates, transitional rules, and alternate limitations
contained in those acts and Regulations.
(f) 1982 Transitional Rule. If a Participant was a
participant in at least one defined contribution plan and at least one defined
benefit plan maintained by the Employer or a Related Employer that was in
existence on July 1, 1982, the numerator of the Defined Contribution Plan
Fraction will be adjusted if the sum of the Defined Contribution Plan Fraction
and the Defined Benefit Plan Fraction would otherwise exceed 1.0 under this
section. Under this adjustment, an amount equal to the product of (i) the excess
of the sum of the fractions over 1.0 multiplied by (ii) the denominator of the
Defined Contribution Plan Fraction will be permanently subtracted from the
numerator of the fraction. This adjustment is calculated using the fractions as
they would be computed as of the end of the last Limitation Year beginning
before January 1, 1983, and, if necessary, January 1, 1984, if the sum of the
fractions exceeds 1.0 due to accruals or Annual Additions that were made before
the limitations of this section became effective for any qualified retirement
plans of the Employer or a Related Employer, in existence on July 1, 1982.
(g) Reduction of Limits. If this plan is determined to be a
Super Top-Heavy Plan for a Plan Year, or at the election of the Employer, the
words "125% of' shall be deleted from each place they appear in (a) and (b)
above.
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ARTICLE 6
Determination of Vested Percentage
6.1 Year of Vesting Service.
An Employee shall be credited with a "Year of Vesting Service" for
each Vesting Period in which the Employee completes at least 1,000 Hours of
Service, including Vesting Periods before the Employee became a Participant and
Vesting Periods before the original effective date of this plan.
The "Vesting Period" for determining Years of Vesting Service and the
existence of Breaks in Service under this article shall be the Plan Year.
6.2 Vested Percentage.
(a) 100% Vesting. A Participant's vested percentage with
respect to the Participant's Elective Contributions Account, Nonelective
Contributions Account, Quali fied Matching Contributions Account, Rollover
Account, and Transfer Account shall be 100%.
(b) Vesting Schedule. A Participant's vested percentage with
respect to the Participant's ESOP Account and Profit-Sharing Contributions
Account shall be determined as follows:
Years of Vesting Service
Vested Percentage
Less than 3 years
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3 years
20%
4 years
40%
5 years
60%
6 years
80%
7 years or more
100%
(c) Normal Retirement Date, Death, or Disability. A
Participant's vested percentage with respect to all of the Participant's
accounts shall be 100% upon the earlier of the Participant's Normal Retirement
Date or the date the Participant's employment terminates due to death or Total
Disability.
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6.3 Cashout.
(a) Partial Vesting. If a Participant's employment terminates
and the Participant's entire Vested Account Balance is distributed before the
last day of the second Plan Year after the Plan Year during which the
Participant's employment terminated, any nonvested amount shall be forfeited as
of the date of distribution.
If the Participant is reemployed by the Employer or a Related Employer
before the Participant has five consecutive Breaks in Service and repays the
entire amount distributed before the earlier of five years after the date the
Participant is reemployed or the date the Participant has five consecutive
Breaks in Service, the forfeited amount shall be restored to the Participant's
account as of the date of repayment.
(b) Zero Vesting. If a Participant's employment terminates
and the Participant's vested percentage under Section 6.2(b) is zero, any
nonvested amount shall be forfeited as of the date that the Participant's
employment terminates. If the former Participant is reemployed by the Employer
or a Related Employer before the Participant has five consecutive Breaks in
Service, the forfeited amount shall be restored as of the date the Participant
is reemployed.
6.4 Five Breaks in Service.
(a) Cancellation of Vesting Service. If an Employee whose
vested percentage under Section 6.2(b) is zero has five consecutive Breaks in
Service, the Participant's Years of Vesting Service credited before the Breaks
in Service shall be permanently canceled.
(b) Forfeiture of Nonvested Amount. Unless previously
forfeited, a Participant's nonvested amount shall be permanently forfeited as of
the end of the Vesting Period that includes the Participant's fifth consecutive
Break in Service.
6.5 Death After Termination/Lost Recipient.
(a) Death After Termination. If a Participant whose vested
percentage under Section 6.2(b) is not 100% dies after termination of employment
but before the Participant has five consecutive Breaks in Service, the remaining
Vested Account Balance shall be distributed pursuant to Article 7. Any nonvested
amount that was not forfeited previously shall be forfeited as of the date of
the Participant's death.
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(b) Lost Recipient. If a Person entitled to a payment cannot
be located, the Participant's account shall be forfeited as of the date the
Administrator certifies to the Trustee that the Person cannot be located. The
Participant's Vested Account Balance shall be restored to the Participant's
account if the Person entitled to the payment submits a written election of
method of payment.
6.6 Vested Account Balance and Nonvested Amount.
(a) Vested Amount. "Vested Account Balance" as of the date of
determination means the sum of (i) the balances in the Participant's accounts
listed under Section 6.2(b) multiplied by the Participant's vested percentage
and (ii) the balances in the Participant's accounts listed under Section 6.2(a).
(b) Nonvested Amount. The remainder shall be the
Participant's nonvested amount.
(c) Partial Distribution of Vested Account Balance. If part
of the Participant's Vested Account Balance is distributed or reduced for any
reason before the Participant's vested percentage is 100%, the remaining amount
in the affected account shall be maintained in a separate account. The
Participant's vested amount with respect to the separate account is equal to
P(AB + (R x D)) - (R x D), where P is the Participant's vested percentage; AB is
the separate account balance, after allocations and revaluation, as of the end
of the most recent Plan Year; D is the amount of the distribution; and R is a
fraction. The numerator of the fraction is AB, and the denominator is the
separate account balance remaining immediately after the distribution. If a
separate account is maintained, it shall be merged into the Participant's
regular account at the end of the Plan Year in which the Participant's vested
percentage under Section 6.2(b) becomes 100%.
ARTICLE 7
Distributions
7.1 Distributive Events.
The following events shall permit distribution.
(a) Normal Retirement Date. A Participant's employment
terminates at or after the Participant's Normal Retirement Date. "Normal
Retirement Date" means the date the Participant attains age 55.
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(b) Death. A Participant dies.
(c) Total Disability. A Participant suffers a Total
Disability while an Employee. "Total Disability" means total and permanent
inability of the Participant due to a physical or mental condition to perform
any regular, full-time employment for remuneration or profit. The Administrator
may require that one or more physicians (chosen or approved by the
Administrator) certify whether or not Total Disability exists. This
certification shall be conclusive.
(d) Other Termination of Employment. A Participant's
employment terminates for any reason. A transfer between Covered Employment and
any other employment with the Employer, or a transfer between the Employer and a
Related Employer, is not a termination of employment.
(e) Attainment of Age 70 1/2. A Participant attains age 70
1/2.
(f) QDRO. This plan receives a QDRO and the Administrator
directs the Trustee to pay benefits to an alternate payee as set forth in the
QDRO.
"QDRO" means a qualified domestic relations order, as
defined in Code Section 414(p), that is issued by a competent state court and
that meets the following conditions:
(i) Alternate Payee. The alternate payee must be
the Spouse or former Spouse or a child or other dependent of the Participant.
(ii) Reason for Distribution. The distribution must
relate to alimony, support of a child or other dependent, or a division of
marital property.
(iii) Contents. The QDRO must contain the name and
address of the Participant and the alternate payee, the amount of the
distribution or percentage of the Participant's account to be distributed, the
Valuation Date as of which the amount or percentage is to be determined, and
instructions concerning the timing and method of distribution.
(iv) Restrictions. A QDRO may not require (A) this
plan to pay more to the Participant and all alternate payees than the
Participants Vested Account Balance; (B) a method, commencement date, or
duration of payment not otherwise permitted under this article; and (C)
cancellation of the prior rights of another alternate payee.
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(g) Plan; Termination; Partial Termination. Termination of
this plan with respect to all Participants or partial termination with respect
to Participants affected by the partial termination.
Notwithstanding the above, a Participant's Elective
Contributions Account, Nonelective Contributions Account, and Qualified Matching
Contributions Account may not be distributed after plan termination if the
Employer or Related Employer maintains a successor defined contribution plan as
described in Regulations under Code Section 401(k) other than an employee stock
ownership plan as defined in Code Sections 4975(e) or 409 or a simplified
employee pension as defined in Code Section 408(k).
(h) In-Service Withdrawal. A Participant who has attained age
59 1/2 requests a distribution of all or part of any of the Participant's
accounts (other than the Participant's ESOP Account). Only one withdrawal under
this provision shall be permitted in any 12-month period.
(i) Hardship Withdrawal. A Participant requests a hardship
withdrawal from the Participant's Elective Contributions Account. A hardship
withdrawal must satisfy the following conditions.
(i) Amount. The amount of the withdrawal shall
not exceed the amount needed to meet an immediate and heavy financial need. The
amount of an immediate and heavy financial need may include any amounts
necessary to pay any federal, state, or local income taxes or penalties
reasonably anticipated to result from the withdrawal. A hardship withdrawal
shall not include earnings on the Elective Contributions Account that are
credited as of any date after the end of the last Plan Year ending before July
1, 1989.
(ii) Immediate and Heavy Financial Need. The
request must establish an unusual financial burden due to immediate and heavy
financial needs. Only the purchase of, but not mortgage or other regular
payments for, a principal residence for the Participant; tuition and related
educational fees for the next 12 months of postsecondary education for the
Participant, Spouse, children, or dependents; medical expenses previously
incurred or necessary to obtain medical care, of the type that are deductible
under Code Section 213(d), for the Participant, Spouse, or dependents;
prevention of eviction from, or foreclosure (or forfeiture) of the mortgage,
land contract, or other security interest on the Participant's principal
residence; or other conditions specified by the Commissioner of Internal Revenue
in official pronouncements are immediate and heavy financial needs for purposes
of this plan.
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(iii) Other Resources. The amount needed to meet
the immediate and heavy financial need must not be reasonably available from
other resources of the Participant. A Participant shall be deemed to have no
other available resources if the Participant has received all distributions from
the plan payable without termination of employment and has received all
available plan loans. The Participant's right to make Elective Deferrals and
after-tax employee contributions under this plan and all other qualified and
nonqualified plans maintained by the Employer including stock option, stock
purchase, and similar plans, and including a cash or deferred arrangement that
is part of a cafeteria plan under Code Section 125 (but not the cafeteria plan
itself), but excluding other health and welfare benefit plans, shall be
suspended for a period of at least 12 months after the withdrawal.
(iv) Dollar Limit Reduction. If a Participant
receives a hardship withdrawal under this provision, the Participant's Elective
Contributions for the following calendar year shall not exceed the Participant's
Elective Deferral Limit under Section 4.2 and Code Section 402(g) minus the
Participant's Elective Contributions for the calendar year in which the
Participant received the hardship withdrawal.
(j) Additional 401(k) Distributive Events. A Participant's
Elective Contributions Account, Nonelective Contributions Account, or Qualified
Matching Contributions Account may be distributed on disposition of Employer
assets or the disposition of a subsidiary.
(i) Disposition of Assets. Distribution may be made
upon disposition by a corporate Employer of substantially all of the assets,
within the meaning of Code Section 409(d)(2), used by the Employer in a trade or
business if the Participant is employed by the purchasing corporation, the
Employer continues to maintain this plan, and the assets were not sold to a
Related Employer. Sale of at least 85% of the assets used in the trade or
business shall be deemed a sale of substantially all of those assets.
(ii) Disposition of Subsidiary. Distribution may be
made upon disposition by a corporate Employer or Related Employer of its
interest in a subsidiary (within the meaning of Code Section 409(d)(3)) to an
unrelated corporation, if the Employer continues to maintain this plan and the
Participant was and continues to be employed by that subsidiary.
(k) Withdrawal of Rollover Account. A Participant requests a
withdrawal of all or part of the Participant's Rollover Account.
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7.2 Valuation for Distribution.
The Participant's Vested Account Balance shall be determined as of the
Valuation Date coinciding with or most recently preceding the date of the
distribution. The amount distributed shall not include investment experience for
the period from the Valuation Date to the date of distribution. Separate
valuations shall be performed for segregated accounts that are commingled for
investment and any accounts that are separately invested without commingling.
The amount to be distributed shall be reduced by the amount of any distribution
or withdrawal during the period from the Valuation Date to the date of
distribution. The amount to be distributed shall be reduced at death by the
amount of any outstanding loan.
7.3 Methods and Form of Distribution.
(a) Method of Distribution/ESOP Account. Distribution of the
ESOP Account shall be made in a single payment or, if necessary, in one or more
payments within one taxable year of the recipient.
(b) Methods of Distribution/Other Accounts. Accounts other
than ESOP Accounts shall be distributed as a QJSA if the Participant is living
unless the Participant waives the QJSA with the written consent of the Spouse,
or as a QPSA if the Participant is deceased unless the Spouse waives the QPSA.
If the QJSA or the QPSA is waived, another method of payment may be elected.
(i) QJSA. If the Participant is married when
distribution first becomes payable, the Trustee shall apply the Participant's
Vested Account Balance to purchase the QJSA specified by the Administrator
unless the Participant waives the QJSA. If the Participant is not married when a
distribution first becomes payable, the Trustee shall apply the Participant's
Vested Account Balance to purchase a life annuity unless the Participant waives
the life annuity.
(A) Definition. "QJSA" means the maximum,
immediate, nontransferable qualified joint and survivor annuity that can be
purchased with the Participant's Vested Account Balance and which provides for
equal monthly payments for the life of the Participant with a survivor annuity
payable for the life of the Spouse. The terms of the annuity must comply with
the distribution requirements and limitations of this plan.
(B) Monthly Payment to Spouse. Each
monthly survivor annuity payment to the Spouse shall be at least 50% and not
more than 100% of each monthly payment during the life of the Participant. If
the Participant fails to elect a
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specific percentage of the monthly payment to be paid to the Spouse, the
percentage shall be 50%.
(ii) QPSA. Upon the death of a married Participant,
the Trustee shall apply the Participant's Vested Account Balance to purchase a
QPSA unless the Participant waived the QPSA before the Participant died or the
Spouse waives the QPSA.
(A) Definition. "QPSA" means the maximum,
immediate, nontransferable life annuity that can be purchased with the
Participant's Vested Account Balance after the Participant dies. The terms of
the QPSA shall comply with the distribution requirements and limitations of this
plan.
(B) Monthly Payment. The QPSA shall
provide for equal monthly payments for the life of the Spouse.
(iii) Lump Sum. Upon waiver of the QJSA or QPSA,
distribution shall be made in a single payment or, if necessary, in one or more
payments within one taxable year of the recipient. A lump sum within the meaning
of the preceding sentence shall be the only permitted method of distribution for
the following:
(A) $3,500 or Less. A distribution when
the Participant's Vested Account Balance, including any earlier distribution, is
$3,500 or less;
(B) Transfer. A transfer to another plan
under (iv) below;
(C) Plan Termination/Partial Termination.
Termination of this plan or partial termination of this plan under Section
7.1(g) and Article 12;
(D) QDRO. A distribution pursuant to a
QDRO under Section 7.1(f) if the Participant has not attained age 50 ;
(E) In-Service Withdrawals. An in-service
withdrawal under Section 7.1(h);
(F) Hardship Withdrawals. A hardship
withdrawal under Section 7.1(i);
(G) Additional 401 (k) Distributive
Events. A disposition of Employer assets or a disposition of a subsidiary with
respect to the Participant's Elective Contributions Account, Nonelective
Contributions Account, and Qualified Matching Contributions Account under
Section 7.1(j); or
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(H) Rollover Account Withdrawal. A
withdrawal of all or part of a Rollover Account under Section 7.1 (k).
(iv) Transfers to Another Plan. Upon waiver of the
QJSA or QPSA, the Trustee shall transfer the distributee's eligible rollover
distribution to the trustee or custodian of an eligible retirement plan for the
benefit of the distributee.
(A) Eligible Rollover Distribution. An
eligible rollover distribution is a distribution of any portion of the balance
to the credit of a distributee, except that an eligible rollover distribution
does not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more; any distribution to the extent
that the distribution is required under Code Section 401(a)(9); and the portion
of any distribution that is not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities).
(B) Eligible Retirement Plan. An eligible
retirement plan is an individual retirement account described in Code Section
408(a), an individual retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a qualified trust described in
Code Section 401(a), that accepts the distributee's eligible rollover
distribution. An eligible rollover distribution to the surviving Spouse may be
transferred only to an individual retirement account or individual retirement
annuity.
(C) Distributee. A distributes includes a
Participant or former Participant, the Participant's surviving Spouse, and the
Participant's Spouse or former Spouse who is an alternate payee under a QDRO.
(v) Installments. Upon waiver of the QJSA or QPSA,
distribution shall be made in installments paid annually, or more frequently if
permitted by the Administrator, over an elected period of years not exceeding
the life expectancy of the Participant or the joint life expectancy of the
Participant and a Beneficiary.
(A) Amount. The amount of the installment
payments distributed each calendar year shall be equal to the quotient obtained
by dividing the Participant's Vested Account Balance by the remaining number of
years in the period. The elected installment payment schedule may be changed,
the initial amount distributed may be greater or lesser than subsequent
payments, or the remainder may be paid in a lump sum, but a Participant may not
elect payments smaller than the Minimum Distribution.
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(B) Life Expectancy. Life expectancy, as
of the calendar year in which payment begins, shall be determined in the manner
described in Section 7.4.
(vi) Other annuity. Upon waiver of the QJSA or
QPSA, the Trustee shall apply the Participant's Vested Account Balance to
purchase the form of nontransferable annuity selected by the Participant
providing benefits over a period not exceeding the life expectancy of the
Participant or the joint-life expectancy of the Participant and the Beneficiary.
(vii) Combination. Upon waiver of the QJSA or OPSA,
distributions shall be made in a combination of the annuity and either the lump
sum or installments.
(c) Form of Distribution/Accounts Holding Employer Stock.
(i) Right to Demand Distribution in Employer Stock.
A Participant or Beneficiary entitled to a distribution of benefits may demand
that the ESOP Account be paid in Employer Stock except that the value of a
fractional share may be paid in cash. To the extent the Participant's accounts
other than the ESOP Account are invested in Employer Stock, the Participant or
Beneficiary may request a distribution of Employer Stock. The distribution of
Employer Stock from such accounts shall not exceed the Employer Stock allocated
to the Participant as of the date of distribution.
(A) Source of Shares. The Trustee may
meet a current distribution obligation by use of the Participant's Employer
Stock Account only, by use of the Participant's Other Investments Account to
acquire Employer Stock, or by partial use of each account.
(B) Acquisition of Additional Shares. A
balance in the Participant's Other Investments Account will be applied to
acquire the maximum number of whole shares of Employer Stock, at the then Fair
Market Value, as necessary to meet the current distribution obligation to the
Participant. Employer Stock to be acquired by use of the Participant's Other
Investments Account may be acquired from any source, including the Employer
Stock Accounts of all other Participants.
(C) Method of Acquisition From Other
Participant's Employer Stock Accounts. If Employer Stock is acquired from the
Employer Stock Accounts of all other Participants, the acquisition shall be from
all other Participants' Employer Stock Accounts at the then Fair Market Value.
The Employer Stock Accounts shall be debited on a reasonable, nondiscriminatory,
pro rata basis. The amount applied from the Participant's Other Investments
Account to acquire the Employer Stock shall be credited to all other
Participants' Other Investments Accounts on the same reasonable,
nondiscriminatory, pro rata basis.
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(ii) Failure to Demand Payment in Employer Stock.
If a Participant or Beneficiary does not demand payment of benefits in Employer
Stock, after notification by the Administrator of that right, benefits may be
paid in cash, in Employer Stock, or in a combination of both, as directed by the
Administrator. If benefits are paid in cash, the amount payable shall be the net
proceeds received by the Trustee with respect to the sale of Employer Stock from
the Participant's Employer Stock Account, plus the value of the Participant's
Other Investments Account.
(iii) Limitation on Election to Receive
Distributions in Employer Stock. A Participant may not elect to receive Employer
Stock with respect to amounts that were liquidated and reinvested under Section
9.8.
(d) Form of Distribution/Other Accounts. Accounts other than
accounts in which Employer Stock is held shall be distributed to the Participant
or Beneficiary in cash.
7.4 Minimum Distribution.
The minimum amount that must be distributed for each calendar year
beginning with the calendar year in which the Participant attains age 70 1/2
("Minimum Distribution") shall be at least equal to the quotient obtained by
dividing the Participant's Vested Account Balance by the applicable divisor.
(a) Vested Account Balance. The value of the Vested Account
Balance shall be determined as of the last Valuation Date within the calendar
year preceding the calendar year of distribution and shall be increased by any
amounts allocated to the Participant's accounts as of any later date during such
preceding calendar year and reduced by any amounts charged against such accounts
as of any later date during such calendar year.
(b) Applicable Divisor.
(i) Beneficiary is Spouse. If the Participant's
Spouse is the designated Beneficiary, the applicable divisor shall be the life
expectancy determined under (c) below.
(ii) Beneficiary is Other. If the designated
Beneficiary is a Person other than the Participant's Spouse, the applicable
divisor shall be the lesser of:
(A) Life Expectancy. The life expectancy
determined under (c) below; or
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(B) Incidental Benefit Factor. The
applicable divisor, under Regulations Section 1.401(a)(9)-2,A-4(a)(2), based on
the Participant's adjusted age at the birthday during the calendar year for
which the distribution is made.
(c) Life Expectancy.
(i) Determination. Life expectancy shall be based
on the Participant's (and/or Beneficiary's) attained age at the birthday during
the calendar year in which the Participant attains age 70 1/2. Life expectancy
shall be determined from life expectancy Tables V and VI in Regulations 1.72-9.
Election of the applicable life expectancy shall be irrevocable when
distribution begins. If a life expectancy or shorter installment period is not
elected, the Participant's life expectancy shall apply.
(ii) Redetermination. If a Participant (or Spouse,
if the Participant is deceased, but not any other Beneficiary) so elects, life
expectancy or the joint life expectancy of the Participant and Spouse may be
redetermined annually under Code Section 401 (a)(9) and Regulations. The
election must be irrevocable when made and must be made not later than the
Required Beginning Date. If redetermination is not elected, the applicable life
expectancy for each calendar year after the calendar year in which installments
begin shall be the life expectancy or joint life expectancy for the first
calendar year reduced by one year for each calendar year after the year in which
installments begin.
(d) Deferred Distribution Date. If the Participant's Required
Beginning Date, or other date when payment of benefits must begin, is later than
April 1 following the calendar year in which the Participant attains age 70 1/2,
these Minimum Distribution rules shall apply to the calendar year in which
distribution must begin and each subsequent calendar year.
7.5 Time of Distribution.
(a) Immediate Distribution. Distribution shall begin on the
Earliest Distribution Date.
(i) Earliest Distribution Date. "Earliest
Distribution Date" means the first date on which distribution is
administratively feasible following the end of the Plan Year that includes the
distributive event or, if later, after election of distribution.
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(ii) Exceptions.
(A) Certain Financed Securities. The
portion of a Participant's Employer Stock Account consisting of Employer Stock
purchased with an Exempt Loan shall be distributed as soon as administratively
feasible after the last day of the Plan Year in which the Exempt Loan is repaid
in full, if later than the date described in (a)(i) above.
(B) Earlier Distribution. Subject to (A)
above, at the election of a Participant, the Participant's Vested Account
Balance shall be distributed as soon as administratively feasible following the
distributive event.
(C) $3,500 or Less. The Vested Account
Balance of a Participant whose employment terminates for any reason other than
death and whose Vested Account Balance, including any earlier distribution, is
$3,500 or less, shall be distributed as soon as administratively feasible
following the end of the Plan Year in which the Participant's employment
terminates. The Participant may elect earlier payment.
(D) Death. Subject to (d) below, the time
of distribution following death of a Participant is determined under Section
7.6.
(E) QDRO. Distribution to an alternate
payee under a QDRO shall be paid to the alternate payee at the time specified in
the order, whether or not the Participant has attained the age of 50 and even
though the Participant continues to be an Employee.
(b) Normal Distribution Date. Distribution due to termination
of employment for any reason other than death shall begin not later than 60 days
after the end of the Plan Year that includes the Participant's Normal Retirement
Date or, if later, the end of the Plan Year in which employment terminates. If
the amount cannot be ascertained at that date, distribution retroactive to that
date shall be made within 60 days of the date that the amount can be determined.
A Participant may elect to defer distribution to any date not later
than the applicable date in (c) below.
(c) Required Distribution. If not made under (a) or (b),
distribution to a Participant shall begin not later than the Participant's
Required Beginning Date.
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(i) Required Beginning Date. "Required Beginning
Date" means:
(A) General. The April 1 following the
calendar year in which the Participant attains age 70 1/2.
(B) Age 70 1/2 in 1988. For a Participant
who is not a 5% Owner and attained age 70 1/2 during 1988, April 1, 1990.
(C) Age 70 1/2 Before 1988. For a
Participant who attained age 70 1/2 before January 1, 1988, and who is not a 5%
Owner, the April 1 after the calendar year in which the Participant's employment
terminates, or if the Participant becomes a 5% Owner, the April 1 following the
calendar year in which the Participant becomes a 5% Owner.
(D) 50% Owner. For purposes of this
definition, a Participant is treated as a 5% Owner if the Participant is a 5%
Owner during the Plan Year in which the Participant attains age 66 1/2 or any
later Plan Year. Once distribution begins to a 5% Owner, it shall continue even
if the Participant ceases to be a 5% Owner.
(ii) Payment. Unless paid during the calendar year
in which the Participant attains age 70 1/2 (or the calendar year before the
Participant's Required Beginning Date, if later), the Minimum Distribution for
that calendar year shall be paid not later than the Required Beginning Date. The
Minimum Distribution for each subsequent calendar year shall be paid by the last
day of the calendar year for which it is required.
(d) Delay. The Administrator may direct that a distribution,
other than a Minimum Distribution or a distribution required after a
Participant's death, shall be valued as of, and distributed after, the next
Valuation Date. This action shall be taken only if the distribution, valued as
of a Valuation Date preceding the distributive event or election of
distribution, would permit the recipient to avoid negative investment experience
with significant detrimental effect on the accounts of other Participants. The
Administrator shall have full discretion in determining whether the conditions
described in the preceding sentence exist.
7.6 Death of Participant.
(a) Death Before Required Beginning Date. If the Participant
dies before the Required Beginning Date, distribution shall be made to the
Participant's Beneficiary, as soon as administratively feasible following the
end of the Plan Year in which the Participant dies or, if later, after election
of distribution. At the election of the
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Beneficiary, the Participant's Vested Account Balance shall be distributed as
soon as administratively feasible following the Participant's death.
(i) Spouse. If the Spouse is the Beneficiary, the
Spouse may elect distribution at any time after the Participant's death.
Distribution must begin on or before the last day of the calendar year in which
the Participant would have attained age 70 1/2 or, if later, the last day of the
calendar year following the calendar year in which the Participant died. If the
Spouse dies before distribution must begin, distribution shall be made under
(ii) or (iii) as though the Spouse were the Participant. if the Spouse dies
after payment must begin, distribution shall be made under (b) as though the
Spouse were the Participant.
(ii) Other Beneficiary. If benefits are to be paid
to a Beneficiary other than the Spouse and payment is elected and begins before
the end of the calendar year following the year in which the Participant died,
the Beneficiary may elect the installment method of distribution over a period
not exceeding the Beneficiary's life expectancy. If the Beneficiary elects to
receive benefit payments over a period in excess of five years and dies before
complete distribution, the remainder shall be distributed to the successor
Beneficiary at least as rapidly as under the method of distribution in effect at
the Beneficiary's death.
(iii) Default Rule. Unless paid under (i) or (ii)
above, distribution shall be completed no later than the last day of the
calendar year that includes the fifth anniversary of the Participant's death. If
the Beneficiary dies before complete distribution, the remainder shall be paid
to the successor Beneficiary no later than the last day of the calendar year
that includes the fifth anniversary of the Participant's death.
(iv) Installment Method. If the installment method
is elected by the Spouse or other Beneficiary, the applicable life expectancy,
as of the calendar year in which distribution begins, or other installment
period and the amount of each installment, shall be determined under Sections
7.3 and 7.4.
(b) Death After Required Beginning Date. If the Participant
dies after the Required Beginning Date, any unpaid amount must be distributed at
least as rapidly as under the method of distribution in effect at the
Participant's death.
(c) Beneficiary is Minor Child. Any amount paid to the
Participant's minor child will be treated as paid to the Spouse if the remainder
becomes payable to the Spouse after the child reaches the age of majority.
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7.7 Waiver of QJSA or QPSA; Election of Method and Time of
Distribution.
(a) Waiver of QJSA.
(i) Notice. At least 30 days, but not more than 90
days, before the Benefit Starting Date, the Administrator shall provide each
Participant, in writing, a reasonable explanation of (A) the terms and
conditions of the QJSA; (B) the Participant's right to waive, and the effect of
the waiver of, the QJSA; (C) the rights of the Spouse; and (D) the right to
revoke, and the effect of a revocation of, a previous waiver of the QJSA.
(ii) Waiver. During the 90-day period before the
Benefit Starting Date, a Participant may waive the QJSA, or the life annuity if
the Participant is not married, and may revoke a prior waiver. The Participant
may waive or revoke a prior waiver of the QJSA with respect to the entire Vested
Account Balance or only with respect to any specific account balance. A waiver
of a QJSA shall not be effective unless the Spouse consents to the waiver. The
Participant may revoke the waiver without the Spouse's consent. The waiver may
be in the form of a written election under (g) below containing the Spouse's
consent.
(b) Waiver of QPSA.
(i) Notice. The Administrator shall provide each
Participant with a whiten notice containing an explanation of the QPSA and other
benefits available upon the death of the Participant. The explanation shall be
comparable to the explanation described above with respect to the QJSA. The
notice shall be provided to each Participant within the period described below
which ends last:
(A) Age-Related. The period beginning
with the first day of the Plan Year that includes the date the Participant
attains age 32 and ending with the last day of the Plan Year preceding the Plan
Year that includes the date the Participant attains age 35; or
(B) Participation. A reasonable period
that includes the date the Employee becomes a Participant. A reasonable period
is the two-year period beginning one year before, and ending one year after, the
occurrence of the described event.
If a Participant's employment terminates before
the Plan Year that includes the date the Participant attains age 35, notice
shall be provided within the two-year period beginning one year before
termination of employment and ending one
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year after termination of employment. If the Participant later returns to
employment with the Employer, the applicable period for the Participant shall be
redetermined.
(ii) Waiver. At any time during the period
beginning on the first day of the Plan Year that includes the date a Participant
attains age 35 (or the date the Participant's employment terminates, if earlier)
and ending on the earlier of the date the first payment is made to the
Participant or the Participant's death, the Participant may waive the QPSA with
the written consent of the Spouse and elect an alternate method of distribution.
The waiver shall be in the form of a written election by the Participant and
consent by the Spouse. The Participant may not designate a different Beneficiary
without a new consent by the Spouse. If the Participant does not waive the QPSA
during the Participant's lifetime, the Spouse may waive the QPSA and elect an
alternate method of distribution at any time after the Participant's death and
before distribution begins. A Participant or Spouse may waive the QPSA with
respect to the entire Vested Account Balance or with respect to any specific
account balance.
(iii) Pre-Age 35 Waiver. A Participant who has not
attained age 35 as of the last day of any current Plan Year may make a special
waiver of the QPSA for the period beginning on the date of the waiver and ending
on the first day of the Plan Year in which the Participant attains age 35. The
waiver is subject to (i) and (ii) above except that the notice under (i) above
must be provided to the Participant before the date of the waiver. The waiver
shall not be valid unless the Participant receives the notice before the date of
the waiver.
The QPSA shall be automatically reinstated as of the first
day of the Plan Year in which the Participant attains age 35. Any new waiver on
or after that date is subject to (i) and (ii) above.
(c) Spousal Consent. A consent by a Spouse shall not be
effective unless the consent is in writing, signed by the Spouse and witnessed
by an individual designated for this purpose by the Administrator or by a notary
public. The consent must acknowledge the effect of the waiver of the QJSA or the
QPSA. If it is established to the satisfaction of the Administrator that the
Spouse cannot be located or if other circumstances set forth in Regulations
issued under Code Section 417 exist, the Spouse's consent is not required. The
consent is effective only with respect to the consenting Spouse and not with
respect to a subsequent Spouse. Consent by the Spouse will be irrevocable with
respect to the Participant's election, waiver, or designation of a Beneficiary
to which the consent relates.
(i) Specific Beneficiary or Method of Distribution.
The consent may be limited to a distribution to a specific alternate
Beneficiary, including any class of Beneficiaries or any contingent
Beneficiaries, and a specified method of distribution.
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Any waiver after the revocation of a prior waiver or change of Beneficiary will
require a new spousal consent.
(ii) General Consent. The consent may permit the
Participant to designate a Beneficiary, or elect an alternate method of
distribution, or to change either or both without a further consent by the
Spouse. This form of consent is not valid unless the Spouse expressly and
voluntarily permits such designations and elections without any further spousal
consent. The consent may be limited to certain Beneficiaries or to certain
methods of distribution.
(d) Permitted Elections. To the extent permitted under this
article and subject to waiver of the QJSA or QPSA, the Participant or other
recipient may elect the method and time of distribution. To the extent met under
subsections (a), (b), or (c), the requirements under (e) and (g) need not be met
again.
(e) Required Consent. If the distributive event is
termination of employment prior to the date the Participant attains age 62 for
any reason other than death, distribution shall not be made without the
Participant's consent. The consent shall be given by an election of
distribution. An election of distribution shall be made within the 90-day period
ending on the Benefit Starting Date.
(i) Notice. When consent is required, the
Participant shall be notified of the right to elect or defer distribution. The
written notice shall provide an explanation of the material features and
relative values of the available methods of distribution. The notice shall be
provided at least 30 days and not more than 90 days before the Benefit Starting
Date.
(ii) Benefit Starting Date. "Benefit Starting Date"
means the first day of the first period for which an amount is distributable in
any form. Generally, the Benefit Starting Date is the date on which distribution
is due when all conditions and requirements for distribution have been met.
(f) Exception to Waiver and Consent Requirements. The waiver
of the QJSA or QPSA and the Participant's consent are not required with respect
to a distribution when the Participant's Vested Account Balance, including any
earlier distribution, is $3,500 or less.
(g) Election Requirements.
(i) Time. The election shall be made not later than
the date distribution begins or, if earlier, the date when distribution must
begin. An election may be revoked or changed before distribution begins.
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(ii) Form. An election shall be made in a form
acceptable to the Administrator.
(h) Failure to Elect. If a Person fails to elect (or multiple
recipients cannot agree):
(i) Method. The method of distribution for an ESOP
Account shall be a lump sum. The method of distribution for all other accounts
shall be a QJSA or QPSA if the Participant is married or a life annuity if the
Participant is not married.
(ii) Time. Distribution shall begin under Section
7.5(b) if the Participant is alive or under Section 7.6(a)(i) if the Participant
was married when the Participant died, or Section 7.6(a)(iii) if the Participant
was not married when the Participant died.
(i) Additional Information. The Administrator may require
additional election, application or information forms required by law or deemed
necessary or appropriate by the Administrator in connection with any
distribution.
(j) No Reduction or Delay of Distribution. An election shall
not cause a reduction in the minimum amount or delay the required time of
payment of any Minimum Distribution or any distribution required after the death
of a Participant.
(k) Limited Application. Subsections (a), (b), and (c) and
all other references to the QJSA or the QPSA in this plan shall apply only to
the portion of a Participants Vested Account Balance that is otherwise required
to be paid in the form of a QJSA or a QPSA.
7.3 Designation of Beneficiary.
A Participant may designate or change a Beneficiary by filing a signed
designation with the Administrator in the form approved by the Administrator.
The Participant's Will is not effective for this purpose.
(a) Beneficiary. "Beneficiary" means the Person designated by
the Participant to receive the Participant's benefits under this plan after the
Participant's death.
(b) Spousal Consent. If a married Participant designates or
changes a Beneficiary other than the Spouse without the Spouse's consent to and
acknowledgment of the effect of the designation, the designation shall be void.
A consent that permits further designations without consent is void unless the
Spouse expressly and
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voluntarily permits such designations without any further spousal consent. The
consent may be limited to a specific Beneficiary and a specific method of
distribution.
(i) Consent. Consent by the Spouse is irrevocable.
The consent and acknowledgment must be witnessed by an individual named by the
Administrator or by a notary public. If the Spouse cannot be located or if other
circumstances set forth in Regulations issued under Code Section 417 exist, the
consent need not be obtained.
(ii) Spouse. "Spouse" means the Participant's
husband or wife at any specified time. A former Spouse shall not be a Spouse
except to the extent specified in a QDRO under Code Section 414(p).
(iii) Successor Beneficiaries. A Participant may
designate one or more successor Beneficiaries to the Spouse without the Spouse's
consent.
(iv) Change of Marital Status. A Beneficiary
designation by a Participant will not be effective upon the Participant's
subsequent marriage unless the Spouse consents to the designation and
acknowledges the effect of the designation.
(c) Failure to Designate. If a Participant fails to designate
a Beneficiary, the Beneficiary shall be the Spouse at the time of the
Participant's death and the Spouse's estate with respect to any amount remaining
undistributed at the subsequent death of the Spouse. If the Participant is not
survived by a Spouse, the Beneficiary for each date of distribution shall be the
first of the following classes with a living member on the date of distribution:
(i) Children. The Participant's children, including
those by adoption, dividing the distribution equally among the Participant's
children with the living issue of any deceased child taking their parent's share
by right of representation;
(ii) Parents. The Participant's parents, dividing
the distribution equally if both parents are living;
(iii) Brothers and Sisters. The Participant's
brothers and sisters, dividing the distribution equally among the Participant's
living brothers and sisters.
(d) Death of Beneficiary. If distribution is being made to a
Beneficiary who dies before complete distribution, the remaining amount in the
account shall be paid to the successor Beneficiary. If distribution is made to
more than one Beneficiary, distribution shall continue to the survivor or
survivors of them, and any remaining amount in the account upon the death of the
last survivor shall be paid to the successor
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Beneficiary. Survivors shall include the issue of any deceased child who shall
take the deceased child's share by right of representation.
(e) No Beneficiary. If a deceased Participant has no
surviving Beneficiary under (c) above on the date a distribution is payable, the
remaining balance shall be paid to the Participant's estate, if then under the
active administration of a probate or similar court, or if not, to those Persons
who would then take the Participant's personal property under the Michigan
intestate laws then in force and in the proportions provided therein, as though
the Participant had died at such time.
(f) Determination. The Administrator shall apply the rules of
this section to determine the proper Persons to whom payment should be made. The
decision of the Administrator shall be final and binding on all Persons.
7.9 Facility of Payment.
A payment under this section shall fully discharge the Employer and
Trustee from all future liability with respect to that payment.
(a) Incapacity. If a recipient entitled to a payment is
legally, physically, or mentally incapable of receiving or acknowledging
payment, the Administrator may direct the payment to the recipient; to the
recipient's legal representative; to the spouse, child, or other relative by
blood or marriage of the recipient; to the individual with whom the recipient
resides; or by expending the payment directly for the benefit of the recipient.
A payment made to any Person other than the recipient shall be used for the
recipient's exclusive benefit.
(b) Legal Representative. The Employer shall not be required
to commence probate proceedings or to secure the appointment of a legal
representative.
(c) Determination. The Employer may act upon affidavits in
making any determinations. In relying upon the affidavits or having made a
reasonable effort to locate any Person entitled to payment, the Employer shall
be authorized to direct payment to a successor Beneficiary or another Person. A
Person omitted from payment shall have no rights on account of payments so made.
7.10 Notice of Penalties.
The following penalties apply to distribution of, or failure to
distribute, certain amounts under this plan.
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(a) Distribution Before Age 59 1/2. A Participant who
receives a distribution before attaining age 59 1/2 may be liable for an
additional 10% federal income tax on any portion of the distribution included in
gross income.
(b) Excess Distributions. If a Participant or Beneficiary
receives excess distributions, as defined in Code Section 498QA(c), the
Participant or Beneficiary shall be subject to a 15% penalty tax on the excess
distributions.
(c) Failure to Receive a Minimum Distribution. For a calendar
year in which a Participant or Beneficiary fails to receive the Minimum
Distribution under Code Section 401(a)(9), the recipient shall be subject to an
additional tax equal to 50% of the difference between the Minimum Distribution
and the amount the recipient actually received.
7.11 Special Rules-Distribution of Employer Stock.
Upon distribution of Employer Stock that is not readily tradeable on
an established securities market, the following provisions shall apply.
(a) Distributee's Option to Sell Benefit Shares. Upon
distribution of Employer Stock to a Participant or Beneficiary (or a donee,
trustee, or other Person, including an estate to whom the Employer Stock passes
as a result of a death), the recipient may elect to sell all or part of the
Employer Stock (the "Benefit Shares").
(i) Option Period: Lapse. The option to sell the
Benefit Shares shall begin on the date of distribution and extend for a period
of the next 60 days. At the end of the period, the option will temporarily
lapse. After the end of the Plan Year in which the temporary lapse occurs, and
after the Employer Stock is valued as of the last day of that Plan Year, each
recipient who has not exercised the option to sell shall be notified of the new
Fair Market Value of the Benefit Shares. Each recipient will then have a period
of 60 days from the date of notification to exercise the option to sell. If the
option to sell is not exercised, it shall lapse at the termination of the new
60-day period and shall not be renewed.
(ii) Written Notice. Upon a written notice to the
Employer of an election to sell, the seller shall sell and the Employer shall
purchase in accordance with the provisions of (c) below.
(iii) Limitation. The 60-day option periods shall
not run during a period of time during which the Employer is unable to purchase
the Benefit Shares due to a state or federal law.
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(iv) Nonterminable. This option to sell, and the
terms of sale as set forth in (c) below, shall be nonterminable for the period
of the option, and shall continue in existence under this plan whether or not
this plan continues as an employee stock ownership plan and whether or not this
plan is discontinued.
(v) Assignment. The Employer may assign the
obligation to purchase to the Trustee, with the agreement of the Trustee.
(b) Right of First Refusal.
(i) Notice of Sale or Transfer. If a Participant or
Beneficiary should at any time intend to sell or exchange or otherwise transfer
any Benefit Shares, and if the Participant obtains a bona fide offer for the
purchase or exchange of the Benefit Shares, or if any of the Benefit Shares
should be the subject of a proposed assignment or transfer by way of gift,
bankruptcy, execution, hypothecation, or seizure and sale by legal process, or
upon the death of the Participant or Beneficiary, the Participant or Beneficiary
(or a creditor causing the proposed transfer) or the personal representative of
the estate of the Participant or Beneficiary shall deliver to the Employer a
written notice stating: (A) the name or names of the proposed transferees; (B)
the certificate number and number of the Benefit Shares proposed to be
transferred; (C) the proposed price (if a sale transaction is contemplated); and
(D) all other terms of the proposed transfer. The Trustee shall have the right
and option for a period of 14 days after receipt of the notice to purchase all
of the Benefit Shares the transfer of which is proposed.
(ii) Failure to Exercise Option. If the Trustee
does not exercise the option to purchase and if the proposed transfer is made
within 20 days after the termination of the option to the Person or Persons in
the manner and upon the terms and conditions set forth in the written notice,
then the Benefit Shares may be so transferred and shall in the hands of the
transferee be free of all options, obligations, and restrictions provided in
this trust.
(iii) Additional Notices of Sale. If the Trustee
does not elect to exercise the option and if the proposed transfer is not made
within 20 days after the termination of the option, then the Benefit Shares so
proposed to be transferred may not be transferred without again giving the
notice to the Trustee and the Trustee again shall have the option to purchase
the Benefit Shares.
(iv) Assignment. The Trustee may assign the option
to purchase to the Employer, with the consent of the Employer.
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(c) Terms of Purchase. If the Trustee or the Employer becomes
obligated to purchase Benefit Shares pursuant to the provisions of either (a) or
(b) above, the terms of the purchase shall be as follows:
(i) Distributee's Option to Sell. If Benefit Shares
are purchased pursuant to the option granted under (a) above, the purchase price
shall be the Fair Market Value of the Benefit Shares, and shall be paid in
either a single lump-sum payment or in not less frequent than annual
installments. If a lump-sum payment is to be made, the payment shall be paid
within 30 days after the date the option is exercised. If installment payments
are to be made, each installment shall be as equal as possible, the first
installment shall be paid within 30 days after the date that the option is
exercised. If installment payments are to be made, interest at a reasonable rate
shall be payable and the purchaser shall grant the seller a security interest in
the Benefit Shares being purchased or in other adequate security. The
installment period may not extend for more than five years.
(ii) Right of First Refusal. If Benefit Shares are
purchased pursuant to (b) above, the purchase price shall be the price stated in
the written notice of the proposed transfer, or if greater, the Fair Market
Value of the Benefit Shares. The terms of purchase shall be no less favorable to
the Participant or Beneficiary than the terms of the offer the Participant or
Beneficiary has received. If the proposed transfer by the Participant or
Beneficiary is not a sale transaction, the purchase price shall be the Fair
Market Value of the Benefit Shares, and the terms of purchase shall be governed
by the rules of (a)(i) above.
(iii) Procedure on Closing. At the time provided
for the payment or initial installment, the seller of Benefit Shares shall
deposit with the purchaser the certificates for the Benefit Shares, properly
endorsed or accompanied by an appropriate stock power. At that time, the
purchaser shall deposit with the seller any required cash payment and, if
applicable, its executed promissory note representing any balance remaining to
be paid. Also at that time the Benefit Shares shall be subject to a security
interest in favor of the seller, as collateral for the payment of the promissory
note, or other adequate security shall be given to the seller. All or a portion
of the unpaid balance of a purchase price may be prepaid by the purchaser at any
time without penalty.
(iv) Fair Market Value. "Fair Market Value"
generally means the value determined as of the most recent Valuation Date,
pursuant to Section 5.6(b)(i). However, in the case of a transaction under this
section between this plan and a disqualified person, as that term is defined in
Code Section 4975, "Fair Market Value" means the value as of the date of the
transaction.
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(d) Securities Law. All plan provisions with respect to
transactions involving Employer Stock, including, but not limited to, its
distribution as a benefit and its repurchase or sale, are subject to and
conditioned upon compliance with applicable provisions of federal and state
securities laws or regulations. Without limiting the preceding sentence, no
certificate for shares of Stock shall be transferred to a Participant or
Beneficiary unless the shares, at the time of any issuance or transfer: (i) are
exempt, are the subject matter of an exempt transaction, or are registered
within the meaning of applicable federal or state securities laws and
regulations; and (ii) comply with the rules of any stock exchange on which the
Employer's shares may be listed. Unless an exemption from registration is
available, prior to or as soon as practicable after the time when shares of
Employer Stock would otherwise be deliverable to a Participant or Beneficiary,
the Employer will register the shares or interest, as required under federal
and/or state law. If the shares are delivered to Participant or Beneficiary
pursuant to a registration exemption, the Participant or Beneficiary shall
deliver to the Employer a representation in writing signed by the Participant or
the Participant's representative, or by the Beneficiary, as the case may be,
that the Employer Stock will be held indefinitely unless it is subsequently
registered under state and federal law, or unless an exemption from the
registration is available. A stock certificate issued by the Employer pursuant
to a registration exemption shall bear a legend and statement that the Employer
deems advisable to assure compliance with this plan and with federal and state
laws and regulations that shall be in substantially the form set forth in (e)
below.
(e) Stock Certificate Legend. Benefit share certificates of
Employer Stock distributed to a Participant or Beneficiary shall have the
following legend endorsed on certificates:
> > THIS CERTIFICATE, AND DISPOSITION OF IT, IS SUBJECT TO THE TERMS OF THE
> > MANATRON, INC. EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN, INCLUDING
> > A RIGHT OF FIRST REFUSAL TO PURCHASE THE SHARES REPRESENTED BY THIS
> > CERTIFICATE.
ARTICLE 8
Administration of the Plan
8.1 Duties, Powers, and Responsibilities of the Employer.
(a) Required. The Employer shall be responsible for:
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(i) Employer Contributions.
(A) Amount. Determining the amount of
Employer Contributions;
(B) Payment. Paying, ceasing, or
suspending Employer Contributions (including additional contributions if
necessary to correct an error in allocation, vesting, or distribution of a
Participant's interest or to make an adjustment for penalties imposed under a
contract of an insurance company); and
(C) Compliance. Determining that the
amount and time of Employer Contributions comply with this plan;
(ii) Agent for Service of Process. Serving as the
agent for service of process;
(iii) Trustee. Appointing the Trustee;
(iv) Amendment. Amending this plan and trust;
(v) Plan Termination. Revoking this instrument and
terminating this plan and trust; and
(vi) Mergers; Spin-Offs. Merging this plan with
another qualified retirement plan maintained by the Employer or dividing this
plan into multiple plans.
(b) Discretionary. The Employer may exercise the following
responsibilities:
(i) Investment Manager. Appointing one or more
Investment Managers, who shall have the power to acquire, manage, or dispose of
any or all trust assets subject to:
(A) Functions. The functions of the
Investment Manager shall be limited to those specified services and duties for
which the Investment Manager is engaged, and the Investment Manager shall have
no other duties, obligations, or responsibilities under this plan or trust;
(B) Qualification. "Investment Manager"
means a Person that is a registered investment adviser under the Investment
Advisors Act of 1940, a bank (as defined in the Investment Advisors Act of
1940), or an insurance company licensed to manage, acquire, and dispose of
assets of qualified retirement plans under the laws of more than one state; and
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(C) Acknowledgment. A prospective
Investment Manager must acknowledge in writing that it is a fiduciary with
respect to this plan and trust;
(ii) Custodian. Appointing one or more agents to
act as custodian of trust assets transferred to the custodian;
(iii) Alternate Administrator. Designating a Person
other than the Employer as the Administrator; and
(iv) Payment of Administrative Expenses. Paying
administrative expenses incurred in the operation, administration, management,
and control of this plan or the trust. These expenses shall be the obligation of
the trust unless paid by the Employer.
8.2 Employer Action.
An action required to be taken by the Employer shall be taken by its
board of directors or by an officer authorized to act on behalf of the Employer.
8.3 Plan Administrator.
"Administrator" means the Employer or a Person designated by the
Employer. The Administrator is a named fiduciary for operation and management of
this plan and shall have the responsibilities conferred by ERISA upon the
"Administrator" as defined in ERISA Section 3(16).
8.4 Administrative Committee.
(a) Appointment. The Employer may, but shall not be required
to, appoint an administrative committee to perform the duties involved in the
daily operation of this plan.
(b) Agent; Powers and Duties. The administrative committee is
an agent of the Employer. The administrative committee shall have the powers and
duties delegated to it by the Administrator.
(c) Not Fiduciary. Except to the extent the administrative
committee is expressly delegated a fiduciary responsibility with respect to this
plan, the administrative
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committee will be responsible to the Employer for its actions and will not be a
named fiduciary for operation and management of this plan.
(d) Membership. The number of members of the administrative
committee shall be determined by the Employer. The Employer shall appoint the
members of the administrative committee and may remove or replace them at any
time.
(e) Records. The administrative committee shall keep records
of its proceedings.
(f) Actions. The administrative committee shall act by a
majority of its members then in office. Action may be taken either by a vote at
a meeting or in writing without a meeting. Actions of the administrative
committee may be evidenced by written instrument executed by the chairman or the
secretary of the administrative committee.
(g) Report to Administrator. The administrative committee
shall report to the Administrator when requested with respect to the
administration, operation, and management of this plan.
(h) Compensation. Any member of the administrative committee
who is an Employee shall serve without compensation.
(i) Conflict of Interest. Any member of the administrative
committee who is a Participant shall not vote or act on a matter that relates
solely to that Participant. If that Participant is the only member of the
administrative committee, the necessary action shall be exercised by the
Administrator.
8.5 Duties, Powers, and Responsibilities of the Administrator.
Except to the extent property delegated, the Administrator shall have
the following duties, powers, and responsibilities and shall:
(a) Plan Interpretation. Interpret all provisions of this
instrument (including resolving an inconsistency or ambiguity or correcting an
error or an omission);
(b) Participant Rights. Subject to Section 8.10, determine
the rights of Participants and Beneficiaries under the terms of this plan and
communicate that information to the Trustee;
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(c) Limits, Nondiscrimination Tests; Top-Heavy Tests. Be
responsible for determining (i) that this plan complies with all limitations and
nondiscrimination tests under the Code and Regulations including maintaining
records necessary to demonstrate compliance with the ADP Limit; and (ii) whether
or not this plan is a Top-Heavy Plan or a Super Top-Heavy Plan for any Plan
Year;
(d) Allocations and Vesting. Determine which Participants are
entitled to a share of the Employer Contribution and other available amounts for
a Plan Year, the amount of each eligible Participant's Participating
Compensation for the Plan Year, the amount of the Employer Contribution to be
allocated to each eligible Participant, the amount and disposition of an excess
Annual Addition, and a Participant's vested percentage;
(e) Errors in Participants' Accounts. Correct (to the extent
possible, by making adjustments to the accounts) an error, including (but not
limited to) errors in allocations of the Employer Contribution or investment
experience, or in determination of vesting or distribution of a Participant's
interest;
(f) Claims and Elections. Establish or approve the manner of
making an election, designation, application, claim for benefits, and review of
claims;
(g) Benefit Payments. Direct the Trustee as to the recipient,
time payments are to be made or to begin, and the elected form of distribution
including selecting annuities;
(h) QDRO Determination. Establish procedures to determine
whether or not a domestic relations order is a QDRO, to notify the Participant
and any alternate payee of this determination, and to administer distributions
pursuant to a QDRO;
(i) Administration Information. Obtain to the extent
reasonably possible all information necessary for the proper administration of
this plan;
(j) Recordkeeping. Establish procedures for and supervise the
establishment and maintenance of all records necessary and appropriate for the
proper administration of this plan;
(k) Reporting and Disclosure. Prepare and (i) file annual and
periodic reports required under ERISA and Regulations; and (ii) distribute
disclosure documents including (but not limited to) the summary plan
description, a form permitting the recipient to reject federal income tax
withholding from a distribution, a notice informing the recipient of the
requirements and effects of lump-sum, five or ten year averaging or of a
qualifying rollover under the Code, the summary annual report, Form 5500 series,
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requested and required benefit statements, and notices to Employees of
applications for determination;
(l) Penalties; Excise Taxes. Report and pay any penalty tax
or excise taxes incurred by this plan or the Employer in connection with this
plan an the proper tax form designated by the Internal Revenue Service and
within the time limits specified for the tax form;
(m) Advisers. Employ attorneys, actuaries, accountants,
clerical employees, agents, or other Persons who are necessary for operation,
administration, and management of this plan ;
(n) Expenses, Fees, and Charges. Present to the Trustee for
payment (if not paid by the Employer) or reimbursement (if advanced by the
Employer) all reasonable and necessary expenses, fees and charges, including
fees for attorneys, actuaries, accountants, clerical employees, agents, or other
Persons, incurred in connection with the administration, management, or
operation of this plan;
(o) Nondiscrimination. Apply all rules, policies, procedures,
and other acts without discrimination among Participants;
(p) Bonding. Review compliance with the bonding requirements
of ERISA; and
(q) Other Powers and Duties. Exercise all other powers and duties
necessary or appropriate under this plan, except those powers and duties
allocated to another named fiduciary.
8.6 Delegation of Administrative Duties.
The powers and duties of the Employer and the Administrator set forth
in Sections 8.1 and 8.5 may be delegated to another fiduciary.
(a) In Writing. The written delegation shall specify (i) the
date of the action and the effective date of the delegation; (ii) the
responsibility delegated; (iii) the name, office, or other reference of each
fiduciary to whom the responsibility is delegated; and (iv) if a responsibility
is delegated to more than one fiduciary, the allocation of the responsibility
among the fiduciaries.
(b) Acceptance of Responsibility. The delegation shall be
communicated to the fiduciary to whom the responsibility is assigned, and
written acceptance of the
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responsibility shall be made by the fiduciary. A fiduciary shall retain the
responsibility until the fiduciary resigns or rejects the responsibility in
writing, or the Administrator takes a superseding action.
(c) Conflict. If a fiduciary's powers or actions conflict
with those of the Administrator, the powers of and actions of the Administrator
will control.
8.7 Interrelationship of Fiduciaries; Discretionary Authority.
A Person may serve in more than one fiduciary capacity with respect to
this plan and trust.
(a) Performance of Duties. Each fiduciary shall act in
accordance with this plan and trust. Each fiduciary shall be responsible for the
proper exercise of its responsibilities.
(b) Reliance on Others. Except as required by ERISA Section
405(b), each fiduciary may rely upon the action of another fiduciary and is not
required to inquire into the propriety of any action.
(c) Discretionary Authority of Fiduciaries. Each fiduciary
shall have full discretionary authority in the exercise of the powers, duties,
and responsibilities allocated or delegated to that fiduciary under this
instrument.
8.8 Compensation; Indemnification.
An Employee fiduciary who is compensated on a full-time basis by the
Employer shall not receive compensation from this plan, except for reimbursement
of expenses, unless permitted under a prohibited transaction exemption issued by
the Department of Labor. The Employer shall indemnify and hold harmless each
member of the Board of Directors, each of its Employees, and each other Person
(except a fiduciary independent of the Employer), to whom responsibilities for
the operation and administration of this plan have been assigned or fiduciary
duties have been delegated from any and all claims, loss, damages, expense, and
liability arising from any action or failure to act. Indemnification shall not
be required if a Person's action or inaction is judicially determined to be due
to gross negligence or willful misconduct of the Person. The Employer may
purchase and maintain liability insurance covering itself, any Related Employer,
and any Person against part or all of any claim, loss, damage, expense, and
liability arising from the performance or failure to perform any power, duty, or
responsibility with respect to this plan and trust.
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8.9 Fiduciary Standards.
Each fiduciary shall act solely in the interest of Participants and
Beneficiaries:
(a) Prudence. With the care, skill, and diligence of a
prudent Person;
(b) Exclusive Purpose. For the exclusive purpose of providing
benefits and paying expenses of administration; and
(c) Prohibited Transaction. To avoid engaging in a prohibited
transaction under the Code or ERISA unless an exemption for the transaction is
available or obtained.
8.10 Claims Procedure.
The Administrator shall determine all issues raising from the
administration of this plan.
(a) Initial Determination. Upon application by a Participant
or Beneficiary, the Administrator shall make an initial determination and
communicate the determination to the Participant or Beneficiary within 90 days
after the application. If the initial determination requires a longer period,
the Administrator shall notify the Participant or Beneficiary that the 90-day
period is extended to 180 days.
(b) Method. The decision of the Administrator shall be in
writing. The decision shall set forth (i) the decision and the specific reason
for the decision; (ii) specific reference to the plan provisions on which the
decision is based; (iii) a description of additional material, information, or
acts that may change or modify the decision; and (iv) an explanation of the
procedure for further review of the decision.
(c) Further Review. Within 60 days of receipt of the initial
written decision, the Participant or Beneficiary filing the original
application, or the applicant's authorized representative, may make a request
for redetermination by the Administrator. The applicant (or the authorized
representative) may review all pertinent documents and submit issues, comments,
and arguments.
(d) Redetermination. Within 60 days of receipt of an
application for redetermination, unless special circumstances require a longer
period of time (but not longer than 120 days after receipt of the application),
the Administrator shall provide the applicant with its final decision, setting
forth specific reasons for the decision with specific reference to plan
provisions on which the decision is based.
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8.11 Participant's Responsibilities.
All requests for action of any kind by a Participant or Beneficiary
under this plan shall be in writing, executed by the Participant or Beneficiary,
and shall be subject to any other plan rules applicable to any specific type of
request.
ARTICLE 9
Investment of Funds
9.1 Investment Responsibility.
Except for investment in Employer Stock and to the extent investment
responsibility is expressly granted to an Investment Manager or a Participant,
the Trustee shall have sole and complete authority and responsibility for the
investment, management, and control of trust assets. The administrative
committee shall give the Trustee written direction with respect to investment in
Employer Stock.
9.2 Authorized Investments.
To the extent the trust is not invested in Employer Stock under
Sections 9.4 and 9.9, the trust may be invested and reinvested in common or
preferred stocks, bonds, mortgages, leases, notes, debentures, mutual funds,
guaranteed investment contracts and other contracts and funds of insurance
companies, other securities, and other real or personal property, including,
without limitation, the investments described in (a) below. Investment in
collectibles (as that term is defined in Code Section 408(m)) shall not be
permitted if the Participant directs the investment of the Participant's
account.
(a) Specific Investments.
(i) Interest-Bearing Deposits. The trust may be i
nvested in deposits, certificates, or share accounts of a bank, savings and loan
association, credit union, or similar financial institution, including a
fiduciary, if the deposits bear a reasonable rate of interest, whether or not
the deposits or certificates are insured or guaranteed by an agency of the
United States Government.
(ii) Pooled Investment Funds. The trust may be
invested through ownership of assets or shares in a common trust fund, pooled
investment fund, mutual
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fund, or other commingled investment, including any pooled or common fund
maintained by the Trustee or custodian, or affiliate of the Trustee or
custodian, that allows participation by a trust fund established under a
qualified retirement plan. For this purpose, the terms and provisions of the
declaration of trust or other governing documents through which the common trust
fund, pooled investment fund or mutual fund is maintained are incorporated in,
and made applicable to, this plan.
(b) Unallocated Funds. An Employer Contribution or other
amounts held by the Trustee pending allocation may be held in cash or invested
in interest-bearing obligations maturing before the date the allocation is
required.
(c) Right of Trustee To Hold Cash. The Trustee may hold a
reasonable portion of the trust in cash pending investment or payment of
expenses and distributions.
9.3 Commingled Investment.
The trust and segregated accounts may be commingled for investment
without distinction between principal and income.
9.4 Investments--Employer Stock.
This plan is designed to operate as an employee stock ownership plan
and to be invested primarily in Employer Stock. The Trustee shall use available
cash and other trust assets in ESOP Accounts to buy Employer Stock from other
stockholders or from the Employer, as directed by the administrative committee.
The Trustee may borrow funds or issue its promissory note or notes to finance
the purchase of Employer Stock.
(a) Acquisition Limit. The Trustee may acquire and hold
Employer Stock in an amount up to 100% of the market value of the ESOP Accounts,
Qualified Matching Contributions Accounts, and Elective Contributions Accounts
(to the extent directed by the Participants under Section 9.9).
(b) Adequate Consideration. A purchase or sale of Employer
Stock by the Trustee shall be for not more than, or less than (as applicable),
adequate consideration and in accordance with this plan and with Regulations
under ERISA Section 3(18).
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(c) No Commissions. No commissions on the purchase or sale of
Employer Stock from or to a disqualified person, as defined in Code Section 4975
or a party in interest, as defined in ERISA Section 3(14), may be paid to any
Person.
(d) Indebtedness. A Securities Acquisition Loan or other
extension of credit ("Exempt Loan") to the trust shall bear a reasonable rate of
interest and shall be for a term certain. Collateral pledged to a creditor by
the trust shall consist solely of the Employer Stock purchased with the borrowed
funds (although the Employer may guarantee payment of the Exempt Loan and may
give security for such guaranty).
(e) Securities Acquisition Loan. "Securities Acquisition
Loan" means any loan that meets the requirements of Code Section 133.
(f) Unallocated and Pledged Employer Stock. The Employer
Stock shall be maintained in a suspense account, if not pledged as collateral,
and shall be released from the suspense account or, if pledged as collateral,
shall be released from encumbrance as provided in (i) below.
(g) No Recourse. Under the terms of an Exempt Loan, the
creditor shall be given no recourse against the trust, except with respect to
the collateral pledged.
(h) Repayment of Loan. An Exempt Loan shall be repaid solely
from Employer Contributions (other than contributions in the form of Employer
Stock and Elective Contributions) and forfeitures, proceeds from the sale of
unallocated shares of Employer Stock purchased with the Exempt Loan, and from
trust earnings on such contributions or on the Employer Stock purchased with
such Exempt Loan, and the Employer Contributions shall be sufficient to enable
the trust to pay each and every installment of principal and interest when due,
even if no tax benefit results from the contributions.
(i) Release of Pledged Employer Stock. An Exempt Loan must
provide that upon payment of a portion of the balance due, the creditor shall
release a Pro Rata Portion of the pledged collateral or, if not pledged as
collateral, a Pro Rata Portion of the Employer Stock shall be released from the
suspense account, as the Exempt Loan is paid. Employer Stock purchased with each
Exempt Loan shall be released separately.
(i) Pro Rata Portion. "Pro Rata Portion" means the
number of pledged securities or number of shares in the suspense account held
immediately before release for the current Plan Year multiplied by a fraction.
The numerator of the fraction is the amount of principal and interest paid
during the Plan Year and the denominator is the sum of the numerator and the
remaining principal and interest to be
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paid under the obligation in all future years. The number of future years shall
be determined without taking into account possible extensions or renewals of the
obligation. If the interest rate under the obligation is variable, the interest
to be paid in future years shall be computed by using the interest rate
applicable as of the end of the current Plan Year. If the collateral or suspense
account includes more than one class of Employer Stock, the number of shares of
each class to be released for a Plan Year must be determined by applying the
same fraction to each class.
(ii) Alternative Determination of Pro Rata Portion.
At the direction of the Administrator, Pro Rata Portion of securities may be
Determined with reference solely to principal payments, but only if (A) the
obligation provides for annual payments of principal and interest at a
cumulative rate that is not less rapid at any time than level annual payments of
the amounts for 10 years, and (B) the interest included in any payment is
disregarded only to the extent that it would be determined to be interest under
standard loan amortization tables. This alternate determination shall not be
applicable from the time that, by reason of a renewal, extension, or
refinancing, the sum of the expired duration of the obligation, plus any renewal
period, extension period, or the duration of a new obligation used to refinance
the existing obligation, exceeds 10 years.
(iii) Special Release Rule. Notwithstanding (i) and
(ii) above, to the extent provided in Section 5.2(a)(ii)(C), at the direction of
the Employer, the Trustee shall release additional shares of Employer Stock for
purposes of allocation to Participant accounts.
(j) Pending Investment. Pending investment in Employer Stock,
funds may be invested and reinvested pursuant to Section 9.2.
9.5 Purchase From Stockholder.
As directed by the administrative committee, the Trustee shall enter
into a buy-sell agreement or agreements under the terms of which the Trustee
agrees to purchase the Employer Stock of a stockholder who is a party to the
agreement. A buy-sell agreement shall provide that the price to be paid by the
Trustee for the Employer Stock shall not exceed the fair market value of the
Employer Stock. The Trustee may not enter into a buy-sell agreement to become
effective upon the death of the stockholder, or at some other future indefinite
time.
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9.6 Stock Dividends, Stock Splits, Etc.
Employer Stock received by the Trustee as a stock dividend or stock
split or as the result of a reorganization or other recapitalization of the
Employer shall be allocated under Section 5.3. If any rights, warrants, or
options are issued on Employer Stock held in the trust, the Trustee may exercise
them for the acquisition of additional shares of Employer Stock to the extent
cash is then available. Employer Stock acquired in this manner shall be treated
as Employer Stock bought by the Trustee for the net price paid. If any rights
warrants, or options on Employer Stock that are not exercised shall be sold by
the Trustee, the proceeds shall be treated as a current cash dividend received
on Employer Stock.
9.7 Voting of Employer Stock.
(a) Participant Direction. Each Participant shall have the
right to direct the Trustee as to the manner in which all Employer Stock held in
the Participant's accounts shall be voted. The Trustee shall total the
fractional shares of all Participants who have directed the vote in the same
manner and shall cast the largest number of whole votes possible from the total
of the fraction. Any remaining fraction shall be disregarded.
(b) Notification. The Employer shall notify the
Trustee and Participants when voting rights are to be exercised and, within
periods as required by law or Employer chart or bylaws for other shareholders,
shall furnish the Trustee and Participants with information similar to that
furnished to other shareholders of the Employer.
(c) Proxy Solicitation. Management and others may solicit and
exercise proxies from Participants to the same extent as authorized for other
shareholders. Any such proxy will be in the form of an instruction to the
Trustee that will be voted by the Trustee in the manner indicated in the
Participant's direction, and will not be returned or disclosed to the solicitor.
(d) Unallocated Shares. Unallocated shares of Employer Stock
shall be voted by the Trustee, as directed by the administrative committee.
(e) Confidentiality. The Trustee may not divulge information
with respect to any Participant's directions under (a) above to any Person,
including the Employer.
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9.8 Diversification of Investments.
Upon the request of a Participant who has attained at least age 55 and
has at least ten years of participation in this plan, the Administrator may
direct the Trustee to establish a segregated account for the Participant and to
liquidate up to 25% of the number of shares of Available Employer Stock
allocated to the Participant. The proceeds shall be reinvested pursuant to
Section 9.9.
(a) Available Employer Stock. "Available Employer Stock"
means Employer Stock acquired by or contributed to this plan and held in the
Participant's ESOP Account. Employer Stock acquired by or contributed to this
plan will not be Available Employer Stock if the Fair Market Value of the
Employer Stock allocated to the eligible Participant's ESOP Account as of the
Valuation Date immediately preceding the first day the Participant is eligible
to make an election under this section is $500 or less.
(b) Timing of Direction. The direction to liquidate and
reinvest Available Employer Stock under this provision may be given during the
first 90 days after the last day of each Plan Year in the Qualified Election
Period. During the first 90 days after the last day of the last (sixth) Plan
Year in the Qualified Election Period, the Participant may request the
liquidation and reinvestment of up to 50% of the number of shares of Available
Employer Stock allocated to the Participant.
(c) Determination of Number of Shares To Be Liquidated and
Reinvested. The total amount liquidated and reinvested at any time shall not
exceed 25% (or 50%) of the number of shares of Available Employer Stock held
allocated to the Participant, including shares of Available Employer Stock
previously liquidated and reinvested. Any fractional number of shares to be
liquidated and reinvested shall be rounded up to the next highest whole number
of shares.
(d) Qualified Election Period. "Qualified Election Period"
means the six-year period beginning on the first day of the first Plan Year in
which the Participant attains at least age 55 and has at least ten years of
participation.
(e) Value of Shares to Be Liquidated and Reinvested. A
direction to liquidate Available Employer Stock and reinvest the proceeds in
accordance with this provision shall apply to the Available Employer Stock held
in the Participant's ESOP Account as of the last day of the Plan Year
immediately preceding the date of liquidation. Dividends paid on Available
Employer Stock before the date of reinvestment of the proceeds from the
liquidation of Available Employer Stock shall be reinvested under this section.
No interest or earnings shall be credited to the Available Employer Stock
liquidated for the period beginning on the last day of the Plan Year immediately
preceding the date of liquidation and the date of liquidation.
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(f) No Reinvestment in Employer Stock. After Available
Employer Stock held in a Participant's Employer Stock Account has been
liquidated and reinvested, the Participant may not direct that the amount shall
be reinvested in Employer Stock.
9.9 Participant Investment Direction.
The Administrator may permit investment direction by Participants
under the following rules:
(a) Accounts. Investment direction by a Participant shall be
permitted with respect to the Participant's Elective Contributions Account or
may be limited to any specified accounts under this plan. If the Employer
contributes Employer Stock to this plan as a Qualified Matching Contribution, to
the extent a Participant's account is allocated shares of Employer Stock from
such Qualified Matching Contribution, the Participant may not direct the
investment of that portion of the account except as specified in Section
9.11(a).
(b) Choices. Investment direction by a Participant shall be
limited to a choice among investments permitted under this article, including
Employer Stock, and designated by the Administrator for this purpose.
(c) Commingling. Funds or assets invested under this
provision may be commingled with other funds or assets similarly invested for
investment purposes.
(d) Written Direction. The written direction by a Participant
shall be in the form prescribed by the Trustee and shall be effective only when
signed by the Participant and filed with the Trustee. The Trustee may rely upon
such direction and upon the continuance of the direction contained therein until
it is revoked or modified in the same manner. The Trustee shall invest the
portion of the Participant's account for which the Participant does not direct
the investment in the manner the Trustee deems advisable in its sole discretion.
(e) Additional Terms and Conditions. The Administrator may
formulate additional terms and conditions for investment direction by the
Participants as necessary or appropriate.
(f) Limitation of Trustee's Responsibilities. The Trustee shall not be
responsible for the investment performance of the assets of any Participant's
account for which a Participant directs the investment.
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9.10 Loans.
Upon the request of a Participant and at the direction of the
Administrator, the Trustee shall loan the Participant the requested amount. The
loan shall be made or refused on the terms and conditions specified by the
Administrator. Loans shall be available to Participants on a reasonably
equivalent basis, but the Administrator may take into account a Participant's
credit rating, financial need, and ability to repay the loan. Loans shall be
available from all of the Participant's accounts other than the Participant's
ESOP Account. A loan shall be available only for the purposes described in
Section 7.1(i)(ii). A loan shall not be available to a Participant unless the
Participant has received or rejected, or is not eligible for, a hardship
withdrawal under Section 7.1(i).
(a) Separate Investment. The loan shall be a separate
investment of the Participant's account as of the date of the loan. Interest on
the loan and repayments of principal shall be credited directly to the
Participant's account.
(b) Fees and Charges. Special fees and charges resulting from
the loan shall be charged to the Participant's account, unless paid by the
Employer.
(c) Promissory Note. The loan shall be documented by a
written promissory note providing for at least equal quarterly payments of
principal and interest with no prepayment penalty.
(i) Interest Rate. The loan shall bear a reasonable
rate of interest which shall be the prevailing rate charged by lenders for a
loan of a similar type.
(ii) Term of Loan. The term of the loan shall not
exceed five years unless the loan is used to acquire or construct the
Participant's principal residence. A loan shall have a stated maturity date not
later than the date of the first expected distribution to the Participant.
(d) Amount. Loans shall not be made available to Highly
Compensated Employees in an amount greater than the amount made available to
other Participants. All outstanding loans to the Participant shall not exceed
the lesser of $50,000 or one-half of the Participant's Vested Account Balance.
The $50,000 limit shall be reduced by the excess of the
highest outstanding balance of all prior loans to the Participant under all
qualified retirement plans of the Employer and each Related Employer during the
one-year period ending on the day before the date of the new loan, over the
outstanding balance of all prior loans to the Participant on the date of the new
loan.
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(e) Security. The loan shall be adequately secured. The
Participant shall execute a security agreement within 90 days before the
effective date of the loan or renegotiation, extension, renewal, or other
revision of an existing loan. The security agreement shall grant to the Trustee,
for the benefit of this plan, a continuing security interest in the
Participant's Vested Account Balance. Upon payment in full of principal and
interest on the loan, the security interest shall terminate.
(i) Security Interest. The security interest shall
not exceed 50% (100% for loans made or revised before October 18, 1989) of the
Participant's Vested Account Balance.
(ii) Alternate Security. With the Administrator's
consent, the Participant may provide additional or alternative security to
secure the repayment of the loan.
(iii) Spousal Consent. No portion of the
Participant's Vested Account Balance shall be used as security for a loan under
this plan unless the Spouse's written consent is obtained within 90 days before
the effective date of the loan, renegotiation, extension, renewal, or otherwise
revision of the loan.
(f) Default. Upon default, the entire loan shall be due and
the security interest may be foreclosed. Unless prohibited by the Regulations,
the Trustee may exercise its right of setoff and equitably charge the
Participant's Vested Account Balance by reducing it by the unpaid balance.
(g) Early Due Date. If all or a part of the loan is
outstanding on the date the first distribution is to be made to the Participant
or a Beneficiary after the Participant's employment terminates or this plan
terminates, the loan shall be due and payable. Unless paid, the remaining
balance of the loan and all accrued and unpaid interest shall be deducted from
the Participant's Vested Account Balance before the first distribution is made.
(h) Limitation on Loan Availability. No loan will be made to
a 5% Owner if the Employer is an S corporation unless the 5% Owner obtains a
prohibited transaction exemption from the Department of Labor.
9.11 Tender Offer.
The following provisions apply if any Person makes an offer to
purchase or solicits an offer to sell to that Person 1 % or more of the
outstanding shares of Employer Stock ("Tender Offer").
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(a) Participant Direction. Each Participant may direct the
Trustee to sell, offer to sell, exchange, or otherwise dispose of Employer Stock
held in the Participant's accounts, in accordance with the terms of the Tender
Offer. Participant direction shall be filed with the Trustee in the form and at
the time specified by the Trustee.
(b) Trustee's Response - Valid Directions. The Trustee shall
follow all Participant's valid directions with respect to the potential sale,
offer, exchange, or other disposal of the Employer Stock held in the
Participant's accounts. The proceeds from the disposition of Employer Stock
under this section shall be credited to each Participant's applicable account
and shall be subject to the investment provisions applicable to such account.
(c) Invalid Directions or No Directions. The Trustee shall
treat invalid directions from a Participant, and failure to give the Trustee
directions, as a direction by the Participant not to dispose of the Employer
Stock held in the Participant's accounts. The Trustee, or its agent, shall
determine the validity of directions from Participants.
(d) Unallocated Shares. The Trustee shall dispose of
unallocated shares of Employer Stock after a Tender Offer. The disposition of
unallocated shares shall be determined by multiplying the total number of
unallocated shares by a fraction. The numerator of the fraction is the number of
shares for which Participants gave valid directions for disposition under (a)
above, and the denominator is the total number of shares for which the
Participants gave valid directions.
(e) Allocation of Proceeds. The proceeds from any disposition
of Employer Stock held in the Participant's accounts as a result of a Tender
Offer shall be allocated to Participants' applicable accounts. Proceeds from
unallocated Employer Stock shall be used to repay the Exempt Loan with which
such Employer Stock was purchased.
(f) Confidentiality. The Trustee may not divulge information
with respect to any Participant's directions under (a) above to any Person,
including the Employer.
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ARTICLE 10
Administration of the Trust
10.1 Duties and Powers of the Trustee.
(a) Duties of the Trustee. The Trustee shall be a named
fiduciary having the following duties:
(i) Control, Manage, and Invest Assets. To
control, manage, and invest trust assets;
(ii) Administrator's Instructions. To carry
out the instructions of the Administrator; and
(iii) Records; Reports. To maintain records
and to prepare and file reports required by law or Regulations, other than those
for which the Administrator is responsible under the terms of this plan.
(b) Powers of the Trustee. The Trustee shall have the
following powers:
(i) Control Property. To hold, manage,
improve, repair, and control all property, real or personal, forming part of the
trust;
(ii) Asset Investment. To invest trust assets
subject to the limitations in this plan;
(iii) Disposition of Asset. To sell, convey,
transfer, exchange, partition, lease for any term (even extending beyond the
duration of the trust), or otherwise dispose of a trust asset from time to time,
in the manner, for the consideration, and upon the terms and conditions that the
Trustee, in its discretion, determines;
(iv) Agents, Advisers, and Counsel. To employ
and to compensate from the trust agents, advisers, and legal counsel reasonably
necessary in managing the trust and advising the Trustee as to its powers,
duties, and liabilities;
(v) Claims. To prosecute, defend, settle, arbitrate,
compromise, or abandon all claims and demands in favor of or against the trust,
with or without the assistance of legal counsel;
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(vi) Vote Securities. To vote a corporation's
stock or other securities, either in person or by proxy, for any purpose;
(vii) Exercise Trust Rights. To exercise,
refrain from the exercise of, or convey a conversion privilege or subscription
right applicable to a trust asset;
(viii) Collection. To demand, collect, and
receive the principal, dividends, interest, income, and all other moneys or
other property due upon trust assets;
(ix) Change of Structure. To consent to,
oppose, or take another action in connection with a bankruptcy, composition,
arrangement, reorganization, consolidation, merger, liquidation, readjustment of
the financial structure, or sale of assets of a corporation or other
organization, the securities of which may constitute a portion of the trust;
(x) Issue, Hold, or Register Securities. To
cause securities or other property forming part of the trust to be issued, held,
or registered in the individual name of the Trustee, in the name of its nominee
or in such form that title will pass by delivery, provided that the records of
the Trustee shall indicate the ownership of the property or security;
(xi) Borrowing. To borrow money for the
benefit of the trust without binding itself individually, and to secure the loan
by pledge, mortgage, or creation of another security interest in the property;
(xii) Distributions. To make distributions
from the trust as directed by the Administrator;
(xiii) Expenses. Unless paid by the Employer,
to pay from the trust all reasonable fees, taxes, commissions, charges, premiums
and other expenses, including expenses described in Section 8.5(n) and
reasonable fees of the Trustee and any other custodian or Investment Manager,
incurred in connection with the administration of this plan or trust;
(xiv) Insure Assets. To insure trust assets
through a policy or contract of insurance;
(xv) Incorporate. To incorporate (or
participate in an incorporation) under the laws of any state for the purpose of
acquiring and holding title to any property that is part of the trust;
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(xvi) Depository. To keep on deposit with a
custodian in the United States any part of the trust; and
(xvii) Other Acts. To perform all other acts the
Trustee deems necessary, suitable, or desirable for the control and management
of the trust and discharge of its duties.
(c) Limitation on Duties and Powers of the Trustee. Unless
properly delegated and assumed by agreement of the Trustee, the Trustee shall
not be required to exercise a duty or power of the Employer, Administrator, or
any other fiduciary under this instrument.
If an Investment Manager is appointed to manage and invest
some or all of the trust assets, the Investment Manager shall have, and the
Trustee shall not have, the specified duties and powers with respect to
investment of trust assets subject to the Investment Manager's control. The
Trustee shall have no obligation or power to exercise discretionary authority or
control with respect to investment of the assets subject to management by the
Investment Manager or to render advice regarding the investment of such assets,
unless required by ERISA Section 405. The Trustee shall not be liable for the
investment performance of the assets subject to management by the Investment
Manager. The powers and duties of the Trustee with respect to such assets shall
be limited to the following:
(i) Custody and Protection. To act as custodian of
the trust assets not transferred to the custody of the Investment Manager or
another custodian, and to protect the assets in its custody from loss by theft,
fire, or other cause;
(ii) Acquisitions. To acquire additional assets for
the trust in accordance with the direction of the Investment Manager;
(iii) Dispositions. To sell or otherwise dispose of
trust assets in accordance with the direction of the Investment Manager;
(iv) Accountings. To account for and render
accountings with respect to the trust (except for assets held by another
custodian);
(v) Authorized Actions. To take authorized actions
for and on behalf of the trust in accordance with the direction of the
Investment Manager; and
(vi) Ministerial and Custodial Tasks. To perform
other ministerial and custodial tasks in accordance with the direction of the
Investment Manager.
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If trust assets are transferred to another custodian, that custodian
shall have, and the Trustee shall not have, the foregoing duties and powers with
respect to those assets.
10.2 Accounting.
The Trustee shall maintain accurate and detailed records of all
investments, receipts, disbursements, and other transactions for the trust. The
records shall be available for inspection at all reasonable times by Persons
designated by the Administrator.
(a) Report. As soon as administratively feasible after each
Valuation Date and each other date agreed to by the Administrator and the
Trustee, the Trustee shall prepare and furnish to the Administrator a statement
of account containing the information required by ERISA Section 103(b)(3).
(b) Judicial Settlement. A dispute concerning the Trustee's
records or statement of account may be settled by a suit for an accounting
brought by a Person having an interest in the trust.
The accounting and reporting responsibilities shall not apply with
respect to assets held by another custodian except to the extent assumed by the
Trustee at the direction of the Administrator.
10.3 Appointment, Resignation, and Removal of Trustee.
The Trustee shall be at least one individual or eligible corporation
with trust powers appointed in writing by the Administrator and authorized to
act as Trustee by ERISA and the Code.
(a) Resignation. The Trustee may resign with at least 60
days' written notice to the Administrator, effective as of the date specified in
the notice. The death or disability of an individual Trustee shall be an
immediate resignation. Disability, for this purpose, shall be determined in
writing by a court of competent jurisdiction or by two physicians licensed in
the State of Michigan stating that a Trustee is suffering from a physical or
mental disability to the extent that the Trustee is incapable of exercising
judgment about or attending to financial and property transactions.
(b) Removal. The Administrator may remove the Trustee with at
least 60 days' written notice to the Trustee, effective as of the date specified
in the notice.
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(c) Successor Trustee. At least 10 days before the effective
date of the resignation or removal, the Administrator shall appoint a successor
Trustee by written instrument delivered to the Trustee with the acceptance of
the successor Trustee endorsed on the instrument.
(d) Effective Date of Resignation or Removal. The resignation
or removal of the Trustee shall not be effective before the appointment is made
and accepted by the successor Trustee. The parties, by agreement, may waive the
time requirements.
(e) Procedure Upon Transfer. Upon the resignation or removal
of the Trustee, the Trustee shall pay from the trust all accrued fees and
expenses of the trust, including its own fees, and, as of the effective date of
its resignation or removal, shall deliver a statement of account to the
Administrator and the successor Trustee.
(f) Earlier Transfer. In order to facilitate the prompt
transfer of fiduciary responsibility and trust assets to the successor Trustee,
the Administrator and the Trustee may agree upon a procedure by which the
Trustee shall deliver all trust assets (less a reasonable reserve for fees and
expenses) to the successor Trustee as soon as administratively feasible after
receipt of notice of appointment of the successor Trustee and acceptance of
trust by the successor Trustee. The Administrator and the Trustee may agree to
the transfer of trust assets to the successor Trustee pending preparation and
approval of the final trust accountings.
(g) Final Transfer. As soon as administratively feasible, the
Trustee shall deliver the remaining trust assets to the successor Trustee,
together with records maintained by the Trustee.
(h) In Kind Transfer. The Trustee shall consult with the
Administrator concerning the liquidation of trust assets to be transferred for
the purpose of determining the feasibility of the transfer of certain trust
assets in kind before implementing the liquidation.
(i) Limitation on Liability of Successor. The successor
Trustee shall not be liable for the acts or omissions of any prior Trustee.
10.4 Trustee Action.
Actions taken by a Trustee shall be by written instrument executed by
the Trustee. Actions of a corporate Trustee shall be either by a resolution of
its board of directors or by a written instrument executed by one of its
authorized officers.
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10.5 Exculpation of Nonfiduciary.
A transfer agent, brokerage, clearing house, insurance company, or any
other Person that is not a fiduciary with respect to this plan and who has paid
money or delivered property to the Trustee shall not be responsible for its
application or for determining the propriety of the actions of the Trustee
concerning the money or other property.
10.6 Co-Trustees.
If there shall be more than one Trustee, the provisions relating to
the Trustee shall apply to the Trustees both collectively and individually. They
shall jointly manage and control the assets of the trust fund and shall be
jointly and severally liable for the management and control of trust assets,
except where responsibilities, obligations, or duties are allocated among them
by the written agreement of all Trustees and the Administrator, or by the
provisions of this plan. Subject to ERISA Section 405(a), the allocation of
duties shall relieve a Co-Trustee to whom enumerated responsibilities,
obligations, or duties have not been allocated, of liability, individually or as
a Co-Trustee, for a loss to the trust arising from the acts or omissions on the
part of another Co-Trustee to whom the enumerated responsibilities, obligations,
or duties have been expressly allocated.
10.7 Multiple Trusts.
(a) Establishment of Additional Trusts. The Employer may
determine that more than one trust shall be established for the purpose of
managing and investing the assets of this plan and may establish an additional
trust or trusts from time to time for that purpose. In that event, the trust and
investment provisions of this plan shall constitute the separate trust agreement
applicable to each trust.
(b) One Fund. All trusts created under this provision shall
constitute one fund for purposes of this plan and for purposes of meeting the
requirements of the Code and Regulations. Nevertheless, each trust shall be a
separate and distinct agreement between the Administrator and the Trustee
appointed by the Administrator to administer the trust.
(c) Separate Trust Agreement. The Administrator shall have
the power to establish a separate trust through a separate trust agreement. The
separate trust agreement may expand or restrict the rights, powers, and duties
of the Trustee and may modify the other trust provisions applicable to the
trust. The separate trust
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agreement shall be consistent with all other provisions of this plan and shall
not alter any other provision of this plan unless a corresponding and consistent
amendment to this plan is adopted.
(d) Contributions; Transfer of Funds; Termination. The
Administrator, in its sole discretion, shall determine from time to time the
portion of the trust assets to be maintained under each separate trust
established pursuant to this provision and the portion of each contribution to
be delivered to and maintained under each trust. In addition, the Administrator
shall have the power to direct the Trustee or Trustees of a trust to transfer
all or part of the assets of such trust to another trust or trusts. The
Administrator shall have the authority to merge a trust into another trust
maintained under this plan for the purpose of reducing the number of trusts in
existence pursuant to this plan, and shall have the power to terminate any
separate trust established under this section without causing termination or
partial termination of this plan.
(e) Named Fiduciaries; Allocation of Duties and
Responsibilities. If separate trusts are established, the Trustee of each trust
shall be a named fiduciary only with respect to the assets of that trust. During
any period when two or more trusts exist, the Administrator shall have the power
and authority to allocate duties and responsibilities between and among the
Trustees of each of the trusts. Subject to ERISA Section 405(a), the allocation
of duties and responsibilities exclusively to a Trustee shall relieve any
Trustee to whom the responsibilities, obligations, or duties have not been
allocated from liability for loss arising from the acts or omissions of the
Trustee to whom the responsibilities, obligations, or duties were allocated.
ARTICLE 11
Amendment, Mergers, Successor Employer
11.1 Amendment.
The Employer may amend this plan and trust. An amendment may be
retroactive or prospective, in the sole discretion of the Employer, except where
prohibited by ERISA or the Code. An amendment may be made without the consent of
any other Person, except that an amendment shall not:
(a) Exclude Participant. Exclude an Employee who previously
became a Participant;
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(b) Reduce Participant's Account. Decrease the amount
credited to a Participant's account;
(c) Reduce Vested Percentage. Reduce a Participant's vested
percentage, as of the later of the date of adoption of the amendment or the
effective date of the amendment;
(d) Vesting Schedule. Modify the vesting schedule for a
Participant who was a Participant on the later of the effective date or the date
of adoption of the amendment, except to increase the Participant's vested
percentage;
(e) Elimination of Protected Benefits. Eliminate any early
retirement benefits and retirement-type subsidy under Code Section
411(d)(6)(B)(i) or any optional forms of distribution with respect to benefits
attributable to service earned before the amendment except as may be permitted
under Code Sections 401(a)(4) and 411; and
(f) Alter Trustee's Duties. Alter the duties,
responsibilities, or liabilities of the Trustee without the consent of the
Trustee.
11.2 Merger of Plans.
This plan may be merged or consolidated, or its assets and
liabilities may be transferred, in whole or in part, to another qualified
retirement plan if:
(a) Preservation of Account Balance. Each
Participant's account balance would be equal to or greater than the account
balance the Participant would have been entitled to receive if this plan had
terminated immediately before the merger, consolidation, or transfer.
(b) Authorization. The Employer and any new or
successor employer authorize the merger, consolidation, or transfer.
11.3 Successor Employer.
If an Employer is dissolved, merged, consolidated, restructured, or
reorganized, or if the assets of the Employer are transferred, this plan and
trust may be continued by the successor, and in that event, the successor will
be substituted for the Employer.
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ARTICLE 12
Termination
12.1 Right to Terminate or Discontinue Contributions.
The Employer reserves the right to revoke this instrument and
terminate this plan and trust, or to cease or suspend further contributions.
12.2 Automatic Termination.
This plan shall automatically terminate, or partially terminate when
applicable, and contributions to the trust shall cease upon the Employer's legal
dissolution, or upon its adjudication as bankrupt or insolvent, or upon a
general assignment by the Employer for the benefit of creditors, or upon the
appointment of a receiver for its assets, or when required by ERISA or the Code.
12.3 Discontinuance of Contributions.
If the Employer determines that it is no longer possible or desirable
to make Employer Contributions to the trust, it may, without terminating this
plan, take appropriate action to permanently discontinue further Employer
Contributions. Upon discontinuance of Employer Contributions, the accounts of
all affected Participants shall be nonforfeitable. This plan and trust will
remain in force, and the Administrator and the Trustee will continue to
administer this plan and trust under its provisions except for Employer
Contributions.
12.4 Effect of Termination or Partial Termination.
(a) Nonforfeitability. Upon termination or partial
termination of this plan, accounts of affected Participants shall be
nonforfeitable.
(b) Distribution. The Administrator shall direct the Trustee
to make distributions to affected Participants under Article 7.
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12.5 No Reversion of Assets.
The Employer shall not receive an amount from the trust upon
termination, partial termination, or discontinuance of contributions.
ARTICLE 13
General Provisions
13.1 Spendthrift Provision.
An interest in the trust shall not be subject to assignment,
conveyance, transfer, anticipation, pledge, alienation, sale, encumbrance, or
charge, whether voluntary or involuntary, by a Participant or Beneficiary except
under a QDRO or as permitted in subsection (a).
(a) Not security. An interest shall not provide collateral or
security for a debt of a Participant or Beneficiary or be subject to
garnishment, execution, assignment, levy, or to another form of judicial or
administrative process or to the claim of a creditor of a Participant or
Beneficiary, through legal process or otherwise, except for a claim the Trustee
may have against the same as security for a Participant loan or under a
voluntary revocable assignment permitted by Regulation 1.401(a)-13.
(b) Attempts Void. An attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge, or otherwise dispose of benefits
payable, before actual receipt of the benefits, or a right to receive benefits,
shall be void. The trust shall not be liable for, or subject to, the debts,
contracts, liabilities, engagements, or torts of a Person entitled to benefits.
The benefits and trust assets under this plan shall not be considered an asset
of a Participant or Beneficiary in the event of insolvency or bankruptcy.
13.2 Effect Upon Employment Relationship.
The adoption of this plan shall not create a contract of employment
between the Employer and an Employee, confer upon an Employee a legal right to
continuation of employment, limit or qualify the right of the Employer to
discharge or retire an Employee at will, or affect the right of the Employee to
remain in service after the Normal Retirement Date.
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13.3 No Interest in Employer Assets.
Nothing in this plan and trust shall be construed to give an Employee,
Participant, or Beneficiary an interest in the assets or the business affairs of
the Employer, or the right to examine the books and records of the Employer. A
Participant's rights are solely those granted by this instrument.
13.4 Construction.
The singular includes the plural, and the plural includes the
singular, unless the context clearly indicates the contrary. Capitalized terms
have the meaning specified in this plan. If a term is not defined, the term
shall have the general, accepted meaning of the term.
Any period of time described in this plan shall consist of consecutive
days, months, or years, as appropriate.
13.5 Severability.
If any provision of this plan is invalid, unenforceable, or
disqualified under the Code, ERISA, or Regulations, for any period of time, the
affected provisions shall be ineffective but the remaining provisions shall be
unaffected.
13.6 Governing Law.
This plan and trust shall be interpreted, administered, and managed in
compliance with the Code, ERISA, and Regulations. To the extent not preempted by
federal law, this plan and trust shall be interpreted, administered, and managed
in compliance with the laws of the State of Michigan.
13.7 Nondiversion.
The trust is established and shall be administered for the exclusive
benefit of Participants and their beneficiaries.
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ARTICLE 14
Top-Heavy Plan Provisions
14.1 Top-Heavy/Super Top-Heavy Determination.
If this plan is or becomes a Top-Heavy Plan or a Super Top-Heavy Plan in a Plan
Year, the provisions of this article shall supersede all conflicting plan
provisions.
(a) Top-Heavy Plan. "Top-Heavy Plan" means this plan for a
Plan Year if:
(i) Not Required or Permissive Aggregation Group.
This plan is not part of a Required Aggregation Group or a Permissive
Aggregation Group, and the Top-Heavy Ratio exceeds 60%;
(ii) Required Aggregation Group. This plan is part
of a Required Aggregation Group (but not part of a Permissive Aggregation
Group), and the Top-Heavy Ratio for the Required Aggregation Group exceeds 60%;
or
(iii) Permissive Aggregation Group. This plan is
part of a Permissive Aggregation Group, and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
(b) Super Top-Heavy Plan. "Super Top-Heavy Plan" means this
plan for a Plan Year if the Top-Heavy Ratio for the plans or groups (set forth
in (a) above) exceeds 90%.
(c) Calculation. The calculation of the Top-Heavy Ratio and
the extent to which distributions, rollovers, and transfers are taken into
account will be made in accordance with Code Section 416 and Regulations.
(i) Disregard Certain Employees. In calculating the
Top-Heavy Ratio, the account balance or accrued benefit of a Participant who was
a Key Employee in a prior year but is no longer a Key Employee or has not
performed services for an Employer maintaining this plan at any time during the
five-year period ending on the Determination Date(s) will be disregarded.
(ii) Ownership. Ownership shall be determined under
Code Section 318 as modified by Code Section 416(i)(1)(B)(iii) without regard to
the aggregation rules under Code Section 414.
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(iii) Rollovers and Transfers. A distribution
rolled over or an amount transferred from this plan to another qualified
retirement plan of the Employer or a Related Employer shall not be included in
the Present Value of Accrued Benefits under this plan. A distribution rolled
over or an amount transferred from another qualified retirement plan of the
Employer or a Related Employer to this plan shall be included in the Present
Value of Accrued Benefits under this plan. If a rollover or transfer to a
qualified retirement plan of an unrelated employer was initiated by the former
Participant, it shall be deemed a distribution from this plan. If a rollover or
transfer from a qualified retirement plan of an unrelated employer to this plan
for a Participant was initiated by the Participant, it shall not be included in
the Present Value of Accrued Benefits under this plan.
14.2 Top-Heavy Definitions.
For purposes of this article, the following terms have the stated
meanings:
(a) Too-Heavy Ratio. "Top-Heavy Ratio" means the ratio, as of
this plan's Determination Date, calculated by dividing the aggregate Present
Value of Accrued Benefits of all Key Employees of each plan in the Required
Aggregation Group (and each other plan in the Permissive Aggregation Group, if
necessary or desirable) by the aggregate Present Value of Accrued Benefits of
all Participants under all plans in the Required (or Permissive) Aggregation
Group.
(b) Present Value of Accrued Benefits.
(i) This Plan. "Present Value of Accrued Benefits"
under this plan means the account balances of all Participants and Beneficiaries
determined as of the Determination Date, including forfeitures reallocated as of
such Determination Date. The Present Value of Accrued Benefits includes the
amount of a distribution made from this plan during the Plan Year that includes
the Determination Date and any of the four preceding Plan Years.
(ii) Other Plans. The Present Value of Accrued
Benefits shall be determined with respect to, and pursuant to the provisions of,
all qualified retirement plans (including a simplified employee pension plan) in
the aggregation group.
(iii) Unpaid Contribution. A contribution not paid
as of a Determination Date for any plan in the aggregation group shall be
included in the determination of the Present Value of Accrued Benefits as
required in Code Section 416 and Regulations.
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(c) Required Aggregation Group. "Required Aggregation Group"
means all qualified retirement plans, including terminated plans, of the
Employer and each Related Employer in which at least one Key Employee
participates, or participated at any time during the five-year period ending on
the Determination Date, plus all other qualified retirement plans of the
Employer and each Related Employer, that enable one or more of the plans
covering at least one Key Employee to meet the requirements of Code Sections
401(a)(4) or 410.
(d) Permissive Aggregation Group. "Permissive Aggregation
Group" means all qualified retirement plans, including terminated plans, if any,
of the Employer and each Related Employer that are part of a Required
Aggregation Group that includes this plan, plus any other qualified retirement
plan (designated by the Employer) of the Employer and each Related Employer that
is not part of the Required Aggregation Group but that, when considered part of
the Permissive Aggregation Group, does not prevent the group from meeting the
requirements of Code Sections 401 (a)(4) and 410.
(e) Determination Date. "Determination Date" means the last
day of the preceding Plan Year.
(i) Present Value of Accrued Benefits. The Present
Value of Accrued Benefits are determined as of the most recent Top-Heavy
Valuation Date within the 12-month period ending on the Determination Date.
(ii) Multiple Plans. When aggregating plans, the
Present Value of Accrued Benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year.
(f) Key Employee. "Key Employee" means an Employee or former
Employee (including any deceased Employee or the Beneficiary of any deceased
Employee) who, under Code Section 416(i), is or was, during the current Plan
Year or any of the four Plan Years immediately preceding the current Plan Year,
one of the following:
(i) Officer. An officer (determined under Section
2.4) of an Employer or Related Employer if the officer's HCE Compensation
exceeds 50% of the defined benefit dollar limit under Code Section 415(b)(1)(a)
(as adjusted under Code Section 415(d)) for the Plan Year;
(ii) Top 10 Owners. One of the 10 Employees owning
the largest interests, exceeding 1/2%, in an Employer or Related Employer if the
Employee's HCE Compensation exceeds $30,000 (or the Defined Contribution Dollar
Limit, if greater);
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(iii) 5% Owner. A 5% Owner: or
(iv) 1% Owner; $150,000 Compensation. A 1% owner,
determined under the definition of 5% Owner but replacing "5%" with "1%," whose
HCE Compensation exceeds $150,000.
Ownership under (ii) above, as well as under (iii) and (iv)
pursuant to the definition of 5% Owner, shall be determined separately for each
Employer and Related Employer. Compensation for (i), (ii), and (iv) above for a
Plan Year includes HCE Compensation from the Employer and all Related Employers.
(g) Top-Heavy Valuation Date. "Top-Heavy Valuation Date"
means, for a defined contribution plan (including a simplified employee pension
plan), the date for revaluation of the assets to market value coinciding with,
or occurring most recently within the 12-month period ending on, the
Determination Date. For a defined benefit plan, the term means the most recent
date used for computing the plan costs for minimum funding purposes (whether or
not an actuarial valuation is performed during that Plan Year) occurring within
the 12-month period ending on the Determination Date.
14.3 Minimum Allocation.
For each Plan Year in which this plan is or becomes a Top-Heavy Plan,
the Employer Contributions (other than Elective Contributions and Qualified
Matching Contributions) and forfeitures allocated to the account of each
Participant who is not a Key Employee and who is employed on the last day of the
Plan Year shall be not less than the lesser of 4% of the Participant's HCE
Compensation, or the largest percentage of HCE Compensation allocated to any Key
Employee from all Employer Contributions (including Elective Contributions). A
Participant who is not a Key Employee and whose employment terminates during the
Plan Year on or after the Participant's Normal Retirement Date or due to death
or Total Disability shall be eligible for this minimum allocation. If necessary,
the Employer shall make an additional contribution to provide this minimum
allocation.
14.4 Vesting Schedule.
The vesting schedule for each Participant who has an Hour of Service
during a Plan Year in which this plan is or becomes a Top-Heavy Plan shall be
replaced with the following schedule:
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Years of Vesting Service
Vested Percentage
Less than 2 years
-0-
2 years
20%
3 years
40%
4 years
60%
5 years
80%
6 years or more
100%
(a) Cessation. If this plan ceases to be a Top-Heavy Plan,
vested percentages shall continue to be determined under this schedule.
(b) Vesting Schedule Change. Any change in the vesting
schedule due to this plan becoming, or ceasing to be, a Top-Heavy Plan shall be
treated as an amendment to this plan, and all rules applying to the amendment of
a vesting schedule shall apply.
14.5 Plan Modifications.
If the Administrator determines the plan to be a Super Top-Heavy Plan
for a Plan Year or the words "125% of" are deleted from each place they appear
in the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction,
the minimum allocation percentage under Section 14.3 shall be decreased from, 4%
of HCE Compensation to 3%.
The Employer has executed this instrument this 29th day of June, 1995,
and pursuant to Section 10.7 has appointed Comerica Bank as Trustee of the
non-ESOP portion of the Plan and appointed Paul R. Sylvester as a separate
Trustee of the ESOP portion of the Plan.
MANATRON, INC.
By
/s/
--------------------------------------------------------------------------------
Its
President
--------------------------------------------------------------------------------
Employer
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Paul R. Sylvester (the "Trustee") accepts the duties, powers and
responsibilities of the Trustee as described in Articles 9 and 10 of the
Manatron, Inc. Employee Stock Ownership and Salary Deferral Plan with respect to
the ESOP portion of the Plan, and shall administer the assets delivered to him
under a separate trust in accordance with Section 10.7 of this plan, effective
as of the lst day of January, 1995.
Dated: June 29, 1995.
/s/ Paul R. Sylvester
--------------------------------------------------------------------------------
Paul R. Sylvester
Trustee
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Comerica Bank ("Trustee") accepts the duties, powers and
responsibilities of the Trustee as described in Articles 9 and 10 of the
Manatron, Inc. Employee Stock Ownership and Salary Deferral Plan with respect to
the non-ESOP portion of the Plan, and shall administer the assets delivered to
it under a separate trust in accordance with Section 10.7 of this plan,
effective as of the 1st day of January, 1995.
Dated: July 5, 1995.
COMERICA BANK
By
/s/ Alan J. Feinauer
--------------------------------------------------------------------------------
Its
Trust Officer
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Trustee
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SCHEDULE A
(a) Original Plan. Manatron, Inc. originally adopted the
Manatron, Inc. Profit-sharing and Salary Deferral Plan on April 26, 1990,
effective May 1, 1989.
(b) First Amendment and Restatement. The original plan was
amended and restated on September 11, 1990, effective May 1, 1989. The plan was
amended an October 23, 1992, effective October 1, 1992.
(c) Second Amendment and Restatement. ATEK Information
Services, Inc. originally adopted the ATEK Information Services, Inc. Retirement
Savings Plan on December 18, 1991, effective January 1, 1992. ATEK Information
Services, Inc. was acquired by Manatron, Inc. on July 28, 1993. The ATEK
Information Services, Inc. Retirement Savings Plan was merged into the Manatron,
Inc. Profit-Sharing and Salary Deferral Plan effective January 1, 1995. In
connection with the merger, the Manatron, Inc. Profit-Sharing and Salary
Deferral Plan was amended and restated on March 21, 1995, effective January 1,
1995.
(d) Third Amendment and Restatement. The plan was amended and
restated to become an employee stock ownership plan effective January 1, 1995.
The name of the plan was changed to the Manatron, Inc. Employee Stock Ownership
and Salary Deferral Plan. Comerica Bank was appointed Trustee of the non-ESOP
portion of the Plan and Paul R. Sylvester was appointed a separate Trustee of
the ESOP portion of the Plan. |
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Exhibit 10.15
STOCK PURCHASE AGREEMENT
(Olympic Property Group LLC and Port Ludlow Associates LLC)
(Olympic Water and Sewer, Inc.)
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into as
of May 29, 2001, between and among OLYMPIC WATER AND SEWER, INC., a Washington
corporation (the "Company"), OLYMPIC PROPERTY GROUP LLC, a Washington limited
liability company, as the sole shareholder in the Company ("OPG"), and PORT
LUDLOW ASSOCIATES LLC, a Washington limited liability company ("Purchaser').
RECITALS
WHEREAS, Purchaser desires to acquire the Company; and
WHEREAS, OPG owns, and at the Closing will own, all of the issued and
outstanding shares of capital stock of the Company (the "Shares"); and
WHEREAS, OPG desires to sell all of the Shares to Purchaser, and Purchaser
desires to purchase all of the Shares from OPG, on the terms and subject to the
conditions contained in this Agreement; and
WHEREAS, the transactions contemplated by this Agreement are to occur
simultaneously with the transactions contemplated under that certain Real Estate
Purchase and Sale Agreement dated January 12, 2001, by and among Purchaser as
Buyer and OPG, Pope Resources, and its wholly owned subsidiaries Olympic Real
Estate Development LLC, Olympic Real Estate Management, Inc., and Olympic
Resorts LLC collectively as Seller, as amended by Amendment No. 1 dated
February 8, 2001, Amendment No. 2 dated February 14, 2001, Amendment No. 3 dated
February 27, 2001, Amendment No. 4 dated March 26, 2001, and Amendment No. 5
dated May 15, 2001, Amendment No. 6 dated May 18, 2001, and Amendment No. 7
dated May 25, 2001 (as amended, the "Asset Purchase Agreement").
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
AGREEMENT
SECTION 1
PURCHASE AND SALE OF STOCK AND COMPANY ASSETS
1.1 Purchase and Sale of Stock. Subject to the terms and conditions of
this Agreement, at the Closing OPG shall sell, convey, assign, transfer and
deliver to Purchaser the Shares, and Purchaser shall purchase the Shares from
OPG, free and clear of all liens, claims, options, charges, encumbrances,
preferential rights and restrictions on transfer whatsoever.
1.2 Purchase Price. At Closing Purchaser shall deliver or cause to be
delivered to OPG, in full payment for the sale, conveyance, assignment, transfer
and delivery of the Shares and the other undertakings of the Company and OPG
hereunder, the amount of Two Million One Hundred Forty Thousand Fifty-six
Dollars (US$2,140,056.00) (the "Purchase Price"). The Purchase Price shall be
paid by Purchaser in immediately available United States funds pursuant to OPG's
instructions on the Closing Date. Notwithstanding anything in this Agreement to
the contrary, after Closing the amount of the Purchase Price shall be adjusted
by calculating the amount of the difference (the "Adjustment"), if any, between
the Estimated Working Capital Amount and Working Capital, determined pursuant to
the procedure set forth in this Section 1.2.
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As used in this Agreement, "Working Capital" means the Company's total
current assets minus the Company's total current liabilities, as of the Closing
Date, determined in accordance with GAAP; provided, however, that for purposes
of this Agreement and the determination of Working Capital hereunder, the
Company's total current assets shall not include the accounts receivable under
the Revolving Promissory Note dated December 28, 2000, given by OPG to the
Company, in the maximum principal amount of US$1,000,000.00 (the "Revolving
Note"), or the accounts payable under the Business Services Agreement dated
December 26, 2000, between ORM, Inc., as Contractor, and the Company as Owner
(the "BSA").
OPG and Purchaser agree that the estimated amount of Working Capital (the
"Estimated Working Capital Amount") is US$168,441.00.
No later than 45 days after the Closing Date, Purchaser and the Company
shall, together with the outside accounting firm of the Company (the
"Accountant"), prepare and deliver to OPG a statement of the Working Capital as
of the Closing Date (the "Closing Statement"). The Closing Statement shall be
prepared in accordance with GAAP (applied consistently with the Financial
Statements defined below) subject to the definition of Working Capital, and OPG
agrees to assist in the preparation of the Closing Statement if and to the
extent requested by Purchaser or the Accountant. OPG shall have fifteen
(15) days following delivery of the Closing Statement to OPG to review the
working papers and books and records of the Company used to determine the
Closing Statement. OPG shall notify the Company and Purchaser within fifteen
(15) days of the delivery of the Closing Statement to OPG whether OPG agrees
with or disagrees with the Closing Statement, including the determination of
Working Capital. If Company and Purchaser receive notice of OPG's disagreement
with the Closing Statement, then all parties shall make a good faith effort to
reach agreement on the Closing Statement, including the determination of Working
Capital, within five (5) days of all parties receiving notice of the
disagreement. If the parties cannot reach such an agreement within such five-day
period, then the parties shall mutually select an independent public accounting
firm (the "Neutral Auditor") to determine the Closing Statement, including the
Working Capital, and such determination shall be binding on all parties to this
Agreement. The cost of such Neutral Auditor shall be borne by whichever of
Purchaser or OPG had a greater differential between their proposed determination
of Working Capital and that determined by the Neutral Auditor. No later than
sixty-five (65) days following the Closing Date or, if applicable, as soon as
practicable after a final determination by the Neutral Auditor:
(i) If Working Capital exceeds the Estimated Working Capital Amount,
Purchaser shall pay the amount of the Adjustment by wire transfer in immediately
available funds to the account or accounts designated by OPG; or
(ii) If the Estimated Working Capital Amount exceeds Working Capital, OPG
shall pay the amount of the Adjustment by wire transfer in immediately available
funds to the account or accounts designated by Purchaser.
1.3 Closing. The closing of the transactions contemplated by this
Agreement shall take place simultaneously with the closing of the transaction
set forth in the Asset Purchase Agreement (the "Closing"). The date of the
Closing is sometimes referred to as the "Closing Date."
1.4 Form of Documents. At the Closing, the parties shall deliver the
documents and shall perform the acts set forth in this Agreement. All closing
documents shall be in form and substance satisfactory to OPG, the Company, and
Purchaser.
1.5 Company Assets. The Company is the owner of certain sewer and water
utility property and facilities located generally within the unincorporated
master planned resort area commonly known as Port Ludlow, Jefferson County,
Washington (the "MPR"), except with respect to certain wells, a reservoir, and
appurtenant facilities located outside the MPR (over which the Company has
rights and
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easements for use, operation, and maintenance), which consist of the Company's
entire right, title, and interest in and to the following:
1.5.1 Water Facilities, defined as the aggregate of the following:
(i) The wells and reservoirs (both active and inactive) listed on
Schedule 1.5.1(i)-1, shown on the map attached hereto as Schedule 1.5.1(i)-2,
and located on the real property described on Schedule 1.5.1(i)-3 (the "Wells
and Reservoirs"). The map attached hereto as Schedule 1.5.1(i)-2 is provided for
illustrative purposes only, might not be accurate, and shall not bind either
party.
(ii) The infrastructure and water lines used to transfer water from the
Wells and Reservoirs (and among the Wells and Reservoirs) to the platted lots
and parcels within the MPR as shown on the map attached as Schedule 1.5.1(ii),
including, without limitation, such easements or licenses as are used for the
infrastructure and waterlines to cross or be placed on property not owned by the
Company (the "Water Line Distribution System"). The map attached hereto as
Schedule 1.5.1(ii) is provided for illustrative purposes only, might not be
accurate, and shall not bind either party.
(iii) The water permits, water certificates, and other water rights listed on
Schedule 1.5.1(iii) relating to the withdrawal of water from the Wells and
Reservoirs listed on Schedule 1.5.1(i) (the "Water Permits").
(iv) All other permits (other than the Water Permits) listed on
Schedule 1.5.1(iv) (the "Other Water Permits"), that are used to operate and
maintain the Water Facilities.
(v) All personal property owned by the Company and used in connection with
the Water Facilities to maintain and operate the water distribution system,
including without limitation the depreciated personal property listed on
Schedule 1.5.1(v).
(vi) All current customer accounts, including prepaid hookup fees, as shown
on Schedule 1.5.1(vi) (which provides customer names, lots served, accounts
receivable aging, and prepaid hookup and tariff fees, and variances from the
Tariff Schedule defined below).
(vii) The current tariff schedule filed with the Washington Utilities and
Transportation Commission ("WUTC") attached hereto as Schedule 1.5.1(vii)
("Tariff Schedule").
(viii) Any real property, franchise, patent, or technology rights not listed
above that are owned by the Company and used in connection with the Water
Facilities.
1.5.2 Sewer Facilities, defined as the aggregate of the following:
(i) The distribution and collection infrastructure used to transfer sewage
wastewater from real property located within the MPR to the sewage treatment
facility located on the Treatment Plant (as described in Section 1.5.2(ii)),
including, without limitation, lift stations, as shown on the map attached
hereto as Schedule 1.5.2(i), including without limitation such licenses and
easements used for the infrastructure and sewer lines to cross or be placed on
property not owned by the Company ("Sewer Line Distribution System"). The map
attached hereto as Schedule 1.5.2(i) is provided for illustrative purposes only,
might not be accurate, and shall not bind either party.
(ii) The real property, improvements and equipment located on the Treatment
Plant described on Schedule 1.5.2(ii) (the "Treatment Plant").
(iii) The permits and licenses listed on Schedule 1.5.2(iii) (the "Sewer
Permits") that permit the Company to operate the Treatment Plant and discharge
sewage.
3
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(iv) All other permits (other than the Sewer Permits) listed on
Schedule 1.5.2(iv) (the "Other Sewer Permits"), that are used to operate and
maintain the Treatment Plant and the Sewer Line Distribution System.
(v) All personal property owned by the Company and used in connection with
the Treatment Plant and the Sewer Line Distribution System, including without
limitation the depreciated personal property listed on Schedule 1.5.2(v).
(vi) All current customer accounts, including prepaid hookup fees, as shown
on Schedule 1.5.2(vi) (which provides customer names, lots served, accounts
receivable aging, and prepaid hookup fees).
(vii) The current rate schedule for sewer service, as shown on
Schedule 1.5.2(vii) attached hereto.
(viii) All rights in and to plans, specifications, and technology owned by the
Company and used in connection with the Sewer Facility.
1.5.3 Other Company Property, defined as the aggregate of the following:
(i) Those certain lots and parcels of real property not otherwise described
on Schedule 1.5.1(i)-3 that are described on Schedule 1.5.3 attached hereto (the
"Land and Improvements").
(ii) All personal property owned by the Company but not listed on
Schedule 1.5.1(v) or Schedule 1.5.2(v), including without limitation vehicles,
maintenance equipment, small tools, inventories, office equipment, construction
materials, spare parts and materials, equipment, computer hardware and software,
security systems and files and records owned by the Company, including without
limitation the depreciated personal property described on Schedule 1.5.3(ii)
(collectively, together with Schedule 1.5.1(v) and Schedule 1.5.2(v), the
"Personal Property").
(iii) All contractual obligations and rights of the Company related to or
used in connection with the Land and Improvements, the Water Facilities and the
Sewer Facilities, including without limitation, development agreements, land use
entitlement agreements, management agreements, service contracts, vendor
agreements, equipment leases, Washington State Department of Natural Resources
aquatic lands leases, settlement agreements, commitments to provide water or
sewer utility services, and maintenance agreements, as generally described on
Schedule 1.5.3(iii) ("Contracts").
(iv) All copyrights, trademarks, tradenames, marketing materials, websites,
and other intellectual property rights owned by the Company, including without
limitation the right to use the name Olympic Water and Sewer, Inc., as described
generally on Schedule 1.5.3(iv) ("Intellectual Property").
The Other Company Property, the Water Facilities and the Sewer Facilities
are sometimes herein collectively referred to as the "Property."
Section 2
INSPECTION AND CLOSING DELIVERIES
2.1 Inspection of Company's Documents. Between January 12, 2001, and
April 2, 2001 (the "Inspection Period"), Purchaser and its agents had the
opportunity to review and photocopy all documents in the possession of OPG, the
Company, and the affiliates, parents, and subsidiaries of OPG and the Company,
relating to the Company and the Property ("Company's Documents") except
(i) materials or communications subject to attorney-client privilege;
(ii) communications with other prospective purchasers of either the Company or
all or any portion of the Property; (iii) the internal
4
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financial analysis of OPG and the affiliates, parents, and subsidiaries of OPG
except for the Company, and (iv) materials or communications deemed confidential
by OPG and the Company and that do not disclose material defects in the Company
or in the Property. OPG and the Company make no representations or warranties,
express or implied, as to the accuracy or completeness of Company's Documents
except those prepared by OPG or the Company for Purchaser (such as financial
information). OPG and the Company expressly disclaim any and all liability for
representations or warranties, expressed or implied, contained in or for
omissions from Company's Documents, except those prepared by OPG or the Company
for Purchaser. Prior to the Closing, Purchaser agrees not to distribute
Company's Documents to others (other than its consultants, affiliates,
investors, advisors and their respective employees) in whole or in part at any
time without the prior written consent of OPG or the Company, and to keep
confidential all information contained therein or made available in connection
with any further discussions relating to the Property. Company's Documents were
delivered for the limited purpose of assisting Purchaser in deciding whether or
not to proceed with its purchase of the Property and upon the express
understanding that they will be used only for such purpose. Upon the termination
of this Agreement, Purchaser shall return its copies of Company's Documents to
OPG and the Company without retaining any copies thereof. Purchaser shall not
distribute Company's Documents to more than ten (10) investors at a time and
shall require all such investors to keep confidential all information contained
therein.
2.2 Inspection of Property. During the Inspection Period, Purchaser at its
sole expense inspected the physical condition of the Property, verified to its
satisfaction the financial information provided to it, and conducted any
environmental or other inspections as it deemed appropriate. Purchaser shall
indemnify, defend and hold OPG and the Company harmless from any claims, liens,
causes of action, or obligations that arise out of or are in any way related to
Purchaser's activities on the Real Property prior to Closing, including without
limitation OPG's and the Company's costs, expenses and attorney's fees, except:
(i) to the extent such claims arise out of OPG's or the Company's negligence or
(ii) the discovery and reporting as required by law of any hazardous or
environmental condition on the Property. Notwithstanding anything to the
contrary herein, this indemnity shall survive termination of this Agreement.
Prior to the Closing, Purchaser may communicate with and retain OPG's and the
Company's consultants regarding the condition of the Real Property. All
consultants retained by Purchaser shall be compensated solely by Purchaser for
their work. If this Agreement is terminated for any reason prior to Closing,
then Purchaser shall cause its consultants to provide to OPG complete copies of
any work product they have produced on behalf of Purchaser, provided that OPG
shall compensate Purchaser's consultants for their reproduction costs. Purchaser
shall cause all of its consultants to keep the transaction described in this
Agreement completely confidential.
2.3 Approval of Property Condition. Based on its inspection of Company's
Documents and the Property and subject to the terms and conditions of this
Agreement and the schedules hereto, Purchaser approves Company's Documents and
the Property. Such approval, and nothing else in this Section 2, in any way
limits or impairs the warranties, representations and covenants of OPG or the
Company in this Agreement.
2.4 Purchaser's Deliveries. At Closing, subject to the fulfillment or
waiver of the conditions set forth in Section 5.2, Purchaser shall execute and
deliver to OPG all of the following:
(a) the Purchase Price as set forth in Section 1.2;
(b) a certified copy of a resolution or other certificate in a form
satisfactory to OPG, executed by Purchaser's managing member or other person or
body having management authority, authorizing the execution, delivery, and
performance of this Agreement by Purchaser;
(c) a certified copy of Purchaser's certificate of limited liability company
on file with the Secretary of State of California;
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(d) a certificate of existence of Purchaser, issued prior to the Closing
Date by the Secretary of State of Washington;
(e) a closing certificate executed by any officer of Purchaser specifically
authorized to do so, on behalf of Purchaser, pursuant to which Purchaser
represents and warrants to OPG that Purchaser's representations and warranties
to OPG are true and correct in all material respects as of the Closing Date as
if originally made on the Closing Date or, if any such representation or
warranty is untrue in any material respect, specifying the respect in which it
is untrue, that all covenants required by this Agreement to be performed by
Purchaser on or before the Closing have been so performed, and that all
documents to be executed and delivered by Purchaser at the Closing have been
executed by duly authorized officers of Purchaser; and
(f) such other documents from Purchaser as may reasonably be required in
order to effectuate the transactions contemplated by this Agreement; and
2.5 OPG's Deliveries. At Closing, subject to the fulfillment or waiver of
the conditions set forth in Section 5.1, OPG shall execute and deliver to
Purchaser at Closing all of the following:
(a) certificates representing the Shares, duly endorsed for transfer or
accompanied by stock assignments in proper form and duly executed;
(b) a certified copy of a resolution or other certificate in a form
satisfactory to Purchaser, executed by OPG's managing member or other person or
body having management authority, authorizing the execution, delivery, and
performance of this Agreement by OPG;
(c) a closing certificate duly executed by OPG, pursuant to which it
represents and warrants to Purchaser that the representations and warranties of
OPG and the Company to Purchaser are true and correct in all material respects
as of the Closing Date as if originally made on the Closing Date or if any such
representation or warranty is untrue in any material respect, specifying the
respect in which it is untrue, that all covenants required by the terms of this
Agreement to be performed by OPG or the Company on or before the Closing Date
have been so performed, and that all documents to be executed and delivered by
OPG and the Company at the Closing have been validly executed by each of OPG and
the Company;
(d) such other documents as may be reasonably required from OPG in order to
effectuate the transactions contemplated by this Agreement.
2.6 Company's Deliveries. At Closing, subject to the fulfillment or waiver
of the conditions set forth in Section 5.1, the Company shall execute and
deliver to Purchaser all of the following:
(a) all books and records of the Company;
(b) resignations of the directors and officers of the Company effective as
of Closing;
(c) a certified copy of the Company's Articles of Incorporation and a copy
of the Company's Bylaws certified to be true and correct by the Secretary of the
Company;
(d) a certificate of existence of the Company, issued not earlier than
thirty (30) days prior to the Closing Date by the Secretary of the State of
Washington;
(e) an incumbency and specimen signature certificate with respect to the
officers of the Company executing this Agreement, and any other document
delivered under this Agreement, on behalf of the Company;
(f) a closing certificate duly executed by the President of the Company, on
behalf of the Company, pursuant to which the Company represents and warrants to
Purchaser that the representations and warranties of the Company to Purchaser
are true and correct in all material respects as of the Closing Date as if
originally made on the Closing Date or if any such
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representation or warranty is untrue in any material respect, specifying the
respect in which it is untrue, that all covenants required by the terms of this
Agreement to be performed by the Company on or before the Closing Date have been
so performed, and that all documents to be executed and delivered by the Company
at the Closing have been validly executed by a duly authorized officer of the
Company;
(g) the Material Consents required to be delivered by the Company pursuant
to Section 4.4;
(h) certified copies of the resolutions of the Company's board of directors
authorizing the execution, delivery, and performance of this Agreement;
(i) A title certificate, endorsement, policy, or guarantee issued by
Jefferson Title Company and dated as of Closing assuring Purchaser as to the
Company's title to the real property described in this Agreement, in form and
substance reasonably satisfactory to Purchaser;
(j) such other documents as may be reasonably required from the Company in
order to effectuate the transactions contemplated by this Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES
3.1 General Statement. The parties make the representations and warranties
to each other that are set forth in this Section 3. OPG and the Company
acknowledge that the representations and warranties contained in this Agreement
(the "Representations and Warranties") are material inducements to Purchaser
entering into this Agreement. Each Representation and Warranty shall survive the
Closing, subject to the limitations set forth herein. The representations and
warranties of OPG and the Company in Sections 3.3.7, 3.3.9, 3.3.11, 3.4.3,
3.4.4, 3.4.5, 3.4.6 and 3.4.7 herein are based upon the current actual knowledge
of (a) Thomas A. Griffin, who is President of the Company, and (b) Larry Smith,
who is Vice President of the Company. OPG and the Company represent and warrant
to Purchaser that Messrs. Griffin and Smith are Seller's officers most familiar
with the condition, use, operation, and development of the Property. OPG and the
Company have no obligation under this Agreement to undertake any investigation
or take any affirmative action to acquire any knowledge, including without
limitation the review of Company's Documents, other than a reasonable inquiry of
the Company's current employees likely to possess knowledge. It is also
understood that information contained in Company's Documents is not imputed to
Messrs. Griffin or Smith except as and to the extent either of them has actual
knowledge of such information. The use of the term "within this Agreement" shall
mean "within this Agreement or any schedule hereto."
3.2 Representations and Warranties of Purchaser. Purchaser represents and
warrants to OPG as follows:
3.2.1 Purchaser is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of California.
Purchaser has full power and authority to enter into and perform this Agreement.
This Agreement has been duly executed and delivered by a duly authorized officer
of Purchaser.
3.2.2 No consent, authorization, order or approval of, or filing or
registration with, any governmental authority or other person is required for
the execution and delivery of this Agreement or for the consummation by
Purchaser of the transactions contemplated by this Agreement except as described
on Schedule 4.4.
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3.2.3 Neither the execution and delivery of this Agreement by Purchaser,
nor the consummation by Purchaser of the transactions contemplated by this
Agreement, will conflict with or result in a breach of any of the terms,
conditions, or provisions of Purchaser's organizational documents, or of any
statute or administrative regulation, or of any order, writ, injunction,
judgment or decree of any court or governmental authority or of any arbitration
award.
3.2.4 Purchaser is not a party to, or bound by, any material unexpired,
undischarged or unsatisfied written or oral contract, agreement, indenture,
mortgage, debenture, note or other instrument whereby timely performance by
Purchaser according to the terms of this Agreement may be prohibited, prevented
or delayed.
3.2.5 Purchaser has not dealt with any person, firm or corporation who is
or may be entitled to a broker's commission, finder's fee, investment banker's
fee or similar payment from Purchaser with respect to this transaction.
3.2.6 Purchaser has been provided the opportunity to ask questions of the
officers and management employees of the Company and to acquire such additional
information about the business and financial condition of the Company as
Purchaser has requested.
3.2.7 The Shares will be acquired by Purchaser for its own account, not as
a nominee or agent, for investment and without a view to resale or other
distribution within the meaning of the Securities Act of 1933, as amended, and
the rules and regulations thereunder. Purchaser is an "accredited investor" as
such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act. Purchaser understands that the Shares are not registered under
the Securities Act and must be held indefinitely by Purchaser unless a
registration statement covering the Shares is effective or an exemption from
registration is available, and the certificates representing the Shares may
contain a restrictive legend noting the restrictions on transfer described
herein and under applicable federal and state securities laws and regulations.
3.3 Representations and Warranties of the Company and OPG: Part I. The
Company and OPG jointly and severally represent and warrant to Purchaser as
follows:
3.3.1 Title to Shares. Prior to and as of Closing, OPG shall be the legal
and beneficial owner and registered holder of all of the Shares of the Company
and all Shares will have been legally and validly issued, are fully paid and
free of any interest or equity of any person (including without limitation to
the generality of the foregoing, any right or option to acquire) or any
mortgage, charge, pledge, lien, encumbrance, assignment, hypothecation, security
interest, title retention, claim, covenant, condition, or any other security
agreement or any restriction of any kind or character whatsoever, including any
escrow arrangement ("Encumbrance"). Prior to and as of Closing, OPG shall have
the right to transfer to Purchaser complete and absolute legal and beneficial
title to, and complete and absolute rights and interests in, the Shares free
from any Encumbrance or any other restrictions on transfer (other than any
restrictions under federal and state securities laws). Neither the Company nor
OPG is a party to any option, warrant, purchase right, or other contract or
commitment that could require the Company or OPG to sell, transfer, or otherwise
dispose of any Shares (other than this Agreement). No person or entity
(including, without limitation, OPG or employees, officers and directors of OPG
or the Company) has any right, security interest, option, warrant, contract,
commitment, equity, claim, or demand to acquire any additional Shares nor are
there any preemptive rights in any issued or unissued capital stock or other
securities of the Company. Neither the Company nor OPG is a party to any voting
trust, proxy, or other agreement or understanding with respect to the voting of
the Shares.
3.3.2 Officers, Directors and Managers. A true and correct listing of the
officers and directors of the Company is attached hereto as Schedule 3.3.2.
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3.3.3 No Conflicts with Obligations. The execution, delivery, and
performance of this Agreement by the Company and OPG does not, and the
consummation of the transactions contemplated hereby will not, violate or result
in a breach of any provision of the Company's or OPG's organizational documents,
or violate any provision of, constitute a default under, result in the
acceleration of any obligation under, or result in the creation or imposition of
any Encumbrance upon the Property of the Company under, any mortgage, lien,
lease, contract, agreement, indenture, order, arbitration award, judgment or
decree to which the Company or OPG is a party or by which either of them is
bound, or violate any other restriction of any kind or character to which the
Company or OPG is subject.
3.3.4 Organization. The Company is a corporation duly organized, existing
and in good standing, under the laws of the State of Washington. The Company has
all necessary power and authority under applicable corporate law and its
organizational documents to own, lease, or operate the Property and to carry on
its business as presently conducted. The Company does not conduct any business
in any foreign jurisdiction where registration to do business would be required.
3.3.5 Capitalization. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Company. There are no voting trusts, proxies, or other agreements
or understandings with respect to the voting of the capital stock of the
Company. The number of shares authorized, the number of shares issued and
outstanding, the name of each individual, partnership, corporation, trust or
other entity holding shares and the number of shares held by each, and the par
value per share of the authorized capital stock of the Company are set forth in
Schedule 3.3.5. All the issued and outstanding shares are duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights. As
of the date of this Agreement, there are not, and on the Closing Date there will
not be, any shares of capital stock of the Company authorized, issued,
outstanding other than the Shares. or any outstanding subscriptions, options,
warrants, stock appreciation rights, calls, rights, convertible securities or
other agreements or commitments of any character relating to issued or unissued
capital stock or other securities of the Company, or otherwise obligating the
Company to issue, transfer or sell any shares of the capital stock of the
Company, or other securities convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of the capital stock of the Company. The
Company does not own, directly or indirectly, any capital stock or other equity
interest of any corporation or have any direct or indirect equity or ownership
interest in any other business.
3.3.6 Authorization. The Company has full corporate power and authority to
enter into and perform this Agreement and to consummate the transactions
contemplated hereby. This Agreement and all other agreements and instruments to
be executed by the Company in connection herewith have been (or upon execution
will have been) duly executed and delivered by the President or other authorized
officers of the Company, have been effectively authorized by all necessary
action, corporate or otherwise, and constitute (or upon execution will
constitute) legal, valid and binding obligations of the Company and are
enforceable against the Company in accordance with their respective terms. OPG
has full power and authority to enter into and perform this Agreement and to
consummate the transactions contemplated hereby. This Agreement and all other
agreements and instruments to be executed by the Company in connection herewith
have been (or upon execution will have been) duly executed and delivered by an
authorized member or manager of OPG, have been effectively authorized by all
necessary action, company or otherwise, and constitute (or upon execution will
constitute) legal, valid, and binding obligations of the OPG and are enforceable
against OPG in accordance with their respective terms.
9
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3.3.7 Consents; Approvals. Except as provided in Schedule 4.4, no consent,
authorization, order, or approval of, or filing or registration with, any
governmental authority or other third party is required for the execution and
delivery of this Agreement by the Company and OPG or for the consummation by the
Company and OPG of the transactions contemplated by this Agreement.
3.3.8 No Conflicts with Other Instruments. The execution, delivery, and
performance of this Agreement by the Company and OPG and the consummation of the
transactions contemplated by this Agreement will not conflict with or result in
a breach of any of the terms, conditions, or provisions of, or constitute a
default under, or conflict with any contracts, agreement, indenture, or other
instrument to which the Company or OPG is a party or by which the Company or OPG
is bound, including (without limitation) the Company's Articles of Incorporation
or Bylaws, OPG's operating agreement, or other organizational documents of the
Company and OPG, or of any statute, administrative regulation, order, writ,
injunction, judgment, or decree.
3.3.9 Employment Matters. With respect to the employees of the Company:
(a) Employees. Schedule 3.3.9(a) contains a list of all employees of the
Company. The Schedule correctly reflects, in all material respects, their
salaries, other compensation, benefits, dates of employment, employment
contracts (if any), and positions. No employee has any employment contract or
similar arrangement with the Company except as noted in Schedule 3.3.9(a).
(b) Benefits. Schedule 3.3.9(b) sets forth a general description of
employee benefits, bonus plans, and any other employee benefit plan applicable
to the employees of the Company ("Employee Benefits").
(c) Other Agreements. The Company is not a party to or bound by a
collective bargaining agreement or other union contract, and it has not been
requested to enter into or be bound by any such agreement or contract and no
effort is currently pending or threatened to organize the employees into a group
bargaining unit. There is not pending or threatened any labor dispute, strike or
work stoppage. The Company has complied with all applicable laws, rules, and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, and the payment and withholding of taxes
and other sums as required by appropriate governmental authorities, and has
withheld and paid to the appropriate governmental authorities or is holding for
payment not yet due to such authorities, all amounts required to be withheld
from such employees of the Company, and is not liable for any arrearages of
wages, taxes, penalties, or other sums for failure to comply with any of the
foregoing. There is no: (i) unfair labor practice complaint pending or
threatened against the Company pending before the National Labor Relations Board
or any state or local agency; (ii) pending or threatened labor strike or other
material labor trouble affecting the Company; (iii) labor grievance pending or
threatened against the Company; (iv) pending representation question respecting
the employees of the Company; (v) pending or threatened arbitration proceedings
arising out of or under any collective bargaining agreement to which the Company
is a party; or (vii) any pending or, to the knowledge of the Company, threatened
claim against the Company regarding the discharge or dismissal of any employee.
All reasonably anticipated obligations of the Company (whether arising by
operation of law, by contract, by past custom or otherwise), for salaries,
vacation and holiday pay, bonuses and other forms of compensation payable to the
officers, directors or other employees of the Company in respect of the services
rendered by any of them have been paid or adequate accruals therefor have been
made in the ordinary course of business in the Financial Statements for
obligations accrued through the date thereof.
(d) Certain Liabilities. The Company is not bound to make nor has proposed
the making of any bonus or incentive or other similar payment to any employee at
any future date
10
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or an increase in the compensation of any employee other than annual review
increases in the usual and ordinary course of business. No employee, director,
officer or shareholder of the Company, either individually or in any other
capacity, has asserted any claim, and has no claim, of any kind whatsoever
against the Company, except the right of its current salary or wages, any
accrued vacation pay, any reimbursable expenses arising in the ordinary course
of business, and other matters disclosed under this Agreement.
3.3.10 Tax Matters. For purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies or other assessments of whatever kind or nature,
including, without limitation, all net income, gross income, gross receipts,
business and occupation, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, estimated, severance, stamp,
occupancy or property taxes, customs duties, fees, assessments or charges of any
kind whatsoever (together with any interest and any penalties, additions to tax
or additional amounts) imposed by any taxing authority (domestic or foreign)
upon or payable by the Company. With respect to all such Taxes:
(a) The Company has filed or will file or cause to be filed, within the time
and in the manner prescribed by law, all returns, declarations, reports,
estimates, information returns and statements ("Tax Returns") required to be
filed under federal, state, local or any foreign laws by the Company for all
taxable periods ending on or prior to the Closing Date. All such Tax Returns
were correct and complete in all material respects. The Company is not currently
a beneficiary of any extension of time within which to file any Tax Return
except in connection with an extension to September 15, 2001, of the deadline
for filing a Year 2000 federal income tax return. No claim has been made within
the past six (6) years by an authority in a jurisdiction where the Company does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. The Company has within the time and in the manner prescribed by
law, paid (and until the Closing will, within the time and in the manner
prescribed by law, pay) all Taxes that are due and payable. The Company has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party. The Company has established (and
until the Closing will establish) on its books and records reserves that are
adequate for the payment of all Taxes not yet due and payable and there shall be
no difference between the amounts of the book basis and the tax basis of assets
(net of liabilities) that are not accounted for by an accrual on the books for
federal and state income tax purposes. There are no liens for Taxes upon the
assets of the Company except liens for real property taxes and assessments not
yet due.
(b) No deficiency or adjustment for any Taxes has been proposed or asserted
in writing, or assessed against the Company and no federal, state or local
audits or other administrative proceedings or court proceedings are presently
pending with regard to any Taxes, and no waiver or consent extending any statute
of limitations for the assessment of collection of any Taxes, which waiver or
consent remains in effect, has been executed by or on behalf of the Company, nor
are any requests for such waiver or consent pending. Schedule 3.3.10(b) lists
all federal, state, local, and foreign income Tax Returns filed with respect to
the Company for taxable periods ended on or after December 31,1998, indicates
those Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. OPG has delivered to the Purchaser correct
and complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Company since
December 31, 1998.
(c) The Company is not a party to any tax-sharing or allocation agreement,
nor does the Company owe any amount under any tax-sharing or allocation
agreement. The Company has not filed a consent under Section 341(f) of the
Internal Revenue Code (the "Code")
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concerning collapsible corporations. The Company is not obligated to make any
payments, or is a party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under Code
Section 280G. The Company is not a United States real property holding
corporation within the meaning of Code Section 897(c)(2). The Company (i) has
not been a member of an affiliated group filing a consolidated federal income
Tax Return or (ii) has any liability for the Taxes of any person other than
Company, as a transferee or successor, by contract, or otherwise
(d) The Company will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any (i) change in
method of accounting for a taxable period ending on or prior to the Closing Date
under Code Section 481(c) (or any corresponding or similar provision of state,
local or foreign income Tax law); (ii) "closing agreement" as described in Code
Section 7121 (or any corresponding or similar provision of state, local or
foreign income Tax law) executed on or prior to the Closing Date; (iii) deferred
intercompany gain or any excess loss account described in Treasury Regulations
under Code Section 1502 (or any corresponding or similar provision of state,
local or foreign income Tax law); (iv) installment sale or open transaction
disposition made on or prior to the Closing Date; or (v) prepaid amount received
on or prior to the Closing Date.
(e) Schedule 3.3.10(e) sets forth the depreciated basis of the Property as
of December 31, 2000.
(f) Notwithstanding the foregoing, Purchaser agrees that the Purchase Price
has been reduced in the amount of US$66,120.00 for estimated potential federal
income tax liability on revenue relating to prepaid utility hook-up fees
received by the Company prior to Closing and recorded as deferred revenue on the
Financial Statements, and Purchaser agrees that, as among the parties, the
Company and OPG have satisfied the Company's obligation for the payment of
federal income taxes relating to such revenue.
3.3.11 Litigation and Claims.
(a) Except for litigation or proceedings relating to the environment (which
are exclusively provided for in Section 3.4.7 below), there is no litigation,
proceeding, action, suit, arbitration, grievance or investigation, pending or
threatened, before any court, tribunal, panel, master or governmental agency,
authority or body in which the Company or OPG is a party or that relates to the
Company's business or operations or the consummation of the transactions
contemplated by this Agreement. The Company is not a party to any decree, order
or arbitration award (or agreement entered into in any administrative, judicial
or arbitration proceeding with any governmental authority) with respect to its
properties, assets, personnel or business activities except as set forth on any
schedule to this Agreement.
(b) Except for laws, rules and regulations relating to the environment
(which are the subject of separate representations and warranties in this
Agreement), matters set forth on Schedule 3.3.11(b), and as otherwise disclosed
in this Agreement, the Company is not in violation of any provision of any law,
statute, decree, license, permit, order, or regulation (including, without
limitation, those relating to antitrust or prohibiting other anti-competitive
business practices, those relating to employment practices, such as
discrimination, health and safety, and those relating to minority business
enterprises) with respect to the Company's properties, operations, personnel, or
business activities.
3.3.12 Loans. Except for loan obligations of the Company to Pope
Resources, OPG, and other affiliates and subsidiaries of Pope Resources, which
obligations shall be eliminated at or prior to Closing, there are no outstanding
loans or obligations for repayment of any borrowed
12
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money by the Company, and there are no guarantees, endorsements or other
obligations of the Company with respect to any indebtedness, obligation or
liability of any party.
3.3.13 Brokers and Finders. Neither the Company nor OPG has dealt with any
person, firm or corporation who is or may be entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment in connection with the
transaction contemplated by this Agreement.
3.4 Representations and Warranties of the Company and OPG: Part II. The
Company and OPG further represent and warrant (jointly and severally) to
Purchaser as follows:
3.4.1 Financial Statements. The balance sheet of the Company as of
December 31, 2000, the income statement of the Company for the fiscal year ended
December 31, 2000, the balance sheet of the Company as of April 30, 2001, and
the income statement of the Company for the fiscal quarter ended April 30, 2001
(copies of which are attached as Schedule 3.4.1), and the updated balance sheet
of the Company as of Closing and the statement of earnings of the Company for
the period ended as of the Closing have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, are true,
complete and accurate and present fairly the financial position of the Company
as of the dates of the balance sheets and the income statements except with
respect to OPG's obligations to the Company under the Revolving Note, the
Company's obligations to ORM, Inc., under the BSA, and understated deferred
revenue in the amount of US$130,000.00 attributable to prepaid utility hook-up
fees received by the Company and recorded as revenue instead of deferred
revenue. The financial statements described in this Section 3.4.1 are referred
to in this Agreement as the "Financial Statements."
The Company is subject to no contract, agreement, purchase order, lease,
license, indenture, commitment, or other liability that should have been accrued
under generally accepted accounting principles except as set forth on the
Financial Statements and (i) liabilities accrued since the date of the Financial
Statements, all of which are listed on Schedule 3.4.1-A, (ii) liabilities
arising under the Contracts, the BSA, and the Revolving Note, (iii) liabilities
relating to the Property that are disclosed in the real property records of
Jefferson County, Washington, and (iv) agreements, contracts, commitments, or
other liabilities that total in the aggregate less than $10,000.
OPG and the Company project that the updated balance sheet of the Company as
of Closing for the period ended as of the Closing Date shall be as shown on
Schedule 3.4.1-B (the "Pro Forma Balance Sheet").
3.4.2 Accounts Receivable. Schedules 1.5.1(vi) and 1.5.2(vi) fairly
reflects in all material respects all notes and accounts receivable of the
Company except notes and accounts receivable due from Pope Resources, OPG, and
other affiliates and subsidiaries of Pope Resources, which obligations shall
eliminate at or prior to Closing, and are valid receivables subject to no
setoffs or counterclaims. All accounts receivable are less than 30 days overdue
except as otherwise stated on Schedules 1.5.1(vi) and 1.5.2(vi) .
3.4.3 Fixed Assets.
(a) Except as described on Schedule 3.4.3(a), the Property in all material
respects is free from material defects that would impair its use. As used within
this section, "material defects" means a defect resulting in a liability or loss
to Purchaser of more than One Hundred Thousand Dollars (US$100,000.00) in each
instance and One Million Dollars (US$1,000,000.00) in the aggregate, which
aggregate shall include and be satisfied by liabilities and losses to Purchaser
resulting from material defects in the Property under Section 8.1.1(e) of the
Asset Purchase Agreement. The inclusion of a defect on Schedule 3.4.3(b) does
not mean that the defect is material. The Company has the legal or equitable
right to maintain and operate the Wells and Reservoirs, Water Line Distribution
System, and Sewer Line
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Distribution System within the real property within which such facilities are
located, subject to matters of record and those matters described on
Schedule 3.4.3(a).
(b) The Company owns all of the Property free and clear of all liens except
for leased Equipment disclosed in Schedule 1.5.3(iii).
(c) The Water Facilities and the Sewer Facilities are, together with all
other Property necessary to their maintenance, operation, and use, sufficient
(i) to serve all present customers of the Company, and (ii) to satisfy all legal
and regulatory requirements applicable to the Company's operations and the
condition of its properties and facilities.
(d) Schedule 1.5.3(iii) discloses obligations of the Company to provide
future sewer or water utility services to Thomas Hanson, Mark Moriarty, and
Albert Loomis IV.
(e) Thomas A. Griffin, who is President of the Company, and Larry Smith, who
is Vice President of the Company, presently maintain offices in portable
trailers owned by OPG and located upon a portion of the Village Center, in which
the Company holds no leasehold interest.
3.4.4 Conduct of Business. Since December 31, 2000, the Company has not:
(i) sold or transferred any material portion of the assets of the Company,
except personal property in the usual and ordinary course of business;
(ii) suffered any material loss, or material interruption in use, of any asset
or property (whether or not covered by insurance), on account of fire, flood,
riot, strike or other hazard or Act of God; (iii) made any material change in
the conduct or nature of its business or operations; (iv) waived any material
rights arising out of the conduct of, or with respect to, its business or
operations; (v) commenced or continued any capital improvement projects that
have not been completed; (vi) suffered or been threatened with any adverse
change with respect to the business or financial condition of the Company that
would have a Material Adverse Effect (as hereinafter defined); or (vii) without
limitation by the enumeration of any of the foregoing, entered into any material
transaction or incurred any liabilities other than in the usual and ordinary
course of business. "Material Adverse Effect" means a material adverse effect on
the business, operations or financial condition of the Company, taken as a
whole.
3.4.5 Contracts.
(a) All contracts and agreements set forth on
Schedule 1.5.3(iii) ("Contracts") are in full force and effect and valid,
binding, and enforceable agreements of the Company and the other parties
thereto. There has not occurred any default under any Contract on the part of
the Company or on the part of the other parties thereto, and no event has
occurred that, with the giving of notice or the lapse of time, or both, would
constitute any default under any Contract.
(b) The Company is party to the BSA, under which ORM, Inc., an affiliate of
the Company, provides the following services to the Company in exchange for
fees: agency billing and collection services, purchase agency services, common
paymaster services, payroll services, accounting and bookkeeping services,
corporate affairs services, and human resources services. The BSA will be
terminated effective on the Closing Date, and ORM, Inc., thereafter will not
provide these services to the Company.
(c) Schedule 1.5.3(iii) includes, without limitation, every contract,
agreement, purchase order, lease, license, indenture or commitment except the
BSA that is material to the Company's business and operations as presently
conducted. True and complete copies of each of the Contracts described in
Schedule 1.5.3(iii), or where they are oral, true and complete written summaries
thereof, have been delivered to Purchaser by the Company.
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3.4.6 Permits and Licenses. Schedules 1.5.1(iii), 1.5.1(iv), 1.5.1(vii),
1.5.2(iii), 1.5.2(iv) , 1.5.3(iii), and 3.4.6 contain lists of every current and
material license, permit, or governmental approval, order, directive, and
agreement applied for, pending, issued or given to the Company with respect to
its conduct of its business or operations (the "Permits"). The Company has and
holds all material licenses, permits, and governmental approvals and
authorizations that are required in order to operate its business as presently
conducted except for the apparent lack of subdivision approvals of Jefferson
County relating to certain Wells and Reservoirs. Except as shown on the
schedules described above, all of the issued Permits are in full force and
effect; there is not any claim, notice or proceeding pending or threatened to
revoke, terminate, or cancel any Permit nor will the transactions contemplated
by this Agreement cause such revocation, termination or cancellation; and the
Company is in substantial compliance with all such Permits. Except as shown on
Schedule 3.4.6, there are no applications pending for any new Permits or to
amend any existing Permits and the Company has done nothing in the conduct of
its business or operations that requires any new Permit or any change or
amendment to any existing Permit. Except as disclosed on Schedule 4.4 with
respect to required consents and notices, the sale and transfer contemplated
herein will not limit or impair the validity or effectiveness of any Permit.
3.4.7 Environmental Provisions.
(a) Except as disclosed in the reports, assessments, and studies described
on Schedule 3.4.7(a) or otherwise within this Agreement, (i) the Company is in
compliance in all material respects with all applicable federal, state, and
local laws and regulations relating to pollution, protection of human health and
the environment, including without limitation laws and regulations relating to
the storage, handling, use or disposal of Hazardous Substances (as defined
below), which compliance includes, but is not limited to, the possession by the
Company of all permits and other governmental authorizations required to conduct
its business and its compliance with the terms and conditions thereof, and
(ii) the Company has not received any communication (written or oral) that
alleges an unresolved environmental claim against the Company, or alleges that
the Company is not presently in compliance with environmental laws, and, to
OPG's current actual knowledge, there are no circumstances that may prevent or
interfere with such full compliance in the future. Schedule 3.4.7(a) lists all
reports and assessments made by or at the request of the Company or OPG or filed
by the Company with any regulatory body since December 12, 1985, relating to the
compliance by the Company with all applicable and material environmental and
health laws, rules and regulations.
(b) Except as disclosed on Schedule 3.4.7(b) or otherwise within this
Agreement, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Hazardous Substances that could
form the basis of any material claim against the Company or, to the Company's
current actual knowledge against any person or entity whose liability for any
claim the Company has or may have retained or assumed either contractually or by
operation of law. For the purposes hereof, "Hazardous Substances" shall mean
asbestos, petroleum and petroleum derivatives and products, and any substance,
chemical, waste or other material that is listed, defined or otherwise
identified as "hazardous" or "toxic" under any federal, state or local ordinance
or law or any administrative agency rule or determination applicable to the
Property, except for processing and discharge of effluent that has been done
strictly in compliance with the Permits.
(c) Without in any way limiting the generality of the foregoing, except as
expressly described on Schedule 3.4.7(c) or otherwise within this Agreement, (i)
there are no on-site or off-site locations where the Company or OPG has stored,
disposed of or arranged for the disposal of Hazardous Materials or sludge from
the Sewer Facility, (ii) there are no
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underground storage tanks located on property owned or leased by the Company,
(iii) there is no asbestos contained in or forming part of any building,
building component, structure or office space owned or leased by the Company;
(iv) no polychlorinated byphenyls (PCB's) are used or stored at any property
owned or leased by the Company, and (v) the Company possesses all manifests,
material safety data sheets, hazard communications program documents and all
other records required to be retained in compliance with the environmental laws.
3.4.8 Insurance. The Company has maintained and will maintain until
Closing (i) property and casualty insurance covering all major facilities,
equipment and real property of the Company (including buildings, improvements,
and fixtures) against risks covered under fire and extended coverage policies
for full replacement cost, (ii) liability insurance in an amount of not less
than $1,000,000.00 per person and per occurrence, and (iii) worker's
compensation insurance and surety bonds reasonable and customary for the
business and operations of the Company (and in any case in scope and amounts
meeting any and all legal or regulatory requirements). The Company is not in
default with respect to any material provision contained in any insurance policy
nor has the Company failed to give any notice or present any claim thereunder in
due and timely fashion and no cancellation or non-renewal has been threatened or
occurred with respect to any policy. The Company has during the past seven
(7) years continuously maintained insurance (including without limitation
liability, property, casualty and workmen's compensation insurance) in scope and
amounts customary and reasonable for its operations and business and consistent
with any and all legal or regulatory requirements.
3.5 Indemnity for Breach of Representations and Warranties. Purchaser
shall defend, indemnify, and hold OPG, its affiliates, directors, employees,
managers, members, officers, parents, partners, and subsidiaries, harmless from
and against any and all claims, demands, damages, losses, liens, liabilities,
fines, penalties, monitoring costs, response costs, and any other costs and
expenses (including attorney's fees and costs and fees of consultants) relating
to the Company or the Property that arise from or relate to a liability or loss
arising after the Closing Date from the breach of any covenant, agreement,
representation, or warranty of Purchaser made herein.
Subject to the limitations set forth in Section 3.7, OPG shall defend,
indemnify, and hold Purchaser, its affiliates (including the Company after
Closing), directors, employees, managers, members, officers, parents, partners,
and subsidiaries, harmless from and against any and all claims, demands,
damages, losses, liens, liabilities, fines, penalties, monitoring costs,
response costs, and any other costs and expenses (including attorney's fees and
costs and fees of consultants) relating to the Company or the Property that
arise from or relate to a liability or loss arising after the Closing Date from
the breach of any covenant, agreement, representation, or warranty of OPG or the
Company made herein.
3.6 Indemnity for Certain Environmental Liabilities. Subject to the
limitations set forth in Section 3.7, OPG shall defend, indemnify, and hold
Purchaser, its affiliates (including the Company after Closing), directors,
employees, managers, members, officers, parents, partners, and subsidiaries,
harmless from and against any and all claims, demands, damages, losses, liens,
liabilities, fines, penalties, monitoring costs, response costs, and any other
costs and expenses (including attorney's fees and costs and fees of consultants)
relating to the Company or the Property that arise from or relate to a liability
or loss arising after the Closing Date from (i) the remediation (including
without limitation monitoring) or cleanup of any Hazardous Substances Problem
(as defined below) resulting from the use, storage, handling, disposal or
release of Hazardous Substances by the Company that occurred or is alleged to
have occurred on or before the Closing Date, provided that such Hazardous
Substance Problem was not disclosed to Purchaser in the reports and studies
listed on Schedules 3.4.7(a) or otherwise in writing prior to expiration of the
Inspection Period; or (ii) any claim, demand or action made or commenced by a
third party (including without limitation any governmental agency) against
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Purchaser resulting from the use, storage, handling, disposal or release of
Hazardous Substances by the Company that occurred or is alleged to have occurred
on or before the Closing Date.
3.7 Limitations on OPG's Indemnity Obligations.
3.7.1 All Matters Except Environmental Matters. OPG's liability for breach
of any representation or warranty made herein except those relating to
environmental matters under Section 3.4.7, those arising under Section 3.6, and
those relating to tax liabilities under Section 3.3.10 shall apply and be
enforced only to the extent that the aggregate liability, loss or cost to
Purchaser together with the aggregate liability, loss or cost to Purchaser as
Buyer for Seller's Indemnification Liabilities under Section 11.2.1(i) of the
Asset Purchase Agreement (as to breach of any representation or warranty made
therein, and as to breach of any agreement or covenant to be performed by Seller
therein at or before Closing) exceeds Fifty Thousand Dollars (US$50,000.00) and
is asserted against or incurred by Purchaser within two (2) years after the
Closing Date. For purposes of this section, it is understood that a
representation or warranty has been "breached" if such representation or
warranty was inaccurate or untrue in any material respect when made. "Asserted
against or incurred by Purchaser" shall mean Purchaser actually has incurred the
liability, loss or cost and either (a) has commenced litigation against OPG
regarding it, or (b) is a defendant in litigation brought by a third party
regarding it, of which OPG has actual notice, within the two (2) year limitation
period.
3.7.2 Environmental Matters. OPG's liability for breach of any
representation or warranty made herein and relating to environmental matters
under Section 3.4.7 and OPG's liability under Section 3.6 shall apply and be
enforced as to claims first made by Purchaser directly against OPG, its
affiliates, directors, employees, members, officers, partners, and subsidiaries,
only to the extent that the liability, loss or cost is first asserted against or
incurred by Purchaser within eight (8) years after the Closing Date. OPG's
liability for breach of any representation or warranty made herein and relating
to environmental matters under Section 3.4.7 and OPG's liability under
Section 3.6 shall apply and be enforced as to claims first made by third parties
against Purchaser more than eight (8) years after the Closing Date except to the
extent that the aggregate liabilities of OPG, its affiliates, directors,
employees, members, officers, partners, and subsidiaries for such claims
together with the aggregate liabilities of Seller, its affiliates, directors,
employees, members, officers, partners, and subsidiaries for Hazardous
Substances claims first made more than eight (8) years after the Closing Date
under the Asset Purchase Agreement exceed One Million Dollars ($1,000,000) in
the aggregate. For purposes of this section, it is understood that a
representation or warranty has been "breached" if such representation or
warranty was inaccurate or untrue in any material respect when made. "Asserted
against or incurred by Purchaser" shall mean Purchaser actually has incurred the
liability, loss or cost and either (a) has commenced litigation against OPG
regarding it, or (b) is a defendant in litigation brought by a third party
regarding it, of which OPG has actual notice, within the eight-(8) year
limitation period.
3.8 Release. Purchaser hereby waives, releases, acquits, and forever
discharges OPG, its affiliates, directors, employees, managers, members,
officers, parents, partners, and subsidiaries, of and from all claims, demands,
damages, losses, liens, liabilities, fines, penalties, monitoring costs,
response costs, and any other costs and expenses (including attorney's fees and
costs and fees of consultants) relating to the Company or Property that are
incurred by the Company or Purchaser after the Closing Date except as to
(a) costs, expenses, and liabilities of the Company or Purchaser for which OPG
is obligated to defend, indemnify, and hold Purchaser harmless under Sections
3.5 and 3.6, including without limitation OPG's direct liability to Purchaser
for breach of any representation or warranty in this Agreement or for breach of
any covenant or agreement to be performed by OPG at or before Closing, subject
to the limitations set forth in Section 3.7, and (b) any obligation of OPG
described within this Agreement that by its express terms is to be performed
after the Closing Date. Purchaser's release under this paragraph shall not take
effect as to any matter that is the subject of pending
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litigation between Purchaser and OPG as of the date on which the applicable
limitations period described in Section 3.7 ends until dismissal, final
judgment, or other resolution of such litigation.
Section 4
COVENANTS
4.1 Conduct of Business of the Company Pending the Closing. OPG and the
Company agree that from the date of this Agreement until the Closing Date:
4.1.1 OPG and the Company will use their best efforts to take all action
and to do all things necessary and proper in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 5
below).
4.1.2 OPG shall cause the Company to give to Purchaser's officers,
employees, agents, attorneys, consultants, accountants and financial advisors
access to the properties, books, contracts, documents, records, information, and
personnel of the Company as provided under Section 2.1.
4.1.3 Without the prior written consent of Purchaser, and without limiting
the generality of any other provision of this Agreement, the Company shall not:
(a) amend its Articles of Incorporation or Bylaws;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities, or amend any of the terms of any such
securities or agreements outstanding as of the date of this Agreement, except as
contemplated by this Agreement;
(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock, or redeem
or otherwise acquire any of its securities;
(d) incur or assume any debt except in the ordinary course of business;
(e) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person or entity except in the ordinary course of business;
(f) make any loans, advances or capital contributions to, or investments
in, any other person or entity except in the ordinary course of business;
(g) incur or commit to incur any capital expenditures that are not approved
by Purchaser except in the ordinary course of business;
(h) sell or transfer any material asset or property (including sales or
transfers to affiliates), except for sales of personal property in the usual and
ordinary course of business that is replaced with personal property of like kind
and value, cash applied in payment of the Company's liabilities in the usual and
ordinary course of business, and dividends allowed to shareholders hereunder;
(i) make any increase in the level of compensation to its officers, or
increase the level of compensation payable to other employees;
(j) sell or transfer, by license or otherwise, any portion of the technical
know-how, patents, trademarks, copyrights, or other intellectual property;
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(k) make or commit to make any distribution to its shareholders except for
distributions of cash and cash equivalents to OPG at or prior to Closing in the
amount of payments by OPG to the Company in settlement of obligations of OPG to
the Company under the Revolving Note, which OPG shall pay in full at or prior to
Closing;
(l) enter into any new contracts or agreements other than hook-up
commitments, acquisition of supplies, and orders pertaining to the maintenance
or servicing of the Company's assets in the usual and ordinary course of
business.
Notwithstanding the foregoing, the Company may (1) pay fees to ORM, Inc., earned
in the ordinary course of business prior to Closing under the BSA, (2) terminate
the BSA at or prior to Closing, and (3) pay dividends to OPG not to exceed the
amount of principal, interest, and other charges paid by OPG to the Company at
or prior to Closing under the Revolving Note.
4.1.4 Except as expressly provided in this Agreement, the Company shall,
and OPG shall cause the Company to, conduct its operations according to its
ordinary and usual course of business and consistent with past practice, and the
Company shall, and OPG shall cause the Company to, use its best efforts to
preserve intact its business organization, to keep available the services of its
officers and employees and to maintain existing relationships with licensors,
licensees, suppliers, contractors, distributors, customers, lessors and others
having business relationships with it. Notwithstanding the foregoing, the
Company may terminate the BSA at or prior to Closing.
4.1.5 The Company may enter into an agreement with Pope Resources at or
prior to Closing regarding the management after Closing of certain sewer and
water utility facilities located in Port Gamble, Kitsap County, Washington, in
the form of Schedule 4.1.5 or as otherwise may be mutually satisfactory to Pope
Resources, the Company, and Purchaser in their reasonable discretion (the "Port
Gamble Maintenance Agreement").
4.2 Financial Statements. The Company shall furnish to Purchaser promptly
(but in no event later than three (3) business days after the preparation of
such statements) monthly and quarterly financial statements of the Company to
the extent prepared by the Company in accordance with its usual business
practices.
4.3 Regulatory Filings. The parties will make or cause to be made all
filings and submissions under laws and regulations applicable to them, if any,
as may be required of them for the consummation of the sale of the Shares
pursuant to this Agreement The parties will coordinate and cooperate with one
another in exchanging such information and reasonable assistance as the other
may request in connection with all of the foregoing.
4.4 Third Party Consents. Without penalty or amendment to the underlying
Agreement, each party shall use its best efforts to obtain, as soon as
reasonably practicable, all material permits, authorizations, consents, waivers
and approvals from third parties or governmental authorities and to provide all
required notices necessary to consummate this Agreement and the transactions
contemplated by this Agreement, including, without limitation, any material
permits, authorizations, consents, waivers, approvals, and notices required in
connection with the sale of the Shares, the transfer of the Water Facilities and
the Sewer Facilities, and any consents, waivers, approvals, and notices required
to assign the Washington State Department of Natural Resources aquatic lands
lease. Such permits, authorizations, consents, waivers, approvals, and notices
are set forth on Schedule 4.4 and are referred to as the "Material Consents" and
must be obtained prior to the Closing Date. Promptly following the execution and
delivery of this Agreement, OPG and Purchaser shall cooperate with each other in
obtaining the Material Consents. The forms of consent shall be reasonably
acceptable to Purchaser.
4.5 Reserved.
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4.6 Material Changes. OPG also shall give Purchaser prompt written notice
if OPG, after the date this Agreement is executed by OPG, discovers or learns of
any fact or occurrence that would make any of OPG's warranties and
representations materially inaccurate if such warranty or representation were
made on or after the date OPG discovered or learned of such fact or occurrence.
4.7 Employees. Schedule 3.3.9(a) sets forth a list of all employees of the
Company ("Employees"). Schedule 3.3.9(b) sets forth a general description of
employee benefits, bonus plans, and any other employee benefit plan applicable
to the employees of the Company ("Employee Benefits"). OPG and the Company shall
cooperate with Purchaser after May 11, 2001, to further Purchaser's efforts to
enter into employment agreements with any Employees designated by Purchaser.
Purchaser agrees to maintain the existing Employee Benefits of Employees of the
Company after the Closing Date. Any health plans applicable to the Employees
after the Closing Date shall waive all pre-existing condition limitations for
all such Employees that are covered by the health care plans of OPG, the
Company, or any affiliate, parent, or subsidiary of OPG or the Company as of the
Closing Date and shall provide such health care coverage effective as of the
Closing Date without the application of any eligibility period for coverage. In
addition, Purchaser shall credit all payments made by the Employees toward
deductible, co-payment and out-of-pocket limits under existing health care plans
for the plan year that includes the Closing Date as if such payments had been
made for similar purposes under post-closing health care plans during the plan
year that includes the Closing Date, with respect to Employees employed by
Purchaser as of the Closing Date. For each Employee employed on the Closing
Date, Purchaser shall (i) permit such Employee to participate in Purchaser's
employee benefit plans to the same extent as similarly situated employees of
Purchaser and their dependents; and (ii) give each such Employee credit for his
or her past service with the Company as of the Closing Date for purposes of
eligibility and vesting, but not for benefit accrual purposes, under Purchaser's
employee plans and compensation arrangements in accordance with Purchaser's
standard practices. Purchaser otherwise shall have no liability for pre-Closing
accrued vacation time, severance, pension plans, welfare plans, and employment
related claims and similar matters with respect to any of the Employees.
Purchaser shall be liable for pre-Closing accrued sick leave, for which the
Purchase Price has been reduced in the amount of US$16,000.00.
4.8 Post-Closing Covenants. The parties to the Agreement agree as follows
with respect to the period following the Closing.
4.8.1 General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
parties to the Agreement will take such further action (including the execution
and delivery of such further instruments and documents) as any other party
reasonably may request, all at the sole cost and expense of the requesting
party. OPG acknowledges and agrees that from and after the Closing, Purchaser
will be entitled to possession of all documents, books, records (including tax
records), agreements, and financial data of any sort relating to the Company,
subject to the obligations of Purchaser under Section 7 to make such documents
(to the extent prepared by the Company or OPG prior to the Closing) available to
OPG after the Closing.
4.8.2 Transition. OPG will not take and will not cause or permit the
Company to take, any action that is designed or intended to have the effect of
discouraging any lessor, licensor, customer, supplier, or other business
associate of the Company from maintaining the same business relationships with
the Company after the Closing as it maintained with the Company prior to the
Closing. OPG and the Company will refer all customer inquiries relating to the
businesses of the Company to Purchaser from and after the Closing.
4.8.3 Confidentiality. OPG shall use best efforts and due diligence to
keep all information concerning the businesses and affairs of the Company that
is not already generally available to the public confidential and private.
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SECTION 5
CONDITIONS TO CLOSING
5.1 Conditions to OPG's and the Company's Obligations. The obligations of
OPG and the Company to close the transactions contemplated by this Agreement are
subject to fulfillment of all of the following conditions precedent on or prior
to the Closing Date:
(a) The representations and warranties made by Purchaser shall have been
true in all material respects when made and shall be true in all material
respects as if originally made on and as of the Closing Date, and Purchaser
shall so certify in form and substance reasonably satisfactory to OPG.
(b) All material obligations and covenants of Purchaser to be performed
under this Agreement through, and including on, the Closing Date (including,
without limitation, all obligations that Purchaser would be required to perform
at the Closing if the transactions contemplated by this Agreement were
consummated) shall have been performed in all material respects.
(c) No injunction shall have been entered by a court of competent
jurisdiction and be in effect that would restrain or prohibit the consummation
of the transactions contemplated by this Agreement.
(d) Purchaser as buyer and OPG and its affiliates as seller shall have
simultaneously closed the Asset Purchase Agreement.
(e) Purchaser, the Company, and OPG shall have timely given all notices
required by all applicable laws, ordinances, regulations, and agreements
relating to the transactions contemplated by this Agreement and shall have
timely obtained all consents required by all applicable laws, ordinances,
regulations, and agreements relating to the same.
5.2 Conditions to Purchaser's Obligations. The obligation of Purchaser to
close the transactions contemplated by this Agreement is subject to the
fulfillment of all of the following conditions precedent on or prior to the
Closing Date:
(a) Purchaser as buyer and OPG and its affiliates as seller shall have
simultaneously closed the Asset Purchase Agreement.
(b) The representations and warranties made by the Company and OPG in this
Agreement shall be true in all material respects when made and shall be true in
all material respects as if originally made on and as of the Closing Date,
subject (with respect to their truth and correctness on and as of the Closing
Date) to changes in the ordinary course of business, provided that such changes
have no material adverse effect on the financial condition, operations, or
assets of the Company and do not result from, create, or constitute a breach or
default by OPG or the Company hereunder. OPG and the Company at Closing shall
also certify the foregoing matters in form and substance reasonably satisfactory
to Purchaser, which certification shall specify in reasonable detail any changes
in the ordinary course of business that affect the truth or correctness of any
representations and warranties on and as of the Closing Date.
(c) All material obligations and covenants of the Company and OPG to be
performed under this Agreement through, and including on, the Closing Date
(including, without limitation, all obligations that the Company and OPG would
be required to perform at the Closing if the transactions contemplated by this
Agreement were consummated) shall have been performed in all material respects.
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(d) No injunction shall have been entered by a court of competent
jurisdiction and remain in effect that would restrain or prohibit the
transactions contemplated by this Agreement.
(e) Since the date of this Agreement, the Company shall not have suffered
any material change in the financial condition, business, or operations of the
Company or suffered any material damage or loss having, or reasonably expected
to have, any Material Adverse Effect on the business or operations of the
Company.
(f) Purchaser, the Company, and OPG shall have timely given all notices
required by all applicable laws, ordinances, regulations, and agreements
relating to the transactions contemplated by this Agreement and shall have
timely obtained all consents required by all applicable laws, ordinances,
regulations, and agreements relating to the same.
(g) The Company shall have obtained and delivered to Purchaser a written
consent for the assignment of the Washington State Department of Natural
Resources aquatic lands lease, and, if requested by Purchaser's lender, a waiver
of landlord liens, collateral assignment of lease or leasehold mortgage from the
landlord or other party whose consent thereto is required under such lease, in
form and substance satisfactory to Purchaser and Purchaser's lender.
(h) The Company shall deliver to Purchaser a non-foreign affidavit dated as
of the Closing Date and in form and substance required under the Treasury
Regulations issued pursuant to Section 1445 of the Internal Revenue Code so that
Purchaser is exempt from withholding any portion of the Purchase Price
thereunder (the "FIRPTA Affidavit").
(i) No damage or destruction or other change shall have occurred with
respect to any of the Property or any portion thereof that, individually or in
the aggregate, that would have a material adverse effect on the use or occupancy
of the Property or the operation of the Company's business as currently
conducted thereon.
(j) Transnation Title shall be ready and willing to issue to the Company a
standard ALTA Owner's title policy in the amount of the purchase price, insuring
the Company's title to all Water Facilities, Sewer Facilities, and land used in
connection therewith, subject only to exceptions that are satisfactory to
Purchaser in its reasonable discretion (and in any case subject to no deeds of
trust, mortgages, mechanics liens, or other liens for security purposes other
than liens for non-delinquent property taxes). Such policy shall also be in form
and substance satisfactory to Purchaser in its reasonable discretion and shall
include such coverages and endorsements as Purchaser may reasonably request. The
foregoing notwithstanding, if Transnation Title for any reason is not ready and
willing to issue the title policy described above, this condition may be
satisfied by OPG's delivery of an instrument warranting to Purchaser and the
Company that the Company owns good and marketable fee title to all real property
(including buildings, improvements and structures) constituting the Water
Facilities and the Sewer Facilities, other than for specified Wells and
Reservoirs owned pursuant to easement rights, subject to (i) no liens or
encumbrances for debt or monetary security other than non-delinquent taxes,
(ii) no easements, use rights or other encumbrances adversely affecting the use,
operation or maintenance of such real property (or any buildings, improvements,
structures or facilities thereon), and (iii) with respect to specified Wells and
Reservoirs, the subdivision problem described in Section 3.4.6, provided,
however, that OPG shall cooperate with the Purchaser to cure the subdivision
problem at Closing.
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SECTION 6
DISCLOSURE AND RELEASE
Purchaser acknowledges that OPG has disclosed to Purchaser the condition of
the Company and the Property by providing to Purchaser the following documents
and information (collectively, the "Disclosures"): the schedules hereto,
Company's Documents, the right to interview the consultants and employees of
OPG, the Company, and their affiliates, parents, and subsidiaries, and the right
to enter upon, inspect, study, survey, and conduct tests upon the Property, all
prior to the time when Purchaser was irrevocably committed to complete the
purchase of the Company under this Agreement. Purchaser further acknowledges
that Purchaser has acquired information regarding the condition of the Company
and the Property from the inspections, studies, surveys and tests upon the
Property conducted by Purchaser and its agents, contractors, consultants, and
employees. All documents and information disclosed to Purchaser in connection
with this Agreement and relating to the Company and the Property are referred to
herein as the "Disclosures."
Purchaser acknowledges and agrees that the Disclosures disclose material
information about the Company and the condition of the Property and that OPG
makes no covenant, representation, or warranty as to the suitability of the
Property for any purpose or as to the condition of the Company or the Property
except as expressly set forth in this Agreement. Purchaser hereby waives all
objections and complaints regarding the condition of the Company and the
Property, including without limitation objections and complaints relating to
surface and subsurface conditions, except as provided in any covenant,
representation, or warranty in this Agreement. Purchaser agrees that it is
purchasing the Company and the Property in its present condition, AS IS, subject
only to the covenants, representations, and warranties provided by OPG and the
Company in this Agreement; provided that nothing in this Agreement shall be
deemed a waiver or release of any claims or rights that Purchaser may have
against any third party, including without limitation any prior owner of the
Company and any portion of the Property. Purchaser assumes the risk that adverse
conditions may not have been revealed by its own investigation or by the
Disclosures. Purchaser hereby waives, releases, acquits, and forever discharges
OPG of and from any and all claims, actions, demands, rights, damages, costs of
response or remedial action, or expenses whatsoever, direct or indirect, known
or unknown, foreseen or unforeseen, including claims of third parties, that now
exist or that may arise in the future on account of or in connection with the
condition of the Company or the Property, including without limitation any
surface or subsurface contamination, and including without limitation all claims
for statutory or contractual right of contribution under any state of federal
hazardous substance law or regulation.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, OPG AND THE
COMPANY MAKE NO COVENANTS, REPRESENTATIONS, OR WARRANTIES WITH RESPECT TO:
(I) THE CONDITION OF THE REAL OR PERSONAL PROPERTY OR ANY BUILDINGS, STRUCTURES,
OR IMPROVEMENTS ON THE REAL PROPERTY OR THE SUITABILITY OF THE REAL PROPERTY FOR
HABITATION OR FOR PURCHASER'S INTENDED USE OR FOR ANY USE WHATSOEVER; (II) ANY
APPLICABLE BUILDING, ZONING, OR FIRE LAWS OR REGULATIONS, OR WITH RESPECT TO
COMPLIANCE THEREWITH, OR WITH RESPECT TO THE EXISTENCE OF OR COMPLIANCE WITH ANY
REQUIRED PERMITS, IF ANY, OF ANY GOVERNMENTAL AGENCY; (III) THE EXISTENCE OF ANY
WATER, SEWER OR OTHER UTILITY DISTRICT; OR (IV) THE PRESENCE OF ANY HAZARDOUS
SUBSTANCES; (V) THE PRESENCE OF ANY UNDERGROUND STORAGE TANKS OR ASBESTOS; OR
(VI) COMPLIANCE OF THE PROPERTY WITH THE TERMS OF THE AMERICANS WITH
DISABILITIES ACT. PURCHASER WAIVES ALL CLAIMS AGAINST OPG, KNOWN OR UNKNOWN,
WITH RESPECT TO THE COMPANY AND THE PROPERTY, INCLUDING CLAIMS FOR CONTRIBUTION
THAT PURCHASER MIGHT HAVE AGAINST OPG UNDER FEDERAL OR STATE ENVIRONMENTAL
REGULATIONS AND STATUTES IN CONNECTION WITH CLEAN UP COSTS RELATED TO HAZARDOUS
SUBSTANCES
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DEPOSITED OR RELEASED ON THE PROPERTY, AND PURCHASER ASSUMES THE RISK OF ALL
DEFECTS AND CONDITIONS, INCLUDING SUCH DEFECTS AND CONDITIONS, IF ANY, THAT
CANNOT BE OBSERVED BY CASUAL INSPECTION, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED
OTHERWISE UNDER OPG'S COVENANTS, REPRESENTATIONS, AND WARRANTIES HEREIN.
PURCHASER ACKNOWLEDGES THAT PURCHASER HAS HAD THE OPPORTUNITY TO INSPECT AND
REVIEW THE CONDITION OF THE COMPANY AND THE PROPERTY AND, EXCEPT FOR THE
COVENANTS, REPRESENTATIONS, AND WARRANTIES OF OPG HEREIN, IS RELYING ENTIRELY
THEREON, ON ANY CONSULTANTS THAT PURCHASER RETAINS, AND ON THE DISCLOSURES.
Anything above to the contrary notwithstanding, nothing in this Section 6 in
any way limits or impairs the warranties, representations, and covenants to the
contrary that are expressly made by OPG and the Company in this Agreement, or
any other obligation of OPG and the Company to Purchaser set forth in this
Agreement.
The terms and conditions of this Section 6 shall survive the closing or
termination of this Agreement and shall benefit and bind the successors and
assigns of Purchaser and OPG.
SECTION 7
TAX RETURNS, COOPERATION, AND DOCUMENT RETENTION
7.1 Certain Tax and Other Matters. For all taxable periods ending
December 31, 2000, and earlier, the Company shall have prepared or will have
prepared and filed prior to Closing all Tax Returns in which are included the
results of operation of the Company and shall pay all taxes shown on such Tax
Returns. The Company shall maintain reasonable and customary tax reserves for
payment of such Taxes. After the Closing Date, Purchaser shall prepare and file
on a timely basis, all Tax Returns in which are included the results of
operation of the Company, for all taxable periods ending after December 31,
2000, and all other Tax Returns of the Company, and shall be responsible for and
shall pay all Taxes shown due thereon. All Tax Returns of the Company filed
after the Closing Date with respect to taxable periods ending before or
including the Closing Date shall be prepared in a manner consistent with returns
filed prior to the Closing Date.
7.2 Certain Information. Purchaser, the Company and OPG agree to furnish
or cause to be furnished to each other (at reasonable times and at no charge)
upon request as promptly as practicable such information (including access to
books and records pertinent to the Company and assistance relating to the
Company) as is reasonably necessary for the preparation, review and audit of
financial statements, the preparation, review, audit and filing of any Tax
Return, the preparation for any audit or the prosecution or defense of any
claim, suit or proceeding relating to any proposed adjustment, provided, that
access shall be limited to items pertaining solely to the Company. OPG shall
grant access to Purchaser to all Tax Returns filed with respect to the Company.
7.3 Document Retention. Purchaser shall preserve and retain all documents
provided by OPG to Purchaser, including without limitation all copies and
originals of Company's Documents, at a secure administrative office or storage
facility within Jefferson County, Kitsap County, or King County, Washington, for
a period not less than ten (10) years after the Closing Date (the "Document
Retention Period"). During the Document Retention Period, upon the prior written
request of OPG, Purchaser shall allow OPG to inspect and copy any and all of
Company's Documents prepared prior to the Closing Date at the office or storage
facility during normal weekday business hours. All copies shall be made at OPG's
expense.
24
--------------------------------------------------------------------------------
SECTION 8
RESERVED
SECTION 9
MISCELLANEOUS
9.1 Confidentiality. Prior to waiver of the Inspection Period, except with
OPG's prior written consent, Purchaser shall keep this Agreement, the
transactions described in this Agreement, the fact that Purchaser and OPG are
discussing any transaction, and all information relating to the Property
disclosed by OPG to Purchaser completely confidential and shall not disclose the
same to any person or entity, specifically including without limitation all
employees of the Company or OPG other than management personnel, and their
subsidiaries and affiliated entities, other than Purchaser's consultants,
affiliates, investors, and their respective employees (who shall agree to keep
the information confidential and be provided only such information as is
necessary to perform their services), except to the extent required otherwise by
applicable laws and regulations and NASDAQ regulations. The obligations of
Purchaser under this section supplement and do not replace the obligations of
Purchaser under that certain Confidentiality Agreement dated ,
2000. Purchaser shall conduct all due diligence consistent with this section.
9.2 Notices. All notices, demands, requests, consents and approvals that
may, or are required to, be given by any party to any other party hereunder
shall be in writing and shall be deemed to have been duly given if delivered
personally, sent by a nationally recognized overnight delivery service,
25
--------------------------------------------------------------------------------
electronically transmitted or if mailed or deposited in the United States mail
and sent by registered or certified mail, return receipt requested, postage
prepaid to:
Purchaser at: Port Ludlow Associates LLC
c/o HCV Pacific Partners LLC
625 Market Street, Suite 600
San Francisco, California 94105
Attn: President
Telephone No. 415-882-0900
Facsimile No. 415-882-0901
with a copy to:
Kenneth J. Cohen
Collette & Erickson LLP
555 California Street
Bank of America Center
43rd Floor
San Francisco, California 94104-1791
Telephone No. 415-788-4646
Facsimile No. 415-788-6929
The Company at:
Olympic Water and Sewer, Inc.
70 Breaker Lane
Port Ludlow, Washington 98365
Attn: President
Telephone No. 360-437-2101
Facsimile No. 360-437-2522
with a copy to:
Marco de Sa e Silva
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, Washington 98101-1688
Telephone No. 206-628-7766
Facsimile No. 206-628-7699
OPG at:
Olympic Property Group LLC
19245 Tenth Avenue N.E.
Poulsbo, Washington 98370-0239
Attn: President
Telephone No. 360-697-6626
Facsimile No. 360-697-6696
with a copy to:
Marco de Sa e Silva
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, Washington 98101-1688
Telephone No. 206-628-7766
Facsimile No. 206-628-7699
or to such other addresses as either party hereto may from time to time
designate in writing and deliver in a like manner. All notices shall be deemed
complete upon actual receipt or refusal to accept delivery.
26
--------------------------------------------------------------------------------
9.3 Entire Agreement. This Agreement and the Asset Purchase Agreement
constitute the final and complete agreement between the parties and shall be
binding upon and inure to the benefit of the parties hereto and their respective
legal representatives, successors and permitted assigns. Each exhibit or
schedule shall be considered incorporated into this Agreement.
9.4 Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege conferred in this Agreement, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.
9.5 Applicable Law. Except as otherwise stated, this Agreement shall be
governed and controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the internal laws of the State
of Washington applicable to contracts made and performed in that State and
without reference to choice of laws provisions.
9.6 Consent to Jurisdiction. This Agreement has been executed and
delivered in and shall be deemed to have been made in Seattle, Washington. Each
of the parties hereto agrees to the exclusive jurisdiction of any state or
Federal court within King County, Washington, with respect to any claim or cause
of action arising under or relating to this Agreement.
9.7 Attorneys' Fees. In the event any party brings an action or any other
proceeding against any other party to enforce or interpret any of the terms,
covenants, or conditions hereof, the party prevailing in any such action or
proceeding shall be paid all costs and reasonable attorneys' fees by
nonprevailing party in such amounts as shall be set by the court, at trial, and
on appeal.
9.8 Binding Effect: Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended to confer on
any person other than the parties hereto and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, including, without limitation, third party beneficiary
rights.
9.9 Assignability. Purchaser's rights under this Agreement are not
assignable, by operation of law or otherwise, and OPG and the Company shall have
no obligation to perform hereunder for any assignee or transferee of Purchaser,
except that Purchaser may assign its rights under this Agreement to any
affiliate of Purchaser, or to a limited partnership in which Purchaser or an
affiliate of Purchaser is a general partner, a general partnership in which
Purchaser or an affiliate of Purchaser is managing general partner, a co-tenancy
in which Purchaser or an affiliate thereof is a co-tenant, or a limited
liability company in which Purchaser is the managing member. In the event of any
assignment by Purchaser of its rights under this Agreement, Purchaser will not
be released from any obligations under this Agreement.
9.10 Amendments. This Agreement shall not be modified, amended or
supplemented, except pursuant to an instrument in writing executed and delivered
on behalf of each of the parties hereto.
9.11 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
9.12 Severability. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
9.13 Survival. All provisions of this Agreement that involve obligations,
duties, or rights to be performed after the Closing Date or the transfer of the
Shares, and all representations, warranties, and
27
--------------------------------------------------------------------------------
indemnifications made in or to be made pursuant to this Agreement shall survive
the Closing Date or the transfer of the Shares, including without limitation the
provisions of Sections 2.3(iii) hereof.
9.14 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, and all such counterparts shall
constitute but one instrument.
9.15 Covenants. Any reference in this Agreement to the "covenants" of any
party means and includes all agreements and commitments of such party set forth
in this Agreement.
9.16 Obligations. All warranties, representations and covenants of the
Company and OPG in and under this Agreement, and all obligations of the Company
and OPG to Purchaser hereunder, are joint and several in every respect. OPG
waives and forever releases any right or claim of contribution or reimbursement
it may have at any time against the Company arising from or relating to the
breach of any warranty, representation, covenant or other obligation to
Purchaser under this Agreement.
9.17 Schedules. The parties acknowledge and agree that, as of the date
this Agreement has been executed, some schedules have not been completed and
agreed upon. The parties agree to review and negotiate such matters diligently
and in good faith, and upon completion and mutual approval of all such schedules
they shall promptly execute an amendment to this Agreement memorializing such
approval. If all schedules hereto are not approved by the parties in an
amendment to this Agreement mutually executed and delivered on or before June 1,
2001, then this Agreement shall terminate and the parties shall have no further
obligations hereunder except under those provisions intended to survive the
termination of this Agreement.
28
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
COMPANY: OLYMPIC WATER AND SEWER, INC.,
a Washington corporation
By:
/s/ TOM GRIFFIN
--------------------------------------------------------------------------------
Name: Tom Griffin
--------------------------------------------------------------------------------
Its: President
--------------------------------------------------------------------------------
OPG:
OLYMPIC PROPERTY GROUP LLC, a
Washington limited liability company
By:
/s/ GREGORY M. MCCARRY
--------------------------------------------------------------------------------
Name: Gregory M. McCarry
--------------------------------------------------------------------------------
Its: C.O.O.
--------------------------------------------------------------------------------
PURCHASER:
PORT LUDLOW ASSOCIATES LLC, a
Washington limited liability company
By Northwest Pacific Partners LLC, a Washington limited liability company, its
manager
By HCV Pacific Partners LLC, a California limited liability company, its manager
By
/s/ RANDALL J. VERRUE
--------------------------------------------------------------------------------
Randall J. Verrue
Its President
29
--------------------------------------------------------------------------------
GUARANTY
POPE RESOURCES, a Delaware limited partnership ("Pope"), the sole owner and
member of OPG, hereby absolutely and unconditionally guarantees to Purchaser
(i) the truth and accuracy of all warranties and representations of OPG under
this Agreement, (ii) the full, faithful and timely performance of all covenants,
agreements, and obligations of OPG under this Agreement, and (iii) prior to
Closing, the full, faithful and timely performance of all covenants, agreements,
and obligations of the Company under this Agreement.
Pope further acknowledges and agrees that its liability hereunder is
independent of the liability of OPG and the Company. A separate action may, at
Purchaser's option, be brought and prosecuted against Pope to enforce its
obligations hereunder, whether or not any action is first or subsequently
brought against OPG or the Company, or whether or not OPG or the Company is
joined in any such action, and Pope may be joined in any action or proceeding
commenced by Purchaser against OPG or the Company arising out of, in connection
with, or based upon this Agreement. Pope expressly waives any right (a) to
require that Purchaser proceed against OPG or the Company (either as a condition
to exercising rights or remedies against Pope hereunder or otherwise); (b) to
require that Purchaser proceed against or exhaust any security or collateral
held by Purchaser from OPG or the Company (either as a condition to exercising
rights or remedies against Pope hereunder or otherwise); (c) to pursue any other
remedy in Purchaser's power whatsoever (either as a condition to exercising
rights or remedies against Pope hereunder or otherwise); or (d) to complain of
delay in the enforcement of Purchaser's rights under this Agreement. Pope also
expressly waives (a) any defense arising by reason of any disability of Pope or
the cessation of the liability of OPG or the Company by reason of bankruptcy or
insolvency of OPG or OPG's lack of authority to enter into the Agreement;
(b) all demands upon and notices to OPG or the Company and to Pope, including,
without limitation, demands for performance, notices of nonperformance, notices
of non-payment, and notices of acceptance of this guaranty obligation; and
(c) any defense arising out of the absence, impairment or loss of any right of
reimbursement, indemnity, contribution or subrogation, or any other right or
remedy of Pope against OPG or the Company, or any security or collateral,
resulting from any enforcement action or election of remedy by Purchaser or
otherwise. Pope further expressly and forever waives any right or claim for
indemnity, contribution or otherwise against the Company resulting from any
loss, liability, damage or expense that Pope may sustain or incur hereunder.
Notwithstanding anything herein to the contrary, Pope's obligations herein
are subject to all Transaction Defenses. As used herein, "Transaction Defenses"
means all defenses against claims by Purchaser that Pope would have had
available to it had Pope executed and delivered the Agreement instead of OPG and
performed the obligations thereunder to the same extent as such obligations were
actually performed by OPG. By way of example, and without limitation,
Transaction Defenses would include defenses based on the statute of limitations,
discharges by performance, the absence of a breach or obligation, waiver
(subject to Section 9.4), and the failure of consideration. Transaction Defenses
would not include defenses predicated on the bankruptcy or insolvency of OPG or
on OPG's lack of authority to enter into the Agreement.
POPE RESOURCES, a Delaware limited partnership, by POPE MGP, INC., a
Delaware corporation, its managing general partner
By:
/s/ GREGORY M. MCCARRY
--------------------------------------------------------------------------------
Name: Gregory M. McCarry
--------------------------------------------------------------------------------
Title: C.O.O.
--------------------------------------------------------------------------------
30
--------------------------------------------------------------------------------
SCHEDULES:
1.2 Qualified Adjustments (9/1/00 to 3/31/01) 1.5.1(i)-1 Water Facilities:
List of Wells and Reservoirs 1.5.1(i)-2 Water Facilities: Map of Wells and
Reservoirs 1.5.1(i)-3 Water Facilities: Description of Well and Reservoir
Parcels 1.5.1(ii) Water Facilities: Map of Water Lines and Other
Infrastructure 1.5.1(iii) Water Facilities: Water Permits 1.5.1(iv) Water
Facilities: Other Water Permits 1.5.1(v) Water Facilities: Depreciated
Personal Property 1.5.1(vi) Water Facilities: Customer Accounts 1.5.1(vii)
Water Facilities: Tariff Schedule 1.5.2(i) Sewer Facilities: Map of Sewer Line
Distribution System 1.5.2(ii) Sewer Facilities: Description of Treatment Plant
Parcel 1.5.2(iii) Sewer Facilities: Sewer Permits 1.5.2(iv) Sewer
Facilities: Other Sewer Permits 1.5.2(v) Sewer Facilities: Depreciated
Personal Property 1.5.2(vi) Sewer Facilities: Customer Accounts 1.5.2(vii)
Sewer Facilities: Rate Schedule 1.5.3(i) Other Company Property: Description
of Land and Improvements 1.5.3(ii) Other Company Property: Depreciated
Personal Property 1.5.3(iii) Contracts 1.5.3(iv) Intellectual Property 3.3.2
Officers and Directors 3.3.5 Capitalization 3.3.9(a) Employees 3.3.9(b)
Employee Benefits 3.3.10(b) List of Tax Returns Filed (on or after 12/31/98)
3.3.10(e) Depreciated Basis of Property (12/31/00) 3.3.11(a) Litigation and
Other Proceedings 3.3.11(b) Violations of Laws, Rules, and Regulations 3.4.1
Copies of Financial Statements (12/31/00 and 4/30/01) 3.4.1-A Accrued
Liabilities (after 4/30/01) 3.4.1-B Pro Forma Balance Sheet 3.4.3(a)
Material Defects 3.4.6 Other Permits and Applications 3.4.7(a) Environmental
Reports 3.4.7(b) Potential Material Hazardous Substances Claims 3.4.7(c)
Storage of Hazardous Substances 4.1.5 Form of Port Gamble Maintenance
Agreement 4.4 Material Governmental and Third Party Consents
31
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QuickLinks
Exhibit 10.15
STOCK PURCHASE AGREEMENT (Olympic Property Group LLC and Port Ludlow Associates
LLC) (Olympic Water and Sewer, Inc.)
RECITALS
AGREEMENT SECTION 1
PURCHASE AND SALE OF STOCK AND COMPANY ASSETS
Section 2 INSPECTION AND CLOSING DELIVERIES
SECTION 3 REPRESENTATIONS AND WARRANTIES
Section 4 COVENANTS
SECTION 5 CONDITIONS TO CLOSING
SECTION 6 DISCLOSURE AND RELEASE
SECTION 7 TAX RETURNS, COOPERATION, AND DOCUMENT RETENTION
SECTION 8 RESERVED
SECTION 9 MISCELLANEOUS
GUARANTY
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Exhibit 10(b)
Draft of November 13, 2001
AMENDMENT TO TRUST AGREEMENT
AMENDMENT, dated as of September 15, 2001 (this "Amendment"), to the Amended
and Restated Trust Agreement, dated as of September 8, 2000 (the "Trust
Agreement"), between NMS Services (Cayman) Inc., a Cayman Islands corporation,
in its capacity as Grantor and Certificateholder (the "Certificateholder") and
Wilmington Trust Company, a Delaware banking corporation, in its capacity as
trustee under the Trust Agreement (the "Trustee").
W I T N E S S E T H
WHEREAS, the parties have entered into the Trust Agreement; and
WHEREAS, the parties wish to amend the Trust Agreement subject to the terms
and conditions of this Amendment.
NOW THEREFORE, the Certificateholder and the Trustee hereby agree as
follows:
1. Defined Terms. Capitalized terms used but not defined herein have the
meanings specified in the Trust Agreement.
2. Additional Shares. (a) Notwithstanding anything to the contrary in the
Trust Agreement, the parties agree that the purchase of Additional Shares during
the Additional Purchase Period in accordance with the Stock Purchase Agreement
shall be treated as the purchase of Initial Shares during the Initial Period for
all purposes under the Trust Agreement, including, without limitation, the
definition of Securities Portfolio, Section 5.2(b)(i) and Section 9.2(a). As
used herein, the terms "Additional Shares" and "Additional Purchase Period" have
the meanings set forth in the Stock Purchase Agreement, as amended as of the
date hereof.
(b)Section 5.2(b)(iii) of the Trust Agreement is hereby amended by (i) inserting
"or Additional Commission Cost" after "Monthly Commission Cost" and
(ii) inserting "each" in the parenthetical before "as defined in."
3. Effect of the Amendment. Except as amended hereby, the Trust Agreement
is ratified and confirmed and continues in full force and effect. All references
to the Trust Agreement in the Trust Agreement or any document related thereto
shall for all purposes constitute references to the Trust Agreement as amended
hereby.
4. Miscellaneous. This Amendment constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto. No amendment in
respect of this Amendment may be made except in accordance with Article VIII of
the Trust Agreement. This Amendment may be executed and delivered in
counterparts (including by facsimile transmission), each of which will be deemed
an original. The headings used in this Amendment are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Amendment.
9. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS.
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the duly authorized representatives of the parties
hereto have executed this Amendment as of the day and year first above written.
NMS SERVICES (CAYMAN) INC., as Certificateholder
By:
/s/ WILLIAM C. CACCAMISE
--------------------------------------------------------------------------------
Name: William C. Caccamise
Title: Authorized Signatory
WILMINGTON TRUST COMPANY, as Trustee
of the MBG TRUST
By:
/s/ JEANNE M. OLLER
--------------------------------------------------------------------------------
Name: Jeanne M. Oller
Title: Financial Services Officer
2
--------------------------------------------------------------------------------
The Relevant Parties hereby consent to this Amendment as of the day and year
first above written.
BANK OF AMERICA, N.A.
By:
/s/ WILLIAM C. CACCAMISE
--------------------------------------------------------------------------------
Name: William C. Caccamise
Title: Authorized Signatory
MANDALAY RESORT GROUP
By:
/s/ GLENN SCHAEFFER
--------------------------------------------------------------------------------
Name: Glenn Schaeffer
Title: President, Chief Financial Officer
and Treasurer
BANC OF AMERICA SECURITIES LLC
By:
/s/ WILLIAM C. CACCAMISE
--------------------------------------------------------------------------------
Name: William C. Caccamise
Title: Managing Director
3
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QuickLinks
AMENDMENT TO TRUST AGREEMENT
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Exhibit A
SCHEDULE OF PARTNERS,
ALLOCATION OF PARTNERSHIP UNITS, PERCENTAGE INTERESTS
AND THE AGREED UPON VALUE OF NON-CASH CAPITAL CONTRIBUTIONS
Date Admitted
--------------------------------------------------------------------------------
Name and address of partners
--------------------------------------------------------------------------------
Value of non-cash
capital contribution
--------------------------------------------------------------------------------
Partnership
units issued
--------------------------------------------------------------------------------
Approx. Percentage Interests
--------------------------------------------------------------------------------
Federal ID #
--------------------------------------------------------------------------------
2/12/1997 Golf Legends Ltd., Inc.
1500 Legends Drive
Myrtle Beach, SC 29578 $ 30,647,030 1,532,352 57-0886834 4/2/2001
Legends (conversion) (294,613 ) 7/31/2001 Redemption at
disposition $ (14,852,868 ) (1,237,739 ) 7/31/2001 Residual Value $
(15,794,162 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Legends Total $ — — 0.00 %
2/12/1997
Seaside Resorts Ltd., Inc.
1500 Legends Drive
Myrtle Beach, SC 29578
$
16,129,118
806,456
57-0729308 7/31/2001 Redemption at disposition (9,677,472 ) (806,456 )
7/31/2001 Residual Value (6,451,646 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Seaside Resorts Ltd., Inc. Total $ — — 0.00 %
2/12/1997
Heritage Golf Club, Ltd., Inc.
1500 Legends Drive
Myrtle Beach, SC 29578
$
16,031,230
801,561
57-0818596 1/6/1999 Heritage (conversion) (11,700 ) 7/31/2001
Redemption at disposition (9,478,332 ) (789,861 ) 7/31/2001 Residual
Value (6,552,898 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Heritage Golf Club, Ltd., Inc. Total $ — — 0.00 %
2/12/1997
Legends of Virginia L.C.
1500 Legends Drive
Myrtle Beach, SC 29578
$
11,963,738
598,187
57-1003883 4/2/2001 Legends (conversion) (598,187 ) 7/31/2001
Residual Value $ (11,963,738 ) 0.00 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Legends of Virgiania Total $ — —
2/12/1997
Northgate
16055 Northgate Forest Drive
Houston, TX 77068
$
3,797,071
189,854
76-0527250 5/20/1998 Northgate (redemption) $ (158,969 ) (5,000 )
1/6/1999 Northgate (conversion) $ — (30,000 ) 3/2/2001 Northgate
(conversion) (60,581 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Northgate Total $ 3,638,102 94,273 1.14 %
2/12/1997
Olde Atlanta Golf Club Limited Partnership
c/o The Crescent Company
1580 S. Milwaukee Ave., Suite 101
Libertyville, IL 60048
$
1,444,926
72,246
36-3834881 4/13/1998 Olde Atlanta (redemption) $ (62,837.60 ) (2,000 )
5/20/1998 Olde Atlanta (redemption) $ (64,017.60 ) (2,000 ) 8/21/1998
Olde Atlanta (redemption) $ (52,387.50 ) (1,500 ) 12/10/1998 Olde
Atlanta (redemption) $ (30,166.11 ) (1,150 ) 1/20/1999 Olde Atlanta
(redemption) $ (66,078.50 ) (2,500 ) 4/6/1999 Olde Atlanta
(conversion) $ — (2,000 ) 5/1/1999 Olde Atlanta (recapitalization)
$ 683,967 30,826
--------------------------------------------------------------------------------
5/27/1999 Olde Atlanta (conversion) (2,000 ) 7/15/1999 Olde
Atlanta (conversion) (3,500 ) 1/10/2000 Olde Atlanta
(conversion) (3,300 ) 1/26/2000 Olde Atlanta (conversion)
(4,100 ) 4/28/2000 Olde Atlanta (correction from 3/24/99)
2,000 8/14/2000 Olde Atlanta (conversion) (10,600 )
7/9/2001 Redemption at disposition (757,036.50 ) (70,422 ) 7/9/2001
Residual Value (1,853,405.98 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Olde Atlanta Total $ — 0 0.00 %
2/12/1997
Bright's Creek Development Co. LLC
104 Cotton Creek Drive
Gulf Shores, AL 36542
$
2,119,005
105,950
63-1120089 5/1/2001 Redemption at disposition (1,271,400 ) (105,950 )
5/1/2001 Residual Value (847,605 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Woodlands Total $ — — 0.00 %
10/31/1996
David Dick Joseph
14 North Adger's Wharf
Charleston, SC 29401
—
12,500
0.00
%
###-##-#### 12/14/1999 David Dick Joseph (conversion) (12,500 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
— —
2/4/1997
W. Bradley Blair, II
14 North Adger's Wharf
Charleston, SC 29401
$
—
12,500
0.15
%
###-##-####
2/4/1997
James Hoppenrath
4221/2 Marguerite Ave.
Corona Del Mar CA 92625
$
—
3,750
0.00
%
###-##-#### 1/6/2000 James Hoppenrath (conversion) (3,750 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$ — —
6/20/1997
Golf Host Resorts, Inc.
c/o Starwood Capital Group, LP
Three Pickwick Plaza, Suite 250
Greenwich, CT 06830
$
—
274,039
0.00
%
84-0631130 3/3/2000 Golf Host (conversion) (274,039 )
--------------------------------------------------------------------------------
—
9/2/1997
John J. Rainieri, Sr.
Betty Rainieri
4350 Mayfair Road
Uniontown, OH 44685
$
3,198,168
114,237
###-##-####
###-##-#### 1/4/2001 Redemption at disposition $ (910,632 ) (75,886 )
5/16/2001 Redemption at disposition $ (460,212 ) (38,351 ) 5/16/2001
Residual Value $ (1,827,324 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Rainieri Total $ — 0 0.00 %
9/2/1997
Raintree Country Club, Inc.
4350 Mayfair Road
Uniontown, OH 44685
$
204,138
7,292
0.00
%
34-1736212 1/4/2001 Raintree
(redemption at disposition) $ (87,504 ) (7,292 )
--------------------------------------------------------------------------------
1/4/2001 Residual Value
(Value at Issue - Value at Redemption) $ (116,634 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Raintree Country Club, Inc. Total $ — — 0.00 %
9/30/1997
Eagle Watch Golf Club, Limited Partnership
c/o E. Neal Trogdon
The Crescent Company
1580 South Milwaukee Avenue, Suite 101
Libertyville, IL 60048
$
1,890,682
70,158
36-3903287 11/2/1998 Eagle Watch (redemption) $ (64,199.00 ) (2,150 )
5/21/1999 Eagle Watch (conversion) (1,250 ) 4/28/2000 Eagle
Watch (correction from 3/24/99) (2,000 ) 7/9/2001 Redemption at
disposition $ (696,148.50 ) (64,758 ) 7/9/2001 Residual Value $
(1,130,334.50 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Eagle Watch Total $ — — 0.00 %
10/17/1997
Properties of the Country, Inc.
908 N. 2nd Street East
Louisburg, KS 66053
$
500,000
19,231
48-1157265 3/16/2001 Redemption at disposition (230,772 ) (19,231 )
3/16/2001 Residual Value (269,228 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Properties of the Country, Inc. Total $ — — 0.00 %
11/25/1997
Granite Golf Corporation
1510 N. Hayden Road, Suite 7
Scottsdale, AZ 85260
$
650,000
24,424
86-0926890 7/2/1999 Granite Golf (redemption) (200,257 ) (8,393 )
7/27/1999 Granite Golf (redemption) (237,935 ) (10,354 ) 8/13/1999
Granite Golf (redemption) (125,746 ) (5,677 ) 8/13/1999 Residual
Value (86,062 ) (Value at Issue - Value at Redemption) —
— 0.00 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$ — —
12/19/1997
Stonehenge Golf Development, LLC
90 Mallet Hill Road
Columbia, SC 29223
$
4,500,000
169,811
56-2027442 1/10/2000 Stonehenge Golf (conversion) (50,000 )
6/20/2000 Stonehenge Golf (conversion) (25,471 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$ 4,500,000 94,340 1.14 %
1/16/1998
Mystic Creek Golf Club, Limited Partnership
32605 West 12 Mile Road
Suite 350
Farmington Hills, MI 48334
$
1,500,000
52,724
0.64
%
38-3187304
2/1/1998
Okeechobee Championship Golf, Inc.
2100 Emerald Dunes Drive
West Palm Beach, FL 33411
$
6,138,369
227,347
(1)
2.74
%
65-0115196
--------------------------------------------------------------------------------
5/22/1998
Eagle Ridge Lease Company LLC
16100 N. Greenway-Hayden Loop
Scottsdale, AZ 85260
$
1,198,750
35,794
0.43
%
52-2099405
5/28/1998
Golf Classic Resorts, LLC
536 South Avenue
Glencoe, IL 60022
$
879,995
26,357
0.00
%
85-0453484 11/26/1999 Golf Classic Resorts (redemption) $ (199,633 ) (11,577
) 12/31/1999 Golf Classic Resorts (redemption) $ (34,517 ) (2,060 )
2/7/2000 Golf Classic Resorts (redemption) $ (221,408 ) (12,720 )
2/7/2000 Residual Value
(Value at Issue - Value at Redemption) $ (424,437 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
— —
8/28/1998
Osage National Golf Club LLC
900 Hickory Street
St. Louis, MO 63104
$
3,451,068
124,700
43-1735431 6/30/1999 Osage (Redemption) $ (1,393,382 ) (58,576 )
6/20/2000 Osage (Redemption) $ (1,055,101 ) (66,124 ) 6/20/2000
Residual Value
(Value at Issue - Value at Redemption) $ (1,002,585 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
— — 0.00 %
12/14/1998
Brentwood Golf & Country Club, Inc.
4801 Faircourt, West Bloomfield, MI 48322
PO Box 386, Union Lake, MI 48387
$
650,000
24,482
0.00
%
38-3148750 6/20/2000 Brentwood (Redemption) $ (390,645 ) (24,482 )
6/20/2000 Residual Value $ (259,355 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
— —
12/22/1998
Gutta-Percha Golf, Inc.
365 W. California Blvd. Suite 2
Pasadena, CA 91105
$
870,000
32,986
0.00
%
95-4493507 9/5/2000 Palm Desert (Redemption) $ (460,785 ) (32,986 )
9/5/2000 Residual Value $ (409,215 )
--------------------------------------------------------------------------------
$ — —
2/4/1997
GTA LP, Inc.
14 North Adger's Wharf
Charleston, SC 29401
$
—
7,761,550
93.57
%
58-2290326
2/4/1997
GTA GP, Inc.
14 North Adger's Wharf
Charleston, SC 29401
$
—
16,553
0.20
%
58-2290217
Total Common OP Units
8,295,081
100.00
%
Series A Preferred OP Units 4/2/1999 GTA LP, Inc.
14 North Adger's Wharf
Charleston, SC 29401 20,000,000 800,000 100 %
--------------------------------------------------------------------------------
Series B Preferred OP Units 5/11/1999 Metamora Golf Operating Company, L.L.C.
c/o Total Golf, Inc.
1303 W. Commerce Drive
Milford, MI 48380 295,003 10,169 38-3462287 9/25/2000 Redemption
at Disposition (295,003 ) (10,169 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
— — 0.00 %
Series C Preferred OP Units 7/28/1999 Burning Embers Corporation
801 Aaron Smith Drive
Bridgeport, WV 26330 1,350,000 48,949 55-0720833 6/20/2001
Redemption
(foreclosure on collateral) (1,350,000 ) (48,949 )
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
— — 0.00 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(1)Includes 218,088 Class A Common Units issued with a valuation of $5,888,376
and 9,259 Class B Common OP Units issued with a valuation of $249,993
--------------------------------------------------------------------------------
QuickLinks
Exhibit A
|
EXHIBIT NO. 10.5
RETIREMENT AGREEMENT
THIS AGREEMENT is made this 18th day of December, 2000,
between ALAN W. OTT ("Mr. Ott") and CHEMICAL FINANCIAL CORPORATION ("Chemical"),
and joined in by its subsidiary, CHEMICAL BANK AND TRUST COMPANY ("Chemical
Bank");
WHEREAS, Chemical is a bank holding company and a Michigan
corporation; and
WHEREAS, Chemical believes that its ability to conduct its
business successfully is dependent upon retaining key management employees until
such time as they retire; and
WHEREAS, Mr. Ott has been employed in an important
management and chief executive position with Chemical for over 30 years, and the
parties desire to continue to maintain a relationship upon the terms and
conditions set forth herein; and
WHEREAS, Mr. Ott has determined to retire from the active
management of Chemical, but has agreed to provide assistance and advice to
Chemical and Chemical Bank;
IT IS, THEREFORE, AGREED AS FOLLOWS:
1. Retirement. Effective the close of business
December 31, 1996, Mr. Ott resigned and retired from his position as President
and Chief Executive Officer of Chemical Financial Corporation and Chief
Executive Officer of Chemical Bank. Mr. Ott shall continue to serve as a
Director of Chemical and Chemical Bank and Chairman of the Board of Directors of
Chemical and Chemical Bank, through January 1, 2001 to December 31, 2001,
without compensation for Directors' meetings. Mr. Ott may thereafter continue
his service to Chemical for such time and in such role as Chemical and he deem
appropriate.
2. Compensation and Benefits. Chemical agrees to
pay to Mr. Ott an annual compensation of Fifty Thousand Dollars ($50,000.00),
commencing on the first day of January, 2001, for a period of one year or until
his death, if earlier. Payments to Mr. Ott will be made on the first business
day of each month during the term of this Agreement.
Mr. Ott shall be provided group health benefits in accordance with the
terms of Chemical's Retiree Medical and Dental Plan. If at any time Chemical
terminates any such insurance plan for its retirees, Chemical may also terminate
such plan for Mr. Ott; if Chemical substitutes medical and hospitalization
insurance plans for its retirees or provides additional medical or
hospitalization insurance coverage for its retirees, then such substituted
and/or additional insurance coverage shall be made available to Mr. Ott.
3. Covenant Not To Compete. Mr. Ott agrees that
during the period that payments are being made to him hereunder, he shall not
enter into employment or any form of equity ownership of any business which is
competitive with the businesses related to, affiliated with, or managed by
Chemical; provided, however, that the parties agree that this provision will be
limited to a geographic area consisting of a fifty (50) mile radius from each
existing business location of Chemical or any business related to, affiliated
with, or managed by Chemical. In the event the Board of Directors of Chemical
determines that Mr. Ott is in violation of this covenant not to compete, it
shall give written notice to him. Mr. Ott shall have a period of ninety (90)
days from the date of such notice to cease his competitive activity, and the
payments hereunder shall continue during such period. If the competitive
activity is not terminated within the ninety (90) day period, further payments
hereunder shall cease. In the event of a dispute hereunder, the parties agree to
submit their disagreement to arbitration. Nothing in this Section 3 shall be
construed to prevent Mr. Ott from acquiring or holding, directly or indirectly,
securities of any corporation or other entity the securities of which are listed
for trading on any national or regional securities exchange or quoted on any
automated quotation system sponsored by the National Association of Securities
Dealers, Inc. as long as Mr. Ott's total beneficial ownership in any such
corporation or entity does not exceed five percent (5%) of the total securities
outstanding of such corporation or entity.
--------------------------------------------------------------------------------
4. No Assignment. This Agreement is personal to
each party to this Agreement and no party may assign or delegate any rights or
obligations hereunder without first obtaining the written consent of the others.
5. Modification. This Agreement supersedes all
prior agreements with respect to the matters covered hereby, and no modification
of this Agreement shall be valid unless it is in writing and signed by Chemical
and by Mr. Ott.
6. Construction. This Agreement shall be governed
and construed in accordance with the laws of the State of Michigan.
7. Headings. The paragraph headings in this
Agreement are for convenient reference only, and shall not modify or amend the
express terms hereof.
8. Successors and Assigns. This Agreement shall be
binding upon, and shall insure to the benefit of, the parties hereto and their
respective heirs, personal representatives, successors and assigns.
DATED: December 18, 2000
s/ Alan W. Ott
--------------------------------------------------------------------------------
Alan W. Ott
CHEMICAL FINANCIAL CORPORATION
DATED: December 18, 2000
By
s/ Aloysius J. Oliver
--------------------------------------------------------------------------------
Aloysius J. Oliver
Its President & Chief Executive Officer
CHEMICAL BANK AND TRUST COMPANY
DATED: December 18, 2000
By
s/ David B. Ramaker
--------------------------------------------------------------------------------
David B. Ramaker
Its President & Chief Executive Officer
2 |
EXHIBIT 10.48
TABLE OF CONTENTS
ARTICLE I SECURITY INTERESTS
1.1 GRANT OF SECURITY INTERESTS
1.2 POWER OF ATTORNEY
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 CHIEF EXECUTIVE OFFICE/INVENTORY AND EQUIPMENT LOCATIONS
2.2 STATE OF INCORPORATION
2.3 TRADE NAMES; CHANGE OF NAME
ARTICLE III PROVISIONS CONCERNING ALL COLLATERAL
3.1 PROTECTION OF ADMINISTRATIVE AGENT’S SECURITY
3.2 WAREHOUSE RECEIPTS NON-NEGOTIABLE; THIRD-PARTY ACKNOWLEDGMENTS
3.3 FURTHER ACTIONS
3.4 FINANCING STATEMENTS
ARTICLE IV REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
4.1 REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT
4.2 REMEDIES; DISPOSITION OF THE COLLATERAL
4.3 WAIVER OF CLAIMS
4.4 APPLICATION OF PROCEEDS
4.5 REMEDIES CUMULATIVE
4.6 DISCONTINUANCE OF PROCEEDINGS
ARTICLE V INDEMNITY
5.1 INDEMNITY
5.2 INDEMNITY OBLIGATIONS SECURED BY COLLATERAL; SURVIVAL
ARTICLE VI DEFINITIONS
ARTICLE VII MISCELLANEOUS
7.1 NOTICES
7.2 WAIVER; AMENDMENT
7.3 OBLIGATIONS ABSOLUTE
7.4 SUCCESSORS AND ASSIGNS
7.5 HEADINGS DESCRIPTIVE
7.6 SEVERABILITY
7.7 GOVERNING LAW
7.8 EACH GUARANTOR’S DUTIES
7.9 TERMINATION; RELEASE
7.10 COUNTERPARTS
7.11 THE ADMINISTRATIVE AGENT
ARTICLE VIII
ANNEX A SCHEDULE OF CHIEF EXECUTIVE OFFICES
ANNEX B SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
ANNEX C SCHEDULE OF TRADE, FICTITIOUS AND OTHER NAMES
SUBSIDIARY GUARANTOR SECURITY AGREEMENT
THIS SUBSIDIARY GUARANTOR SECURITY AGREEMENT (this "Agreement"), dated as of
October 12, 2001, is among the undersigned (each an “Guarantor” and, together
with any other entity that becomes party hereto pursuant to Section 7.13 hereof,
collectively, the "Guarantors"), BANKERS TRUST COMPANY, as administrative agent
(the “Administrative Agent”) and U.S. BANK NATIONAL ASSOCIATION ("US Bank") for
the benefit of (i) the Lenders and the Agent under the Credit Agreement
hereinafter referred to (such Lenders and the Agent are hereinafter called the
“Bank Creditors”), (ii) if one or more Lenders (or any Affiliate thereof) enter
into one or more (A) interest rate protection agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar agreements),
(B) foreign exchange contracts, currency swap agreements or other similar
agreements or arrangements designed to protect against the fluctuations in
currency values and/or (C) other types of hedging agreements from time to time
(collectively, the “Interest Rate Protection or Other Hedging Agreements”) with,
or guaranteed by, Borrower, any such Lender or Lenders or any Affiliate of such
Lender or Lenders (even if the respective Lender subsequently ceases to be a
Lender under the Credit Agreement for any reason) so long as any such Lender or
Affiliate participates in the extension of such Interest Rate Protection or
Other Hedging Agreements and their subsequent assigns, if any (collectively, the
“Other Creditors”) and (iii) US Bank as lender under the US Bank Letter of
Credit Facility (as defined below) (the "LC Creditor" and, together with the
Other Creditors and the Bank Creditors, hereinafter called the “Secured
Creditors”). Except as otherwise defined herein, terms used herein and defined
in the Credit Agreement (as hereinafter defined) shall be used herein as so
defined.
W I T N E S S E T H :
WHEREAS, BMC Industries, Inc. (the "Borrower"), the financial institutions (the
“Lenders”) from time to time party thereto and Bankers Trust Company, as
Administrative Agent (together with any successor agent, the “Agent”), have
entered into an Amended and Restated Credit Agreement, dated as of June 25,
1998, providing for the making of Loans and the issuance of, and participation
in, Letters of Credit as contemplated therein (as used herein, the term “Credit
Agreement” means the Credit Agreement described above in this paragraph, as in
effect on the date hereof and as amended by that certain Second Amendment and
Restatement Agreement dated as of the date hereof, as the same may be amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time, and including any agreement extending the maturity of or restructuring of
all or any portion of the Indebtedness under such agreement or any successor
agreements);
WHEREAS, Borrower may at any time and from time to time enter into, or
guarantee, one or more Interest Rate Protection or Other Hedging Agreements with
one or more Other Creditors;
WHEREAS, pursuant to the Amended and Restated Subsidiary Guarantee Agreement,
dated the date hereof, each Guarantor has jointly and severally guaranteed to
the Secured Creditors the payment when due of certain obligations of Borrower
and each Guarantor under or with respect to the Loan Documents, the Interest
Rate Protection or Other Hedging Agreements and the US Bank Letter of Credit
Facility (provided that at no time shall there be more than $2,000,000 under the
US Bank Letter of Credit Facility secured by the Security Documents);
WHEREAS, it is a condition precedent to each of the above-described extensions
of credit that each Guarantor shall have executed and delivered this Agreement;
and
WHEREAS, each Guarantor desires to enter into this Agreement in order to satisfy
the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the extensions of credit to be made to
Borrower 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 Administrative Agent for the
benefit of the Secured Creditors and hereby covenants and agrees with the
Administrative Agent for the benefit of the Secured Creditors 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 THE OBLIGATIONS, EACH
GUARANTOR DOES HEREBY PLEDGE AND GRANT TO THE ADMINISTRATIVE AGENT FOR THE
BENEFIT OF THE SECURED CREDITORS, A CONTINUING SECURITY INTEREST OF FIRST
PRIORITY (SUBJECT TO LIENS EVIDENCED BY PERMITTED FILINGS AND OTHER PERMITTED
LIENS) IN, ALL OF THE RIGHT, TITLE AND INTEREST OF SUCH GUARANTOR IN, TO AND
UNDER ALL OF THE FOLLOWING, WHETHER NOW EXISTING OR HEREAFTER FROM TIME TO TIME
ACQUIRED: (I) EACH AND EVERY ACCOUNT, (II) ALL CONTRACTS, TOGETHER WITH ALL
CONTRACT RIGHTS ARISING THEREUNDER, (III) ALL INVENTORY, (IV) ALL EQUIPMENT, (V)
ALL OTHER GOODS, GENERAL INTANGIBLES, CHATTEL PAPER, DOCUMENTS, INVESTMENT
PROPERTY AND INSTRUMENTS, AND (VI) ALL PROCEEDS AND PRODUCTS OF ANY AND ALL OF
THE FOREGOING (ALL OF THE ABOVE, COLLECTIVELY, THE “COLLATERAL”).
(b) The security interests of the Administrative Agent under this Agreement
extend to all Collateral of the kind which is the subject of this Agreement
which any Guarantor may acquire at any time during the continuation of this
Agreement.
1.2 POWER OF ATTORNEY. EACH GUARANTOR HEREBY CONSTITUTES AND APPOINTS
THE ADMINISTRATIVE AGENT ITS TRUE AND LAWFUL ATTORNEY, WITH FULL POWER AFTER THE
OCCURRENCE OF AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT (IN THE NAME OF
SUCH GUARANTOR OR OTHERWISE), IN THE ADMINISTRATIVE AGENT’S REASONABLE
DISCRETION, TO TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT REQUIRED BY THIS
AGREEMENT IF SUCH GUARANTOR HAS FAILED TO DO SO AFTER DEMAND BY THE
ADMINISTRATIVE AGENT.
ARTICLE II
GENERAL REPRESENTATIONS WARRANTIES AND COVENANTS
Each Guarantor represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
2.1 CHIEF EXECUTIVE OFFICE/INVENTORY AND EQUIPMENT LOCATIONS. THE
CHIEF EXECUTIVE OFFICE OF SUCH GUARANTOR IS LOCATED AT THE ADDRESS INDICATED ON
ANNEX A HERETO. ALL INVENTORY AND EQUIPMENT HELD ON THE DATE HEREOF BY SUCH
GUARANTOR IS LOCATED AT ONE OF THE LOCATIONS SHOWN ON ANNEX B HERETO (OTHER THAN
(I) IMMATERIAL PORTIONS OF INVENTORY OR EQUIPMENT OR (II) EQUIPMENT OUT FOR
REPAIR). PRIOR TO JANUARY 1, 2002, SUCH GUARANTOR SHALL NOT (X) MOVE ITS
CHIEF EXECUTIVE OFFICE TO ANY OF THE STATES OF MISSISSIPPI, ALABAMA OR FLORIDA,
OR (Y) MOVE ANY INVENTORY OR EQUIPMENT TO ANY OF THE STATES OF MISSISSIPPI,
ALABAMA OR FLORIDA UNTIL (I) IT SHALL HAVE GIVEN TO THE ADMINISTRATIVE AGENT NOT
LESS THAN 30 DAYS’ PRIOR WRITTEN NOTICE OF ITS INTENTION TO DO SO, (II) WITH
RESPECT TO SUCH MOVE, IT SHALL HAVE TAKEN ALL ACTION, REASONABLY SATISFACTORY TO
THE ADMINISTRATIVE AGENT, TO MAINTAIN THE SECURITY INTEREST OF THE
ADMINISTRATIVE AGENT IN THE COLLATERAL INTENDED TO BE GRANTED AND PERFECTED
UNDER THE UNIFORM COMMERCIAL CODE HEREBY AT ALL TIMES FULLY PERFECTED AND IN
FULL FORCE AND EFFECT, (III) AT THE REASONABLE REQUEST OF THE ADMINISTRATIVE
AGENT, IT SHALL HAVE FURNISHED A CUSTOMARY OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE ADMINISTRATIVE AGENT TO THE EFFECT THAT ALL FINANCING OR
CONTINUATION STATEMENTS AND AMENDMENTS OR SUPPLEMENTS THERETO HAVE BEEN FILED IN
THE APPROPRIATE FILING OFFICE OR OFFICES, AND ALL OTHER ACTIONS (INCLUDING,
WITHOUT LIMITATION, THE PAYMENT OF ALL FILING FEES AND TAXES, IF ANY, PAYABLE IN
CONNECTION WITH SUCH FILINGS) HAVE BEEN TAKEN, IN ORDER TO PERFECT (AND MAINTAIN
THE PERFECTION AND PRIORITY OF) THE SECURITY INTEREST GRANTED HEREBY AND (IV)
THE ADMINISTRATIVE AGENT SHALL HAVE RECEIVED EVIDENCE THAT ALL OTHER ACTIONS
(INCLUDING, WITHOUT LIMITATION, THE PAYMENT OF ALL FILING FEES AND TAXES, IF
ANY, PAYABLE IN CONNECTION WITH SUCH FILINGS) HAVE BEEN TAKEN, IN ORDER TO
PERFECT (AND MAINTAIN THE PERFECTION AND PRIORITY OF) THE SECURITY INTEREST
GRANTED HEREBY.
2.2 STATE OF INCORPORATION. THE STATE OF INCORPORATION OF EACH
GUARANTOR IS INDICATED ON ANNEX A HERETO. NO GUARANTOR WILL CHANGE ITS STATE OF
INCORPORATION EXCEPT AS IN ACCORDANCE WITH THE LAST SENTENCE OF THIS SECTION
2.2. NO GUARANTOR SHALL ESTABLISH A NEW STATE OF INCORPORATION UNTIL (I) IT
SHALL HAVE GIVEN TO THE ADMINISTRATIVE AGENT NOT LESS THAN 30 DAYS’ PRIOR
WRITTEN NOTICE OF ITS INTENTION TO DO SO, CLEARLY DESCRIBING SUCH NEW STATE OF
INCORPORATION AND PROVIDING SUCH OTHER INFORMATION IN CONNECTION THEREWITH AS
THE ADMINISTRATIVE AGENT MAY REASONABLY REQUEST, (II) WITH RESPECT TO SUCH NEW
STATE OF INCORPORATION, IT SHALL HAVE TAKEN ALL ACTION, REASONABLY SATISFACTORY
TO THE ADMINISTRATIVE AGENT, TO MAINTAIN THE SECURITY INTEREST OF THE
ADMINISTRATIVE AGENT IN THE COLLATERAL INTENDED TO BE GRANTED AND PERFECTED
UNDER THE UNIFORM COMMERCIAL CODE HEREBY AT ALL TIMES FULLY PERFECTED AND IN
FULL FORCE AND EFFECT, (III) AT THE REASONABLE REQUEST OF THE ADMINISTRATIVE
AGENT, IT SHALL HAVE FURNISHED A CUSTOMARY OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE ADMINISTRATIVE AGENT TO THE EFFECT THAT ALL FINANCING OR
CONTINUATION STATEMENTS AND AMENDMENTS OR SUPPLEMENTS THERETO HAVE BEEN FILED IN
THE APPROPRIATE FILING OFFICE OR OFFICES, AND ALL OTHER ACTIONS (INCLUDING,
WITHOUT LIMITATION, THE PAYMENT OF ALL FILING FEES AND TAXES, IF ANY, PAYABLE IN
CONNECTION WITH SUCH FILINGS) HAVE BEEN TAKEN, IN ORDER TO PERFECT (AND MAINTAIN
THE PERFECTION AND PRIORITY OF) THE SECURITY INTEREST GRANTED HEREBY AND (IV)
THE ADMINISTRATIVE AGENT SHALL HAVE RECEIVED EVIDENCE THAT ALL OTHER ACTIONS
(INCLUDING, WITHOUT LIMITATION, THE PAYMENT OF ALL FILING FEES AND TAXES, IF
ANY, PAYABLE IN CONNECTION WITH SUCH FILINGS HAVE BEEN TAKEN, IN ORDER TO
PERFECT (AND MAINTAIN THE PERFECTION AND PRIORITY OF) THE SECURITY INTEREST
GRANTED HEREBY.
2.3 TRADE NAMES; CHANGE OF NAME. NO GUARANTOR OPERATES IN ANY
JURISDICTION UNDER, NOR IN THE PRECEDING 12 MONTHS HAS OPERATED IN ANY
JURISDICTION UNDER, ANY TRADE NAMES, FICTITIOUS NAMES OR OTHER NAMES (INCLUDING,
WITHOUT LIMITATION, ANY NAMES OF DIVISIONS OR OPERATIONS) EXCEPT ITS LEGAL NAME
AND SUCH OTHER TRADE, FICTITIOUS OR OTHER NAMES AS ARE LISTED ON ANNEX C
HERETO. THE CORPORATION IDENTIFICATION NUMBER OR OTHER APPLICABLE FORMATION
IDENTIFICATION NUMBER SHALL BE SET FORTH ACROSS FROM THE EXACT LEGAL NAME OF
EACH GUARANTOR IDENTIFIED IN ANNEX C. NO GUARANTOR SHALL CHANGE ITS LEGAL NAME
OR ASSUME OR OPERATE IN ANY JURISDICTION UNDER ANY TRADE, FICTITIOUS OR OTHER
NAME IN ANY MANNER WHICH MIGHT MAKE ANY FINANCING STATEMENT OR CONTINUATION
STATEMENT FILED IN CONNECTION THEREWITH SERIOUSLY MISLEADING EXCEPT THOSE NAMES
LISTED ON ANNEX C HERETO AND NEW NAMES (INCLUDING, WITHOUT LIMITATION, ANY NAMES
OF DIVISIONS OR OPERATIONS) ESTABLISHED IN ACCORDANCE WITH THE LAST SENTENCE OF
THIS SECTION 2.3. NO GUARANTOR SHALL ASSUME OR OPERATE IN ANY JURISDICTION
UNDER ANY NEW TRADE, FICTITIOUS OR OTHER NAME THAT WOULD MAKE ANY FINANCING
STATEMENT OR CONTINUATION STATEMENT FILED IN CONNECTION THEREWITH, SERIOUSLY
MISLEADING UNTIL (I) IT SHALL HAVE GIVEN TO THE ADMINISTRATIVE AGENT NOT LESS
THAN 30 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 ADMINISTRATIVE
AGENT MAY REASONABLY REQUEST, (II) WITH RESPECT TO SUCH NEW NAME, IT SHALL HAVE
TAKEN ALL ACTION TO MAINTAIN THE SECURITY INTEREST OF THE ADMINISTRATIVE AGENT
IN THE COLLATERAL INTENDED TO BE GRANTED HEREBY AT ALL TIMES FULLY PERFECTED AND
IN FULL FORCE AND EFFECT, (III) AT THE REASONABLE REQUEST OF THE ADMINISTRATIVE
AGENT, IT SHALL HAVE FURNISHED A CUSTOMARY OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE ADMINISTRATIVE AGENT TO THE EFFECT THAT ALL
FINANCING OR CONTINUATION STATEMENTS AND AMENDMENTS OR SUPPLEMENTS THERETO HAVE
BEEN FILED IN THE APPROPRIATE FILING OFFICE OR OFFICES, AND (IV) THE
ADMINISTRATIVE AGENT SHALL HAVE RECEIVED EVIDENCE THAT ALL OTHER ACTIONS
(INCLUDING, WITHOUT LIMITATION, THE PAYMENT OF ALL FILING FEES AND TAXES, IF
ANY, PAYABLE IN CONNECTION WITH SUCH FILINGS) HAVE BEEN TAKEN, IN ORDER TO
PERFECT (AND MAINTAIN THE PERFECTION AND PRIORITY OF) THE SECURITY INTEREST
GRANTED HEREBY.
ARTICLE III
PROVISIONS CONCERNING ALL COLLATERAL
3.1 PROTECTION OF ADMINISTRATIVE AGENT’S SECURITY. NO GUARANTOR WILL
DO ANYTHING TO IMPAIR THE RIGHTS OF THE ADMINISTRATIVE AGENT IN THE COLLATERAL
OTHER THAN DISPOSITIONS, THE CREATION OF LIENS AND OTHER ENCUMBRANCES AND OTHER
ACTIONS PERMITTED HEREUNDER AND UNDER THE CREDIT AGREEMENT AND OTHER LOAN
DOCUMENTS.
3.2 WAREHOUSE RECEIPTS NON-NEGOTIABLE; THIRD-PARTY ACKNOWLEDGMENTS.
EACH GUARANTOR 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
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). WHERE COLLATERAL
WITH A FAIR MARKET VALUE OF GREATER THAN $100,000 IS IN THE POSSESSION OF A
THIRD PARTY, EACH GUARANTOR WILL JOIN WITH THE ADMINISTRATIVE AGENT IN NOTIFYING
THE THIRD PARTY OF THE ADMINISTRATIVE AGENT'S SECURITY INTEREST AND OBTAINING AN
ACKNOWLEDGMENT FROM THE THIRD PARTY THAT IT IS HOLDING THE COLLATERAL FOR THE
BENEFIT OF THE ADMINISTRATIVE AGENT.
3.3 FURTHER ACTIONS. EACH GUARANTOR WILL, AT ITS OWN EXPENSE, MAKE,
EXECUTE, ENDORSE, ACKNOWLEDGE, FILE AND/OR DELIVER TO THE ADMINISTRATIVE AGENT
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, POWERS OF
ATTORNEY, 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 ADMINISTRATIVE AGENT
DEEMS REASONABLY APPROPRIATE OR ADVISABLE TO PERFECT, PRESERVE OR PROTECT ITS
SECURITY INTEREST IN THE COLLATERAL. NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT, SO LONG AS NO UNMATURED EVENT OF DEFAULT OR EVENT OF DEFAULT
SHALL HAVE OCCURRED AND BE CONTINUING, THE ONLY OBLIGATION OF ANY GUARANTOR
ARISING HEREUNDER IN CONNECTION WITH THE PERFECTION OF THE SECURITY INTERESTS
GRANTED IN THE COLLATERAL LISTED IN SECTIONS 1.1(A)(II) AND (V) ABOVE (AND
SECTION 1.1(A)(VI), BUT SOLELY TO THE EXTENT IT RELATES TO SECTIONS 1.1(A)(II)
AND (V)) SHALL BE TO DELIVER FINANCING STATEMENTS PURSUANT TO SECTION 3.4 BELOW.
3.4 FINANCING STATEMENTS. EACH GUARANTOR AGREES TO DELIVER TO THE
ADMINISTRATIVE AGENT SUCH FINANCING STATEMENTS, IN FORM REASONABLY ACCEPTABLE TO
THE ADMINISTRATIVE AGENT, AS THE ADMINISTRATIVE AGENT MAY FROM TIME TO TIME
REASONABLY REQUEST OR AS ARE REASONABLY NECESSARY (OR DESIRABLE IN THE
REASONABLE OPINION OF THE ADMINISTRATIVE AGENT) TO ESTABLISH AND MAINTAIN A
VALID, ENFORCEABLE, FIRST PRIORITY PERFECTED SECURITY INTEREST (SUBJECT ONLY TO
PERMITTED LIENS) IN THE COLLATERAL AS PROVIDED HEREIN AND THE OTHER RIGHTS AND
SECURITY CONTEMPLATED HEREBY ALL IN ACCORDANCE WITH THE UNIFORM COMMERCIAL CODE
AS ENACTED IN ANY AND ALL RELEVANT JURISDICTIONS OR ANY OTHER RELEVANT LAW.
EACH GUARANTOR WILL PAY ANY APPLICABLE FILING FEES, RECORDATION TAXES AND
RELATED EXPENSES RELATING TO ITS COLLATERAL. EACH GUARANTOR HEREBY AUTHORIZES
THE ADMINISTRATIVE AGENT TO FILE ANY SUCH UNIFORM COMMERCIAL CODE FINANCING
STATEMENTS WITHOUT THE SIGNATURE OF SUCH GUARANTOR WHERE PERMITTED BY LAW.
ARTICLE IV
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
4.1 REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT. EACH GUARANTOR
AGREES THAT, IF ANY EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, THEN
AND IN EVERY SUCH CASE, SUBJECT TO ANY MANDATORY REQUIREMENTS OF APPLICABLE LAW
THEN IN EFFECT, THE ADMINISTRATIVE AGENT, IN ADDITION TO ANY RIGHTS NOW OR
HEREAFTER EXISTING UNDER APPLICABLE LAW, SHALL HAVE ALL RIGHTS AS A SECURED
CREDITOR UNDER THE UNIFORM COMMERCIAL CODE IN ALL RELEVANT JURISDICTIONS AND
MAY:
(a) personally, or by agents or attorneys, immediately take possession
of the Collateral or any part thereof, from such Guarantor 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 Guarantor’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
Guarantor; and
(b) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Accounts and the Contracts)
constituting the Collateral to make any payment required by the terms of such
agreement, instrument or other obligation directly to the Administrative Agent
and may exercise any and all remedies of such Guarantor in respect of such
Collateral; and
(c) sell, assign or otherwise liquidate, or direct such Guarantor to
sell, assign or otherwise liquidate, any or all of the Collateral or any part
thereof, and take possession of the proceeds of any such sale or liquidation;
and
(d) take possession of the Collateral or any part thereof, by
directing such Guarantor in writing to deliver the same to the Administrative
Agent at any place or places reasonably designated by the Administrative Agent,
in which event such Guarantor shall at its own expense:
(i) forthwith cause the same to be moved to the place or places so
designated by the Administrative Agent and there delivered to the Administrative
Agent, and
(ii) store and keep any Collateral so delivered to the Administrative
Agent at such place or places pending further action by the Administrative Agent
as provided in Section 6.2 hereof, and
(iii) while the Collateral shall be so stored and kept, provide such
guards and maintenance services as shall be necessary to protect the same and to
preserve and maintain them in good condition; and
it being understood that each Guarantor’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 Administrative Agent
shall be entitled to seek a decree requiring specific performance by such
Guarantor of said obligation.
4.2 REMEDIES; DISPOSITION OF THE COLLATERAL. IF AN EVENT OF DEFAULT
SHALL HAVE OCCURRED AND BE CONTINUING, THEN ANY COLLATERAL REPOSSESSED BY THE
ADMINISTRATIVE AGENT UNDER OR PURSUANT TO SECTION 4.1 HEREOF AND ANY OTHER
COLLATERAL WHETHER OR NOT SO REPOSSESSED BY THE ADMINISTRATIVE AGENT, 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 ADMINISTRATIVE AGENT MAY, IN
COMPLIANCE WITH ANY MANDATORY REQUIREMENTS OF APPLICABLE LAW, DETERMINE TO BE
COMMERCIALLY REASONABLE. ANY OF THE COLLATERAL MAY BE SO SOLD, LEASED OR
OTHERWISE DISPOSED OF, IN THE CONDITION IN WHICH THE SAME EXISTED WHEN TAKEN BY
THE ADMINISTRATIVE AGENT OR AFTER ANY OVERHAUL OR REPAIR AT THE EXPENSE OF THE
RELEVANT GUARANTOR WHICH THE ADMINISTRATIVE AGENT 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’ WRITTEN NOTICE TO THE RELEVANT GUARANTOR 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 SUCH GUARANTOR OR ANY NOMINEE OF SUCH GUARANTOR
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’ WRITTEN NOTICE TO THE RELEVANT
GUARANTOR 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
ADMINISTRATIVE AGENT’S OPTION, BE SUBJECT TO RESERVE), AFTER PUBLICATION OF
NOTICE OF SUCH AUCTION NOT LESS THAN 10 DAYS PRIOR THERETO IN TWO NEWSPAPERS IN
GENERAL CIRCULATION IN THE CITY OF NEW YORK OR IN SUCH OTHER LOCATIONS AS MAY BE
NECESSARY IN ORDER FOR THE SALE TO BE "COMMERCIALLY REASONABLE" (AS SUCH TERM IS
USED IN ARTICLE 9 PART V OF THE NEW YORK UNIFORM COMMERCIAL CODE). TO THE
EXTENT PERMITTED BY ANY SUCH REQUIREMENT OF LAW, THE ADMINISTRATIVE AGENT AND
THE SECURED CREDITORS MAY BID FOR AND BECOME THE PURCHASER OF THE COLLATERAL OR
ANY ITEM THEREOF, OFFERED FOR SALE IN ACCORDANCE WITH THIS SECTION WITHOUT
ACCOUNTABILITY TO SUCH GUARANTOR. IF, UNDER MANDATORY REQUIREMENTS OF
APPLICABLE LAW, THE ADMINISTRATIVE AGENT SHALL BE REQUIRED TO MAKE DISPOSITION
OF THE COLLATERAL WITHIN A PERIOD OF TIME WHICH DOES NOT PERMIT THE GIVING OF
NOTICE TO THE RELEVANT GUARANTOR AS HEREINABOVE SPECIFIED, THE ADMINISTRATIVE
AGENT NEED GIVE SUCH GUARANTOR ONLY SUCH NOTICE OF DISPOSITION AS SHALL BE
REASONABLY PRACTICABLE IN VIEW OF SUCH MANDATORY REQUIREMENTS OF APPLICABLE
LAW. EACH GUARANTOR 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
GUARANTOR’S EXPENSE.
4.3 WAIVER OF CLAIMS. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT,
EACH GUARANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE
AND JUDICIAL HEARING IN CONNECTION WITH THE ADMINISTRATIVE AGENT’S TAKING
POSSESSION OR THE ADMINISTRATIVE AGENT’S DISPOSITION OF ANY OF THE COLLATERAL,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH GUARANTOR WOULD
OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF
ANY STATE, AND EACH GUARANTOR HEREBY FURTHER WAIVES, TO THE EXTENT PERMITTED BY
LAW:
(a) all damages occasioned by such taking of possession except any
damages which are the direct result of the Administrative Agent’s gross
negligence or willful misconduct;
(b) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Administrative Agent’s
rights hereunder; and
(c) 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 such Guarantor, 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 such Guarantor therein and thereto, and
shall be a perpetual bar both at law and in equity against such Guarantor 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 Guarantor.
4.4 APPLICATION OF PROCEEDS. (A) ALL MONEYS COLLECTED BY THE
ADMINISTRATIVE AGENT (OR, TO THE EXTENT THE PLEDGE AGREEMENT OR ANY MORTGAGE TO
WHICH ANY GUARANTOR IS A PARTY REQUIRES PROCEEDS OF COLLATERAL UNDER SUCH
AGREEMENT TO BE APPLIED IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT, THE
PLEDGEE OR MORTGAGEE UNDER SUCH OTHER AGREEMENT) UPON ANY SALE OR OTHER
DISPOSITION OF THE COLLATERAL, TOGETHER WITH ALL OTHER MONEYS RECEIVED BY THE
ADMINISTRATIVE AGENT HEREUNDER, SHALL BE APPLIED AS FOLLOWS: (I) FIRST, TO THE
PAYMENT OF ALL AMOUNTS OWING THE ADMINISTRATIVE AGENT OF THE TYPE DESCRIBED IN
CLAUSES (III) AND (IV) OF THE DEFINITION OF “OBLIGATIONS”;
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding Primary
Obligations shall be paid to the Secured Creditors as provided in Section 4.4(e)
hereof, with each Secured Creditor receiving an amount equal to such outstanding
Primary Obligations or, if the proceeds are insufficient to pay in full all such
Primary Obligations, its Pro Rata Share of the amount remaining to be
distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations shall be paid to the Secured Creditors as
provided in Section 4.4(e), with each Secured Creditor receiving an amount equal
to its outstanding Secondary Obligations or, if the proceeds are insufficient to
pay in full all such Secondary Obligations, its Pro Rata Share of the amount
remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, and following
the termination of this Agreement pursuant to Section 7.9(a) hereof, to such
Guarantor or to whomever may be lawfully entitled to receive such surplus.
(b) For purposes of this Agreement (i) “Pro Rata Share” shall mean,
when calculating a Secured Creditor’s portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor’s Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary Obligations or Secondary Obligations,
as the case may be, (ii) “Primary Obligations” shall mean (A) in the case of the
Credit Agreement Obligations, all principal of, and interest on, all Loans, all
Unpaid Drawings theretofore made (together with all interest accrued thereon),
and the aggregate Stated Amounts of all Letters of Credit issued (or deemed
issued) under the Credit Agreement, and all Fees and (B) in the case of the
Other Obligations, all amounts due under the Interest Rate Protection or Other
Hedging Agreements (other than indemnities, fees (including, without limitation,
attorneys’ fees) and similar obligations and liabilities) and (iii) “Secondary
Obligations” shall mean all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their respective
Pro Rata Shares, the amounts received by such Secured Creditors hereunder shall
be applied (for purposes of making determinations under this Section 4.4 only)
(i) first, to their Primary Obligations and (ii) second, to their Secondary
Obligations. If any payment to any Secured Creditor of its Pro Rata Share of
any distribution would result in overpayment to such Secured Creditor, such
excess amount shall instead be distributed in respect of the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of the other Secured
Creditors, with each Secured Creditor whose Primary Obligations or Secondary
Obligations, as the case may be, have not been paid in full to receive an amount
equal to such excess amount multiplied by a fraction the numerator of which is
the unpaid Primary Obligations or Secondary Obligations, as the case may be, of
such Secured Creditor and the denominator of which is the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of all Secured
Creditors entitled to such distribution.
(d) Each of the Secured Creditors agrees and acknowledges that if the
Bank Creditors are to receive a distribution on account of undrawn amounts with
respect to Letters of Credit issued (or deemed issued) under the Credit
Agreement (which shall only occur after all outstanding Loans and Unpaid
Drawings with respect to such Letters of Credit have been paid in full), such
amounts shall be paid to the Agent under the Credit Agreement and held by it,
for the equal and ratable benefit of the Bank Creditors, as cash security for
the repayment of Obligations owing to the Bank Creditors as such. If any
amounts are held as cash security pursuant to the immediately preceding
sentence, then upon the termination of all outstanding Letters of Credit, and
after the application of all such cash security to the repayment of all
Obligations owing to the Bank Creditors after giving effect to the termination
of all such Letters of Credit, if there remains any excess cash, such excess
cash shall be returned by the Agent to the Administrative Agent for distribution
in accordance with Section 4.4(a) hereof.
(e) Except as set forth in Section 4.4(d) hereof, all payments
required to be made hereunder shall be made (i) if to the Bank Creditors, to the
Agent under the Credit Agreement for the account of the Bank Creditors, and (ii)
if to the Other Creditors, to the trustee, paying agent or other similar
representative (each a “Representative”) for the Other Creditors or, in the
absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance with
this Section 4.4, the Administrative Agent shall be entitled to rely upon (i)
the Agent under the Credit Agreement and (ii) the Representative for the Other
Creditors or, in the absence of such a Representative, upon the Other Creditors
for a determination (which the Agent, each Representative for any Secured
Creditors and the Secured Creditors agree (or shall agree) to provide upon
request of the Administrative Agent) of the outstanding Primary Obligations and
Secondary Obligations owed to the Bank Creditors or the Other Creditors, as the
case may be. Unless it has actual knowledge (including by way of written notice
from a Bank Creditor or an Other Creditor) to the contrary, the Agent and each
Representative, in furnishing information pursuant to the preceding sentence,
and the Administrative Agent, in acting hereunder, shall be entitled to assume
that no Secondary Obligations are outstanding. Unless it has actual knowledge
(including by way of written notice from an Other Creditor) to the contrary, the
Administrative Agent, in acting hereunder, shall be entitled to assume that no
Interest Rate Protection or Other Hedging Agreements are in existence.
(g) It is understood and agreed that each Guarantor shall remain
jointly and severally liable to the extent of any deficiency between the amount
of the proceeds of the Collateral hereunder and the aggregate amount of the sums
referred to in clauses (i) through (iii), inclusive, of Section 4.4(a) hereof.
4.5 REMEDIES CUMULATIVE. EACH AND EVERY RIGHT, POWER AND REMEDY
HEREBY SPECIFICALLY GIVEN TO THE ADMINISTRATIVE AGENT SHALL BE IN ADDITION TO
EVERY OTHER RIGHT, POWER AND REMEDY SPECIFICALLY GIVEN UNDER THIS AGREEMENT, THE
INTEREST RATE PROTECTION OR OTHER HEDGING AGREEMENTS, THE OTHER LOAN DOCUMENTS
OR NOW OR HEREAFTER EXISTING AT LAW OR 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 ADMINISTRATIVE AGENT. 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 ADMINISTRATIVE AGENT
IN THE EXERCISE OF ANY SUCH RIGHT, POWER OR REMEDY AND NO RENEWAL OR EXTENSION
OF ANY OF THE OBLIGATIONS AND NO COURSE OF DEALING BETWEEN ANY GUARANTOR AND THE
ADMINISTRATIVE AGENT OR ANY HOLDER 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
GUARANTOR 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 ADMINISTRATIVE AGENT TO ANY OTHER OR FURTHER ACTION IN ANY CIRCUMSTANCES
WITHOUT NOTICE OR DEMAND. IN THE EVENT THAT THE ADMINISTRATIVE AGENT SHALL
BRING ANY SUIT TO ENFORCE ANY OF ITS RIGHTS HEREUNDER AND SHALL BE ENTITLED TO
JUDGMENT, THEN IN SUCH SUIT THE ADMINISTRATIVE AGENT MAY RECOVER REASONABLE
EXPENSES, INCLUDING REASONABLE ATTORNEYS’ FEES, AND THE AMOUNTS THEREOF SHALL BE
INCLUDED IN SUCH JUDGMENT.
4.6 DISCONTINUANCE OF PROCEEDINGS. IN CASE THE ADMINISTRATIVE AGENT
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 ADMINISTRATIVE AGENT, THEN AND IN EVERY SUCH CASE
EACH GUARANTOR, THE ADMINISTRATIVE AGENT 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 (EXCEPT TO THE EXTENT OF ANY SUCH ADVERSE DETERMINATION), AND ALL
RIGHTS, REMEDIES AND POWERS OF THE ADMINISTRATIVE AGENT SHALL CONTINUE (A) AS IF
NO SUCH PROCEEDING HAD BEEN INSTITUTED, IN THE CASE OF ANY SUCH PROCEEDING SO
DISCONTINUED OR ABANDONED, OR (B) AS IF NO PROCEEDING HAD BEEN INSTITUTED,
EXCEPT TO THE EXTENT OF THE DETERMINATION, IN THE CASE OF ANY SUCH PROCEEDING SO
ADVERSELY DETERMINED.
ARTICLE V
INDEMNITY
5.1 INDEMNITY. (A) EACH GUARANTOR AGREES TO INDEMNIFY AND HOLD
HARMLESS THE ADMINISTRATIVE AGENT AND EACH SECURED CREDITOR AND THEIR RESPECTIVE
SUCCESSORS, ASSIGNS, EMPLOYEES, AGENTS AND SERVANTS (INDIVIDUALLY AN
“INDEMNITEE,” AND COLLECTIVELY THE “INDEMNITEES”) FROM AND AGAINST ANY AND ALL
CLAIMS, DEMANDS, LOSSES, JUDGMENTS AND LIABILITIES (INCLUDING LIABILITIES FOR
PENALTIES) OF WHATSOEVER KIND OR NATURE, AND TO REIMBURSE EACH INDEMNITEE FOR
ALL COSTS AND EXPENSES, INCLUDING REASONABLE ATTORNEYS’ FEES, GROWING OUT OF OR
RESULTING FROM THIS AGREEMENT OR THE EXERCISE BY ANY INDEMNITEE OF ANY RIGHT OR
REMEDY GRANTED TO IT HEREUNDER OR UNDER ANY INTEREST RATE HEDGING AGREEMENT OR
UNDER ANY OTHER LOAN DOCUMENT (BUT EXCLUDING ANY CLAIMS, DEMANDS, LOSSES,
JUDGMENTS AND LIABILITIES OR EXPENSES TO THE EXTENT INCURRED BY REASON OF GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE). IF AND TO THE EXTENT THAT
THE OBLIGATIONS OF SUCH GUARANTOR UNDER THIS SECTION 5.1(A) ARE UNENFORCEABLE
FOR ANY REASON, SUCH GUARANTOR HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO
THE PAYMENT AND SATISFACTION OF SUCH OBLIGATIONS WHICH IS PERMISSIBLE UNDER
APPLICABLE LAW.
(b) Without limiting the application of Section 5.1(a) hereof, each
Guarantor agrees to pay, or reimburse the Administrative Agent 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 Administrative
Agent’s Liens on, and security interest in, the Collateral, including, without
limitation, all reasonable 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 reasonable fees, costs and expenses
in connection with protecting, maintaining or preserving the Collateral and the
Administrative Agent’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 5.1(a) or (b) hereof,
each Guarantor agrees 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 such Guarantor in this Agreement, any Interest Rate
Protection or Other Hedging Agreement, any other Loan Document or in any writing
contemplated by or made or delivered pursuant to or in connection with this
Agreement, any Interest Rate Protection or Other Hedging Agreement or any other
Loan Document.
(d) If and to the extent that the obligations of any Guarantor under
this Section 5.1 are unenforceable for any reason, each Guarantor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
5.2 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 PRIOR TO
THE RELEASE OF THE COLLATERAL PURSUANT TO THE TERMS HEREOF. THE INDEMNITY
OBLIGATIONS OF EACH GUARANTOR CONTAINED IN THIS ARTICLE V SHALL CONTINUE IN FULL
FORCE AND EFFECT NOTWITHSTANDING THE FULL PAYMENT OF ALL THE NOTES ISSUED UNDER
THE CREDIT AGREEMENT, THE TERMINATION OF ALL INTEREST RATE PROTECTION OR OTHER
HEDGING AGREEMENTS AND THE PAYMENT OF ALL OTHER OBLIGATIONS (BUT EXCLUDING ANY
UNASSERTED CONTINGENT AND INDEMNIFICATION OBLIGATIONS WHICH SURVIVE THE
TERMINATION HEREOF) AND NOTWITHSTANDING THE DISCHARGE THEREOF.
ARTICLE VI
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.
"Account" shall have the meaning provided in the Uniform Commercial Code.
“Administrative Agent” shall have the meaning provided in the first paragraph of
this Agreement.
“Agent” shall have the meaning provided in the first WHEREAS clause of this
Agreement.
“Agreement” shall mean this Security Agreement as the same may be modified,
supplemented, extended, renewed, replaced, restated or amended from time to time
in accordance with its terms.
"Guarantor" shall have the meaning provided in the first paragraph of this
Agreement.
“Bank Creditor” shall have the meaning provided in the first paragraph of this
Agreement.
“Borrower” shall have the meaning provided in the first WHEREAS clause of this
Agreement.
“Chattel Paper” shall have the meaning provided in the Uniform Commercial Code.
“Class” shall have the meaning provided in Section 7.2 of this Agreement.
“Collateral” shall have the meaning provided in Section 1.1(a) of this
Agreement.
“Contract Rights” shall mean all rights of an Guarantor (including, without
limitation, all rights to payment) under each Contract.
“Contracts” shall mean all contracts between an Guarantor and one or more
additional parties (including, without limitation, (i) each partnership
agreement to which an Guarantor is a party and (ii) any Interest Rate Protection
or Other Hedging Agreements), but excluding licenses, agreements and leases,
which are immaterial to the operations of an Guarantor, to the extent that the
terms thereof prohibit the assignment of, or granting of a security interest in,
such licenses, agreements or leases.
“Credit Agreement” shall have the meaning provided in the first WHEREAS clause
of this Agreement.
“Credit Agreement Obligations” shall have the meaning provided in the definition
of “Obligations” in this Article VI.
“Default” shall mean any event which, with notice or lapse of time, or both,
would constitute an Event of Default.
“Documents” shall have the meaning provided in the Uniform Commercial Code.
“Equipment” shall mean any “equipment,” as such term is defined in the Uniform
Commercial Code, now or hereafter owned by an Guarantor.
“Event of Default” shall mean any Event of Default under, and as defined in, the
Credit Agreement and shall in any event, without limitation, include any payment
default on any of the Obligations after the expiration of any applicable grace
period.
“General Intangibles” shall have the meaning provided in the Uniform Commercial
Code.
“Goods” shall have the meaning provided in the Uniform Commercial Code.
“Indemnitee” shall have the meaning provided in Section 5.1 of this Agreement.
“Instrument” shall have the meaning provided in Article 9 of the Uniform
Commercial Code.
“Interest Rate Protection or Other Hedging Agreements” shall have the meaning
provided in the first paragraph of this Agreement.
“Inventory” shall mean all “inventory” as such term is defined in the Uniform
Commercial Code, now or hereafter owned by an Guarantor.
“Investment Property” shall have the meaning ascribed thereto in Article 9 of
the UCC.
"LC Creditor" shall have the meaning provided in the first WHEREAS clause of
this Agreement.
“Lenders” shall have the meaning provided in the first WHEREAS clause of this
Agreement.
“Obligations” shall mean (i) the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of all obligations
(including, without limitation, all “Obligations” as such term is defined in the
Credit Agreement and all obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities of
Borrower and each Guarantor now existing or hereafter incurred under, arising
out of or in connection with the Credit Agreement or any other Loan Document to
which Borrower or any Guarantor is a Party and the due performance and
compliance by Borrower and each Guarantor with all of the terms, conditions and
agreements contained in each such Loan Document (all such obligations and
liabilities being herein collectively called the “Credit Agreement
Obligations”); (ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of Borrower now existing or
hereafter incurred under, arising out of or in connection with (x) any Interest
Rate Protection or Other Hedging Agreement, whether such Interest Rate
Protection or Other Hedging Agreement is now in existence or hereafter arising
and the due performance and compliance by Borrower with all of the terms,
conditions and agreements contained therein and (y) the US Bank Letter of Credit
Facility up to a maximum amount of $2,000,000 (provided that at no time shall
there be more than $2,000,000 under the US Bank Letter of Credit Facility
secured by the Security Documents) (all such obligations and liabilities
described in this clause (ii) being herein collectively called the “Other
Obligations”); (iii) any and all sums advanced by the Administrative Agent in
order to preserve the Collateral or preserve its security interest in the
Collateral; (iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of Borrower or any
Guarantor referred to in clauses (i) and (ii), after an Event of Default shall
have occurred and be continuing, the reasonable expenses of taking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, or of any exercise by the Administrative Agent of its rights
hereunder, together with reasonable attorneys’ fees and court costs; and (v) all
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement under Section 6.1 of this Agreement. It is 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.
“Other Creditors” shall have the meaning provided in the first paragraph of this
Agreement.
“Other Obligations” shall have the meaning provided in the definition of
“Obligations” in this Article VI.
“Permitted Filings” shall mean any filing or similar item that is a matter of
public record on the date of this Agreement.
“Primary Obligations” shall have the meaning provided in Section 4.4(b) of this
Agreement.
“Pro Rata Share” shall have the meaning provided in Section 4.4(b) of this
Agreement.
“Proceeds” shall have the meaning provided in the Uniform Commercial Code.
“Representative” shall have the meaning provided in Section 5.4(e) of this
Agreement.
“Required Secured Creditors” shall mean (i) the Required Lenders (or, to the
extent required by Article XI of the Credit Agreement, all of the Lenders) under
the Credit Agreement so long as any Credit Agreement Obligations remain
outstanding and (ii) in any situation not covered by preceding clause (i), the
holders of a majority of the outstanding principal amount of the Other
Obligations.
“Requisite Creditors” shall have the meaning provided in Section 7.2 of this
Agreement.
“Secondary Obligations” shall have the meaning provided in Section 4.4(b) of
this Agreement.
“Secured Creditors” shall have the meaning provided in the first paragraph of
this Agreement.
“Termination Date” shall have the meaning provided in Section 7.9 of this
Agreement.
”Uniform Commercial Code" or ”UCC" shall mean the Uniform Commercial Code as now
or hereafter in effect from time to time in the State of New York or any other
applicable jurisdiction.
"US Bank Letter of Credit Facility" means that certain revolving letter of
credit facility in effect on the date hereof pursuant to that certain Continuing
Reimbursement Agreement for Commercial Letters of Credit, dated as of July 14,
2000 by and among the LC Creditor and the Borrower providing for commercial
letters of credit; provided, however, that at no time shall there be more than a
maximum amount of $2,000,000 under the US Bank Letter of Credit Facility secured
by the Security Documents.
ARTICLE VII
MISCELLANEOUS
7.1 NOTICES. ALL SUCH NOTICES AND COMMUNICATIONS HEREUNDER SHALL BE
SENT OR DELIVERED IN ACCORDANCE WITH THE TERMS OF THE CREDIT AGREEMENT.
7.2 WAIVER; AMENDMENT. NONE OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT MAY BE CHANGED, WAIVED, MODIFIED OR VARIED IN ANY MANNER WHATSOEVER
UNLESS IN WRITING DULY SIGNED BY EACH GUARANTOR AND THE ADMINISTRATIVE AGENT
(WITH THE WRITTEN CONSENT OF THE REQUIRED LENDERS, OR TO THE EXTENT REQUIRED BY
SECTION 11.1 OF THE CREDIT AGREEMENT, ALL THE LENDERS); PROVIDED, HOWEVER, THAT
ANY CHANGE, WAIVER, MODIFICATION OR VARIANCE AFFECTING THE RIGHTS AND BENEFITS
OF A SINGLE CLASS OF SECURED CREDITORS (AND NOT ALL SECURED CREDITORS IN A LIKE
OR SIMILAR MANNER) SHALL REQUIRE THE WRITTEN CONSENT OF THE REQUISITE CREDITORS
OF SUCH AFFECTED CLASS. FOR THE PURPOSE OF THIS AGREEMENT, THE TERM “CLASS”
SHALL MEAN EACH CLASS OF SECURED CREDITORS, I.E., WHETHER (I) THE BANK CREDITORS
AS HOLDERS OF THE CREDIT AGREEMENT OBLIGATIONS OR (II) THE OTHER CREDITORS AS
THE HOLDERS OF THE OTHER OBLIGATIONS; AND THE TERM “REQUISITE CREDITORS” OF ANY
CLASS SHALL MEAN EACH OF (A) WITH RESPECT TO THE CREDIT AGREEMENT OBLIGATIONS,
THE REQUIRED LENDERS AND (B) WITH RESPECT TO THE OTHER OBLIGATIONS, THE HOLDERS
OF AT LEAST A MAJORITY OF ALL OBLIGATIONS OUTSTANDING FROM TIME TO TIME UNDER
THE INTEREST RATE PROTECTION AGREEMENTS OR OTHER HEDGING AGREEMENTS.
7.3 OBLIGATIONS ABSOLUTE. THE OBLIGATIONS OF EACH GUARANTOR 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 GUARANTOR; (B) ANY
EXERCISE OR NON-EXERCISE, OR ANY WAIVER OF, ANY RIGHT, REMEDY, POWER OR
PRIVILEGE UNDER OR IN RESPECT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY
INTEREST RATE PROTECTION OR OTHER HEDGING AGREEMENT EXCEPT AS SPECIFICALLY SET
FORTH IN A WAIVER GRANTED PURSUANT TO SECTION 7.2 HEREOF; OR (C) ANY AMENDMENT
TO OR MODIFICATION OF ANY LOAN DOCUMENT OR ANY INTEREST RATE PROTECTION OR OTHER
HEDGING AGREEMENT OR ANY SECURITY FOR ANY OF THE OBLIGATIONS; WHETHER OR NOT
SUCH GUARANTOR SHALL HAVE NOTICE OR KNOWLEDGE OF ANY OF THE FOREGOING.
7.4 SUCCESSORS AND ASSIGNS. THIS AGREEMENT SHALL BE BINDING UPON THE
PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS AND SHALL INURE TO
THE BENEFIT OF THE ADMINISTRATIVE AGENT, EACH SECURED CREDITOR AND EACH
GUARANTOR AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, PROVIDED THAT NO
GUARANTOR MAY TRANSFER OR ASSIGN ANY OR ALL OF ITS RIGHTS OR OBLIGATIONS
HEREUNDER WITHOUT THE WRITTEN CONSENT OF THE REQUIRED SECURED CREDITORS. ALL
AGREEMENTS, STATEMENTS, REPRESENTATIONS AND WARRANTIES MADE BY EACH GUARANTOR
HEREIN OR IN ANY CERTIFICATE OR OTHER INSTRUMENT DELIVERED BY SUCH GUARANTOR OR
ON ITS BEHALF UNDER THIS AGREEMENT SHALL BE CONSIDERED TO HAVE BEEN RELIED UPON
BY THE SECURED CREDITORS AND SHALL SURVIVE THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE INTEREST RATE PROTECTION OR OTHER
HEDGING AGREEMENTS REGARDLESS OF ANY INVESTIGATION MADE BY THE SECURED CREDITORS
OR ON THEIR BEHALF.
7.5 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.
7.6 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.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF SAID STATE,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
7.8 EACH GUARANTOR’S DUTIES. IT IS EXPRESSLY AGREED, ANYTHING HEREIN
CONTAINED TO THE CONTRARY NOTWITHSTANDING, THAT EACH GUARANTOR SHALL REMAIN
LIABLE TO PERFORM ALL OF THE OBLIGATIONS, IF ANY, ASSUMED BY IT WITH RESPECT TO
THE COLLATERAL AND THE ADMINISTRATIVE AGENT SHALL NOT HAVE ANY OBLIGATIONS OR
LIABILITIES WITH RESPECT TO ANY COLLATERAL BY REASON OF OR ARISING OUT OF THIS
AGREEMENT, NOR SHALL THE ADMINISTRATIVE AGENT BE REQUIRED OR OBLIGATED IN ANY
MANNER TO PERFORM OR FULFILL ANY OF THE OBLIGATIONS OF SUCH GUARANTOR UNDER OR
WITH RESPECT TO ANY COLLATERAL.
7.9 Termination; Release. (a) After the Termination Date, this
Agreement shall automatically terminate (provided that all indemnities set forth
herein including, without limitation, in Section 5.1 hereof shall survive such
termination) and the Administrative Agent, at the request and expense of the
Guarantors, will execute and deliver to each Guarantor 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 each Guarantor (without recourse and
without any representation or warranty) such of the Collateral of such Guarantor
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 Total Commitment and all Interest Rate Protection or Other
Hedging Agreements have been terminated, no Note under the Credit Agreement is
outstanding (and all Loans have been repaid in full), all Letters of Credit have
been terminated and all Obligations (as defined in the Credit Agreement) then
outstanding (other than any indemnities described in Section 5.1 hereof and in
Section 11.4 of the Credit Agreement with respect to which no claim has been
asserted) have been paid in full in cash.
(b) In the event that any part of the Collateral is sold or otherwise
disposed of in connection with a sale or other disposition permitted by Section
8.7 of the Credit Agreement or is otherwise released at the direction of the
Required Lenders (or all the Lenders if required by Section 11.1 of the Credit
Agreement) and the proceeds of such sale or sales or from such release are
applied in accordance with the provisions of Section 4.4 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 Administrative
Agent, at the request and expense of the Guarantors, will duly assign, transfer
and deliver to the relevant Guarantor (without recourse and without any
representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and has not theretofore been released pursuant to this
Agreement. The Administrative Agent shall also be entitled to and is hereby
authorized and directed to duly assign, transfer and deliver such of the
Collateral as provided in Section 11.20(b) of the Credit Agreement.
(c) At any time that an Guarantor desires that the Administrative
Agent take any action to acknowledge or give effect to any release of Collateral
pursuant to the foregoing Section 7.9(a) or (b), as the case may be, it shall
deliver to the Administrative Agent a certificate signed by an Authorized
Officer stating that the release of the respective Collateral is permitted
pursuant to Section 7.9(a) or (b), as the case may be.
(d) The Administrative Agent shall have no liability whatsoever to any
Secured Creditor as a result of any release of Collateral by it in accordance
with this Section 7.9.
7.10 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 GUARANTOR AND THE
ADMINISTRATIVE AGENT.
7.11 THE ADMINISTRATIVE AGENT. THE ADMINISTRATIVE AGENT WILL HOLD IN
ACCORDANCE WITH THIS AGREEMENT ALL ITEMS OF THE COLLATERAL AT ANY TIME RECEIVED
UNDER THIS AGREEMENT. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES
HERETO AND EACH SECURED CREDITOR, BY ACCEPTING THE BENEFITS OF THIS AGREEMENT,
ACKNOWLEDGES AND AGREES THAT THE OBLIGATIONS OF THE ADMINISTRATIVE AGENT AS
HOLDER OF THE COLLATERAL AND INTERESTS THEREIN AND WITH RESPECT TO THE
DISPOSITION THEREOF, AND OTHERWISE UNDER THIS AGREEMENT, ARE ONLY THOSE
EXPRESSLY SET FORTH IN THIS AGREEMENT AND AS PROVIDED IN THE UNIFORM COMMERCIAL
CODE IN THE STATE OF NEW YORK. THE ADMINISTRATIVE AGENT SHALL ACT HEREUNDER ON
THE TERMS AND CONDITIONS SET FORTH IN ARTICLE IX AND SECTION 11.18 OF THE CREDIT
AGREEMENT.
7.12 US Bank. (a) US Bank as LC Creditor under the US
Bank Letter of Credit Facility and in its capacity as a Secured Party hereunder
hereby irrevocably designates and appoints Bankers Trust Company as
Administrative Agent under this Agreement and irrevocably authorizes Bankers
Trust Company to act as its Administrative Agent and to take such action on its
behalf under the provisions of this Agreement and to exercise such powers and
perform such duties as are expressly delegated to the Administrative Agent under
this Agreement and the Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary in
this Agreement, the Administrative Agent shall not have any duties or
responsibilities with respect to US Bank in its capacity LC Creditor under the
US Bank Letter of Credit Facility or any fiduciary relationship with US Bank,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Administrative Agent.
(b) For avoidance of doubt, US Bank expressly
acknowledges that all rights and remedies of the Administrative Agent hereunder
shall be exercised by the Administrative Agent in accordance with the applicable
provisions of the Credit Agreement, and no consent of, or notice to, US Bank
shall be required with respect thereto and US Bank shall not undertake any
separate action with respect to the Collateral. The sole right of US Bank
hereunder shall be to receive its proportionate share of any proceeds received
by the Administrative Agent hereunder in accordance with the terms hereof.
7.13 Additional Guarantors. It is understood and agreed
that any Subsidiary of Borrower that is required to become a party to this
Agreement after the Restatement Date pursuant to Section 7.12 of the Credit
Agreement shall automatically become a party hereunder upon the execution and
delivery by such Subsidiary of an instrument in the form of Annex D hereto and
the delivery of same to the Administrative Agent, with the same force and effect
as if originally named as a party herein. The execution and delivery of any
instrument adding an additional party to this Agreement shall not require the
consent of any party hereunder or of any Secured Creditor. The rights and
obligations of each party hereunder shall remain in full force and effect
notwithstanding the addition of any new party hereto.
[Signature Page Follows]
. 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.
VISION-EASE LENS, INC.,
as Guarantor
By:
/s/Bradley D. Carlson
Name:
Bradley D. Carlson
Title:
Treasurer
VISION-EASE LENS AZUSA, INC.,
as Guarantor
By:
/s/Bradley D. Carlson
Name:
Bradley D. Carlson
Title:
Treasurer
BANKERS TRUST COMPANY,
as Administrative Agent
By:
/s/ Robert Telesca
Name:
Robert Telesca
Title:
Vice President
U.S. BANK NATIONAL ASSOCIATION
By:
/s/ William J. Umscheid
Name:
William J. Umscheid
Title:
Vice President
ANNEX A
to
Security Agreement
SCHEDULE OF CHIEF EXECUTIVE OFFICES
(a) Chief Executive Office
One Meridian Crossings, Suite 850
Minneapolis, Minnesota 55423
(b) State of Incorporation
Minnesota
ANNEX B
to
Security Agreement
SCHEDULE OF INVENTORY
AND EQUIPMENT LOCATIONS
ARTICLE VIII
Vision-Ease Lens, Inc.
Hennepin County, Minnesota
Anoka County, Minnesota
Stearns County, Minnesota
Vision-Ease Lens Azusa, Inc.
Hennepin County, Minnesota
Los Angeles County, California
ANNEX C
to
Security Agreement
SCHEDULE OF TRADE, FICTITIOUS AND OTHER NAMES
Vision-Ease Lens, Inc.:
Vision-Ease Lens, Inc.
ID#: 41-1837709
Vision-Ease Lens
Vision-Ease
Optifacts
Envia Vision
SunSport
Custom Rx Lab
Vision-Ease Lens Azusa, Inc.:
Vision-Ease Lens Azusa, Inc. ID#:
41-1904176
Vision-Ease Lens Azusa
Vision-Ease Lens
Vision-Ease
SunSport
ANNEX D
to
Subsidiary Guarantor Security Agreement
ADDITION OF NEW GUARANTOR
TO SUBSIDIARY GUARANTOR SECURITY AGREEMENT
ADDITION OF NEW GUARANTOR TO SUBSIDIARY GUARANTOR SECURITY AGREEMENT (this
"Instrument"), dated as of ___________ __, ______, amending that certain
Subsidiary Guarantor Security Agreement dated as of October __, 2001 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the "Agreement") by and among the Guarantors (the "Guarantors") party
thereto and Bankers Trust Company, as Administrative Agent (the "Administrative
Agent") for the Secured Creditors.
Reference is made to the Amended and Restated Credit Agreement, dated as of June
25, 1998, by and among BMC Industries, Inc. (the "Borrower"), the financial
institutions (the “Lenders”) from time to time party thereto and Bankers Trust
Company, as Administrative Agent (together with any successor agent, the
“Agent”) providing for the making of Loans and the issuance of, and
participation in, Letters of Credit as contemplated therein (as used herein, the
term “Credit Agreement” means the Credit Agreement described above in this
paragraph, as in effect on October __, 2001 and as amended by that certain
Second Amendment and Restatement Agreement dated as of the October _, 2001, as
the same may be amended, modified, extended, renewed, replaced, restated or
supplemented from time to time, and including any agreement extending the
maturity of or restructuring of all or any portion of the Indebtedness under
such agreement or any successor agreements).
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Agreement and the Credit Agreement.
The Guarantors have entered into the Agreement in order to induce the Lenders to
extend credit pursuant to the Credit Agreement and to induce the Other Creditors
to extend Interest Rate Protection or other Hedging Agreements. Pursuant to
Sections 7.12 of the Credit Agreement, the undersigned is required to enter into
the Agreement. Section 7.13 of the Agreement provides that additional parties
may become a party under the Agreement by execution and delivery of an
instrument in the form of this Instrument. The undersigned (the "New Party") is
executing this Instrument in accordance with the requirements of the Credit
Agreement to become a party under the Agreement in order to induce the Lenders
to extend and continue the extension of credit pursuant to the Credit Agreement.
Accordingly, the New Party agrees as follows:
SECTION 1. In accordance with the Agreement, the New Party by its
signature below becomes a party to the Agreement with the same force and effect
as if originally named therein as a party and the New Party hereby (a) agrees to
all the terms and warrants that the representations and warranties made by it as
a party thereunder are true and correct in all material respects on and as of
the date hereof. Each reference to an "Guarantor" in the Agreement shall be
deemed to include the New Party. The Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Party represents and warrants to the Administrative
Agent and the Secured Creditors that this Instrument has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law).
SECTION 3. This Instrument may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Instrument shall become effective when the
Administrative Agent shall have received a counterpart of this Instrument that
bears the signatures of the New Party.
SECTION 4. Except as expressly supplemented hereby, the Agreement
shall remain in full force and effect.
SECTION 5. THIS INSTRUMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
SECTION 6. All communications and notices hereunder shall be in
writing and given as provided in the Agreement. All communications and notices
hereunder to the New Party shall be given to it at the address set forth under
its signature below.
IN WITNESS WHEREOF, the New Party has duly executed this Addition of New
Guarantor to Subsidiary Guarantor Security Agreement as of the day and year
first above written.
[NAME OF NEW PARTY],
By:
Name:
Title:
Address:
|
EXECUTION COPY
AMENDMENT NO. 4
AMENDMENT NO. 4 dated as of March 16, 2001 (this "Agreement") among
SEQUA CORPORATION (the "Borrower"), the LENDERS party hereto and THE CHASE
MANHATTAN BANK, as Administrative Agent (in such capacity, the "Administrative
Agent").
The Borrower, certain Subsidiary Guarantors, certain Lenders and
the Administrative Agent are parties to a Credit Agreement dated as of October
10, 1997 (as heretofore amended, the "Credit Agreement") providing, subject to
the terms and conditions thereof, for loans to be made by said Lenders to the
Borrower in an aggregate principal amount not exceeding $150,000,000. Except as
otherwise defined herein, terms defined in the Credit Agreement have the same
respective meanings when used herein.
The Borrower has requested that the Required Lenders amend the
Credit Agreement as hereinafter provided, and the Required Lenders have
consented to such amendment. Accordingly, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS. Except as otherwise defined in this
Agreement, terms defined in the Credit Agreement have the same respective
meanings when used herein.
SECTION 2. AMENDMENTS. Effective on the Amendment Effective Date,
the Credit Agreement is amended as follows:
(1) Section 1.01 of the Credit Agreement is hereby amended as follows:
(a) The pricing grid in the definition of "Applicable Rate" is amended
to read in its entirety as follows:
CASH FLOW RATIO
ABR SPREAD
EURODOLLAR
SPREAD
COMMITMENT FEE
RATE
Less than or equal to 2.75
-0-
1.000%
.300%
Greater than 2.75 and less than or equal to 3.25
.250%
1.250%
.325%
Greater than 3.25 and less than or equal to 3.75
.500%
1.500%
.350%
Greater than 3.75 and less than or equal to 4.25
.750%
1.750%
.500%
Greater than 4.25
1.00%
2.000%
.500%
(b) The following new terms are added in the appropriate alphabetical
locations:
"2001 Senior Notes" means the 2001 senior notes issued by the Borrower.
"Bond Issuance Date" means the date on which the 2001 Senior Notes are
issued.
"Bond Issuance Election Date" means the date on which the Loans are
prepaid as set forth in Section 7.16 (provided that the Bond Issuance Date shall
have occurred on or before June 30, 2001 and that the aggregate principal amount
of 2001 Senior Notes issued on the Bond Issuance Date does not exceed
$200,000,000).
(2) Section 2.08 of the Credit Agreement is amended by adding a new clause
(e) in the appropriate alphabetical location to read as follows:
(e) On the Bond Issuance Election Date, the Commitment of each Lender
shall automatically and permanently be reduced by an amount equal to 50% of its
Commitment as in effect immediately prior to such date if, after giving effect
to such reduction, the total Revolving Exposures would not exceed the total
Commitments. The Borrower will give the Administrative Agent three days' prior
notice of the Bond Issuance Date.
(3) Section 7.13(a) of the Credit Agreement is amended to read in its
entirety as follows:
(a) Cash Flow Ratio. The Borrower will not permit the Cash Flow Ratio to
exceed the following respective ratios at any time during the following
respective periods:
Period
Ratio
From the Effective Date
through December 31, 1997
4.00 to 1
From January 1, 1998
through December 31, 1998
3.75 to 1
From January 1, 1999
through December 31, 1999
3.50 to 1
From January 1, 2000
through December 31, 2000
3.25 to 1
From January 1, 2001
through March 31, 2001
3.90 to 1, or 4.50 to 1 if the
Bond Issuance Election Date
has occurred
From April 1, 2001
through June 30, 2001
3.75 to 1, or 4.15 to 1 if the
Bond Issuance Election
Date has occurred
From July 1, 2001
through December 31, 2001
3.65 to 1, or 4.00 to 1 if the
Bond Issuance Election
Date has occurred
From January 1, 2002
through June 30, 2002
3.50 to 1, or 3.75 to 1 if the
Bond Issuance Election
Date has occurred
From July 1, 2002
and at all times thereafter
3.50 to 1
Notwithstanding the foregoing, at any time during the period beginning on the
date three days before the Bond Issuance Date until and including the date three
days thereafter, the Borrower will not permit the Cash Flow Ratio to exceed 4.90
to 1.
(4) Section 7.13(c) of the Credit Agreement is amended in its
entirety to read as follows:
(c) Fixed Charges Ratio. The Borrower will not permit the Fixed Charges
Ratio to be less than the following respective ratios during the following
respective periods:
Period
Ratio
From the Effective Date
through March 31, 2001
2.25 to 1
From April 1, 2001
and at all times thereafter
2.25 to 1, or 2.15 to 1 if the
Bond Issuance Election
Date has occurred
(5) Article VII of the Credit Agreement is amended by adding a new
Section 7.16 at the end thereof to read as follows:
SECTION 7.16. Proceeds of the Bond Issuance. The Borrower will
use the proceeds of the 2001 Senior Notes to prepay the Loans within three days
after the Bond Issuance Date in a principal amount equal to the amount necessary
so that on the date three days after the Bond Issuance Date, after giving effect
to any such prepayment, the total Revolving Exposures does not exceed
$75,000,000. Such prepayment shall be accompanied by accrued interest to the
extent required by Section 2.12, and any amounts owing pursuant to Section 2.15.
SECTION 3. Up-front Fees. The Borrower hereby agrees to pay on
the Amendment Effective Date to each Lender who executes and delivers this
Agreement on or before the Amendment Effective Date an up-front fee (each, an
"Up-front Fee") in an amount equal to 0.15% of such Lender's Commitment as in
effect on the Amendment Effective Date. Such Up-front Fees shall be payable in
Dollars and immediately available funds, and once paid, shall not be refundable
under any circumstances.
SECTION 4 Conditions Precedent. This Agreement shall become
effective on the date (the "Amendment Effective Date") on which the
Administrative Agent notifies the Borrower that the following conditions have
been satisfied:
(i) This Agreement shall have been duly executed and delivered by
the Borrower, the Required Lenders and the Administrative Agent, and shall have
been acknowledged by the Subsidiary Guarantors as provided on the signature
pages hereof.
(ii) The Administrative Agent shall have received the following
documents, each of which shall be dated the Amendment Effective Date and shall
be satisfactory to the Administrative Agent in form and substance:
(a) Certified copies of (x) the articles of incorporation and by-laws of
the Borrower, (y) corporate resolutions evidencing the authority for and the
validity of this Agreement and the Credit Agreement as amended hereby, and (z)
all documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the Credit Agreement as
amended hereby.
(b) A secretary's certificate of the Borrower certifying the names and
true signatures of the officers of the Borrower authorized to sign this
Agreement and the other documents to be delivered hereunder.
(c) An opinion of Stuart Z. Krinsly, General Counsel of the Borrower,
substantially in the form of Exhibit C to the Credit Agreement (with appropriate
modifications to reflect the amendment thereof contemplated hereby).
(iii) The Administrative Agent shall have received evidence of the
payment of (x) all Up-front Fees, (y) all reasonable out-of pocket expenses of
the Administrative Agent, including fees and disbursements of special New York
counsel to the Administrative Agent, in connection with the execution and
delivery of this Agreement and (z) all other amount then due and owing pursuant
to Section 10.03 of the Credit Agreement.
SECTION 5 RATIFICATION. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders, as of the date hereof,
that (i) the execution, delivery and performance by the Borrower of this
Agreement have been duly authorized by all necessary corporate action on its
part and do not contravene any applicable law or regulation or any contractual
provision applicable to it, (ii) this Agreement constitutes the legal, valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
(iii) the representations and warranties set forth in Article IV of the Credit
Agreement are true and complete as if made on and as of such date and as if each
reference in such representations and warranties to the Credit Agreement
included reference to such Credit Agreement as amended by this Agreement, and
(iv) no Default has occurred and is continuing, or will occur and be continuing
after giving effect hereto, under the terms of the Credit Agreement, as modified
hereby; and the Borrower agrees that a breach of any of the representations and
warranties set forth in this Section 5 shall be an Event of Default for purposes
of clause (c) of Article VIII of the Credit Agreement.
SECTION 6. CONTINUING VALIDITY. Except as specifically set forth
herein, the Credit Agreement and each other Loan Document are in all respects
ratified and confirmed and shall remain unchanged and in full force and effect.
From and after the Amendment Effective Date, all references in the Credit
Agreement and in any related document to "this Agreement", "the Credit
Agreement" and words of like import shall be deemed to refer to the Credit
Agreement as amended hereby.
SECTION 7. MISCELLANEOUS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the day and year first above written.
SEQUA CORPORATION
By___________________________________
Name: Kenneth A. Drucker
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By___________________________________
Name: Stacey Haines
Title:
Lenders
THE CHASE MANHATTAN BANK
By___________________________________
Name: Stacey Haines
Title:
THE BANK OF NEW YORK
By___________________________________
Name: Eliza S. Adams
Title: Vice President
THE BANK OF NOVA SCOTIA
By___________________________________
Name: TODD S. MELLER
Title: MANAGING DIRECTOR
BANK OF MONTREAL
By___________________________________
Name: MICHAEL P. JOYCE
Title: MANAGING DIRECTOR
BANKERS TRUST COMPANY
By___________________________________
Name: Marguerite Sutton
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By___________________________________
Name: Donald V. Davis
Title: Vice President
MELLON BANK, N.A.
By___________________________________
Name: Donald G. Cassidy, Jr.
Title: Senior Vice President
THE SUMITOMO BANK, LIMITED
By___________________________________
Name: Edward D. Henderson, Jr.
Title: Senior Vice President
THE FUJI BANK, LIMITED
By___________________________________
Name:
Title:
NATEXIS BANQUE
By___________________________________
Name: Pieter J. van Tulder
Title: Vice President and Manager
Multinational Group
By___________________________________
Name: Nicolos Regent
Title: VP Multinational Group
ACKNOWLEDGED
:
CASCO INVESTORS CORPORATION
CHROMALLOY AMERICAN CORPORATION
CHROMALLOY GAS TURBINE CORPORATION
CASCO PRODUCTS CORPORATION
SEQUA FINANCIAL CORPORATION
ATLANTIC RESEARCH CORPORATION
By ____________________________________
Name: Kenneth A. Drucker
Title:
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SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is made and entered into as of
December 29, 2000, by and between FS Ascent Investments LLC, a Delaware limited
liability company ("Pledgor"), and Alpharma USPD Inc., a Maryland corporation ("
Pledgee").
W I T N E S S E T H
:
WHEREAS, contemporaneously with the execution and delivery of this Agreement,
Pledgor and Pledgee are entering into a Loan Agrement dated the date hereof (the
"Alpharma/Investments Loan Agreement") under which Pledgee has agreed to lend
Pledgor an aggregate of up to six million two hundred and fifty thousand dollars
($6,250,000) and pursuant to which Pledgor is executing and delivering to
Pledgee a Promissory Note dated the date hereof (the "Alpharma/Investments
Promissory Note");
WHEREAS, contemporaneously with the execution and delivery of this Agreement,
Pledgor and Ascent Pediatrics, Inc., a Delaware corporation ("Ascent"), are
entering into a Loan Agreement dated the date hereof (the "Investments/Ascent
Loan Agreement") under which Pledgor has agreed to lend Ascent an aggregate of
up to six million two hundred and fifty thousand dollars ($6,250,000) and
pursuant to which Ascent is executing and delivering to Pledgor a Promissory
Note dated the date hereof (the " Investments/Ascent Promissory Note");
WHEREAS, pursuant to a Security Agreement dated December 29, 2000 (the "Ascent
Security Agreement"), Ascent has granted a security interest in and to the
product identified by the name of Primsol (the "Product"), the New Drug
Application with respect to the Product and certain other intellectual and
non-intellectual property rights related to the Product, all as specified in the
Ascent Security Agreement (collectively, the "Product Collateral") to Pledgor to
secure Ascent's obligations under the Investments/Ascent Loan Agreement and the
Investments/Ascent Promissory Note; and
WHEREAS, Pledgor has agreed to grant to Pledgee a security interest in the
Ascent Security Agreement and the proceeds thereunder and certain other assets
of Pledgor to secure Pledgor's Obligations (as defined herein) under the A
lpharma/Investments Loan Agreement and the Alpharma/Investments Promissory Note.
NOW, THEREFORE, in consideration of the promises and of the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. The following terms shall have the following meanings when used
in this Agreement:
a. "Event of Default" shall have the meaning assigned to such term in the
Alpharma/Investments Loan Agreement.
b. "Governmental Authority" shall mean any agency, instrumentality, department,
commission, court, tribunal or board of any government, whether foreign or
domestic and whether national, federal, state, provincial or local.
c. "License Agreement" shall mean the License Agreement dated the date hereof
between Pledgor and Ascent.
d. "Obligations" shall mean all obligations of Pledgor under the
Alpharma/Investments Loan Agreement and the Alpharma/Investments Note, including
any extension, modification, substitution, amendment or renewal thereof.
e. "Proceeds" or "proceeds" shall mean "proceeds," as such term is defined in
Section 9-306(l) of the UCC and, in any event, shall include, without
limitation, (i) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to Pledgor from time to time with respect to the Collateral (as
defined herein), (ii) any and all payments (in any form whatsoever) made or due
and payable to Pledgor 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, authority, bureau or agency (or any
person acting under color of governmental authority), (iii) any and all proceeds
from any claim of Pledgor against third parties in respect of the Collateral and
(iv) any and all other amounts from time to time paid or payable under or in
connection with the Collateral.
f. "UCC" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Delaware; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Pledgee's security interest in the Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of Delaware, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
2. Grant of Security Interest. As security for the prompt performance of all of
the Obligations, Pledgor hereby grants to Pledgee a lien on, and a first
security interest in (a "Lien"), all of Pledgor's right, title and interest in,
to and under, and the proceeds from the following (collectively, the
"Collateral"):
a. the Ascent Security Agreement and the Liens created thereby;
b. the Investments/Ascent Loan Agreement;
c. the Investments/Ascent Promissory Note; and
d. the License Agreement.
3. Representations and Warranties. Pledgor hereby represents and warrants to
Pledgee that:
a. Pledgor is the sole owner of the Collateral, free and clear of any Lien
thereon, except for the Lien created by this Agreement.
b. Pledgor has the legal right to assign, convey, mortgage, pledge, hypothecate
and transfer the Collateral, as provided for in this Agreement.
c. No security agreement, financing statement or equivalent security or lien
instrument or continuation statement covering all or any part of the Collateral
is on file or of record in any public office, except for the Lien created by
this Agreement. No security agreement, financing statement or equivalent
security or lien instrument or continuation statement covering all or any part
of the Product Collateral is on file or of record in any public office, except
for the Lien created by the Ascent Security Agreement
d. No consent, approval, authorization or other order of any person, and no
consent, authorization, approval, or other action by and no notice to or filing
with, any Governmental Authority is required (i) for the execution, delivery and
performance of this Agreement or the Ascent Security Agreement or (ii) for the
Pledgor's assignment, conveyance, mortgage, pledge, hypothecation or transfer of
the Collateral or for Ascent's assignment, conveyance, mortgage, pledge,
hypothecation or transfer of the Product Collateral.
e. The Pledgor's assignment, conveyance, mortgage, pledge, hypothecation or
transfer of the Collateral pursuant to this Agreement creates a valid and
continuing Lien on and a perfected first priority security interest in such
Collateral and the proceeds thereof, securing the payment of the Obligations,
subject to no prior Lien.
f. This Agreement has been duly executed and delivered by Pledgor and
constitutes a legal, valid and binding obligation of Pledgor enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, or other similar laws affecting the rights of creditors
generally or by the application of general equity principles.
4. Covenants. Pledgor covenants and agrees with Pledgee that until the
Termination Date (as defined herein):
a. Pledgor will, at its expense, promptly and duly execute, acknowledge and
deliver all such instruments and documents and take any such action as Pledgee
from time to time may request in order to ensure to Pledgee the benefits of the
Liens on, and security interests in, the Collateral intended to be created by
this Agreement, including the filing of any necessary Uniform Commercial Code
financing statements, which may be filed by Pledgee with or without the
signature of Pledgor. Pledgor will cooperate with Pledgee, at Pledgor's expense,
in obtaining all necessary approvals and making all necessary filings under
federal or state law in connection with such Liens or any sale or transfer of
the Collateral. Pledgor will, at its expense, promptly take, or exercise its
rights under the Ascent Security Agreement to cause Ascent to take, all such
action as Pledgee from time to time may request in order to ensure that Pledgee
has the benefits of the assignment of Pledgor's Liens on, and security interests
in, the Collateral (as such term is defined in the Ascent Security Agreement)
intended to be created by the Ascent Security Agreement and this Agreement,
including the filing of any necessary Uniform Commercial Code Financing
Statements.
b. Pledgor will mark its books and records pertaining to such Collateral to
evidence this Agreement and the Lien on and security interest in such Collateral
granted by this Agreement.
c. Except as provided hereunder, Pledgor will not create, permit or suffer to
exist, and will defend the Collateral against, and take such other action as is
necessary to remove any Lien on, or security interest in, such Collateral and
will defend the right, title and interest of Pledgee in and to any of such
Pledgor's rights in and to the interests comprising such Collateral against the
claims and demands of all persons whomsoever.
5. Pledgee's Appointment as Attorney-in-Fact.
a. Pledgor hereby irrevocably constitutes and appoints Pledgee and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Pledgor and in the name of Pledgor or in its own name, from time to
time in Pledgee's discretion, for the purpose of carrying out the terms of this
Agreement, and the Ascent Security Agreement, to take any and all appropriate
action and to execute and deliver any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement and
the Ascent Security Agreement and, without limitation, hereby gives Pledgee the
power and right, on behalf of Pledgor, without notice to or assent by Pledgor to
pay or discharge taxes, Liens, security interests or other encumbrances levied
or placed on or threatened against the Collateral or Product Collateral.
b. Pledgee agrees that, except upon the occurrence of an Event of Default, it
will forebear from exercising the power of attorney or any rights granted to
Pledgee pursuant to this Section 5. The power of attorney granted pursuant to
this Section 5 is a power coupled with an interest and shall be irrevocable
until the Obligations are indefeasibly paid and satisfied in full.
c. The powers conferred on Pledgee hereunder are solely to protect Pledgee's
interests in the Collateral and indirect interests in the Product Collateral and
shall not impose any duty upon it to exercise any such powers. Pledgee shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither it nor any of its officers, directors,
employees or agents shall be responsible to Pledgor for any act or failure to
act, except for its own gross negligence or willful misconduct.
d. Pledgor authorizes Pledgee, at any time and from time to time upon the
occurrence of any Event of Default, to execute any endorsements, assignments or
other instruments of conveyance or transfer with respect to the Collateral and
the Product Collateral, including the exercise of all of Pledgor's rights under
the Ascent Security Agreement, as if such rights belonged to Pledgee.
6. Performance by Pledgee of Pledgor's Obligations. If Pledgor fails to perform
or comply with any of its agreements contained herein and Pledgee, as provided
for by the terms of this Agreement, shall itself perform or comply, or otherwise
cause performance or compliance, with such agreement, the reasonable expenses of
Pledgee incurred in connection with such performance or compliance shall be
payable by Pledgor to Pledgee on demand and shall constitute Obligations secured
hereby.
7. Remedies, Rights Upon Default.
a. If any Event of Default shall occur and be continuing, Pledgee may exercise
in addition to all other rights and remedies granted to it in this Agreement and
in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the UCC and all of
the rights of FS Ascent Investments LLC or its permitted successor and assigns
under and pursuant to the Ascent Security Agreement, including, without
limitation, its rights under Section 6(a) of the Ascent Security Agreement.
b. Pledgor hereby waives presentment, demand, protest or any notice (to the
maximum extent permitted by applicable law) of any kind in connection with this
Agreement or the Collateral.
8. Application of Proceeds. Upon the occurrence of an Event of Default, Pledgee
shall apply all the proceeds of any sale, disposition or other realization upon
all or any part of the Collateral to the Obligations as Pledgee may determine.
9. Termination. Immediately following payment or satisfaction of all Obligations
(the date of such payment or satisfaction referred to herein as the "Termination
Date"), (i) Pledgee shall execute and file, or cause to be executed and filed,
at Pledgor's expense, any and all releases, terminations and satisfactions in
forms satisfactory to Pledgor releasing, discharging and terminating all of
Pledgee's Liens on, and security interests in, any of the Collateral and (ii)
except as otherwise provided herein, all of Pledgor's obligations hereunder
shall at such time terminate.
10. Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against Pledgor for
liquidation or reorganization, should Pledgor become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of Pledgor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Obligations, whether as a "voidable preference"
or "fraudulent conveyance" under the Bankruptcy Code, or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
11. No Waiver: Cumulative Remedies. No delay on Pledgee's part in exercising any
power of sale, Lien, option or other right hereunder, and no notice or demand
which may be given to or made upon Pledgor by Pledgee with respect to any power
of sale, Lien, option or other right hereunder, shall constitute a waiver
thereof, or limit or impair Pledgee's right to take any action or to exercise
any power of sale, Lien, option, or any other right hereunder, without notice or
demand, or prejudice Pledgee's rights as against Pledgor in any respect. The
rights and remedies hereunder provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights and remedies
provided by law.
12. Continuing Assignment. This Agreement shall create a continuing assignment
of, Lien on and security interest in each and all of the Collateral and shall
(a) remain in full force and effect until the Termination Date; (b) be binding
upon Pledgor, its successors and permitted assigns, as applicable, and (c) inure
to the benefit of Pledgee and its successors, transferees and assigns. Pledgor
may not assign or transfer any or all of its rights and obligations hereunder
without the express written consent of Pledgee.
13. Sale of Assets. The parties hereto acknowledge that, upon mutual agreement,
Pledgor may sell all or part of the Collateral to Pledgee subsequent to the date
of this Agreement. In the event of the consummation of the sale of the
Collateral, or any part thereof, from Pledgor to Pledgee, the parties hereto
agree that the any proceeds of such sale shall be used first to pay amounts due
and payable from Pledgor to Pledgee under the Obligations and excess proceeds,
if any, shall be payable by Pledgee to Pledgor.
14. Notices. Except as otherwise provided herein, any notice hereunder shall be
in writing, and shall be deemed to have been validly served, given or delivered
upon receipt after transmittal by hand or by Federal Express or similar service,
or by facsimile transmission, or five business days after deposit in the United
States mail, registered mail, with proper postage prepaid, and addressed to the
party to be notified at the following addresses (or such other address as such
party shall designate by notice to the other party hereunder):
If to Pledgee, to:
Alpharma, Inc.
One Executive Drive
Fort Lee, New Jersey 07024
Attention:
Facsimile:
with a copy (which shall not constitute notice) to:
Alpharma, Inc.
One Executive Drive
Fort Lee, New Jersey 07024
Attention: Chief Legal Officer
Facsimile:
If to Pledgor, to:
FS Ascent Investments LLC
c/o FS Private Investments LLC
55 East 52nd Street
New York, New York 10055-0002
Attention: James L. Luikart
Facsimile: (212) 409-5874
with a copy (which shall not constitute notice) to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attention: Melvin Epstein, Esq.
Facsimile: (212) 806-6006
Failure to deliver any copies pursuant to this Section 14 shall not impair the
validity of any notice otherwise complying therewith.
15. 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 or affect the remainder of this Agreement.
16. Governing Law. This Agreement shall be governed by, and be construed and
enforced in accordance with, the internal laws of the State of New York, without
regard to the provisions thereof relating to conflict of laws.
17. Successors and Assigns. This Agreement shall be binding upon Pledgor and its
permitted assigns, and shall inure to the benefit of, and be enforceable by,
Pledgee and its successors and assigns.
18. Amendments. None of the terms or provisions of this Agreement may be waived,
altered, modified or amended except in writing duly signed for and on behalf of
Pledgee and Pledgor.
19. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
20. Acceptance of Facsimile Signatures. The parties agree that this Agreement
will be considered signed when the signature of a party is delivered by
facsimile transmission. Such facsimile signature shall be treated in all
respects as having the same effect as an original signature.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed and delivered by such party or its duly authorized office on the date
first set forth above.
FS ASCENT INVESTMENTS LLC
By: FS PRIVATE INVESTMENTS, LLC,
MANAGER
By: /s/ James L. Luikart
Name: James L. Luikart
Title: Managing Member
ALPHARMA USPD INC.
By: /s/ Thomas L. Anderson
Name: Thomas L. Anderson
Title: President |
AMENDMENT TO LEVERAGED LEASE FACILITY
AND SECOND SUPPLEMENTAL INDENTURE
THIS AMENDMENT TO LEVERAGED LEASE FACILITY AND SECOND SUPPLEMENTAL
INDENTURE (the "Amendment"), dated as of March 7, 2001 (the "Effective Date"),
is made and entered by and among UNITED ARTISTS THEATRE CIRCUIT, INC., a
Maryland corporation ("Tenant"), WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in its individual capacity but solely as the Corporate Owner
Trustee (the "Corporate Owner Trustee"), WILLIAM J. WADE, an individual having
an address of c/o the Corporate Owner Trustee, not in his individual capacity
but solely as the Individual Owner Trustee (the "Individual Owner Trustee" and,
collectively with the Corporate Owner Trustee, the "Owner Trustee" under the
Trust Agreement with the Owner Participant), THEATRE INVESTORS, INC., a Delaware
corporation (the "Owner Participant"), WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its individual capacity but solely as the Corporate
Remainderman Trustee (the "Corporate Remainderman Trustee"), WILLIAM J. WADE, an
individual having an address of c/o the Corporate Owner Trustee, not in his
individual capacity but solely as the Individual Remainderman Trustee (the
"Individual Remainderman Trustee" and, collectively with the Corporate
Remainderman Trustee, the "Remainderman Trustee" under the Remainderman Trust
Agreement with the Remainderman Participant), NORTHWAY ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited partnership (successor in interest to Northway
Mall Associates LLC) (the "Remainderman Participant"; the Owner Trustee, the
Owner Participant, the Remainderman Trustee and the Remainderman Parcticipant,
collectively, the "Owner Parties"), STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its individual capacity but solely as the
successor Corporate Indenture Trustee to Fleet National Bank of Connecticut (the
"Corporate Indenture Trustee"), SUSAN KELLER, an individual having an address
c/o the Indenture Trustee, not in her individual capacity but solely as the
successor Individual Indenture Trustee to Alan B. Coffey (the "Individual
Indenture Trustee " and, collectively with the Corporate Indenture Trustee, the
"Indenture Trustee" under the Original Indenture), STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, not in its individual capacity but
solely as successor pass through trustee to Fleet National Bank of Connecticut
under the Pass Through Trust Agreement (the "Pass Through Trustee"), the
beneficial Certificateholders which are affiliates of American Express Financial
Corporation, a Delaware corporation ("AMEX"), or for which AMEX or an affiliate
thereof is investment advisor and all of which are identified as "AMEX
Certificateholders" on the signature pages hereto (collectively, the AMEX
Certificateholders"), and MacKay Shields LLC, a Delaware limited liability
company ("MacKay Shields"), not individually but solely on behalf of the
beneficial Certificateholders to which MacKay Shields LLC is investment advisor
(collectively, the MacKay Shields Certificateholders"; the AMEX
Certificateholders and the MacKay Shields Certificateholders, collectively, the
"Undersigned Certificateholders").
WITNESSETH:
WHEREAS, the Owner Trustee, Remainderman Trustee, Owner Participant,
Remainderman Participant, Indenture Trustee, Pass Through Trustee, and Tenant
(collectively, the "Leveraged Lease Parties") entered into that certain
leveraged lease facility ("Leveraged Lease Facility"), as such Leveraged Lease
Facility is set forth in principal in the following operative documents: (a)
Participation Agreement dated as of December 13, 1995 (the "Participation
Agreement"), by and among Tenant, Owner Trustee, Remainderman Trustee, Owner
Participant, Remainderman Participant, Indenture Trustee, and Pass Through
Trustee; (b) Lease dated as of December 13, 1995 (the "Lease"), by and between
Owner Trustee and Tenant; (c) Trust Indenture and Security Agreement dated as of
December 13, 1995 (the "Original Indenture"), as supplemented by the Mortgage,
Deed of Trust, Assignment of Leases and Rents, Security Agreement, Financing
Statement and First Supplemental Indenture executed in connection with each
Property (as defined in the Participation Agreement) (collectively, the
"Supplemental Indenture") of even date therewith, each by and among Owner
Trustee, Remainderman Trustee and Indenture Trustee; (d) Pass Through Trust
Agreement dated as of December 13, 1995 (the "Pass Through Trust Agreement"), by
and between Tenant and Pass Through Trustee; (e) Tripartite Agreement dated as
of December 13, 1995 (the "Tripartite Agreement"), by and among Owner Trustee,
Remainderman Trustee, and Tenant; and, (f) all additional documents executed in
connection with the Leveraged Lease Facility (collectively with the
above-defined documents, the "Transaction Documents");
WHEREAS, Tenant and its affiliates filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code in the United States
District Court for the District of Delaware 00-3514(SLR) (the " Bankruptcy
Reorganization");
WHEREAS, in connection with the Bankruptcy Reorganization, the Tenant
desired to effect certain amendments to the Leveraged Lease Facility so as (i)
to permit, from time to time, sales to bona fide third-party purchasers not
affiliated with Tenant or its management of certain Leased Premises free and
clear of the lien of the Leveraged Lease Facility, (ii) to obtain a reduction in
the Fixed Rent payable under the Lease upon the sale of such property, (iii)
upon or otherwise in connection with each sale, to cause to be redeemed by the
Owner Trustee portions of the Outstanding Notes and, as a result thereof,
Special Payments be made to Certificateholders, all in the manner provided
herein, and (iv) to waive any and all defaults existing under the Leveraged
Lease Facility from Tenant's Bankruptcy Reorganization and otherwise provided
herein;
WHEREAS, in order to effect the amendments to the Leveraged Lease Facility,
the Leveraged Lease Parties executed that certain Lock-Up Term Sheet, dated
January 26, 2001 (the "Term Sheet"), wherein such parties agreed, subject to
obtaining the consent of one hundred percent (100%) of the Certificateholders,
to amend the Transaction Documents in accordance with the terms and conditions
of the Term Sheet;
WHEREAS, the Tenant delivered a Consent Solicitation Statement to the
Certificateholders on January 26, 2001 and requested the consent of such
Certificateholders to the amendments proposed in the Term Sheet and, on February
23, 2001, Tenant received the final Certificateholder approval and, as of the
date hereof, one hundred percent (100%) of the Certificateholders have consented
to the amendments proposed in the Term Sheet;
WHEREAS, the Leveraged Lease Parties now desire to amend the Transaction
Documents in order to effect the amendments contemplated in the Term Sheet and
approved by the Certificateholders pursuant to the Consent Solicitation
Statement and all acts and things necessary to constitute this Amendment as a
valid and binding Supplemental Indenture according to its terms, have been done
and performed, and the execution of this Amendment has in all respects been duly
authorized and executed by the parties in the exercise of their respective legal
rights and powers vested in them;
WHEREAS, the AMEX Certificateholders and the MacKay Certificateholders
desire to join in this Amendment for the limited purposes hereinafter set forth;
and
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
INTRODUCTION
The capitalized terms used herein and not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Transaction
Documents, as amended hereby.
ARTICLE II
AMENDMENTS TO TRANSACTION DOCUMENTS
A. Amendments to Lease.
The Lease is hereby amended as follows:
1. Section 21.3(a) of the Lease is amended by deleting the third sentence in
its entirety and replacing it with the following: "In the case of a Substitution
as a result of a Leased Premises becoming Economically Obsolete, a Major Repair
Event or a Major Requirement Event, the Fair Market Value of the Replaced Leased
Premises shall be equal to the appraised values as of the date of such
Rejectable Substitution Offer (but in no event less than the Property Stipulated
Loss Value thereof as of the Termination Date)."
2. The following Section 21.7 is added to the Lease:
Section 21.7. Notwithstanding any other provision in this Lease, the
rights of Tenant to purchase or substitute any Economically Obsolete Leased
Premises under the terms of this Lease shall be suspended (absent the approval
of the Owner Parties and the holders of a majority of outstanding Certificates
(as defined in the Participation Agreement) otherwise) from and after the
Effective Date until the earlier to occur of (i) the receipt by the Indenture
Trustee of Thirty-five Million Dollars ($35,000,000) in aggregate Special
Redemption Payments (as defined in the Amendment to Leveraged Lease Facility and
Second Supplemental Indenture (the "Amendment")) (the "$35,000,000 Date")
pursuant to the Original Indenture, (ii) written notice delivered after the date
that is 18 months after the Effective Date (the "18 Month Date") from Tenant to
the other Leveraged Lease Parties (as defined in the Amendment) of Tenant's
election to waive its right to deliver any further Notices (hereinafter defined)
(the "Opt-Out Date"), or (iii) a default or breach (which has not been cured
within 30 days after written notice from Tenant) by any Leveraged Lease Party
other than Tenant under the Transaction Documents. Thereafter, the rights of
Tenant to purchase or substitute Economically Obsolete Leased Premises shall be
as provided elsewhere herein. The time period from the Effective Date until the
earlier to occur of the $35,000,000 Date or the 18 Month Date is hereinafter
referred to as the "Discounted Redemption Period", and the time period from the
18 Month Date until the Opt-Out Date is hereinafter referred to as the "Par
Redemption Period").
3. The following Article 21A is added to the Lease:
ARTICLE 21A
SALES OF SPECIAL REDEMPTION PROPERTY
Section 21A.1. Subject to the limitations on sales described below,
Landlord and Tenant agree that Tenant may identify in writing, in its sole
discretion, one or more Leased Premises (each, a "Special Redemption Property")
to be sold to bona fide third-party purchasers not affiliated with Tenant or its
management (each, a "Purchaser"). The written identification (each, a "Notice")
of each Special Redemption Property shall be given by Tenant to each of the
other Leveraged Lease Parties and the Undersigned Certificateholders and shall
include the name and address of the Purchaser, the purchase price and the other
terms and conditions of the contemplated sale (each, a "Sale"). Upon receipt of
a Notice, the Landlord shall enter, and shall cause the other Owner Parties to
enter, into a purchase and sale contract (each, a "Purchase Contract") with a
Purchaser identified by Tenant to effect the sale of the applicable Special
Redemption Property to the Purchaser at such specified price and on such other
terms and conditions as shall be negotiated in good faith by Tenant. Tenant
shall join in the execution of a Purchase Contract to the extent any Purchaser
may require representations and warranties to be made relative to the Special
Redemption Property (excluding warranties of title described below). In order
to qualify as a Purchase Contract to be executed by the Owner Parties, a
proposed contract shall (i) provide for a closing of the Sale to occur not later
than one hundred twenty (120) days after the execution of the Purchase Contract,
(ii) be made for all cash payable at closing, (iii) provide for a purchase price
not less than 95% of the Special Redemption Fair Market Value (hereinafter
defined) of the applicable Special Redemption Property, (iv) not contain any
representations or warranties of the Owner Parties other than such warranties of
title contemplated under this Lease in a conveyance of any Leased Premises to
Tenant, (v) specifically provide that the Owner Parties shall not have any
personal liability under such Purchase Contract (other than in connection with
their warranties of title and their obligation to transfer the Special
Redemption Property upon compliance with the contract by the Purchaser), and
(vi) provide that Tenant shall be responsible, at Tenant's sole expense (unless
paid for by Purchaser under the Purchase Contract), for obtaining any applicable
appraisals, surveys, title insurance commitments and policies, environmental and
engineering reports and studies, and otherwise preparing for each Sale. For
purposes of this Section only, the term "Special Redemption Fair Market Value"
shall be presumed to be the purchase price of the applicable Special Redemption
Property obtained in an arms length transaction with a Purchaser.
Section 21A.2. In the case of each Sale to a Purchaser, Landlord shall
convey title to the applicable Special Redemption Property to the applicable
Purchaser subject only to the Permitted Exceptions (other than those described
in paragraphs B and D of Exhibit B to the Lease and any other Mortgages) and any
other liens, charges, restrictions or encumbrances created by Tenant or any of
its creditors, employees, contractors, agents or created by Landlord pursuant to
the terms hereof or with Tenant's consent.
Section 21A.3. Upon the date fixed for any such Sale to a Purchaser, and
upon the Purchaser's delivery of the purchase price therefor, Landlord shall
deliver, or cause to be delivered, to Purchaser (i) a deed containing the same
type of warranty as in the deed from Tenant to Landlord and/or (ii) such other
instrument or instruments of transfer as are reasonably necessary but in no
event shall the Owner Parties make any representations or warranties (other than
warranties of title), including, without limitation, any representations or
warranties regarding the condition of the applicable Special Redemption
Property. If any Purchaser shall fail to close upon the acquisition of a
Special Redemption Property, the reasonable expenses of Landlord and other Owner
Parties in entering into the Purchase Contract shall be paid or reimbursed (as
applicable) by Tenant.
Section 21A.4. Upon consummation of the sale of any Special Redemption
Property, Landlord and Tenant shall execute a lease amendment reflecting the
termination of this Lease as to such Special Redemption Property. From and
after the applicable Special Redemption Payment Date (as defined in the
Amendment), the Fixed Rent payable under the Lease shall be reduced (subject to
the limitations, and provided Tenant makes the representations and warranties
set forth, in the last sentence of Section 3.6 herein) by an amount equal to (a)
the product of the original Fixed Rent payable prior to the Effective Date
multiplied by the Discounted Fixed Rent Reduction Percentage (hereinafter
defined) for any Special Redemption Payments (as defined in the Amendment)
received or placed in escrow under an Escrow Agreement (as defined in the
Amendment) during the Discounted Redemption Period, and (b) the product of the
original Fixed Rent payable prior to the Effective Date multiplied by the Par
Fixed Rent Reduction Percentage (hereinafter defined) for any Special Redemption
Payment received after the Discounted Redemption Period (excluding Special
Redemption Payments placed in escrow during the Discounted Redemption Period
under an Escrow Agreement). For purposes hereof, the "Discounted Fixed Rent
Reduction Percentage" shall equal the quotient (expressed as a percentage) of
(i) the Special Redemption Payment divided by eighty-five percent (85%), plus
the Special Interest Payment, divided by (ii) the original principal balance of
the Outstanding Notes; and the "Par Fixed Rent Reduction Percentage" shall equal
the quotient (expressed as a percentage) of (i) the Special Redemption Payment
plus the Special Interest Payment divided by (ii) the original principal balance
of the Outstanding Notes.
Section 21A.5. Tenant shall not be permitted to give any further Notices
after the $35,000,000 Date or, if earlier, the Opt-Out Date (the "End Date"),
and the Landlord may not sell any Leased Premises as a Special Redemption
Property as to which a Notice has been received after the End Date.
Notwithstanding any Notice (or anything else to the contrary set forth herein),
a Special Redemption Property may not be sold if the Consolidated Fixed Charge
Coverage Ratio (determined solely on the basis of the rent and operating cash
flow of all of the Leased Premises in the Leveraged Lease Facility and otherwise
as defined in the Participation Agreement) determined on a pro forma basis after
giving effect as of the beginning of the Four Quarter Period (hereinafter
defined) to the sale of such proposed Special Redemption Property, does not
equal or exceed the Consolidated Fixed Charge Coverage Ratio for all of the
Leased Premises in the Leveraged Lease Facility (without giving effect to the
sale of such proposed Special Redemption Property) for the immediately preceding
four (4) quarter period (the "Four Quarter Period"). Each Notice shall contain
a certification (based on reasonable assumptions and projections and relevant
historical results, all of which shall be set forth therein) from Tenant that
the foregoing covenant shall be satisfied at the time of delivery of each Notice
and at the time of closing of each Sale.
4. The following Section 26.21 is added to the Lease:
Section 26.21. Except as expressly provided therein, nothing in the
Amendment shall be deemed to (i) create, grant or vest any additional rights in
this Lease in favor of any of the Leveraged Lease Parties other than Landlord
and Tenant, (ii) diminish, limit or restrict any rights of the Leveraged Lease
Parties in this Lease, or (iii) create, impose or establish any additional
obligations or liabilities upon Tenant under the other Transaction Documents.
As to those rights which are created in favor of the Leveraged Lease Parties
other than Landlord and Tenant hereunder, such Leveraged Lease Parties shall be
entitled to enforce such rights directly.
5. The following Section 26.22 is added to the Lease:
Section 26.22. Capitalized terms used herein but not otherwise defined
herein shall have the meaning ascribed to such terms in the Participation
Agreement.
B. Amendments to Original Indenture.
The Original Indenture is hereby amended as follows and this Amendment shall
constitute a Supplemental Indenture (as defined in the Original Indenture) for
purposes of effecting the following amendments to the Original Indenture:
1. Section 1.12 of the Original Indenture is amended by adding the term ",
Special Redemption Payment Date" after each occurrence of the term "Interest
Payment Date."
2. The following paragraph (iv) is added to Subsection 3.3(a) of the
Original Indenture:
3.3(a)(iv) the termination of the Lease with respect to any Special Redemption
Property (as defined in the Lease as amended by the Amendment to Leveraged Lease
Facility and Second Supplemental Indenture) pursuant to Article 21A thereof and
the payment (or placement into escrow, as provided in the Lease) of the
applicable Special Redemption Payment;
3. The following Subsection 4.2(c) is added to the Original Indenture:
4.2(c) If Tenant shall exercise its right to terminate the Lease with
respect to Special Redemption Property in accordance with Article 21A thereof,
the proceeds from each Sale (as defined in the Lease) of each Special Redemption
Property shall be distributed at the time of each closing of a Sale (the date of
each distribution to the Indenture Trustee (whether at closing or from the
Escrow Agent as provided below) being referred to as a "Special Redemption
Payment Date") in the following order and priority:
first, so much of such payment as shall be required to pay all Closing
Costs (hereinafter defined) and any Certificateholder Expenses (hereinafter
defined) to the extent not previously paid by Tenant;
second, so much of such payment as shall be required to pay to the
Remainderman Trustee the applicable amount set forth in Schedule B of the
Tripartite Agreement in consideration for the Remainder Interest in the relevant
Special Redemption Property sold (the "Remainderman Payment");
third, to deposit in escrow, under an escrow agreement (an "Escrow
Agreement") among the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee, and an escrow agent (the "Escrow Agent") reasonably satisfactory (as to
the Escrow Agreement and the Escrow Agent) to the Owner Trustee, Indenture
Trustee, Pass Through Trustee, the MacKay Certificateholders, and the AMEX
Certificateholders, an amount equal to the amount of the tax liability estimated
to be incurred by the Owner Participant in respect of such Sale (as estimated in
good faith by a financial officer of the Owner Participant in a reasonably
detailed writing and based on the following tax assumptions (the "Assumed Tax
Amount"):
(i) Owner Participant is domiciled in California; each Sale at a gain
will trigger only US federal and California state income taxes on such gain;
(ii) The Owner Participant will be taxed on any such gain at the highest
US federal and California state marginal rates; and,
(iii) 100% of any resulting California state tax will be deductible on
the Owner Participant's US federal income tax returns, and so will reduce its US
federal income tax accordingly.
fourth, ninety-six percent (96%) of the proceeds remaining after payment of
the aforesaid items shall be applied by the Indenture Trustee (i) first, to pay
accrued interest on the applicable Deemed Redemption Amount (hereafter defined)
from the date of the last interest payment made on the Outstanding Notes through
the applicable Special Redemption Payment Date (each herein, an "Initial Special
Interest Payment"), and (ii) second, on account of a special redemption of a
portion of the Outstanding Notes without any Make-Whole Premium as hereinafter
provided (each herein, an "Initial Special Redemption Payment", and each Initial
Special Interest Payment and Initial Special Redemption Payment, an "Initial
Indenture Payment"); and
fifth, the balance shall be delivered to the Owner Trustee in consideration
for the Owner Trustee's interest in the Estate for Years in the relevant Special
Redemption Property sold; provided, however, that from and after such point in
time that Deemed Redemption Amounts (hereinafter defined) of Ten Million Nine
Hundred Seventy Thousand Three Hundred Twenty and 00/100 Dollars
($10,970,320.00) in the aggregate shall have occurred, such balance (including
for all Sales thereafter) shall be allocated and delivered two-thirds (2/3) to
the Owner Trustee and one-third (1/3) to the Remainderman Trustee in
consideration for their respective interests in the relevant Special Redemption
Property sold.
Notwithstanding the foregoing allocation of Sale proceeds, the Remainderman
Trustee shall be the last of such parties to receive its proceeds.
Either a financial officer of the Owner Participant or the certified public
accounting firm of the Owner Participant will provide to the Indenture Trustee,
the AMEX Certificateholders, and MacKay Shields Ce rtificateholders within three
(3) days after the closing of each Sale, a reasonably detailed writing
calculating (i) as accurately as reasonably possible the tax liability of the
Owner Participant payable in relation to the applicable Sale on the next
succeeding April 15, based on the Tax Assumptions (the "Final Tax Amount"), (ii)
the discounted value of the Final Tax Amount, calculated at the interest rate of
six percent (6%) per annum from the date which is ten (10) days after delivery
of such calculation until the first succeeding April 15 on which such tax shall
be due (the "Discounted Final Tax Amount"). Within one (1) day after providing
the calculation of the Discounted Final Tax Amount, (a) if the Assumed Tax
Amount in respect of any Special Redemption Property exceeds the Discounted
Final Tax Amount, (i) 96% of such excess shall be delivered to the Indenture
Trustee and applied (A) first, to pay accrued interest on the applicable Deemed
Redemption Amount from the date of the last interest payment made on the
Outstanding Notes through the applicable Special Redemption Payment Date (each
herein, an "Additional Special Interest Payment", and each Initial Special
Interest Payment and Additional Special Interest Payment, a "Special Interest
Payment"), and (B) second, on account of a special redemption of a portion of
the Outstanding Notes without Make-Whole Premium as hereinafter provided (each
herein, an "Additional Special Redemption Payment", and each Additional Special
Interest Payment and Additional Special Redemption Payment, an "Additional
Indenture Payment", and each Initial Indenture Payment and Additional Indenture
Payment, an " Indenture Payment"), and (ii) the balance of the excess Assumed
Tax Amount shall be delivered to the Owner Trustee in further consideration for
the Owner Trustee's interest in the Estate for Years in the relevant Special
Redemption Property sold, and (b) if the Discounted Final Tax Amount in respect
of any Special Redemption Property exceeds the Assumed Tax Amount, such excess
shall be paid to the Owner Trustee on such April 15 pursuant to Section 7A of
the Participation Agreement.
As used in this Section 4.2(c), the term "Closing Costs" shall mean any and
all third-party out-of-pocket costs and expenses reasonably incurred by Owner
Trustee, Remainderman Trustee, Owner Participant, Remainderman Participant,
Indenture Trustee, Pass Through Trustee, and Tenant in connection with each
Sale, including, without limitation, attorneys' fees, brokerage commissions,
transfer or documentary stamp taxes, title fees and premiums, survey charges,
environmental and engineering costs, closing and escrow fees and such other
similar third-party costs. The term "Certificateholder Expenses" shall mean any
and all out-of-pocket expenses (including attorneys' fees) reasonably incurred
by any Certificateholder in connection with any of the transactions contemplated
by the Amendment to Leveraged Lease Facility and Second Supplemental Indenture
(the "Amendment"), including, without limitation, those incurred in connection
with (a) the negotiation, execution, delivery or implementation of the Term
Sheet (as defined in the Amendment), the Proposed Amendments (as defined in the
Term Sheet) or the Escrow Agreement (b) the Present Proceedings, any Other
Proceedings or any Certificateholder Approval (as such terms are defined in the
Term Sheet), (c) any action taken in furtherance of its obligations under the
Sections "Implementation" or "Lock-Up Arrangement" of the Term Sheet, and (d)
any breach, default or event of default by Tenant under the Amendment or the
Transaction Documents, excluding, however, any principal, interest, premiums or
other payments expressly waived or forgiven by the Certificateholders hereunder
or otherwise due under the Notes.
4. The following Subsection 6.1(b)(vi) is added to the Original Indenture:
6.1(b)(vi) Upon receipt by the Indenture Trustee of any Initial Special
Redemption Payment or Additional Special Redemption Payment (each, a "Special
Redemption Payment"), the Outstanding Notes shall be deemed to have been
redeemed in part (a) for any Special Redemption Payment received or placed in
escrow under an Escrow Agreement during the Discounted Redemption Period by an
amount equal to the quotient of (i) the Special Redemption Payment, divided by
(ii) eighty-five percent (85%) (the "Deemed Discounted Redemption Amount"), and
(b) for any Special Redemption Payment received after the Discounted Redemption
Period (excluding Special Redemption Payments placed in escrow during the
Discounted Redemption Period and applied to redeem in accordance with subsection
(a) above), by an amount equal to the Special Redemption Payment (the "Deemed
Par Redemption Amount"). For purposes hereof, the "Deemed Discounted Redemption
Amount" and the "Deemed Par Redemption Amount" shall be amounts determined
algebraically by deducting from the applicable Indenture Payment the accrued and
unpaid interest on the principal amount of the Outstanding Notes actually
redeemed or deemed to be redeemed in accordance with subsections (a) and (b)
above (each of the Deemed Discounted Redemption Amount and the Deemed Par
Redemption Amount, a "Deemed Redemption Amount"). The principal balance of the
Outstanding Notes shall be reduced by the Deemed Redemption Amount and the
amount, if any, by which the Deemed Redemption Amount exceeds the Special
Redemption Payment shall be forgiven and none of the Owner Trust, the Owner
Trustee nor any other party shall have any obligation for the payment thereof.
In no event shall there be levied or assessed any prepayment or redemption
premium, payment or penalty associated with any Special Redemption (including,
without limitation, any Make-Whole Premium). The Redemption Date for such
redemption shall be the date the Lease is terminated as to the applicable
Special Redemption Property pursuant to the Lease and the applicable Special
Redemption Payment is made or placed into escrow, as provided in the Lease.
5. Section 6.2 of the Original Indenture is hereby amended by adding the
following language at the end of the first paragraph of such Section: "
provided, however, in the case of any Special Redemption Payment, such notice
may be delivered by the Owner Trustee to the Indenture Trustee on the Redemption
Date or at any time not more than sixty (60) days before such date."
6. Section 6.3 of the Original Indenture is hereby amended by adding the
following language at the end of the first paragraph of such Section: ";
provided, however, in the case of any Special Redemption Payment, such notice
may be delivered by the Indenture Trustee to the each such Holder on the
Redemption Date or at any time not more than sixty (60) days before such date."
7. Section 6.3(b) of the Original Indenture is hereby deleted and replaced
with the following: "the Redemption Price and, in the case of any Special
Redemption Payment, the Deemed Redemption Amount;"
8. Pursuant to Section 9.7 of the Original Indenture, Alan B. Coffey
delivered written notice of his resignation as the Indenture Trustee and the
Owner Trustee thereupon appointed Susan Keller, having an Indenture Trustee
Office (as defined in the Original Indenture) at the address stated in Section
1.5(1) of the Original Indenture, as the successor Indenture Trustee to Alan B.
Coffey. Pursuant to and in accordance with Section 9.8 of the Original
Indenture, Susan Keller executed, acknowledged and delivered to the Owner
Trustee, Tenant and Alan B. Coffey, an instrument accepting such appointment
and, therefore, this Amendment shall constitute a Supplemental Indenture for
purposes of Section 11.1(i) of the Original Indenture .
C. Amendments to Supplemental Indenture.
Section 2.6 of the Supplemental Indenture is hereby amended by adding the term
"or 6.1(b)(vi)" after the term "6.1(b)(v)."
D. Amendments to Pass Through Trust Agreement
. The Pass Through Trust Agreement is hereby amended as follows:
1. The definition of "Special Payment" in Section 1.01 of the Pass Through
Trust Agreement is amended by adding to the end of subsection (i) of such
definition the parenthetical phrase "(including, without limitation, any
Indenture Payment (as defined in the Indenture))".
2. The following Section 4.02A is added to the Pass Through Trust Agreement:
Section 4.02A. Distributions of Indenture Payments.
(a) The Pass Through Trustee shall deposit any Indenture Payment
received by the Pass Through Trustee in the Special Payments Account and shall
notify the Certificateholders of the receipt of such Indenture Payment in same
manner as provided for Special Payments in Section 4.02(c) herein and each such
Indenture Payment shall be deemed to be a "Special Payment" for purposes of the
certificate requirements set forth in Section 4.03 and the investment provisions
of Section 4.04. In such notice to the Certificateholders of receipt of the
Indenture Payment, the Pass Through Trustee shall designate a date (not less
than twenty (20) days after the date of such notice (the "Election Period")) by
which any of the Certificateholders may provide written notice to the Pass
Through Trustee of such Certificateholder's election not to receive its
Fractional Undivided Interest of such Indenture Payment (each such
Certificateholder, a "Non-Participating Certificateholder", and all remaining
Certificateholders, the "Participating Certificateholders"); provided, however,
that: (x) beneficial Certificateholders which are affiliates of American Express
Financial Corporation, or for which American Express Financial Corporation or an
affiliate thereof is an investment advisor ("Amex Certificateholders"), and
beneficial Certificateholders as to which MacKay Shields LLC is investment
advisor ("MacKay Certificateholders") may not elect to be Non-Participating
Certificateholders to the extent that such elections would result in the receipt
by Certificateholders of less than 100% of any Indenture Payment (such a
deficit, a "Non-Participation Deficit"); and (y) in the event that with respect
to any such Indenture Payment the election of Non-Participating
Certificateholders (excluding Amex Certificateholders and MacKay
Certificateholders) shall result in a Non-Participation Deficit: (i) Amex
Certificateholders shall be required to be Participating Certificateholders to
the extent of 61.72% of such Non-Participation Deficit, and (ii) MacKay
Certificateholders shall be required to be Participating Certificateholders to
the extent of 38.28% of such Non-Participation Deficit (provided that Amex
Certificateholders and MacKay Certificateholders may separately agree upon a
different allocation of the whole of a Non-Participation Deficit with respect to
any particular Indenture Payment. In any event, the Undersigned
Certificateholders covenant and agree that, with respect to any Indenture
Payment, they shall hold sufficient Certificates so as to prevent the occurrence
of a Non-Participation Deficit as of the end of any Election Period. The
failure of any Certificateholder to deliver timely notice of an election not to
receive such amounts shall be deemed an election to receive its Fractional
Undivided Interest therein.
(b) Within two (2) business days after the expiration of the Election
Period, the Pass Through Trustee shall thereupon distribute the Indenture
Payment (which date of distribution on account of an Indenture Payment shall be
deemed to be the "Special Distribution Date" hereunder) to the Participating
Certificateholders pari passu in accordance with the ratio that each
Participating Certificateholder's Fractional Undivided Interest bears to the
Fractional Undivided Interest of all Participating Certificateholders (the
"Participating Ratio"). Thereafter, the Fractional Undivided Interests of all
the Certificateholders shall be adjusted to reflect the distribution of the
Indenture Payment. The adjustment of the Fractional Interests shall be
determined as follows: (x) the Fractional Undivided Interest of each
Certificateholder prior to the applicable Indenture Payment shall be multiplied
by the principal balance of the Outstanding Notes immediately prior to such
Indenture Payment, thereby allocating an undivided interest in the Outstanding
Notes to each Certificateholder (the "Allocated Investment"); (y) the Allocated
Investment of each Participating Certificateholder shall then be reduced by an
amount equal to such Participating Certificateholder's Participating Ratio
multiplied by the Deemed Redemption Amount; and (z) thereafter, the Fractional
Undivided Interests of each Certificateholder after such distribution shall
equal the quotient of (i) the applicable Certificateholder's Allocated
Investment (as reduced in accordance with subsection (y) above) divided by (ii)
the principal balance of the Outstanding Notes (after reduction by the Deemed
Redemption Amount).
3. The following Subsection 4.03(c) is added to the Pass Through Trust
Agreement:
4.03(c) On each Special Distribution Date on which distributions on
account of an Indenture Payment are made, the Trustee will include in its
statement to Certificateholders, in addition to the matters set forth in Section
4.03(a) herein, any adjustments to Fractional Undivided Interests pursuant to
Section 4.02A herein.
4. Section 6.07 of the Pass Through Trust Agreement is amended by adding "or
Section 4.02A" after the term "Section 4.02."
E. Amendments to Participation Agreement.
The Participation Agreement is hereby amended by adding the following Section
7A:
Section 7A. Tenant's Indemnity Relating to Sales of Special Redemption
Property. Tenant shall indemnify and hold (A) the Financing Parties and Owner
Parties harmless from and against any and all: (i) Closing Costs (as defined in
the Original Indenture) and actual costs of the Owner Parties for transactions
as to which a Notice (as defined in the Lease) was given but the Sale (as
defined in the Lease) did not close, (ii) any claims asserted by any Purchaser
(as defined in the Lease) arising solely out of a Purchase Contract (as defined
in the Lease) or any sale consummated thereunder, except (x) with respect to the
Owner Parties, in connection with any affirmative undertakings thereunder by
such Owner Party or the failure by such Owner Party to deliver the deed for the
applicable Special Redemption Property (as defined in the Lease) in accordance
with the applicable Purchase Contract (as defined in the Lease) if required to
do so under the terms of the Amendment, or (y) with respect the Financing
Parties, in connection with the gross negligence, willful misconduct or willful
breach of contract by such Financing Party, (iii) tax consequences as a result
of any payments received by the Owner Participant on account of any Sale, and
(iv) reasonable out-of-pocket costs actually incurred by any Financing Party or
Owner Party in connection with any of the transactions contemplated hereunder
(including, without limitation, those incurred in connection with the
negotiation and execution of the Amendment (as defined in the Original
Indenture) and the Term Sheet (as defined in the Amendment) and the documents
contemplated thereby), except, in each instance, matters arising from the gross
negligence or willful misconduct of the applicable Financing Party or Owner
Party, and (B) the Undersigned Certificateholders harmless from and against any
and all Certificateholder Expenses. The foregoing shall be in addition to any
and all rights of indemnification, contribution and reimbursement provided for
under the Transaction Documents as presently in effect, provided, however,
Tenant shall have no obligation or liability for the payment of any principal,
interest, premiums or other payments expressly waived or forgiven by the
applicable parties hereunder. Tenant shall pay, within thirty (30) days after
demand, any reasonable third-party expenses incurred by the Owner Parties, the
Financing Parties or the Undersigned Certificateholders in connection with the
negotiation and execution of the Amendment (as defined in the Original
Indenture), the Term Sheet (as defined in the Amendment) and the documents
contemplated hereby.
F. Amendments to Tripartite Agreement.
The Tripartite Agreement is hereby amended by adding the following Section 4A:
Section 4A. Provisions Relating the Sales of Special Redemption
Property.
(a) Agreement to Participate in Sales. Remainderman hereby agrees that
if at any time Owner is obligated to convey all or any portion of Owner's
Interest in a Property or the Properties pursuant to Article 21A of the Lease
(Sales of Special Redemption Property), Remainderman shall convey its
corresponding interest in the applicable Property or Properties to the
applicable Purchaser (as defined in the Lease) upon payment to Remainderman of a
price equal to (i) the amount allocable to Remainderman set forth on Exhibit B
to the Tripartite Agreement with respect to the applicable Property or
Properties, plus, (ii) as and when applicable, the additional amount to which
Remainderman is entitled pursuant to the clause fifth of Section 4.2(c) of that
certain Trust Indenture and Security Agreement dated as of December 13, 1995, as
amended by that certain Amendment to Leveraged Lease Facility and Second
Supplemental Indenture dated March 7, 2001 (the "Indenture"); provided, however,
that Remainderman's obligation to so convey shall be subject in each instance to
the following: (A) that all payments made in connection with a Sale (as defined
in the Lease) are made in the order and manner set forth in said Section 4.2(c)
of the Indenture, and (B) that no amendments, modifications, waivers or other
changes have been made to Article 21A of the Lease without the prior written
consent of the Remainderman. At the closing of any such transfer as
contemplated herein, Remainderman shall deliver such documents, affidavits and
certificates as are reasonably required to effectuate the transfer of title.
(b) Allocation of Purchase Price. In the event that a Property is sold
pursuant to Article 21A of the Lease and Section 4A hereof, the purchase price
payable in connection with the sale shall be distributed in the order of
priority set forth in Section 4.2(c) of the Original Indenture, as amended by
the Amendment.
G. Amendments to Definitions.
The following definitions are added (in alphabetical order) to Appendix A to
each of the Participation Agreement, Original Indenture, and Supplemental
Indenture:
"AMEX Certificateholders" shall mean the beneficial Certificateholders (as
defined in the Pass Through Trust Agreement) of which American Express Financial
Corporation, a Delaware corporation ("AMEX") is an affiliate or for which AMEX
or an affiliate thereof is investment advisor.
"Effective Date" shall mean the date first set forth in the preamble of
that certain Amendment to Leveraged Lease Facility and Second Supplemental
Indenture by and among the Leveraged Lease Parties, AMEX Ce rtificateholders,
and MacKay Shields Certificateholders.
"Financing Parties" shall mean the various parties to the Leveraged Lease
Facility other than Owner Parties and Tenant.
"Leveraged Lease Facility" means that certain leveraged lease facility, as
amended hereby, by Landlord, Owner Participant, Corporate Owner Trustee,
Individual Owner Trustee, Remainderman Participant, Corporate Remainderman
Trustee, Individual Remainderman Trustee, Corporate Indenture Trustee,
Individual Indenture Trustee and Pass Through Trustee, in favor of Tenant, as
such Leveraged Lease Facility is set forth in principal in the following
operative documents: (a) Participation Agreement (b) Lease; (c) Original
Indenture, as supplemented by the Supplemental Indenture; (d) Pass Through Trust
Agreement; (e) Tripartite Agreement; and, (f) all additional documents executed
in connection with the Leveraged Lease Facility (collectively with the
above-defined documents, the "Transaction Documents").
"Leveraged Lease Parties" shall mean, collectively, Landlord, Remainderman
Trustee, Owner Participant, Remainderman Participant, Indenture Trustee, Pass
Through Trustee, and Tenant.
"MacKay Shields Certificateholders" shall mean MacKay Shields LLC, a
Delaware limited liability company, not individually but solely on behalf of the
beneficial Certificateholders to which MacKay Shields LLC is investment advisor.
"Owner Parties" shall mean the Owner Trustee, Owner Participant,
Remainderman Trustee and Remainderman Participant.
"Owner Trust" shall mean the trust created between Landlord and Owner
Participant.
"Remainderman Trust" shall mean the trust created between Remainderman
Trustee and Remainderman Participant.
"Undersigned Certificateholders" shall mean collectively the AMEX
Certificateholders and the MacKay Shields Certificateholders.
ARTICLE III
WAIVER OF DEFAULTS
A. Waiver of Defaults.
The Owner Parties and the Financing Parties (for themselves and for all of the
Certificateholders) hereby expressly waive, for the benefit of Tenant and the
Owner Parties, (i) any and all existing defaults under the Leveraged Lease
Facility which have occurred or may occur prior to the Effective Date as a
result of or in connection with Tenant having filed a voluntary petition for
bankruptcy, and (ii) any and all other existing or past defaults, whether
matured or unmatured, under the Leveraged Lease Facility prior to the Effective
Date, including without limitation, any such default in any of the following
provisions:
(1) Section 6.7(j) of the Participation Agreement;
(2) Sections 7.6, 12.1, 13.1(e), 13.1(g), 13.1(h), 13.1(i), 13.1(j),
13.1(k), 13.6, and 13.12 of the Lease;
(3) Sections 5.10, 8.1(b) of the Original Indenture;
(4) Sections 2.1(a)-(b) of the Supplemental Indenture; and
(5) Section 6.01 of the Pass Through Trust Agreement.
The foregoing waivers shall not be effective with respect to any default
that may occur or exist after the Effective Date, even if arising out of the
same acts, omissions, facts or circumstances which resulted in the occurrence of
a default prior to the Effective Date, provided, however, in no event shall the
continuation beyond the Effective Date of the present bankruptcy proceedings
filed by Tenant under Chapter 11 of the United States Bankruptcy Code by Tenant
in the United States Bankruptcy Court for the District of Delaware be deemed to
constitute a default under any of the Transaction Documents.
ARTICLE IV
MISCELLANEOUS
A. Effect of Amendments.
Except as expressly amended by this Amendment, and subject to the waiver set
forth in Article 3 herein, the Leveraged Lease Facility and Transaction
Documents shall remain in full force and effect.
B. Conflict.
If any provision of the Leverage Lease Facility shall conflict with any
provision of this Amendment, the provisions of this Amendment shall control.
C. Governing Law.
This Amendment shall be governed by and construed in accordance with the laws of
the state of New York.
D. Counterparts.
This Amendment may be executed in one or more counterparts.
E. Tenant Not Liable
. In no event shall any provision of this Amendment or the Notes (as defined in
the Original Indenture) constitute a guaranty or assumption by Tenant of the
Notes or the indebtedness represented thereby.
F. Execution as a Supplemental Indenture
. This Amendment is executed and, with respect to the amendments set forth in
Sections II(B) and II(C) hereof, shall be construed as an indenture supplemental
to the Original Indenture and, as provided in the Original Indenture, such
Sections II(B) and II(C) of this Amendment shall form a part of such Original
Indenture.
G. Acknowledgement Regarding Florida Mall Property
. Tenant executed that certain Purchase Agreement (the "Purchase Agreement")
dated August 24, 2000, with Florida Mall Associates, a Florida general
partnership ("Assignor"), as assigned to Florida Mall Associates, Ltd., a
Florida limited partnership ("Assignee") by that certain Assignment of Purchase
Agreement and Acceptance of Assignment dated as of March 7, 2001, and that
pursuant to the Purchase Agreement Tenant desires to cause the sale of that
certain Leased Premises (the "Florida Mall Property"), commonly known as "Movies
at Florida Mall" and located in Orange County, Florida. Section 21A.1. of the
Lease provides that upon delivery of a Notice, the Landlord and Owner Parties
shall enter into a Purchase Contract for the sale of the applicable Leased
Premises. The Leveraged Lease Parties hereby consent and agree that, although
Tenant executed the Purchase Agreement prior to delivery of the Notice, such
Purchase Agreement constitutes a Purchase Contract for purposes of the Lease and
the consummation of the sale contemplated therein shall constitute a "Sale" for
purposes of the Lease and other Transaction Documents.
H. Amendments
. No term, covenant, agreement or condition of this Amendment may be amended
except by an instrument or instruments in writing by each party hereto.
IN WITNESS WHEREOF, the parties have entered into this Amendment on the
date first written above.
Tenant:
United Artists Theatre Circuit, Inc.,
a Maryland corporation
By:
Title:
Owner Parties:
Wilmington Trust Company, a Delaware banking corporation, not in its individual
capacity but solely as the Corporate Owner Trustee
By:
Title:
William J. Wade, not in his individual capacity but solely as the Individual
Owner Trustee
Theatre Investors, Inc., a Delaware corporation
By:
Title:
Wilmington Trust Company, a Delaware banking corporation, not in its individual
capacity but solely as the Corporate Remainderman Trustee
By:
Title:
William J. Wade, not in his individual capacity but solely as the Individual
Remainderman Trustee
Northway Associates Limited Partnership, a Delaware limited partnership
By: Fivzar Associates, its general partner
By: Fivzar I Limited Partnership, a partner
By: Fivzar Corp., its general partner
By
Title:
Financing Parties:
State Street Bank and Trust Company, a Massachusetts trust company, not in its
individual capacity but solely as the Corporate Indenture Trustee
By
Title:
Susan Keller, not in her individual capacity but solely as the Individual
Indenture Trustee
By
Title:
State Street Bank and Trust Company, a Massachusetts trust company, not in its
individual capacity but solely as pass through trustee under the Pass Through
Trust Agreement
By:
Title:
THE UNDERSIGNED CERTIFICATIONHOLDERS HEREBY JOIN IN THIS AMENDMENT BY THEIR
EXECUTION HEREOF SOLELY FOR THE PURPOSE OF ACCEPTING AND CONFIRMING THEIR
AGREEMENTS AND COMMITMENTS SET FORTH IN FOLLOWING PROVISIONS OF ARTICLE II,
SUBSECTION D(2) (Amendments to Pass Through Trust Agreement, Section 4.02A):
(i) PROVISO TO THE SECOND SENTENCE OF SECTION 4.02(A); AND (ii) THE THIRD
SENTENCE OF SECTION 4.02(A).
Undersigned Certificateholders:
MacKay Shields LLC, for and on behalf of the MacKay Certificateholders, and not
individually
By:
Title:
(The following Undersigned Certificateholders constitute the Amex
Certificateholders)
AXP Bond Fund, Inc.
By:
Frederick C. Quirsfeld, Vice President
High Yield Portfolio, as series of Income Trust
By:
Frederick C. Quirsfeld, Vice President
AXP Variable Portfolio-Bond Fund, a series of AXP Variable Portfolio Income
Series, Inc.
By:
Frederick C. Quirsfeld, Vice President
AXP Variable Portfolio-Managed Fund, a series of AXP Variable Portfolio Managed
Series, Inc.
By:
Frederick C. Quirsfeld, Vice President
Income Portfolio, a series of IDS Life Series Fund, Inc
By:
Frederick C. Quirsfeld, Vice President
Managed Portfolio, a series of IDS Life Series Fund, Inc.
By:
Frederick C. Quirsfeld, Vice President
AXP Variable Portfolio-Extra Income Fund, a series of AXP Variable Portfolio
Income Series, Inc.
By:
Frederick C. Quirsfeld, Vice President
IDS Life Insurance Company
By:
Lorraine R. Hart, Vice President, Investments
23
|
EXHIBIT 10.24
September 13, 2001
Dave Nagel, Ph.D.
66 Pennsylvania Avenue
Los Gatos, CA 95030
Dear Dave:
This letter amends and restates in its entirety that certain letter dated August
10, 2001 between you and Palm. All terms of the prior letter are replaced by the
terms of this letter.
It is my pleasure to extend a revised offer of employment to you with Newco,
Inc. (“Newco”), an initially wholly-owned subsidiary of Palm to be formed as
soon as possible but in any case no later than December 31, 2001. You currently
serve as Chairman of the recently formed Platform Solutions Group Committee of
the Palm Board of Directors. In addition, you will become the CEO, President,
and a director of Newco, reporting to the Board of Directors of Newco. In that
dual capacity, your duties will be two-fold: first, you will oversee the
proposed separation of the Palm Solutions Group business from Palm, in a way
that maximizes the interest of Palm shareholders, reporting directly to the Palm
Board of Directors. The separation process may include a legal separation, third
party investments by strategic partners, sub-IPO and spin-off. To this end, Palm
currently intends to complete the items listed on Exhibit A by no later than
December 31, 2001. Second, you will be responsible for Newco, reporting directly
to the Newco Board of Directors, initially consisting of three members.
Your starting salary will be $620,000.00 per year ($51,666.66 monthly) payable
semi-monthly to be paid by Palm and/or Newco. You will also be eligible to
participate in a Newco discretionary cash bonus plan. For purposes of this
offer, the Newco discretionary bonus plan shall be assumed no worse than the
equivalent Palm bonus plan. As a point of reference, for fiscal 2002, the Palm
bonus plan offers the opportunity to earn a bonus with a target amount of 70% of
base salary; actual payments being based on various factors, including company
and individual performance, and paid semi-annually. Your individual performance
targets will be set by the Board of Newco during the second quarter of FY 2002.
Any bonus earned will be prorated and paid depending upon targets achieved at
the time Newco is fully established as an independent subsidiary.
A stock option plan for Newco will be established promptly following Newco’s
formation, both of which shall occur as soon as possible but in any case no
later than December 31, 2001. Upon establishing the plan and upon receipt of the
required approval by Newco’s board of directors, you shall receive an option for
a number of shares equal to six point five percent (6.5%) of the shares of Newco
(the “Newco Grant”) on the date the option is granted, calculated on a fully-
Page 2
diluted basis assuming convertibility of all other forms of security into common
stock, including but not limited to the shares owned or controlled by Palm and
the amount expected to be set aside in the initial option pool for employees,
directors and consultants. Such stock option shall provide for four-year vesting
and other terms, all in accordance with Palm’s standard policies and assuming
your continued employment with Newco (but subject to the other provisions of
this letter). Vesting will begin effective upon the date of grant of your
option. The option’s per share exercise price will equal the fair market value
per share of Newco common stock on the date of grant, as determined by the Newco
Board (and taking into consideration the value of the assets to be contributed
to Newco by Palm). By mutual consent Palm and/or Newco will have the right to
repurchase the option (and any shares acquired upon exercise of the option) by
paying you the fair market value (at the time of repurchase) of the stock
covered by the option, minus the exercise price otherwise paid or payable. If
necessary or appropriate to preserve favorable tax treatment for the spin-off of
Newco, changes may be made in the option terms described above (but without
materially diminishing the potential value of the option).
You will also receive two restricted stock grants (“Restricted Stock Grants”) of
Palm shares. The first grant of 50,000 shares will be scheduled to “cliff vest”
two (2) years after grant and will accelerate vesting upon the successful
release to the market of the first Palm ARM-based OS, currently referred to as
Hercules 1.0 or its equivalent. The second grant of 100,000 shares will be
scheduled to vest annually at the rate of 50% per year. Except as provided
herein, vesting of such awards is dependent on your continued employment with
Newco. Your purchase price for the shares will equal the par value of the shares
($0.001 per share). The Restricted Stock Grants shall vest in full on the date
of your involuntary termination for a reason other than Cause or death. Two
years from your date of hire, we will calculate the value of your Restricted
Stock Grants (150,000 shares in aggregate) based on the then current market
price of Palm stock. If the total fair market value of the 150,000 shares of
Palm on such date is less than $2.0 million, you will receive a cash payment on
September 15, 2003 equal to the difference between $2.0 million and the fair
market value of the 150,000 shares. Except as provided herein, this cash payment
is also dependent on your continued employment with Newco.
We are pleased to offer you a sign-on/retention bonus of $200,000.00, payable
over the next 18 months, contingent upon your continued employment with Newco
(“Sign-On/Retention Bonus”). You will receive $50,000.00 (25%) of this bonus
within 30 days of commencing your position as CEO and President of Newco. You
will receive the next $50,000.00 (25%) six months after such commencement date;
the next $50,000.00 (25%) one year after such commencement date, and the final
$50,000.00 (25%) 18 months after such commencement date. By signing this letter
below, except as provided herein, you agree to repay the amount of the
Sign-On/Retention Bonus received if you voluntarily leave Newco within one year
of the effective date of your hire.
Newco shall offer you the same benefits it provides to its other senior
executives. If Newco does not have its own benefit programs, you will
participate in the Palm benefit plans on the same terms as Palm’s senior
executives (but excluding incentive and equity compensation programs.) You also
shall receive 28 days of combined time off and holidays, and other benefits as
Page 3
established by Newco (including any sabbatical program). Your benefits will
depend upon the terms of the benefit plans and programs as they may exist from
time to time. Until Newco establishes comparable benefits, you shall be covered
by Palm’s benefit plans including medical coverage.
Your employment is expressly contingent upon the acceptable results of a
background check. Any falsification of an applicant’s employment history or
educational background will result in withdrawal of the offer and or termination
of employment, if hired.
As a condition of employment, you must sign a Conflicts, Confidential
Information And Assignment Of Invention Agreement as provided by Newco and Palm
stating, among other things, that you will keep confidential company information
of Newco and Palm throughout and beyond your employment. This offer of
employment is also contingent upon receipt of satisfactory proof of
identification and work authorization as required by the Immigration Reform and
Control Act of 1990, and the receipt of satisfactory references.
The terms and conditions of your proposed employment with Newco in this letter
supersede any contrary verbal representations concerning conditions of
employment. While we are confident that we will have a mutually beneficial
employment relationship, employment with Newco is voluntary and at-will. This
means that you are free to resign at any time. Similarly, Newco is free to
terminate your employment relationship, with or without Cause or notice, at any
time. Exceptions to this employment-at-will policy may be made only by a written
agreement signed by Newco’s Board of Directors.
If Palm or Newco terminates your employment relationship without cause, you
shall be paid all base salary and your prorated bonus calculated at 100% of
target or greater percentage if then applicable through the date of termination
in addition to any other amounts then earned, vested or due, including but not
limited to stock, expenses, vacation, sabbatical and other benefits. In
addition, you shall be paid an amount equal to two hundred percent (200%) your
then current annual salary and your then current annual bonus calculated at one
hundred percent (100%) of target in a lump sum. Newco shall also accelerate the
vesting of your initial Newco option grant as if you had continued as an
employee of Newco for two additional years following your termination, and shall
continue all medical, dental and related benefits at active employee rates for
two years from your termination. Furthermore, Palm shall accelerate the vesting
of your Stock Grant as if you had continued as an employee for two additional
years following your date of termination and shall make any required cash
payment if your Restricted Stock Grants are less than $2 million on the date of
termination, and such amount has not been paid. Finally, your obligation, if
any, to repay the Sign-On/Retention Bonus shall be waived. The above amounts and
benefits paid or extended to you upon Newco’s termination of your employment
relationship without Cause shall hereinafter be referred to as “Severance
Benefits.”
For purposes of this Agreement, “Cause” shall mean:
Page 4
1. failure to perform (other than due to mental or
physical disability or death) the duties of your position (as they may exist
from time to time) to the reasonable satisfaction of Palm or Newco after receipt
of a written warning and a reasonable opportunity to cure; 2. any act of
dishonesty taken in connection with your responsibilities as an employee that is
intended to result in your substantial personal enrichment; 3. your
conviction or plea of no contest to a crime that negatively reflects on your
fitness to perform your duties or harms Palm’s or Newco’s reputation or
business; 4. willful misconduct by you that is injurious to Palm’s or Newco’s
reputation or business; or 5. your willful violation of a material employment
policy.
For purposes of this definition, an act or failure to act shall be deemed
“willful” if effected not in good faith or without reasonable belief that such
action or failure to act was in the best interests of Palm or Newco.
Anything herein to the contrary notwithstanding, your employment shall not be
terminated for Cause, unless written notice stating the basis for the
termination is provided to you and you are given fifteen (15) days after receipt
of such notice to cure,, and you have had an opportunity to be heard by a quorum
of the Board and, after such hearing, the Board votes to terminate you for
Cause.
You shall also have the right for “Good Reason” to resign from Newco and to
receive the “Severance Benefits” provided herein. For the purposes of this
Agreement, Good Reason shall mean without your express written consent:
1. Any material reduction in your title, duties, authority or
responsibilities; 2. Any change in reporting such that you do not report to
the Board of Directors of your employer or the parent corporation of your
employer; 3. The failure of Palm within six months to take all reasonably
necessary actions to capitalize Newco sufficient to operate for one year as
determined by Newco’s Board, including the actions listed on Exhibit A;
provided, however that you must have completed the actions described in Exhibit
B by the specified deadlines and to the satisfaction of Newco’s Board;
Page 5
3. Reduction of your base salary other than reduction by
Newco with respect to all executive officers as a part of a general readjustment
of their compensation levels; 4. Any material reduction, without good
business reason, of facilities, assistance and perquisites (including office
space and location) available to you immediately prior to such reduction; 5.
Palm’s or Newco’s failure to provide you with benefits at least equal to those
provided to other senior executives of Newco; 6. The relocation of your
office more than 50 miles from its then present location; or 7. Failure of
Newco to obtain assumption of this Agreement by any successor in interest to all
or substantially all of the assets or business of Newco upon merger,
consolidation, sale or similar transaction (unless you remain in a comparable
position with Palm (or a successor) and your new employer assumes this
Agreement).
For the purpose of any determination regarding the applicability of the
immediately preceding events, the position taken by you shall be presumed to be
correct unless Newco establishes by clear and convincing evidence that such
position is not correct. Your continued employment shall not constitute a
consent to a waiver of your rights to assert Good Reason hereunder nor shall
your death or disability terminate the right of your estate or heirs to assert
Good Reason if such right exists at the time of your death or disability.
Palm currently is amending the form of Change of Control agreement provided to
its senior executives. You also will receive one of those agreements. However,
please be aware that benefits under your Change of Control agreement will be
offset by your benefits under this Agreement. Your severance benefits under this
Agreement (whether or not a Change of Control has occurred) generally will be
more favorable than under your Change of Control agreement.
In the event that the benefits provided for in this Agreement or otherwise
payable to you constitute “parachute payments” within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the “Code”) and will be
subject to the excise tax imposed by Section 4999 of the Code, then you shall
receive (i) a payment from Newco or Palm sufficient to pay such excise tax, plus
(ii) an additional payment from Newco or Palm sufficient to pay the excise tax
and federal and state income and employment taxes arising from the payments made
to you pursuant to this sentence. Unless Newco or Palm and you otherwise agree
in writing, the determination of your excise tax liability and the amount
required to be paid under this paragraph shall be made in writing by Newco or
Palm’s independent auditors who are then primarily used by either such company
as the case may be (the “Accountants”). For purposes of making the calculations
required by this paragraph, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith
Page 6
interpretations concerning the application of Sections 280G and 4999 of the
Code. Newco or Palm shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a
determination under this paragraph. Newco or Palm shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this paragraph.
You shall not be required to mitigate the value of any of the benefits
contemplated by this Agreement, nor shall such benefits be reduced by any
earnings or benefits that you may receive from any other source.
Consent is given to your membership on the Board of Directors for Liberate,
RespondTV and Arcsoft. Your activities on behalf of such Boards shall not
interfere with any your obligation to spend all or substantially all of your
business time on behalf of Newco. If any term or provision of this Agreement
shall be inconsistent or less favorable than any term or provision of any other
agreement or document including, but not limited to, Bonus Plan, Restricted
Stock Agreement, Stock Option Agreement or other matter, the terms and
provisions of this Agreement shall preempt such inconsistent or less favorable
terms or provisions.
Newco or Palm shall pay your reasonable attorneys’ fees and expenses (not to
exceed $7,500) in connection with the negotiation of this Agreement.
This offer of employment is open for a period of 5 working days from the date of
this letter. Within this time period, I would appreciate your confirming your
acceptance by singing on the space provided and returning this letter to me,
indicating your proposed start date.
Let me close by reaffirming our belief that the skill and background you bring
to Palm Inc. and Newco will be instrumental to the future success of the
Company. It is the collective belief of the Palm Board of Directors that your
acceptance of this offer will be in the best interest of Palm shareholders. I
look forward to working with you very soon.
Sincerely,
Eric Benhamou
Chairman of the Board of Directors, Palm, Inc.
I accept the offer of employment at Palm Inc. based on the terms described in
this offer letter. I propose a start date of September 14, 2001.
Signature /s/ David C. Nagel
David C. Nagel Date Oct. 1, 2001
Page 7
EXHIBIT A
ACTIONS REQUIRED TO BE TAKEN BY PALM
CONCERNING SEPARATION OF NEWCO
1. Board Resolution authorizing separation of Newco from Palm 2.
Public announcement required under Rule FD by the SEC 3. Report of the PSG
Committee of the Palm Board of Directors describing with particularity the
nature of the assets/consideration/business operations intended to be spun-off
4. Establishment of schedule to take action on report of PSG Committee of the
Palm Board of Directors, towards the establishment of Newco as an independent
subsidiary
Page 8
EXHIBIT B
ACTIONS REQUIRED TO BE TAKEN BY DAVE NAGEL
CONCERNING SEPARATION OF NEWCO
1. Formulate an IP separation plan and obtain approval of the plan
from the Palm PSG Committee by November 1, 2001. 2. Formulate an
organizational and financial model for Newco and obtain approval of the plan
from the Palm PSG Committee by September 17, 2001. 3. Develop a PalmOS
strategy and product roadmap for Newco and obtain approval of same by the Palm
Board at its October 11, 2001 meeting. 4. Complete (to the reasonable
satisfaction of the Palm Board) the integration of El Camino within two weeks of
closing of the El Camino transaction. 5. Complete substantive face-to-face
meetings with the top three prospective investors in Newco by November 1, 2001.
|
Exhibit 10.4
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement (this "Agreement") is made and entered
into as of February 28, 2001, by and among Harold's Stores, Inc., an Oklahoma
corporation (the "Company"), the investors set forth on the Schedule of
Investors attached hereto (collectively, the "Investors"), and each of the
persons set forth on the Schedule of Family Shareholders attached hereto
(collectively, the "Family Shareholders").
RECITALS
WHEREAS, the Company and the Investors have entered into a Series 2001-A
Preferred Stock Purchase Agreement (the "Preferred Purchase Agreement"), whereby
the Company will sell, and the Investors will purchase, 300,000 shares of Series
2001-A Preferred Stock, $.01 par value per share (the "Preferred Stock"), of the
Company (the "Financing");
WHEREAS, the Preferred Purchase Agreement requires, as a condition to closing
the Financing, that the parties hereto enter into this Agreement; and
WHEREAS, the Family Shareholders desire to induce the Investors to consummate
the Financing.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
RIGHT OF FIRST REFUSAL
General
. Before any shares of the $.01 par value common stock of the Company (the "
Common Stock
") held by any of the Family Shareholders, excluding any shares acquired after
the date of this Agreement in open market purchases in the public securities
markets or pursuant to the Company's 1993 Employee Stock Purchase Plan, or upon
the exercise of options granted under the Company's 1993 Performance and Equity
Incentive Plan (the "
Family Shares
") may be sold or otherwise transferred, including any act of selling,
assigning, transferring, pledging, encumbering, giving and any other form of
conveying, whether voluntary or by operation of law (each a "
transfer
"), the holders of the Company's outstanding Preferred Stock and of any shares
of Common Stock into which the Preferred Stock is converted, excluding any
shares that have been sold in the public securities markets pursuant to an
effective registration statement or a valid exemption from such registration
(the "
Series A Holders
"), shall have rights of first refusal to purchase such Family Shares on the
terms and conditions set forth herein.
Notice of Proposed Transfer
.
If a Family Shareholder (a "
Selling Holder
") proposes to transfer any Family Shares, such Selling Holder shall deliver to
the Company and the Series A Holders a written notice (the "
Notice
") stating: (i) the Selling Holder's bona fide intention to transfer Family
Shares; (ii) the name of each proposed transferee, if in connection with a
transfer of shares other than into the public securities markets (a "
Private Sal e
"); (iii) the number of Family Shares to be transferred to each proposed
transferee if the transfer is a Private Sale and the consideration, if any, for
which the Selling Holder proposes to transfer the Family Shares; (iv) if the
transfer is to be made into the public securities markets (a "
Public Sale
"), the number of shares to be sold, the manner and timing of the intended
individual sales, the anticipated timing (not to exceed 90 days) of the sale of
all such shares to be sold in the proposed Public Sale and the Average Market
Price (defined below) of the shares to be sold; and (v) the deadline for
submission of the Initial Purchase Notice in accordance with the time limits set
forth in Section 1.3 below. If the proposed sale is by an "affiliate" of the
Company, or is of "restricted securities," each as defined in Rule 144
promulgated under the Securities Act of 1933, as amended (the "
Securities Act
"), then the Notice shall be accompanied by an opinion of counsel reasonably
acceptable to the Company that the proposed sale would be exempt from
registration under the Securities Act, or would be sold pursuant to an effective
registration statement under the Securities Act
Exercise of Right of First Refusal
.
After receipt of the Notice, the Series A Holders may, by giving written notice
to the Selling Holder (the "Initial Purchase Notice"), elect to purchase all,
but not less than all, of the Family Shares proposed to be transferred, at the
purchase price determined in accordance with Section 1.4 below. If the total
number of Shares that the Series A Holders elect to purchase exceeds the number
of Family Shares that the Selling Holder proposes to transfer, each Series A
Holder electing to purchase (each a "Purchasing Shareholder") shall be entitled
to purchase such holder's Pro Rata Share (as defined in Section 1.3(d)), of the
Family Shares to be transferred. The Initial Purchase Notice shall be given to
the Selling Holder within twenty (20) days after receipt of the Notice, in the
case of a proposed Private Sale, and within fifteen (15) days after receipt of
the Notice, in the case of a proposed Public Sale.
If the Series A Holders do not choose to purchase all of the available Family
Shares, the Selling Holder shall promptly give written notice (the "Second
Notice") to the Series A Holders who have elected to purchase (the "Purchasing
Shareholders"), which shall set forth (i) the number of Family Shares elected to
be purchased by the Purchasing Shareholders and the identity of the Purchasing
Shareholders so electing and number of Family Shares so elected to be purchased
by each of them, (ii) the number of Family Shares remaining available for
purchase, if the Purchasing Shareholders have not elected to purchase all of the
available Family Shares, and (iii) the deadline for submission of the Second
Purchase Notice in accordance with the time limits set forth in this Section
1.3. The Purchasing Shareholders may then elect by giving written notice to the
Selling Holder (the "Second Purchase Notice") to purchase the remaining
available Family Shares at the purchase price determined in accordance with
Section 1.4 below, as to each Purchasing Shareholder in accordance with its Pro
Rata Share. The Second Purchase Notice shall be given to the Selling Holder
within ten (10) days after receipt of the Second Notice, in the case of a
proposed Private Sale or a proposed Public Sale.
Notwithstanding the foregoing, the Family Shareholders may, as to not more than
30,000 shares in the aggregate for all Family Shareholders during any
three-month period, provide for an expedited Public Sale pursuant to the terms
of this Section 1.3(c). In such event, the Notice will specify in bold letters
at the top that it is being submitted pursuant to this Section 1.3(c) for an
expedited sale pursuant to the terms of this Section (an "Expedited Sale"). The
procedures applicable to a Public Sale shall apply to an Expedited Sale, except
that the Purchasing Shareholders will respond to the Notice within five (5)
business days after receipt of the Notice, and no Second Notice need be given.
For purposes of this Section 1.3(c), the term "business day" means any day,
other than a Saturday or Sunday, or any other day on which national banks in the
City of Atlanta are authorized to close.
For purposes of this Agreement, a Purchasing Shareholder's "Pro Rata Share" is a
fraction, the numerator of which is the number of shares of Common Stock held by
such holder (assuming conversion of all shares of Preferred Stock into shares of
Common Stock), and the denominator of which is the total number of shares of
Common Stock held by all Purchasing Shareholders. If the Purchasing Shareholders
do not elect to purchase all of the available Family Shares following receipt of
the Notice, then as to the remaining available Family Shares, the Pro Rata
Shares of Purchasing Shareholders electing to purchase such available shares
shall be proportionately increased to reflect a fraction, the numerator of which
is the number of shares of Common Stock held by each such holder (assuming
conversion of all shares of Preferred Stock into shares of Common Stock), and
the denominator of which is the total number of shares of Common Stock held by
all Purchasing Shareholders electing to purchase such available shares. If any
Purchasing Shareholder does not elect to purchase its full entitlement, it may
convey its unused right to purchase to any other Purchasing Shareholder(s).
Purchase Price
.
The purchase price for the Family Shares purchased by the Purchasing
Shareholders shall be the same price as the price offered to the proposed
transferee, subject to the following:
(a) If such price includes consideration other than cash, or if the Common Stock
is no longer traded on a securities exchange or on the over-the-counter market,
the cash equivalent value of the non-cash consideration or the value of the
shares to be purchased shall be determined by the mutual consent of the Selling
Holder and a majority-in-interest of the Purchasing Shareholders or, in the
absence of such agreement, by a third party appraiser mutually agreed upon by
such holder and a majority-in-interest of the Purchasing Shareholders; provided
that the fees and expenses of such appraiser shall be paid by the Company.
(b) In the context of a proposed Public Sale, and in the context of a proposed
transfer for no consideration while the Common Stock is traded on a securities
exchange or on the over-the-counter market, the price shall be equal to the
following applicable average market price (the "Average Market Price") of the
Common Stock to be transferred as of the trading day immediately preceding the
date of the Notice, or such other price as may be agreed by the Selling Holder
and a majority-in-interest of the Purchasing Shareholders :
(i) If traded on a securities exchange, the value shall be deemed to be the
average of the closing prices of the Common Stock on such exchange over the
twenty (20) trading day period ending on the trading day prior to the date of
the Notice, adjusted appropriately for any stock splits, stock dividends or
similar changes in capitalization occurring during such period;
(ii) If actively traded over-the-counter, the value shall be deemed to be the
average of the closing bid prices over the twenty (20) trading day period ending
on the trading day prior to the date of the Notice, adjusted appropriately for
any stock splits, stock dividends or similar changes in capitalization occurring
during such period.
Payment
.
Payment of the purchase price shall be made in cash (by wire transfer or check)
within (a) 15 days after delivery of the Initial Purchase Notice or, if
applicable, the Second Purchase Notice, in the case of a proposed Private Sale;
provided
that if the proposed Private Sale involves consideration other than cash, or no
consideration, payment shall be made within 15 days after the consideration to
be paid by the Purchasing Shareholders is determined pursuant to Section 1.4(a);
or (b) 5 days after delivery of the Initial Purchase Notice or, if applicable,
the Second Purchase Notice, in the case of a proposed Public Sale. The
Purchasing Shareholders' obligation to consummate such purchase shall be
conditioned upon the Selling Holder's delivery of original share certificates
representing the Family Shares to be sold, together with customary
representations and warranties and instruments of conveyance, so that the
Purchasing Shareholders take title to such shares free of all liens and
encumbrances. The Family Shareholders will cooperate in good faith with the
Purchasing Shareholders to provide such deliveries and otherwise to consummate
the transactions contemplated hereby.
Family Shareholder's Right to Transfer
.
If all of the Family Shares proposed in the Notice to be transferred are not
purchased by the Series A Holders within the time frames provided herein, the
Selling Holder may transfer all of such Family Shares in accordance with the
terms described in the Notice, provided that such transfer (i) is consummated
within 90 days after the date of the Notice, (ii) is in accordance with all of
the terms of this Agreement and all other agreements between or among such
Family Shareholder, the Series A Holders and the Company and (iii) is effected
in accordance with any applicable securities laws. Any Family Shares transferred
pursuant to this Section 1.6 in connection with a Public Sale shall no longer be
subject to the restrictions of this Agreement, but in connection with any
transfer pursuant to a Private Sale, the transferee shall agree in writing to be
bound by the restrictions set forth in this Agreement as to the transferred
Family Shares as a "Family Shareholder" hereunder unless such Private Sale is a
bona fide sale to a person or entity that is neither a Family Shareholder nor an
affiliate of a Family Shareholder (in which case such shares shall no longer be
subject to the restrictions in this Agreement). If the Family Shares described
in the Notice are not transferred in accordance with the terms described in the
Notice within such period, a new Notice shall be given to the Series A Holders
and the Company, and the Series A Holders shall again be offered a right of
first refusal pursuant to this Agreement, before any Family Shares held by the
Family Shareholders may be sold or otherwise transferred.
Certain Limitations
. Except as may otherwise be expressly agreed by a majority-in-interest of the
Series A Holders, no Family Shareholder may submit an additional Notice with
respect to another proposed transfer for so long as the period during which the
Series A Holders may exercise their first refusal rights pursuant to Section 1.3
and acquire shares pursuant to Section 1.5 remains open as to a prior Notice
submitted by that Family Shareholder.
LIMITATIONS ON RIGHT OF FIRST REFUSAL
Non-applicable Transfers
. The restrictions on transfers set forth in Section 1 of this Agreement shall
not apply where the transfer of securities by a selling Family Shareholder is:
to such selling Family Shareholder's "immediate family" (for purposes of this
Agreement, such Family Shareholder's spouse, parents and siblings, and children,
grandchildren or other lineal descendants, whether natural or adopted, and the
spouses of any of them), or to a custodian, trustee or other fiduciary for the
account of the selling Family Shareholder or members of the selling Family
Shareholder's immediate family in connection with an estate planning
transaction, or a distribution by any trustee of shares to a selling Family
Shareholder or a member of the selling Family Shareholder's immediate family;
pursuant to sales permitted by and effected in compliance with Rule 144
promulgated under the Securities Act, or pursuant to transfers to charitable
institutions or other gifts involving a bona fide donative intent; provided,
however, that the amount of Family Shares transferred by all Family Shareholders
under this Section 2.1(b) shall not exceed the greater of either of the
following limitations: (1) in any consecutive three-month period, 1% of the
total number of shares of Common Stock outstanding (without regard to any
securities that may be convertible into, or exercisable or exchangeable for,
Common Stock), or (2) in any consecutive three-month period, 25% of the average
weekly trading volume of the Common Stock on the American Stock Exchange or such
other principal exchange or market upon which the Common Stock is then listed or
quoted for the four calendar weeks immediately preceding the proposed sale;
by operation of law, or pursuant to a bequest or inheritance, in connection with
the distribution of the estate of a deceased Family Shareholder upon his or her
death;
to one or more Series A Holders;
to a corporation or other entity that would be considered an "affiliate" (as
defined in the Securities Act) of such Family Shareholder;
pursuant to a public offering registered under the Securities Act; or
to a bona fide pledgee reasonably acceptable to a majority-in-interest of the
Investors in connection with the granting of a security interest with respect to
the pledged shares (and a U.S. FDIC-insured commercial bank or savings bank with
assets in excess of $100 million shall be deemed to be reasonably acceptable to
the Investors);
provided
that, except in the case of transfers pursuant to subsections (b), (d) and (f),
as to which this Agreement shall cease to apply to the transferee, the
transferee agrees in writing to be bound by the restrictions set forth in this
Agreement as to such transferred Family Shares as a "Family Shareholder"
hereunder.
Termination
. This Agreement shall terminate immediately upon the date that the Series A
Holders no longer hold, beneficially or of record, shares of Common Stock
(including shares of Common Stock issuable upon the conversion of the
outstanding Preferred Stock) representing at least 10% of the Company's
outstanding Common Stock (treating the outstanding Common Stock and shares of
Common Stock issuable upon the conversion of the Preferred Stock as outstanding
in the aggregate).
Legends; Transfer
.
Each certificate representing the Family Shareholders' shares, other than
certificates that are as of the date of this Agreement issued in "street name"
and under which the Family Shareholders beneficially own shares, and any
certificates issued to their successors and assigns who remain bound by this
Agreement, shall be endorsed by the Company with a legend reading substantially
as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE
TRANSFERRED ONLY IN COMPLIANCE WITH, AN AGREEMENT AMONG THE COMPANY, THE HOLDER
OF THESE SECURITIES AND CERTAIN OTHER HOLDERS OF THE COMPANY'S STOCK, WHICH
INCLUDES RIGHTS OF FIRST REFUSAL, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICES OF THE COMPANY."
The Company shall not transfer any of the Family Shares on its books without
first ascertaining compliance with all of the applicable provisions of this
Agreement with respect to such transfer.
MISCELLANEOUS
Successors and Assigns
. Subject to the exceptions specifically set forth in this Agreement, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective executors, administrators, heirs, successors and permitted
assigns of the parties.
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws
of the State of Oklahoma without regard to the conflicts of laws principles
thereof.
Counterparts
. This Agreement may be executed in counterparts, each of which shall be an
original, but all of which together shall constitute one and the same
instrument.
Headings
. The section headings of this Agreement are for convenience and shall not by
themselves determine the interpretation of this Agreement.
Notices
. Any notice required or permitted hereunder shall be given in writing and shall
be conclusively deemed effectively given upon personal delivery, or by delivery
by overnight courier, or delivery via telecopy (with confirmation of receipt),
or five (5) days after deposit in the United States mail, by registered or
certified mail, postage prepaid, addressed: (i) if to the Company, as follows:
Harold's Stores, Inc.
765 Asp
Norman, Oklahoma 73070
Attn: Chief Financial Officer
Telecopy: (405) 366-2538
with a copy to: Crowe & Dunlevy
1800 Mid-America Tower
20 North Broadway
Oklahoma City, Oklahoma 73102
Attn: Michael M. Stewart, Esq.
Telecopy: (405) 272-5238
(ii) if to a Family Shareholder, to such Family Shareholder's address as set
forth on the Schedule of Family Shareholders attached hereto, (iii) if to an
Investor, to such Investor's address as set forth on the Schedule of Investors
attached hereto, or at such other address as the parties may designate by ten
(10) days advance written notice to the other parties, with a copy to:
Sutherland Asbill & Brennan LLP
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Thomas C. Herman, Esq.
Telecopy: (404) 853-8806
and
Robert Anderson Consulting LLC
4401 Northside Parkway
Suite 340
Atlanta, Georgia 30327
Attn: Robert L. Anderson
Telecopy: (404) 949-3156
and (iv) if to Series A Holders other than the Investors, at such address as
such Series A Holders provide to the Company from time to time for purposes of
the notices provision of this Agreement.
Amendment of Agreement
. Any provision of this Agreement may be amended by a written instrument signed
by the Company, the Family Shareholders holding a majority of the then
outstanding shares of Common Stock held by the Family Shareholders, and a
majority-in-interest of the Series A Holders.
Status of Shares Purchased by Company
. Shares of Common Stock purchased by the Company pursuant hereto shall not be
deemed to be outstanding, and shall revert to authorized, and unissued shares.
Entire Agreement
. This Agreement constitutes the entire agreement between the Family
Shareholders, the Investors and the Company relative to the subject matter
hereof and supersedes any previous agreements or negotiations among the parties.
[Signatures Appear on Following Pages]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date above set forth.
"Company"
Harold's Stores, Inc.
By: /s/ H. Rainey Powell
Name: H. Rainey Powell
Title: President
"Family Shareholders"
/s/ H. Rainey Powell, Attorney-In-Fact for Harold G. Powell
Harold G. Powell, individually and as Trustee under the Harold G. Powell Family
Revocable Trust, UA dated 9/7/93, and under the Harold G. Powell Revocable Trust
dated 9/8/93
/s/ H. Rainey Powell, Attorney-In-Fact for Anna M. Powell
Anna M. Powell, individually and as Trustee under the Harold G. Powell Revocable
Trust dated 9/8/93
/s/ Rebecca Powell Casey
Rebecca Powell Casey, individually and as custodian for Meredith M. Casey,
Lindsey M. Casey and Bryan A. Casey under the Texas UGMA
/s/ Michael T. Casey
Michael T. Casey, individually and as Trustee under the H. Rainey Powell and
Mary U. Powell 1997 Irrevocable Trust
/s/ H. Rainey Powell
H. Rainey Powell, individually and as custodian for Elizabeth M. Powell and Alex
M. Powell under the Oklahoma UTMA
/s/ Mary U. Powell
Mary U. Powell
/s/ Lisa Powell Hunt
Lisa Powell Hunt, individually and as custodian for Miles M. Hunt, Patrick M.
Hunt and Hayden E. Hunt under the Texas UGMA
/s/ Clay M. Hunt
Clay M. Hunt
Arvest Trust Company, N.A., as Trustee*
By: /s/ Lewis W. Beckett
Name: Lewis W. Beckett
Title: Sr. Vice President
*Executed as Trustee with respect to:
Elizabeth M. Powell Trust A
Elizabeth M. Powell Trust B
"Investors"
INTER-HIM, N.V.
By: /s/ Robert L. Anderson
Robert L. Anderson
Attorney-In-Fact
SCHEDULE OF INVESTORS
INTER-HIM, N.V.
Switzerland Representative Office
Im Langacker 16
Postfach
CH - 5401 Baden
Schweiz
Attn.: Mr. Victor Hoogstraal
Telecopy: +41 56 483 0389
SCHEDULE OF FAMILY SHAREHOLDERS
Harold G. Powell
2516 Walnut Road
Norman, OK 73072
Anna M. Powell
2516 Walnut Road
Norman, OK 73072
Rebecca Powell Casey
3835 Shenandoah
Dallas, TX 75205
Michael T. Casey
3835 Shenandoah
Dallas, TX 75205
H. Rainey Powell
1926 Pin Oak Circle
Norman, OK 73072
Mary U. Powell
1926 Pin Oak Circle
Norman, OK 73072
Lisa Powell Hunt
3940 Marquette
Dallas, TX 75225
Clay M. Hunt
3940 Marquette
Dallas, TX 75225
Arvest Trust Company, N.A., as Trustee
200 East Main Street
P.O. Drawer 900
Norman, OK 73069
939620 |
EXHIBIT 10(i)
AMENDMENT NO. 2 TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT dated as of
August 30, 2001 (this “Amendment No. 2”), by and among COOPER TIRE & RUBBER
COMPANY, a Delaware corporation (as more fully defined in the Existing Credit
Agreement referred to below, the “Borrower”), and the Banks (as defined in the
Existing Credit Agreement) and PNC BANK, NATIONAL ASSOCIATION, in its capacity
as the issuer of letters of credit under the Existing Credit Agreement and as
agent for the Banks under the Existing Credit Agreement (in such capacity, as
more fully defined in the Existing Credit Agreement, as the “Agent”), amends
that certain Amended and Restated Credit Agreement dated as of September 1,
2000, by and among the Borrower, the Banks and the Agent (such Credit Agreement
is herein referred to as the “Original Credit Agreement”), as amended by that
certain Amendment No. 1 to Amended and Restated Credit Agreement dated as of
March 27, 2001 (the “Amendment No. 1”; and the Original Credit Agreement, as
amended by the Amendment No. 1, is herein referred to as the “Existing Credit
Agreement”).
WITNESSETH:
WHEREAS, the Borrower has requested an amendment of certain covenants
contained in the Existing Credit Agreement; and the Banks and the Agent have
agreed to certain amendments to the Existing Credit Agreement upon the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the premises (each of which is
incorporated herein by reference), the Borrower, the Banks and the Agent,
intending to be legally bound hereby, agree as follows:
ARTICLE I
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Section 1.01. Amendment to Section 1.1 of the Existing Credit Agreement.
The following definition set forth in Section 1.1 of the Existing Credit
Agreement is amended and restated to read as follows:
“Loan Documents” shall mean this Agreement, the Notes, the Requests for
Disbursement, the Amendment No. 1 Loan Documents, the Amendment No. 2 Loan
Documents and any other instruments, certificates or documents delivered or
contemplated to be delivered hereunder or thereunder or in connection herewith
or therewith, as the same may be supplemented or amended from time to time in
accordance herewith or therewith; and “Loan Document” shall mean any of the Loan
Documents.
“Maturity Date” shall mean (i) initially, August 31, 2001, and on and after
the Amendment No. 2 Closing Date, August 30, 2002, (ii) such later date as is
agreed to by the Banks pursuant to Section 2.2c hereof, (iii) such earlier date
on which the Short Term Revolving Credit Commitment shall terminate pursuant to
Section 2.4 or (iv) such earlier date when, pursuant to Article VII hereof, the
Short Term Revolving Credit shall terminate.
“Termination Date” shall mean (i) initially, August 31, 2005, and on and
after the Amendment No. 2 Closing Date, August 31, 2006, (ii) such earlier date
on which the Long Term Revolving Credit Commitment shall terminate pursuant to
Section 2.4 and the Long Term Revolving Credit Loans then outstanding shall be
paid in full in accordance with Section 2.1e, (iii) such later date as is agreed
to by the Borrower and the Banks pursuant to Subsection 2.1c hereof at which
time the Long Term Revolving Credit
--------------------------------------------------------------------------------
Commitment shall terminate and the Long Term Revolving Credit Loans then
outstanding shall be paid in full in accordance with Section 2.1e, or (iv) such
date when, pursuant to Article VII hereof, the Long Term Revolving Credit
Commitment shall terminate.
Section 1.02. Addition of Definitions to Section 1.1 of the Existing Credit
Agreement. The following definitions are hereby added to Section 1.1 of the
Existing Credit Agreement and shall be inserted in their correct alphabetical
order:
“Amendment No. 2” shall mean that certain Amendment No. 2 to Credit
Agreement dated as of August 30, 2001, by and among the Borrower, the Agent and
the Banks.
“Amendment No. 2 Closing Date” shall mean August 30, 2001.
“Amendment No. 2 Loan Documents” shall mean this Amendment No. 2, and any
other documents delivered or contemplated to be delivered hereunder or
thereunder or in connection herewith or therewith, as the same may be
supplemented or amended from time to time in accordance herewith or therewith;
and the term “Amendment No. 2 Loan Document” shall mean any of the Amendment
No. 2 Loan Documents.
Section 1.03. No Other Amendments. The amendments to the Existing Credit
Agreement set forth in Sections 1.01 and 1.02 of this Amendment No. 2 do not
either implicitly or explicitly alter, waive or amend, except as expressly
provided in this Amendment No. 2, the provisions of the Existing Credit
Agreement. The amendments set forth in Sections 1.01 and 1.02 of this Amendment
No. 2 do not waive, now or in the future, compliance with any other covenant,
term or condition to be performed or complied with nor does it impair any rights
or remedies of the Banks or the Agent under the Existing Credit Agreement with
respect to any such violation.
ARTICLE II
BORROWER’S SUPPLEMENTAL REPRESENTATIONS
As an inducement to the Banks and the Agent to enter into this Amendment
No. 2, the Borrower hereby represents and warrants that:
Section 2.01. Incorporation by Reference. The Borrower hereby repeats
herein for the benefit of the Banks and the Agent the representations and
warranties made by the Borrower in Article III of the Existing Credit Agreement,
as amended hereby, except that for purposes hereof such representations and
warranties shall be deemed to extend to and cover this Amendment No. 2.
ARTICLE III
MISCELLANEOUS
Section 3.01. Ratification of Terms. This Amendment No. 2 shall be
construed in connection with and as part of the Existing Credit Agreement; and
the Existing Credit Agreement is hereby amended and modified to include this
Amendment No. 2. Except as expressly amended by this Amendment No. 2, the
Existing Credit Agreement and each and every representation, warranty, covenant,
term and condition contained therein is specifically ratified and confirmed.
Section 3.02. References. All notices, communications, agreements,
certificates, documents or other instruments executed and delivered after the
execution and delivery of this Amendment No. 2 may refer to the Existing Credit
Agreement without making specific reference to this
--------------------------------------------------------------------------------
Amendment No. 2, but nevertheless all such references shall include this
Amendment No. 2 unless the context requires otherwise.
Section 3.03. Counterparts. This Amendment No. 2 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 together shall constitute one and the same instrument. Delivery
of an executed counterpart of a signature page to this Amendment No. 2 by
telecopier shall be effective as of delivery of a manually executed counterpart
of this Amendment No. 2.
Section 3.04. Capitalized Terms. Except for proper nouns and as otherwise
defined herein, capitalized terms used herein shall have the meanings ascribed
to them in the Existing Credit Agreement, as amended hereby.
Section 3.05. Conditions Precedent. It shall be a condition precedent to
the effectiveness of this Amendment No. 2 and to the amendment of terms of the
Existing Credit Agreement as herein set forth that:
(i) The Agent shall have received on behalf of the Banks, on or before the
Amendment Effective Date (as hereinafter defined) the following items, each,
unless otherwise indicated, dated on or before the Amendment Effective Date and
in form and substance satisfactory to the Agent and its counsel:
(A) A duly executed counterpart original of this Amendment No. 2;
(B) A copy of the corporate action of the Borrower certified by the
Secretary or Assistant Secretary of the Borrower to authorize the execution and
delivery of, and performance under, this Amendment No. 2 and the other Amendment
No. 2 Loan Documents to which it is a party;
(C) A certificate of the secretary or assistant secretary of the
Borrower certifying the names of the persons authorized to sign this Amendment
No. 2 and the other Amendment No. 2 Loan Documents to which it is a party, and
all other documents and certificates delivered hereunder together with the true
signatures of such persons;
(D) A certificate of the Chief Financial Officer of the Borrower
certifying that the statements set forth in Section 3.05(ii) of this Amendment
No. 2, as of the Amendment No. 2 Closing Date, are true and correct;
(E) The Borrower shall have paid to the Agent for the benefit of each
Bank that executes and delivers to the Agent a counterpart signature page of
this Amendment No. 2 an amendment fee of five (5) basis points times the stated
Commitment of such a Bank; and
(F) No event has occurred to the Borrower which would reasonably be
likely to have a Material Adverse Effect on the Borrower; and there shall be
delivered to the Agent for the benefit of each Bank and the Agent a certificate
dated the Closing Date and signed by the Chief Executive Officer, President,
Chief Financial Officer or Vice President of the Borrower to such effect;
(ii) The following statements shall be true and correct on the Amendment
Effective Date and the Agent shall have received a certificate signed by an
authorized officer of the Borrower, dated the Amendment Effective Date, stating
that:
--------------------------------------------------------------------------------
(A) the representations and warranties contained in Section 2.01 of
this Amendment No. 2 and in the other Loan Documents, as amended hereby, with
respect to the Borrower are true and correct on and as of the Amendment
Effective Date as though made on and as of such date;
(B) no Event of Default, or event which, with the passage of time or
the giving of notice or both, would become an Event of Default, has occurred and
is continuing, or would result from the execution of this Amendment No. 2;
(C) the Borrower has in all material respects performed all
agreements, covenants and conditions required to be performed on or prior to the
date hereof under the Agreement and the other Loan Documents;
For purposes of this Amendment No. 2 the term “Amendment Effective Date” means
the date on which the Agent and its counsel has determined that each of the
conditions set forth in this Section 3.05 have been satisfied by the Borrower or
waived by the Banks or the Agent, as the case may be.
Section 3.06. Amendment Effective Date. From and after the Amendment
Effective Date, all references in the Existing Credit Agreement and each of the
other Loan Documents to the Agreement shall be deemed to be references to the
Existing Credit Agreement as amended hereby.
Section 3.07. Certain Taxes. The Borrower agrees to pay, and save the Agent
and the Banks harmless from, all liability for any stamp or other taxes which
may be payable with respect to the execution of this Amendment No. 2, the other
Amendment No. 2 Loan Documents or any other documents, instruments or
transactions pursuant to or in connection herewith or therewith, which
obligation shall survive the termination of this Amendment No. 2.
Section 3.08. Costs and Expenses. The Borrower hereby agrees to pay all
reasonable out-of-pocket costs and expenses of the Agent (including, without
limitation, the reasonable fees and the disbursements of the Agent’s special
counsel, Tucker Arensberg, P.C.) in connection with the preparation, execution
and delivery of this Amendment No. 2 and the related documents.
Section 3.09. Severability. Any provision of this Amendment No. 2 which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or enforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 3.10. Governing Law. Amendment No. 2 shall be a contract made under
and governed by the laws of the Commonwealth of Pennsylvania.
Section 3.11. Headings. The headings of this Amendment No. 2 are for
purposes of reference only and shall not limit or otherwise affect the meaning
thereof.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto, with the intent to be legally bound
hereby, have caused this Amendment No. 2 to be duly executed by their proper and
duly authorized officers as of the day and year first above written.
Borrower: ATTEST (SEAL)COOPER TIRE & RUBBER COMPANY,
a Delaware corporation By: /s/ Richard N. Jacobson
--------------------------------------------------------------------------------
Name: Richard N. Jacobson
Title: Assistant Secretary By: /s/ Philip G. Weaver
--------------------------------------------------------------------------------
Name: Philip G. Weaver
Title: Vice President & CFO By:
--------------------------------------------------------------------------------
Name:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
By: /s/ Stephen O. Schroeder
--------------------------------------------------------------------------------
Name: Stephen O. Schroeder
Title: Treasurer
Agent: PNC BANK, NATIONAL ASSOCIATION,
in its capacity as Agent
By: /s/ James V. Cannella
--------------------------------------------------------------------------------
Name: James V. Cannella
Title: Vice President By: /s/ Joseph G. Moran
--------------------------------------------------------------------------------
Name: Joseph G. Moran
Title: Vice President
Banks: PNC BANK, NATIONAL ASSOCIATION By: /s/
Joseph G. Moran
--------------------------------------------------------------------------------
Name: Joseph G. Moran
Title: Vice President
[SIGNATURES FOR OTHER BANKS SET FORTH ON THE FOLLOWING PAGE]
--------------------------------------------------------------------------------
[SIGNATURES FOR OTHER BANKS SET FORTH BELOW]
Banks Cont.: NATIONAL CITY BANK By: /s/ James C. Ritchie
--------------------------------------------------------------------------------
Name: James C. Ritchie
Title: Assistant Vice President BANK OF AMERICA, N.A By: /s/ Matthew
J. Reilly
--------------------------------------------------------------------------------
Name: Matthew J. Reilly
Title: Vice President THE CHASE MANHATTAN BANK By: /s/ Henry W.
Centa
--------------------------------------------------------------------------------
Name: Henry W. Centa
Title: Vice President BANK ONE, MICHIGAN By: /s/ Jean A. Phelan
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Name: Jean A. Phelan
Title: Vice President THE BANK OF NEW YORK By: /s/ Edward J.
Dougherty III
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Name: Edward J. Dougherty
Title: Vice President
[SIGNATURES FOR OTHER BANKS SET FORTH ON THE FOLLOWING PAGE]
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[SIGNATURES FOR OTHER BANKS SET FORTH BELOW]
Banks Cont.: FIFTH THIRD BANK, NORTHWESTERN, OHIO, N.A By: /s/
Jeffery C. Shrader
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Name: Jeffery C. Shrader
Title: Vice President SUNTRUST BANK By: /s/ William C. Humphries
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Name: William C. Humphries
Title: Director
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EXHIBIT 10.10
PHILLIPS-VAN HEUSEN CORPORATION
1997 STOCK OPTION PLAN
(As Amended Through March 7, 2001)
1. Purpose. The purposes of the 1997 Stock Option Plan (the "Plan") are to
induce certain individuals to remain in the employ, or to continue to serve as
directors, of Phillips-Van Heusen Corporation (the "Company") and its present
and future subsidiary corporations (each a "Subsidiary"), as defined in Section
424(f) of the Internal Revenue Code of 1986, as amended (the "Code"), to attract
new individuals to enter into such employment or service and to encourage such
individuals to secure or increase on reasonable terms their stock ownership in
the Company. The Board of Directors of the Company (the "Board") believes that
the granting of stock options (the "Options") under the Plan will promote
continuity of management and increased incentive and personal interest in the
welfare of the Company by those who are or may become primarily responsible for
shaping and carrying out the long range plans of the Company and securing its
continued growth and financial success. Options granted hereunder are intended
to be either (a) "incentive stock options" (which term, when used herein, shall
have the meaning ascribed thereto by the provisions of Section 422(b) of the
Code) or (b) options which are not incentive stock options ("non-incentive stock
options") or (c) a combination thereof, as determined by the Committee (the
"Committee") referred to in Section 5 at the time of the grant thereof.
2. Effective Date of the Plan. The Plan became effective on April 29, 1997.
3. Stock Subject to Plan. 2,500,000 of the authorized but unissued shares of the
common stock, $1.00 par value, of the Company (the "Common Stock") are hereby
reserved for issue upon the exercise of Options granted under the Plan;
provided, however, that the number of shares so reserved may from time to time
be reduced to the extent that a corresponding number of issued and outstanding
shares of the Common Stock are purchased by the Company and set aside for issue
upon the exercise of Options. If any Options expire or terminate for any reason
without having been exercised in full, the unpurchased shares subject thereto
shall again be available for the purposes of the Plan.
4. Administration.
A. Except as otherwise provided in paragraph B of Section 4, the Plan shall be
administered by the Committee. Subject to the express provisions of the Plan,
the Committee shall have complete authority, in its discretion, to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to it, to
determine the terms and provisions of the respective option agreements or
certificates (which need not be identical), to determine the individuals (each a
"Participant") to whom and the times and the prices at which Options shall be
granted, the periods during which each Option shall be exercisable, the number
of shares of the Common Stock to be subject to each Option and whether such
Option shall be an incentive stock option or a non-incentive stock option and to
make all other determinations necessary or advisable for the administration of
the Plan. In making such determinations, the Committee may take into account the
nature of the services rendered by the respective individuals, their present and
potential contributions to the success of the Company and the Subsidiaries and
such other factors as the Committee in its discretion shall deem relevant. The
Committee's determination
1
on the matters referred to in this Section 4 shall be conclusive. Any dispute or
disagreement which may arise under or as a result of or with respect to any
Option shall be determined by the Committee, in its sole discretion, and any
interpretations by the Committee of the terms of any Option shall be final,
binding and conclusive.
B. The Chairman of the Board or, if the Chairman is not an executive officer of
the Company, the Chief Executive Officer of the Company or other executive
officer of the Company designated by the Committee who is also a director (the
Chairman, Chief Executive Officer or other designated executive officer being
referred to as the "Designated Director") may administer the Plan with respect
to employees of the Company or a Subsidiary (i) who are not officers of the
Company subject to the provisions of Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and (ii) whose compensation is not
subject to the provisions of Section 162(m) of the Code. The authority of the
Designated Director and Options granted by the Designated Director shall be
subject to such terms, conditions, restrictions and limitations as may be
imposed by the Board, including, but not limited to, a limit on the aggregate
number of shares of Common Stock subject to Options that may be granted in any
one calendar year by the Designated Director to all such employees of the
Company and its Subsidiaries and a maximum number of shares that may be subject
to Options granted under the Plan in any one calendar year to any single
employee by the Designated Director. Unless and until the Board shall take
further action, the maximum number of shares of Common Stock that may be subject
to Options granted under the Plan, the Company's 2000 Stock Option Plan and any
other stock option plan then in effect in any one calendar year by the
Designated Director shall be 100,000 in the aggregate and the maximum number of
shares of Common Stock that may be subject to Options granted under the Plan,
the Company's 2000 Stock Option Plan and any other stock option plan then in
effect in any one calendar year by the Designated Director to any single
employee shall be 5,000 in the aggregate. Any actions duly taken by the
Designated Director with respect to the grant of Options to such employees shall
be deemed to have been taken by the Committee for purposes of the Plan.
5. Committee. The Committee shall consist of two or more members of the Board.
It is intended that all of the members of the Committee shall be "non-employee
directors" within the meaning of Rule 16b-3(b)(3) promulgated under the Exchange
Act, and "outside directors" within the contemplation of Section 162(m)(4)(C)(i)
of the Code. The Committee shall be appointed annually by the Board, which may
at any time and from time to time remove any members of the Committee, with or
without cause, appoint additional members to the Committee and fill vacancies,
however caused, in the Committee. A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members present at a meeting duly called and held, except that
the Committee may delegate to any one of its members the authority of the
Committee with respect to the grant of Options to any person who shall not be an
officer and/or director of the Company and who is not, and in the judgment of
the Committee may not be reasonably expected to become, a "covered employee"
within the meaning of Section 162(m)(3) of the Code. Any decision or
determination of the Committee reduced to writing and signed by all of the
members of the Committee (or by the member(s) of the Committee to whom authority
has been delegated) shall be fully as effective as if it had been made at a
meeting duly called and held.
2
6. Eligibility. An Option may be granted only to a key employee of the Company
or a Subsidiary or to a director of the Company or a Subsidiary who is not an
employee of the Company or a Subsidiary.
7. Option Prices.
A. The initial per share option price of any Option shall be the price
determined by the Committee, but not less than the fair market value of a share
of the Common Stock on the date of grant; provided, however, that, in the case
of a Participant who owns more than 10% of the total combined voting power of
the Common Stock at the time an Option which is an incentive stock option is
granted to him or her, the initial per share option price shall not be less than
110% of the fair market value of a share of the Common Stock on the date of
grant.
B. For all purposes of the Plan, the fair market value of a share of the Common
Stock on any date shall be equal to (i) the closing sale price of the Common
Stock on the New York Stock Exchange on the business day preceding such date or
(ii) if there is no sale of the Common Stock on such Exchange on such business
day, the average of the bid and asked prices on such Exchange at the close of
the market on such business day.
8. Option Term. Participants shall be granted Options for such term as the
Committee shall determine, not in excess of ten years from the date of the
granting thereof; provided, however, that, in the case of a Participant who owns
more than 10% of the total combined voting power of the Common Stock at the time
an Option which is an incentive stock option is granted to him or her, the term
with respect to such Option shall not be in excess of five years from the date
of the granting thereof.
9. Limitations on Amount of Options Granted.
A. The aggregate fair market value of the shares of the Common Stock for which
any Participant may be granted incentive stock options which are exercisable for
the first time in any calendar year (whether under the terms of the Plan or any
other stock option plan of the Company) shall not exceed $100,000.
B. No Participant shall, during any fiscal year of the Company, be granted
Options under the Plan to purchase more than 100,000 shares of the Common Stock.
10. Exercise of Options.
A. Except as otherwise determined by the Committee at the time of grant, a
Participant may not exercise an Option during the period commencing on the date
of the granting of such Option to him or her and ending on the day next
preceding the third anniversary of such date. Except as otherwise determined by
the Committee at the time of grant, a Participant may (i) during the period
commencing on the third anniversary of the date of the granting of an Option to
him or her and ending on the day next preceding the fourth anniversary of such
date, exercise such Option with respect to one- third of the shares granted
thereby, (ii) during the period commencing on such fourth anniversary and ending
on the day next preceding the fifth anniversary of the date of the granting of
such Option, exercise such Option with respect to
3
two-thirds of the shares granted thereby, and (iii) during the period commencing
on such fifth anniversary, exercise such Option with respect to all of the
shares granted thereby.
B. Except as hereinbefore otherwise set forth, an Option may be exercised either
in whole at any time or in part from time to time.
C. An Option may be exercised only by a written notice of intent to exercise
such Option with respect to a specific number of shares of the Common Stock and
payment to the Company of the amount of the option price for the number of
shares of the Common Stock so specified; provided, however, that, if the
Committee shall in its sole discretion so determine at the time of the grant of
any Option, all or any portion of such payment may be made in kind by the
delivery of shares of the Common Stock having a fair market value equal to the
portion of the option price so paid; provided, further, however, that no portion
of such payment may be made by delivering shares of the Common Stock acquired
upon the exercise of an Option if such shares shall not have been held by the
Participant for at least six months; provided, further, however, that, subject
to the requirements of Regulation T (as in effect from time to time) promulgated
under the Exchange Act, the Committee may implement procedures to allow a broker
chosen by a Participant to make payment of all or any portion of the option
price payable upon the exercise of an Option and receive, on behalf of such
Participant, all or any portion of the shares of the Common Stock issuable upon
such exercise.
D. The Board may, in its discretion, permit any Option to be exercised, in whole
or in part, prior to the time when it would otherwise be exercisable.
E. I. Notwithstanding the provisions of paragraph A of this Section 10, in the
event that a Change in Control shall occur, then, each Option theretofore
granted to any Participant which shall not have theretofore expired or otherwise
been cancelled or become unexercisable shall become immediately exercisable in
full. For the purposes of this paragraph E, a "Change in Control" shall be
deemed to occur upon (a) the election of one or more individuals to the Board
which election results in one-third of the directors of the Company consisting
of individuals who have not been directors of the Company for at least two
years, unless such individuals have been elected as directors or nominated for
election by the stockholders as directors by at least three-fourths of the
directors of the Company who have been directors of the Company for at least two
years, (b) the sale by the Company of all or substantially all of its assets to
any Person, the consolidation of the Company with any Person, the merger of the
Company with any Person as a result of which merger the Company is not the
surviving entity as a publicly held corporation, (c) the sale or transfer of
shares of the Company by the Company and/or any one or more of its stockholders,
in one or more transactions, related or unrelated, to one or more Persons under
circumstances whereby any Person and its Affiliates shall own, after such sales
and transfers, at least one-fourth, but less than one-half, of the shares of the
Company having voting power for the election of directors, unless such sale or
transfer has been approved in advance by at least three- fourths of the
directors of the Company who have been directors of the Company for at least two
years, or (d) the sale or transfer of shares of the Company by the Company
and/or any one or more of its stockholders, in one or more transactions, related
or unrelated, to one or more Persons under circumstances whereby any Person and
its Affiliates shall own, after such sales and transfers, at least one-half of
the shares of the Company having voting power for the election of directors. For
the purposes of this division I, (1) the term "Affiliate" shall mean any Person
that directly, or indirectly through one
4
or more intermediaries, controls, or is controlled by, or is under common
control with, any other Person, (2) the term "Person" shall mean any individual,
partnership, firm, trust, corporation or other similar entity and (3) when two
or more Persons act as a partnership, limited partnership, syndicate or other
group for the purpose of acquiring, holding or disposing of securities of the
Company, such partnership, limited partnership, syndicate or group shall be
deemed a "Person".
II. In the event that a Change of Control shall occur, then, from and after the
time of such event, neither the provisions of this paragraph E nor any of the
rights of any Participant thereunder shall be modified or amended in any way.
F. Notwithstanding any other provision of the Plan to the contrary, including,
but not limited to, the provisions of paragraph D of Section 10, if any
Participant shall have effected a Hardship Withdrawal from a 401(k) Plan
maintained by the Company and/or one or more of the Subsidiaries, then, during
the period of one year commencing on the date of such Hardship Withdrawal, such
Participant may not exercise any Option using cash. For the purpose of this
paragraph F, a "Hardship Withdrawal" shall mean a distribution to a Participant
provided for in Reg. § 1.401(k)-1(d)(1)(ii) promulgated under Section
401(k)(2)(B)(i)(IV) of the Code or an analogous provision of the Puerto Rico
Internal Revenue Code of 1994, as amended (the "Puerto Rico Code") and the
regulations promulgated thereunder, and a "401(k) Plan" shall mean a plan which
is a "qualified plan" within the contemplation of Section 401(a) of the Code or
an analogous provision of the Puerto Rico Code which contains a "qualified cash
or deferred arrangement" within the contemplation of Section 401(k)(2) of the
Code or an analogous provision of the Puerto Rico Code.
11. Transferability. No Option shall be assignable or transferable except by
will and/or by the laws of descent and distribution and, during the life of any
Participant, each Option granted to him or her may be exercised only by him or
her.
12. Termination of Employment or Service. In the event a Participant leaves the
employ, or ceases to serve as a director, of the Company and the Subsidiaries,
whether voluntarily or otherwise but other than by reason of his or her death or
retirement, each Option theretofore granted to him or her which shall not have
theretofore expired or otherwise been cancelled shall, to the extent exercisable
on the date of such termination of employment or service and not theretofore
exercised, terminate upon the earlier to occur of the expiration of 30 days
after the date of such Participant's termination of employment or cessation of
service and the date of termination specified in such Option. Notwithstanding
the foregoing, if a Participant is terminated for cause (as defined herein),
each Option theretofore granted to him or her which shall not have theretofore
expired or otherwise been cancelled shall, to the extent not theretofore
exercised, terminate forthwith. In the event a Participant leaves the employ, or
ceases to serve as a director, of the Company and the Subsidiaries by reason of
his or her retirement, each Option theretofore granted to him or her which shall
not have theretofore expired or otherwise been cancelled shall become
immediately exercisable in full and shall, to the extent not theretofore
exercised, terminate upon the earlier to occur of the expiration of three years
after the date of such retirement and the date of termination specified in such
Option. In the event a Participant's employment, or service as a director, with
the Company and the Subsidiaries terminates by reason of his or her death, each
Option theretofore granted to him or her which shall not have theretofore
expired or otherwise been cancelled shall become immediately exercisable in full
and shall, to the extent not theretofore exercised, terminate upon the earlier
to occur of the expiration
5
of three months after the date of the qualification of a representative of his
or her estate and the date of termination specified in such Option. For purposes
of the foregoing, (a) the term "cause" shall mean: (i) the commission by the
Participant of any act or omission that would constitute a crime under federal,
state or equivalent foreign law, (ii) the commission by the Participant of any
act of moral turpitude, (iii) fraud, dishonesty or other acts or omissions that
result in a breach of any fiduciary or other material duty to the Company and/or
the Subsidiaries, or (iv) continued alcohol or other substance abuse that
renders the Participant incapable of performing his or her material duties to
the satisfaction of the Company and/or the Subsidiaries and (b) the term
"retirement" shall mean (i) the termination of a Participant's employment with
the Company and all of the Subsidiaries (A) other than for cause or by reason of
his or her death and (B) on or after the earlier to occur of (I) the first day
of the calendar month in which his or her 65th birthday shall occur and (II) the
date on which he or she shall have both attained his or her 55th birthday and
completed 10 years of employment with the Company and/or the Subsidiaries or
(ii) the termination of a Participant's service as a director with the Company
and all of the Subsidiaries (A) other than for cause or by reason of his or her
death and (B) on or after the first day of the calendar month in which his or
her 65th birthday shall occur.
13. Adjustment of Number of Shares. In the event that a dividend shall be
declared upon the Common Stock payable in shares of the Common Stock, the number
of shares of the Common Stock then subject to any Option and the number of
shares of the Common Stock reserved for issuance in accordance with the
provisions of the Plan but not yet covered by an Option and the number of shares
set forth in paragraph B of Section 9 shall be adjusted by adding to each share
the number of shares which would be distributable thereon if such shares had
been outstanding on the date fixed for determining the stockholders entitled to
receive such stock dividend. In the event that the outstanding shares of the
Common Stock shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock
split-up, combination of shares, sale of assets, merger or consolidation in
which the Company is the surviving corporation, then, there shall be substituted
for each share of the Common Stock then subject to any Option and for each share
of the Common Stock reserved for issuance in accordance with the provisions of
the Plan but not yet covered by an Option and for each share of the Common Stock
referred to in paragraph B of Section 9, the number and kind of shares of stock
or other securities into which each outstanding share of the Common Stock shall
be so changed or for which each such share shall be exchanged. In the event that
there shall be any change, other than as specified in this Section 13, in the
number or kind of outstanding shares of the Common Stock, or of any stock or
other securities into which the Common Stock shall have been changed, or for
which it shall have been exchanged, then, if the Committee shall, in its sole
discretion, determine that such change equitably requires an adjustment in the
number or kind of shares then subject to any Option and the number or kind of
shares reserved for issuance in accordance with the provisions of the Plan but
not yet covered by an Option and the number or kind of shares referred to in
paragraph B of Section 9, such adjustment shall be made by the Committee and
shall be effective and binding for all purposes of the Plan and of each stock
option agreement or certificate entered into in accordance with the provisions
of the Plan. In the case of any substitution or adjustment in accordance with
the provisions of this Section 13, the option price in each stock option
agreement or certificate for each share covered thereby prior to such
substitution or adjustment shall be the option price for all shares of stock or
other securities which shall have been substituted for such share or to which
such share shall have been adjusted in accordance with the provisions of this
Section 13. No adjustment or substitution provided for
6
in this Section 13 shall require the Company to sell a fractional share under
any stock option agreement or certificate. In the event of the dissolution or
liquidation of the Company, or a merger, reorganization or consolidation in
which the Company is not the surviving corporation, then, except as otherwise
provided in the second sentence of this Section 13, each Option, to the extent
not theretofore exercised, shall terminate forthwith.
14. Purchase for Investment, Withholding and Waivers. Unless the shares to be
issued upon the exercise of an Option by a Participant shall be registered prior
to the issuance thereof under the Securities Act of 1933, as amended, such
Participant will, as a condition of the Company's obligation to issue such
shares, be required to give a representation in writing that he or she is
acquiring such shares for his or her own account as an investment and not with a
view to, or for sale in connection with, the distribution of any thereof. In the
event of the death of a Participant, a condition of exercising any Option shall
be the delivery to the Company of such tax waivers and other documents as the
Committee shall determine. In the case of each
non-incentive stock option, a condition of exercising the same shall be the
entry by the person exercising the same into such arrangements with the Company
with respect to withholding as the Committee may determine.
15. No Stockholder Status. Neither any Participant nor his or her legal
representatives, legatees or distributees shall be or be deemed to be the holder
of any share of the Common Stock covered by an Option unless and until a
certificate for such share has been issued. Upon payment of the purchase price
thereof, a share issued upon exercise of an Option shall be fully paid and
non-assessable.
16. No Restrictions on Corporate Acts. Neither the existence of the Plan nor any
Option shall in any way affect the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Common
Stock or the rights thereof, or dissolution or liquidation of the Company, or
any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding whether of a similar character or otherwise.
17. No Employment Right. Neither the existence of the Plan nor the grant of any
Option shall require the Company or any Subsidiary to continue any Participant
in the employ of the Company or such Subsidiary.
18. Termination and Amendment of the Plan. The Board may at any time terminate
the Plan or make such modifications of the Plan as it shall deem advisable;
provided, however, that the Board may not without further approval of the
holders of a majority of the shares of the Common Stock present in person or by
proxy at any special or annual meeting of the stockholders, increase the number
of shares as to which Options may be granted under the Plan (as adjusted in
accordance with the provisions of Section 13), or change the class of persons
eligible to participate in the Plan, or change the manner of determining the
option prices. Except as otherwise provided in Section 13, no termination or
amendment of the Plan may, without the consent of the Participant to whom any
Option shall theretofore have been granted, adversely affect the rights of such
Participant under such Option. The Committee may not, without further approval
of the holders of a majority of the shares of the Common Stock present in person
or by
7
proxy at any special or annual meeting of the stockholders, amend any
outstanding Option to reduce the option price, or cancel any outstanding Option
and contemporaneously award a new Option to the same optionee for substantially
the same number of shares at a lower option price.
19. Expiration and Termination of the Plan. The Plan shall terminate on April
28, 2007 or at such earlier time as the Board may determine. Options may be
granted under the Plan at any time and from time to time prior to its
termination. Any Option outstanding under the Plan at the time of the
termination of the Plan shall remain in effect until such Option shall have been
exercised or shall have expired in accordance with its terms.
20. Options for Outside Directors.
A. A director of the Company who is not an employee of the Company or a
Subsidiary (an "Outside Director") shall be eligible to receive, in addition to
any other Option which he or she may receive pursuant to Section 6, an annual
Option. Except as otherwise provided in this Section 20, each such Option shall
be subject to all of the terms and conditions of the Plan.
B. I. At the first meeting of the Board immediately following each Annual
Meeting of the Stockholders of the Company, each Outside Director shall be
granted an Option, which shall be a non-incentive stock option, to purchase
8,000 shares of the Common Stock. Notwithstanding the foregoing, an Outside
Director may not receive a grant under this Section 20 for any year if and to
the extent such Outside Director receives a grant of options to purchase Common
Stock under any other Company stock option plan then in effect solely for his or
her services as a director of the Company for such year and the aggregate number
of shares of Common Stock issuable upon the exercise of all such options granted
for such year would exceed 8,000.
II. The initial per share option price of each Option granted to an Outside
Director shall under this Section 20 be equal to the fair market value of a
share of the Common Stock on the date of grant.
III. The term of each Option granted to an Outside Director shall be ten years
from the date of the granting thereof.
IV. All or any portion of the payment required upon the exercise of an Option
granted to an Outside Director may be made in kind by the delivery of shares of
the Common Stock having a fair market value equal to the portion of the option
price so paid.
C. The provisions of this Section 20 may not be amended except by the vote of a
majority of the members of the Board and by the vote of a majority of the
members of the Board who are not Outside Directors.
8 |
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EXHIBIT 10.1
CATERPILLAR INC.
1996 STOCK OPTION AND LONG-TERM INCENTIVE PLAN
(Amended and Restated as of 12/31/2000)
Section 1. Purpose
The Caterpillar Inc. 1996 Stock Option and Long-Term Incentive Plan ("Plan") is
designed to attract and retain outstanding individuals as directors, officers
and key employees of Caterpillar Inc. and its subsidiaries (collectively, the
"Company"), and to furnish incentives to such individuals through awards based
upon the performance of the Company and its stock. To this end, the Plan
provides for grants of stock options, restricted stock, and performance awards,
or combinations thereof, to non-employee directors, officers and other key
employees of the Company, on the terms and subject to the conditions set forth
in the Plan.
Section 2. Shares Subject to the Plan
> 2.1 Shares Reserved for Issuance
Twenty-four million shares of Company common stock ("Shares") shall be
available for issuance under the Plan either from authorized but unissued Shares
or from Shares acquired by the Company, including Shares purchased in the open
market. An additional four million Shares authorized but unissued under prior
Company stock option plans shall be available for issuance under this Plan.
> 2.2 Stock Splits/Stock Dividends
In the event of a change in the outstanding Shares of the Company by reason of a
stock dividend, recapitalization, merger, consolidation, split-up, combination,
exchange of shares, or similar event, the Compensation Committee ("Committee")
of the Company's Board of Directors ("Board") shall take any action, which, in
its discretion, it deems necessary to preserve benefits under the Plan,
including adjustment to the aggregate number of Shares reserved for issuance
under the Plan, the number and option price of Shares subject to outstanding
options granted under the Plan and the number and price of Shares subject to
other awards under the Plan.
> 2.3 Reacquired Shares
If Shares issued pursuant to the Plan are not acquired by participants because
of lapse, expiration or termination of an award, such Shares shall again become
available for issuance under the Plan. Shares tendered upon exercise of an
option by a Plan participant may be added back and made available solely for
future grants under the Plan.
1
--------------------------------------------------------------------------------
Section 3. Administration
The Committee shall have the authority to grant awards under the Plan to
officers and other key employees of the Company. Except as limited by the
express provisions of the Plan or by resolutions adopted by the Board, the
Committee also shall have the authority and discretion to interpret the Plan, to
establish and revise rules and regulations relating to the Plan, and to make any
other determinations that it believes necessary or advisable for administration
of the Plan.
The Committee shall be composed solely of members of the Board that are outside
directors, as that term is defined in Section 162(m) of the Internal Revenue
Code. The Committee shall have no authority with respect to non-employee
director awards under the Plan.
Section 4. Stock Options
4.1 Company Employees
(a) Eligibility
The Committee shall determine Company officers and employees to whom options
shall be granted, the timing of such grants, and the number of shares subject to
the option; provided that the maximum number of Shares upon which options may be
granted to any employee in any calendar year shall be 400,000.
> (b) Option Exercise Price
The exercise price of each option shall not be less than 100% of the fair market
value of Shares underlying the option at the time the option is granted. The
fair market value for purposes of determining the exercise price shall be the
mean between the high and low prices at which Shares are traded on the New York
Stock Exchange the day the option is granted. In the event this method for
determining fair market value is not practicable, fair market value shall be
determined by such other reasonable method as the Committee shall select.
> (c) Option Exercise
Options shall be exercisable in such installments and during such periods as may
be fixed by the Committee at the time of grant. Options that are not incentive
stock options as defined in Section 4.1(f) of the Plan shall not be exercisable
after the expiration of ten years from the date of grant.
Payment of the exercise price shall be made upon exercise of all or a portion of
any option. Such payment shall be in cash or by tendering Shares having a fair
market value equal to 100% of the exercise price. The fair market value of
Shares for this purpose shall be the mean between the high and low prices at
which Shares are traded on the New York Stock Exchange on the date of exercise.
Upon exercise of an option, any applicable taxes the Company is required to
withhold shall be paid to the Company. Shares to be received upon exercise may
be surrendered to satisfy withholding obligations.
2
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(d) Termination of Employment
The Committee may require a period of continued employment before an option can
be exercised. That period shall not be less than one year, except that the
Committee may permit a shorter period in the event of termination of employment
by retirement or death.
Termination of employment with the Company shall terminate remaining rights
under options then held; provided, however, that an option grant may provide
that if employment terminates after completion of a specific period, the option
may be exercised during a period of time after termination. That period may not
exceed sixty months where termination of employment is caused by retirement or
death or sixty days where termination results from any other cause. If death
occurs after termination of employment but during the period of time specified,
such period may be extended to not more than sixty-six months after retirement,
or thirty-eight months after termination of employment for any other cause. In
the event of termination within two years after a Change of Control as defined
in Section 7.2 of the Plan, options shall be exercisable for a period of sixty
months following the date of termination or for the maximum term of the option,
whichever is shorter. Notwithstanding the foregoing, the Committee may change
the post-termination period of exercisability of an option provided that change
does not extend the original maximum term of the option.
(e) Transferability of Options
(i) Except as otherwise permitted in Section 4.1(e)(ii), options
shall not be transferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code or the Employee Retirement Income Security Act.
Options are exercisable during the holder's lifetime only by the holder, unless
the holder becomes incapacitated or disabled, in which case the option may be
exercised by the holder's authorized representative. A holder may file with the
Company a written designation of beneficiaries with the authority to exercise
options in the event of the holder's death.
(ii) Notwithstanding the provisions of Section 4.1(e)(i), and in
addition to the permissible transfers under that provision, options granted to
persons at the level of Vice President and above, as well as directors of this
corporation and persons retired from those positions, may be transferred to any
one or more "Permitted Transferees," as long as those options are not incentive
stock options as defined below and are fully vested. Options granted to
employees below the level of Vice President may be transferred upon prior
approval of the Company's Director of Compensation and Benefits pursuant to the
terms of this section.
(iii) For purposes of Section 4.1(e)(ii), the term "Permitted
Transferees" shall mean the members of the group that consists exclusively of
the individual to whom the option is granted, the spouse of the individual to
whom the option is granted, the lineal descendants of the individuals to whom
the option is granted, the spouses of the lineal descendents to whom the
3
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option is granted, the lineal descendants of any spouse or former spouse of the
individual to whom the option is granted, the spouses of the lineal descendants
of any spouse or former spouse of the individual to whom the option is granted,
the estate (and any trust that serves a distributive function of an estate) of
the Permitted Transferee, all trusts that an individual who is a Permitted
Transferee can revoke and all trusts, corporations, partnerships, limited
liability companies and other entities in which, directly or indirectly, but for
the exercise of a power of appointment or the death of the survivor of the
individual who are Permitted Transferees. Each owner of an equitable interest is
an individual who is a Permitted Transferee.
(f) Incentive Stock Options
Incentive stock options, as defined in Section 422 of the Internal Revenue Code,
may be granted under the Plan. The decision to grant incentive stock options to
particular persons is within the Committee's discretion. Incentive stock options
shall not be exercisable after expiration of ten years from the date of grant.
The amount of incentive stock options vesting in a particular year cannot exceed
$100,000 per option recipient, based on the fair market value of the options on
the date of grant; provided that any portion of an option that cannot be
exercised as an incentive stock option because of this limitation may be
converted by the Committee to another form of option. The Board may amend the
Plan to comply with Section 422 of the Internal Revenue Code or other applicable
laws and to permit options previously granted to be converted to incentive stock
options.
4.2 Non-Employee Directors
(a) Terms
Subject to the share ownership requirements, options with a term of ten years
and one day are granted to each non-employee director for 4,000 Shares,
effective as of the close of each annual meeting of stockholders at which an
individual is elected a director or following which such individual continues as
a director. Options granted to non-employee directors shall become exercisable
by one-third at the end of each of the three successive one-year periods since
the date of grant. The exercise price of each option shall be 100% of the fair
market value of Shares underlying the option on the date of grant.
(b) Termination of Directorship
An option awarded to a non-employee director may be exercised any time within
60 months of the date the director terminates such status. In the event of a
director's death, the director's authorized representative may exercise the
option within 60 months of the date of death, provided that if the director dies
after cessation of director status, the option is exercisable within 66 months
of such cessation. In no event shall an option awarded to a non-employee
director be exercisable beyond the expiration date of that option.
4
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Section 5. Restricted Stock
5.1 Company Employees
(a) Eligibility
The Committee may determine whether restricted stock shall be awarded to Company
officers and employees, the timing of award, and the conditions and restrictions
imposed on the award.
(b) Terms
During the restriction period, the recipient shall have a beneficial interest in
the restricted stock and all associated rights and privileges of a stockholder,
including the right to vote and receive dividends, subject to any restrictions
imposed by the Committee at the time of grant.
The following restrictions will be imposed on Shares of restricted stock until
expiration of the restriction period:
(i) The recipient shall not be entitled to delivery of the
Shares;
(ii) None of the Shares issued as restricted stock may be
transferred other than by will or by the laws of descent and distribution; and
(iii) Shares issued as restricted stock shall be forfeited if
the recipient terminates employment with the Company, except for termination due
to retirement after a specified age, disability, death or other special
circumstances approved by the Committee.
Shares awarded as restricted stock will be issued subject to a restriction
period set by the Committee of no less than two nor more than ten years. The
Committee, except for restrictions specified in the preceding paragraphs, shall
have the discretion to remove any or all of the restrictions on a restricted
stock award whenever it determines such action appropriate. Upon expiration of
the restriction period, the Shares will be made available to the recipient,
subject to satisfaction of applicable tax withholding requirements.
> 5.2 Non-Employee Directors
(a) On January 1 of each year, 400 Shares of restricted stock shall
be granted to each director who is not currently an employee of the Company. The
stock will be subject to a restriction period of three years from the date of
grant. During the restriction period, the recipient shall have a beneficial
interest in the restricted stock and all associated rights and privileges of a
stockholder, including the right to vote and receive dividends.
5
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The following restrictions will be imposed on restricted stock until expiration
of the restricted period:
(i) The recipient shall not be entitled to delivery of the
Shares;
(ii) None of the Shares issued as restricted stock may be
transferred other than by will or by the laws of descent and distribution; and
(iii) Shares issued as restricted stock shall be forfeited if
the recipient ceases to serve as a director of the Company, except for
termination due to death, disability, or retirement under the Company's
Directors' Retirement Plan.
Upon expiration of the restriction period, the Shares will be made available to
the recipient, subject to satisfaction of applicable tax withholding
requirements.
(b) Each January 1st, 350 shares of restricted stock, in addition to
shares described in Section 5.2(a), shall be awarded to each director who is not
currently and has not been an employee of the Company. Shares awarded under this
Section 5.2(b) will be held in escrow until the director terminates service with
the Company. During the restriction period, the recipient shall have a
beneficial interest in the restricted stock and all associated rights and
privileges of a stockholder except as discussed below.
The following restrictions will be imposed on restricted stock awarded under
this Section 5.2(b) until it is made available to the recipient:
(i) The recipient shall not receive dividends on the shares, but
an amount equal to such dividends will be credited to the director's stock
equivalent account in the Company's Directors' Deferred Compensation Plan;
(ii) The recipient shall not be entitled to delivery of the
shares;
(iii) None of the shares awarded may be transferred other than
by will or by the laws of descent and distribution; and
(iv) The right to receive shares shall be subordinate to the
claims of general creditors of the Company.
Upon termination of service, restricted shares will be made available to the
recipient subject to satisfaction of applicable tax withholding requirements;
provided, however, that if the recipient has not served on the Board for at
least five years at the time of such termination, all restricted shares awarded
under this Section 5.2(b) shall be forfeited.
Pursuant to termination of the Company's Directors' Retirement Plan effective
December 31, 1996, each director continuing in office was awarded an amount of
restricted stock equal to the accumulated value of past pension accruals as
determined by the Company's actuary. Those shares will be subject to the same
restrictions as shares awarded annually pursuant to this Section 5.2(b).
6
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Section 6. Performance Awards
6.1 Eligibility and Terms
The Committee may grant awards to officers and other key employees ("Performance
Awards") based upon Company performance over a period of years ("Performance
Period"). The Committee shall have sole discretion to determine persons eligible
to participate, the Performance Period, Company performance factors applicable
to the award ("Performance Measures"), and the method of Performance Award
calculation.
At the time the Committee establishes a Performance Period for a particular
award, it shall also establish Performance Measures and targets to be attained
relative to those measures ("Performance Targets"). Performance Measures may be
based on any of the following factors, alone or in combination, as the Committee
deems appropriate: (i) return on assets; (ii) return on equity; (iii) return on
sales; (iv) total shareholder return; (v) cash flow; (vi) economic value added;
and (vii) net earnings. Performance Targets may include a minimum, maximum and
target level of performance with the size of Performance Awards based on the
level attained. Once established, Performance Targets and Performance Measures
shall not be changed during the Performance Period; provided, however, that the
Committee may eliminate or decrease the amount of a Performance Award otherwise
payable to a participant. Upon completion of a Performance Period, the Committee
shall determine the Company's performance in relation to the Performance Targets
for that period and certify in writing the extent to which Performance Targets
were satisfied.
6.2 Payment of Awards
Performance Awards may be paid in cash, Shares of restricted stock (pursuant to
terms applicable to restricted stock awarded to Company employees as described
in the Plan) or a combination thereof, as determined by the Committee.
Performance Awards shall be made not later than 90 days following the end of the
relevant Performance Period. The fair market value of a Performance Award
payment to any individual employee in any calendar year shall not exceed $2.5
million. The fair market value of Shares to be awarded shall be determined by
the average of the high and low price of Shares on the New York Stock Exchange
on the last business day of the Performance Period. Federal, state and local
taxes will be withheld as appropriate.
6.3 Termination
To receive a Performance Award, the participant must be employed by the Company
on the last day of the Performance Period. If a participant terminates
employment during the Performance Period by reason of death, disability or
retirement, a payout based on the time of employment during the Performance
Period shall be distributed. Participants employed on the last day of the
Performance Period, but not for the entire Performance Period, shall receive a
payout prorated for that part of the Performance Period for which they were
participants. If the participant is deceased at the time of Performance Award
payment, the payment shall be made to the recipient's designated representative.
7
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Section 7. Election to Receive Non-Employee Director Fees in Shares
Effective April 8, 1998, non-employee directors shall have the option of
receiving all or a portion of their annual retainer fees, as well as fees for
attendance at meetings of the Board and committees of the Board (including any
Committee Chairman stipend), in the form of Shares.
The number of Shares that may be issued pursuant to such election shall be based
on the amount of cash compensation subject to the election divided by the fair
market value of one Share on the date such cash compensation is payable. The
fair market value shall be the mean between the high and low prices at which
shares are traded on the New York Stock Exchange on payable date.
Shares provided pursuant to the election shall be held in book-entry form by the
Company on behalf of the non-employee director. Upon request, the Company shall
deliver Shares so held to the non-employee director. While held in book-entry
form, the Shares shall have all associated rights and privileges, including
voting rights and the right to receive dividends.
Section 8. Change of Control
8.1 Effect on Grants and Awards
Unless the Committee shall otherwise expressly provide in the agreement relating
to a grant or award under the Plan, upon the occurrence of a Change of Control
as defined below: (i) all options then outstanding under the Plan shall become
fully exercisable as of the date of the Change of Control; (ii) all terms and
conditions of restricted stock awards then outstanding shall be deemed satisfied
as of the date of the Change of Control; and (iii) all Performance Awards for a
Performance Period not completed at the time of the Change of Control shall be
payable in an amount equal to the product of the maximum award opportunity for
the Performance Award and a fraction, the numerator of which is the number of
months that have elapsed since the beginning of the Performance Period through
the later of (A) the date of the Change of Control or (B) the date the
participant terminates employment, and the denominator of which is the total
number of months in the Performance Period; provided, however, that if this Plan
shall remain in force after a Change of Control, a Performance Period is
completed during that time, and the participant's employment has not terminated,
this provision (iii) shall not apply.
8.2 Change of Control Defined
For purposes of the Plan, a "Change of Control" shall be deemed to have occurred
if:
(a) Any person becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 15 percent or more of the combined voting power of the
Company's then outstanding common stock, unless the Board by resolution negates
the effect of this provision in a particular circumstance, deeming that
resolution to be in the best interests of Company stockholders;
8
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(b) During any period of two consecutive years, there shall cease to
be a majority of the Board comprised of individuals who at the beginning of such
period constituted the Board;
(c) The shareholders of the Company approve a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) less than fifty percent of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(d) Company shareholders approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all of its assets.
Section 9. Amendment and Termination
The Board may terminate the Plan at any time, except with respect to grants and
awards then outstanding. The Board may amend the Plan without shareholder
approval, unless such approval is necessary to comply with applicable laws,
including provisions of the Exchange Act or Internal Revenue Code.
Section 10. Regulatory Compliance
Notwithstanding any other provision of the Plan, the issuance or delivery of any
Shares may be postponed for such period as may be required to comply with any
applicable requirements of any national securities exchange or any requirements
under any other law or regulation applicable to the issuance or delivery of such
Shares. The Company shall not be obligated to issue or deliver any Shares if
such issuance or delivery shall constitute a violation of any provision of any
law or regulation of any governmental authority or national securities exchange.
Section 11. Effective Date
The Plan shall be effective upon its approval by the Company's stockholders at
the 1996 Annual Meeting of Stockholders.
9
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Links:
Section 1. Purpose
Section 2. Shares Subject to the Plan
Section 3. Administration
Section 4. Stock Options
Section 5. Restricted Stock
Section 6. Performance Awards
Section 7. Election to Receive Non-Employee Director Fees in Shares
Section 8. Change of Control
Section 9. Amendment and Termination
Section 10. Regulatory Compliance
Section 11. Effective Date
|
$1,310,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
August 10, 2001
Among
OM GROUP, INC.
as a Borrower
OMG AG & CO. KG
as a Borrower
THE LENDING INSTITUTIONS NAMED THEREIN
as Lenders
CREDIT SUISSE FIRST BOSTON
as a Lender, the Syndication Agent,
a Joint Lead Arranger
,
and
a Joint Book Running Manager
NATIONAL CITY BANK
as a Lender, the Swing Line Lender, the Letter of Credit Issuer,
the Administrative Agent, the Collateral Agent,
a Joint Lead Arranger, and a Joint Book Running Manager
ABN AMRO BANK N.V.,
CREDIT LYONNAIS NEW YORK BRANCH,
and
KEYBANK NATIONAL ASSOCIATION,
as Documentation Agent
s
$325,000,000 Revolving Facility
$135,000,000 Term A Facility
$500,000,000 Term B Facility
$350,000,000 Asset Sale Term Facility
TABLE OF CONTENTS
SECTION 1.
DEFINITIONS AND TERMS
1.1.
Certain Defined Terms
1.2
Computation of Time Periods
1.3
Accounting Terms
1.4.
Terms Generally
1.5.
Currency Equivalents
1.6.
Pro Forma Calculations
1.7.
Appointment of the Company as Representative
1.8.
Addition of Borrowers
SECTION 2.
AMOUNT AND TERMS OF LOANS
2.1.
Commitments for Loans
2.2.
Minimum Borrowing Amounts, etc.; Pro Rata Borrowings
2.3.
Procedures for Borrowing and Disbursement of Funds
2.4.
Refunding of, or Participation in, Swing Line Loans
2.5.
Notes; Loan Accounts
2.6.
Voluntary Conversions of Dollar Denominated Loans
2.7.
Interest
2.8.
Selection and Continuation of Interest Periods
2.9.
Increased Costs, Illegality, etc.
2.10.
Breakage Compensation
2.11.
Change of Lending Office; Replacement of Lenders
SECTION 3.
LETTERS OF CREDIT
3.1.
Letters of Credit
3.2.
Letter of Credit Requests: Notices of Issuance
3.3.
Agreement to Repay Letter of Credit Drawings
3.4.
Letter of Credit Participations
3.5.
Increased Costs
3.6.
Guaranty of Letter of Credit Obligations of Other Letter of Credit Obligors
SECTION 4.
FEES; COMMITMENTS
4.1.
Fees
4.2.
Voluntary Termination/Reduction of Commitments
4.3.
Mandatory Adjustments of Commitments, etc.
SECTION 5.
PAYMENTS
5.1.
Voluntary Prepayments
5.2.
Scheduled Repayments and Mandatory Prepayments
5.3.
Method and Place of Payment
5.4.
Net Payments
SECTION 6.
CONDITIONS PRECEDENT
6.1.
Conditions Precedent at Closing Date
6.2.
Conditions Precedent to All Credit Events
SECTION 7.
REPRESENTATIONS AND WARRANTIES
7.1.
Corporate Status, etc.
7.2.
Subsidiaries
7.3.
Corporate Power and Authority, etc.
7.4.
No Violation
7.5.
Governmental Approvals
7.6.
Litigation
7.7.
Use of Proceeds; Margin Regulations
7.8.
Financial Statements, etc.
7.9.
No Material Adverse Change
7.10.
Tax Returns and Payments
7.11.
Title to Properties, etc.
7.12.
Lawful Operations, etc.
7.13.
Environmental Matters
7.14.
Compliance with ERISA
7.15.
Intellectual Property, etc.
7.16.
Investment Company
7.17.
Existing Indebtedness
7.18.
Burdensome Contracts; Labor Relations
7.19.
Security Interests
7.20.
Target Acquisition Documents, etc
7.21.
True and Complete Disclosure
SECTION 8.
AFFIRMATIVE COVENANTS
8.1.
Reporting Requirements
8.2.
Books, Records and Inspections
8.3.
Insurance
8.4.
Payment of Taxes and Claims
8.5.
Corporate Franchises
8.6.
Maintenance of Properties
8.7.
Compliance with Statutes, etc.
8.8.
Compliance with Environmental Laws
8.9.
Fiscal Years, Fiscal Quarters
8.10.
Hedge Agreements, etc.
8.11.
Certain Subsidiaries to Join in Subsidiary Guaranty
8.12.
Additional Security; Further Assurances
8.13.
Casualty and Condemnation
8.14.
Landlord/Mortgagee Waivers; Bailee Letters
8.15.
Most Favored Covenant Status
8.16.
Senior Debt
SECTION 9.
NEGATIVE COVENANTS
9.1.
Changes in Business
9.2.
Consolidation, Merger, Acquisitions, Asset Sales, etc.
9.3.
Liens
9.4.
Indebtedness
9.5.
Advances, Investments, Loans and Guaranty Obligations
9.6.
Dividends and Other Restricted Payments
9.7.
Consolidated Total Debt/Consolidated EBITDA Ratio
9.8.
Consolidated Total Debt/Consolidated Total Capitalization Ratio
9.9.
Fixed Charge Coverage Ratio
9.10.
Interest Coverage Ratio
9.11.
Limitation on Certain Restrictive Agreements
9.12.
Prepayments and Refinancings of Other Debt, etc.
9.13.
Transactions with Affiliates
9.14.
Modifications of Target Acquisition Documents, etc.
9.15.
Plan Terminations, Minimum Funding, etc.
SECTION 10.
EVENTS OF DEFAULT
10.1.
Events of Default
10.2.
Acceleration, etc.
10.3.
Application of Liquidation Proceeds
SECTION 11.
THE ADMINISTRATIVE AGENT
11.1.
Appointment
11.2.
Delegation of Duties
11.3.
Exculpatory Provisions
11.4.
Reliance by Administrative Agent
11.5.
Notice of Default
11.6.
Non-Reliance
11.7.
Indemnification
11.8.
The Administrative Agent in Individual Capacity
11.9.
Successor Administrative Agent
11.10.
Other Agents
SECTION 12.
GUARANTY BY THE COMPANY
12.1.
Guaranty of Certain Subsidiary Borrowings
12.2.
Additional Undertaking
12.3.
Guaranty Unconditional, etc
12.4.
Company Obligations to Remain in Effect; Restoration
12.5.
Waiver of Acceptance, etc
12.6.
Subrogation
12.7.
Effect of Stay
SECTION 13.
MISCELLANEOUS
13.1.
Payment of Expenses etc.
13.2.
Right of Setoff
13.3.
Notices
13.4.
Benefit of Agreement
13.5.
No Waiver: Remedies Cumulative
13.6.
Payments Pro Rata; Sharing of Setoffs, etc
13.7.
Calculations: Computations
13.8.
Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial
13.9.
Counterparts
13.10.
Effectiveness; Integration
13.11.
Headings Descriptive
13.12.
Amendment or Waiver
13.13.
Survival of Indemnities
13.14.
Domicile of Loans
13.15.
Confidentiality
13.16.
Lender Register
13.17.
Limitations on Liability of the Letter of Credit Issuers
13.18.
General Limitation of Liability
13.19.
No Duty
13.20.
Lenders and Agent Not Fiduciary to Borrowers, etc.
13.21.
Survival of Representations and Warranties
13.22.
Severability
13.23.
Independence of Covenants
13.24.
Judgment Currency
13.25.
Interest Rate Limitation
ANNEX I-A
-
INFORMATION AS TO LENDERS
ANNEX I-B
-
EXISTING LOANS
ANNEX II
-
INFORMATION AS TO SUBSIDIARIES
ANNEX III
-
DESCRIPTION OF EXISTING INDEBTEDNESS
ANNEX IV
-
DESCRIPTION OF EXISTING LIENS
ANNEX V
-
DESCRIPTION OF EXISTING ADVANCES, LOANS,
INVESTMENTS AND GUARANTEES
ANNEX VI
-
DESCRIPTION OF LETTERS OF CREDIT DEEMED
ISSUED UNDER THE CREDIT AGREEMENT
EXHIBIT A-1
-
FORM OF TERM A NOTE
EXHIBIT A-2
-
FORM OF TERM B NOTE
EXHIBIT A-3
-
FORM OF ASSET SALE TERM NOTE
EXHIBIT A-4
-
FORM OF REVOLVING NOTE
EXHIBIT A-5
-
FORM OF SWING LINE NOTE
EXHIBIT B-1
-
FORM OF NOTICE OF BORROWING
EXHIBIT B-2
-
FORM OF NOTICE OF CONVERSION
EXHIBIT B-3
-
FORM OF LETTER OF CREDIT REQUEST
EXHIBIT C-1
-
FORM OF SUBSIDIARY GUARANTY
EXHIBIT C-2
-
FORM OF SECURITY AGREEMENT
EXHIBIT C-3
-
FORM OF COLLATERAL ASSIGNMENT OF PATENTS
EXHIBIT C-4
-
FORM OF COLLATERAL ASSIGNMENT OF TRADEMARKS
EXHIBIT C-5
-
FORM OF PLEDGE AGREEMENT
EXHIBIT D-1
-
FORM OF OPINION OF COUNSEL TO THE BORROWER
EXHIBIT D-2
-
FORM OF SOLVENCY CERTIFICATE
EXHIBIT E
-
FORM OF ASSIGNMENT AGREEMENT
EXHIBIT F
-
FORM OF SECTION 5.4(b)(ii) CERTIFICATE
EXHIBIT G
-
FORM OF ADDITIONAL BORROWER JOINDER
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT
, dated as of August 10, 2001, among the following:
(i) OM GROUP, INC.
, a Delaware corporation (herein, together with its successors and assigns, the
"Company" or a "Borrower");
(ii)
OMG AG & Co. KG, a partnership organized under the laws of the Federal Republic
of Germany (herein, together with its successors and assigns, "OMG AG" or a
"Borrower");
(iii)
the lending institutions signatory hereto (each a "Lender" and collectively, the
"Lenders");
(iv)
CREDIT SUISSE FIRST BOSTON ("CSFB") as a Lender, the syndication agent (the
"Syndication Agent"), Joint Book Running Manager and a Joint Lead Arranger (a
"Joint Lead Arranger");
(v) NATIONAL CITY BANK
, a national banking association, as a Lender, the Swing Line Lender, the Letter
of Credit Issuer, and as the administrative agent (the "Administrative Agent"),
the collateral agent (the "Collateral Agent"), Joint Book Running Manager and a
Joint Lead Arranger (a "Joint Lead Arranger", and together with CSFB, the "Joint
Lead Arrangers"); and
(vi)
ABN AMRO BANK N.V., CREDIT LYONNAIS NEW YORK BRANCH, and KEYBANK NATIONAL
ASSOCIATION, each as a Lender and as a documentation agent (the "Documentation
Agent"):
PRELIMINARY STATEMENTS:
(1) Unless otherwise defined herein, all capitalized terms used herein
and defined in section 1 are used herein as so defined.
(2) The Company entered into the Credit Agreement dated as of April 3,
2000 with the lending institutions party thereto (the "Existing Lenders") and
National City Bank, as the Administrative Agent and the Collateral Agent (the
"Existing Credit Agreement").
(3) The parties hereto desire to amend and restate the Existing Credit
Agreement in its entirety in order to, among other things, (i) finance the
acquisition (the "Target Acquisition") by the Company of all of the shares of
dmc2 Degussa Metals Catalysts Cerdec (the "Target"), from Degussa AG, a
corporation formed under the laws of the Federal Republic of Germany pursuant to
the Purchase Agreement, dated as of August 10, 2001, among the Target, the
Company, and Degussa AG (such Purchase Agreement, as amended or otherwise
modified from time to time, the "Target Purchase Agreement"), (ii) provide for
the repayment of certain existing Indebtedness, (iii) permit certain
Subsidiaries of the Company to become Borrowers hereunder and (iv) provide
working capital and funds for other lawful purposes.
(4) Subject to and upon the terms and conditions set forth herein, the
Lenders are willing to make available to the Borrowers the credit facilities
provided for herein.
NOW, THEREFORE
, the parties hereto agree that the Existing Credit Agreement shall, as of the
Effective Date, but subject to the satisfaction of the conditions precedent set
forth in section 6.1 hereof, be amended and restated in its entirety as follows:
SECTION 1. DEFINITIONS AND TERMS.
1.1. Certain Defined Terms.
As used herein, the following terms shall have the meanings herein specified
unless the context otherwise requires.
"Acquisition" shall mean and include (i) any acquisition on a going
concern basis (whether by purchase, lease or otherwise) of any facility and/or
business operated by any person who is not a Subsidiary of the Company, and (ii)
acquisitions of a majority of the outstanding equity or other similar interests
in any such person (whether by merger, stock purchase or otherwise).
"Additional Borrower Joinder"
shall mean, in the case of a Domestic Subsidiary, an Additional Borrower Joinder
in the Form of Exhibit G to this Agreement, and in the case of any Foreign
Subsidiary, in such form as is acceptable to the Administrative Agent and the
Company, pursuant to which the signatory thereto becomes a Borrower hereunder
pursuant to section 1.8.
"Additional Security Document" shall have the meaning provided in
section 8.12(b).
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to section 11.9.
"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, or, in the case of any Lender which is an
investment fund, the investment advisor thereof and any investment fund having
the same investment advisor. A person shall be deemed to control a second person
if such first person possesses, directly or indirectly, the power (i) to vote
20% or more of the securities having ordinary voting power for the election of
directors or managers of such second person or (ii) to direct or cause the
direction of the management and policies of such second person, whether through
the ownership of voting securities, by contract or otherwise. Notwithstanding
the foregoing, (x) a director, officer or employee of a person shall not, solely
by reason of such status, be considered an Affiliate of such person; and (y)
neither the Administrative Agent nor any Lender shall in any event be considered
an Affiliate of the Borrower or any other Credit Party or any of their
respective Subsidiaries.
"Agreement" shall mean this Amended and Restated Credit Agreement, as
the same may be from time to time further modified, amended and/or supplemented.
"Alternative Currency" shall mean Euros, if at the time such currency
is readily and freely transferable and convertible into Dollars.
"Alternative Currency Sublimit" shall mean $150,000,000.
"Applicable Commitment Fee"
shall mean a rate per annum set forth in the Pricing Grid in section 2.7(g)(ii).
"Applicable Eurocurrency Margin" shall have the meaning provided in
section 2.7(g).
"Applicable Lending Office" shall mean, with respect to each Lender,
(i) such Lender's Domestic Lending Office in the case of Borrowings consisting
of Prime Rate Loans and (ii) such Lender's Eurocurrency Lending Office in the
case of Borrowings consisting of Eurocurrency Loans, and (iii) in the case of
Borrowings from the Swing Line Lender which consist of Money Market Rate Loans,
the Domestic Lending Office of the Swing Line Lender.
"Applicable Prime Rate Margin" shall have the meaning provided in
section 2.7(g).
"Approved Fund" means with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in commercial loans and is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Asset Sale" shall mean, with respect to any person, any sale, lease,
transfer or other disposition by such person (including a consolidation or
merger or other sale of any Subsidiary of such person with, into or to any other
person in a transaction in which such Subsidiary ceases to be a Subsidiary) of
(i) all or substantially all of the assets of any division or line of business
of such person or any of its Subsidiaries, (ii) any manufacturing or processing
plant or facility of such person or any of its Subsidiaries, (iii) shares of
capital stock or other equity interests (or any options, warrants or rights to
acquire any such shares or other equity interests) of a Subsidiary, with the
result that the Company's fully diluted direct and indirect percentage ownership
interest in such Subsidiary is reduced, including any such transaction resulting
in such Subsidiary ceasing to be a Subsidiary, or effected by means of a
liquidation of a corporation, partnership or limited liability company which is
not a Wholly-Owned Subsidiary, or (v) other non-cash assets or rights of such
person or any Subsidiary outside the ordinary course of business, provided that
the term Asset Sale specifically excludes (x) any sales, transfers or other
dispositions of inventory, or obsolete or excess furniture, fixtures, equipment
or other property, real or personal, tangible or intangible, in each case in the
ordinary course of business, and (y) any Event of Loss. The term Asset Sale
specifically includes any Sale and Lease-Back Transaction and the disposition of
the Divested Businesses.
"Asset Sale Proceeds Account" shall mean a "securities account" (as
such term is defined in Article 8 of the Uniform Commercial Code) in respect of
which the Collateral Agent is the "entitlement holder" (as defined in Article 8
of the Uniform Commercial Code) into which the Company shall deposit the Net
Cash Proceeds generated from any Asset Sale of the Divested Businesses, if the
Company so elects pursuant to section 5.2(g)(ii).
"Asset Sale Term Borrowing" shall mean the incurrence of Asset Sale
Term Loans consisting of one Type of Loan, by the Company from all of the
Lenders having Commitments in respect thereof on a pro rata basis on a given
date (or resulting from Conversions or Continuations on a given date), having in
the case of Eurocurrency Loans the same Interest Period.
"Asset Sale Term Commitment" shall mean, with respect to each Lender,
the amount, if any, set forth opposite such Lender's name in Annex I-A hereto as
its "Asset Sale Term Commitment" as the same may be reduced from time to time
pursuant to sections 4.2, 4.3 and/or 10.2 or adjusted from time to time as a
result of assignments to or from such Lender pursuant to section 13.4.
"Asset Sale Term Facility" shall mean the credit facility evidenced by
the Total Asset Sale Term Commitment.
"Asset Sale Term Loan" shall have the meaning provided in section
2.1(c).
"Asset Sale Term Maturity Date" shall mean the date which is 270 days
after the Closing Date, or such earlier date on which the Total Asset Sale Term
Commitment is terminated.
"Asset Sale Term Note" shall have the meaning provided in section
2.5(a).
"Assignment Agreement" shall mean an Assignment Agreement
substantially in the form of Exhibit E hereto.
"Augmenting Revolving Lender" shall have the meaning provided in
section 2.1(h).
"Authorized Officer" shall mean any officer or employee of any
Borrower designated as such in writing to the Administrative Agent by the
Company.
"Bankruptcy Code" shall have the meaning provided in section 10.1(h).
"Borrower" shall mean each of the Company, OMG AG and such other
wholly-owned Subsidiaries of the Company as may from time to time execute an
Additional Borrower Joinder which is accepted by the Administrative Agent and
the Required Lenders pursuant to section 1.8 of this Agreement and otherwise
satisfies the terms and conditions of this Agreement.
"Borrowing" shall mean a Revolving Borrowing, a Swing Line Borrowing
or a Term Borrowing, as the case may be.
"Bridge Notes" shall mean the Company's Senior Subordinated Increasing
Rate Bridge Notes issued on the Closing Date and "Bridge Note Documents" shall
mean the Bridge Notes and all documents executed in connection therewith.
"Business Day"shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in the city in which the applicable Payment Office is located a legal holiday or
a day on which banking institutions are authorized by law or other governmental
actions to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurocurrency Loans,
any day which is a Business Day described in clause (i) and which is also a day
on which dealings are carried on in the London interbank market and banks are
open for business in London and in the country of issue of any Alternative
Currency in which any applicable Eurocurrency Loans are denominated.
"Capital Lease" as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Company or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities identified as "capital lease
obligations" (or any similar words) on a consolidated balance sheet of the
Company and its Subsidiaries prepared in accordance with GAAP.
"Cash Equivalents" shall mean any of the following:
(i) securities issued or directly and fully guaranteed or insured by
the United States of America or any agency or instrumentality thereof (provided
that the full faith and credit of the United States of America is pledged in
support thereof) having maturities of not more than one year from the date of
acquisition;
(ii) U.S. dollar denominated time deposits, certificates of deposit
and bankers' acceptances of (x) any Lender or (y) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody's is at least P-1 or the equivalent thereof (any such bank, an
"Approved Bank"), in each case with maturities of not more than three months
from the date of acquisition;
(iii) commercial paper issued by any Lender or Approved Bank or by
the parent company of any Lender or Approved Bank and commercial paper issued
by, or guaranteed by, any industrial or financial company with a short- term
commercial paper rating of at least A-1 or the equivalent thereof by S&P or at
least P-1 or the equivalent thereof by Moody's, or guaranteed by any industrial
company with a long term unsecured debt rating of at least A or A2, or the
equivalent of each thereof, from S&P or Moody's, as the case may be, and in each
case maturing within 90 days after the date of acquisition;
(iv) fully collateralized repurchase agreements entered into with any
Lender or Approved Bank having a term of not more than 30 days and covering
securities described in clause (i) above;
(v) investments in money market funds substantially all the assets of
which are comprised of securities of the types described in clauses (i) through
(iv) above;
(vi) investments in money market funds access to which is provided as
part of "sweep" accounts maintained with a Lender or an Approved Bank;
(vii) investments in industrial development revenue bonds which (A)
"re-set" interest rates not less frequently than quarterly, (B) are entitled to
the benefit of a remarketing arrangement with an established broker dealer, and
(C) are supported by a direct pay letter of credit covering principal and
accrued interest which is issued by an Approved Bank;
(viii) investments in pooled funds or investment accounts consisting
of investments of the nature described in the foregoing clause (vii); and
(ix) in the case of any Foreign Subsidiary only, short term deposits,
certificates of deposit, repurchase agreements and similar financial
instruments, in any currency, with or issued by any local or international
financial institution with undivided capital and surplus of at least
$350,000,000 (or the equivalent in any applicable currency).
"Cash Proceeds" shall mean, with respect to (i) any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by the Company and/or any Subsidiary from such Asset
Sale, and (ii) any Event of Loss, the aggregate cash payments, including all
insurance proceeds and proceeds of any award for condemnation or taking,
received in connection with such Event of Loss.
"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. 9601 et seq.
"Change of Control" shall mean and include any of the following:
(i) during any period of two consecutive calendar years, individuals
who at the beginning of such period constituted the Company's Board of Directors
(together with any new directors (x) whose election by the Company's Board of
Directors was, or (y) whose nomination for election by the Company's
shareholders was (prior to the date of the proxy or consent solicitation
relating to such nomination), approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved), shall cease for any reason to constitute a majority of the directors
then in office;
(ii) any person or group (as such term is defined in section 13(d)(3)
of the 1934 Act) shall acquire, directly or indirectly, beneficial ownership
(within the meaning of Rule 13d-3 and 13d-5 of the 1934 Act) of more than 50%,
on a fully diluted basis, of the economic or voting interest in the Company's
capital stock;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other person, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted or exchanged for voting securities
of the surviving or resulting entity) more than 50% of the combined voting power
of the voting securities of the Company or such surviving or resulting entity
outstanding after such merger or consolidation;
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement or agreements for the sale or
disposition by the Company of all or substantially all of the Company's assets;
and/or
(v) any "change in control" or any similar term as defined in any of
the indentures, credit agreements or other instruments governing any
Indebtedness of the Company or any of its Subsidiaries with an outstanding
principal amount, or providing for commitments to lend in an outstanding
principal amount, of at least $10,000,000 (or the equivalent amount in any other
currency).
"Closing Date" shall mean the date, on or after the Effective Date,
upon which the conditions specified in section 6.1 are satisfied.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"Collateral" shall mean any collateral covered by any Security
Document.
"Collateral Agent" shall mean the Administrative Agent acting as
Collateral Agent for the Lenders pursuant to the Security Documents.
"Commitment" shall mean, with respect to each Lender, its Term A
Commitment, if any, its Term B Commitment, if any, its Asset Sale Term
Commitment, if any, its Revolving Commitment, if any, its Swing Line Commitment,
if any, or any or all of such Commitments of a Lender, as applicable.
"Commitment Fee" shall have the meaning provided in section 4.1(a).
"Consolidated Amortization Expense" shall mean, for any period, all
amortization expenses of the Company and its Subsidiaries, all as determined for
the Company and its Subsidiaries on a consolidated basis in accordance with
GAAP.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events amounts expended or capitalized under Capital Leases
and Synthetic Leases but excluding any amount representing capitalized interest)
by the Company and its Subsidiaries during that period that, in conformity with
GAAP, are or are required to be included in the property, plant or equipment
reflected in the consolidated balance sheet of the Company and its Subsidiaries.
"Consolidated Depreciation Expense" shall mean, for any period, all
depreciation expenses of the Company and its Subsidiaries, all as determined for
the Company and its Subsidiaries on a consolidated basis in accordance with
GAAP.
"Consolidated EBITDA" shall mean, for any period, Consolidated Net
Income for such period; plus (A) the sum of the amounts for such period included
in determining such Consolidated Net Income of (i) Consolidated Interest
Expense, (ii) Consolidated Income Tax Expense, (iii) Consolidated Depreciation
Expense, (iv) Consolidated Amortization Expense, and (v) non-cash losses and
charges which are properly classified as extraordinary or non-recurring
(including, without limitation, non-recurring fees, expenses and costs relating
to the Transaction and the Refinancing Issuance); less (B) gains on sales of
assets and other extraordinary gains and other non-recurring non-cash gains; all
as determined for the Company and its Subsidiaries on a consolidated basis in
accordance with GAAP; except that in computing Consolidated Net Income for
purposes of this definition, there shall be excluded therefrom (x) the income,
(or loss) of any entity (other than Subsidiaries of the Company) in which the
Company or any of its Subsidiaries has a joint or minority interest, except to
the extent of the amount of dividends or other distributions actually paid to
the Company or any of its Subsidiaries during such period, and (y) the income of
any Subsidiary of the Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary.
"Consolidated Income Tax Expense" shall mean, for any period, all
provisions for taxes based on the net income of the Company or any of its
Subsidiaries (including, without limitation, any additions to such taxes, and
any penalties and interest with respect thereto), all as determined for the
Company and its Subsidiaries on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that which is capitalized, that which is
attributable to Capital Leases or Synthetic Leases and the pre-tax equivalent of
dividends payable on Redeemable Stock) of the Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of the Company
and its Subsidiaries including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and net costs
under Hedge Agreements, but excluding, however, any amortization or write-off of
deferred financing costs and any charges for prepayment penalties on prepayment
of Indebtedness.
"Consolidated Net Income" shall mean for any period, the net income
(or loss), without deduction for minority interests, of the Company and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP.
"Consolidated Net Working Capital" shall mean current assets
(excluding cash and Cash Equivalents), minus current liabilities, all as
determined for the Company and its Subsidiaries on a consolidated basis in
accordance with GAAP.
"Consolidated Net Worth" shall mean at any time for the determination
thereof all amounts which, in conformity with GAAP, would be included under the
caption "total stockholders' equity" (or any like caption) on a consolidated
balance sheet of the Company as at such date, provided that in no event shall
Consolidated Net Worth include any amounts in respect of Redeemable Stock.
"Consolidated Senior Debt" shall mean the sum (without duplication) of
all Indebtedness other than Subordinated Indebtedness of the Company and of each
of its Subsidiaries, all as determined on a consolidated basis.
"Consolidated Total Capital" shall mean, at any date of determination,
the sum of (i) Consolidated Total Debt at such time, plus (ii) Consolidated Net
Worth as of the end of the most recent fiscal period for which financial
statements are at the time required to have been delivered to the Lenders
hereunder.
"Consolidated Total Debt" shall mean the sum (without duplication) of
all Indebtedness (other than Indebtedness described in clause (x) of the
definition thereof) of the Company and of each of its Subsidiaries, all as
determined on a consolidated basis.
"Continue", "Continuation" and "Continued" each refers to a
continuation of Eurocurrency Loans for an additional Interest Period as provided
in section 2.8.
"Convert", "Conversion" and "Converted" each refers to a conversion of
Loans of one Type into Loans of another Type, pursuant to section 2.6, 2.8(b),
2.9 or 5.2.
"Credit Documents" shall mean this Agreement, the Notes, the
Subsidiary Guaranty, the Security Documents, any Letter of Credit Document and
any Incremental Term Loan Assumption Agreement.
"Credit Event" shall mean the making of any Loans and/or the issuance
of any Letter of Credit.
"Credit Party" shall mean the Company, each other Borrower and each of
the Company's Subsidiaries and Affiliates which is a party to any Credit
Document.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" shall mean any Lender with respect to which a
Lender Default is in effect.
"Designated Hedge Agreement" shall mean any Hedge Agreement to which
the Company or any of its Subsidiaries is a party which, pursuant to (x) a
written instrument signed by the Administrative Agent and (y) the following
provisions, has been designated as a Designated Hedge Agreement so that the
Company's or Subsidiary's counterparty's credit exposure thereunder will be
entitled to share in the benefits of the Subsidiary Guaranty and the Security
Documents to the extent the Subsidiary Guaranty and such Security Documents
provide guarantees or security for creditors of the Company or any Subsidiary
under Designated Hedge Agreements:
(i) If so requested by the Company, the Administrative Agent may,
without the approval or consent of the Lenders, designate a Hedge Agreement as a
Designated Hedge Agreement.
(ii) Notwithstanding the foregoing, the Administrative Agent will not
designate any Hedge Agreement as a Designated Hedge Agreement without the
approval, consent or instructions of the Required Lenders, unless the
Administrative Agent reasonably determines, at the time of such designation and
after giving effect thereto, in accordance with its own customary valuation
practices, that the maximum aggregate credit exposure to the Company and its
Subsidiaries of all counterparties under all Designated Hedge Agreements is not
more than $20,000,000.
(iii) It shall be a condition to the rights of any counterparty
creditor of the Company or any Subsidiary under any Designated Hedge Agreement
to share in any recoveries of enforcement of the Subsidiary Guaranty and of the
Security Documents, that such counterparty creditor shall have entered into an
intercreditor or similar agreement with the Administrative Agent under which
recoveries from the Company and its Subsidiaries with respect to such Designated
Hedge Agreement will be shared in a manner consistent with the provisions of
section 10.3 hereof.
"Divested Businesses" shall mean the Electronic Materials, Performance
Pigments and Colors, Glass Systems, and Cerdec Ceramics divisions of the Target.
"Dollars", "U.S. dollars" and the sign "$" each means lawful money of
the United States.
"Domestic Lending Office" shall mean, with respect to any Lender, the
affiliate, branch or office of such Lender specified as its Domestic Lending
Office in the Administrative Questionnaire delivered by it to the Administrative
Agent or in the Assignment Agreement pursuant to which it became a Lender, or
such other affiliate, branch or office of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.
"Domestic Subsidiary" shall mean any Subsidiary organized under the
laws of the United States of America, any State thereof, the District of
Columbia, or any United States possession, the chief executive office and
principal place of business of which is located in, and which conducts the
majority of its business within, the United States of America and its
territories and possessions; excluding, however, any Subsidiary of a Foreign
Subsidiary.
"Effective Date" shall have the meaning provided in section 13.10.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in SEC
Regulation D), in each case which is:
(i) identified in a written notice from the Administrative Agent or a
requesting Lender to the Company, and not disapproved in writing by the Company
in a notice given to the Administrative Agent and any such requesting Lender,
specifying the reasons for such disapproval, within two Business Days following
the receipt by the Company of such notice disclosing the identity of any
proposed transferee (any such disapproval by the Company must be reasonable),
provided that the Company shall not be entitled to exercise the foregoing right
of disapproval if and so long as any Event of Default shall have occurred and be
continuing; and
(ii) not a direct competitor of the Company or engaged in the same or
similar principal lines of business as the Company and its Subsidiaries
considered as a whole, or is not an Affiliate of any such competitor of the
Company and its Subsidiaries.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any Environmental Law or any permit issued under any such law
(hereafter "Claims"), including, without limitation, (i) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (ii) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the storage, treatment or Release (as defined
in CERCLA) of any Hazardous Materials or arising from alleged injury or threat
of injury to health, safety or the environment.
"Environmental Law" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule of common
law now or hereafter in effect and in each case as amended, and any binding and
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment issued to or
rendered against the Borrower or any of its Subsidiaries relating to the
environment, employee health and safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. 2601 et seq.; the Clean Air Act, 42 U.S.C. 7401 et seq.; the Safe
Drinking Water Act, 42 U.S.C. 3803 et seq.; the Oil Pollution Act of 1990, 33
U.S.C. 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act
of 1986, 42 U.S.C. 11001 et seq., the Hazardous Material Transportation Act, 49
U.S.C. 1801 et seq. and the Occupational Safety and Health Act, 29 U.S.C. 651 et
seq. (to the extent it regulates occupational exposure to Hazardous Materials);
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
Effective Date 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 Company 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 Company or a Subsidiary
of the Company being or having been a general partner of such person.
"Euro" shall mean the single currency of the Participating Member
States of the European Union.
"Eurocurrency Lending Office" shall mean, with respect to any Lender,
the affiliate, branch or office of such Lender specified as its Eurocurrency
Lending Office in the Administrative Questionnaire delivered by it to the
Administrative Agent or in the Assignment Agreement pursuant to which it became
a Lender, or such other affiliate, branch or office or offices (for Eurocurrency
Loans denominated in Dollars or Euros) of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.
"Eurocurrency Loans" shall mean each Loan, denominated in Dollars or
in Euros, bearing interest at the rates provided in section 2.7(b).
"Eurocurrency Rate" shall mean with respect to each Interest Period
for a Eurocurrency Loan, (A) either (i) the rate per annum for deposits in
Dollars or in Euros for a maturity most nearly comparable to such Interest
Period which appears on page 3740 or 3750, as applicable, of the Dow Jones
Telerate Screen as of 11:00 A.M. (local time at the Notice Office) on the date
which is two Business Days prior to the commencement of such Interest Period, or
(ii) if such a rate does not appear on such a page, an interest rate per annum
equal to the average (rounded to the nearest ten thousandth of 1% per annum, if
such average is not such a multiple) of the rate per annum at which deposits in
Dollars or in Euros are offered to each of the Reference Banks by prime banks in
the London interbank Eurocurrency market for deposits of amounts in same day
funds comparable to the outstanding principal amount of the Eurocurrency Loan
for which an interest rate is then being determined with maturities comparable
to the Interest Period to be applicable to such Eurocurrency Loan, determined as
of 11:00 A.M. (London time) on the date which is two Business Days prior to the
commencement of such Interest Period, in each case divided (and rounded to the
nearest ten thousandth of 1%) by (B) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable to
any member bank of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D (or any successor category of liabilities
under Regulation D); provided, however, that in the event that the rate referred
to in clause (i) above is not available at any such time for any reason, then
the rate referred to in clause (i) shall instead be the average (rounded to the
nearest ten thousandth of 1%) of the rates at which U.S. dollar deposits of
$5,000,000 are offered to the Reference Banks in the London interbank market at
approximately 11:00 a.m. (London time), two Business Days prior to the
commencement of such Interest Period, for contracts which would be entered into
at the commencement of such Interest Period.
"Event of Default" shall have the meaning provided in section 10.1.
"Event of Loss" shall mean, with respect to any property, (i) the
actual or constructive total loss of such property or the use thereof, resulting
from destruction, damage beyond repair, or the rendition of such property
permanently unfit for normal use from any casualty or similar occurrence
whatsoever, (ii) the destruction or damage of a portion of such property from
any casualty or similar occurrence whatsoever under circumstances in which such
damage cannot reasonably be expected to be repaired, or such property cannot
reasonably be expected to be restored to its condition immediately prior to such
destruction or damage, within 90 days after the occurrence of such destruction
or damage, (iii) the condemnation, confiscation or seizure of, or requisition of
title to or use of, any property, or (iv) in the case of any property located
upon a Leasehold, the termination or expiration of such Leasehold.
"Excess Cash Flow" shall mean, for any period, the excess of (i)
Consolidated EBITDA for such period, over (ii) the sum for such period of (A)
Consolidated Interest Expense, (B) Consolidated Income Tax Expense, (C)
Consolidated Capital Expenditures, (D) the increase, if any, in Consolidated Net
Working Capital, (E) scheduled repayments and mandatory prepayments or
redemptions of the principal of Indebtedness and the stated or liquidation value
of Redeemable Stock (including required reductions in committed credit
facilities), (F) without duplication of any amount included under the preceding
clause (E), scheduled payments representing the principal portion of Capitalized
Leases and Synthetic Leases, and (G) Restricted Payments by the Company, if any;
all as determined on a consolidated basis for the Company and its Subsidiaries
for such period.
"Excess Cash Flow Prepayment Amount" shall have the meaning provided
in section 5.2(f).
"Existing Credit Agreement" shall have the meaning provided in the
preliminary statements to this Agreement.
"Existing Indebtedness" shall have the meaning provided in section
7.17.
"Existing Indebtedness Agreements" shall have the meaning provided in
section 7.17.
"Existing Lenders" shall have the meaning provided in the preliminary
statements of this Agreement.
"Existing Letter of Credit" shall have the meaning provided in section
3.1(d).
"Facility" shall mean the Revolving Facility, the Swing Line Facility,
the Term A Facility, the Term B Facility, the Asset Sale Term Facility, any
Incremental Term Loan Facility, or any of them, as applicable.
"Facing Fee" shall have the meaning provided in section 4.1(c).
"Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
section 4.1.
"Ferro Purchase Agreement" shall mean the Heads of Agreement dated as
of April 23, 2001 by and between Borrower and Ferro Corporation relating to the
purchase and sale of the Divested Businesses.
"Financial Projections" shall have the meaning provided in section
6.1(t).
"Fixed Charge Coverage Ratio" shall mean, for any Testing Period, the
ratio of
(i) Cnsolidated EBITDA for such Testing Period,
to
ii) the sum of (A) Consolidated Interest Expense, (B) Consolidated
Income Tax Expense, (C) Consolidated Capital Expenditures (other than any
capital expenditures which are funded with the proceeds of Indebtedness
permitted hereunder (other than Revolving Loans)), (D) scheduled or mandatory
repayments, prepayments or redemptions of the principal of Indebtedness (other
than any Excess Cash Flow Prepayment Amount pursuant to section 5.2(f) hereof)
and the stated or liquidation value of Redeemable Stock (including required
reductions in committed credit facilities), (E) without duplication of any
amount included under the preceding clause (D), scheduled payments representing
the principal portion of Capitalized Leases and Synthetic Leases, and (F) the
sum of all Restricted Payments by the Company , if any, in each case on a
consolidated basis for the Company and its Subsidiaries for such Testing Period.
"Foreign Borrower" shall mean any Borrower which is a Foreign
Subsidiary.
"Foreign Subsidiary" shall mean any Subsidiary (i) which is not
incorporated (or otherwise organized) in the United States and substantially all
of whose assets and properties are located, or substantially all of whose
business is carried on, outside the United States, or (ii) substantially all of
whose assets consist of Subsidiaries that are Foreign Subsidiaries as defined in
clause (i) of this definition.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of section 9,
including defined terms as used therein, are subject (to the extent provided
therein) to sections 1.3 and 13.7(a).
"Guaranty Obligations" shall mean as to any person (without
duplication) any obligation of such person guaranteeing any Indebtedness or
obligations under Precious Metal Leases ("primary Indebtedness") 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, (a) to purchase any such primary Indebtedness or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary Indebtedness or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary Indebtedness of the ability of the primary obligor
to make payment of such primary Indebtedness, or (d) otherwise to assure or hold
harmless the owner of such primary Indebtedness against loss in respect thereof,
provided, however, that the term Guaranty Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guaranty Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary Indebtedness in
respect of which such Guaranty 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.
"Hazardous Materials" shall mean (i) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (ii) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "restricted hazardous materials", "extremely hazardous
wastes", "restrictive hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants" or "pollutants", or words of similar meaning and regulatory
effect, under any applicable Environmental Law.
"Hedge Agreement" shall mean (i) any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect against fluctuations in interest
rates, (ii) any currency swap agreement, forward currency purchase agreement or
similar agreement or arrangement designed to protect against fluctuations in
currency exchange rates, and (iii) any forward commodity purchase agreement or
similar agreement or arrangement designed to protect against fluctuations in raw
material or other commodity prices.
"Incremental Facility" shall mean any Incremental Revolving Facility
or any Incremental Term Loan Facility.
"Incremental Facility Loans" shall mean any Loans made pursuant to any
Incremental Facility.
"Incremental Revolving Facility" shall mean the credit facility
created pursuant to Section 2.1(g) hereof.
"Incremental Revolving Facility Amount" shall mean, at any time the
excess, if any, of (a) $100,000,000 over (b) the sum of (i) the aggregate amount
of all Incremental Term Loan Commitments established at or prior to such time
pursuant to section 2.1(h) and (ii) the aggregate increase in the Revolving
Credit Commitments established prior to such time pursuant to section 2.1(g).
"Incremental Term Borrowing" shall mean the incurrence of Incremental
Term Loans consisting of one Type of Loan, by the Company from all the Lenders
having an Incremental Term Loan Commitment in respect thereof on a pro rata
basis on a given date, having in the case of Eurocurrency Loans the same
Interest Period.
"Incremental Term Lender" shall mean a Lender with an Incremental Term
Loan Commitment or an outstanding Incremental Term Loan.
"Incremental Term Loan Amount" shall mean, at any time, the excess, if
any, of (a) $100,000,000 over (b) the sum of (i) the aggregate increase in the
Revolving Credit Commitments established at or prior to such time pursuant to
section 2.1(g) and (ii) the aggregate amount of all Incremental Term Loan
Commitments established prior to such time pursuant to section 2.1(h).
"Incremental Term Loan Assumption Agreement" shall mean an Incremental
Term Loan Assumption Agreement in form and substance reasonably satisfactory to
the Administrative Agent, among the Administrative Agent and one or more
Incremental Term Lenders.
"Incremental Term Loan Commitment" shall mean the commitment of any
Lender, established pursuant to section 2.1(h), to make Incremental Term Loans
to the Company.
"Incremental Term Loan Facility" shall mean the credit facility
created pursuant to Section 2.1(h) hereof.
"Incremental Term Loan Maturity Date" shall mean the final maturity
date of any Incremental Term Loan, as set forth in the applicable Incremental
Term Loan Assumption Agreement.
"Incremental Term Loan Repayment Dates" shall mean the dates scheduled
for the repayment of principal of any Incremental Term Loan, as set forth in the
applicable Incremental Term Loan Assumption Agreement.
"Incremental Term Loans" shall mean Term Loans made by one or more
Lenders to the Company pursuant to an Incremental Term Loan Commitment.
Incremental Term Loans may be made in the form of additional Term A Loans, Term
B Loans, or the extent permitted by section 2.01(h) and provided for in the
relevant Incremental Term Loan Assumption Agreement, Other Term Loans.
"Indebtedness" of any person shall mean without duplication:
i) all indebtedness of such person for borrowed money;
ii) all bonds, notes, debentures and similar debt securities of such
person;
iii) the deferred purchase price of capital assets or services which
in accordance with GAAP would be shown on the liability side of the balance
sheet of such person;
iv) the face amount of all letters of credit or bankers' acceptances
issued for the account of such person and, without duplication, all drafts drawn
thereunder;
v) all obligations, contingent or otherwise, of such person in respect
of bankers' acceptances;
vi) all Indebtedness of a second person secured by any Lien on any
property owned by such first person, whether or not such Indebtedness has been
assumed;
vii) all Capitalized Lease Obligations of such person;
viii) the present value, determined on the basis of the implicit
interest rate, of all basic rental obligations under all Synthetic Leases of
such person;
ix) 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;
x) all net obligations of such person under Hedge Agreements;
xi) the full outstanding balance of trade receivables, notes or other
instruments sold with full recourse (and the portion thereof subject to
potential recourse, if sold with limited recourse), other than in any such case
any thereof sold solely for purposes of collection of delinquent accounts;
xii) the stated value, or liquidation value if higher, of all
Redeemable Stock of such person; and
(xiii) all Guaranty Obligations of such person;
provided
that (x) neither trade payables nor other similar accrued expenses, in each case
arising in the ordinary course of business, nor obligations in respect of
insurance policies or performance or surety bonds which themselves are not
guarantees of Indebtedness (nor drafts, acceptances or similar instruments
evidencing the same nor obligations in respect of letters of credit supporting
the payment of the same), shall constitute Indebtedness; (y) the Indebtedness of
any person shall in any event include (without duplication) the Indebtedness of
any other entity (including any general partnership in which such person is a
general partner) to the extent such person is liable thereon as a result of such
person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide expressly that such person is
not liable thereon, and (z) any and all obligations under Precious Metal Leases
shall not constitute Indebtedness for purposes of calculating compliance with
the covenants herein to the extent such obligations would not constitute
"indebtedness" under GAAP.
"Interest Coverage Ratio" shall mean, for any Testing Period, the
ratio of
(i) Consolidated EBITDA for such Testing Period,
to
(ii) Consolidated Interest Expense for such Testing Period.
"Interest Period" with respect to any Eurocurrency Loan shall mean the
interest period applicable thereto, as determined pursuant to section 2.8.
"Joint Lead Arrangers" shall have the meaning provided in the preamble
to this Agreement.
"Leaseholds" of any person means 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 of
this Agreement, and shall include any person that shall agree to become a party
hereto as a "Lender" hereunder with a commitment to make Incremental Facility
Loans pursuant to section 2.1(g) or (h).
"Lender Default" shall mean (i) the refusal (which has not been
retracted) of a Lender in violation of the requirements of this Agreement to
make available its portion of any incurrence of Loans, to fund its Swing Line
Participation Amount under section 2.4(b), or to fund its portion of any
unreimbursed payment under section 3.4(c) or (ii) a Lender having notified the
Administrative Agent and/or the Borrower that it does not intend to comply with
the obligations under section 2.1, section 2.4(b) and/or section 3.4(c), in the
case of either (i) or (ii) as a result of the appointment of a receiver or
conservator with respect to such Lender at the direction or request of any
regulatory agency or authority.
"Lender Register" shall have the meaning provided in section 13.16.
"Letter of Credit" shall have the meaning provided in section 3.1(a).
"Letter of Credit Documents" shall have the meaning specified in
section 3.2(a).
"Letter of Credit Fee" shall have the meaning provided in section
4.1(b).
"Letter of Credit Issuer" shall mean (i) in respect of each Existing
Letter of Credit, the Lender that has issued same as of the Effective Date; and
(ii) in respect of any other Letter of Credit, (1) NCB, and/or (2) such other
Lender that is requested, and agrees, to so act by the Company, and is approved
by the Administrative Agent.
"Letter of Credit Obligor" shall have the meaning provided in section
3.1(a).
"Letter of Credit Outstandings" shall mean, at any time, the sum,
without duplication, of the Dollar equivalent of (i) the aggregate Stated Amount
of all outstanding Letters of Credit and (ii) the aggregate amount of all Unpaid
Drawings.
"Letter of Credit Request" shall have the meaning provided in section
3.2(a).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan" shall have the meaning provided in section 2.1.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean any or all of the following: (i)
any material adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of, when used with reference
to the Company and/or any of its Subsidiaries, the Company and its Subsidiaries,
taken as a whole, or when used with reference to any other person, such person
and its Subsidiaries, taken as a whole, as the case may be; (ii) any material
adverse effect on the ability of the Company or any other Credit Party to
perform its obligations under the Credit Documents to which it is a party; (iii)
any material adverse effect on the ability of the Company and its Subsidiaries,
taken as a whole, to pay their liabilities and obligations as they mature or
become due; or (iv) any material adverse effect on the validity, effectiveness
or enforceability, as against any Credit Party, of any of the Credit Documents
to which it is a party.
"Material Subsidiary" shall mean, at any time, with reference to any
person, any Subsidiary of such person (i) that has assets at such time
comprising 5% or more of the consolidated assets of such person and its
Subsidiaries, or (ii) whose operations in the current fiscal year are expected
to, or whose operations in the most recent fiscal year did (or would have if
such person had been a Subsidiary for such entire fiscal year), represent 5% or
more of the consolidated earnings before interest, taxes, depreciation and
amortization of such person and its Subsidiaries for such fiscal year.
"Maturity Date" shall mean the Revolving Maturity Date, the Term A
Maturity Date, the Term B Maturity Date, or the Asset Sale Maturity Date, as
applicable.
"Minimum Borrowing Amount" shall mean:
(i) with respect to Borrowings under a Term Facility consisting of
(x) Prime Rate Loans, $5,000,000, with minimum increments thereafter of
$1,000,000, or (y) Eurocurrency Loans, $5,000,000, with minimum increments
thereafter of $1,000,000;
(ii) with respect to Borrowings under the Revolving Facility
consisting of (x) Prime Rate Loans, $2,500,000, with minimum increments
thereafter of $500,000, or (y) Eurocurrency Loans, $5,000,000 (or the
substantial equivalent thereof in Euros), with minimum increments thereafter of
$1,000,000 (or the substantial equivalent thereof in Euros); or
(iii) with respect to a Borrowing under the Swing Line Facility
consisting of (x) a Prime Rate Loan, $100,000, with minimum increments
thereafter of $50,000, or (y) a Money Market Rate Loan, $250,000, with minimum
increments thereafter of $50,000.
"Money Market Rate Loan" shall mean each Swing Line Loan bearing
interest at a rate provided in section 2.7(c).
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors.
"Multiemployer Plan" shall mean a multiemployer plan, as defined in
section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate is
making or accruing an obligation to make contributions or has within any of the
preceding three plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" shall mean an employee benefit plan, other
than a Multiemployer Plan, to which the Company or any ERISA Affiliate, and one
or more employers other than the Company or an ERISA Affiliate, is making or
accruing an obligation to make contributions or, in the event that any such plan
has been terminated, to which the Company or an ERISA Affiliate made or accrued
an obligation to make contributions during any of the five plan years preceding
the date of termination of such plan.
"NCB" shall mean National City Bank, a national banking association,
together with its successors and assigns.
"Net Cash Proceeds" shall mean, with respect to (i) any Asset Sale,
the Cash Proceeds resulting therefrom net of (A) reasonable and customary
expenses of sale incurred in connection with such Asset Sale, and other
reasonable and customary fees and expenses incurred, and all state and local
taxes paid or reasonably estimated to be payable by such person, as a
consequence of such Asset Sale and the payment of principal, premium and
interest of Indebtedness (other than the Obligations) secured by the asset which
is the subject of the Asset Sale and required to be, and which is, repaid under
the terms thereof as a result of such Asset Sale, (B) amounts of any
distributions payable to holders of minority interests in the relevant person or
in the relevant property or assets and (C) incremental federal, state and local
income taxes paid or payable as a result thereof; and (ii) any Event of Loss,
the Cash Proceeds resulting therefrom net of (A) reasonable and customary
expenses incurred in connection with such Event of Loss, and local taxes paid or
reasonably estimated to be payable by such person, as a consequence of such
Event of Loss and the payment of principal, premium and interest of Indebtedness
(other than the Obligations) secured by the asset which is the subject of the
Event of Loss and required to be, and which is, repaid under the terms thereof
as a result of such Event of Loss, (B) amounts of any distributions payable to
holders of minority interests in the relevant person or in the relevant property
or assets and (C) incremental federal, state and local income taxes paid or
payable as a result thereof.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Non-Defaulting Lender" shall mean each Lender other than a Defaulting
Lender.
"Note" shall mean a Revolving Note, the Swing Line Note, a Term A
Note, a Term B Note, an Asset Sale Term Note, or any promissory note evidencing
any Incremental Facility Loan, as applicable.
"Notice of Borrowing" shall have the meaning provided in section
2.3(a).
"Notice of Conversion" shall have the meaning provided in section 2.6.
"Notice Office" shall mean the office of the Administrative Agent at
1900 East Ninth Street, Cleveland, Ohio 44114, Attention: Agency Services Group
(facsimile: (216) 575-2481), or such other office, located in a city in the
United States Eastern Time Zone, as the Administrative Agent may designate to
the Company from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing by
the Company or any other Credit Party to the Administrative Agent, the
Collateral Agent, any Lender or any Letter of Credit Issuer pursuant to the
terms of this Agreement or any other Credit Document.
"OMG AG" shall have the meaning provided in the preamble to this
Agreement.
"Operating Lease" as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is not accounted for as a Capital Lease on the balance
sheet of that person.
"Other Term Loans" shall have the meaning provided in section 2.1(h).
"Participant" shall have the meaning provided in section 3.4(a).
"Payment Office" shall mean the office of the Administrative Agent at
1900 East Ninth Street, Cleveland, Ohio 44114, Attention: Agency Services Group
(facsimile: (216) 575-2481), or such other office, located in a city in the
United States Eastern Time Zone, as the Administrative Agent may designate to
the Company from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean at any time for any Lender with a Commitment
under any Facility (other than the Swing Line Facility), the percentage obtained
by dividing such Lender's aggregate Commitment under such Facilities, as
applicable, by the Total Commitment (exclusive of the Swing Line Commitment),
provided, that if the Total Commitment has been terminated, the Percentage for
each Lender shall be determined by dividing such Lender's aggregate Commitment
immediately prior to such termination by the Total Commitment (exclusive of the
Swing Line Commitment) immediately prior to such termination.
"Permitted Acquisition" shall mean and include any Acquisition as to
which all of the following conditions are satisfied:
(i) such Acquisition involves a line or lines of business which is
complementary to the lines of business in which the Company and its
Subsidiaries, considered as an entirety, are engaged on the Effective Date,
unless the Required Lenders specifically approve or consent to such Acquisition
in writing;
(ii) such Acquisition is not actively opposed by the Board of
Directors (or similar governing body) of the selling person or the person whose
equity interests are to be acquired, unless all of the Lenders specifically
approve or consent to such Acquisition in writing;
(iii) the aggregate consideration for such Acquisition and all other
Acquisitions completed during any fiscal year of the Company (other than the
Target Acquisition), including the principal amount of any assumed Indebtedness
and (without duplication) any Indebtedness of any acquired person or persons,
does not exceed $50,000,000, unless the Required Lenders specifically approve or
consent to such Acquisition in writing; and
(iv) at least 10 Business Days prior to the completion of any such
Acquisition involving aggregate consideration, including the principal amount of
any assumed Indebtedness and (without duplication) any Indebtedness of any
acquired person or persons, in excess of $25,000,000, the Company shall have
delivered to the Lenders (A) audited financial statements for the acquired
businesses for the most recent fiscal year, unless the same are unavailable and
unaudited financial statements are acceptable to the Required Lenders and (B) a
certificate of a responsible financial or accounting officer of the Company
demonstrating, in reasonable detail, the computation of the ratios referred to
in sections 9.7, 9.8, 9.9 and 9.10 on a Pro Forma Basis;
provided
, that the term Permitted Acquisition specifically excludes the Target
Acquisition and any loans, advances or minority investments otherwise permitted
pursuant to section 9.5.
"Permitted Liens" shall mean Liens permitted by section 9.3.
"person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan as defined
in section 4001 of ERISA, which is maintained or contributed to by (or to which
there is an obligation to contribute by) the Company or a Subsidiary of the
Company or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which the Company, or a Subsidiary of
the Company or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Pledge Agreement" shall have the meaning provided in section 6.1(c).
"PM Facility" shall mean the collective reference to (i) the Precious
Metals Facility among Degussa AG, OMG AG and the Company and (ii) the PM
Facility Security Documents; ;provided, however, that the Liens granted pursuant
to the PM Facility Security Documents shall comply with the requirements of
clause (x) of the definition of Standard Permitted Liens set forth below in this
section 1.1.
"PM Facility Security Documents" shall mean, collectively, the
security transfer agreements, global assignment agreements and other security
documents from time to time securing the obligations of OMG AG (and any of its
Subsidiaries) under the PM Facility.
"Precious Metal Leases" shall mean precious metals leases and/or
consignment arrangements which are incurred by the Company or its Subsidiaries
in the ordinary course of business and in accordance with past practice.
"Prime Rate" shall mean, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the greater of (i) the rate of interest established by the
Administrative Agent from time to time, as its prime rate, whether or not
publicly announced, which interest rate may or may not be the lowest rate
charged by it for commercial loans or other extensions of credit; and (ii) the
Federal Funds Effective Rate in effect from time to time plus 1/2 of 1% per
annum.
"Prime Rate Loan" shall mean each Loan, denominated in U.S. Dollars,
bearing interest at the rate provided in section 2.7(a).
"Pro Forma Basis" shall mean, with respect to compliance with any test
or covenant hereunder, in connection with or after the occurrence of (i) any
Acquisition (including the Target Acquisition), any Asset Sale or any payment
permitted under section 5.2(g)(ii), compliance with such covenant or test after
giving effect to such Acquisition or Asset Sale, (including pro forma
adjustments arising out of events which are directly attributable to such
proposed Acquisition or Asset Sale, are factually supportable and are expected
to have a continuing impact, in each case determined on a basis consistent with
Article 11 of Regulation S-X of the Securities Act of 1933, as amended, and as
interpreted by the Staff of the Securities and Exchange Commission using, for
purposes of determining such compliance, the historical financial statements of
all entities or assets so acquired or to be acquired (or the assets so disposed
of or to be disposed of in the Asset Sale) and the consolidated financial
statements of the Company and its Subsidiaries which shall be reformulated as if
such Acquisition, such Asset Sale, and any other Acquisitions or Asset Sales
that have been consummated during the relevant period, and the incurrence,
assumption and/or repayment of any Indebtedness or other liabilities incurred in
connection with any such Acquisitions or related to the Assets so disposed of or
to be disposed of in any such Asset Sale or otherwise during the relevant period
had been consummated, incurred or repaid, respectively, at the beginning of such
period and assuming that any such Indebtedness bears interest during any portion
of the applicable measurement period prior to the relevant Acquisition or Asset
Sale at the interest rates applicable to outstanding Loans during such period,
provided, that in connection with an Asset Sale consisting of the Divested
Business, such calculations shall be based on the actual interest rate related
thereto or such proposed payment, it being understood that with respect to any
such Acquisition or Asset Sale, Consolidated EBITDA shall include (or exclude)
the results of operations of the person or assets acquired or disposed of if
such Acquisition or Asset Sale occurred on the first day of the respective
Testing Period. For the avoidance of doubt, to the extent the Company or any
Subsidiary has, at the end of any Testing Period, assets on its balance sheet
classified as "Assets held for Sale", such assets, and the related financial
items, including income and expense items, shall be included in calculating
compliance with covenants or tests on a Pro Forma Basis.
"Pro Forma Compliance" shall mean, at any date of determination, that
the Company shall be in pro forma compliance with the covenants set forth in
Sections 9.7, 9.8, 9.9 and 9.10 as of the last day of the most recent fiscal
quarter-end (computed on the basis of (a) balance sheet amounts as of the most
recently completed fiscal quarter, and (b) income statement amounts for the most
recently completed period of four consecutive fiscal quarters, in each case, for
which financial statements have been delivered to the Administrative Agent and
calculated on a Pro Forma Basis.
"Prohibited Transaction" shall mean a transaction with respect to a
Plan that is prohibited under section 4975 of the Code or section 406 of ERISA
and not exempt under section 4975 of the Code or section 408 of ERISA.
"Proposed Rejectable Prepayment" shall have the meaning provided in
section 5.2(l).
"Quoted Rate" shall have the meaning provided in section 2.3(c).
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. 6901 et seq.
"Real Property" of any person shall mean all of the right, title and
interest of such person in and to land, improvements and fixtures, including
Leaseholds.
"Redeemable Stock" shall mean with respect to any person any capital
stock or similar equity interests of such person that (i) is by its terms
subject to mandatory redemption, in whole or in part, pursuant to a sinking
fund, scheduled redemption or similar provisions, at any time prior to the
latest Maturity Date; or (ii) otherwise is required to be repurchased or retired
on a scheduled date or dates, upon the occurrence of any event or circumstance,
at the option of the holder or holders thereof, or otherwise, at any time prior
to the latest Maturity Date under this Agreement, other than any such repurchase
or retirement occasioned by a "change of control" or similar event.
"Reference Banks" shall mean (i) NCB and (ii) any other Lender or
Lenders selected as a Reference Bank by the Administrative Agent and the
Required Lenders, provided, that if any of such Reference Banks is no longer a
Lender, such other Lender or Lenders as may be selected by the Administrative
Agent acting on instructions from the Required Lenders.
"Refinancing Issuance" shall mean any issuance by the Borrower of
shares of equity securities or subordinated debt securities in a public
offering, Rule 144A offering or private placement, the proceeds of which are
used solely to repay any outstanding Indebtedness under the Bridge Notes, and,
in the case of subordinated debt securities, which are subordinated to the
Obligations on substantially the same terms as those then generally prevailing
in the market on the date of such issuance to issuers of similar credit quality,
as determined by the Joint Lead Arrangers.
"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.
"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 establishing margin requirements.
"Reportable Event" shall mean an event described in section 4043 of
ERISA or the regulations thereunder with respect to a Plan, other than those
events as to which the notice requirement is waived under subsections .22, .23,
.25, .27, .28, .29, .30, .31, .32, .34, .35, .62, .63, .64, .65 or .67 of PBGC
Regulation section 4043.
"Required Asset Sale Term Lenders" shall mean Non-Defaulting Lenders
whose outstanding Asset Sale Term Loans and Unutilized Asset Sale Term
Commitments constitute at least 51% of the sum of the total outstanding Asset
Sale Term Loans and Unutilized Asset Sale Term Commitments of Non-Defaulting
Lenders (provided that, for purposes hereof, neither the Company, nor any of its
Affiliates, shall be included in (i) the Lenders holding such amount of the
Asset Sale Term Loans or having such amount of the Unutilized Asset Sale Term
Commitments, or (ii) determining the aggregate unpaid principal amount of the
Asset Sale Term Loans or Unutilized Asset Sale Term Commitments).
"Required Incremental Term Lenders" shall mean Non-Defaulting Lenders
whose outstanding Incremental Term Loans constitute at least 51% of the sum of
the total outstanding Incremental Term Loans of Non-Defaulting Lenders (provided
that, for purposes hereof, neither the Company, nor any of its Affiliates, shall
be included in (i) the Lenders holding such amount of the Incremental Term
Loans, or (ii) determining the aggregate unpaid principal amount of the
Incremental Term Loans).
"Required Lenders" shall mean (i) Required Revolving and Term A
Lenders, (ii) Required Asset Sale Term Lenders, (iii) Required Term B Lenders,
and (iv) Required Incremental Term Lenders.
"Required Revolving and Term A Lenders" shall mean Non-Defaulting
Lenders whose outstanding Revolving Loans and Term A Loans and Unutilized
Revolving Commitments and Unutilized Term A Commitments constitute at least 51%
of the sum of the total outstanding Revolving Loans and Term A Loans and
Unutilized Revolving Commitments and Unutilized Term A Commitments of
Non-Defaulting Lenders (provided that, for purposes hereof, neither the Company,
nor any of its Affiliates, shall be included in (i) the Lenders holding such
amount of the Revolving Loans or Term A Loans or having such amount of the
Unutilized Revolving Commitments or Unutilized Term A Commitments, or (ii)
determining the aggregate unpaid principal amount of the Revolving Loans or Term
A Loans or Unutilized Revolving Commitments or Unutilized Term A Commitments).
"Required Revolving Lenders" shall mean Non-Defaulting Lenders whose
outstanding Revolving Loans and Unutilized Revolving Commitments constitute at
least 51% of the sum of the total outstanding Revolving Loans and Unutilized
Revolving Commitments of Non-Defaulting Lenders (provided that, for purposes
hereof, neither the Company, nor any of its Affiliates, shall be included in (i)
the Lenders holding such amount of the Revolving Loans or having such amount of
the Unutilized Revolving Commitments, or (ii) determining the aggregate unpaid
principal amount of the Revolving Loans or Unutilized Revolving Commitments).
"Required Term A Lenders" shall mean Non-Defaulting Lenders whose
outstanding Term A Loans and Unutilized Term A Commitments constitute at least
51% of the sum of the total outstanding Term A Loans and Unutilized Term A
Commitments of Non-Defaulting Lenders (provided that, for purposes hereof,
neither the Company, nor any of its Affiliates, shall be included in (i) the
Lenders holding such amount of the Term A Loans or having such amount of the
Unutilized Term A Commitments, or (ii) determining the aggregate unpaid
principal amount of the Term A Loans or Unutilized Term A Commitments).
"Required Term B Lenders" shall mean Non-Defaulting Lenders whose
outstanding Term B Loans and Unutilized Term B Commitments constitute at least
51% of the sum of the total outstanding Term B Loans and Unutilized Term B
Commitments of Non-Defaulting Lenders (provided that, for purposes hereof,
neither the Borrower, nor any of its Affiliates, shall be included in (i) the
Lenders holding such amount of the Term B Loans or having such amount of the
Unutilized Term B Commitments, or (ii) determining the aggregate unpaid
principal amount of the Term B Loans or Unutilized Term B Commitments).
"Restricted Payment" shall mean (i) any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of the Company or any Subsidiary, or (ii) any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
the Company or any option, warrant or other right to acquire any such shares of
capital stock of the Company.
"Retained Businesses" shall mean the business divisions of the Target
other than the Divested Businesses.
"Revolving Borrowing" shall mean the incurrence of Revolving Loans
consisting of one Type of Loan, by the applicable Borrower from all of the
Lenders having Commitments in respect thereof on a pro rata basis on a given
date (or resulting from Conversions or Continuations on a given date), having in
the case of Eurocurrency Loans the same Interest Period.
"Revolving Commitment" shall mean, with respect to each Lender, the
amount, if any, set forth opposite such Lender's name in Annex I-A hereto as its
"Revolving Commitment" as the same may be reduced from time to time pursuant to
section 4.2, 4.3 and/or 10.2 or adjusted from time to time as a result of
assignments to or from such Lender pursuant to section 13.4.
"Revolving Facility" shall mean the credit facility evidenced by the
Total Revolving Commitment.
"Revolving Facility Percentage" shall mean at any time for any Lender
with a Revolving Commitment, the percentage obtained by dividing such Lender's
Revolving Commitment by the Total Revolving Commitment, provided, that if the
Total Revolving Commitment has been terminated, the Revolving Facility
Percentage for each Lender shall be determined by dividing such Lender's
Revolving Commitment immediately prior to such termination by the Total
Revolving Commitment immediately prior to such termination.
"Revolving Loan" shall have the meaning provided in section 2.1(d).
"Revolving Maturity Date" shall mean April 1, 2006, or such earlier
date on which the Total Revolving Commitment is terminated.
"Revolving Note" shall have the meaning provided in section 2.5(a).
"Sale and Lease-Back Transaction" shall mean any arrangement with any
person providing for the leasing by the Company or any Subsidiary of the Company
of any property (except for temporary leases for a term, including any renewal
thereof, of not more than one year and except for leases between the Company and
a Subsidiary or between Subsidiaries), which property has been or is to be sold
or transferred by the Company or such Subsidiary to such person.
"S&P" shall mean Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., and its successors.
"Scheduled Repayment" shall have the meaning provided in section
5.2(a).
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Section 5.4(b)(ii) Certificate" shall have the meaning provided in
section 5.4(b)(ii).
"Security Agreement" shall have the meaning provided in section
6.1(c).
"Security Documents" shall mean the Security Agreement, the Pledge
Agreement, and each other document pursuant to which any Lien or security
interest is granted by any Credit Party to the Collateral Agent as security for
any of the Obligations.
"Senior Leverage Ratio" shall mean, for any Testing Period, the ratio
of:
(i) Consolidated Senior Debt for such Testing Period,
to
(ii) Consolidated EBITDA for such Testing Period.
"Standard Permitted Liens" shall mean the following:
(i) Liens for taxes not yet delinquent or Liens for taxes being
contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Company) have been
established;
(ii) Liens in respect of property or assets imposed by law which were
incurred in the ordinary course of business, such as carriers', warehousemen's,
materialmen's and mechanics' Liens and other similar Liens arising in the
ordinary course of business, which do not in the aggregate materially detract
from the value of such property or assets or materially impair the use thereof
in the operation of the business of the Company or any Subsidiary;
(iii) Liens created by this Agreement or the other Credit Documents;
(iv) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under section 10.1(g);
(v) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; and
mechanic's Liens, carrier's Liens, and other Liens to secure the performance of
tenders, statutory obligations, contract bids, government contracts, performance
and return-of-money bonds and other similar obligations, incurred in the
ordinary course of business (exclusive of obligations in respect of the payment
for borrowed money), whether pursuant to statutory requirements, common law or
consensual arrangements;
(vi) Leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its Subsidiaries and
any interest or title of a lessor under any lease not in violation of this
Agreement;
(vii) easements, rights-of-way, zoning or other restrictions,
charges, encumbrances, defects in title, prior rights of other persons, and
obligations contained in similar instruments, in each case which do not involve,
and are not likely to involve at any future time, either individually or in the
aggregate, (A) a substantial and prolonged interruption or disruption of the
business activities of the Company and its Subsidiaries considered as an
entirety, or (B) a Material Adverse Effect;
(viii) Liens arising from the rights of lessors under leases
(including financing statements regarding property subject to lease) not in
violation of the requirements of this Agreement, provided that such Liens are
only in respect of the property subject to, and secure only, the respective
lease (and any other lease with the same or an affiliated lessor);
(ix) rights of consignors of goods purchased or possessed by the
Company or any of its Subsidiaries for inclusion in their inventory, whether or
not such consignment is perfected by the filing of any financing statement under
the UCC; and
(x) (A) Liens on precious metals and leases and rights of consignors
in respect of precious metals arising in connection with Precious Metal Leases
entered into by the Company or any of its Subsidiaries, and (B) Liens granted
pursuant to the PM Facility Security Documents; provided, however, that the
recourse under any Liens granted in the PM Facility Security Documents shall be
limited to 120% of the aggregate value of all outstanding precious metals
advanced pursuant to the PM Facility on the date remedies are commenced to be
exercised by the lessor thereof.
"Stated Amount" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions or other
requirements for drawing could then be met).
"Subsidiary" of any person shall mean and include (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 directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Company.
"Subsidiary Guarantor" shall mean any Subsidiary which is a party to
the Subsidiary Guaranty.
"Subsidiary Guaranty" shall have the meaning provided in section
6.1(c).
"Subordinated Indebtedness" shall mean any Indebtedness which has been
subordinated to the Obligations in such manner and to such extent as the
Administrative Agent (acting on instructions from the Required Lenders) may
require.
"Swing Line Borrowing" shall mean the incurrence of a single Type of
Swing Line Loan from the Swing Line Lender on a given date.
"Swing Line Cap" shall mean $15,000,000.
"Swing Line Commitment" shall mean, with respect to the Swing Line
Lender, the amount set forth opposite such Lender's name in Annex I-A as its
"Swing Line Commitment" as the same may be reduced from time to time pursuant to
section 4.2, 4.3 and/or 10.2 or adjusted from time to time as a result of
assignments to or from the Swing Line Lender pursuant to section 13.4.
"Swing Line Exposure" shall mean, with respect to any Lender at any
time, such Lender's obligation to refund or purchase a participation equal to,
its Revolving Facility Percentage of the aggregate Swing Line Loans outstanding
advanced to all Borrowers.
"Swing Line Facility" shall mean the credit facility evidenced by the
Swing Line Commitment.
"Swing Line Lender" shall mean the Lender indicated in Annex I-A
hereto as having the "Swing Line Commitment" and shall include any other single
Lender to whom the Swing Line Lender has transferred its entire Swing Line
Commitment and any Swing Line Loans.
"Swing Line Loan" shall have the meaning provided in section 2.1(e).
"Swing Line Note" shall have the meaning provided in section 2.5(a).
"Synthetic Lease" shall mean any lease (i) which is accounted for by
the lessee as an Operating Lease, and (ii) under which the lessee is intended to
be the "owner" of the leased property for Federal income tax purposes.
"Target" shall have the meaning provided in the preliminary statements
of this Agreement.
"Target Acquisition" shall have the meaning provided in the
preliminary statements of this Agreement.
"Target Acquisition Documents" shall mean the Target Purchase
Agreement, all ancillary agreements between or among any of such parties or
their Affiliates related thereto, including, without limitation, any "side
letters", any agreements with any officers or Affiliates of any of such persons
or any of their Subsidiaries, and the "disclosure schedule" or similar document
furnished to the Company pursuant to such Target Purchase Agreement.
"Target Purchase Agreement" shall have the meaning provided in the
preliminary statements of this Agreement.
"Taxes" shall have the meaning provided in section 5.4.
"Term A Borrowing" shall mean the incurrence of Term A Loans
consisting of one Type of Loan, by the Company from all of the Lenders having
Commitments in respect thereof on a pro rata basis on a given date (or resulting
from Conversions or Continuations on a given date), having in the case of
Eurocurrency Loans the same Interest Period.
"Term A Commitment" shall mean, with respect to each Lender, the
amount, if any, set forth opposite such Lender's name in Annex I-A hereto as its
"Term A Commitment" as the same may be reduced from time to time pursuant to
sections 4.2, 4.3 and/or 10.2 or adjusted from time to time as a result of
assignments to or from such Lender pursuant to section 13.4.
"Term A Facility" shall mean the credit facility evidenced by the
Total Term A Commitment.
"Term A Loan" shall have the meaning provided in section 2.1(a).
"Term A Maturity Date" shall mean April 1, 2006, or such earlier date
on which the Total Term A Commitment is terminated.
"Term A Note" shall have the meaning provided in section 2.5(a).
"Term B Borrowing" shall mean the incurrence of Term B Loans
consisting of one Type of Loan, by the Company from all of the Lenders having
Commitments in respect thereof on a pro rata basis on a given date (or resulting
from Conversions or Continuations on a given date), having in the case of
Eurocurrency Loans the same Interest Period.
"Term Borrowing" shall mean a Term A Borrowing, Term B Borrowing,
Asset Sale Term Borrowing, or Incremental Term Borrowing, as applicable.
"Term B Commitment" shall mean, with respect to each Lender, the
amount, if any, set forth opposite such Lender's name in Annex I-A hereto as its
"Term B Commitment" as the same may be reduced from time to time pursuant to
sections 4.2, 4.3 and/or 10.2 or adjusted from time to time as a result of
assignments to or from such Lender pursuant to section 13.4.
"Term B Facility" shall mean the credit facility evidenced by the
Total Term B Commitment.
"Term B Loan" shall have the meaning provided in section 2.1(b).
"Term B Maturity Date" shall mean April 1, 2007, or such earlier date
on which the Total Term B Commitment is terminated.
"Term B Note" shall have the meaning provided in section 2.5(a).
"Term Facility" shall mean the credit facility evidenced by the Total
Term Commitment.
"Term Loan" shall mean a Term A Loan, Term B Loan, Asset Sale Term
Loan, or Incremental Term Loan, as applicable.
"Testing Period" shall mean for any determination a single period
consisting of the four consecutive fiscal quarters of the Company then last
ended (whether or not such quarters are all within the same fiscal year), except
that if a particular provision of this Agreement indicates that a Testing Period
shall be of a different specified duration, such Testing Period shall consist of
the particular fiscal quarter or quarters then last ended which are so indicated
in such provision.
"Total Asset Sale Term Commitment" shall mean the sum of the Asset
Sale Term Commitments of the Lenders.
"Total Commitment" shall mean the sum of the Commitments of the
Lenders.
"Total Revolving Commitment" shall mean the Revolving Commitments of
the Lenders, including any increase thereto pursuant to section 2.1(g).
"Total Term A Commitment" shall mean the sum of the Term A Commitments
of the Lenders.
"Total Term B Commitment" shall mean the sum of the Term B Commitments
of the Lenders.
"Total Term Commitment" shall mean the Total Term A Commitment, the
Total Term B Commitment, and the Total Asset Sale Commitment.
"Transaction" shall mean the Target Acquisition, the repayment of
Revolving Loans contemplated by Section 6.1(p), the incurrence of the Loans on
the Closing Date, and the payment of fees and expenses associated therewith.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Prime Rate Loan, a Eurocurrency Loan
or a Money Market Rate Loan.
"UCC" shall mean the Uniform Commercial Code.
"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 as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 87, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided in section 3.3(a).
"Unutilized Commitment" shall mean, with respect to any Lender and its
Commitment, if any, under a particular Facility, the excess of (i) such Lender's
Commitment under such Facility at such time over (ii) the sum of (x) the
principal amount of Loans made by such Lender under such Facility and
outstanding at such time, and (y) in the case of a Commitment under the
Revolving Facility only, such Lender's Revolving Facility Percentage of Letter
of Credit Outstandings at such time.
"Unutilized Swing Line Commitment" shall mean, at any time, the excess
of (i) the Swing Line Commitment at such time over (ii) the aggregate principal
amount of all Swing Line Loans then outstanding.
"Unutilized Total Asset Sale Term Commitment" shall mean, at any time,
the excess of (i) the Total Asset Sale Term Commitment at such time over (ii)
the aggregate principal amount of all Asset Sale Term Loans then outstanding.
"Unutilized Total Commitment" shall mean, at any time, the excess of
(i) the Total Commitment at such time over (ii) the sum of (x) the aggregate
principal amount of all Loans then outstanding plus (y) the aggregate Letter of
Credit Outstandings at such time.
"Unutilized Total Revolving Commitment" shall mean, at any time, the
excess of (i) the Total Revolving Commitment at such time over (ii) the sum of
(x) the aggregate principal amount of all Revolving Loans then outstanding plus
(y) the aggregate Letter of Credit Outstandings at such time.
"Unutilized Total Term A Commitment" shall mean, at any time, the
excess of (i) the Total Term A Commitment at such time over (ii) the aggregate
principal amount of all Term A Loans then outstanding.
"Unutilized Total Term B Commitment" shall mean, at any time, the
excess of (i) the Total Term B Commitment at such time over (ii) the aggregate
principal amount of all Term B Loans then outstanding.
"Wholly-Owned Subsidiary" shall mean each Subsidiary of the Company at
least 95% of whose capital stock, equity interests and partnership interests,
other than director's qualifying shares or similar interests, are owned directly
or indirectly by the Borrower.
"Written", "written" or "in writing" shall mean any form of written
communication or a communication by means of telex, facsimile transmission,
telegraph or cable.
1.2. Computation of Time Periods. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each means "to
but excluding".
1.3. Accounting Terms. Except as otherwise specifically provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Company notifies the Administrative Agent that the Company requests an amendment
to any provision of section 8 or 9 hereof to eliminate the effect of any change
occurring after the Effective Date in GAAP or in the application thereof to such
provision (or if the Administrative Agent notifies the Company that the Required
Lenders request an amendment to any such provision hereof for such purposes),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance with the requirements of this Agreement.
1.4. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any person shall be construed to include such person's successors and
assigns, (c the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to sections, Annexes
and Exhibits shall be construed to refer to sections of, and Annexes and
Exhibits to, this Agreement, and (e) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and all real
property, tangible and intangible assets and properties, including cash,
securities, accounts and contract rights, and interests in any of the foregoing.
1.5. Currency Equivalents. For purposes of this Agreement, except as
otherwise specified herein, (i) the equivalent in Dollars of Euros shall be
determined by using the quoted spot rate at which the Administrative Agent
offers to exchange Dollars for Euros at its Payment Office at 9:00 A.M. (local
time at the Payment Office) two Business Days prior to the date on which such
equivalent is to be determined and (ii) the equivalent in Euros of Dollars shall
be determined by using the quoted spot rate at which the Administrative Agent's
Payment Office offers to exchange Euros for Dollars at the Payment Office at
9:00 A.M. (local time at the Payment Office) two Business Days prior to the date
on which such equivalent is to be determined; provided, that (A) the equivalent
in Dollars of each Eurocurrency Loan made in Euros shall be, for the purposes of
determining the unused portion of each Lender's Commitment, or any or all Loan
or Loans outstanding on such date, calculated or recalculated, as the case may
be, on the date that the Eurocurrency Rate applicable to such Loan is
established, on the last day of the Interest Period applicable thereto, and on
each date that it shall be necessary (or the Administrative Agent shall elect)
to determine the unused portion of each Lender's Commitment; (B) the equivalent
in Dollars of any Unpaid Drawing in respect of any Letter of Credit denominated
in Euros shall be determined at the time the drawing under such Letter of Credit
was paid or disbursed by the applicable Letter of Credit Issuer; (C) for
purposes of determining the Letter of Credit Outstandings or the Unutilized
Total Revolving Commitment as contemplated by sections 2.1(d), 3.1(b) and 5.2,
the equivalent in Dollars of the Stated Amount of any Letter of Credit
denominated in Euros shall be calculated (x) on the date of the issuance of the
respective Letter of Credit, and (y) in any other case where the same is
required or permitted to be calculated, on such other day as the Administrative
Agent may, in its sole discretion, consider appropriate; and (D) for purposes of
sections 4.1(b) and (c), the equivalent in Dollars of the Stated Amount of any
Letter of Credit denominated in Euros shall be calculated for the applicable
quarterly period at the time of invoicing for such quarterly period in which the
respective payment is due pursuant to said sections. Notwithstanding the
foregoing, for purposes of determining the amount of the Commitment Fee payable
pursuant to Section 4.1(a) hereof, the equivalent in Dollars of any outstanding
Revolving Loans which are denominated in Euros shall be determined by using the
quoted spot rate at which the Administrative Agent offers to exchange Dollars
for Euros at its Payment Office at 9:00 A.M. (local time at the Payment Office)
two Business Days prior to the commencement date of the applicable Interest
Period for such Revolving Loans, unless the Administrative Agent, in its sole
discretion, shall elect to use another day or basis for determining such
equivalent in Dollars.
1.6. Pro Forma Calculations. Notwithstanding anything to the contrary
in this Agreement, with respect to any period during which the Target
Acquisition, any Permitted Acquisition or any Asset Sale occurs as permitted
pursuant to the terms hereof, for purposes of determining compliance with the
covenants set forth in Sections 9.7, 9.8, 9.9 and 9.10, such compliance shall be
determined on the basis of Pro Forma Compliance and, accordingly, Consolidated
EBITDA, Consolidated Total Debt, Consolidated Total Capital, the Fixed Charge
Coverage Ratio and the Interest Coverage Ratio shall be calculated with respect
to such periods on a Pro Forma Basis.
1.7. Appointment of the Company as Representative. For purposes of
this Agreement, each Borrower other than the Company (i) authorizes the Company
to make such requests, give such notices or furnish such certificates to the
Administrative Agent or any Lender as may be required or permitted by this
Agreement for the benefit of such Borrower and (ii) authorizes the
Administrative Agent to treat such requests, notices, certificates or consents
given or made by the Company to have been made, given or furnished by the
applicable Borrower for purposes of this Agreement. The Administrative Agent and
each Lender shall be entitled to rely on each such request, notice, certificate
or consent made, given or furnished by the Borrower pursuant to the provisions
of this Agreement or any other Credit Document as being made or furnished on
behalf of, and with the effect of irrevocably binding, such Borrower.
1.8. Addition of Borrowers. By execution of an Additional Borrower
Joinder by a Wholly-Owned Subsidiary, and upon acceptance thereof by the
Administrative Agent and the Required Lenders, each in its sole discretion, and
such person's satisfaction of all conditions and completion of all deliveries
specified in the Additional Borrower Joinder, this Agreement shall be deemed to
be amended so that such person shall become for all purposes of this Agreement
as if an original signatory hereto, and shall be admitted as a Borrower
hereunder, and this Agreement shall be binding for all purposes on such person
as a Borrower as if an original signatory hereto.
SECTION 2. AMOUNT AND TERMS OF LOANS.
2.1. Commitments for Loans. Subject to and upon the terms and
conditions herein set forth, each Lender severally agrees to make a loan or
loans (each a "Loan" and, collectively, the "Loans") to the Borrowers, which
Loans shall be drawn, to the extent such Lender has a commitment under a
Facility for the Borrowers, under the applicable Facility, as set forth below:
(a Term Loan A Facility. Prior to the Closing Date, the Existing
Lenders have made loans to the Company which are outstanding as a "Term A Loan"
pursuant to the Existing Credit Agreement, which loans are outstanding in the
amount set forth on Annex I-B hereto under the heading "Existing Term A Loans".
Loans under the Term A Facility (each a "Term A Loan" and, collectively, the
"Term A Loans"): (i) with respect to additional Term A Loans, can only be
incurred by the Company on the Closing Date in the entire amount of the
Unutilized Total Term A Commitment, if any; (ii) except as otherwise provided,
may, at the option of the Company, be incurred and maintained as, or Converted
into Term A Loans which are Prime Rate Loans or Eurocurrency Loans, in each case
denominated in Dollars provided that all Term A Loans made as part of the same
Term Borrowing shall, unless otherwise specifically provided herein, consist of
Term A Loans of the same Type; and (iii) shall not exceed for any Lender at the
time of incurrence thereof the aggregate principal amount of the Term A
Commitment, if any, of such Lender at such time. Once prepaid or repaid, Term A
Loans may not be reborrowed.
(b Term Loan B Facility. Prior to the Closing Date, Existing Lenders
have made loans to the Company which are outstanding as a "Term B Loan" pursuant
to the Existing Credit Agreement, which loans are outstanding in the amount set
forth on Annex I-B hereto under the heading "Existing Term B Loans". Loans under
the Term B Facility (each a "Term B Loan" and, collectively, the "Term B
Loans"): (i) with respect to additional Term B Loans, can only be incurred by
the Company on the Closing Date in the entire amount of the Unutilized Total
Term B Commitment, if any; (ii) except as otherwise provided, may, at the option
of the Company, be incurred and maintained as, or Converted into, Term B Loans
which are Prime Rate Loans or Eurocurrency Loans, in each case denominated in
Dollars, provided that all Term B Loans made as part of the same Term Borrowing
shall, unless otherwise specifically provided herein, consist of Term B Loans of
the same Type; and (iii) shall not exceed for any Lender at the time of
incurrence thereof the aggregate principal amount of the Term B Commitment, if
any, of such Lender at such time. Once prepaid or repaid, Term B Loans may not
be reborrowed.
(c Asset Sale Term Loan Facility. Loans under the Asset Sale Term
Loan Facility (each an "Asset Sale Term Loan" and, collectively, the "Asset Sale
Term Loans"): (i) can only be incurred by the Company on the Closing Date in the
entire amount of the Unutilized Total Asset Sale Term Commitment; (ii) except as
otherwise provided, may, at the option of the Company, be incurred and
maintained as, or Converted into, Asset Sale Term Loans which are Prime Rate
Loans or Eurocurrency Loans, in each case denominated in Dollars, provided that
all Asset Sale Term Loans made as part of the same Term Borrowing shall, unless
otherwise specifically provided herein, consist of Asset Sale Term Loans of the
same Type; and (iii) shall not exceed for any Lender at the time of incurrence
thereof the aggregate principal amount of the Asset Sale Term Loan Commitment,
if any, of such Lender at such time. Once prepaid or repaid, Asset Sale Term
Loans may not be reborrowed.
(d Revolving Facility. Prior to the Closing Date, Existing Lenders
have made loans to the Company which are outstanding as "Revolving Loans"
pursuant to the Existing Credit Agreement, which loans are outstanding in the
amount set forth on Annex I-B hereto under the heading "Existing Revolving
Loans". Thereafter, all Loans under the Revolving Facility (each a "Revolving
Loan" and, collectively, the "Revolving Loans"): (i) may be incurred by any
Borrower, at any time and from time to time on and after the Closing Date and
prior to the date the Total Revolving Commitment expires or is terminated;
(ii) except as otherwise provided, may, at the option of the applicable Borrower
be incurred and maintained as, or Converted into, Revolving Loans which are
Prime Rate Loans or Eurocurrency Loans, in each case denominated in Dollars or
Euros, provided that all Revolving Loans made as part of the same Revolving
Borrowing shall, unless otherwise specifically provided herein, consist of
Revolving Loans of the same Type and currency, and provided, further, that
Foreign Borrowers may borrow Revolving Loans denominated only in Euros, and
provided, further, the aggregate principal amount of Revolving Loans denominated
in Euros shall not exceed at any time outstanding the Alternative Currency
Sublimit; (iii) may be repaid or prepaid and reborrowed in accordance with the
provisions hereof; (iv) may only be made if after giving effect thereto the
Unutilized Total Revolving Commitment exceeds the outstanding Swing Line Loans;
and (v) shall not exceed for any Lender at any time outstanding that aggregate
principal amount which, when added to the sum of (1) such Lender's Swing Line
Exposure plus (2) the product at such time of (A) such Lender's Revolving
Facility Percentage, times (B) the aggregate Letter of Credit Outstandings,
equals the Revolving Commitment of such Lender at such time.
(e Swing Line Facility. Loans to the Company under the Swing Line
Facility (each a "Swing Line Loan" and, collectively, the "Swing Line Loans"):
(i) shall be made only by the Swing Line Lender; (ii) may be made at any time
and from time to time on and after the Closing Date and prior to the earlier of
(x) the date the Swing Line Commitment expires or is terminated, or (y) the date
the Total Revolving Commitment expires or is terminated; (iii) shall be made
only in Dollars; (iv) shall have a maturity of no longer than one Business Day;
(v) may be incurred as either a Prime Rate Loan or a Money Market Rate Loan;
(vi) may be repaid or prepaid and reborrowed in accordance with the provisions
hereof; (vii) may only be made if after giving effect thereto the Unutilized
Total Revolving Commitment exceeds the outstanding Swing Line Loans; and (viii)
shall not exceed for the Swing Line Lender at any time outstanding its Swing
Line Commitment at such time; and (ix) shall not exceed in the aggregate, the
Swing Line Cap.
(f) Treatment of Loans Outstanding on the Closing Date; Borrowings of
Loans on the Closing Date. On the Closing Date, this Agreement and the other
Credit Documents shall not be deemed or construed to provide for or effect a
repayment and re-advance of any portion of the Borrower's Indebtedness under the
Existing Credit Agreement now outstanding, it being the intention of the Company
and the Lenders hereby that the Indebtedness owing under this Agreement be and
hereby is the same Indebtedness as that owing pursuant to the Existing Credit
Agreement immediately prior to the effectiveness of the amendment and
restatement thereof pursuant to the terms and conditions of this Agreement;
provided, that on the Closing Date, such Indebtedness shall be increased by the
amounts set forth in this Agreement, shall be re-allocated among the Lenders in
accordance with their Commitments established pursuant to this Agreement, and
shall be governed by the amended and restated terms and conditions effected by
this Agreement.
(g) Increase in Revolving Credit Commitments. (i) The Company may, by
written notice to the Administrative Agent from time to time, request that the
Total Revolving Commitment be increased by an amount not to exceed the
Incremental Revolving Facility Amount at such time. Upon the approval of such
request by the Administrative Agent (which approval shall not be unreasonably
withheld), the Administrative Agent shall deliver a copy thereof to each Lender
with a Revolving Commitment. Such notice shall set forth the amount of the
requested increase in the Total Revolving Commitment (which shall be in minimum
increments of $5,000,000 and a minimum amount of $10,000,000 or equal to the
remaining Incremental Revolving Facility Amount) and the date on which such
increase is requested to become effective (which shall be not less than 10
Business Days nor more than 60 days after the date of such notice and which, in
any event, must be on or prior to the Revolving Maturity Date), and shall offer
each such Lender the opportunity to increase its Revolving Commitment by its
Revolving Facility Percentage of the proposed increased amount. Each such Lender
shall, by notice to the Company and the Administrative Agent given not more than
10 days after the date of the Administrative Agent's notice, either agree to
increase its Revolving Commitment by all or a portion of the offered amount
(each such Lender so agreeing being an "Increasing Revolving Lender") or decline
to increase its Revolving Commitment (and any such Lender that does not deliver
such a notice within such period of 10 days shall be deemed to have declined to
increase its Revolving Commitment) each Lender so declining or being deemed to
have declined being a "Non-Increasing Revolving Lender"). In the event that, on
the 10th day after the Administrative Agent shall have delivered a notice
pursuant to the second sentence of this paragraph, the Increasing Revolving
Lenders shall have agreed pursuant to the preceding sentence to increase their
Revolving Commitments by an aggregate amount less than the increase in the Total
Revolving Commitment requested by the Company, the Company may arrange for one
or more banks or other entities (any such bank or other entity referred to in
this clause being an "Augmenting Revolving Lender"), which may include any
Lender, to extend Revolving Commitments or increase their existing Revolving
Commitments in an aggregate amount equal to the unsubscribed amount; provided
that each Augmenting Revolving Lender, if not already a Lender with a Revolving
Commitment hereunder, shall be subject to the approval of the Administrative
Agent, (which approval shall not be unreasonably withheld) and the Company and
each Augmenting Revolving Lender shall execute all such documentation as the
Administrative Agent shall reasonably specify to evidence its Revolving
Commitment and/or its status as a Lender with a Revolving Commitment hereunder.
Any increase in the Total Revolving Commitment may be made in an amount which is
less than the increase requested by the Company if the Company is unable to
arrange for, or chooses not to arrange for, Augmenting Revolving Lenders.
(ii) Each of the parties hereto agrees that the Administrative Agent
may take any and all actions as may be reasonably necessary to ensure that,
after giving effect to any increase in the Total Revolving Commitment pursuant
to this Section 2.1(g), the outstanding Revolving Loans (if any) are held by the
Lenders with Revolving Commitments in accordance with their new Revolving
Facility Percentages. This may be accomplished at the discretion of the
Administrative Agent (w) by requiring the outstanding Revolving Loans to be
prepaid with the proceeds of new Revolving Borrowings, (x) by causing
Non-Increasing Revolving Lenders to assign portions of their outstanding
Revolving Loans to Increasing Revolving Lenders and Augmenting Revolving
Lenders, (y) by permitting the Revolving Borrowings outstanding at the time of
any increase in the Total Revolving Commitment pursuant to this section 2.1(g)
to remain outstanding until the last days of the respective Interest Periods
therefor, even though the Lenders would hold such Revolving Borrowings other
than in accordance with their new Revolving Facility Percentages, or (z) by any
combination of the foregoing. Any prepayment or assignment described in this
paragraph (ii) shall be subject to section 2.10 hereof but otherwise without
premium or penalty.
(iii) Notwithstanding the foregoing, no increase in the Total
Revolving Commitment (or in the Revolving Credit Commitment of any Lender) or
addition of a new Lender shall become effective under this section 2.1(g)
unless, (x) on the date of such increase, the conditions set forth in section
6.2 shall be satisfied and the Administrative Agent shall have received a
certificate to that effect dated such date and executed by a responsible
financial officer of the Company, and (y) the Administrative Agent shall have
received (with sufficient copies for each of the Lenders with Revolving
Commitments) legal opinions, board resolutions and an officer's certificate
consistent with those delivered on the Closing Date under sections 6.1(e), (g)
and (n).
(h) Increase in Term Loan Commitments. (i) The Company may, by
written notice to the Administrative Agent from time to time, request
Incremental Term Loan Commitments in an amount not to exceed the Incremental
Term Loan Amount from one or more Incremental Term Lenders, which may include
any existing Lender; provided that each Incremental Term Lender, if not already
a Lender hereunder, shall be subject to the approval of the Administrative Agent
(which approval shall not be unreasonably withheld). Such notice shall set forth
(i) the amount of the Incremental Term Loan Commitments being requested (which
shall be in minimum increments of $5,000,000 and a minimum amount of $10,000,000
or equal to the remaining Incremental Term Loan Amount), (ii) the date on which
such Incremental Term Loan Commitments are requested to become effective (which
shall not be less than 10 Business Days nor more than 60 days after the date of
such notice), and (iii) whether such Incremental Term Loan Commitments are to be
Term A Commitments, Term B Commitments or commitments to make Term Loans with
terms different from the Term A Loans and Term B Loans ("Other Term Loans").
Each Lender may in its sole discretion agree or decline to provide Incremental
Term Loan Commitments.
(ii) The Company and each Incremental Term Lender shall execute and
deliver to the Administrative Agent an Incremental Term Loan Assumption
Agreement and such other documentation as the Administrative Agent shall
reasonably specify to evidence the Incremental Term Loan Commitment of such
Incremental Term Lender. Each Incremental Term Loan Assumption Agreement shall
specify the terms of the Incremental Term Loans to be made thereunder; provided
that, without the prior written consent of the Required Term B Lenders (i) the
interest rate spreads in respect of any Other Term Loans shall not exceed by
more than 1/2 of 1% the Applicable Margin for the Term B Loans, (ii) the final
maturity date of any Other Term Loans shall be no earlier than the Term B
Maturity Date and (iii) the average life to maturity of any Other Term Loans
shall be no shorter than the average life to maturity of the Term B Loans. The
Administrative Agent shall promptly notify each Lender as to the effectiveness
of each Incremental Term Loan Assumption Agreement. Each of the parties hereto
hereby agrees that, upon the effectiveness of any Incremental Term Loan
Assumption Agreement, this Agreement shall be deemed amended to the extent (but
only to the extent) necessary to reflect the existence and terms of the
Incremental Term Loan Commitment evidenced thereby.
(iii) Notwithstanding the foregoing, no Incremental Term Loan
Commitment shall become effective under this section 2.1(h) unless (x) on the
date of such effectiveness, the conditions set forth in section 6.2 hereof shall
be satisfied and the Administrative Agent shall have received a certificate to
that effect dated such date and executed by a responsible financial officer of
the Company, and (ii) the Administrative Agent shall have received (with
sufficient copies for each of the Incremental Term Lenders) legal opinions,
board resolutions and an officer's certificate consistent with those delivered
on the Closing Date under Sections 6.1(e), (g) and (n).
(iv) Each of the parties hereto hereby agrees that the Administrative
Agent may take any and all action as may be reasonably necessary to ensure that
all Incremental Term Loans (other than any Other Term Loans), when originally
made, are included in each Borrowing of outstanding Term A Loans or Term B
Loans, as the case may be, on a pro rata basis. This may be accomplished at the
discretion of the Administrative Agent by requiring each outstanding Term A or
Term B Borrowing, as the case may be, outstanding as a Eurocurrency Loan, to be
converted into a Prime Rate Loan on the date of each Incremental Term Loan, or
by allocating a portion of each Incremental Term Loan to each outstanding Term A
Borrowing or Term B Borrowing, as the case may be, on a pro rata basis, even
though as a result thereof such Incremental Term Loan may effectively have a
shorter Interest Period than the Term Loans included in the Borrowing of which
they are a part (and notwithstanding any other provision of this Agreement that
would prohibit such an initial Interest Period). Any Conversion of Eurocurrency
Loans to Prime Rate Loans required by the preceding sentence shall be subject to
section 2.10 hereof. If any Incremental Term Loan is to be allocated to an
existing Interest Period for a Eurocurrency Loan then, subject to section
2.7(d), the interest rate applicable to such Incremental Term Loan for the
remainder of such Interest Period shall equal the Eurocurrency Rate for a period
approximately equal to the remainder of such Interest Period (as determined by
the Administrative Agent two Business Days before the date such Incremental Term
Loan is made) plus the Applicable Margin. In addition, to the extent any
Incremental Term Loans are Term A Loans or Term B Loans, the scheduled
amortization payments under section 5.2(a) required to be made after the making
of such Incremental Term Loans shall be ratably increased by the aggregate
principal amount of such Incremental Term Loans.
2.2. Minimum Borrowing Amounts, etc.; Pro Rata Borrowings. (a) The
aggregate principal amount of each Borrowing by any Borrower shall not be less
than the Minimum Borrowing Amount. More than one Borrowing may be incurred by
any Borrower on any day, provided that (i) if there are two or more Borrowings
on a single day by a Borrower under the same Facility which consist of
Eurocurrency Loans, each such Borrowing shall have a different initial Interest
Period, (ii) only one Borrowing may be made under the Swing Line Facility on any
day, and (iii) at no time shall there be more than 12 Borrowings of Eurocurrency
Loans outstanding hereunder.
(b) All Borrowings under a Facility shall be made by the Lenders
having Commitments under such Facility pro rata on the basis of their respective
Commitments under such Facility. It is understood that no Lender shall be
responsible for any default by any other Lender in its obligation to make Loans
hereunder and that each Lender shall be obligated to make the Loans provided to
be made by it hereunder, regardless of the failure of any other Lender to
fulfill its Commitment hereunder.
2.3. Procedures for Borrowing and Disbursement of Funds. (a) Notice of
Borrowing. Whenever any Borrower desires to incur Loans, it shall give the
Administrative Agent at its Notice Office,
(A) Borrowings of Prime Rate Loans under the Revolving and Term
Facilities: in the case of any Borrowing under a Term Facility or the Revolving
Facility of Prime Rate Loans to be made hereunder, prior to 12:00 noon (local
time at its Notice Office), at least one Business Day's prior written or
telephonic notice thereof (in the case of telephonic notice, promptly confirmed
in writing if so requested by the Administrative Agent); or
(B) Borrowings of Eurocurrency Loans under the Revolving and Term
Facilities Denominated in Dollars: in the case of any Borrowing under a Term
Facility or the Revolving Facility of Eurocurrency Loans denominated in Dollars
to be made hereunder, prior to 12:00 noon (local time at its Notice Office), at
least three Business Days' prior written or telephonic notice thereof (in the
case of telephonic notice, promptly confirmed in writing if so requested by the
Administrative Agent); or
(C) Borrowings of Eurocurrency Loans under the Revolving Facilities
Denominated in an Alternative Currency: in the case of any Borrowing under the
Revolving Facility of Eurocurrency Loans denominated in an Alternative Currency
to be made hereunder, prior to 12:00 noon (local time at its Notice Office), at
least five Business Days' prior written or telephonic notice thereof (in the
case of telephonic notice, promptly confirmed in writing if so requested by the
Administrative Agent); or
(D) Borrowings under the Swing Line Facility: in the case of any
Borrowing under the Swing Line Facility of (1) a Prime Rate Loan to be made
hereunder, prior to 1:00 P.M. (local time at its Notice Office), at least same
Business Day's prior written or telephonic notice thereof (in the case of
telephonic notice, promptly confirmed in writing if so requested by the
Administrative Agent); or (2) a Money Market Rate Loan to be made hereunder, if
the Administrative Agent shall have furnished the Borrower with a Quoted Rate
therefor, prior to 1:00 P.M. (local time at its Notice Office), at least same
Business Day's prior written or telephonic notice thereof (in the case of
telephonic notice, promptly confirmed in writing if so requested by the
Administrative Agent), which proposed Borrowing shall be within such period as
the Administrative Agent shall have specified for such Quoted Rate.
Each such notice (each such notice, a "Notice of Borrowing") shall (if requested
by the Administrative Agent to be confirmed in writing), be substantially in the
form of Exhibit B-1, and in any event shall be irrevocable and shall specify:
(i) the Facility under which the Borrowing is to be incurred, and if applicable,
the Borrower incurring the Loan; (ii) the aggregate principal amount of the
Loans to be made pursuant to such Borrowing; (iii) the date of the Borrowing
(which shall be a Business Day); (iv) whether the Borrowing shall consist of
Prime Rate Loans, Eurocurrency Loans or a Money Market Rate Loan; (v) if the
Borrowing consists of a Swing Line Loan which is a Money Market Rate Loan, the
Quoted Rate therefor; (vi) if the requested Borrowing consists of Eurocurrency
Loans, the Interest Period to be initially applicable thereto ; and (vii) in the
case of a requested Borrowing of Revolving Loans consisting of Loans which are
Eurocurrency Loans whether the Loans are to be denominated in Dollars or Euros.
The stated maturity date of any Swing Line Loan shall be the Business Day which
immediately follows the date such Swing Line Loan is made, subject to any
reborrowing thereof as provided in section 2.1(e). The Administrative Agent
shall promptly give each Lender which has a Commitment under any applicable
Facility written notice (or telephonic notice promptly confirmed in writing) of
each proposed Borrowing under the applicable Facility, of such Lender's
proportionate share thereof and of the other matters covered by the Notice of
Borrowing relating thereto.
(b) Borrowings of Eurocurrency Loans Denominated in Euros. In the
case of a proposed Borrowing comprised of Revolving Loans which are Eurocurrency
Loans denominated in Euros, the obligation of each affected Lender to make its
Eurocurrency Loan in Euros as part of such Borrowing is subject to the
confirmation by the Administrative Agent to the Company not later than the
fourth Business Day before the requested date of such Borrowing that Euros are
readily and freely transferable and convertible into Dollars.
If the Administrative Agent shall not have provided the confirmation referred to
above the Administrative Agent shall promptly notify the Company and each
Lender, whereupon the Company or the applicable Borrower may, or if the Borrower
is a Foreign Borrower, the Borrower shall, by notice to the Administrative Agent
not later than the third Business Day before the requested date of such
Borrowing, withdraw the Notice of Borrowing relating to such requested
Borrowing. If the Borrower does so withdraw such Notice of Borrowing, the
Borrowing requested in such Notice of Borrowing shall not occur and the
Administrative Agent shall promptly so notify each Lender. If the applicable
Borrower does not so withdraw such Notice of Borrowing, the Administrative Agent
shall promptly so notify each Lender and such Notice of Borrowing shall be
deemed to be a Notice of Borrowing which requests a Borrowing of Loans comprised
of Eurocurrency Loans in an aggregate amount in Dollars equivalent, on the date
the Administrative Agent so notifies each Lender, to the amount of the
originally requested Borrowing in Euros; and in such notice by the
Administrative Agent to each Lender the Administrative Agent shall state such
aggregate equivalent amount of such Borrowing in Dollars and such Lender's
ratable portion of such Borrowing.
(c) Borrowings of Money Market Rate Loans. Whenever the Company
proposes to submit a Notice of Borrowing with respect to a Swing Line Loan which
will be a Money Market Rate Loan, it will prior to submitting such Notice of
Borrowing notify the Administrative Agent of its intention and request the
Administrative Agent to quote a fixed or floating interest rate (the "Quoted
Rate") to be applicable thereto prior to the proposed maturity thereof. The
Administrative Agent will immediately so notify the Swing Line Lender, and if
the Swing Line Lender is agreeable to a particular interest rate for the
proposed Money Market Rate Loan if such Loan is made on or prior to a specified
date, the Administrative Agent shall quote such interest rate to the Company as
the Quoted Rate applicable to such proposed Money Market Rate Loan if made on or
before such specified date for a maturity of one Business Day as so proposed by
the Company. The Swing Line Lender contemplates that any Quoted Rate will be a
rate of interest which reflects a margin corresponding to (or greater than) the
Applicable Eurocurrency Margin in effect at the time of quotation of any Quoted
Rate over the then prevailing fully absorbed average cost of funds of the Swing
Line Lender, Federal Funds Effective Rate, commercial paper, call money,
overnite repurchase or other commonly quoted interest rate, in each case as
selected by the Swing Line Lender. Nothing herein shall be deemed to permit any
Lender other than the Swing Line Lender any right of approval with respect to a
Quoted Rate.
(d) Actions by Administrative Agent on Telephone Notice. Without in
any way limiting the obligation of any Borrower to confirm in writing any
telephonic notice permitted to be given hereunder, the Administrative Agent may
act prior to receipt of written confirmation without liability upon the basis of
such telephonic notice believed by the Administrative Agent in good faith to be
from an Authorized Officer of the applicable Borrower entitled to give
telephonic notices under this Agreement on behalf of such Borrower. In each such
case, the Administrative Agent's record of the terms of such telephonic notice
shall be conclusive absent manifest error.
(e) Disbursement of Funds. (i) No later than 2:00 P.M. (local time at
the Payment Office) on the date specified in each Notice of Borrowing, each
Lender will make available its pro rata share, if any, of each Borrowing
requested to be made on such date in the manner provided below. All amounts
shall be made available to the Administrative Agent in Dollars or Euros, as
applicable and in immediately available funds at the Payment Office and the
Administrative Agent promptly will make available to the applicable Borrower by
depositing to its account at the Payment Office the aggregate of the amounts so
made available in the type of funds received.
(ii) Unless the Administrative Agent shall have been notified by any
Lender prior to the date of Borrowing that such Lender does not intend to make
available to the Administrative Agent its portion of the Borrowing or Borrowings
to be made on such date, the Administrative Agent may assume that such Lender
has made such amount available to the Administrative Agent on such date of
Borrowing, and the Administrative Agent, in reliance upon such assumption, may
(in its sole discretion and without any obligation to do so) make available to
the Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender and the Administrative
Agent has made available same to the applicable Borrower, the Administrative
Agent shall be entitled to recover such corresponding amount from such Lender.
If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the applicable Borrower, and such Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent shall
also be entitled to recover from such Lender or the applicable Borrower, as the
case may be, interest on such corresponding amount in respect of each day from
the date such corresponding amount was made available by the Administrative
Agent to such Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (x) if paid by such Lender,
the overnight Federal Funds Effective Rate, in the case of any Loan denominated
in Dollars, or at the weighted average overnight or weekend borrowing rate for
immediately available and freely transferrable funds in the applicable
Alternative Currency which is offered to the Administrative Agent in the
international markets, in the case of any Loan denominated in Euros , or (y) if
paid by the Borrower, the then applicable rate of interest, calculated in
accordance with section 2.7, for the respective Loans (but without any
requirement to pay any amounts in respect thereof pursuant to section 2.10).
(iii) Nothing in this section 2.3(e) and no subsequent termination of
the Commitments pursuant to section 4.2 or 4.3 shall be deemed to relieve any
Lender from its obligation to fulfill its Commitment hereunder and in existence
from time to time or to prejudice any rights which any Borrower may have against
any Lender as a result of any default by such Lender hereunder.
2.4. Refunding of, or Participation in, Swing Line Loans. (a) If any
Event of Default exists, the Swing Line Lender may, in its sole and absolute
discretion, direct that the Swing Line Loans owing to it be refunded by
delivering a notice to such effect to the Administrative Agent, specifying the
aggregate principal amount thereof (a "Notice of Swing Line Refunding").
Promptly upon receipt of a Notice of Swing Line Refunding, the Administrative
Agent shall give notice of the contents thereof to the Lenders with Revolving
Commitments and, unless an Event of Default specified in section 10.1(h) in
respect of any Borrower has occurred, also to the Company. Each such Notice of
Swing Line Refunding shall be deemed to constitute delivery by the Borrower of a
Notice of Borrowing requesting Revolving Loans denominated in Dollars and
consisting of Prime Rate Loans in the amount of the Swing Line Loans to which it
relates. Each Lender with a Revolving Commitment (including the Swing Line
Lender in its capacity as a Lender) hereby unconditionally agrees
(notwithstanding that any of the conditions specified in section 6.2 hereof or
elsewhere in this Agreement shall not have been satisfied, but subject to the
provisions of paragraph (b) below) to make a Revolving Loan to the applicable
Borrower in an amount equal to such Lender's Revolving Facility Percentage of
the aggregate Dollar amount of the Swing Line Loans to which such Notice of
Swing Line Refunding relates. Each such Lender shall make the amount of such
Revolving Loan available to the Administrative Agent in immediately available
funds at the Payment Office not later than 2:00 P.M. (local time at the Payment
Office), if such notice is received by such Lender prior to 11:00 A.M. (local
time at its Domestic Lending Office), or not later than 2:00 P.M. (local time at
the Payment Office) on the next Business Day, if such notice is received by such
Lender after such time. The proceeds of such Revolving Loans shall be made
immediately available to the Swing Line Lender and applied by it to repay the
principal amount of the Swing Line Loans to which such Notice of Swing Line
Refunding related. Each non-Foreign Borrower irrevocably and unconditionally
agrees that, notwithstanding anything to the contrary contained in this
Agreement, Revolving Loans made as herein provided in response to a Notice of
Swing Line Refunding shall constitute Revolving Loans hereunder denominated in
Dollars and consisting of Prime Rate Loans.
(b) If prior to the time a Revolving Loan would otherwise have been
made as provided above as a consequence of a Notice of Swing Line Refunding, any
of the events specified in section 10.1(h) shall have occurred in respect of any
Borrower or one or more of the Lenders with Revolving Commitments shall
determine that it is legally prohibited from making a Revolving Loan under such
circumstances, each Lender (other than the Swing Line Lender), or each Lender
(other than the Swing Line Lender) so prohibited, as the case may be, shall, on
the date such Revolving Loan would have been made by it (the "Purchase Date"),
purchase an undivided participating interest in the outstanding Swing Line Loans
to which such Notice of Swing Line Refunding related, in an amount (the "Swing
Line Participation Amount") equal to such Lender's Revolving Facility Percentage
of such Swing Line Loans. On the Purchase Date, each such Lender or each such
Lender so prohibited, as the case may be, shall pay to the Swing Line Lender in
immediately available funds, such Lender's Swing Line Participation Amount, and
promptly upon receipt thereof the Swing Line Lender shall, if requested by such
other Lender, deliver to such Lender a participation certificate, dated the date
of the Swing Line Lender's receipt of the funds from, and evidencing such
Lender's participating interest in such Swing Line Loans and its Swing Line
Participation Amount in respect thereof. If any amount required to be paid by a
Lender to the Swing Line Lender pursuant to the above provisions in respect of
any Swing Line Participation Amount is not paid on the date such payment is due,
such Lender shall pay to the Swing Line Lender on demand interest on the amount
not so paid at the overnight Federal Funds Effective Rate from the due date
until such amount is paid in full.
(c) Whenever, at any time after the Swing Line Lender has received
from any other Lender such Lender's Swing Line Participation Amount, the Swing
Line Lender receives any payment from or on behalf of the Company on account of
the related Swing Line Loans, the Swing Line Lender will promptly distribute to
such Lender its Revolving Facility Percentage of such payment on account of its
Swing Line Participation Amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender's participating
interest was outstanding and funded); provided, however, that in the event such
payment received by the Swing Line Lender is required to be returned, such
Lender will return to the Swing Line Lender any portion thereof previously
distributed to it by the Swing Line Lender.
(d) Each Lender's obligation to make Revolving Loans and/or to
purchase participations in connection with a Notice of Swing Line Refunding
(which shall in all events be within such Lender's Unutilized Revolving
Commitment, taking into account all outstanding participations in connection
with Swing Line Refundings) shall be subject to the conditions that:
(i) such Lender shall have received a Notice of Swing Line Refunding
complying with the provisions hereof, and
(ii) at the time the Swing Line Loans which are the subject of such
Notice of Swing Line Refunding were made, the Swing Line Lender had no actual
written notice from another Lender notifying the Swing Line Lender that an Event
of Default had occurred and was continuing under this Agreement and that any
further increases in the aggregate principal amount of Swing Line Loans would
not be entitled to the benefit of the participation arrangements provided in
this section 2.4,
but otherwise shall be absolute and unconditional, shall be solely for the
benefit of the Swing Line Lender and shall not be affected by any circumstance,
including, without limitation, (A) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against any other Lender, any
Credit Party, or any other person, or any Credit Party may have against any
Lender or other person, as the case may be, for any reason whatsoever; (B) the
occurrence or continuance of a Default or Event of Default; (C) any event or
circumstance involving a Material Adverse Effect upon any Borrower; (D) any
breach of any Credit Document by any party thereto; or (E) any other
circumstance, happening or event, whether or not similar to any of the
foregoing.
2.5. Notes; Loan Accounts. (a) Forms of Notes. The obligation of each
Borrower to pay the principal of, and interest on, the Loans made to it by each
Lender shall be evidenced (i) if a Term A Loan, by a promissory note of the
Company substantially in the form of Exhibit A-1 (each a "Term A Note" and,
collectively, the "Term A Notes"), (ii) if a Term B Loan, by a promissory note
of the Company substantially in the form of Exhibit A-2 (each a "Term B Note"
and, collectively, the "Term B Notes"), (iii) if an Asset Sale Term Loan, by a
promissory note of the Company substantially in the form of Exhibit A-3 (each an
"Asset Sale Term Note" and, collectively, the "Asset Sale Term Notes"), (iv) if
a Revolving Loan, by a promissory note of each Borrower substantially in the
form of Exhibit A-4 with blanks appropriately completed in conformity herewith
(each a "Revolving Note" and, collectively, the "Revolving Notes"), and (v) if a
Swing Line Loan, by a promissory note of the Company substantially in the form
of Exhibit A-5 with blanks appropriately completed in conformity herewith (the
"Swing Line Note").
(b) Term A Notes. The Term A Note issued by the Company to a Lender
with a Term A Commitment shall: (i) be executed by the Company; (ii) be payable
to the order of such Lender and be dated on or prior to the Closing Date; (iii)
be payable in the principal amount of Term A Loans evidenced thereby; (iv) be
payable in installments as provided in section 5.2(a) and mature on the Term A
Maturity Date; (v) bear interest as provided in section 2.7 in respect of the
Prime Rate Loans or Eurocurrency Loans, as the case may be, evidenced thereby;
(vi) be subject to mandatory prepayment as provided in section 5.2; and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(c) Term B Notes. The Term B Note issued by the Company to a Lender
with a Term B Commitment shall: (i) be executed by the Company; (ii) be payable
to the order of such Lender and be dated on or prior to the Closing Date; (iii)
be payable in the principal amount of Term B Loans evidenced thereby; (iv) be
payable in installments as provided in section 5.2(a) and mature on the Term B
Maturity Date; (v) bear interest as provided in section 2.7 in respect of the
Prime Rate Loans or Eurocurrency Loans, as the case may be, evidenced thereby;
(vi) be subject to mandatory prepayment as provided in section 5.2; and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(d) Asset Sale Term Notes. The Asset Sale Term Note issued by the
Company to a Lender with an Asset Sale Term Commitment shall: (i) be executed by
the Company; (ii) be payable to the order of such Lender and be dated on or
prior to the Closing Date; (iii) be payable in the principal amount of Asset
Sale Term Loans evidenced thereby; (iv) be payable in installments as provided
in section 5.2(a) and mature on the Asset Sale Term Maturity Date; (v) bear
interest as provided in section 2.7 in respect of the Prime Rate Loans or
Eurocurrency Loans, as the case may be, evidenced thereby; (vi) be subject to
mandatory prepayment as provided in section 5.2; and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(e) Revolving Notes. The Revolving Note issued by any Borrower to a
Lender with a Revolving Commitment shall: (i) be executed only by such Borrower;
(ii) be payable to the order of such Lender and be dated on or prior to the
Closing Date; (iii) be payable in the principal amount of Revolving Loans
evidenced thereby; (iv) mature on the Revolving Maturity Date; (v) bear interest
as provided in section 2.7 in respect of the Prime Rate Loans or Eurocurrency
Loans, as the case may be, evidenced thereby; (vi) be subject to mandatory
prepayment as provided in section 5.2; and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents. In furtherance of the provisions
of Section 13.26, below, and for the avoidance of doubt, a Foreign Borrower only
shall be required to execute and deliver the Revolving Note evidencing the
Revolving Loans actually advanced to such Foreign Borrower and in no event,
shall a Foreign Borrower execute a Revolving Note evidencing any obligations in
respect of Revolving Loans advanced to any other Borrowers including, without
limitation, the Company.
(f) Swing Line Note. The Swing Line Revolving Note issued to the
Swing Line Lender shall: (i) be executed by the Company; (ii) be payable to the
order of such Lender and be dated on or prior to the date the first Loan
evidenced thereby is made; (iii) be in a stated principal amount equal to the
Swing Line Commitment of such Lender and be payable in the principal amount of
Swing Line Loans evidenced thereby; (iv) mature as to any Swing Line Loan
evidenced thereby on the first Business Day following the date such Swing Line
Loan was made; (v) bear interest as provided in section 2.7 in respect of the
Prime Rate Loans or Money Market Rate Loans, as the case may be, evidenced
thereby; (vi) be subject to mandatory prepayment as provided in section 5.2; and
(vii) be entitled to the benefits of this Agreement and the other Credit
Documents.
(g) Loan Accounts of Lenders. Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrowers to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid to
such Lender from time to time hereunder.
(h) Loan Accounts of Administrative Agent. The Administrative Agent
shall maintain accounts in which it shall record (i) the amount of each Loan
made hereunder, the Type thereof, and the particular Facility under which such
Loan was made, (ii) the Interest Period and applicable interest rate if such
Loan is a Eurocurrency Loan, (iii) the maturity date and interest rate if such
Loan is a Swing Line Loan, (iv) the amount of any principal due and payable or
to become due and payable from the Borrowers to each Lender hereunder, and (v)
the amount of any sum received by the Administrative Agent hereunder for the
account of the Lenders and each Lender's share thereof.
(i) Effect of Loan Accounts, etc. The entries made in the accounts
maintained pursuant to section 2.5(g) and (h) shall be prima facie evidence of
the existence and amounts of payments and amounts of the obligations recorded
therein; provided, that the failure of any Lender or the Administrative Agent to
maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrowers to repay or prepay the Loans in accordance with the
terms of this Agreement.
(j) Endorsements of Amounts on Notes Prior to Transfer. Each Lender
will, prior to any transfer of any of the Notes issued to it by any Borrower,
endorse on the reverse side thereof or the grid attached thereto the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in any such notation shall not affect the Borrowers' obligations in
respect of such Loans.
2.6. Voluntary Conversions of Dollar Denominated Loans.
The Borrowers shall have the option to Convert on any Business Day all
or a portion at least equal to the applicable Minimum Borrowing Amount of the
outstanding principal amount of its Loans denominated in Dollars of one Type
owing by it pursuant to a single Facility into a Borrowing or Borrowings
pursuant to the same Facility of another Type of Loans denominated in Dollars
which can be made pursuant to such Facility, provided that:
(i) no Conversions may be made with respect to any Swing Line Loans;
(ii) no partial Conversion of a Borrowing of Eurocurrency Loans shall
reduce the outstanding principal amount of the Eurocurrency Loans made pursuant
to such Borrowing to less than the Minimum Borrowing Amount applicable thereto;
(iii) any Conversion of Eurocurrency Loans into Prime Rate Loans
shall be made on, and only on, the last day of an Interest Period for such
Eurocurrency Loans;
(iv) Prime Rate Loans may only be Converted into Eurocurrency Loans
if no Default under section 10.1(a) or Event of Default is in existence on the
date of the Conversion unless the Required Revolving Lenders, the Required Term
A Lenders, the Required Term B Lenders, the Required Asset Sale Term Lenders, or
the Required Incremental Term Lenders, as applicable, otherwise agree;
(v) Prime Rate Loans may not be Converted into Eurocurrency Loans
during any period when such Conversion is not permitted under section 2.9; and
(vi) Borrowings of Eurocurrency Loans resulting from this section 2.6
shall conform to the requirements of section 2.2.
Each such Conversion shall be effected by the applicable Borrower giving the
Administrative Agent at its Notice Office, prior to 12:00 noon (local time at
such Notice Office), at least three Business Days', in the case of Conversion
into a Eurocurrency Loans (or prior to 12:00 noon (local time at such Notice
Office) same Business Day's, in the case of a Conversion into Prime Rate Loans),
prior written notice (or telephonic notice promptly confirmed in writing if so
requested by the Administrative Agent) (each a "Notice of Conversion"),
substantially in the form of Exhibit B-2, specifying the Loans to be so
Converted, the Type of Loans to be Converted into and, if to be Converted into a
Borrowing of Eurocurrency Loans, the Interest Period to be initially applicable
thereto. The Administrative Agent shall give each Lender prompt notice of any
such proposed Conversion affecting any of its Loans. For the avoidance of doubt,
the prepayment or repayment of any Revolving Loans out of the proceeds of other
Revolving Loans by a Borrower is not considered a Conversion of Revolving Loans
into other Revolving Loans.
Revolving Loans denominated in Euros may be continued as Revolving
Loans denominated in Euros, bearing interest based on the Eurocurrency Rate, at
the end of any relevant Interest Period.
2.7. Interest. (a) Interest on Prime Rate Loans. During such periods
as a Loan is a Prime Rate Loan, it shall bear interest at a fluctuating rate per
annum which shall at all times be equal to the Prime Rate in effect from time to
time plus the Applicable Prime Rate Margin in effect from time to time for such
Loan.
(b) Interest on Eurocurrency Loans. During such periods as a Loan is
a Eurocurrency Loan, it shall bear interest at a rate per annum which shall at
all times during an Interest Period therefor be the relevant Eurocurrency Rate
for such Eurocurrency Loan for such Interest Period plus the Applicable
Eurocurrency Margin in effect from time to time for such Loan.
(c) Interest on Money Market Rate Loans. During such periods as a
Swing Line Loan is a Money Market Rate Loan, it shall bear interest until
maturity (whether by acceleration or otherwise) at the rate per annum which
shall be equal to the Quoted Rate therefor.
(d) Default Interest. Notwithstanding the above provisions, if a
Default under section 10.1(a) or Event of Default is in existence, all
outstanding amounts of principal and, to the extent permitted by law, all
overdue interest, in respect of each Loan shall bear interest, payable on
demand, at a rate per annum equal to 2% per annum above the interest rate which
is or would be applicable from time to time pursuant to section 2.7(a). If any
amount (other than the principal of and interest on the Loans) payable by a
Borrower under the Credit Documents is not paid when due, such amount shall bear
interest, payable on demand, at a rate per annum equal to 2% per annum above the
interest rate which is or would be applicable from time to time pursuant to
section 2.7(a).
(e) Accrual and Payment of Interest. Interest shall accrue from and
including the date of any Borrowing to but excluding the date of any prepayment
or repayment thereof and shall be payable:
(i) in respect of any Swing Line Loan, monthly in arrears on the
first Business Day of the next succeeding month;
(ii) in respect of each Prime Rate Loan under the Revolving Facility
or any Term Facility, quarterly in arrears on each April 1, July 1, October 1
and January 1, and
(iii) in respect of each Eurocurrency Loan under the Revolving
Facility or any Term Facility, on the last day of each Interest Period
applicable thereto and, in the case of an Interest Period in excess of three
months, on the dates which are successively three months after the commencement
of such Interest Period, and
(iv) in the case of any Loan under any Facility, on any repayment,
prepayment or Conversion (on the amount repaid, prepaid or Converted), at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(f) Computations of Interest. All computations of interest hereunder
shall be made in accordance with section 13.7(b).
(g) Interest Rate Margins. As used herein the terms "Applicable Prime
Rate Margin" and "Applicable Eurocurrency Margin" shall mean the applicable
rates determined in accordance with the following provisions.
(i) Applicable Margin for Term B Loans and Asset Sale Loans. In the
case of the Asset Sale Loans, the Applicable Eurocurrency Margin is 300 basis
points per annum, and the Applicable Prime Rate Margin is 200 basis points per
annum. In the case of the Term B Loans, the Applicable Prime Rate Margin or
Applicable Eurocurrency Margin, as the case may be, is the particular rate per
annum determined by the Administrative Agent in accordance with the Pricing Grid
Table which appears below, based on the Company's ratio of Consolidated Total
Debt to Consolidated EBITDA, as computed in accordance with section 9.7 hereof,
and such Pricing Grid Table, and the following provisions:
(A) Initially, until changed hereunder in accordance with the
following provisions, the Applicable Prime Rate Margin for Term B Loans will be
200 basis points per annum, and the Applicable Eurocurrency Margin for Term B
Loans will be 300 basis points per annum.
(B) Commencing with the fiscal quarter of the Company ended on or
nearest to December 31, 2001, and continuing with each fiscal quarter
thereafter, the Administrative Agent will determine the Applicable Prime Rate
Margin or Applicable Eurocurrency Margin for any Term B Loan in accordance with
the Pricing Grid Table, based on the Company's ratio of (x) Consolidated Total
Debt as of the end of the fiscal quarter, to (y) Consolidated EBITDA for the
Testing Period ended on the last day of the fiscal quarter, as computed in
accordance with section 9.7 hereof, and identified in such Pricing Grid Table.
Changes in the Applicable Prime Rate Margin or Applicable Eurocurrency Margin
based upon changes in such ratio shall become effective on the first day of the
month following the receipt by the Administrative Agent pursuant to section
8.1(a) or (b) of the financial statements of the Company, accompanied by the
certificate and calculations referred to in section 8.1(c), demonstrating the
computation of such ratio, based upon the ratio in effect at the end of the
applicable period covered (in whole or in part) by such financial statements.
(C) Notwithstanding the above provisions, in no event shall there be
any reduction during the period of six months following the Closing Date in (1)
the Applicable Prime Rate Margin for Term B Loans, or (2) the Applicable
Eurocurrency Margin for Term B Loans.
(D) Notwithstanding the above provisions, during any period when (1)
the Company has failed to timely deliver its consolidated financial statements
referred to in section 8.1(a) or (b), accompanied by the certificate and
calculations referred to in section 8.1(c), (2) a Default under section 10.1(a)
has occurred and is continuing, or (3) an Event of Default has occurred and is
continuing, the Applicable Prime Rate Margin and the Applicable Eurocurrency
Margin for Term B Loans shall be the highest rate per annum indicated therefor
in the Pricing Grid Table, regardless of the Company's ratio of Consolidated
Total Debt to Consolidated EBITDA at such time.
(E) Any changes in the Applicable Prime Rate Margin or Applicable
Eurocurrency Margin for Term B Loans shall be determined by the Administrative
Agent in accordance with the above provisions and the Administrative Agent will
promptly provide notice of such determinations to the Company and the Lenders.
Any such determination by the Administrative Agent pursuant to this section
2.7(g) shall be conclusive and binding absent manifest error.
PRICING GRID TABLE
FOR
TERM B LOANS
(Expressed in Basis Points)
Ratio of Consolidated Total Debt
To Consolidated EBITDA
_______________________________
Applicable Prime
Rate Margin
_______________
Applicable
Eurocurrency Margin
___________________
Equal to or greater than 3.00 to 1.00
200
300
Less than 3.00 to 1.00
175
275
(ii) Applicable Margins for Revolving Loans, Swing Line Loans, and
Term A Loans. In the case of the Revolving Loans, the Swing Line Loans and the
Term A Loans, the Applicable Prime Rate Margin or Applicable Eurocurrency
Margin, as the case may be, and the Applicable Commitment Fee, is the particular
rate per annum determined by the Administrative Agent in accordance with the
Pricing Grid Table which appears below, based on the Company's ratio of
Consolidated Total Debt to Consolidated EBITDA, as computed in accordance with
section 9.7 hereof, and such Pricing Grid Table, and the following provisions:
(A) Initially, until changed hereunder in accordance with the
following provisions, the Applicable Prime Rate Margin for Revolving Loans,
Swing Line Loans, and Term A Loans will be 150 basis points per annum, the
Applicable Eurocurrency Margin for Revolving Loans and Term A Loans will be 300
basis points per annum, and the Applicable Commitment Fee shall be 50 basis
points per annum.
(B) Commencing with the fiscal quarter of the Company ended on or
nearest to December 31, 2001, and continuing with each fiscal quarter
thereafter, the Administrative Agent will determine the Applicable Prime Rate
Margin or Applicable Eurocurrency Margin for any Revolving Loan, Swing Line Loan
or Term A Loan and the Applicable Commitment Fee in accordance with the Pricing
Grid Table, based on the Company's ratio of (x) Consolidated Total Debt as of
the end of the fiscal quarter, to (y) Consolidated EBITDA for the Testing Period
ended on the last day of the fiscal quarter, as computed in accordance with
section 9.7 hereof, and identified in such Pricing Grid Table. Changes in the
Applicable Prime Rate Margin, Applicable Eurocurrency Margin or Applicable
Commitment Fee based upon changes in such ratio shall become effective on the
first day of the month following the receipt by the Administrative Agent
pursuant to section 8.1(a) or (b) of the financial statements of the Company,
accompanied by the certificate and calculations referred to in section 8.1(c),
demonstrating the computation of such ratio, based upon the ratio in effect at
the end of the applicable period covered (in whole or in part) by such financial
statements.
(C) Notwithstanding the above provisions, in no event shall there be
any reduction during the period of six months following the Closing Date in (1)
the Applicable Prime Rate Margin for Revolving Loans, Swing Line Loans, or Term
A Loans, or (2) the Applicable Eurocurrency Margin for Revolving Loans or Term A
Loans or (3) the Applicable Commitment Fee.
(D) Notwithstanding the above provisions, during any period when (1)
the Company has failed to timely deliver its consolidated financial statements
referred to in section 8.1(a) or (b), accompanied by the certificate and
calculations referred to in section 8.1(c), (2) a Default under section 10.1(a)
has occurred and is continuing, or (3) an Event of Default has occurred and is
continuing, the Applicable Prime Rate Margin and the Applicable Eurocurrency
Margin for Revolving Loans, Swing Line Loans and Term A Loans and the Applicable
Commitment Fee shall be the highest rate per annum indicated therefor in the
Pricing Grid Table, regardless of the Company's ratio of Consolidated Total Debt
to Consolidated EBITDA at such time.
(E) Any changes in the Applicable Prime Rate Margin or Applicable
Eurocurrency Margin for Revolving Loans, Swing Line Loans or Term A Loans and
the Applicable Commitment Fee shall be determined by the Administrative Agent in
accordance with the above provisions and the Administrative Agent will promptly
provide notice of such determinations to the Company and the Lenders. Any such
determination by the Administrative Agent pursuant to this section 2.7(g) shall
be conclusive and binding absent manifest error.
PRICING GRID TABLE
FOR
REVOLVING LOANS, SWING LINE LOANS AND TERM A LOANS
(Expressed in Basis Points)
Ratio of Consolidated Total Debt
To Consolidated EBITDA
____________________________
Applicable Prime Rate Margin
_______________
Applicable
Eurocurrency Margin
_____________
Applicable
Commitment
Fee Rate
____________
Equal to or greater than 3.75 to 1.00
150
300
50
Equal to or greater than 3.25 to 1.00 and less than 3.75 to 1.00
125
275
50
Equal to or greater than 2.75 to 1.00 and less than 3.25 to 1.00
100
250
50
Equal to or greater than 2.25 to 1.00 and less than 2.75 to 1.00
50
200
50
Equal to or greater than 1.75 to 1.00 and less than 2.25 to 1.00
12.5
162.5
37.5
Less than 1.75 to 1.00
0
137.5
37.5
(h) Information as to Interest Rates. The Administrative Agent upon
determining the interest rate for any Borrowing shall promptly notify the
applicable Borrower and the affected Lenders thereof. If the Administrative
Agent is unable to determine the Eurocurrency Rate for any Borrowing of
Eurocurrency Loans based on the quotation service referred to in clause (i) of
the definition of the term Eurocurrency Rate, it will promptly so notify the
Reference Banks and each Reference Bank will furnish the Administrative Agent
timely information for the purpose of determining the Eurocurrency Rate for such
Borrowing. If any one or more of the Reference Banks shall not timely furnish
such information, the Administrative Agent shall determine the Eurocurrency Rate
for such Borrowing on the basis of timely information furnished by the remaining
Reference Banks.
2.8. Selection and Continuation of Interest Periods. (a) Each Borrower
shall have the right
(x) at the time it gives a Notice of Borrowing or Notice of
Conversion in respect of the making of, or Conversion into, a Borrowing of
Eurocurrency Loans, to select in such Notice the Interest Period to be
applicable to such Borrowing, and
(y) prior to 12:00 noon (local time at the Notice Office) on the
third Business Day prior to the expiration of an Interest Period applicable to a
Borrowing under a Facility of Eurocurrency Loans, to elect by giving the
Administrative Agent written or telephonic notice (in the case of telephonic
notice, promptly confirmed in writing if so requested by the Administrative
Agent) to Continue all or the Minimum Borrowing Amount of the principal amount
of such Loans as one or more Borrowings of Eurocurrency Loans and to select the
Interest Period to be applicable to any such Borrowing (any such notice, a
"Notice of Continuation"),
which Interest Period shall, at the option of the applicable Borrower, be a one,
two, three or six month period; provided, that notwithstanding anything to the
contrary contained above, each Borrower's right to select an Interest Period or
to effect any Continuation shall be subject to the applicable provisions of
section 2.9 and to the following:
(i) the initial Interest Period for any Borrowing of Eurocurrency
Loans shall commence on the date of such Borrowing (the date of a Borrowing
resulting from a Conversion or Continuation shall be the date of such Conversion
or Continuation) and each Interest Period occurring thereafter in respect of
such Borrowing shall commence on the day on which the next preceding Interest
Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period, such Interest Period shall end on the last Business Day of such calendar
month;
(iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day, provided that if any Interest Period would otherwise expire on a
day which is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(iv) no Interest Period for any Eurocurrency Loan may be selected
which would end after the Maturity Date applicable thereto;
(v) no Interest Period with respect to any Term A Borrowing may be
elected that would extend beyond any date upon which a Scheduled Repayment is
required to be made in respect of the Term A Loans if, after giving effect to
the selection of such Interest Period, the aggregate principal amount of Term A
Loans maintained as Eurocurrency Loans with Interest Periods ending after such
date would exceed the aggregate principal amount of Term A Loans permitted to be
outstanding after such Scheduled Repayment;
(vi) no Interest Period with respect to any Term B Borrowing may be
elected that would extend beyond any date upon which a Scheduled Repayment is
required to be made in respect of the Term B Loans if, after giving effect to
the selection of such Interest Period, the aggregate principal amount of Term B
Loans maintained as Eurocurrency Loans with Interest Periods ending after such
date would exceed the aggregate principal amount of Term B Loans permitted to be
outstanding after such Scheduled Repayment;
(vii) no Interest Period with respect to any Asset Sale Term
Borrowing may be elected that would extend beyond any date upon which a
Scheduled Repayment is required to be made in respect of the Asset Sale Term
Loans if, after giving effect to the selection of such Interest Period, the
aggregate principal amount of Asset Sale Term Loans maintained as Eurocurrency
Loans with Interest Periods ending after such date would exceed the aggregate
principal amount of Asset Sale Term Loans permitted to be outstanding after such
Scheduled Repayment;
(viii) each Borrowing resulting from a Continuation shall be in at
least the Minimum Borrowing Amount applicable thereto; and
(ix) no Interest Period may be elected at any time when a Default
under section 10.1(a) or an Event of Default is then in existence unless the
Required Revolving and Term A Lenders, the Required Term B Lenders, the Required
Asset Sale Term Lenders, or Required Incremental Term Lenders, as applicable,
otherwise agree.
(b) If upon the expiration of any Interest Period the applicable
Borrower has failed to (or may not) elect a new Interest Period to be applicable
to the respective Borrowing of Eurocurrency Loans as provided above, in the case
of any such Eurocurrency Loans which are denominated in Dollars, such Borrower
shall be deemed to have elected to convert such Borrowing to Prime Rate Loans
effective as of the expiration date of such current Interest Period, and in the
case of any such Eurocurrency Loans which are denominated in Euros, such
Borrower shall be deemed to have elected effective as of the expiration date of
such current Interest Period to continue such Loans in Euros with an Interest
Period of one month.
2.9. Increased Costs, Illegality, etc.
(a) In the event that (x) in the case of clause (i) below, the Administrative
Agent or (y) in the case of clauses (ii) and (iii) below, any Lender, shall have
determined on a reasonable basis (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurocurrency Rate for
Eurocurrency Loans denominated in Dollars or in Euros for any Interest Period
that, by reason of any changes arising after the Effective Date affecting the
interbank Eurocurrency market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Eurocurrency Rate; or
(ii) at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder in an amount which
such Lender deems material with respect to any Eurocurrency Loans (other than
any increased cost or reduction in the amount received or receivable resulting
from the imposition of or a change in the rate of taxes or similar charges)
because of (x) any change since the Effective Date in any applicable law,
governmental rule, regulation, guideline, order or request (whether or not
having the force of law), or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regulation,
guideline, order or request (such as, for example, but not limited to, a change
in official reserve requirements, but, in all events, excluding reserves
includable in the Eurocurrency Rate pursuant to the definition thereof) and/or
(y) other circumstances adversely affecting the interbank Eurocurrency market or
the position of such Lender in such market; or
(iii) at any time, that the making or continuance of any Eurocurrency
Loan denominated in Dollars or in Euros has become unlawful by compliance by
such Lender in good faith with any change since the Effective Date in any law,
governmental rule, regulation, guideline or order, or the interpretation or
application thereof, or would conflict with any thereof not having the force of
law but with which such Lender customarily complies or has become impracticable
as a result of a contingency occurring after the Effective Date which materially
adversely affects the interbank Eurocurrency market;
then
, and in any such event, such Lender (or the Administrative Agent in the case of
clause (i) above) shall (x) on or promptly following such date or time and (y)
within 10 Business Days of the date on which such event no longer exists give
notice (by telephone confirmed in writing) to the Company and to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other applicable Lenders).
Thereafter (x) in the case of clause (i) above, Eurocurrency Loans shall no
longer be available in the applicable currency until such time as the
Administrative Agent notifies the Company and the applicable Lenders that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing, Notice of Conversion or Notice of
Continuation given by any Borrower or with respect to Eurocurrency Loans
denominated in Dollars or Euros which have not yet been incurred, Converted or
Continued shall be deemed rescinded or, in the case of a Notice of Borrowing,
shall, at the option of such Borrower (if other than a Foreign Subsidiary), be
deemed converted into a Notice of Borrowing for Prime Rate Loans to be made on
the date of Borrowing contained in such Notice of Borrowing, (y) in the case of
clause (ii) above, the applicable Borrower shall pay to such Lender, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender shall determine) as shall be required to compensate such Lender, for such
increased costs or reductions in amounts receivable hereunder (a written notice
as to the additional amounts owed to such Lender, showing the basis for the
calculation thereof, which basis must be reasonable, submitted to the Company by
such Lender shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (iii) above, the
applicable Borrower shall take one of the actions specified in section 2.9(b) as
promptly as possible and, in any event, within the time period required by law.
(b) At any time that any Eurocurrency Loan denominated in Dollars or
in Euros is affected by the circumstances described in section 2.9(a)(ii) or
(iii), the applicable Borrower may (and in the case of a Eurocurrency Loan
affected pursuant to section 2.9(a)(iii), shall) either (i) if the affected
Eurocurrency Loan is then being made pursuant to a Borrowing, by giving the
Administrative Agent telephonic notice (confirmed promptly in writing) thereof
on the same date that the Company was notified by a Lender pursuant to section
2.9(a)(ii) or (iii), cancel said Borrowing, if the Borrower is not a Foreign
Subsidiary, convert the related Notice of Borrowing into one requesting a
Borrowing of Prime Rate Loans or require the affected Lender to make its
requested Loan as a Prime Rate Loan, or (ii) if the affected Eurocurrency Loan
is then outstanding, upon at least one Business Day's notice to the
Administrative Agent, require the affected Lender to Convert each such
Eurocurrency Loan denominated in Dollars into a Prime Rate Loan or, if the
Borrower is a Foreign Borrower, repay any Eurocurrency Loan denominated in
Euros, provided that if more than one Lender is affected at any time, then all
affected Lenders must be treated the same pursuant to this section 2.9(b).
(c) If any Lender shall have determined that after the Effective
Date, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged by law with the interpretation or administration thereof, or
compliance by such Lender or its parent corporation with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank, or comparable agency, in each case made
subsequent to the Effective Date, has or would have the effect of reducing by an
amount reasonably deemed by such Lender to be material the rate of return on
such Lender's or its parent corporation's capital or assets as a consequence of
such Lender's commitments or obligations hereunder to a level below that which
such Lender or its parent corporation could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration such Lender's or
its parent corporation's policies with respect to capital adequacy), then from
time to time, within 15 days after demand by such Lender (with a copy to the
Administrative Agent), the applicable Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or its parent
corporation for such reduction. Each Lender, upon determining in good faith that
any additional amounts will be payable pursuant to this section 2.9(c), will
give prompt written notice thereof to the Company, which notice shall set forth,
in reasonable detail, the basis of the calculation of such additional amounts,
which basis must be reasonable, although the failure to give any such notice
shall not release or diminish any of the applicable Borrower's obligations to
pay additional amounts pursuant to this section 2.9(c) upon the subsequent
receipt of such notice.
(d) Notwithstanding anything in this Agreement to the contrary, (i)
no Lender shall be entitled to compensation or payment or reimbursement of other
amounts under section 2.9, 3.5 or 5.4 for any amounts incurred or accruing more
than 270 days prior to the giving of notice to the Company of additional costs
or other amounts of the nature described in such sections, and (ii) no Lender
shall demand compensation for any reduction referred to in section 2.9(c) or
payment or reimbursement of other amounts under section 3.5 or 5.4 if it shall
not at the time be the general policy or practice of such Lender to demand such
compensation, payment or reimbursement in similar circumstances under comparable
provisions of other credit agreements.
2.10. Breakage Compensation. Each Borrower shall compensate each
applicable Lender, upon its written request (which request shall set forth the
detailed basis for requesting and the method of calculating such compensation),
for all reasonable losses, expenses and liabilities (including, without
limitation, any loss, expense or liability incurred by reason of the liquidation
or reemployment of deposits or other funds required by such Lender to fund its
Eurocurrency Loans or Money Market Rate Loans) which such Lender may sustain:
(i) if for any reason (other than a default by such Lender or the Administrative
Agent), (A) a Borrowing of Eurocurrency Loans does not occur on a date specified
therefor in a Notice of Borrowing, Notice of Conversion or Notice of
Continuation (whether or not rescinded or withdrawn by or on behalf of any
Borrower or deemed rescinded or withdrawn pursuant to section 2.9(a)), or (B) a
Borrowing of Money Market Rate Loans does not occur on a date specified therefor
in a Notice of Borrowing; (ii) if any repayment, prepayment, Conversion or
Continuation of any of its Eurocurrency Loans occurs on a date which is not the
last day of an Interest Period applicable thereto; (iii) if any repayment or
prepayment of any Money Market Rate Loan occurs on a date which is not the
maturity date thereof; (iv) if any prepayment of any Eurocurrency Loans or Money
Market Rate Loans, as the case may be, is not made on any date specified in a
notice of prepayment given by or on behalf of the applicable Borrower; (v) if
any Borrower, pursuant to section 2.11(b) hereof, requires any Lender (other
than a Defaulting Lender) to transfer its Eurocurrency Loans and/or Money Market
Rate Loans, as the case may be, on any date other than the last day of the
Interest Period or maturity date thereof; or (vi) as a consequence of (x) any
other default by the applicable Borrower to repay its Eurocurrency Loans or
Money Market Rate Loans, as the case may be, when required by the terms of this
Agreement or (y) an election made pursuant to section 2.9(b). Such loss, cost,
expense and liability to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the interest rate that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then
current Interest Period therefor or the then maturity date thereof in the case
of any Money Market Rate Loan (or, in the case of a failure to effect a
Borrowing, Conversion or Continuation, for the period that would have been the
Interest Period for such Loan or the period to maturity of such Loan, in the
case of a Money Market Rate Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for Dollar
deposits of a comparable amount and period from other banks in the London
interbank market. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this section shall
be delivered to the Company and shall be conclusive absent convincing evidence
of error. Each Borrower shall pay such Lender the amount shown as due on any
such request as soon as practicable but in any event within 30 days after
receipt by the Company thereof.
2.11. Change of Lending Office; Replacement of Lenders. (a) Each
Lender agrees that, upon the occurrence of any event giving rise to the
operation of section 2.9(a)(ii) or (iii), 2.9(c), 3.5 or 5.4 with respect to
such Lender, it will, if requested by the Company, use reasonable efforts
(subject to overall policy considerations of such Lender) to designate another
Applicable Lending Office for any Loans or Commitment affected by such event,
provided that such designation is made on such terms that such Lender and its
Applicable Lending Office suffer no economic, legal or regulatory disadvantage,
with the object of avoiding the consequence of the event giving rise to the
operation of any such section.
(b) If any Lender requests any compensation, reimbursement or other
payment under section 2.9(a)(ii) or (iii), 2.9(c) or 3.5 with respect to such
Lender, or if any Borrower is required to pay any additional amount to any
Lender or governmental authority pursuant to section 5.4, or if any Lender is a
Defaulting Lender, then the Company may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with the restrictions
contained in section 13.4(c)), all its interests, rights and obligations under
this Agreement to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that (i)
the Company shall have received the prior written consent of the Administrative
Agent, which consent shall not be unreasonably withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Company or other Borrower (in the case of all
other amounts, including any breakage compensation under section 2.10 hereof),
and (iii) in the case of any such assignment resulting from a claim for
compensation, reimbursement or other payments required to be made under section
2.9(a)(ii) or (iii), 2.9(c) or 3.5 with respect to such Lender, or resulting
from any required payments to any Lender or governmental authority pursuant to
section 5.4, such assignment will result in a reduction in such compensation,
reimbursement or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling any Borrower to require such
assignment and delegation cease to apply.
(c) Nothing in this section 2.11 shall affect or postpone any of the
obligations of any Borrower or the right of any Lender provided in section 2.9,
3.5 or 5.4.
SECTION 3. LETTERS OF CREDIT.
3.1. Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, any Borrower may request a Letter of Credit Issuer
at any time and from time to time on or after the Closing Date and prior to the
date that is 60 Business Days prior to the Revolving Maturity Date to issue, for
the account of such Borrower or any of its Subsidiaries (the Borrowers or any
such Subsidiary, a "Letter of Credit Obligor"), and in support of worker
compensation, liability insurance, releases of contract retention obligations,
contract performance guarantee requirements and other bonding obligations of a
Borrower or any such other Letter of Credit Obligor incurred in the ordinary
course of its business, and such other standby obligations of a Borrower and the
other Letter of Credit Obligors that are acceptable to the Letter of Credit
Issuer, and subject to and upon the terms and conditions herein set forth, such
Letter of Credit Issuer agrees to issue from time to time, irrevocable standby
letters of credit denominated and payable in Dollars or Euros in such form as
may be approved by such Letter of Credit Issuer and the Administrative Agent
(each such letter of credit (and each Existing Letter of Credit described in
section 3.1(d)), a "Letter of Credit" and collectively, the "Letters of
Credit").
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued, and the Stated Amount of any outstanding Letter of Credit shall not be
increased, if after giving effect thereto the Letter of Credit Outstandings
would exceed either (x) $50,000,000 or (y) when added to the aggregate principal
amount of all Revolving Loans and Swing Line Loans then outstanding, an amount
equal to the Total Revolving Commitment at such time; (ii) no individual Letter
of Credit (other than any Existing Letter of Credit) shall be issued which has
an initial Stated Amount less than $100,000 unless such lesser Stated Amount is
acceptable to the Letter of Credit Issuer; and (iii) each Letter of Credit shall
have an expiry date (including any renewal periods) occurring not later than the
earlier of (A) one year from the date of issuance thereof, unless a longer
period is approved by the relevant Letter of Credit Issuer and Lenders (other
than any Defaulting Lender) holding a majority of the Total Revolving
Commitment, and (B) 15 Business Days prior to the Revolving Maturity Date, in
each case on terms acceptable to the Administrative Agent and the relevant
Letter of Credit Issuer.
(c) Notwithstanding the foregoing, in the event a Lender Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless either (i) such Letter of Credit Issuer has entered into
arrangements satisfactory to it and the Company to eliminate such Letter of
Credit Issuer's risk with respect to the participation in Letters of Credit of
the Defaulting Lender or Lenders, including by cash collateralizing such
Defaulting Lender's or Lenders' Revolving Facility Percentage of the Letter of
Credit Outstandings; or (ii) the issuance of such Letter of Credit, taking into
account the potential failure of the Defaulting Lender or Lenders to risk
participate therein, will not cause the Letter of Credit Issuer to incur
aggregate credit exposure hereunder with respect to Revolving Loans and Letter
of Credit Outstandings in excess of its Revolving Commitment, and the Company
has undertaken, for the benefit of such Letter of Credit Issuer, pursuant to an
instrument satisfactory in form and substance to such Letter of Credit Issuer,
not to thereafter incur Loans or Letter of Credit Outstandings hereunder which
would cause the Letter of Credit Issuer to incur aggregate credit exposure
hereunder with respect to Revolving Loans and Letter of Credit Outstandings in
excess of its Revolving Commitment.
(d) Annex VI hereto contains a description of all letters of credit
outstanding on, and to continue in effect after, the Closing Date. Each such
letter of credit issued by a bank that is or becomes a Lender under this
Agreement on the Effective Date (each, an "Existing Letter of Credit") shall
constitute a "Letter of Credit" for all purposes of this Agreement, issued, for
purposes of section 3.4(a), on the Closing Date, and the Borrowers, the
Administrative Agent and the applicable Lenders hereby agree that, from and
after such date, the terms of this Agreement shall apply to such Letters of
Credit, superseding any other agreement theretofore applicable to them to the
extent inconsistent with the terms hereof.
3.2. Letter of Credit Requests: Notices of Issuance. (a) Whenever it
desires that a Letter of Credit be issued, a Borrower shall give the
Administrative Agent and the Letter of Credit Issuer written or telephonic
notice (in the case of telephonic notice, promptly confirmed in writing if so
requested by the Administrative Agent) which, if in the form of written notice
shall be substantially in the form of Exhibit B-3, or transmit by electronic
communication (if arrangements for doing so have been approved by the Letter of
Credit Issuer), prior to 12:00 noon (local time at its Notice Office) at least
three Business Days (or such shorter period as may be acceptable to the relevant
Letter of Credit Issuer) prior to the proposed date of issuance (which shall be
a Business Day) (each a "Letter of Credit Request"), which Letter of Credit
Request shall include such supporting documents that such Letter of Credit
Issuer customarily requires in connection therewith (including, in the case of a
Letter of Credit for an account party other than the Company, an application
for, and if applicable a reimbursement agreement with respect to, such Letter of
Credit). Any such documents executed in connection with the issuance of a Letter
of Credit, including the Letter of Credit itself, are herein referred to as
"Letter of Credit Documents". In the event of any inconsistency between any of
the terms or provisions of any Letter of Credit Document and the terms and
provisions of this Agreement respecting Letters of Credit, the terms and
provisions of this Agreement shall control. The Administrative Agent shall
promptly notify each Lender of each Letter of Credit Request.
(b) Each Letter of Credit Issuer shall, on the date of each issuance
of a Letter of Credit by it, give the Administrative Agent, each applicable
Lender and the applicable Borrower written notice of the issuance of such Letter
of Credit, accompanied by a copy to the Administrative Agent of the Letter of
Credit or Letters of Credit issued by it. Each Letter of Credit Issuer shall
provide to the Administrative Agent a quarterly (or monthly if requested by any
applicable Lender) summary describing each Letter of Credit issued by such
Letter of Credit Issuer and then outstanding and an identification for the
relevant period of the daily aggregate Letter of Credit Outstandings represented
by Letters of Credit issued by such Letter of Credit Issuer.
3.3. Agreement to Repay Letter of Credit Drawings. (a) Each Borrower
hereby agrees to reimburse (or cause any Letter of Credit Obligor for whose
account a Letter of Credit was issued to reimburse) each Letter of Credit
Issuer, by making payment directly to such Letter of Credit Issuer in
immediately available funds at the payment office of such Letter of Credit
Issuer, for any payment or disbursement made by such Letter of Credit Issuer
under any Letter of Credit (each such amount so paid or disbursed until
reimbursed, an "Unpaid Drawing") immediately after, and in any event on the date
on which, such Letter of Credit Issuer notifies such Borrower (or any such other
Letter of Credit Obligor for whose account such Letter of Credit was issued) of
such payment or disbursement (which notice to such Borrower (or such other
Letter of Credit Obligor) shall be delivered reasonably promptly after any such
payment or disbursement), such payment to be made in Dollars (and in the amount
which is the Dollar equivalent of any such payment or disbursement made or
denominated in Euros), with interest on the amount so paid or disbursed by such
Letter of Credit Issuer, to the extent not reimbursed prior to 1:00 P.M. (local
time at the payment office of the Letter of Credit Issuer) on the date of such
payment or disbursement, from and including the date paid or disbursed to but
not including the date such Letter of Credit Issuer is reimbursed therefor at a
rate per annum which shall be the rate then applicable to Revolving Loans which
are Prime Rate Loans (plus an additional 2% per annum if not reimbursed on the
date of such payment or disbursement), any such interest also to be payable on
demand.
(b) Each Borrower's obligation under this section 3.3 to reimburse,
or cause another Letter of Credit Obligor to reimburse, each Letter of Credit
Issuer with respect to Unpaid Drawings (including, in each case, interest
thereon) shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which any
Borrower or any other Letter of Credit Obligor may have or have had against such
Letter of Credit Issuer, the Administrative Agent, any other Letter of Credit
Issuer or any Lender, including, without limitation, any defense based upon the
failure of any drawing under a Letter of Credit to conform to the terms of the
Letter of Credit or any non-application or misapplication by the beneficiary of
the proceeds of such drawing, provided, however that no Borrower shall be
obligated to reimburse, or cause another Letter of Credit Obligor to reimburse,
a Letter of Credit Issuer for any wrongful payment made by such Letter of Credit
Issuer under a Letter of Credit as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of such Letter of Credit
Issuer.
3.4. Letter of Credit Participations. (a) Immediately upon the
issuance by a Letter of Credit Issuer of any Letter of Credit (and on the
Closing Date with respect to any Existing Letter of Credit), such Letter of
Credit Issuer shall be deemed to have sold and transferred to each Lender with a
Revolving Commitment, and each such Lender (each a "Participant") shall be
deemed irrevocably and unconditionally to have purchased and received from such
Letter of Credit Issuer, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender's Revolving Facility Percentage, in
such Letter of Credit, each substitute letter of credit, each drawing made
thereunder, the obligations of the Borrowers under this Agreement with respect
thereto (although Letter of Credit Fees shall be payable directly to the
Administrative Agent for the account of the Lenders as provided in section
4.1(b) and the Participants shall have no right to receive any portion of any
fees of the nature contemplated by section 4.1(c)), the obligations of any
Letter of Credit Obligor under any Letter of Credit Documents pertaining
thereto, and any security for, or guaranty pertaining to, any of the foregoing.
Upon any change in the Revolving Commitments of the Lenders pursuant to section
13.4(c), it is hereby agreed that, with respect to all outstanding Letters of
Credit and Unpaid Drawings, there shall be an automatic adjustment to the
participations pursuant to this section 3.4 to reflect the new Revolving
Facility Percentages of the assigning and assignee Lender.
(b) In determining whether to pay under any Letter of Credit, a
Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be delivered
under such Letter of Credit have been delivered and that they appear to comply
on their face with the requirements of such Letter of Credit. Any action taken
or omitted to be taken by a Letter of Credit Issuer under or in connection with
any Letter of Credit if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for such Letter of Credit Issuer any
resulting liability.
(c) In the event that a Letter of Credit Issuer makes any payment
under any Letter of Credit and the applicable Borrower shall not have reimbursed
(or caused any applicable Letter of Credit Obligor to reimburse) such amount in
full to such Letter of Credit Issuer pursuant to section 3.3(a), such Letter of
Credit Issuer shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify each Participant of such failure, and
each Participant shall promptly and unconditionally pay to the Administrative
Agent for the account of such Letter of Credit Issuer, the amount of such
Participant's Revolving Facility Percentage of such payment in Dollars (the
Administrative Agent having determined in the case of any payment by a Letter of
Credit Issuer made in Euros the equivalent thereof in Dollars) and in same day
funds, provided, however, that no Participant shall be obligated to pay to the
Administrative Agent its Revolving Facility Percentage of such unreimbursed
amount for any wrongful payment made by such Letter of Credit Issuer under a
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of such Letter of Credit Issuer. If
the Administrative Agent so notifies any Participant required to fund a payment
under a Letter of Credit prior to 11:00 A.M. (local time at its Notice Office)
on any Business Day, such Participant shall make available to the Administrative
Agent for the account of the relevant Letter of Credit Issuer such Participant's
Revolving Facility Percentage of the amount of such payment on such Business Day
in same day funds. If and to the extent such Participant shall not have so made
its Revolving Facility Percentage of the amount of such payment available to the
Administrative Agent for the account of the relevant Letter of Credit Issuer,
such Participant agrees to pay to the Administrative Agent for the account of
such Letter of Credit Issuer, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Administrative Agent for the account of such Letter of Credit Issuer at
the Federal Funds Effective Rate. The failure of any Participant to make
available to the Administrative Agent for the account of the relevant Letter of
Credit Issuer its Revolving Facility Percentage of any payment under any Letter
of Credit shall not relieve any other Participant of its obligation hereunder to
make available to the Administrative Agent for the account of such Letter of
Credit Issuer its Revolving Facility Percentage of any payment under any Letter
of Credit on the date required, as specified above, but no Participant shall be
responsible for the failure of any other Participant to make available to the
Administrative Agent for the account of such Letter of Credit Issuer such other
Participant's Revolving Facility Percentage of any such payment.
(d) Whenever a Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has received for
the account of such Letter of Credit Issuer any payments from the Participants
pursuant to section 3.4(c) above, such Letter of Credit Issuer shall pay to the
Administrative Agent and the Administrative Agent shall promptly pay to each
Participant which has paid its Revolving Facility Percentage thereof, in Dollars
and in same day funds, an amount equal to such Participant's Revolving Facility
Percentage of the principal amount thereof and interest thereon accruing after
the purchase of the respective participations, as and to the extent so received.
(e) The obligations of the Participants to make payments to the
Administrative Agent for the account of each Letter of Credit Issuer with
respect to Letters of Credit shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
(ii) the existence of any claim, set-off defense or other right which
the Borrower (or any other Letter of Credit Obligor) may have at any time
against a beneficiary named in a Letter of Credit, any transferee of any Letter
of Credit (or any person for whom any such transferee may be acting), the
Administrative Agent, any Letter of Credit Issuer, any Lender, or other person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions (including any
underlying transaction between the Borrowers (or any other Letter of Credit
Obligor) and the beneficiary named in any such Letter of Credit), other than any
claim which the Borrowers (or any other Letter of Credit Obligor which is the
account party with respect to a Letter of Credit) may have against any
applicable Letter of Credit Issuer for gross negligence or wilful misconduct of
such Letter of Credit Issuer in making payment under any applicable Letter of
Credit;
(iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents: or
(v) the occurrence of any Default or Event of Default.
(f) To the extent the Letter of Credit Issuer is not indemnified by
the Borrowers, the Participants will reimburse and indemnify the Letter of
Credit Issuer, in proportion to their respective Revolving Facility Percentages,
for and against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, costs, expenses or disbursements of
whatsoever kind or nature which may be imposed on, asserted against or incurred
by the Letter of Credit Issuer in performing its respective duties in any way
related to or arising out of its issuance of Letters of Credit, provided that no
Participants shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements resulting from the Letter of Credit Issuer's gross negligence or
willful misconduct.
3.5. Increased Costs. If after the Effective Date, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Letter of Credit Issuer or any Lender with any
request or directive (whether or not having the force of law) by any such
authority, central bank or comparable agency (in each case made subsequent to
the Effective Date) shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against Letters of
Credit issued by such Letter of Credit Issuer or such Lender's participation
therein, or (ii) shall impose on such Letter of Credit Issuer or any Lender any
other conditions affecting this Agreement, any Letter of Credit or such Lender's
participation therein; and the result of any of the foregoing is to increase the
cost to such Letter of Credit Issuer or such Lender of issuing, maintaining or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Letter of Credit Issuer or such Lender hereunder
(other than any increased cost or reduction in the amount received or receivable
resulting from the imposition of or a change in the rate of taxes or similar
charges), then, upon demand to the applicable Borrower by such Letter of Credit
Issuer or such Lender (a copy of which notice shall be sent by such Letter of
Credit Issuer or such Lender to the Administrative Agent), the applicable
Borrower shall pay to such Letter of Credit Issuer or such Lender such
additional amount or amounts as will compensate any such Letter of Credit Issuer
or such Lender on an after tax basis for such increased cost or reduction. A
certificate submitted to the applicable Borrower by any Letter of Credit Issuer
or any Lender, as the case may be (a copy of which certificate shall be sent by
such Letter of Credit Issuer or such Lender to the Administrative Agent),
setting forth, in reasonable detail, the basis for the determination of such
additional amount or amounts necessary to compensate any Letter of Credit Issuer
or such Lender as aforesaid shall be conclusive and binding on the Borrowers
absent manifest error, although the failure to deliver any such certificate
shall not release or diminish any of such Borrower's obligations to pay
additional amounts pursuant to this section 3.5. Reference is hereby made to the
provisions of section 2.10(d) for certain limitations upon the rights of a
Letter of Credit Issuer or Lender under this section.
3.6. Guaranty of Letter of Credit Obligations of Other Letter of
Credit Obligors. (a) The Company hereby unconditionally guarantees, for the
benefit of the Administrative Agent and the Lenders, the full and punctual
payment of the Obligations of each other Letter of Credit Obligor under each
Letter of Credit Document to which such other Letter of Credit Obligor is now or
hereafter becomes a party. Upon failure by any such other Letter of Credit
Obligor to pay punctually any such amount, the Company shall forthwith on demand
by the Administrative Agent pay the amount not so paid at the place and in the
currency and otherwise in the manner specified in this Agreement or any
applicable Letter of Credit Document.
(b) As a separate, additional and continuing obligation, the Company
unconditionally and irrevocably undertakes and agrees, for the benefit of the
Administrative Agent and the Lenders, that, should any amounts not be
recoverable from the Company under section 3.6(a) for any reason whatsoever
(including, without limitation, by reason of any provision of any Credit
Document or any other agreement or instrument executed in connection therewith
being or becoming void, unenforceable, or otherwise invalid under any applicable
law) then, notwithstanding any notice or knowledge thereof by any Lender, the
Administrative Agent, any of their respective Affiliates, or any other person,
at any time, the Company as sole, original and independent obligor, upon demand
by the Administrative Agent, will make payment to the Administrative Agent, for
the account of the Lenders and the Administrative Agent, of all such obligations
not so recoverable by way of full payment therefor, in such currency and
otherwise in such manner as is provided in the Credit Documents.
(c) The obligations of the Company under this section shall be
unconditional and absolute and, without limiting the generality of the foregoing
shall not be released, discharged or otherwise affected by the occurrence, one
or more times, of any of the following:
(i) any extension, renewal, settlement, compromise, waiver or release
in respect to any obligation of any other Letter of Credit Obligor under any
Letter of Credit Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, any Note or any other Credit Document;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of the Borrower under this Agreement, any
Note or any other Credit Document or of any other Letter of Credit Obligor under
any Letter of Credit Document;
(iv) any change in the corporate existence, structure or ownership of
any other Letter of Credit Obligor or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting any other Letter of Credit Obligor or its
assets or any resulting release or discharge of any obligation of any other
Letter of Credit Obligor contained in any Letter of Credit Document;
(v) the existence of any claim, set-off or other rights which the
Company may have at any time against any other Letter of Credit Obligor, the
Administrative Agent, any Lender or any other person, whether in connection
herewith or any unrelated transactions;
(vi) any invalidity or unenforceability relating to or against any
other Letter of Credit Obligor for any reason of any Letter of Credit Document,
or any provision of applicable law or regulation purporting to prohibit the
payment by any other Letter of Credit Obligor of any Obligations in respect of
any Letter of Credit; or
(vii) any other act or omission to act or delay of any kind by any
other Letter of Credit Obligor, the Administrative Agent, any Lender or any
other person or any other circumstance whatsoever which might, but for the
provisions of this section, constitute a legal or equitable discharge of the
Company's obligations under this section.
(d) The Company's obligations under this section shall remain in full
force and effect until the Commitments shall have terminated and the principal
of and interest on the Notes and all other amounts payable by the Company under
the Credit Documents and by any other Letter of Credit Obligor under the Letter
of Credit Documents shall have been paid in full. If at any time any payment of
any of the Obligations of any other Letter of Credit Obligor in respect of any
Letter of Credit Documents is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of such other Letter
of Credit Obligor, the Company's obligations under this section with respect to
such payment shall be reinstated at such time as though such payment had been
due but not made at such time.
(e) The Company irrevocably waives acceptance hereof, presentment,
demand, protest and any notice not provided for herein, as well as any
requirement that at any time any action be taken by any person against any other
Letter of Credit Obligor or any other person, or against any collateral or
guaranty of any other person.
(f) Until the indefeasible payment in full of all of the Obligations
and the termination of the Commitments of the Lenders hereunder, the Company
shall have no rights, by operation of law or otherwise, upon making any payment
under this section to be subrogated to the rights of the payee against any other
Letter of Credit Obligor with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by any other Letter of Credit Obligor in
respect thereof.
(g) In the event that acceleration of the time for payment of any
amount payable by any other Letter of Credit Obligor under any Letter of Credit
Document is stayed upon insolvency, bankruptcy or reorganization of such other
Letter of Credit Obligor, all such amounts otherwise subject to acceleration
under the terms of any applicable Letter of Credit Document shall nonetheless be
payable by the Company under this section forthwith on demand by the
Administrative Agent.
SECTION 4. FEES; COMMITMENTS.
4.1. Fees. (a) Commitment Fees. The Company agrees to pay to the
Administrative Agent fees ("Commitment Fees") for the account of each
Non-Defaulting Lender which has a Revolving Commitment for the period from and
including the Effective Date to, but not including, the Revolving Maturity Date
or, if earlier, the date upon which the Total Revolving Commitment has been
terminated, computed for each day at a rate per annum equal to the Applicable
Commitment Fee for such day on the amount of such Lender's Revolving Facility
Percentage of the Unutilized Total Revolving Commitment for such day. Commitment
Fees shall be due and payable in arrears on April 1, July 1, October 1 and
January 1 and on the Revolving Maturity Date or, if earlier, the date upon which
the Total Revolving Commitment has been terminated.
(b) Letter of Credit Fees. The Company agrees to pay to the
Administrative Agent, for the account of each Non-Defaulting Lender which has a
Revolving Commitment, pro rata on the basis of its Revolving Facility
Percentage, a fee in respect of each Letter of Credit (the "Letter of Credit
Fee"), computed for each day at the rate per annum equal to the Applicable
Eurocurrency Margin then in effect for Revolving Loans on the Stated Amount of
all Letters of Credit outstanding on such day. Accrued Letter of Credit Fees
shall be due and payable quarterly in arrears on each April 1, July 1, October 1
and January 1 and on the date when the Total Revolving Commitment expires or is
terminated and no Letters of Credit remain outstanding. The Company also agrees
to pay to the Administrative Agent, for the account of each Non-Defaulting
Lender which has a Revolving Commitment, pro rata on the basis of its Revolving
Facility Percentage, additional Letter of Credit Fees, on demand, at the rate of
200 basis points per annum, on the Stated Amount of each Letter of Credit, for
any period when a Default under section 10.1(a) or Event of Default is in
existence.
(c) Facing Fees. The Company agrees to pay directly to each Letter of
Credit Issuer a fee in respect of each Letter of Credit issued by it (a "Facing
Fee"), computed for each day at the rate of 1/8 of 1% per annum on the Stated
Amount of such Letter of Credit issued by such Letter of Credit Issuer which is
outstanding on such day. Accrued Facing Fees shall be due and payable quarterly
in arrears on April 1, July 1, October 1 and January 1 and on the date on which
the Total Revolving Commitment expires or is terminated and no Letters of Credit
remain outstanding.
(d) Additional Charges of Letter of Credit Issuer. The Company agrees
to pay directly to each Letter of Credit Issuer upon each issuance of, drawing
under, and/or amendment, extension, renewal or transfer of, a Letter of Credit
issued by it such amount as shall at the time of such issuance, drawing,
amendment, extension, renewal or transfer be the administrative or processing
charge which such Letter of Credit Issuer is customarily charging for issuances
of, drawings under or amendments, extensions, renewals or transfers of, letters
of credit issued by it.
(e) Other Fees. The Company shall pay to the Administrative Agent
and/or the Joint Lead Arrangers, on the Effective Date and thereafter, for its
or their own account and/or for distribution to the Lenders, such fees as have
heretofore been agreed by the Company in a letter among the Borrower, the
Administrative Agent and the Joint Lead Arrangers.
(f) Computations of Fees. All computations of Fees shall be made in
accordance with section 13.7(b).
4.2. Voluntary Termination/Reduction of Commitments. Upon at least
three Business Days' prior written notice (or telephonic notice confirmed in
writing) to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right to:
(a) terminate the Total Commitment, provided that (i) all outstanding
Loans are contemporaneously prepaid in accordance with section 5.1, and (ii)
either (A) no Letters of Credit remain outstanding, or (B) the Borrowers shall
contemporaneously either (x) cause all outstanding Letters of Credit to be
surrendered for cancellation (any such Letters of Credit to be replaced by
letters of credit issued by other financial institutions acceptable to each
Letter of Credit Issuer and the Required Revolving Lenders), or (y) the
Borrowers shall pay to the Collateral Agent an amount in cash and/or Cash
Equivalents equal to 100% of the Letter of Credit Outstandings and the
Collateral Agent shall hold such payment as security for the reimbursement
obligations of the Borrowers and the other Letter of Credit Obligors in respect
of Letters of Credit pursuant to a cash collateral agreement to be entered into
in form and substance reasonably satisfactory to the Collateral Agent, each
Letter of Credit Issuer and the Borrowers (which shall permit certain
investments in Cash Equivalents satisfactory to the Collateral Agent, each
Letter of Credit Issuer and the Borrowers until the proceeds are applied to the
secured obligations);
(b) terminate the Total Term A Commitment, provided that all
outstanding Term A Loans are contemporaneously prepaid in accordance with
section 5.1;
(c) terminate the Total Term B Commitment, provided that all
outstanding Term B Loans are contemporaneously prepaid in accordance with
section 5.1;
(d) terminate the Total Asset Sale Term Commitment, provided that all
outstanding Asset Sale Term Loans are contemporaneously prepaid in accordance
with section 5.1;
(e) partially and permanently reduce the Unutilized Total Revolving
Commitment, provided that:
(i) any such reduction shall apply to proportionately and permanently
reduce the Revolving Commitment of each of the Lenders;
(ii) any partial reduction of the Unutilized Total Revolving
Commitment pursuant to this section 4.2(e) shall be in the amount of at least
$5,000,000 (or, if greater, in integral multiples of $1,000,000);
(iii) if at such time any Term Loans are outstanding, the Unutilized
Total Revolving Commitment as so reduced shall be at least $25,000,000; and
(iv) after giving effect to any such partial reduction of the
Unutilized Total Revolving Commitment, (x) the Total Revolving Commitment then
in effect shall exceed the aggregate of the Swing Line Commitment then in effect
by at least $25,000,000, and (y) the resulting Unutilized Total Revolving
Commitment shall exceed the outstanding Swing Line Loans, if any, by at least
$25,000,000;
(f) partially and permanently reduce the Unutilized Swing Line
Commitment, provided that any partial reduction of the Unutilized Swing Line
Commitment pursuant to this section 4.2(f) shall be in the amount of at least
$1,000,000 (or, if greater, in integral multiples of $1,000,000);
(g) after the incurrence of Term Loans on the Closing Date, partially
and permanently reduce the Total Term A Commitment, the Total Term B Commitment,
or the Total Asset Sale Term Commitment only by making Scheduled Repayments of
Term Loans pursuant to section 5.2, and prepayments of Term Loans pursuant to
sections 5.1 and 5.2; and/or
(h) terminate any Incremental Term Loan Commitment, provided that all
outstanding Incremental Term Loans are contemporaneously prepaid in accordance
with section 5.1.
The Company may not reduce the Unutilized Total Term A Commitment, the
Unutilized Total Term B Commitment, or the Unutilized Total Asset Sale Term
Commitment, in whole or in part, prior to the Borrowing of Term Loans on the
Closing Date.
4.3. Mandatory Adjustments of Commitments, etc. (a) The Total
Commitment (and the Commitment of each Lender) shall terminate on August 17,
2001, unless the Closing Date has occurred on or prior to such date.
(b) The Total Term A Commitment shall terminate (and the Term A
Commitment of each Lender shall terminate) on the earlier of (x) the Term A
Maturity Date and (y) the date on which a Change of Control occurs.
(c) The Total Term B Commitment shall terminate (and the Term B
Commitment of each Lender shall terminate) on the earlier of (x) the Term B
Maturity Date and (y) the date on which a Change of Control occurs.
(d) The Total Asset Sale Term Commitment shall terminate (and the
Asset Sale Term Commitment of each Lender shall terminate) on the earlier of (x)
the Asset Sale Term Maturity Date and (y) the date on which a Change of Control
occurs.
(e) The Total Revolving Commitment (and the Revolving Commitment of
each Lender) shall terminate on the earlier of (x) the Revolving Maturity Date
and (y) the date on which a Change of Control occurs.
(f) The Swing Line Commitment shall terminate on the earlier of (x)
the Revolving Maturity Date and (y) the date on which a Change of Control
occurs.
(g) Any Incremental Term Loan Commitment shall terminate (and the
Incremental Term Loan Commitment of each Lender shall terminate) on the earlier
of (x) the date provided in the Incremental Term Loan Assumption Agreement and
(y) the date on which a Change of Control occurs.
(h) The Total Term A Commitment shall be permanently reduced, without
premium or penalty, at the time of each (i) voluntary prepayment of Term A Loans
pursuant to section 5.1, and (ii) Scheduled Repayment or mandatory prepayment of
Term A Loans pursuant to section 5.2, in an amount equal to the aggregate
principal amount of the Term A Loans so repaid or prepaid.
(i) The Total Term B Commitment shall be permanently reduced, without
premium or penalty, at the time of each (i) voluntary prepayment of Term B Loans
pursuant to section 5.1, and (ii) Scheduled Repayment or mandatory prepayment of
Term B Loans pursuant to section 5.2, in an amount equal to the aggregate
principal amount of the Term B Loans so repaid or prepaid.
(j) The Total Asset Sale Term Commitment shall be permanently
reduced, without premium or penalty, at the time of each (i) voluntary
prepayment of Asset Sale Term Loans pursuant to section 5.1, and (ii) Scheduled
Repayment or mandatory prepayment of Asset Sale Term Loans pursuant to section
5.2, in an amount equal to the aggregate principal amount of the Asset Sale
Loans so repaid or prepaid.
(k) The Total Revolving Commitment shall be permanently reduced,
without premium or penalty, at the time that any mandatory prepayment of
Revolving Loans would be made pursuant to section 5.2(g), (h), (i), (j) or (k)
if Revolving Loans were then outstanding in the full amount of the Total
Revolving Commitment, in an amount equal to the required prepayment of principal
of Revolving Loans which would be required to be made in such circumstance;
provided that no such reduction in the Total Revolving Commitment shall be
required as a result of any required prepayment of Revolving Loans which would
be (x) attributable to the receipt of Net Cash Proceeds representing proceeds of
business interruption insurance or insurance on inventory pursuant to section
5.2(j), or (y) required solely because of the operation of the provisions of
section 5.2(l). Any such required reduction shall apply to proportionately and
permanently reduce the Revolving Commitment of each of the affected Lenders. The
Company will provide at least three Business Days' prior written notice (or
telephonic notice confirmed in writing) to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Lenders), of any reduction of the Total Revolving Commitment
pursuant to this section 4.3(k), specifying the date and amount of the
reduction.
(l) Each Incremental Term Loan Commitment shall be permanently
reduced, without premium or penalty, at the time of each (i) voluntary
prepayment of Incremental Term Loans pursuant to section 5.1, and (ii) Scheduled
Repayment or mandatory prepayment of Incremental Term Loans pursuant to section
5.2, in an amount equal to the aggregate principal amount of the Incremental
Term Loans so repaid or prepaid.
SECTION 5. PAYMENTS.
5.1. Voluntary Prepayments. The Borrowers shall have the right to
prepay any of their Loans, in whole or in part, without premium or penalty, from
time to time, but only on the following terms and conditions:
(a) Notices: the Borrowers shall give the Administrative Agent at the
Notice Office written or telephonic notice (in the case of telephonic notice,
promptly confirmed in writing if so requested by the Administrative Agent) of
its intent to prepay the Loans, the amount of such prepayment and (in the case
of Eurocurrency Loans or Money Market Rate Loans) the specific Borrowing(s)
pursuant to which made, which notice shall be received by the Administrative
Agent by
(i) 11:00 A.M. (local time at the Notice Office) three Business Days
prior to the date of such prepayment, in the case of any prepayment of
Eurocurrency Loans or Money Market Rate Loans, or
(ii) 11:00 A.M. (local time at the Notice Office) on the date of such
prepayment, in the case of any prepayment of Prime Rate Loans,
and which notice shall promptly be transmitted by the Administrative Agent to
each of the affected Lenders;
(b) Partial Prepayments of Revolving Borrowing: in the case of
prepayment of a Borrowing under the Revolving Facility, each partial prepayment
of such Borrowing shall be in an aggregate principal of at least $2,500,000 or
an integral multiple of $500,000 in excess thereof, in the case where such
Borrowing consists of Prime Rate Loans, and at least $5,000,000 (or the
substantial equivalent in Euros) or an integral multiple of $1,000,000 (or the
substantial equivalent in Euros) in excess thereof, in the case where such
Borrowing consists of Eurocurrency Loans;
(c) Partial Prepayment of Swing Line Borrowing: in the case of
prepayment of a Borrowing under the Swing Line Facility, each partial prepayment
of such Borrowing shall be in an aggregate principal of at least $100,000 or an
integral multiple of $50,000 in excess thereof;
(d) Partial Prepayments of Term Borrowings to Be Applied Pro Rata
Between Term A Borrowings, Term B Borrowings, Asset Sale Term Borrowings, and
Incremental Term Loan Borrowings, etc.: so long as any Term A Loans, Term B
Loans, Asset Sale Term Loans or Incremental Term Loans are outstanding, any
partial prepayment of the Term Loans shall be applied among the outstanding Term
A Loans, Term B Loans, Asset Sale Term Loans, and Incremental Term Loans pro
rata in the proportion which the aggregate outstanding principal amount of the
Term A Loans, Term B Loans, Asset Sale Term Loans, and Incremental Term Loans,
as the case may be, bears to the aggregate principal amount of the Term Loans
immediately prior to such application;
(e) Prepayments of Term Borrowings: in the case of prepayment of any
Borrowing under the Term A Facility, the Term B Facility, the Asset Sale Term
Facility or any Incremental Term Loan Facility, (i) such prepayment shall be
applied to reduce the Scheduled Repayments in respect of such Facility in
inverse order of maturity, and (ii) each partial prepayment of any such
Borrowing shall be in an aggregate principal of at least $5,000,000 or an
integral multiple of $1,000,000 in excess thereof, in the case of Prime Rate
Loans, and at least $5,000,000 or an integral multiple of $1,000,000 in excess
thereof, in the case of Eurocurrency Loans;
(f) Minimum Unutilized Total Revolving Commitment Remaining After
Prepayment of Term Loans: no prepayment of any Term Loans pursuant to this
section 5.1 shall be made unless, after giving effect thereto and any Revolving
Borrowings made in connection therewith, the Unutilized Total Revolving
Commitment would be at least $25,000,000;
(g) Minimum Borrowing Amount After Partial Prepayment: no partial
prepayment of any Loans made pursuant to a Borrowing shall reduce the aggregate
principal amount of such Loans outstanding pursuant to such Borrowing to an
amount less than the Minimum Borrowing Amount applicable thereto;
(h) Prepayments to be Applied Pro Rata: each prepayment in respect of
any Loans made pursuant to a Borrowing shall be applied pro rata among such
Loans; and
(i) Breakage Compensation: each prepayment of Eurocurrency Loans or
Money Market Rate Loans pursuant to this section 5.1 on any date other than the
last day of the Interest Period applicable thereto, in the case of Eurocurrency
Loans, or the maturity date thereof, in the case of Money Market Rate Loans,
shall be accompanied by any amounts payable in respect thereof under section
2.10.
5.2. Scheduled Repayments and Mandatory Prepayments. The Loans shall
be subject to mandatory repayment or prepayment in accordance with the following
provisions:
(a) Scheduled Repayments of Term Loans. (i) On each of the dates set
forth below the Company shall be required to, and shall, repay the principal
amount of its Term A Loans and Term B Loans in the amount set forth opposite
such date, except that the payment due on the Maturity Date of any Term Loans
under a Facility shall in any event be in the amount of the entire remaining
principal amount of the outstanding Term Loans under such Facility (each such
repayment, as the same may be reduced by reason of the application of
prepayments pursuant to section 5.1(d) or sections 5.2(f), (g), (h), (i) or (j),
a "Scheduled Repayment"):
Date
______________
Term A Loans
_____________
Term B Loans
____________
January 1, 2002
$3,375,000
$1,250,000
April 1, 2002
$3,375,000
$1,250,000
July 1, 2002
$3,375,000
$1,250,000
October 1, 2002
$5,062,500
$1,250,000
January 1, 2003
$5,062,500
$1,250,000
April 1, 2003
$5,062,500
$1,250,000
July 1, 2003
$5,062,500
$1,250,000
October 1, 2003
$6,750,000
$1,250,000
January 1, 2004
$6,750,000
$1,250,000
April 1, 2004
$6,750,000
$1,250,000
July 1, 2004
$6,750,000
$1,250,000
October 1, 2004
$8,437,500
$1,250,000
January 1, 2005
$8,437,500
$1,250,000
April 1, 2005
$8,437,500
$1,250,000
July 1, 2005
$8,437,500
$1,250,000
October 1, 2005
$10,125,000
$1,250,000
January 1, 2006
$10,125,000
$1,250,000
April 1, 2006
$23,625,000
$1,250,000
July 1, 2006
$1,250,000
October 1, 2006
$1,250,000
January 1, 2007
$1,250,000
April 1, 2007
$473,750,000
(ii) The Company shall repay the entire principal amount outstanding
of any Revolving Loans and Asset Sale Term Loans on the Revolving Maturity Date
and the Asset Sale Term Loan Maturity Date, respectively.
(ii) The Company shall repay any Incremental Term Loans on such dates
and in such amounts as may be agreed pursuant to section 2.1(h) at the time any
Incremental Term Loan Commitments are established.
(b) Mandatory Prepayment---If Outstanding Revolving Loans, Swing Line
Loans and Letter of Credit Outstandings Exceed Total Revolving Commitment. If on
any date (after giving effect to any other payments on such date) the sum of (i)
the aggregate outstanding principal amount of Revolving Loans plus (ii) the
aggregate outstanding principal amount of Swing Line Loans plus (iii) the
aggregate amount of Letter of Credit Outstandings, exceeds the Total Revolving
Commitment as then in effect, then the Borrower shall prepay on such date that
principal amount of Swing Line Loans and, after Swing Line Loans have been paid
in full, Revolving Loans, and after Revolving Loans have been paid in full,
Unpaid Drawings, in an aggregate amount at least equal to such excess and
conforming in the case of partial prepayments of Loans to the requirements as to
the amounts of partial prepayments which are contained in section 5.1. If, after
giving effect to the prepayment of Swing Line Loans, Revolving Loans and Unpaid
Drawings, the aggregate amount of Letter of Credit Outstandings exceeds the
Total Revolving Commitment as then in effect, then the Borrowers shall pay to
the Collateral Agent an amount in cash and/or Cash Equivalents equal to such
excess and the Collateral Agent shall hold such payment as security for the
reimbursement obligations of the Borrowers and other Letter of Credit Obligors
in respect of Letters of Credit pursuant to a cash collateral agreement or other
appropriate documentation to be entered into in form and substance reasonably
satisfactory to the Collateral Agent, each Letter of Credit Issuer and the
Borrowers (which shall permit certain investments in Cash Equivalents
satisfactory to the Collateral Agent, each Letter of Credit Issuer and the
Borrower until the proceeds are applied to the secured obligations).
(c) Mandatory Prepayment---If Swing Line Loans Exceed Unutilized
Total Revolving Commitment. If on any date (after giving effect to any other
payments on such date) the aggregate outstanding principal amount of Swing Line
Loans exceeds the Unutilized Total Revolving Commitment as then in effect, the
Borrowers shall prepay on such date Swing Line Loans in an aggregate principal
amount at least equal to such excess and conforming in the case of partial
prepayments of Swing Line Loans to the requirements as to the amounts of partial
prepayments which are contained in section 5.1.
(d) Mandatory Prepayment---If Swing Line Loans Exceed Swing Line
Commitment. If on any date (after giving effect to any other payments on such
date) the aggregate outstanding principal amount of Swing Line Loans exceeds the
Swing Line Commitment as then in effect, the Company shall prepay on such date
Swing Line Loans in an aggregate principal amount at least equal to such excess
and conforming in the case of partial prepayments of Loans to the requirements
as to the amounts of partial prepayments which are contained in section 5.1.
(e) Mandatory Prepayment---If Loans Denominated In Euros Exceed
Alternative Currency Sublimit. If on any date (after giving effect to any other
payments on such date) the aggregate outstanding principal amount of Revolving
Loans denominated in Euros exceeds the Alternative Currency Sublimit, the
Borrowers shall prepay on such date Revolving Loans denominated in Euros in an
aggregate principal amount at least equal to such excess and conforming in the
case of partial prepayments of Revolving Loans to the requirements as to the
amounts of partial prepayments which are contained in section 5.1.
(f) Mandatory Prepayment---Excess Cash Flow. If as of the fiscal year
ending December 31, 2002 or the end of any subsequent fiscal year of the
Company, its ratio of Consolidated Total Debt to Consolidated EBITDA for the
Testing Period then ended, computed in accordance with section 9.7 hereof,
exceeds 3.25 to 1.00, then within 10 days after the date on which the Company
delivers its audited financial statements to the Lenders pursuant to section
8.1(a) hereof with respect to such fiscal year (or, if the Company fails to do
so as required by said section 8.1(a), within 10 days after the last date by
which such audited financial statements are required to have been so delivered
pursuant to said section 8.1(a)), the Company shall prepay the principal of the
Loans in an aggregate amount (an "Excess Cash Flow Prepayment Amount"),
conforming to the requirements as to the amount of partial prepayments contained
in section 5.1, at least equal to 50% of the amount of Excess Cash Flow for such
fiscal year. Prepayments of the Loans pursuant to this section 5.2(f) shall be
applied (i) first, to the Term Loans, with the Excess Cash Flow Prepayment
Amount being allocated among the Term A Loans, Term B Loans, Asset Sale Term
Loans and Incremental Term Loans in the same proportion as the then outstanding
Term A Loans, Term B Loans, Asset Sale Loans and Incremental Term Loans, as the
case may be, bear to the then outstanding Term Loans, and (ii) second, after no
Term Loans are outstanding, to the Revolving Loans. The Company shall be
entitled to credit against the Excess Cash Flow Prepayment Amount payable on any
date the principal amount of Term Loans prepaid pursuant to section 5.1
subsequent to the end of the fiscal year and on or prior to the date such Excess
Cash Flow Prepayment Amount is payable. Prepayments of the Term Loans pursuant
to this section 5.2(f) shall be applied to the Scheduled Repayments in inverse
order of their maturity.
(g) Mandatory Prepayment---Certain Proceeds of Asset Sales;
Disposition of Divested Businesses. (i) If during any fiscal year of the
Company, the Company and its Subsidiaries have received cumulative Cash Proceeds
during such fiscal year from one or more Asset Sales of at least $10,000,000,
not later than the fifth Business Day following the date of receipt of any Cash
Proceeds in excess of such amount, an amount, conforming to the requirements as
to the amount of partial prepayments contained in section 5.1, at least equal to
100% of the Net Cash Proceeds then received in excess of such amount from any
Asset Sale, shall be applied as a mandatory prepayment of principal of first,
the outstanding Term Loans, with the amount of such prepayment being allocated
among the Term A Loans, Term B Loans, Asset Sale Term Loans and Incremental Term
Loans in the same proportion as the then outstanding Term A Loans, Term B Loans,
Asset Sale Loans and Incremental Term Loans, as the case may be, bear to the
then outstanding Term Loans, and second, after no Term Loans are outstanding,
the outstanding Revolving Loans; provided, that if (A) no Default under section
10.1(a) or Event of Default shall have occurred and be continuing, (B) the
Company's ratio of Consolidated Total Debt to Consolidated EBITDA as of the end
of the most recent Testing Period for which financial statements have been
delivered to the Lenders hereunder was not in excess of 3.50 to 1.00, (C) the
Company and its Subsidiaries have scheduled Consolidated Capital Expenditures
during the following 12 months, and (D) the Company notifies the Administrative
Agent of the amount and nature thereof and of its intention to reinvest all or a
portion of such Net Cash Proceeds in such Consolidated Capital Expenditures
during such 12 month period, then no such prepayment shall be required to the
extent of the amount of such Net Cash Proceeds as to which the Company so
indicates such reinvestment will take place. If at the end of any such 12 month
period any portion of such Net Cash Proceeds has not been so reinvested, the
Company will immediately make a prepayment of the principal of first, the
outstanding Term Loans, and second, after no Term Loans are outstanding, the
outstanding Revolving Loans, as provided above, in an amount, conforming to the
requirements as to amount of partial prepayments contained in section 5.1, at
least equal to such remaining amount. Prepayments of the Term Loans pursuant to
this section 5.2(g) shall be applied to the Scheduled Repayments in inverse
order of their maturity.
(ii) Notwithstanding anything in section 5.2(g)(i) to the contrary, upon the
receipt of Cash Proceeds from one or more Asset Sales of the Divested
Businesses, not later than the fifth Business Day following the receipt of any
such Cash Proceeds, as amount equal to 100% of the Net Cash Proceeds so received
from such Asset Sale shall be applied as a mandatory prepayment first of the
outstanding Asset Sale Term Loans and second, after no Asset Sale Term Loans are
outstanding, to the Term A Loans, Term B Loans and any Incremental Term Loans in
the same proportion as the then outstanding Term A Loans, Term B Loans and any
Incremental Term Loans bear to the then outstanding Term Loans, and third, after
no Term Loans are outstanding, to the outstanding Revolving Loans; provided,
however, that if, after all Asset Sale Term Loans have been repaid in full, on a
Pro Forma Basis and after giving effect to any such full or partial application,
the Company's Senior Leverage Ratio would be less than 3.00 to 1.00, then the
Company may apply all or any portion of any Net Cash Proceeds from any Asset
Sale of the Divested Businesses to repay any outstanding Bridge Notes, and
provided, further, however, that if all Asset Sale Term Loans have been paid in
full, and if no Default under Section 10.(a) or Event of Default shall have
occurred and be continuing, the Company shall not be required to repay the
remaining Term Loans and Revolving Credit Loans as provided above if the Company
(A) delivers a notice to the Administrative Agent that it intends to hold the
Net Cash Proceeds as permitted by this section 5.2(g)(ii), (B) delivers the Net
Cash Proceeds to the Collateral Agent to be held in the Asset Sale Proceeds
Account pending application to the Term Loans or Bridge Notes as provided above
and (C) within 180 days from the date such Net Cash Proceeds are received,
directs the Administrative Agent to pay such Net Cash Proceeds to the Term Loans
or Bridge Notes as permitted above.
(h) Mandatory Prepayment---Certain Proceeds of Equity Sales. Not
later than the Business Day following the date of the receipt by the Company or
any Subsidiary of the cash proceeds (net of underwriting discounts and
commissions, placement agent fees and other customary fees and costs associated
therewith) from any sale or issuance of equity securities by the Company or any
Subsidiary after the Closing Date (other than (i) any Refinancing Issuance or
(ii) any sale or issuance to management, employees (or key employees) or
directors pursuant to stock option, stock grant or similar plans for the benefit
of management, employees (key employees) or directors generally), the Company
will prepay the principal of first, the outstanding Term Loans, with the amount
of such prepayment being allocated among the Term A Loans, Term B Loans, Asset
Sale Term Loans and any Incremental Term Loans in the same proportion as the
then outstanding Term A Loans, Term B Loans, Asset Sale Term Loans and any
Incremental Term Loans bear to the then outstanding Term Loans, and second,
after no Term Loans are outstanding, the outstanding Revolving Loans, in an
aggregate amount, conforming to the requirements as to the amounts of partial
prepayments contained in section 5.1, which is not less than (x) 50% of such net
proceeds, or (y) if less, an amount equal to the then aggregate outstanding
principal amount of the outstanding Loans, if any, provided that to the extent
any proceeds of any Refinancing Issuance consisting of an issuance of equity
securities are not used to repay outstanding Bridge Notes, 100% of the cash
proceeds therefrom shall be applied to the Term Loans as provided above.
Prepayments of the Term Loans pursuant to this section 5.2(h) shall be applied
to the Scheduled Repayments in inverse order of their maturity.
(i) Mandatory Prepayment---Certain Proceeds of Debt Securities. Not
later than the Business Day following the date of the receipt by the Company or
any Subsidiary of the cash proceeds (net of underwriting discounts and
commissions, placement agent fees and other customary fees and costs associated
therewith) from any sale or issuance of debt securities by the Company or any
Subsidiary after the Closing Date (other than any Refinancing Issuance) in an
underwritten public offering, Rule 144A offering, or private placement with one
or more institutional investors, the Company will prepay the principal of first,
the outstanding Term Loans, with the amount of such prepayment being allocated
among the Term A Loans, Term B Loans, Asset Sale Loans and any Incremental Term
Loans in the same proportion as the then outstanding Term A Loans, Term B Loans,
Asset Sale Loans or any Incremental Term Loans, as the case may be, bear to the
then outstanding Term Loans, and second, after no Term Loans are outstanding,
the outstanding Revolving Loans, in an aggregate amount, conforming to the
requirements as to the amounts of partial prepayments contained in section 5.1,
which is not less than (x) 100% of such net proceeds, or (y) if less, an amount
equal to the then aggregate outstanding principal amount of the outstanding
Loans, if any. Prepayments of the Term Loans pursuant to this section 5.2(i)
shall be applied to the Scheduled Repayments in inverse order of their maturity.
(j) Mandatory Prepayment---Certain Proceeds of an Event of Loss. If
during any fiscal year of the Company, the Company and its Subsidiaries have
received cumulative Net Cash Proceeds during such fiscal year from one or more
Events of Loss of at least $10,000,000, not later than the fifth Business Day
following the date of receipt of any Net Cash Proceeds in excess of such amount,
an amount, conforming to the requirements as to the amount of partial
prepayments contained in section 5.1, at least equal to 100% of the Net Cash
Proceeds then received in excess of such amount from any Event of Loss, shall be
applied as a mandatory prepayment of principal of first, the outstanding Term
Loans, with the amount of such prepayment being allocated among the Term A
Loans, Term B Loans, Asset Sale Term Loans and any Incremental Term Loans in the
same proportion as the then outstanding Term A Loans, Term B Loans, Asset Sale
Term Loans and any Incremental Term Loans, as the case may be, bear to the then
outstanding Term Loans, and second, after no Term Loans are outstanding, the
outstanding Revolving Loans; provided, that notwithstanding the foregoing, any
such Net Cash Proceeds representing proceeds of business interruption insurance
or insurance on inventory may instead be applied first, to the principal of
outstanding Revolving Loans, and second, after no Revolving Loans are
outstanding, to the principal of Term Loans, but otherwise in accordance with
the above provisions. Prepayments of the Term Loans pursuant to this section
5.2(j) shall be applied to the Scheduled Repayments in inverse order of their
maturity.
Notwithstanding the foregoing, in the event any property suffers an
Event of Loss and (i) the Net Cash Proceeds received in any fiscal year as a
result of such Event of Loss are more than $10,000,000, (ii) no Default under
section 10.1(a) or Event of Default has occurred and is continuing, (iii) the
Company's ratio of Consolidated Total Debt to Consolidated EBITDA as of the end
of the most recent Testing Period for which financial statements have been
delivered to the Lenders hereunder was not in excess of 3.50 to 1.00, and (iv)
the Company notifies the Administrative Agent and the Lenders in writing that it
intends to rebuild or restore the affected property, and that such rebuilding or
restoration can be accomplished within 18 months out of such Net Cash Proceeds
and other funds available to the Company, then no such prepayment of the Loans
shall be required if the Company immediately deposits such Net Cash Proceeds in
a cash collateral deposit account over which the Collateral Agent shall have
sole dominion and control, and which shall constitute part of the Collateral
under the Security Documents and may be applied as provided in section 10.3 if
an Event of Default occurs and is continuing. So long as no Default under
section 10.1(a) or Event of Default has occurred and is continuing, the
Collateral Agent is authorized to disburse amounts from such cash collateral
deposit account to or at the direction of the Company for application to the
costs of rebuilding or restoration of the affected property. Any amounts not so
applied to the costs of rebuilding or restoration or as provided in section 10.3
shall be applied to the prepayment of the Loans as provided above.
(k) Mandatory Prepayment---Change of Control. On the date of which a
Change of Control occurs, notwithstanding anything to the contrary contained in
this Agreement, no further Borrowings shall be made and the then outstanding
principal amount of all Loans, if any, and other Obligations, shall become due
and payable and shall be prepaid in full, together with accrued interest and
Fees and the Company shall contemporaneously either (i) cause all outstanding
Letters of Credit to be surrendered for cancellation (any such Letters of Credit
to be replaced by letters of credit issued by other financial institutions
acceptable to the Required Revolving Lenders), or (ii) the Company shall pay to
the Collateral Agent an amount in cash and/or Cash Equivalents equal to 100% of
the Letter of Credit Outstandings and the Administrative Agent shall hold such
payment as security for the reimbursement obligations of the Borrowers and the
other Letter of Credit Obligors in respect of Letters of Credit pursuant to a
cash collateral agreement to be entered into in form and substance reasonably
satisfactory to the Collateral Agent, each Letter of Credit Issuer and the
Company (which shall permit certain investments in Cash Equivalents satisfactory
to the Collateral Agent, each Letter of Credit Issuer and the Borrowers until
the proceeds are applied to the secured obligations).
(l) Right of Term B Lenders to Forego Certain Mandatory Prepayments.
Unless at such time (after giving effect to any other contemporaneous payments)
there are no Term A Loans outstanding, each Term B Lender shall have the right
to forego the application to its Term B Loans of any mandatory prepayment of its
Term B Loans required to be made pursuant to section 5.2(f), (g), (h), (i) or
(j) hereof (any such proposed mandatory prepayment, a "Proposed Rejectable
Prepayment"), in accordance with the following provisions:
(i) The Administrative Agent shall, on or prior to 3:00 P. M. (local
time at the Notice Office) on the date it receives immediately available funds
from the Borrower in respect of a prepayment of Loans which is in whole or in
part a Proposed Rejectable Prepayment, give each Term B Lender written or
telephonic notice of (A) the amount of such prepayment and the particular
provision of this Agreement pursuant to which such prepayment is intended to be
made, (B) the portion thereof proposed to be applied to the Term B Loans of such
Term B Lender, and (C) such Term B Lender's right to forego the application to
its Term B Loans of such portion of such prepayment, which notice shall request
such Term B Lender to confirm to the Administrative Agent whether or not it
wishes to forego such application to its Term B Loans.
(ii) If any Term B Lender so indicates its desire to forego such
application to the prepayment of its Term B Loans by giving the Administrative
Agent written or telephonic notice to such effect by 5:00 P. M. (local time at
the Notice Office) no later than the third Business Day after the date such Term
B Lender receives such written or telephonic notice from the Administrative
Agent, the amount of the applicable prepayment which otherwise would have been
applied to its Term B Loans shall, notwithstanding anything to the contrary
contained in this section 5.2, be applied instead to the prepayment of other
Term Loans, and after no Term Loans are outstanding, to the prepayment of the
Revolving Loans, all such prepayments to be made in accordance with any other
applicable provisions of this section 5.2.
(iii) The Administrative Agent may act without liability upon the
basis of any such telephonic notice or written notice believed by the
Administrative Agent in good faith to be from an authorized representative of a
Term B Lender. In the case of each such telephonic notice, the Administrative
Agent's record of the terms of such telephonic notice shall be conclusive absent
manifest error.
(iv) Any Term B Lender which does not respond to the Administrative
Agent within the time period specified above to a notice from the Administrative
Agent requesting it to confirm whether or not it wishes to exercise its right to
forego the application of its portion of such prepayment to its Term B Loans
pursuant to this section 5.2(l) shall be deemed to have waived such right to
forego such application.
(v) Notwithstanding anything to the contrary contained in this
Agreement, the Administrative Agent may defer, until the next Business Day, the
distribution to the Lenders of any portion of any prepayment of Loans received
by the Administrative Agent pursuant to section 5.2(f), (g), (h), (i) or (j), as
applicable, as to which the Administrative Agent is determining whether or not
the Term B Lenders wish to exercise their rights under this section 5.2(l).
(m) Right of Incremental Term Lender to Forego Certain Mandatory
Prepayments. Pursuant to the terms of any Incremental Term Loan Assumption
Agreement, the Administrative Agent, the Company and the Incremental Term Loan
Lenders party thereto may agree to a provision similar to paragraph (l) above
pursuant to which such Incremental Term Lenders may reject mandatory
prepayments.
(n) Particular Loans to be Prepaid. With respect to each repayment or
prepayment of Loans required by this section 5.2, the Company shall designate
the Types of Loans which are to be repaid or prepaid and the specific
Borrowing(s) pursuant to which such repayment or prepayment is to be made,
provided that (i) the Company shall first so designate all Loans that are Prime
Rate Loans and Eurocurrency Loans with Interest Periods ending on the date of
repayment or prepayment prior to designating any other Eurocurrency Loans for
repayment or prepayment, (ii) if the outstanding principal amount of
Eurocurrency Loans made pursuant to a Borrowing is reduced below the applicable
Minimum Borrowing Amount as a result of any such repayment or prepayment, then
all the Loans outstanding pursuant to such Borrowing shall be Converted into
Prime Rate Loans, and (iii) each repayment and prepayment of any Loans made
pursuant to a Borrowing shall be applied pro rata among such Loans. In the
absence of a designation by the Company as described in the preceding sentence,
the Administrative Agent shall, subject to the above, make such designation in
its sole discretion with a view, but no obligation, to minimize breakage costs
owing under section 2.10. Any repayment or prepayment of Eurocurrency Loans or
Money Market Loans pursuant to this section 5.2 shall in all events be
accompanied by such compensation as is required by section 2.10.
No Foreign Borrower shall be required to make a mandatory repayment or
prepayment as provided in this section 5.2 in excess of the amount actually
advanced to any such Foreign Borrower.
5.3. Method and Place of Payment. (a) Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable (based on its pro rata share) account of
the Lenders entitled thereto, not later than 12:00 noon (local time at the
Payment Office) on the date when due and shall be made at the Payment Office in
immediately available funds and in lawful money of the United States of America
(in the case of Loans denominated in Dollars), or in Euros (in the case of Loans
denominated in Euros), at the Payment Office, it being understood that written
notice by the Company to the Administrative Agent to make a payment from the
funds in the Company's account at the Payment Office shall constitute the making
of such payment to the extent of such funds held in such account. Any payments
under this Agreement which are made later than 12:00 noon (local time at the
Payment Office) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder 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 during such extension at the applicable rate in effect
immediately prior to such extension.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, Unpaid
Drawings, interest and Fees then due hereunder and an Event of Default is not
then in existence, such funds shall be applied (i) first, towards payment of
interest and Fees then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of interest and Fees then due to such parties,
and (ii) second, towards payment of principal and Unpaid Drawings then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and Unpaid Drawings then due to such parties.
5.4. Net Payments. (a) All payments made by the Borrowers hereunder,
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as provided for in section 5.4(b), 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
net profits of a Lender pursuant to the laws of the jurisdiction under which
such Lender is organized or the jurisdiction in which the principal office or
Applicable Lending Office of such 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 nonexcluded taxes levies, imposts, duties, fees assessments or
other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, the Borrowers agree to pay the full amount of such Taxes and
such additional amounts as may be necessary so that every payment by them of all
amounts due hereunder, under any Note or under any other Credit Document, after
withholding or deduction for or on account of any Taxes will not be less than
the amount provided for herein or in such Note or in such other Credit Document.
If any amounts are payable in respect of Taxes pursuant to the preceding
sentence, the Borrowers agree to reimburse each Lender, upon the written request
of such Lender for taxes imposed on or measured by the net income or profits of
such Lender pursuant to the laws of the jurisdiction in which such Lender is
organized or in which the principal office or Applicable Lending Office of such
Lender is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which the principal office or Applicable
Lending Office of such Lender is located and for any withholding of income or
similar taxes imposed by the United States of America as such Lender shall
determine are payable by, or withheld from, such Lender in respect of such
amounts so paid to or on behalf of such Lender pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of such Lender
pursuant to this sentence, which request shall be accompanied by a statement
from such Lender setting forth, in reasonable detail, the computations used in
determining such amounts. The Borrowers will furnish to the Administrative Agent
within 45 days after the date the payment of any Taxes, or any withholding or
deduction on account thereof, is due pursuant to applicable law certified copies
of tax receipts, or other evidence satisfactory to the relevant Lender,
evidencing such payment by the Borrowers. The Borrowers will indemnify and hold
harmless the Administrative Agent and each Lender, and reimburse the
Administrative Agent or such Lender upon its written request, for the amount of
any Taxes so levied or imposed and paid or withheld by such Lender.
(b) Each Lender that is not a United States person (as such term is
defined in section 7701(a)(30) of the Code) for Federal income tax purposes
agrees to provide to the Company and the Administrative Agent on or prior to the
Effective Date, or in the cases of a Lender that is an assignee or transferee of
an interest under this Agreement pursuant to section 13.4 (unless the respective
Lender was already a Lender hereunder immediately prior to such assignment or
transfer and such Lender is in compliance with the provisions of this section
5.4(b)), on the date of such assignment or transfer to such Lender, (i) two
accurate and complete original signed copies of Internal Revenue Service Form
W-8BEN or W-8ECI (or successor forms) certifying to such Lender's entitlement to
a complete exemption from United States withholding tax with respect to payments
to be made under this Agreement, any Note or any other Credit Document, or (ii)
if the Lender is not a "bank" within the meaning of section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form W-8BEN or W-8ECI
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit F (any such certificate, a "Section 5.4(b)(ii) Certificate") and (y) two
accurate and complete original signed copies of Internal Revenue Service Form
W-8 (or successor form) certifying to such Lender's entitlement to a complete
exemption from United States withholding tax with respect to payments of
interest to be made under this Agreement, any Note or any other Credit Document.
In addition, each Lender agrees that from time to time after the Effective Date,
when a lapse in time or change in circumstances renders the previous
certification obsolete or inaccurate in any material respect, it will deliver to
the Company and the Administrative Agent two new accurate and complete original
signed copies of Internal Revenue Service Form W-8BEN or W-8ECI, and a Section
5.4(b)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement, any Note or any other Credit Document,
or it shall immediately notify the Company and the Administrative Agent of its
inability to deliver any such Form or Certificate, in which case such Lender
shall not be required to deliver any such Form or Certificate pursuant to this
section 5.4(b). Notwithstanding anything to the contrary contained in section
5.4(a), but subject to section 13.4(c) and the immediately succeeding sentence,
(x) the Borrowers shall be entitled, to the extent they are required to do so by
law, to deduct or withhold income or other similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder for the account of any
Lender which is not a United States person (as such term is defined in section
7701(a)(30) of the Code) for United States federal income tax purposes and which
has not provided to the Company such forms that establish a complete exemption
from such deduction or withholding and (y) the Borrowers shall not be obligated
pursuant to section 5.4(a) hereof to gross-up payments to be made to a Lender in
respect of income or similar taxes imposed by the United States or any
additional amounts with respect thereto (I) if such Lender has not provided to
the Company the Internal Revenue Service forms required to be provided to the
Company pursuant to this section 5.4(b) or (II) in the case of a payment other
than interest, to a Lender described in clause (ii) above, to the extent that
such forms do not establish a complete exemption from withholding of such taxes.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this section 5.4 and except as specifically provided for in section
13.4(c), the Borrowers agree to pay additional amounts and indemnify each Lender
in the manner set forth in section 5.4(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any Taxes
deducted or withheld by it as described in the previous sentence as a result of
any changes after the Effective Date in any applicable law, treaty, governmental
rule, regulation, guideline or order, or in the interpretation thereof, relating
to the deducting or withholding of income or similar Taxes.
(c) If any Lender, in its sole opinion, determines that it has
finally and irrevocably received or been granted a refund in respect of any
Taxes paid as to which indemnification has been paid by any Borrower pursuant to
this section, it shall promptly remit such refund (including any interest
received in respect thereof), net of all out-of-pocket costs and expenses;
provided, that the Borrowers agree to promptly return any such refund (plus
interest) to such Lender in the event such Lender is required to repay such
refund to the relevant taxing authority. Any such Lender shall provide the
Company with a copy of any notice of assessment from the relevant taxing
authority (redacting any unrelated confidential information contained therein)
requiring repayment of such refund. Nothing contained herein shall impose an
obligation on any Lender to apply for any such refund.
(d) Reference is hereby made to the provisions of section 2.9(d) for
certain limitations upon the rights of a Lender under this section.
SECTION 6. CONDITIONS PRECEDENT.
6.1. Conditions Precedent at Closing Date. The obligation of the
Lenders to make Loans, and of any Letter of Credit Issuer to issue Letters of
Credit, is subject to the satisfaction of each of the following conditions on
the Closing Date:
(a) Effectiveness; Notes. On or prior to the Closing Date, (i) the
Effective Date shall have occurred and (ii) there shall have been delivered to
the Administrative Agent for the account of each Lender each appropriate Note
executed by the Borrowers, in each case, in the amount, maturity and as
otherwise provided herein.
(b) Fees, etc. The Company shall have paid or caused to be paid all
fees required to be paid by it on or prior to such date pursuant to section 4.1
hereof and all reasonable fees and expenses of the Joint Lead Arrangers and the
Administrative Agent and of special counsel to the Administrative Agent which
have been invoiced on or prior to such date in connection with the preparation,
execution and delivery of this Agreement and the other Credit Documents and the
consummation of the transactions contemplated hereby and thereby.
(c) Other Credit Documents. The Credit Parties named therein shall
have duly executed and delivered and there shall be in full force and effect,
and original counterparts shall have been delivered to the Administrative Agent,
in sufficient quantities for the Lenders, of amendments to, or restatements or
confirmations of, (i) the Subsidiary Guaranty (as modified, amended or
supplemented from time to time in accordance with the terms thereof and hereof,
the "Subsidiary Guaranty"), substantially in the form attached hereto as Exhibit
C-1, (ii) the Security Agreement (as modified, amended or supplemented from time
to time in accordance with the terms thereof and hereof, the "Security
Agreement"), substantially in the form attached hereto as Exhibit C-2; (iii)
each Acknowledgment and Amendment to Collateral Assignment of Patents and
Security Agreement (as modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof, a "Collateral Assignment of
Patents"), substantially in the form attached hereto as Exhibit C-3; (iv) each
Acknowledgment and Amendment to Collateral Assignment of Trademarks and Security
Agreement (as modified, amended or supplemented from time to time in accordance
with the terms thereof and hereof, a "Collateral Assignment of Trademarks"),
substantially in the form attached hereto as Exhibit C-4; and (v) the Pledge
Agreement (as modified, amended or supplemented from time to time in accordance
with the terms thereof and hereof, the "Pledge Agreement"), substantially in the
form attached hereto as Exhibit C-5.
(d) Charter and By-Laws, Good Standing of the Borrowers. The
Administrative Agent shall have received, in sufficient quantity for the
Administrative Agent and the Lenders, (i) a copy of the certificate or articles
of incorporation of each Borrower, including any amendments or restatements
thereof, certified as of a recent date by the Secretary of State or other
governmental official of the jurisdiction of its formation, (ii) a copy of the
By-Laws or equivalent governing documents of the Borrowers, certified as true,
correct and in full force and effect by the Secretary or an Assistant Secretary
of each Borrower; and (iii) a copy of a certificate of good standing for the
Borrowers, issued as of a recent date by the Secretary of State or other
governmental official of the jurisdiction of its formation.
(e) Corporate Resolutions and Approvals. The Administrative Agent
shall have received, in sufficient quantity for the Administrative Agent and the
Lenders, certified copies of the resolutions of the Board of Directors (or the
equivalent) of the Borrowers and each other Credit Party, approving the Credit
Documents to which the Borrowers or any such other Credit Party, as the case may
be, is or may become a party, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to the
execution, delivery and performance by the Borrowers or any such other Credit
Party of the Credit Documents to which it is or may become a party.
(f) Incumbency Certificates. The Administrative Agent shall have
received, in sufficient quantity for the Administrative Agent and the Lenders, a
certificate of the Secretary or an Assistant Secretary of each Borrower and of
each other Credit Party, certifying the names and true signatures of the
officers of the Borrowers or such other Credit Party, as the case may be,
authorized to sign the Credit Documents to which the Borrower or such other
Credit Party is a party and any other documents to which any Borrower or any
such other Credit Party is a party which may be executed and delivered in
connection herewith.
(g) Opinion of Counsel. On the Closing Date, the Administrative Agent
shall have received an opinion, addressed to the Administrative Agent and each
of the Lenders and dated the Closing Date, (i) from Squire, Sanders & Dempsey
LLP, special counsel to the Borrowers, substantially in the form of Exhibit D-1
hereto and covering such other matters incident to the transactions contemplated
hereby as the Joint Lead Arrangers may reasonably request, such opinion to be in
form and substance satisfactory to the Joint Lead Arrangers and (ii) from
special counsel to OMG AG covering such matters as the Joint Lead Arrangers may
reasonably request, such opinion in form and substance satisfactory to the Joint
Lead Arrangers.
(h) Recordation of Security Documents, Delivery of Collateral, Taxes,
etc. The Security Documents (or proper notices or financing statements in
respect thereof) shall have been duly recorded, published and filed in such
manner and in such places as is required by law to establish, perfect, preserve
and protect the rights and security interests of the parties thereto and their
respective successors and assigns, all collateral items required to be
physically delivered to the Collateral Agent thereunder shall have been so
delivered, accompanied by any appropriate instruments of transfer, and all
taxes, fees and other charges then due and payable in connection with the
execution, delivery, recording, publishing and filing of such instruments and
the issue and delivery of the Notes shall have been paid in full.
(i) Evidence of Insurance. The Collateral Agent shall have received
certificates of insurance and other evidence, satisfactory to it, of compliance
with the insurance requirements of this Agreement and the Security Documents.
(j) Search Reports. The Administrative Agent shall have received
completed requests for information on Form UCC-11, or search reports from one or
more commercial search firms acceptable to the Administrative Agent, listing all
of the effective financing statements filed against any Credit Party which is a
party to any Security Document in any jurisdiction in which such Credit Party
maintains an office or in which any Collateral of such Credit Party is located,
together with copies of such financing statements.
(k) Target Acquisition. Contemporaneously with the Closing Date, the
Company shall have completed the acquisition of the Target, as contemplated by
the Target Acquisition Documents, and prepaid or caused to be prepaid any and
all indebtedness for borrowed money which is secured by any of the assets
acquired in the Target Acquisition, which completion may be effected pursuant to
an informal escrow arrangement extending not more than two Business Days and
conditioned only on international funds transfer from a Borrowing hereunder and
release of signed instruments transferring ownership of the Target to the
Company. There shall have been no material change in or modification or waiver
of any of the terms, conditions or provisions of any of the Target Acquisition
Documents, and there shall have been no material matters disclosed in any
supplemental disclosure materials relating to any of the Target Acquisition
Documents, which shall have been made, become effective or been furnished,
subsequent to the date the Target Acquisition Documents were furnished to the
Administrative Agent and the Lenders pursuant to section 7.20 hereof, which is
not acceptable to the Joint Lead Arrangers, in their sole discretion. Each of
the conditions precedent to the obligations of the Company to consummate the
Target Acquisition which is contained in any of the Target Acquisition Documents
shall have been fulfilled (without any material waiver thereto not acceptable to
the Joint Lead Arrangers as provided above) to the satisfaction of the Joint
Lead Arrangers. Without limiting the generality of the foregoing, the aggregate
purchase price consideration payable by the Company for the Target Acquisition
shall not exceed 1.2 billion Euros, subject to adjustment as provided in section
2 and other applicable provisions of the Target Purchase Agreement, and the
Target Acquisition shall have been consummated in compliance with the terms of
the Target Acquisition Documents and all applicable laws, and all material
governmental and third party approvals in connection with the Target Acquisition
contemplated by the Target Acquisition Documents and otherwise referred to
herein or therein shall have been obtained and remain in effect, and all
applicable waiting periods under applicable antitrust or competition merger
notification laws, and the regulations thereunder, and under any other
applicable laws or regulations, shall have expired without any action being
taken by any competent authority (including any court having jurisdiction) which
restrains or prevents such transactions or imposes, in the judgment of the
Required Lenders, materially adverse conditions upon the consummation of the
Target Acquisition or the continued operation of the Company's businesses or the
business to be acquired by the Company in the Target Acquisition. Each of the
Administrative Agent and the Lenders shall be satisfied, in its sole discretion,
with (i) such "due diligence" review as it shall undertake with regard to the
properties, business, operations and prospects of the business to be acquired,
and the liabilities to be assumed (or to which the Company and its Subsidiaries
will be subject), in the Target Acquisition, and the projected cost savings
which the Company estimates it can realistically achieve for the acquired
business, (ii) the terms of the Target Acquisition Documents, (iii) all
disclosure documentation referred to in the Target Acquisition Documents, and
(iv) any and all environmental studies and other reports and evaluations which
the Company shall have obtained in connection with the Target Acquisition and
provided to the Administrative Agent and the Lenders.
(l) No Material Adverse Effect in Target. There shall not have
occurred any adverse impact on the value of the Target that results from a
change in the financial condition of the Target or extraordinary damage, in each
case resulting in a change of at least 10% of the cash purchase price of the
Target.
(m) No Material Adverse Change in Loan Syndication or Capital
Markets. There shall not have occurred a material disruption or material adverse
change in financial, banking, loan syndication or capital market conditions
generally or in the market for new issuance of high yield securities or
syndicated leveraged loans which, in the sole respective judgment of the Joint
Lead Arrangers, could be expected to materially adversely affect the syndication
of portions or all of the Facilities to additional Lenders.
(n) Company's Closing Certificate. On the Closing Date the
Administrative Agent shall have received a certificate, dated the Closing Date,
of a responsible financial or accounting officer of the Company to the effect
that, at and as of the Closing Date and both before and after giving effect to
the initial Borrowings hereunder and the application of the proceeds thereof,
(x) the Company is in compliance with all of the covenants contained in sections
8 and 9 of this Agreement, (y) no Default or Event of Default has occurred or is
continuing, and (z) all representations and warranties of the Credit Parties
contained herein or in the other Credit Documents are true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the Closing Date, except that as to any
such representations and warranties which expressly relate to an earlier
specified date, such representations and warranties are only represented as
having been true and correct in all material respects as of the date when made.
(o) Solvency Certificate. The Administrative Agent shall have
received, in sufficient quantities for the Lenders, a duly executed solvency
certificate substantially in the form attached hereto as Exhibit D-2, and such
certificate shall be satisfactory in form and substance to each of the Lenders.
(p) Unused Availability. After giving effect to the Target
Acquisition and the use of the proceeds of the initial Borrowings hereunder and
repayments of Revolving Loans outstanding under the Existing Credit Agreement
prior to the Transaction, the Unutilized Total Revolving Commitment shall be at
least $100,000,000.
(q) Proceedings and Documents. All corporate and other proceedings
and all documents incidental to the transactions contemplated hereby shall be
satisfactory in substance and form to the Administrative Agent and the Lenders
and the Administrative Agent and its special counsel and the Lenders shall have
received all such counterpart originals or certified or other copies of such
documents as the Administrative Agent or its special counsel or any Lender may
reasonably request.
(s) Absence of Litigation. There shall not be any action, suits or
proceedings pending or threatened with respect to the Borrower or its
Subsidiaries (i) that have, or could reasonably be expected to have, a Material
Adverse Effect, (ii) that question the validity or enforceability of any of the
Credit Documents, or of any action to be taken by the Borrower or any of the
Credit Parties pursuant to any of the Credit Documents, or (iii) that question
the validity or the enforceability of the Target Acquisition Documents, the
Bridge Notes, or the transactions contemplated hereby or thereby, or of any
action to be taken by the Borrower or its Subsidiaries thereunder.
(t) Financial Statements; Projections. The Administrative Agent shall
have received the following financial statements and information: (a) (1)
audited consolidated balance sheets of the Company as of December 31, 1999 and
December 31, 2000, and unaudited consolidated balance sheets of the Company as
of March 31, 2001, and the related audited consolidated statements of operations
and cash flows of the Company for each of the of the twelve-month periods ended
December 31, 1998, December 31, 1999 and December 31, 2000 and unaudited
consolidated statements of operations and cash flows of the Company for the
three-month period ended March 31, 2001, (2) a consolidated pro forma income
statement and balance sheet of the Company and its Subsidiaries (after giving
effect to the Target Acquisition) as of December 31, 2000 and (3) a consolidated
pro forma income statement of the Company and its Subsidiaries (after giving
effect to the Target Acquisition) as of the most recent date practicable but no
earlier than the end of the most recent fiscal quarter, giving effect (with
respect to (2) and (3)) to the Transaction and the sale of the Divested
Businesses and reflecting estimated accounting adjustments in connection with
the Transaction and the sale of the Divested Businesses, prepared by the Company
and (b) projected financial statements (including balance sheets and income
statements, stockholders' equity and cash flows) (the "Financial Projections")
of the Company and its Subsidiaries (after giving effect to the Target
Acquisition) for the seven-year period following the Closing Date; all of the
foregoing to be in form and substance satisfactory to the Joint Lead Arrangers.
(u) Target Financial Statements. The Administrative Agent shall have
received copies of the audited consolidated financial statements of the Target
as of December 31, 2000, comprised of a balance sheet as of December 31, 2000
and the profit and loss accounts and the notes thereto for the year ended
December 31, 2000, all in accordance with generally accepted accounting
principles in Germany (except for pension liabilities and obligations accounted
for under German GAAP but measured in accordance with FAS 87), applied on a
basis consistent with that applied by the Target in preparing its pro forma
consolidated financial statements for financial years 1997/98 and 1998/99 and
the short financial year 1999 (October 1 to December 31, 1999); such financial
statements prepared on the premise that the Target had already been in existence
in its present structure since October 1, 1997, and accompanied by the opinion
of KPMG Deutsche Treuhand-Gesellschaft Akiengesellschaft
Wirtschaftsprufungsgesellschaft.
(v) Proceeds of Bridge Indebtedness. The Company shall have received
net proceeds of no less than $550,000,000 from the issuance of the Bridge Notes.
6.2. Conditions Precedent to All Credit Events. The obligations of the
Lenders to make each Loan and/or of a Letter of Credit Issuer to issue each
Letter of Credit is subject, at the time thereof, to the satisfaction of the
following conditions:
(a) Notice of Borrowing, etc. The Administrative Agent shall have
received a Notice of Borrowing meeting the requirements of section 2.3 with
respect to the incurrence of Loans or a Letter of Credit Request meeting the
requirement of section 3.2 with respect to the issuance of a Letter of Credit.
(b) No Default; Representations and Warranties. At the time of each
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties of the
Credit Parties contained herein or 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 and as of the date of such
Credit Event, except to the extent that such representations and warranties
expressly relate to an earlier specified date, in which case such
representations and warranties shall have been true and correct in all material
respects as of the date when made.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to each of the Lenders that all of
the applicable conditions specified in section 6.1 and/or 6.2, as the case may
be, have been satisfied as of the times referred to in sections 6.1 and 6.2. All
of the certificates, legal opinions and other documents and papers referred to
in this section 6, unless otherwise specified, shall be delivered to the
Administrative Agent for the account of each of the Administrative Agent and the
Lenders and, except for the Notes, in sufficient counterparts for the
Administrative Agent and the Lenders, and the Administrative Agent will promptly
distribute to the Lenders their respective Notes and the copies of such other
certificates, legal opinions and documents.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders to enter into this Agreement and to
make the Loans, and/or to issue and/or to participate in the Letters of Credit
provided for herein, the Company makes the following representations and
warranties to, and agreements with, the Lenders, all of which shall survive the
execution and delivery of this Agreement and each Credit Event:
7.1. Corporate Status, etc. Each of the Company and its Subsidiaries
(i) is a duly organized or formed 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 formation and has the corporate, partnership or
limited liability company power and authority, as applicable, to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage, and (ii) has duly qualified and is authorized to
do business in all jurisdictions where it is required to be so qualified except
where the failure to be so qualified would not have a Material Adverse Effect.
7.2. Subsidiaries. Annex II hereto lists, as of the date hereof and
after giving effect to the Target Acquisition, each Subsidiary of the Company
(and the direct and indirect ownership interest of the Company therein).
7.3. Corporate Power and Authority, etc. Each Credit Party has the
corporate or other organizational power and authority to execute, deliver and
carry out the terms and provisions of the Credit Documents to which it is party
and has taken all necessary corporate or other organizational action to
authorize the execution, delivery and performance of the Credit Documents, the
Target Acquisition Documents and Bridge Note Documents to which it is party.
Each Credit Party has duly executed and delivered each Credit Document, Target
Acquisition Document and Bridge Note Document to which it is party and each
Credit Document, Target Acquisition Document and Bridge Note Document to which
it is party constitutes the legal, valid and binding agreement or obligation of
such Credit Party 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).
7.4. No Violation. Neither the execution, delivery and performance by
any Credit Party of the Credit Documents, Target Acquisition Documents or the
Bridge Note Documents to which it is party nor compliance with the terms and
provisions thereof (i) will contravene any provision of any law, statute, rule,
regulation, order, writ, injunction or decree of any court or governmental
instrumentality applicable to such Credit Party or its properties and assets,
(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
(other than the Liens created pursuant to the Security Documents) upon any of
the property or assets of such Credit Party pursuant to the terms of any
promissory note, bond, debenture, indenture, mortgage, deed of trust, credit or
loan agreement, or any other material agreement or other instrument, to which
such Credit Party is a party or by which it or any of its property or assets are
bound or to which it may be subject, or (iii) will violate any provision of the
certificate or articles of incorporation, code of regulations or by-laws, or
other charter documents of such Credit Party.
7.5. Governmental Approvals. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required as a
condition to (i) the execution, delivery and performance by any Credit Party of
any Credit Document or Target Acquisition Document or the Bridge Notes Documents
to which it is a party, or (ii) the legality, validity, binding effect or
enforceability of any Credit Document to which any Credit Party is a party,
except for (x) the filing and recording of financing statements and other
documents necessary in order to perfect the Liens created by the Security
Documents, and (y) the filing of required information under and the expiration
of any applicable waiting periods provided under any applicable pre-merger
antitrust or similar laws or regulations.
7.6. Litigation. There are no actions, suits or proceedings pending
or, to the knowledge of the Company, threatened with respect to the Company or
any of its Subsidiaries (i) that have, or could reasonably be expected to have,
a Material Adverse Effect, or (ii) which question the validity or enforceability
of any of the Credit Documents, or of any action to be taken by the Company or
any of the other Credit Parties pursuant to any of the Credit Documents.
7.7. Use of Proceeds; Margin Regulations. (a) The proceeds of all the
Borrowings under the Term A Facility, Term B Facility or Asset Sale Term Loan
made hereunder on the Closing Date shall be utilized to (i) repay the
Indebtedness referred to in section 6.1(p), (ii) pay the purchase price under
the Target Purchase Agreement, (iii) pay fees and expenses incurred in
connection with the foregoing and the transactions contemplated by the Credit
Documents, (iv) support working capital needs, and (v) otherwise be utilized for
lawful purposes not inconsistent with the requirements of this Agreement. Any
additional proceeds of such Borrowings and all proceeds of all other Loans and
Credit Events shall be utilized to support working capital needs, and otherwise
be utilized for lawful purposes not inconsistent with the requirements of this
Agreement.
(b) No part of the proceeds of any Credit Event will be used directly
or indirectly to purchase or carry Margin Stock, or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock, in violation of any
of the provisions of Regulation T, U or X of the Board of Governors of the
Federal Reserve System. The Company is not engaged in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. At no time
would more than 25% of the value of the assets of the Company or of the Company
and its consolidated Subsidiaries that are subject to any "arrangement" (as such
term is used in section 221.2(g) of such Regulation U) hereunder be represented
by Margin Stock.
7.8. Financial Statements, etc. (a) The audited consolidated balance
sheets of the Company as of December 31, 1999 and December 31, 2000 and the
audited consolidated statements of operations and cash flows for the fiscal
years ended December 31, 1998, December 31, 1999 and December 31, 2000 were
prepared in accordance with Regulation S-X and fairly present the financial
position of the Company as of each such date and its results of operations for
each such period. The consolidated pro forma income statements and balance
sheets of the Company and its Subsidiaries (after giving effect to the Target
Acquisition) were prepared on a basis consistent with the requirements of, but
not pursuant to, Rule 11-02 if Regulation S-X and the Projections include all
adjustments necessary to present fairly in all material respects the pro forma
financial conditions of the Company and its Subsidiaries (after giving effect to
the Target Acquisition) at the respective dates and for the respective periods
indicated. The Company and its Subsidiaries did not have, as of the date of the
latest Financial Statements referred to above, and will not have as of the
Closing Date after giving effect to the consummation of the Target Acquisition
and the incurrence of Loans hereunder, any material or significant contingent
liability or liability for taxes, long-term lease or unusual forward or
long-term commitment (other than Precious Metal Leases) that is not reflected in
the foregoing financial statements or the notes thereto in accordance with GAAP
and which in any such case is material in relation to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries (including the Target and its Subsidiaries).
(b) Each Borrower has received consideration which is the reasonable
equivalent value of the obligations and liabilities that such Borrower has
incurred to the Administrative Agent and the Lenders. Each Borrower now has
capital sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage and is now solvent and able to
pay its debts as they mature and each Borrower, as of the Closing Date, owns
property having a value, both at fair valuation and at present fair salable
value, greater than the amount required to pay such Borrower's debts; and each
Borrower is not entering into the Credit Documents with the intent to hinder,
delay or defraud its creditors. For purposes of this section 7.8(b), "debt"
means any liability on a claim, and "claim" means (x) 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 (y) 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.
(c) The Company has delivered or caused to be delivered to the
Lenders prior to the execution and delivery of this Agreement (i) a copy of the
Company's Report on Form 10-K as filed (without Exhibits) with the SEC for its
fiscal year ended December 31, 2000, which contains a general description of the
business and affairs of the Company and its Subsidiaries (before giving effect
to the Target Acquisition), (ii) a confidential information brochure dated May
2001 prepared by the Joint Lead Arrangers (with assistance from the Company)
which contains information with respect to the business, properties and
operations of the Company and its Subsidiaries (the "Confidential Information
Memorandum"), and (iii) the Financial Projections. To the best of the Company's
knowledge, as of the date thereof and as of the Closing Date, the information
contained in the Confidential Information Memorandum provided by the Company
relating to the Company and its Affiliates is correct in all material respects
and does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
materially misleading in the light of the circumstances under which such
statements were made. Degussa AG has provided the information relating to the
Retained Businesses and the Company believes it to be correct in all material
respects, both as of the date of the Confidential Information Memorandum and as
of the Closing Date. The foregoing representations as to the Confidential
Information Memorandum are made on the express understanding that (x) the only
representations and warranties concerning the Financial Projections included in
the Confidential Information Memorandum are those representations and warranties
specifically set forth below, (y) the summary description in the Confidential
Information Memorandum of the principal terms and conditions of the Credit
Documents is qualified in its entirety by reference to the actual terms and
conditions of this Agreement and the other Credit Documents, and (z) the Company
makes no representation or warranty concerning any estimates or projections
included in the Confidential Information Memorandum except for those
representations and warranties concerning the Financial Projections which are
specifically set forth below. The Financial Projections were prepared on behalf
of the Company in good faith after taking into account historical levels of
business activity of the Company and its Subsidiaries, historical financial
information with respect to the properties and business to be acquired pursuant
to the Target Acquisition, as supplied by the seller and/or the Target, known
trends, including general economic trends, and all other information,
assumptions and estimates considered by management of the Company and its
Subsidiaries to be pertinent thereto, taking into account the fact that such
management is not intimately familiar with the properties and business acquired
pursuant to the Target Acquisition; provided, that no representation or warranty
is made as to the impact of future general economic conditions or as to whether
the Company's projected consolidated results as set forth in the Financial
Projections will actually be realized. No facts are known to the Company at the
Closing Date which, if reflected in the Financial Projections, would result in a
Material Adverse Effect.
7.9. No Material Adverse Change. Since December 31, 2000, there has
been no change in the condition, business, affairs or prospects of the Company
and its Subsidiaries taken as a whole, or their properties and assets considered
as an entirety, except for (i) changes incident to the completion of the Target
Acquisition, as contemplated hereby, including the incurrence of the additional
Indebtedness contemplated hereby to be incurred to finance and support the
Target Acquisition, and (ii) other changes none of which, individually or in the
aggregate, has had or could reasonably be expected to have, a Material Adverse
Effect.
7.10. Tax Returns and Payments. Each of the Company and each of its
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith. The
Company and each of its Subsidiaries has established on its books such charges,
accruals and reserves in respect of taxes, assessments, fees and other
governmental charges for all fiscal periods as are required by GAAP. The Company
knows of no proposed assessment for additional federal, foreign or state taxes
for any period, or of any basis therefor, which, individually or in the
aggregate, taking into account such charges, accruals and reserves in respect
thereof as the Company and its Subsidiaries have made, could reasonably be
expected to have a Material Adverse Effect.
7.11. Title to Properties, etc. The Company and each of its
Subsidiaries has good and marketable title, in the case of real property, and
good title (or valid Leaseholds, in the case of any leased property), in the
case of all other property, to all of its properties and assets free and clear
of Liens other than Permitted Liens. The interests of the Company and each of
its Subsidiaries in the properties reflected in the most recent balance sheet
referred to in section 7.8, taken as a whole, were sufficient, in the judgment
of the Company, as of the date of such balance sheet for purposes of the
ownership and operation of the businesses conducted by the Company and such
Subsidiaries.
7.12. Lawful Operations, etc. Except for known situations or incidents
which are reserved for on the most recent consolidated balance sheet referred to
in section 7.8 or which, if not so reserved, could not reasonably be expected to
have a Material Adverse Effect, the Company and each of its Subsidiaries is in
full compliance with all material requirements imposed by law, whether federal
or state, including (without limitation) Environmental Laws and zoning
ordinances.
7.13. Environmental Matters. (a) The Company and each of its
Subsidiaries is in compliance with all Environmental Laws governing its
business, except to the extent that any such failure to comply (together with
any resulting penalties, fines or forfeitures) would not reasonably be expected
to have a Material Adverse Effect. All licenses, permits, registrations or
approvals required for the business of the Company and each of its Subsidiaries
under any Environmental Law have been secured and the Company and each of its
Subsidiaries is in substantial compliance therewith, except for such licenses,
permits, registrations or approvals the failure to secure or to comply therewith
is not reasonably likely to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries has received written notice, or otherwise knows,
that it is in any respect in noncompliance with, breach of or default under any
Environmental Laws, and no event has occurred and is continuing which, with the
passage of time or the giving of notice or both, would constitute noncompliance,
breach of or default thereunder, except in each such case, such noncompliance,
breaches or defaults as would not reasonably be expected to, in the aggregate,
have a Material Adverse Effect. There are no Environmental Claims pending or, to
the best knowledge of the Company, threatened wherein an unfavorable decision,
ruling or finding would reasonably be expected to have a Material Adverse
Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property of the
Company or any of its Subsidiaries or (ii) released on any such Real Property,
in each case where such occurrence or event is not in compliance with
Environmental Laws and is reasonably likely to have a Material Adverse Effect.
7.14. Compliance with ERISA. Compliance by the Company and each of its
Subsidiaries with the provisions hereof and Credit Events contemplated hereby
will not involve any prohibited transaction within the meaning of ERISA or
section 4975 of the Code. The Company and each of its Subsidiaries, (i) has
fulfilled all obligations under minimum funding standards of ERISA and the Code
with respect to each Plan that is not a Multiemployer Plan or a Multiple
Employer Plan, (ii) has satisfied all respective contribution obligations in
respect of each Multiemployer Plan and each Multiple Employer Plan, (iii) is in
compliance in all material respects with all other applicable provisions of
ERISA and the Code with respect to each Plan, each Multiemployer Plan and each
Multiple Employer Plan, and (iv) has not incurred any liability under the Title
IV of ERISA to the PBGC with respect to any Plan, any Multiemployer Plan, any
Multiple Employer Plan, or any trust established thereunder. No Plan or trust
created thereunder has been terminated, and there have been no Reportable
Events, with respect to any Plan or trust created thereunder or with respect to
any Multiemployer Plan or Multiple Employer Plan, which termination or
Reportable Event will or could result in the termination of such Plan,
Multiemployer Plan or Multiple Employer Plan or give rise to a material
liability of the Company or any ERISA Affiliate in respect thereof. Neither the
Company nor any ERISA Affiliate is at the date hereof, or has been at any time
within the two years preceding the date hereof, an employer required to
contribute to any Multiemployer Plan or Multiple Employer Plan, or a
"contributing sponsor" (as such term is defined in section 4001 of ERISA) in any
Multiemployer Plan or Multiple Employer Plan. Neither the Company nor any ERISA
Affiliate has any contingent liability with respect to any post-retirement
"welfare benefit plan" (as such term is defined in ERISA) except as has been
disclosed to the Lenders in writing.
7.15. Intellectual Property, etc. The Company and each of its
Subsidiaries has obtained or has the right to use all material patents,
trademarks, service marks, trade names, copyrights, licenses and other rights
with respect to the foregoing necessary for the present and planned future
conduct of its business, without any known conflict with the rights of others,
except for such patents, trademarks, service marks, trade names, copyrights,
licenses and rights, the loss of which, and such conflicts, which in any such
case individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
7.16. Investment Company Act, etc. Neither the Company nor any of its
Subsidiaries is subject to regulation with respect to the creation or incurrence
of Indebtedness under the Investment Company Act of 1940, as amended, the ICC
Termination Act of 1995, as amended, the Federal Power Act, as amended, the
Public Utility Holding Company Act of 1935, as amended, or any applicable state
public utility law.
7.17. Existing Indebtedness. Annex III sets forth a true and complete
list, as of the date or dates set forth therein, of all Indebtedness of the
Company and each of its Subsidiaries, on a consolidated basis, which (i) has an
outstanding principal amount of at least $1,000,000, or may be incurred pursuant
to existing commitments or lines of credit, or (ii) is secured by any Lien on
any property of the Company or any Subsidiary, and which will be outstanding on
the Closing Date after giving effect to any Borrowing hereunder which is
expected to be made on the Closing Date, other than the Indebtedness created
under the Credit Documents (all such Indebtedness, whether or not in a principal
amount meeting such threshold and required to be so listed on Annex III, herein
the "Existing Indebtedness"). The Company has provided to the Administrative
Agent prior to the date of execution hereof true and complete copies (or summary
descriptions) of all agreements and instruments governing the Indebtedness
listed on Annex III (the "Existing Indebtedness Agreements").
7.18. Burdensome Contracts; Labor Relations. Neither the Company nor
any of its Subsidiaries (i) is subject to any burdensome contract, agreement,
corporate restriction, judgment, decree or order, (ii) is a party to any labor
dispute affecting any bargaining unit or other group of employees generally,
(iii) is subject to any material strike, slow down, workout or other concerted
interruptions of operations by employees of the Company or any Subsidiary,
whether or not relating to any labor contracts, (iv) is subject to any
significant pending or, to the knowledge of the Company, threatened, unfair
labor practice complaint, before the National Labor Relations Board, and (v) is
subject to any significant pending or, to the knowledge of the Company,
threatened, grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement, (vi) is subject to any significant
pending or, to the knowledge of the Company, threatened, significant strike,
labor dispute, slowdown or stoppage, or (vii) is, to the knowledge of the
Company, involved or subject to any union representation organizing or
certification matter with respect to the employees of the Company or any of its
Subsidiaries, except (with respect to any matter specified in any of the above
clauses), for such matters as, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
7.19. Security Interests. Once executed and delivered, and until
terminated in accordance with the terms thereof, each of the Security Documents
creates, as security for the obligations purported to be secured thereby, a
valid and enforceable perfected security interest in and Lien on all of the
Collateral subject thereto from time to time, in favor of the Collateral Agent
for the benefit of the Secured Creditors referred to in the Security Documents,
superior to and prior to the rights of all third persons and subject to no other
Liens, except that the Collateral under the Security Documents may be subject to
Permitted Liens. No filings or recordings are required in order to perfect the
security interests created under any Security Document except for filings or
recordings required in connection with any such Security Document which shall
have been made, or for which satisfactory arrangements have been made, upon or
prior to the execution and delivery thereof. All recording, stamp, intangible or
other similar taxes required to be paid by any person under applicable legal
requirements or other laws applicable to the property encumbered by the Security
Documents in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement thereof have been paid.
7.20. Target Acquisition Documents, etc. The Company has delivered to
the Administrative Agent and the Lenders prior to the Effective Date true,
correct and complete copies of all of the Target Acquisition Documents. The
Target Acquisition Documents constitute all of the agreements, disclosure
schedules, side letters and other documents relating to the Target Acquisition
and any related arrangements between the Company or any of its Subsidiaries and
any of the stockholders or any executive or other officers of the Target or any
of its Subsidiaries. Each Target Acquisition Document which has been executed
and delivered as the Effective Date is, and each Target Acquisition Document
which is executed and delivered at the time of the consummation of the Target
Acquisition will be at such time, the legal, valid and binding agreement or
obligation of each party thereto, 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). At and as of
the Closing Date, (i) to the best of the Company's knowledge, all of the
representations and warranties contained in the Target Acquisition Documents or
made in any other certificate or other document delivered in connection
therewith will be true and correct in all material respects, (ii) all of the
terms, covenants, agreements and conditions contained therein required to be
performed or complied with at or prior to such time will have been duly
performed or complied with in all material respects, (iii) all material consents
and approvals of, and filings and registrations with, and all other actions in
respect of, all governmental agencies, authorities or instrumentalities required
to be obtained, given, filed or taken by any party to any of the Target
Acquisition Documents or any of its Subsidiaries in order to make or consummate
each component of the transactions contemplated thereby will have been obtained,
given, filed or taken and are or will be in full force and effect (or effective
judicial relief with respect thereto will have been obtained) except for
filings, consents or notices not required by federal or state securities laws to
be made at such time, which filings, consents or notices have been or will be
made during the period in which they are required to be made, and (iv) each
component of such transactions shall have been consummated in accordance, in all
material respects, with the applicable Target Acquisition Documents and in
compliance, in all material respects, with all applicable laws.
7.21. True and Complete Disclosure. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of the
Company or any of its Subsidiaries in writing to the Administrative Agent or any
Lender for purposes of or in connection with this Agreement or any transaction
contemplated herein, other than the Confidential Information Memorandum and the
Financial Projections (as to which representations are made only as provided in
section 7.8), is, and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of such person in writing to any 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
material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided, except that any such future information consisting of
financial projections prepared by the Borrower is only represented herein as
being based on good faith estimates and assumptions believed by such persons to
be reasonable at the time made, it being recognized by the Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
materially from the projected results.
SECTION 8. AFFIRMATIVE COVENANTS.
The Company hereby covenants and agrees that on the Effective Date and
thereafter so long as this Agreement is in effect and until such time as the
Total Commitment has been terminated, no Notes or Letters of Credit remain
outstanding and the Loans, together with interest, Fees and all other
Obligations incurred hereunder and under the other Credit Documents, have been
paid in full:
8.1. Reporting Requirements. The Company will furnish to each Lender
and the Administrative Agent:
(a) Annual Financial Statements. As soon as available and in any
event within 90 days after the close of each fiscal year of the Company, the
consolidated balance sheets of the Company and its consolidated Subsidiaries as
at the end of such fiscal year and the related consolidated statements of
income, of stockholders' equity and of cash flows for such fiscal year, in each
case setting forth comparative figures for the preceding fiscal year, all in
reasonable detail and accompanied by the opinion with respect to such
consolidated financial statements of independent public accountants of
recognized national standing selected by the Company, which opinion shall be
unqualified and shall (i) state that such accountants audited such consolidated
financial statements in accordance with generally accepted auditing standards,
that such accountants believe that such audit provides a reasonable basis for
their opinion, and that in their opinion such consolidated financial statements
present fairly, in all material respects, the consolidated financial position of
the Company and its consolidated Subsidiaries as at the end of such fiscal year
and the consolidated results of their operations and cash flows for such fiscal
year in conformity with generally accepted accounting principles, or (ii)
contain such statements as are customarily included in unqualified reports of
independent accountants in conformity with the recommendations and requirements
of the American Institute of Certified Public Accountants (or any successor
organization).
(b) Quarterly Financial Statements. As soon as available and in any
event within 45 days after the close of each of the quarterly accounting periods
in each fiscal year of the Company, the unaudited consolidated balance sheets of
the Company and its consolidated Subsidiaries as at the end of such quarterly
period and the related unaudited consolidated statements of income and of cash
flows for such quarterly period and/or for the fiscal year to date, and setting
forth, in the case of such unaudited consolidated statements of income and of
cash flows, comparative figures for the related periods in the prior fiscal
year, and which shall be certified on behalf of the Company by the Chief
Financial Officer or other Authorized Officer of the Company, subject to changes
resulting from normal year-end audit adjustments.
(c) Officer's Compliance Certificates. At the time of the delivery of
the financial statements provided for in sections 8.1(a) and (b), a certificate
on behalf of the Company of the Chief Financial Officer or other Authorized
Officer of the Company to the effect that, to the best knowledge of the Company,
no Default or Event of Default exists or, if any Default or Event of Default
does exist, specifying the nature and extent thereof and the actions the Company
proposes to take with respect thereto, which certificate shall set forth the
calculations required to establish compliance with the provisions of sections
9.7, 9.8, 9.9 and 9.10 of this Agreement, and in the event the compliance with
any such covenant is being calculated on a Pro Forma Basis, such certificate
shall contain a certification that the financial items presented on a Pro Forma
Basis have been derived in accordance with the definition of Pro Forma Basis and
the relevant assumptions made in such determination.
(d) Budgets and Forecasts. Not later than 60 days following the
commencement of any fiscal year of the Company and its Subsidiaries, a
consolidated budget in reasonable detail for each of the four fiscal quarters of
such fiscal year, as customarily prepared by management for its internal use,
setting forth the forecasted balance sheet, income statement, operating cash
flows and capital expenditures of the Company and its Subsidiaries for the
period covered thereby.
(e) Notice of Default, Litigation or Certain Matters Involving Major
Customers or Suppliers. Promptly, and in any event within three Business Days,
in the case of clause (i) below, or 10 days, in the case of clause (ii) or (iii)
below, after the Company or any of its Subsidiaries obtains knowledge thereof,
notice of
(i) the occurrence of any event which constitutes a Default or Event
of Default, which notice shall specify the nature thereof, the period of
existence thereof and what action the Company proposes to take with respect
thereto,
(ii) the commencement of, or any other material development
concerning, any litigation or governmental or regulatory proceeding pending
against the Company or any of its Subsidiaries, if the same involves (in the
Company's reasonable judgment) any substantial likelihood of having a Material
Adverse Effect, and
(iii) if the same involves (in the Company's reasonable judgment) any
substantial likelihood of having a Material Adverse Effect, any significant
adverse change in the Company's or any Subsidiary's relationship with, or any
significant event or circumstance which is in the Company's reasonable judgment
likely to adversely affect the Company's or any Subsidiary's relationship with,
(A) any customer (or related group of customers) representing more than 10% of
the Company's consolidated revenues during its most recent fiscal year, or (B)
any supplier which is material to the operations of the Company and its
Subsidiaries considered as an entirety.
(f) ERISA. Promptly, and in any event within 10 days after the
Company, any Subsidiary of the Company or any ERISA Affiliate knows of the
occurrence of any of the following, the Company will deliver to each of the
Lenders a certificate on behalf of the Company of an Authorized Officer of the
Company setting forth the full details as to such occurrence and the action, if
any, that the Company, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by the Company, the Subsidiary, the ERISA Affiliate, the PBGC,
a Plan participant or the Plan administrator with respect thereto:
(i) that a Reportable Event has occurred with respect to any Plan;
(ii) the institution of any steps by the Company, any ERISA
Affiliate, the PBGC or any other person to terminate any Plan;
(iii) the institution of any steps by the Company or any ERISA
Affiliate to withdraw from any Plan;
(iv) the institution of any steps by the Company or any Subsidiary to
withdraw from any Multiemployer Plan or Multiple Employer Plan, if such
withdrawal could result in withdrawal liability (as described in Part 1 of
Subtitle E of Title IV of ERISA) in excess of $5,000,000;
(v) a non-exempt "prohibited transaction" within the meaning of
section 406 of ERISA in connection with any Plan;
(vi) that a Plan has an Unfunded Current Liability exceeding
$5,000,000;
(vii) any material increase in the contingent liability of the
Company or any Subsidiary with respect to any post-retirement welfare liability;
or
(viii) the taking of any action by, or the threatening of the taking
of any action by, the Internal Revenue Service, the Department of Labor or the
PBGC with respect to any of the foregoing.
(g) Environmental Matters. Promptly upon, and in any event within 10
Business Days after, an officer of the Company or any of its Subsidiaries
obtains knowledge thereof, notice of one or more of the following environmental
matters: (i) any pending or threatened material Environmental Claim against the
Company or any of its Subsidiaries or any Real Property owned or operated by the
Company or any of its Subsidiaries; (ii) any condition or occurrence on or
arising from any Real Property owned or operated by the Company or any of its
Subsidiaries that (A) results in material noncompliance by the Company or any of
its Subsidiaries with any applicable Environmental Law or (B) would reasonably
be expected to form the basis of a material Environmental Claim against the
Company or any of its Subsidiaries or any such Real Property; (iii) any
condition or occurrence on any Real Property owned, leased or operated by the
Company or any of its Subsidiaries that could reasonably be expected to cause
such Real Property to be subject to any material restrictions on the ownership,
occupancy, use or transferability by the Company or any of its Subsidiaries of
such Real Property under any Environmental Law; and (iv) the taking of any
material 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 Company or any of its Subsidiaries as required by any
Environmental Law or any governmental or other administrative agency. All such
notices shall describe in reasonable detail the nature of the Environmental
Claim, the Company's or such Subsidiary's response thereto and the potential
exposure in dollars of the Company and its Subsidiaries with respect thereto.
(h) SEC Reports and Registration Statements. Promptly after
transmission thereof or other filing with the SEC, copies of all registration
statements (other than the exhibits thereto and any registration statement on
Form S-8 or its equivalent) and all annual, quarterly or current reports that
the Company or any of its Subsidiaries files with the SEC on Form 10-K, 10-Q or
8-K (or any successor forms).
(i) Annual and Quarterly Reports, Proxy Statements and other Reports
Delivered to Stockholders Generally. Promptly after transmission thereof to its
stockholders, copies of all annual, quarterly and other reports and all proxy
statements that the Company furnishes to its stockholders generally.
(j) Press Releases. Promptly after the release thereof to any news
organization or news distribution organization, copies of any press releases and
other similar statements intended to be made available generally by the Company
or any of its Subsidiaries to the public concerning material developments
relating to the Company or any of its Subsidiaries.
(k) Other Information. With reasonable promptness, such other
information or documents (financial or otherwise) relating to the Company or any
of its Subsidiaries as any Lender may reasonably request from time to time.
(l) Additional Financial Statements. Within 120 days following the
Closing Date, the Company shall provide the Administrative Agent with copies of
the financial statements of the Target, including consolidated balance sheets as
of December 31, 1999 and December 31, 2000 (audited) and as of June 30, 2001
(unaudited), and consolidated statements of operations and cash flows for each
of the twelve month periods ended December 31, 1998, December 31, 1999 and
December 31, 2000 (audited) and for each of the six month periods ended June 30,
2000 and June 30, 2001 (unaudited), such financial statements to be reconciled
with GAAP and all in form and substance satisfactory to the Joint Lead
Arrangers.
8.2. Books, Records and Inspections. (a) The Company will, and will
cause each of its Subsidiaries to, keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of the Company or such Subsidiaries, as the case may be,
in accordance with GAAP.
(b) The Company will permit officers and designated representatives
of the Administrative Agent or the Collateral Agent, upon at least two Business
Days' notice to the Chief Financial Officer of the Company, to visit and inspect
any of the properties or assets of the Company and any of its Subsidiaries in
whomsoever's possession (but only to the extent the Company or such Subsidiary
has the right to do so to the extent in the possession of another person), to
examine the books of account, records, reports and other papers of the Company
and any of its Subsidiaries, and make copies thereof and take extracts
therefrom, and to discuss the affairs, finances and accounts of the Company and
of any of its Subsidiaries with, and be advised as to the same by, its and their
officers and independent accountants and independent actuaries, if any (and by
this provision the Company authorizes such independent accountants and actuaries
to discuss the affairs, finances and accounts of the Company and any of its
Subsidiaries), all at such reasonable times and intervals and to such reasonable
extent as the Administrative Agent or the Collateral Agent may request. The
Administrative Agent and the Collateral Agent may (at their own initiative), and
shall (if so instructed by the Required Lenders), exercise their rights under
this section 8.2(b) from time to time. In any event, the Administrative Agent
and the Collateral Agent will promptly furnish the Lenders with copies of any
material documentation obtained by them during the course of any inspection,
examination or discussions pursuant to this section 8.2(b). If any Lender
requests copies of any other documentation so obtained by the Administrative
Agent or the Collateral Agent, the Administrative Agent or the Collateral Agent,
as applicable, will promptly furnish copies thereof to all of the Lenders.
(c) During any period in which an Event of Default shall have
occurred and be continuing, any Lender (or group of Lenders whose investments
are under management by a common investment advisor or one or more affiliated
investment advisors, or who are otherwise Affiliates of each other) whose
Commitments or outstanding Loans exceed $10,000,000, may itself, in coordination
with the Administrative Agent, exercise any or all of the rights afforded to the
Administrative Agent as specified in section 8.2(b).
8.3. Insurance. (a) The Company will, and will cause each of its
Subsidiaries to, (i) maintain insurance coverage by such insurers and in such
forms and amounts and against such risks as are generally consistent with the
insurance coverage maintained by the Company and its Subsidiaries at the date
hereof, and (ii) forthwith upon the Administrative Agent's written request
(which the Administrative Agent may make on its own initiative and shall make if
so requested by the Required Lenders), furnish to the Administrative Agent (who
shall promptly distribute copies to the Lenders) such information about such
insurance as the Administrative Agent may from time to time reasonably request,
which information shall be prepared in form and detail satisfactory to the
Administrative Agent and certified by an Authorized Officer of the Company.
(b) The Company will, and will cause each of its Subsidiaries which
is a Credit Party to, at all times keep their respective property which is
subject to the Lien of any Security Document insured in favor of the Collateral
Agent, and all policies or certificates (or certified copies thereof) with
respect to such insurance (and any other insurance maintained by the Company or
any such Subsidiary) (i) shall be endorsed to the Collateral Agent's
satisfaction for the benefit of the Collateral Agent (including, without
limitation, by naming the Collateral Agent as loss payee (with respect to
Collateral) or, to the extent permitted by applicable law, as an additional
insured), (ii) shall state that such insurance policies shall not be canceled
without 30 days' prior written notice thereof (or 10 days' prior written notice
in the case of cancellation for the non-payment of premiums) by the respective
insurer to the Collateral Agent, (iii) shall provide that the respective
insurers irrevocably waive any and all rights of subrogation with respect to the
Collateral Agent and the Lenders, and (iv) shall in the case of any such
certificates or endorsements in favor of the Collateral Agent, be delivered to
or deposited with the Collateral Agent. In no event shall the Company be
required to deposit the actual insurance policies with the Collateral Agent. The
Administrative Agent shall deliver copies of any certificates of insurance to a
Lender upon such Lender's reasonable request.
(c) If the Company or any of its Subsidiaries shall fail to maintain
all insurance in accordance with this section 8.3, or if the Company or any of
its Subsidiaries shall fail to so endorse and deliver or deposit all
endorsements or certificates with respect thereto, the Administrative Agent
and/or the Collateral Agent shall have the right (but shall be under no
obligation), upon prior written notice to the Company, to procure such insurance
and the Company agrees to reimburse the Administrative Agent or the Collateral
Agent, as the case may be, on demand, for all costs and expenses of procuring
such insurance.
8.4. Payment of Taxes and Claims. The Company will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien or charge upon any properties of the Company or any of its
Subsidiaries; provided that neither the Company nor any of its Subsidiaries
shall be required to pay any such tax, assessment, charge, levy or claim which
is being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with GAAP; and provided,
further, that the Company will not be considered to be in default of any of the
provisions of this sentence if the Company or any Subsidiary fails to pay any
such amount which, individually or in the aggregate, is immaterial. Without
limiting the generality of the foregoing, the Company will, and will cause each
of its Subsidiaries to, pay in full all of its wage obligations to its employees
in accordance with the Fair Labor Standards Act (29 U.S.C. sections 206-207) and
any comparable provisions of applicable law.
8.5. Corporate Franchises. The Company will do, 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 corporate existence, rights and authority,
provided that nothing in this section 8.5 shall be deemed to prohibit (i) any
transaction permitted by section 9.2; (ii) the termination of existence of any
Subsidiary if (A) the Company determines that such termination is in its best
interest and (B) such termination is not adverse in any material respect to the
Lenders; or (iii) the loss of any rights, authorities or franchises if the loss
thereof, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
8.6. Maintenance of Properties. The Company will, and will cause each
of its Subsidiaries to, ensure that its material properties and equipment used
or useful in its business in whomsoever's possession they may be, in good
repair, working order and condition, ordinary wear and tear excepted, and that
from time to time there are made in such properties and equipment all needful
and proper repairs, renewals, replacements, extensions, additions, betterments
and improvements, thereto, to the extent and in the manner customary for
companies in similar businesses.
8.7. Compliance with Statutes, etc. The Company will, and will cause
each of its Subsidiaries to, comply, in all material respects, 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, other than those the
noncompliance with which would not have, and which would not be reasonably
expected to have, a Material Adverse Effect.
8.8. Compliance with Environmental Laws. Without limitation of the
covenants contained in section 8.7 hereof,
(a) The Company will comply, and will cause each of its Subsidiaries
to comply, in all material respects, with all Environmental Laws applicable to
the ownership, lease or use of all Real Property now or hereafter owned, leased
or operated by the Company or any of its Subsidiaries, and will promptly pay or
cause to be paid all costs and expenses incurred in connection with such
compliance, except to the extent that such compliance with Environmental Laws is
being contested in good faith and by appropriate proceedings and for which
adequate reserves have been established to the extent required by GAAP, and an
adverse outcome in such proceedings is not reasonably expected to have a
Material Adverse Effect.
(b) The Company will keep or cause to be kept, and will cause each of
its Subsidiaries to keep or cause to be kept, all such Real Property free and
clear of any Liens imposed pursuant to such Environmental Laws which are not
permitted under section 9.3.
(c) Neither the Company 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 Company or any of its
Subsidiaries or transport or permit the transportation of Hazardous Materials to
or from any such Real Property other than in compliance with applicable
Environmental Laws and in the ordinary course of business, except for such
noncompliance as would not have, and which would not be reasonably expected to
have, a Material Adverse Effect.
(d) If required to do so under any applicable order of any
governmental agency, the Company will undertake, and cause each of its
Subsidiaries to undertake, any clean up, removal, remedial or other action
necessary to remove and clean up any Hazardous Materials from any Real Property
owned, leased or operated by the Company or any of its Subsidiaries in
accordance with, in all material respects, the requirements of all applicable
Environmental Laws and in accordance with, in all material respects, such orders
of all governmental authorities, except to the extent that the Company or such
Subsidiary is contesting such order in good faith and by appropriate proceedings
and for which adequate reserves have been established to the extent required by
GAAP.
(e) At the written request of the Administrative Agent or the
Required Lenders, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time after the Lenders receive notice
under section 8.1(g) for any Environmental Claim involving potential
expenditures by the Company or any of its Subsidiaries in excess of $5,000,000
in the aggregate for any Real Property, the Company will provide, at its sole
cost and expense, an environmental site assessment report concerning any such
Real Property now or hereafter owned, leased or operated by the Company or any
of its Subsidiaries, prepared by an environmental consulting firm reasonably
acceptable to the Administrative Agent, indicating the presence or absence of
Hazardous Materials and the potential cost of any removal or a remedial action
in connection with any Hazardous Materials on such Real Property. If the Company
fails to provide the same within 90 days after such request was made, the
Administrative Agent may order the same, and the Company shall grant and hereby
grants, to the Administrative Agent and the Lenders and their agents, access to
such Real Property and specifically grants the Administrative Agent and the
Lenders an irrevocable non-exclusive license, subject to the rights of tenants,
to undertake such an assessment, all at the Company's expense.
8.9. Fiscal Years, Fiscal Quarters. If the Company shall change any of
its or any of its Subsidiaries' fiscal years or fiscal quarters (other than the
fiscal year or fiscal quarters of a person which becomes a Subsidiary, made at
the time such person becomes a Subsidiary to conform to the Company's fiscal
year and fiscal quarters), the Company will promptly, and in any event within 30
days following any such change, deliver a notice to the Administrative Agent and
the Lenders describing such change and any material accounting entries made in
connection therewith and stating whether such change will have any impact upon
any financial computations to be made hereunder, and if any such impact is
foreseen, describing in reasonable detail the nature and extent of such impact.
If the Required Lenders determine that any such change will have any impact upon
any financial computations to be made hereunder which is adverse to the Lenders,
the Company will, if so requested by the Administrative Agent, enter into an
amendment to this Agreement, in form and substance reasonably satisfactory to
the Administrative Agent and the Required Lenders, modifying any of the
financial covenants or related provisions hereof in such manner as the Required
Lenders determine is necessary to eliminate such adverse effect.
8.10. Hedge Agreements, etc. (a) In the event the Company or any of
its Subsidiaries determines to enter into a Hedge Agreement it may do so,
provided that (i) the purpose of such Hedge Agreement is to provide protection
to the Company or any such Subsidiary from fluctuations and other changes in
interest rates, currency exchange rates and/or commodity prices, as and to the
extent considered reasonably necessary by the Company, but without exposing the
Company or its Subsidiaries to predominantly speculative risks unrelated to the
amount of assets, Indebtedness or other liabilities intended to be subject to
coverage on a notional basis under all such Hedge Agreements; and (ii) in the
case of any Hedge Agreement entered into after the Effective Date for the
purpose of protecting against fluctuations in interest rates, only if the
proposed form thereof (including any proposed pricing or other material terms)
has been provided to the Administrative Agent, for its consideration of any
potential intercreditor issues, contemporaneously with the entry into such Hedge
Agreement.
(b) Without limitation of the foregoing, the Company will, on or
before the 90th day following the Closing Date, obtain and maintain in effect
for a period of at least two years such Hedge Agreements with such notional
amounts such that the notional principal amount of all such Hedge Agreements
shall be an amount equal to at least $350,000,000, such Hedge Agreements to be
in form and substance satisfactory to the Joint Lead Arrangers and protecting
the Company against such changes in interest rates as can be obtained at
reasonable cost in light of prevailing market conditions.
8.11. Certain Subsidiaries to Join in Subsidiary Guaranty. (a) In the
event that at any time after the Closing Date
(x) the Company has any Subsidiary (other than a Foreign Subsidiary
as to which section 8.11(b) applies) which is not a party to the Subsidiary
Guaranty, or
(y) an Event of Default shall have occurred and be continuing and the
Company has any Subsidiary which is not a party to the Subsidiary Guaranty,
the Company will notify the Administrative Agent in writing of such event,
identifying the Subsidiary in question and referring specifically to the rights
of the Administrative Agent and the Lenders under this section. The Company
will, within 30 days following request therefor from the Administrative Agent
(who may give such request on its own initiative or upon request by the Required
Lenders), cause such Subsidiary to deliver to the Administrative Agent, in
sufficient quantities for the Lenders, (i) the Subsidiary Guaranty, if the
Subsidiary Guaranty has not previously been executed and delivered, (ii) if the
Subsidiary Guaranty has previously been executed and delivered, a joinder
supplement, reasonably satisfactory in form and substance to the Administrative
Agent and the Required Lenders, duly executed by such Subsidiary, pursuant to
which such Subsidiary joins in the Subsidiary Guaranty as a guarantor
thereunder, and (ii) if such Subsidiary is a corporation, resolutions of the
Board of Directors of such Subsidiary, certified by the Secretary or an
Assistant Secretary of such Subsidiary as duly adopted and in full force and
effect, authorizing the execution and delivery of such joinder supplement, or if
such Subsidiary is not a corporation, such other evidence of the authority of
such Subsidiary to execute such joinder supplement as the Administrative Agent
may reasonably request; provided, however, that a Foreign Subsidiary that is a
Borrower shall become obligated in respect of, and pledge collateral to secure,
only such Indebtedness as is actually advanced directly to such Foreign
Subsidiary.
(b) Notwithstanding the foregoing provisions of this section 8.11 or
the provisions of section 8.12 hereof, the Company shall not, unless an Event of
Default shall have occurred and be continuing, be required to pledge (or cause
to be pledged) more than 65% of the stock or other equity interests in any first
tier Foreign Subsidiary, or any of the stock or equity interests in any first
tier Foreign Subsidiaries which alone or when combined or consolidated with each
other would not constitute a Material Subsidiary, or any of the stock or other
equity interests in any other Foreign Subsidiary, or to cause a Foreign
Subsidiary to join in the Subsidiary Guaranty or to become a party to the
Security Agreement or any other Security Document.
8.12. Additional Security; Further Assurances. (a) In the event that
at any time after the Closing Date the Company or any of its Subsidiaries owns
or holds an interest in any Real Property, assets, stock, securities or any
other property or interest, located within or outside of the United States or
arising out of business conducted from any location within or outside the United
States, which is not at the time included in the Collateral and is not subject
to a Permitted Lien securing Indebtedness (all of the foregoing,
"Uncollateralized Property"), the Company will notify the Administrative Agent
in writing of such event, identifying the Uncollateralized Property in question
and referring specifically to the rights of the Administrative Agent and the
Lenders under this section 8.12; provided that notwithstanding the foregoing,
the Company need not notify the Administrative Agent under this section 8.12(a)
of (x) any leasehold interest which is acquired or held by the Company or any
Subsidiary unless the same involves a nominal or bargain purchase price option,
or (y) any Uncollateralized Property which at the time is not required to be
included in the Collateral pursuant to section 8.11(b) or the proviso at the end
of section 8.12(b).
(b) The Company will, or will cause an applicable Subsidiary to,
within 30 days following request by the Collateral Agent (who may make such
request on its own initiative or upon instructions from the Required Lenders),
grant the Collateral Agent for the benefit of the Secured Creditors (as defined
in the Security Documents) security interests and mortgages or deeds of trust,
pursuant to the Pledge Agreement or other new documentation (each an "Additional
Security Document") or joinder in any existing Security Document to which it is
not already a party, in all of the Uncollateralized Property as to which the
Administrative Agent has notified the Company that the same is required to be
included in the Collateral, subject to obtaining any required consents from
third parties (including third party lessors and co-venturers) necessary to be
obtained for the granting of a Lien on any particular Uncollateralized Property
(with the Company hereby agreeing to use, and to cause its Subsidiaries to use,
reasonable best efforts to obtain such consents), and also subject to the
provisions of section 8.11(b); provided that the Company shall not be required
to cause to be delivered any mortgage or deed of trust on any Leasehold or other
Real Property, or any chattel mortgage or security agreement covering an
aircraft, unless an Event of Default shall have occurred and be continuing.
(c) Each Additional Security Document (i) shall be granted pursuant
to documentation reasonably satisfactory in form and substance to the
Administrative Agent, which documentation shall in the case of Real Property
owned in fee be accompanied by such Phase I environmental reports or
assessments, a mortgage policy of title insurance (subject to a standard survey
exception), and other supporting documentation requested by and reasonably
satisfactory in form and substance to the Administrative Agent; and (ii) shall
constitute a valid and enforceable perfected Lien upon the interests or
properties so included in the Collateral, superior to and prior to the rights of
all third persons and subject to no other Liens except those permitted by
section 9.3 or otherwise agreed by the Administrative Agent at the time of
perfection thereof and (in the case of Real Property or interests therein) such
other encumbrances as may be set forth in the mortgage policy, if any, relating
to such Additional Security Document which shall be delivered to the Collateral
Agent together with such Additional Security Document and which shall be
satisfactory in form and substance to the Collateral Agent and the
Administrative Agent. The Company, at its sole cost and expense, will cause each
Additional Security Document or instruments related thereto to be duly recorded
or filed in such manner and in such places as are required by law to establish,
perfect, preserve and protect the Liens created thereby required to be granted
pursuant to the Additional Security Document, and will pay or cause to be paid
in full all taxes, fees and other charges payable in connection therewith.
Furthermore, the Company shall cause to be delivered to the Collateral Agent
such opinions of local counsel, appraisals, title insurance, environmental
assessments, consents of landlords, lien waivers from landlords or mortgagees
and other related documents as may be reasonably requested by the Collateral
Agent in connection with the execution, delivery and recording of any Additional
Security Document, all of which documents shall be in form and substance
reasonably satisfactory to the Collateral Agent and the Administrative Agent,
except that no leasehold mortgage or deed of trust, title insurance or surveys
shall be required for any leasehold properties (unless the lessee has a nominal
or bargain purchase option).
(d) The Company will, and will cause each of its Subsidiaries to, at
the expense of the Company, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, and other
assurances or instruments and take such further steps relating to the Collateral
covered by any of the Security Documents as the Collateral Agent may reasonably
require. If at any time the Collateral Agent determines, based on applicable
law, that all applicable taxes (including, without limitation, mortgage
recording taxes or similar charges) were not paid in connection with the
recordation of any mortgage or deed of trust, the Company shall promptly pay the
same upon demand.
(e) The Company will if requested by any Lender at any time, in order
to meet any legal requirement applicable to such Lender, provide to the
Collateral Agent and the Lenders, at the sole cost and expense of the Company,
appraisals and other supporting documentation relating to any mortgage or deed
of trust delivered as an Additional Security Document hereunder, as specified by
any Lender, meeting the appraisal and other documentation requirements of the
Real Estate Reform Amendments of the Financial Institution Reform, Recovery and
Enforcement Act of 1989, as amended, or any other legal requirements applicable
to any Lender, which in the case of any such appraisal shall be prepared by one
or more valuation firms of national standing, acceptable to the Required
Lenders, utilizing appraisal standards satisfying such Amendments, Act or other
legal requirements.
(f) For the avoidance of doubt, the Company shall have no obligation
to cause to be delivered any survey of any Real Property which is covered by any
mortgage, deed of trust or similar instrument constituting an Additional
Security Document so as to permit a title company to eliminate by endorsement
the "survey exception" to the title policy for such Real Property.
(g) Notwithstanding the foregoing provisions of this section 8.12, in
the event the Administrative Agent notifies the Company that the Required
Lenders have determined on the basis of an environmental report or assessment
delivered by the Company pursuant to the provisions of section 8.12(c) that an
Additional Security Document encumbering any particular Real Property should not
be delivered under this section 8.12, the Company shall be relieved of its
obligation in this section 8.12 to deliver or cause to be delivered an
Additional Security Document in the form of a mortgage, deed of trust or similar
instrument covering such Real Property, subject to any later determination by
the Required Lenders notified to the Company by the Administrative Agent that an
Additional Security Document in the form of a mortgage, deed of trust or similar
instrument covering such Real Property should be executed and delivered
hereunder.
(h) As promptly as practicable after the date (i) any Credit Party
has any Collateral located in a jurisdiction as to which the Administrative
Agent shall not previously have received a lien search report listing all
effective UCC financing statements and other Liens filed against such Credit
Party in such jurisdiction and containing copies of all such effective UCC
financing statements and other Lien documents, (ii) any person first becomes a
Credit Party, or (iii) any UCC financing statement or Security Document is filed
against any Credit Party to perfect security interests granted pursuant to the
Security Agreement or any other Security Document, the Company will, at its
expense, cause to be delivered to the Administrative Agent and the Lenders
search reports listing all effective UCC financing statements and other Lien
documents filed against such person or Credit Party in each applicable
jurisdiction and containing copies of all such effective UCC financing
statements and other Lien documents. In addition, whenever requested by the
Administrative Agent, but not more frequently than once in any 12-month period,
the Company will promptly provide the Administrative Agent and the Lenders with
such new or updated title, lien, judgment, patent, trademark and UCC financing
statement searches or reports as to the Company or any of its Subsidiaries, or
any Collateral of any Credit Party, as the Administrative Agent may specify to
the Company in its request.
(i) The Collateral Agent is authorized, without the consent of any of
the Lenders, to (i) enter into any modification of any Security Document which
the Collateral Agent reasonably believes is required to conform to the mandatory
requirements of local law, or to local customs followed by financial
institutions with respect to similar collateral documents involving property
located in any particular jurisdiction, (ii) in the case of any Security
Document relating to property located in a particular jurisdiction which imposes
a tax with respect to such Security Document based on the amount of the
obligations secured thereby, expressly limit the amount of such secured
obligations which are secured by such property to such amount as, in the
Collateral Agent's good faith judgment, is appropriate so that the amount of
such tax is reasonable in light of the estimated value of the property located
in such jurisdiction, and/or (iii) designate the amount of title insurance
coverage for any title insurance policy provided hereunder in an amount
reasonably believed by the Collateral Agent to be representative of the fair
value of the property covered thereby.
(j) The Company will provide the Administrative Agent with sufficient
copies of each Additional Security Document and any additional supporting
documents delivered in connection therewith for distribution of copies thereof
to the Lenders, and the Administrative Agent will promptly so distribute such
copies.
8.13. Casualty and Condemnation. (a) The Company will promptly (and in
any event within 10 days) furnish to the Administrative Agent and the Lenders
written notice of any Event of Loss involving any property included in the
Collateral which is reasonably believed to be in excess of $10,000,000.
(b) If any Event of Loss results in Net Cash Proceeds (whether in the
form of insurance proceeds, a condemnation award or otherwise), a portion or all
of which is required to be applied as a prepayment of the Loans or to the
rebuilding or restoration of any affected property pursuant to section 5.2, the
Collateral Agent is authorized to collect such Net Cash Proceeds and, if
received by any Credit Party, the Company will, or will cause any applicable
Credit Party, to pay over such Net Cash Proceeds to the Collateral Agent.
8.14. Landlord/Mortgagee Waivers; Bailee Letters. If requested to do
so by the Administrative Agent (who may so request on its own initiative and who
shall so request if required to do so by instructions from the Required
Lenders), the Company will promptly (and in any event within 60 days following
any such request) obtain, and thereafter the Company will maintain in effect,
(a) lien waivers from landlords and mortgagees having any interest in any Real
Property on which any tangible items of Collateral, having a minimum value as
specified by the Administrative Agent in such request, are located,
substantially in the form provided by, or otherwise reasonably acceptable to,
the Administrative Agent, and (b) bailee letters, substantially in the form
provided by, or otherwise reasonably acceptable to, the Administrative Agent,
from persons unrelated to any of the Credit Parties who are parties to the
Security Agreement to whom any tangible items of Collateral having a minimum
value as specified by the Administrative Agent in such request, have been
delivered for storage, use, consignment or similar purposes.
8.15. Most Favored Covenant Status. Should the Company at any time
after the Effective Date, issue or guarantee any unsecured Indebtedness
denominated in Dollars for money borrowed or represented by bonds, notes,
debentures or similar securities in an aggregate amount exceeding $10,000,000,
to any lender or group of lenders acting in concert with one another, or one or
more institutional investors, pursuant to a loan agreement, credit agreement,
note purchase agreement, indenture, guaranty or other similar instrument, which
agreement, indenture, guaranty or instrument, includes affirmative or negative
business or financial covenants (or any events of default or other type of
restriction which would have the practical effect of any affirmative or negative
business or financial covenant, including, without limitation, any "put" or
mandatory prepayment of such Indebtedness upon the occurrence of a "change of
control") which are applicable to the Company, other than those set forth herein
or in any of the other Credit Documents, the Company shall promptly so notify
the Administrative Agent and the Lenders and, if the Administrative Agent shall
so request by written notice to the Company (after a determination has been made
by the Required Lenders that any of the above-referenced documents or
instruments contain any such provisions, which either individually or in the
aggregate, are more favorable to the holders of such unsecured Indebtedness than
any of the provisions set forth herein), the Company, the Administrative Agent
and the Lenders shall promptly amend this Agreement to incorporate some or all
of such provisions, in the discretion of the Administrative Agent and the
Required Lenders, into this Agreement and, to the extent necessary and
reasonably desirable to the Administrative Agent and the Required Lenders, into
any of the other Credit Documents, all at the election of the Administrative
Agent and the Required Lenders.
8.16. Senior Debt. The Company will at all times ensure that (i) the
claims of the Lenders in respect of the Obligations of the Borrowers will in all
respects rank prior to the claims of every unsecured creditor of the Borrowers,
and (ii) any Indebtedness of the Borrowers which is subordinated in any manner
to the claims of any other creditor of the Borrowers will be subordinated in
like manner to such claims of the Lenders.
SECTION 9. NEGATIVE COVENANTS.
The Company hereby covenants and agrees that on the Effective Date and
thereafter for so long as this Agreement is in effect and until such time as the
Total Commitment has been terminated, no Notes or Letters of Credit remain
outstanding and the Loans, together with interest, Fees and all other
Obligations incurred hereunder and under the other Credit Documents, have been
paid in full:
9.1. Changes in Business. Neither the Company nor any of its
Subsidiaries will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Company and its Subsidiaries, would be substantially changed from the
general nature of the business engaged in by the Company and its Subsidiaries on
the Effective Date (but giving effect to the completion of the Target
Acquisition).
9.2. Consolidation, Merger, Acquisitions, Asset Sales, etc. The
Company will not, and will not permit any Subsidiary to, (1) wind up, liquidate
or dissolve its affairs, (2) enter into any transaction of merger or
consolidation, (3) make or otherwise effect any Acquisition, (4) sell or
otherwise dispose of any of its property or assets outside the ordinary course
of business, or otherwise make or otherwise effect any Asset Sale, or (5) agree
to do any of the foregoing at any future time, except that the following shall
be permitted:
(a) Certain Intercompany Mergers, etc. If no Default or Event of
Default shall have occurred and be continuing or would result therefrom,
(i) the merger, consolidation or amalgamation of any Subsidiary of
the Company with or into the Company, provided the Company is the surviving or
continuing or resulting corporation;
(ii) the merger, consolidation or amalgamation of any Domestic
Subsidiary of the Company with or into another Domestic Subsidiary of the
Company, provided that the surviving or continuing or resulting corporation is a
Domestic Subsidiary of the Company which is a Subsidiary Guarantor and a
Wholly-Owned Subsidiary of the Company;
(iii) the merger, consolidation or amalgamation of any Foreign
Subsidiary of the Company (other than any which is a Borrower hereunder) with or
into another Foreign Subsidiary of the Company, provided that the surviving or
continuing or resulting corporation is a Wholly-Owned Subsidiary of the Company;
(iv) the liquidation, winding up or dissolution of (x) any
Wholly-Owned Subsidiary of the Company; or (y) any other Subsidiary of the
Company in an Asset Sale permitted under section 9.2(d); and
(v) the transfer or other disposition of any property by the Company
to any Wholly-Owned Subsidiary or by any Subsidiary to the Company or any other
Wholly-Owned Subsidiary of the Company, regardless of whether such intercompany
transaction would constitute an Asset Sale.
(b) Other Mergers, etc. Involving the Company. The Company may
consolidate or merge with any other corporation, or sell, transfer or otherwise
dispose of all or substantially all of the property and assets of the Company
and its Subsidiaries to any person, if (i) the surviving, continuing or
resulting corporation of such merger or consolidation (if other than the
Company) or the acquiring person unconditionally assumes the obligations of the
Company under the Credit Documents pursuant to an assumption agreement in form
and substance reasonably satisfactory to the Required Lenders, (ii) no Event of
Default has occurred and is continuing or would result therefrom, (iii) no
Change of Control would be occasioned thereby; and (iv) if any such merger or
consolidation is entered into for the purpose of effecting an Acquisition, such
Acquisition is permitted by section 9.2(c).
(c) Acquisitions. The Target Acquisition shall be permitted to be
completed as contemplated by section 6.1 hereof; and if no Default or Event of
Default shall have occurred and be continuing or would result therefrom, the
Company or any Subsidiary may make any Acquisition which is a Permitted
Acquisition, provided that all of the conditions contained in the definition of
the term Permitted Acquisition are satisfied.
(d) Permitted Dispositions. If no Default or Event of Default shall
have occurred and be continuing or would result therefrom, the Company or any of
its Subsidiaries may (i) sell any property, land or building (including any
related receivables or other intangible assets) to any person which is not a
Subsidiary of the Company, or (ii) sell the entire capital stock (or other
equity interests) and Indebtedness of any Subsidiary owned by the Company or any
other Subsidiary to any person which is not a Subsidiary of the Company, or
(iii) permit any Subsidiary to be merged or consolidated with a person which is
not an Affiliate of the Company, or (iv) consummate any other Asset Sale with a
person who is not a Subsidiary of the Company; provided that:
(A) the consideration for such transaction represents fair value (as
determined by management of the Company), and at least 80% of such consideration
consists of cash;
(B) the cumulative aggregate consideration for all such transactions
completed during any fiscal year does not exceed $50,000,000;
(C) in the case of any such transaction involving consideration in
excess of $25,000,000, at least five Business Days prior to the date of
completion of such transaction the Company shall have delivered to the
Administrative Agent an officer's certificate executed on behalf of the Company
by an Authorized Officer of the Company, which certificate shall contain (1) a
description of the proposed transaction, the date such transaction is scheduled
to be consummated, the estimated purchase price or other consideration for such
transaction, (2) a certification that no Default or Event of Default has
occurred and is continuing, or would result from consummation of such
transaction, and (3) which shall (if requested by the Administrative Agent)
include a certified copy of the draft or definitive documentation pertaining
thereto; and
(D) contemporaneously with the completion of such transaction the
Company prepays the Loans as and to the extent required by section 5.2 hereof.
(e) Disposition of Divested Businesses. The Company may effect the
disposition of the Divested Businesses, whether pursuant to the Ferro Purchase
Agreement or otherwise, provided that the Company prepays the Loans as and to
the extent required by Section 5.2 hereof.
(f) Leases. The Company or any of its Subsidiaries may enter into
leases of property or assets not constituting Acquisitions, provided such leases
are not otherwise in violation of this Agreement.
(g) Capital Expenditures: The Company and it Subsidiaries shall be
permitted to make any Consolidated Capital Expenditures, provided such
Consolidated Capital Expenditures are not otherwise in violation of this
Agreement.
(h) Permitted Investments. The Company and it Subsidiaries shall be
permitted to make the investments permitted pursuant to section 9.5.
To the extent any Collateral is sold, transferred or disposed of as permitted by
this section 9.2, (i) such Collateral shall be sold, transferred or disposed of
free and clear of the Liens created by the respective Security Documents; (ii)
if such Collateral includes all of the capital stock of a Subsidiary which is a
party to the Subsidiary Guaranty or whose stock is pledged pursuant to the
Pledge Agreement, such capital stock shall be released from the Pledge Agreement
and such Subsidiary shall be released from the Subsidiary Guaranty; and (iii)
the Administrative Agent and the Collateral Agent shall be authorized to take
actions deemed appropriate by them in order to effectuate the foregoing.
9.3. Liens. The Company will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Company or any such Subsidiary 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 or notes with or without recourse to the
Company or any of its Subsidiaries, other than for purposes of collection of
delinquent accounts in the ordinary course of business) or assign any right to
receive income, or file 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, except that the foregoing restrictions shall not apply to:
(a) Standard Permitted Liens: the Standard Permitted Liens;
(b) Existing Liens, etc.: Liens (i) in existence on the Effective
Date which are listed, and the Indebtedness secured thereby and the property
subject thereto on the Effective Date described, in Annex IV, or (ii) arising
out of the refinancing, extension, renewal or refunding of any Indebtedness
secured by any such Liens, provided that the principal amount of such
Indebtedness is not increased and such Indebtedness is not secured by any
additional assets;
(c) Purchase Money Liens: Liens (i) which are placed upon fixed or
capital assets, acquired, constructed or improved by the Company or any
Subsidiary, provided that (A) such Liens secure Indebtedness permitted by
section 9.4(c), (B) such Liens and the Indebtedness secured thereby are incurred
prior to or within 120 days after such acquisition or the completion of such
construction or improvement, (C) the Indebtedness secured thereby does not
exceed 100% of the cost of acquiring, constructing or improving such fixed or
capital assets; and (D) such Liens shall not apply to any other property or
assets of the Company or any Subsidiary; or (ii) arising out of the refinancing,
extension, renewal or refunding of any Indebtedness secured by any such Liens,
provided that the principal amount of such Indebtedness is not increased and
such Indebtedness is not secured by any additional assets;
(d) Liens on Acquired Properties: any Lien (i) existing on any
property or asset prior to the acquisition thereof by the Company or any
Subsidiary, or existing on any property or asset of any person that becomes a
Subsidiary after the date hereof prior to the time such person becomes a
Subsidiary; provided that (A) such Lien secures Indebtedness permitted by
section 9.4(c), (B) such Lien is not created in contemplation of or in
connection with such acquisition or such person becoming a Subsidiary, as the
case may be, (C) such Lien shall not attach or apply to any other property or
assets of the Company or any Subsidiary, (D) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the date such
person becomes a Subsidiary, as the case may be; or (ii) arising out of the
refinancing, extension, renewal or refunding of any Indebtedness secured by any
such Liens, provided that the principal amount of such Indebtedness is not
increased and such Indebtedness is not secured by any additional assets;
(e) Additional Liens: additional Liens (including Liens securing
Indebtedness permitted pursuant to section 9.4(c)(iii)) covering property of the
Company or its Subsidiaries, securing Indebtedness in an aggregate principal
amount not exceeding, at the time of incurrence thereof, $75,000,000 as to all
such Indebtedness.
9.4. Indebtedness. The Company will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness of the Company or any of its Subsidiaries, except:
(a) Credit Documents: Indebtedness incurred under this Agreement and
the other Credit Documents;
(b) Existing Indebtedness; Bridge Indebtedness: Existing Indebtedness
and Indebtedness represented by the Bridge Notes (and the senior subordinated
guaranties executed in connection therewith) in an aggregate principal amount
not to exceed $550,000,000; and any refinancing, extension, renewal or refunding
of (i) any such Existing Indebtedness, not involving an increase in the
principal amount thereof or a reduction of more than 10% in the remaining
weighted average life to maturity thereof (computed in accordance with standard
financial practice) or (ii) any such Bridge Notes if such Indebtedness otherwise
qualifies as a "Refinancing Issuance";
(c) Certain Priority Debt: in addition to the Indebtedness which is
permitted by the preceding clauses, the following additional Indebtedness:
(i) Indebtedness consisting of Capital Lease Obligations of the
Company and its Subsidiaries,
(ii) Indebtedness consisting of obligations under Synthetic Leases of
the Company and its Subsidiaries,
(iii) Indebtedness secured by a Lien referred to in section 9.3(c),
9.3(d) or 9.3(e), and
(iv) other Indebtedness of Subsidiaries of the Company (exclusive of
Indebtedness owed pursuant to any of the Credit Documents, or to the Company or
a Wholly-Owned Subsidiary of the Company);
provided
that (A) at the time of any incurrence thereof after the date hereof, and after
giving effect thereto, the Company would be in compliance with sections 9.7,
9.8, 9.9, and 9.10, and no Event of Default shall have occurred and be
continuing or would result therefrom; and (B) the aggregate outstanding
principal amount (using Capitalized Lease Obligations in lieu of principal
amount, in the case of any Capital Lease, and using the present value, based on
the implicit interest rate, in lieu of principal amount, in the case of any
Synthetic Lease) of Indebtedness permitted by this clause (c), shall not exceed
$100,000,000;
(d) Intercompany Debt: the following: (i) unsecured Indebtedness of
the Company owed to any of its Subsidiaries, provided such Indebtedness
constitutes Subordinated Indebtedness; and (ii) unsecured Indebtedness of any of
the Company's Subsidiaries to the Company or to another Subsidiary of the
Company, representing loans or advances permitted by section 9.5 hereof provided
that any such intercompany loans which are made by or to Domestic Subsidiaries
are evidenced by promissory notes pledged to the Collateral Agent pursuant to
the Security Documents;
(e) Hedge Agreements: Indebtedness of the Company and its
Subsidiaries under Hedge Agreements;
(f) Guaranty Obligations: any Guaranty Obligations permitted by
section 9.5; and
(g) Additional Debt of Foreign Subsidiaries: unsecured Indebtedness
not otherwise permitted by the foregoing clauses incurred by Foreign
Subsidiaries in an amount not to exceed at any time $50,000,000.
9.5. Advances, Investments, Loans and Guaranty Obligations. The
Company will not, and will not permit any of its Subsidiaries to, (1) lend money
or credit or make advances to any person, (2) purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, or other investment in, any person, (3) create, acquire or hold
any Subsidiary, (4) be or become a party to any joint venture or partnership, or
(5) be or become obligated under any Guaranty Obligations (other than those
which may be created in favor of the Lenders and any other benefitted creditors
under any Designated Hedge Agreements pursuant to the Credit Documents), except:
(a) the Company or any of its Subsidiaries may invest in cash and
Cash Equivalents;
(b) any endorsement of a check or other medium of payment for deposit
or collection, or any similar transaction in the normal course of business;
(c) the Company and its Subsidiaries may acquire and hold receivables
owing to them in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms;
(d) investments acquired by the Company or any of its Subsidiaries
(i) in exchange for any other investment held by the Company or any such
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other investment, or
(ii) as a result of a foreclosure by the Company or any of its Subsidiaries with
respect to any secured investment or other transfer of title with respect to any
secured investment in default;
(e) loans and advances to employees for business-related travel
expenses, moving expenses, costs of replacement homes, business machines or
supplies, automobiles and other similar expenses, in each case incurred in the
ordinary course of business;
(f) to the extent not permitted by the foregoing clauses, the
existing loans, advances, investments and guarantees described on Annex V
hereto;
(g) investments of the Company and its Subsidiaries in Hedge
Agreements;
(h) existing investments in any Subsidiaries and any additional
investments in any Domestic Subsidiary Guarantor;
(i) intercompany loans and advances made by the Company or any other
Subsidiary to a Subsidiary which is both a Subsidiary Guarantor and a Domestic
Subsidiary;
(j) intercompany loans and advances made after the Closing Date by
the Company or any Domestic Subsidiary to any Foreign Subsidiary, provided (1)
no Default under section 10.1(a) or Event of Default has occurred and be
continuing at the time any such loan or advance is made, and (2) the aggregate
principal amount of all such loans and advances does not exceed $150,000,000
outstanding at any time, and provided, further, that all computations pursuant
to this clause (j) shall be exclusive of (x) loans and advances made to Foreign
Subsidiaries on or after the Closing Date which are intended to represent the
intercompany financing of all or a portion of the purchase price for the Target
Acquisition, (y) loans and advances representing an exchange or conversion of
equity to debt, or other transfer, assumption, recognition, creation,
reclassification or reallocation of equity and/or debt, which is effected in
connection with a reorganization transaction among some or all of the Company's
Foreign Subsidiaries, and on a noncash basis as far as the Company is concerned,
and (z) loans and advances made for working capital requirements;
(k) the Acquisitions permitted by section 9.2; and loans, advances
and investments of any person which are outstanding at the time such person
becomes a Subsidiary of the Company as a result of an Acquisition permitted by
section 9.2, but not any increase in the amount thereof;
(l) any unsecured Guaranty Obligation incurred by the Company or any
Subsidiary with respect to (i) Indebtedness of a Wholly-Owned Subsidiary of the
Company which is permitted under section 9.4 without restriction upon the
ability of the Company or any Subsidiary to guarantee the same, or (ii) other
obligations of a Wholly-Owned Subsidiary of the Company which are not prohibited
by this Agreement;
(m) advances to any supplier who is not an Affiliate, consisting of
prepayments for raw materials purchased for consumption or processing in the
ordinary course of business and pursuant to arrangements designed to assure an
adequate supply of such raw materials;
(n) any additional loans, advances or investments (whether in the
form of cash or contribution of property, and if in the form of a contribution
of property, such property shall be valued for purposes of this clause at the
fair value thereof as reasonably determined by the Company) made after December
31, 1999, in or to The Weda Bay Project identified as a "subsequent event" in
the notes to the Company's consolidated financial statements for its fiscal year
ended December 31, 1999, up to an aggregate of $20,000,000; and
(o) any other loans, advances, investments (whether in the form of
cash or contribution of property, and if in the form of a contribution of
property, such property shall be valued for purposes of this clause at the fair
value thereof as reasonably determined by the Company) and Guaranty Obligations,
in or to or for the benefit of, any corporation, partnership, limited liability
company, joint venture or other business entity, which is not itself a
Subsidiary of the Company or owned or controlled by any director, officer or
employee of the Company or any of its Subsidiaries, not otherwise permitted by
the foregoing clauses, made after the Closing Date (such loans, advances and
investments and Guaranty Obligations, collectively, "Basket Investments and
Guarantees"), shall be permitted to be incurred if (i) no Event of Default shall
have occurred and be continuing, or would result therefrom, and (ii) the
aggregate cumulative amount of such Basket Investments and Guarantees (taking
into account any repayments of loans or advances), does not exceed $50,000,000.
9.6. Dividends and Other Restricted Payments. The Company will not,
and will not permit any of its Subsidiaries to, declare or make, or agree to pay
or make, directly or indirectly, any Restricted Payment, except:
(a) the Company may declare and pay or make dividends or other
distributions with respect to any class of its capital stock which are payable
solely in additional shares of its common stock (or warrants, options or other
rights to acquire additional shares of its common stock);
(b) any Subsidiary of the Company may declare and pay or make
dividends or distributions ratably with respect to its capital stock;
(c) the Company may make Restricted Payments pursuant to and in
accordance with its existing stock option, stock purchase and other benefit
plans of general application to management, directors or other employees of the
Company and its Subsidiaries;
(d) the Company may, during any fiscal year, declare and pay cash
dividends on its common stock, if immediately prior to and immediately after
giving effect to such action (A) no Default under section 10.1(a) or Event of
Default shall have occurred and be continuing, (B) the Company shall be in
compliance with sections 9.7, 9.8, 9.9 and 9.10, after giving pro forma effect
to such action, and (C) the aggregate amount so expended during such fiscal year
is not in excess of the greater of (x) $15,000,000, or (y) 25% of the Company's
Consolidated Net Income (if positive) for the fiscal year to the end of the
month preceding the date of payment;
(e) the Company may, during any fiscal year, repurchase shares of its
common stock in open market transactions or privately negotiated transactions,
for cash consideration and for use in satisfying current and reasonably
projected stock option and similar exercises by employees and/or directors under
stock option, stock grant, stock purchase and similar plans, if immediately
prior to and immediately after giving effect to such action (A) no Default under
section 10.1(a) or Event of Default shall have occurred and be continuing, and
(B) the Borrowers shall be in compliance with sections 9.8, 9.9 and 9.10, after
giving pro forma effect to such action.
9.7. Consolidated Total Debt/Consolidated EBITDA Ratio. The Company
will not on the last day of any Testing Period indicated below permit the ratio
of (i) the amount of its Consolidated Total Debt at such time to (ii) its
Consolidated EBITDA for its Testing Period most recently ended, to exceed the
ratio specified below for any Testing Period:
Testing Period
__________________________________
Ratio
__________
Testing Period ended September 30, 2001
5.75 to 1.00
Testing Period ended December 31, 2001
5.00 to 1.00
Testing Period ended March 31, 2002
4.75 to 1.00
Testing Period ended June 30, 2002
4.00 to 1.00
Testing Period ended September 30, 2002
3.50 to 1.00
Testing Period ended December 31, 2002
3.50 to 1.00
Testing Period ended March 31, 2003
3.25 to 1.00
Testing Period ended June 30, 2003
3.25 to 1.00
Testing Period ended September 30, 2003
3.25 to 1.00
Testing Period ended December 31, 2003
3.25 to 1.00
Any Testing Period thereafter
3.00 to 1.00
9.8. Consolidated Total Debt/Consolidated Total Capitalization Ratio.
The Company will not on the last day of any fiscal quarter indicated below
permit the ratio, expressed as a percentage, of (i) the amount of its
Consolidated Total Debt at such time to (ii) its Consolidated Total Capital, to
exceed the ratio specified below:
Period
____________________________________________________________
Ratio
______
September 30, 2001
80%
December 31, 2001 and March 31, 2002
70%
June 30, 2002
65%
September 30, 2002 and December 31, 2002
60%
March 31, 2003, June 30, 2003, September 30, 2003 and December 31, 2003
55%
Any fiscal quarter thereafter
50%
9.9. Fixed Charge Coverage Ratio. The Company will not permit its
Fixed Charge Coverage Ratio for any Testing Period to be less than the ratio
specified below:
Testing Period
______________________________________________
Ratio
_________
Any Testing Period ended through December 31, 2002
1.00 to 1.00
Testing Period ended March 31, 2003 and thereafter
1.10 to 1.00
9.10. Interest Coverage Ratio. The Company will not permit its
Interest Coverage Ratio for any Testing Period to be less than the ratio
specified below:
Testing Period
__________________________________
Ratio
__________
Testing Period ended September 30, 2001
2.25 to 1.00
Testing Period ended December 31, 2001
2.25 to 1.00
Testing Period ended March 31, 2002
2.50 to 1.00
Testing Period ended June 30, 2002
3.00 to 1.00
Testing Period ended September 30, 2002
3.25 to 1.00
Testing Period ended December 31, 2002
3.25 to 1.00
Any Testing Period thereafter
3.50 to 1.00
9.11. Limitation on Certain Restrictive Agreements. The Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
enter into, incur or permit to exist or become effective, any "negative pledge"
covenant or other agreement, restriction or arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of the Company or any
Subsidiary to create, incur or suffer to exist any Lien upon any of its property
or assets as security for Indebtedness, or (b) the ability of any such
Subsidiary to pay dividends or make any other distributions on its capital stock
or any other interest or participation in its profits owned by the Company or
any Subsidiary of the Company, or pay any Indebtedness owed to the Company or a
Subsidiary of the Company, or to make loans or advances to the Company or any of
the Company's other Subsidiaries, or transfer any of its property or assets to
the Company or any of the Company's other Subsidiaries, except for such
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, (iv)
customary provisions restricting assignment of any licensing agreement entered
into in the ordinary course of business, (v) customary provisions restricting
the transfer or further encumbering of assets subject to Liens permitted under
section 9.3(b) or 9.3(c), (vi) restrictions contained in the Existing
Indebtedness Agreements as in effect on the Effective Date (and any similar
restrictions contained in any agreement governing any refinancing or refunding
thereof not prohibited by this Agreement), (vii) customary restrictions
affecting only a Subsidiary of the Company under any agreement or instrument
governing any of the Indebtedness of a Subsidiary permitted pursuant to 9.4,
(viii) restrictions affecting any Foreign Subsidiary of the Company under any
agreement or instrument governing any Indebtedness of such Foreign Subsidiary
permitted pursuant to 9.4, and customary restrictions contained in "comfort"
letters and guarantees of any such Indebtedness, (ix) any document relating to
Indebtedness secured by a Lien permitted by section 9.3, insofar as the
provisions thereof limit grants of junior liens on the assets securing such
Indebtedness, and (x) any Operating Lease or Capital Lease, insofar as the
provisions thereof limit grants of a security interest in, or other assignments
of, the related leasehold interest to any other person.
9.12. Prepayments and Refinancings of Other Debt, etc. The Company
will not, and will not permit any of its Subsidiaries to, make (or give any
notice in respect thereof) any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including, without limitation, by way of
depositing with the trustee with respect thereto money or securities before due
for the purpose of paying when due) or exchange of, or refinance or refund, any
Indebtedness of the Company or its Subsidiaries which has an outstanding
principal balance (or Capitalized Lease Obligation, in the case of a Capital
Lease, or present value, based on the implicit interest rate, in the case of a
Synthetic Lease) greater than $1,000,000 (other than the Obligations and
intercompany loans and advances among the Company and its Subsidiaries);
provided that the Company or any Subsidiary may (1) repay, refinance or refund
the Bridge Notes with the proceeds of any Refinancing Issuance, (2) provided
that at least $400,000,000 in aggregate principal amount of Bridge Notes has
been repaid or refinanced with the proceeds of a Refinancing Issuance, repay,
refinance or refund, provided no Default or Event of Default has occurred and is
continuing, up to an additional $50,000,000 in aggregate principal amount of the
Bridge Notes, and (3) any other such Indebtedness if the aggregate principal
amount thereof (or Capitalized Lease Obligation, in the case of a Capital Lease,
or present value, based on the implicit interest rate, in the case of a
Synthetic Lease) is not increased and the weighted average life to maturity
thereof (computed in accordance with standard financial practice) is not reduced
by more than 10%.
9.13. Transactions with Affiliates. The Company will not, and will not
permit any Subsidiary to, enter into any transaction or series of transactions
with any Affiliate (other than, in the case of the Company, any Subsidiary, and
in the case of a Subsidiary, the Company or another Subsidiary) other than in
the ordinary course of business of and pursuant to the reasonable requirements
of the Company's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a person other than an Affiliate,
except (i) sales of goods to an Affiliate for use or distribution outside the
United States which in the good faith judgment of the Company complies with any
applicable legal requirements of the Code, or (ii) agreements and transactions
with and payments to officers, directors and shareholders which are either (A)
entered into in the ordinary course of business and not prohibited by any of the
provisions of this Agreement, or (B) entered into outside the ordinary course of
business, approved by the directors or shareholders of the Company, and not
prohibited by any of the provisions of this Agreement.
9.14. Modifications of Target Acquisition Documents, etc. The Company
will not enter into any material modification of any of the terms, conditions or
provisions of any of the Target Acquisition Documents or the Ferro Purchase
Agreement, or grant any consent or waiver of any of such terms, conditions or
provisions, or release or discharge any person from any material obligations
thereunder. The Company will take all reasonable actions to enforce the
obligations of all other parties to any of the Target Acquisition Documents or
the Ferro Purchase Agreement, and will contemporaneously with the assertion or
resolution of any purchase price adjustment, or indemnity claim, made under any
Target Acquisition Document or the Ferro Purchase Agreement, provide the
Administrative Agent and the Lenders with written notice thereof, describing in
reasonable detail the full particulars thereof.
9.15. Plan Terminations, Minimum Funding, etc. The Company will not,
and will not permit any ERISA Affiliate to, (i) terminate any Plan or Plans so
as to result in liability of the Company or any ERISA Affiliate to the PBGC in
excess of, in the aggregate, $5,000,000, (ii) permit to exist one or more events
or conditions which reasonably present a material risk of the termination by the
PBGC of any Plan or Plans with respect to which the Company or any ERISA
Affiliate would, in the event of such termination, incur liability to the PBGC
in excess of such amount in the aggregate, or (iii) fail to comply with the
minimum funding standards of ERISA and the Code with respect to any Plan.
SECTION 10. EVENTS OF DEFAULT.
10.1. Events of Default. Any of the following specified events shall
constitute an Event of Default (each an "Event of Default"):
(a) Payments: any Borrower shall (i) default in the payment when due
(whether at the Maturity Date, on a date fixed for a Scheduled Repayment, on a
date on which a required prepayment is to be made, upon acceleration or
otherwise) of any principal of the Loans or any reimbursement obligation in
respect of any Unpaid Drawing; or (ii) default, and such default shall continue
for five or more days, in the payment when due of any interest on the Loans or
any Fees or any other amounts owing hereunder or under any other Credit
Document; or
(b) Representations, etc.: any representation, warranty or statement
made by the Company or any other Credit Party herein or in any other Credit
Document or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made; or
(c) Certain Covenants: the Company shall default in the due
performance or observance by it of any term, covenant or agreement contained in
section 8.11, 8.12(b) or 8.16, or sections 9.2 through 9.10, inclusive, or
section 9.15, of this Agreement; or
(d) Other Covenants: the Company shall default in the due performance
or observance by it of any term, covenant or agreement contained in this
Agreement or any other Credit Document, other than those referred to in section
10.1(a) or (b) or (c) above, and such default is not remedied within 30 days
after the earlier of (i) an officer of the Company obtaining actual knowledge of
such default and (ii) the Company receiving written notice of such default from
the Administrative Agent or the Required Lenders (any such notice to be
identified as a "notice of default " and to refer specifically to this
paragraph); or
(e) Cross Default Under Other Agreements: the Company or any of its
Subsidiaries shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations) owed to any Lender, or having an aggregate unpaid
principal amount (or Capitalized Lease Obligation, in the case of a Synthetic
Lease, or present value, based on the implicit interest rate, in the case of a
Synthetic Lease) of $10,000,000 or greater, and such default shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Indebtedness or (ii) default in the observance or
performance of any agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto (and all grace periods applicable to such observance, performance or
condition shall have expired), 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 any such Indebtedness to become due
prior to its stated maturity; or any such Indebtedness of the Company or any of
its Subsidiaries shall be declared to be due and payable, or shall be required
to be prepaid (other than by a regularly scheduled required prepayment or
redemption, prior to the stated maturity thereof); or (iii) without limitation
of the foregoing clauses, the Company or any of its Subsidiaries shall default
in any payment obligation under a Designated Hedge Agreement, and such default
shall continue after the applicable grace period, if any, specified in such
Designated Hedge Agreement or any other agreement or instrument relating
thereto; or
(f) Other Credit Documents: the Subsidiary Guaranty or any Security
Document (once executed and delivered) shall cease for any reason (other than
termination in accordance with its terms) to be in full force and effect; or any
Credit Party shall default in any payment obligation thereunder; or any Credit
Party shall default in any material respect in the due performance and
observance of any other obligation thereunder and such default shall continue
unremedied for a period of at least 30 days after notice by the Administrative
Agent or the Required Lenders; or any Credit Party shall (or seek to) disaffirm
or otherwise limit its obligations thereunder otherwise than in strict
compliance with the terms thereof; or
(g) Judgments: one or more judgments, orders or decrees shall be
entered against the Company and/or any of its Subsidiaries involving a liability
(other than a liability covered by insurance, as to which the carrier has
adequate claims paying ability and has not effectively reserved its rights) of
$5,000,000 or more in the aggregate for all such judgments, orders and decrees
for the Company and its Subsidiaries, and any such judgments or orders or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal within 30 days (or such longer period, not in excess of 60 days, during
which enforcement thereof, and the filing of any judgment lien, is effectively
stayed or prohibited) from the entry thereof; or
(h) Bankruptcy, etc.: any of the following shall occur:
(i) the Company, any of its Material Subsidiaries or any other Credit
Party (the Company and each of such other persons, each a "Principal Party")
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, or any other similar laws in other jurisdictions (the
"Bankruptcy Code"); or
(ii) an involuntary case is commenced against any Principal Party
under the Bankruptcy Code and the petition is not controverted within 10 days,
or is not dismissed within 60 days, after commencement of the case; or
(iii) a custodian (as defined in the Bankruptcy Code) is appointed
for, or takes charge of, all or substantially all of the property of any
Principal Party; or
(iv) any Principal Party commences (including by way of applying for
or consenting to the appointment of, or the taking of possession by, a
rehabilitator, receiver, custodian, trustee, conservator or liquidator
(collectively, a "conservator") of itself or all or any substantial portion of
its property) any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency, liquidation,
rehabilitation, conservatorship or similar law of any jurisdiction whether now
or hereafter in effect relating to such Principal Party; or
(v) any such proceeding is commenced against any Principal Party to
the extent such proceeding is consented by such person or remains undismissed
for a period of 60 days; or
(vi) any Principal Party is adjudicated insolvent or bankrupt; or
(vii) any order of relief or other order approving any such case or
proceeding is entered; or
(viii) any Principal Party suffers any appointment of any conservator
or the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of 60 days; or
(ix) any Principal Party makes a general assignment for the benefit
of creditors; or
(x) any corporate (or similar organizational) action is taken by any
Principal Party for the purpose of effecting any of the foregoing; or
(i) ERISA: (i) any of the events described in clauses (i) through
(viii) of section 8.1(f) shall have occurred; or (ii) there shall result from
any 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 (iii)
any such event or events or any such lien, security interest or liability,
individually, and/or in the aggregate, in the opinion of the Required Lenders,
has had, or could reasonably be expected to have, a Material Adverse Effect.
10.2. Acceleration, etc. Upon the occurrence of any Event of Default,
and at any time thereafter, if any Event of Default shall then be continuing,
the Administrative Agent shall, upon the written request of the Required
Lenders, by written notice to the Company, take any or all of the following
actions, without prejudice to the rights of the Administrative Agent, the
Collateral Agent or any Lender to enforce its claims against the Borrowers or
any other Credit Party in any manner permitted under applicable law:
(a) declare the Total Commitment terminated, whereupon the Commitment
of each Lender shall forthwith terminate immediately without any other notice of
any kind;
(b) declare the principal of and any accrued interest in respect of
all Loans, all Unpaid Drawings and all other Obligations owing hereunder and
under the other Credit Documents, 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 the Borrowers;
(c) terminate any Letter of Credit which may be terminated in
accordance with its terms;
(d) direct the Borrowers to pay (and each Borrower hereby agrees that
on receipt of such notice or upon the occurrence of an Event of Default with
respect to the Borrower under section 10.1(h), it will pay) to the Collateral
Agent an amount of cash equal to the aggregate Stated Amount of all Letters of
Credit then outstanding (such amount to be held as security for the Borrower's
and any other Letter of Credit Obligor's reimbursement obligations in respect
thereof); and/or
(e) exercise any other right or remedy available under any of the
Credit Documents or applicable law;
provided
that, if an Event of Default specified in section 10.1(h) shall occur with
respect to the Company or any other Borrower, the result which would occur upon
the giving of written notice by the Administrative Agent as specified in clauses
(a) and/or (b) above shall occur automatically without the giving of any such
notice.
10.3. Application of Liquidation Proceeds. All monies received by the
Administrative Agent, the Collateral Agent or any Lender from the exercise of
remedies hereunder or under the other Credit Documents or under any other
documents relating to this Agreement shall, unless otherwise required by the
terms of the other Credit Documents or by applicable law, be applied as follows:
(i) first, to the payment of all expenses (to the extent not
otherwise paid by the Company or any of the other Credit Parties) incurred by
the Administrative Agent and the Lenders in connection with the exercise of such
remedies, including, without limitation, all reasonable costs and expenses of
collection, reasonable documented attorneys' fees, court costs and any
foreclosure expenses;
(ii) second, to the payment pro rata of interest then accrued on the
outstanding Loans;
(iii) third, to the payment pro rata of any fees then accrued and
payable to the Administrative Agent, any Letter of Credit Issuer or any Lender
under this Agreement in respect of the Loans or the Letter of Credit
Outstandings;
(iv) fourth, to the payment pro rata of (A) the principal balance
then owing on the outstanding Loans, (B) the amounts then due under Designated
Hedge Agreements to creditors of the Company or any Subsidiary, subject to
confirmation by the Administrative Agent of any calculations of termination or
other payment amounts being made in accordance with normal industry practice,
and (C) the Stated Amount of the Letter of Credit Outstandings (to be held and
applied by the Collateral Agent as security for the reimbursement obligations in
respect thereof);
(v) fifth, to the payment to the Lenders of any amounts then accrued
and unpaid under sections 2.9, 2.10, 3.5 and 5.4 hereof, and if such proceeds
are insufficient to pay such amounts in full, to the payment of such amounts pro
rata;
(vi) sixth, to the payment pro rata of all other amounts owed by the
Company to the Administrative Agent, to any Letter of Credit Issuer or any
Lender under this Agreement or any other Credit Document, and to any
counterparties under Designated Hedge Agreements of the Company and its
Subsidiaries, and if such proceeds are insufficient to pay such amounts in full,
to the payment of such amounts pro rata; and
(vii) finally, any remaining surplus after all of the Obligations
have been paid in full, to the Company or to whomsoever shall be lawfully
entitled thereto.
SECTION 11. THE ADMINISTRATIVE AGENT.
11.1. Appointment. Each Lender hereby irrevocably designates and
appoints NCB as Administrative Agent (such term to include, for the purposes of
this section 11, NCB acting as Collateral Agent) to act as specified herein and
in the other Credit Documents, and each such Lender hereby irrevocably
authorizes NCB as the Administrative Agent for such Lender, to take such action
on its behalf under the provisions of this Agreement and the other Credit
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent agrees to act as such upon the
express conditions contained in this section 11. Notwithstanding any provision
to the contrary elsewhere in this Agreement, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein or
in the other Credit Documents, nor any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Administrative Agent. The provisions of this section 11 are solely for the
benefit of the Administrative Agent, and the Lenders, and the Company and its
Subsidiaries shall not have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties under this
Agreement, the Administrative Agent shall act solely as agent of the Lenders and
does not assume and shall not be deemed to have assumed any obligation or
relationship of agency or trust with or for the Company or any of its
Subsidiaries.
11.2. Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by section 11.3.
11.3. Exculpatory Provisions. Neither the Administrative Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such person under or in connection with this Agreement (except
for its or such person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Company or of its Subsidiaries or any
of their respective officers contained in this Agreement, any other Credit
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Credit Document or for any failure
of the Company or any Subsidiary of the Company or any of their respective
officers to perform its obligations hereunder or thereunder. The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
the Company or any of its Subsidiaries. The Administrative Agent shall not be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Credit
Document or for any representations, warranties, recitals or statements made
herein or therein or made in any written or oral statement or in any financial
or other statements, instruments, reports, certificates or any other documents
in connection herewith or therewith furnished or made by the Administrative
Agent to the Lenders or by or on behalf of the Company or any of its
Subsidiaries to the Administrative Agent or any Lender or be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or of the existence or possible
existence of any Default or Event of Default.
11.4. Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile transmission, telex or teletype message, statement, order or
other document or conversation believed by it, in good faith, to be genuine and
correct and to have been signed, sent or made by the proper person or persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Company or any of its Subsidiaries), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Credit Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Credit Documents in accordance with a request of the Required Lenders (or
all of the Lenders, or all of the Lenders (other than any Defaulting Lender), as
applicable, as to any matter which, pursuant to section 13.12, can only be
effectuated with the consent of all Lenders, or all Lenders (other than any
Defaulting Lender), as the case may be), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders.
11.5. Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give prompt notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders, provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
11.6. Non-Reliance. Each Lender expressly acknowledges that neither
the Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates have made any representations or warranties to
it and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Company or any of its Subsidiaries, shall be deemed
to constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent, or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Company and its Subsidiaries and made its own decision
to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent, or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Company and its Subsidiaries.
The Administrative Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, assets, property, financial and other conditions, prospects or
creditworthiness of the Company or any of its Subsidiaries which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
11.7. Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such ratably according to their
respective Loans and Percentages of the Unutilized Total Commitment, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, reasonable expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Obligations) be imposed on, incurred by or
asserted against the Administrative Agent in its capacity as such in any way
relating to or arising out of this Agreement or any other Credit Document, or
any documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted to be taken by the
Administrative Agent under or in connection with any of the foregoing, but only
to the extent that any of the foregoing is not paid by the Company, provided
that no Lender shall be liable to the Administrative Agent for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting from the Administrative Agent's gross negligence or willful
misconduct. If any indemnity furnished to the Administrative Agent for any
purpose shall, in the opinion of the Administrative Agent, be insufficient or
become impaired, the Administrative Agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against until such additional
indemnity is furnished. The agreements in this section 11.7 shall survive the
payment of all Obligations.
11.8. The Administrative Agent in Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Company, its Subsidiaries
and their Affiliates as though not acting as Administrative Agent hereunder.
With respect to the Loans made by it and all Obligations owing to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.
11.9. Successor Administrative Agent. The Administrative Agent may
resign as the Administrative Agent upon not less than 20 Business Days' notice
to the Lenders and the Company. The Administrative Agent may be removed as the
Administrative Agent for cause upon not less than 20 Business Days' notice to
the Administrative Agent and the Company from the Required Lenders. The Required
Lenders shall appoint from among the Lenders a successor Administrative Agent
for the Lenders, subject to prior approval by the Company if no Event of Default
has occurred and is continuing (such approval not to be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative Agent, and the term "Administrative Agent" shall
include such successor agent effective upon its appointment, and the resigning
or removed Administrative Agent's rights, powers and duties as the
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement. After the retiring or removed Administrative Agent's resignation
or removal hereunder as the Administrative Agent, the provisions of this section
11 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Administrative Agent under this Agreement.
11.10. Other Agents. Any Lender identified herein as a Co-Agent,
Syndication Agent, Documentation Agent, Managing Agent, Manager, Lead Arranger,
Arranger or any other corresponding title, other than "Administrative Agent" or
"Collateral Agent", shall have no right, power, obligation, liability,
responsibility or duty under this Agreement or any other Credit Document except
those applicable to all Lenders as such. Each Lender acknowledges that it has
not relied, and will not rely, on any Lender so identified in deciding to enter
into this Agreement or in taking or not taking any action hereunder.
SECTION 12. GUARANTY BY THE COMPANY.
12.1. Guaranty of Certain Subsidiary Borrowings. The Company hereby
unconditionally guarantees, for the benefit of any Lender or any of its
Affiliates which extends credit to any other Borrower hereunder, the full and
punctual payment of all amounts at any time owed of every type or description,
whether direct or indirect, contingent or absolute, by any such other Borrower
in respect of any such extension or extensions of credit (collectively, the
"Guaranteed Obligations"). Upon failure by any other Borrower to pay punctually
any such amount, the Company shall forthwith on demand by the Administrative
Agent (acting on instructions from any affected Lender, on its own behalf or on
behalf of any of its Affiliates) pay the amount not so paid at the place and in
the currency and otherwise in the manner specified in this Agreement or any
other applicable agreement or instrument.
12.2. Additional Undertaking. As a separate, additional and continuing
obligation, the Company unconditionally and irrevocably undertakes and agrees,
for the benefit of the Lenders and their Affiliates referred to in section 12.1,
that, should any amounts not be recoverable from the Company under section 12.1
for any reason whatsoever (including, without limitation, by reason of any
provision of any Credit Document or any other agreement or instrument executed
in connection therewith being or becoming void, unenforceable, or otherwise
invalid under any applicable law) then, notwithstanding any notice or knowledge
thereof by any Lender, the Administrative Agent, any of their respective
Affiliates, or any other person, at any time, the Company as sole, original and
independent obligor, upon demand by the Administrative Agent (acting on
instructions from any affected Lender, on its own behalf or on behalf of any of
its Affiliates), will make payment to the Administrative Agent, for the account
of the affected Lenders (or any such Affiliate), of all such obligations not so
recoverable by way of full indemnity, in such currency and otherwise in such
manner as is provided in any applicable agreement or instrument.
12.3. Guaranty Unconditional, etc. The obligations of the Company
under this section shall be unconditional and absolute and, without limiting the
generality of the foregoing shall not be released, discharged or otherwise
affected by the occurrence, one or more times, of any of the following:
(i) any extension, renewal, settlement, compromise, waiver or release
in respect to any Guaranteed Obligation of any other Borrower under any
agreement or instrument, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, any Note, any other Credit Document, or any agreement or instrument
evidencing or relating to any Guaranteed Obligation;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any Guaranteed Obligation of any Subsidiary under any
agreement or instrument evidencing or relating to any Guaranteed Obligation;
(iv) any change in the corporate existence, structure or ownership of
any other Borrower or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any other Borrower or its assets or any resulting
release or discharge of any obligation of any other Borrower contained in any
agreement or instrument evidencing or relating to any Guaranteed Obligation;
(v) the existence of any claim, set-off or other rights which the
Company may have at any time against any other Borrower, the Administrative
Agent, any Lender, any Affiliate of any Lender or any other person, whether in
connection herewith or any unrelated transactions;
(vi) any invalidity or unenforceability relating to or against any
other Borrower for any reason of any agreement or instrument evidencing or
relating to any Guaranteed Obligation, or any provision of applicable law or
regulation purporting to prohibit the payment by any other Borrower of any
Guaranteed Obligation; or
(vii) any other act or omission to act or delay of any kind by any
other Borrower, the Administrative Agent, any Lender, any of their Affiliates,
or any other person, or any other circumstance whatsoever, which might, but for
the provisions of this section, constitute a legal or equitable discharge of the
Company's obligations under this section.
12.4. Company Obligations to Remain in Effect; Restoration. The
Company's obligations under this section 12 shall remain in full force and
effect until the Commitments shall have terminated, and the principal of and
interest on the Notes and other Guaranteed Obligations, and all other amounts
payable by the Company or any other Borrower under the Credit Documents or any
other agreement or instrument evidencing or relating to any of the Guaranteed
Obligations, shall have been paid in full and all Letters of Credit have been
terminated or have expired. If at any time any payment of any of the Guaranteed
Obligations of any other Borrower in respect of any Guaranteed Obligations is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such other Borrower, the Company's obligations
under this section with respect to such payment shall be reinstated at such time
as though such payment had been due but not made at such time.
12.5. Waiver of Acceptance, etc. The Company irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
person against any other Borrower or any other person, or against any collateral
or guaranty of any other person.
12.6. Subrogation. Until the indefeasible payment in full of all of
the Obligations and any other Guaranteed Obligations and the termination of the
Commitments of the Lenders hereunder, and the termination or expiration of any
Letters of Credit, the Company shall have no rights, by operation of law or
otherwise, upon making any payment under this section to be subrogated to the
rights of the payee against any other Borrower with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by any other Borrower in
respect thereof.
12.7. Effect of Stay. In the event that acceleration of the time for
payment of any amount payable by any other Borrower under any Guaranteed
Obligation is stayed upon insolvency, bankruptcy or reorganization of such other
Borrower, all such amounts otherwise subject to acceleration under the terms of
any applicable agreement or instrument evidencing or relating to any Guaranteed
Obligation shall nonetheless be payable by the Company under this section
forthwith on demand by the Administrative Agent.
SECTION 13. MISCELLANEOUS.
13.1. Payment of Expenses etc. (a) Whether or not the transactions
contemplated hereby are consummated, the Company agrees to pay (or reimburse the
Administrative Agent, the Collateral Agent, the Syndication Agent and the Joint
Lead Arrangers for) all reasonable out-of-pocket costs and expenses of the
Administrative Agent, the Collateral Agent, the Syndication Agent, the Joint
Book Running Managers and the Joint Lead Arrangers in connection with the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein, including, without limitation,
the reasonable fees and disbursements of Jones, Day, Reavis & Pogue, special
counsel to the Administrative Agent.
(b) The Company agrees to pay (or reimburse the Joint Lead Arrangers,
Joint Book Running Managers and Syndication Agent for) all reasonable
out-of-pocket costs and expenses of the Joint Lead Arrangers, Joint Book Running
Managers and Syndication Agent in connection with the syndication prior to the
Effective Date of the Commitments of the other Lenders hereunder, including,
without limitation, the reasonable fees and disbursements of internal or special
counsel for any of such persons.
(c) The Company agrees to pay (or reimburse the Administrative Agent,
the Lenders and their Affiliates for) all reasonable out-of-pocket costs and
expenses of the Administrative Agent, the Lenders and their Affiliates in
connection with any amendment, waiver or consent relating to any of the Credit
Documents which is requested by any Credit Party, including, without limitation,
the reasonable fees and disbursements of Jones, Day, Reavis & Pogue, special
counsel to the Administrative Agent.
(d) The Company agrees to pay (or reimburse the Administrative Agent,
the Lenders and their Affiliates for) all reasonable out-of-pocket costs and
expenses of the Administrative Agent, the Lenders and their Affiliates in
connection with the enforcement of any of the Credit Documents or the other
documents and instruments referred to therein, including, without limitation,
(i) the reasonable fees and disbursements of Jones, Day, Reavis & Pogue, special
counsel to the Administrative Agent, and (ii) the reasonable fees and
disbursements of any individual counsel to any Lender (including allocated costs
of internal counsel).
(e) Without limitation of the preceding section 12.1(d), in the event
of the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of the Company or any of its Subsidiaries, the Company agrees to pay all
costs of collection and defense, including reasonable attorneys' fees in
connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, which shall be due and payable together
with all required service or use taxes.
(f) The Company agrees to pay and hold the Administrative Agent, the
Collateral Agent and each of the Lenders harmless from and against any and all
present and future stamp and other similar taxes with respect to the foregoing
matters and save each such Agent and each of the Lenders 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 any such indemnified person)
to pay such taxes.
(g) The Company agrees to indemnify the Administrative Agent, the
Collateral Agent, the Joint Lead Arrangers, the Syndication Agent, each other
Agent, each Lender, and their respective officers, directors, trustees,
employees, representatives, agents, investment advisors and Affiliates
(collectively, the "Indemnitees") from and hold each of them harmless against
any and all losses, liabilities, claims, damages or expenses reasonably incurred
by any of them as a result of, or arising out of, or in any way related to, or
by reason of
(i) any investigation, litigation or other proceeding (whether or not
any Lender is a party thereto) related to the entering into and/or performance
of any Credit Document or the use of the proceeds of any Loans hereunder or the
consummation of any transactions contemplated in any Credit Document, other than
any such investigation, litigation or proceeding arising out of transactions
solely between any of the Lenders or the Administrative Agent, transactions
solely involving the assignment by a Lender of all or a portion of its Loans and
Commitments, or the granting of participations therein, as provided in this
Agreement, or arising solely out of any examination of a Lender by any
regulatory or other governmental authority having jurisdiction over it, or
(ii) 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 Company or any of its
Subsidiaries, the release, generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or not owned or
operated by the Company or any of its Subsidiaries, if the Company or any such
Subsidiary could have or is alleged to have any responsibility in respect
thereof, the non-compliance of any such Real Property with foreign, federal,
state and local laws, regulations and ordinances (including applicable permits
thereunder) applicable thereto, or any Environmental Claim asserted against the
Company or any of its Subsidiaries, in respect of any such Real Property,
including, in each case, without limitation, the reasonable documented fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such 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 or of any other
Indemnitee who is such person or an Affiliate of such person). To the extent
that the undertaking to indemnify, pay or hold harmless any person set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the Company shall make the maximum contribution to the payment
and satisfaction of each of the indemnified liabilities which is permissible
under applicable law.
13.2. 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, each Lender is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Borrower
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 such Lender (including,
without limitation, by branches, agencies and Affiliates of such Lender wherever
located) to or for the credit or the account of any Borrower against and on
account of the Obligations and liabilities of such Borrower to such Lender under
this Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations any Borrower purchased by such Lender
pursuant to section 13.4(c), and all other claims of any nature or description
arising out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not such Lender shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured. Each Lender agrees to promptly notify such Borrower
after any such set off and application, provided, however, that the failure to
give such notice shall not affect the validity of such set off and application.
13.3. Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or electronic e-mail transmission or
cable communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered, if to the Company, at 3800 Terminal Tower, Cleveland, Ohio 44113,
attention: James M. Materna, Chief Financial Officer (facsimile: (216)
781-0902); if to any Lender at its address specified for such Lender on Annex
I-A hereto or the Assignment Agreement pursuant to which it became a Lender
hereunder; if to the Administrative Agent, at its Notice Office; or at such
other address as shall be designated by any party in a written notice to the
other parties hereto. All such notices and communications shall be mailed,
telegraphed, telexed, transmitted via facsimile or electronic e-mail, cabled or
sent by overnight courier, and shall be effective when received.
13.4. Benefit of Agreement. (a) Successors and Assigns Generally. This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors and assigns, provided that
the Borrowers may not assign or transfer any of their rights or obligations
hereunder without the prior written consent of all the Lenders (other than any
Defaulting Lender), and, provided, further, that any assignment by a Lender of
its rights and obligations hereunder shall be effected in accordance with
section 13.4(c).
(b) Participations. Notwithstanding the foregoing, each Lender may at
any time grant participations in any of its rights hereunder or under any of the
Notes to (x) another Lender that is not a Defaulting Lender or to an Affiliate
of such Lender which is a commercial bank, financial institution or other
"accredited investor" (as defined in SEC Regulation D), and (y) one or more
Eligible Transferees (except that no notice to or the consent of the Company or
the Administrative Agent is required), provided that in the case of any such
participation,
(i) except as provided below, the participant shall not have any
rights under this Agreement or any of the other Credit Documents, including
rights of consent, approval or waiver (the participant's rights against such
Lender in respect of such participation to be those set forth in the agreement
executed by such Lender in favor of the participant relating thereto),
(ii) such Lender's obligations under this Agreement (including,
without limitation, its Commitment hereunder) shall remain unchanged,
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations,
(iv) such Lender shall remain the holder of any Note for all purposes
of this Agreement, and
(v) the Company, the Administrative Agent, and the other Lenders
shall continue to deal solely and directly with the selling Lender in connection
with such Lender's rights and obligations under this Agreement, and all amounts
payable by the Company and other Borrowers hereunder shall be determined as if
such Lender had not sold such participation, except that the participant shall
be entitled to the benefits of sections 2.9, 2.10, 3.5 and 5.4 of this Agreement
to the extent that such Lender would be entitled to such benefits if the
participation had not been entered into or sold,
and, provided further, that no Lender shall transfer, grant or sell any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (1) change any date upon which a
mandatory and automatic reduction in any Commitment in which such Participant is
participating is scheduled to be made, or change the amount thereof, (2) change
any date upon which an installment payment of any Loans in which such
Participant is participating is scheduled to be made, or change the amount
thereof, (3) change any date upon which a reimbursement obligation in respect of
a Letter of Credit or Unpaid Drawing in which such Participant is participating
is scheduled to be made, or change the amount thereof, (4) extend the final
scheduled maturity of the Loans in which such participant is participating (it
being understood that any waiver of the making of, or the application of, any
mandatory prepayment to such Loans shall not constitute an extension of the
final maturity date thereof), (5) reduce the rate or extend the time of payment
of interest or Fees on any such Loan or Commitment (except in connection with a
waiver of the applicability of any post-default increase in interest rates), (6)
reduce the principal amount of any such Loan, (7) increase such participant's
participating interest in any Commitment over the amount thereof then in effect,
(8) extend the expiration or termination of any Letter of Credit beyond the
scheduled expiration of any Commitment with respect thereto in which such
participant is participating, (9) release any Credit Party from its obligations
under the Subsidiary Guaranty, except strictly in accordance with the provisions
of the Credit Documents, (10) release all or any substantial portion of the
Collateral, in each case except strictly in accordance with the provisions of
the Credit Documents, or (11) consent to the assignment or transfer by any
Borrower of any of its rights and obligations under this Agreement.
(c) Assignments by Lenders. Notwithstanding the foregoing, (x) any
Lender may assign all or a fixed portion of its Loans and/or Commitment, and its
rights and obligations hereunder, which does not have to be pro rata among the
Facilities, to another Lender that is not a Defaulting Lender, or to an
Affiliate of any Lender (including itself or any Approved Fund) and which is not
a Defaulting Lender and which is a commercial bank, financial institution or
other "accredited investor" (as defined in SEC Regulation D), and (y) any Lender
may assign all, or if less than all, a fixed portion, equal to at least
$1,000,000 in the aggregate for the assigning Lender or assigning Lenders, of
its Loans and/or Commitment and its rights and obligations hereunder, which does
not have to be pro rata among the Facilities, to one or more Eligible
Transferees, each of which assignees shall become a party to this Agreement as a
Lender by execution of an Assignment Agreement, provided that
(i) in the case of any assignment of a portion of any Loans and/or
Commitment of a Lender, such Lender shall retain a minimum fixed portion of all
Loans and Commitments equal to at least $1,000,000,
(ii) at the time of any such assignment the Lender Register shall be
deemed modified to reflect the Commitments of such new Lender and of the
existing Lenders,
(iii) upon surrender of the old Notes, new Notes will be issued, at
the Borrower's expense, to such new Lender and to the assigning Lender, such new
Notes to be in conformity with the requirements of section 2.5 (with appropriate
modifications) to the extent needed to reflect the revised Commitments,
(iv) in the case of clause (y) only, the consent of (i) the
Administrative Agent and the Joint Lead Arrangers, and (ii) provided no Default
or Event of Default shall have occurred or be continuing, the Company, shall be
required in connection with any such assignment (which consent shall not be
unreasonably withheld or delayed),
(v) in the case of any assignment of all or any portion of a
Revolving Commitment to any person, other than another Lender that is not a
Defaulting Lender, the consent of each Letter of Credit Issuer shall be required
in connection with any such assignment (which consent shall not be unreasonably
withheld or delayed), and
(vi) the Administrative Agent shall receive at the time of each such
assignment, from the assigning or assignee Lender, the payment of a
non-refundable assignment fee of $3,500, provided, (i) that the assignment fee
shall be waived in connection with any assignment made to either (A) a person
that is not a bank, an investment bank or an Affiliate of a bank or an
investment bank or (B) a bank, an investment bank or an Affiliate of a bank or
an investment bank (a "Financial Institution") which has, to the satisfaction of
the Administrative Agent, announced and adopted a general policy that (x) is in
effect on the date of the proposed assignment, (y) is binding on such Financial
Institution, and (z) provides that such Financial Institution has agreed to
waive its rights to receive all similar processing, recordation or assignment
fees which would be payable as a result of an assignment by any person of any
commitments, loans or other extensions of credit under a syndicated leveraged
credit facility and (ii) no such assignment fee shall be payable in the case of
an assignee which is already a Lender, an Affiliate of such Lender or an
Approved Fund of any Lender and in the case of assignments on the same day by a
Lender to more than one fund managed or advised by the same investment advisor
(which funds are not then Lenders hereunder), only a single $3,500 fee shall be
payable for all such assignments by such Lender to such funds.
and, provided further, that such transfer or assignment will not be effective
until the Assignment Agreement in respect thereof is recorded by the
Administrative Agent on the Lender Register maintained by it as provided herein.
To the extent of any assignment pursuant to this section 13.4(c) the
assigning Lender shall be relieved of its obligations hereunder with respect to
its assigned Commitments.
At the time of each assignment pursuant to this section 13.4(c) to a
person which is not already a Lender hereunder and which is not a United States
person (as such term is defined in section 7701(a)(30) of the Code) for Federal
income tax purposes, the respective assignee Lender shall provide to the Company
and the Administrative Agent the appropriate Internal Revenue Service Forms
(and, if applicable a Section 5.4(b)(ii) Certificate) described in section
5.4(b). To the extent that an assignment of all or any portion of a Lender's
Commitment and related outstanding Obligations pursuant to this section 13.4(c)
would, at the time of such assignment, result in increased costs under section
2.9 from those being charged by the respective assigning Lender prior to such
assignment, then the Company shall not be obligated to pay such increased costs
(although the Company shall be obligated to pay any other increased costs of the
type described above resulting from changes after the date of the respective
assignment).
Nothing in this section 13.4(c) shall prevent or prohibit (i) any
Lender which is a bank, trust company or other financial institution from
pledging its Notes or Loans to a Federal Reserve Bank in support of borrowings
made by such Lender from such Federal Reserve Bank, or (ii) any Lender which is
a trust, limited liability company, mutual fund, partnership or other investment
company from pledging its Notes or Loans to a trustee or agent for the benefit
of holders of certificates or debt securities issued by it. No such pledge, or
any assignment pursuant to or in lieu of an enforcement of such a pledge, shall
relieve the transferor Lender from its obligations hereunder.
(d) No SEC Registration or Blue Sky Compliance. Notwithstanding any
other provisions of this section 13.4, no transfer or assignment of the
interests or obligations of any Lender hereunder or any grant of participation
therein shall be permitted if such transfer, assignment or grant would require
the Company to file a registration statement with the SEC or to qualify the
Loans under the "Blue Sky" laws of any State.
(e) Representations of Lenders. Each Lender initially party to this
Agreement hereby represents, and each person that became a Lender pursuant to an
assignment permitted by this section 13.4 will, upon its becoming party to this
Agreement, represent that it is a commercial lender, other financial institution
or other "accredited" investor (as defined in SEC Regulation D) which makes or
acquires loans in the ordinary course of its business and that it will make or
acquire Loans for its own account in the ordinary course of such business,
provided that subject to the preceding sections 13.4(b) and (c), the disposition
of any promissory notes or other evidences of or interests in Indebtedness held
by such Lender shall at all times be within its exclusive control.
(f) Grants by Lenders to SPVs. (i) Notwithstanding anything to the
contrary contained herein, any Lender (a "Designating Lender") may grant to a
special purpose funding vehicle (an "SPV"), identified as such in writing from
time to time by the Designating Lender to the Administrative Agent, the Company
and the other Lenders, the option to provide to the Borrowers all or any part of
any Loan that such Designating Lender would otherwise be obligated to make to
the Borrowers pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPV to make any Loan, (ii) if an SPV elects not
to exercise such option or otherwise fails to provide all or any part of such
Loan, the Designating Lender shall be obligated to make such Loan pursuant to
the terms hereof, and (iii) the Designating Lender shall remain liable for any
indemnity or other payment obligation with respect to its Commitment hereunder.
The making of a Loan by an SPV hereunder shall utilize the Commitment of the
Designating Lender to the same extent, and as if, such Loan were made by such
Designating Lender.
(ii) As to any Loans or portion thereof made by it, each SPV shall
have all the rights that a Lender making such Loans or portion thereof would
have had under this Agreement; provided, however, that each SPV shall have
granted to its Designating Lender an irrevocable power of attorney, to deliver
and receive all communications and notices under this Agreement (and any other
Credit Documents) and to exercise on such SPV's behalf, all of such SPV's voting
rights under this Agreement. No additional Note shall be required to evidence
the Loans or portion thereof made by an SPV; and the related Designating Lender
shall be deemed to hold its Note as agent for such SPV to the extent of the
Loans or portion thereof funded by such SPV. In addition, any payments for the
account of any SPV shall be paid to its Designating Lender as agent for such
SPV.
(iii) Each party hereto hereby agrees that no SPV shall be liable for
any indemnity or payment under this Agreement for which a Lender would otherwise
be liable. In furtherance of the foregoing, each party hereto hereby agrees
(which agreement shall survive the termination of this Agreement) that, prior to
the date that is one year and one day after the payment in full of all
outstanding commercial paper or other senior indebtedness of any SPV, it will
not institute against, or join any other person in instituting against, such SPV
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof.
(iv) In addition, notwithstanding anything to the contrary contained
in this section 13.4, any SPV may (A) with notice to, but without the prior
written consent of, the Company and the Administrative Agent and without paying
any processing fee therefor, assign all or a portion of its interests in any
Loans to the Designating Lender or to any financial institutions providing
liquidity and/or credit support to or for the account of such SPV to support the
funding or maintenance of Loans and (B) disclose on a confidential basis any
non-public information relating to its Loans to any rating agency, commercial
paper dealer or provider of any surety, guarantee or credit or liquidity
enhancements to such SPV. This section 13.4(f) may not be amended without the
written consent of any Designating Lender affected thereby.
13.5. No Waiver: Remedies Cumulative. No failure or delay on the part
of the Administrative Agent or any Lender in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrowers and the Administrative Agent or any Lender shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege 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. No notice to or demand on the Borrowers in
any case shall entitle the Borrowers to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Lenders to any other or further action in any
circumstances without notice or demand. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default or Event of Default, regardless of whether
the Administrative Agent, any Lender or the Letter of Credit Issuer may have had
notice or knowledge of such Default or Event of Default at the time. The rights
and remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Administrative Agent or any Lender would otherwise
have.
13.6. Payments Pro Rata; Sharing of Setoffs, etc. (a) The
Administrative Agent agrees that promptly after its receipt of each payment from
or on behalf of any Borrower in respect of any Obligations, it shall distribute
such payment to the Lenders (other than any Lender that has expressly waived in
writing its right to receive its pro rata share thereof) pro rata based upon
their respective shares, if any, of the Obligations with respect to which such
payment was received. As to any such payment received by the Administrative
Agent prior to 1:00 P.M. (local time at the Payment Office) in funds which are
immediately available on such day, the Administrative Agent will use all
reasonable efforts to distribute such payment in immediately available funds on
the same day to the Lenders as aforesaid.
(b) Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations to such Lenders in such amount as shall result in a proportional
participation by all of the Lenders in such amount, provided that (i) if all or
any portion of such excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest, and (ii) the provisions of this section
13.6(b) shall not be construed to apply to any payment made by the Borrowers
pursuant to and in accordance with the express terms of this Agreement, or any
payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in Letters of Credit to any
assignee or participant pursuant to section 13.4, other than to the Company or
any Subsidiary or Affiliate thereof (as to which the provisions of this section
13.6(b) shall apply). Each Borrower consents to the foregoing and agrees, to the
extent it may effectively do so under applicable law, that any Lender acquiring
a participation pursuant to the foregoing arrangements may exercise against the
Borrowers rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrowers in the amount
of such participation.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding sections 13.6(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Lenders which are not Defaulting Lenders, as opposed to
Defaulting Lenders.
(d) If any Lender shall fail to make any payment required to be made
by it to the Administrative Agent pursuant to section 2.4(b) or 3.4(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision of this Agreement), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations to the Administrative Agent under such sections until all such
unsatisfied obligations are fully paid.
13.7. Calculations: Computations. (a) The financial statements to be
furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Company to the Lenders); provided, that if at any time the computations
determining compliance with section 9 utilize accounting principles different
from those utilized in the financial statements furnished to the Lenders, such
computations shall set forth in reasonable detail a description of the
differences and the effect upon such computations.
(b) All computations of interest on Eurocurrency Loans and Prime Rate
Loans hereunder and all computations of Commitment Fees, Letter of Credit Fees
and other Fees hereunder shall be made on the actual number of days elapsed over
a year of 360 days.
13.8. 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 OHIO. TO THE FULLEST
EXTENT PERMITTED BY LAW, EACH BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY JURISDICTION OTHER THAN THE STATE
OF OHIO GOVERNS THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the Court of Common Pleas of Cuyahoga County, Ohio, or of the
United States for the Northern District of Ohio, and, by execution and delivery
of this Agreement, each Borrower hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each Borrower hereby 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 Borrowers at their addresses for notices pursuant to
section 13.3, such service to become effective 30 days after such mailing or at
such earlier time as may be provided under applicable law. Nothing herein shall
affect the right of the Administrative Agent or any Lender to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Borrowers in any other jurisdiction.
(b) Each 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 section 13.8(a) above and
hereby further irrevocably 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 OR ANY OF THE OTHER CREDIT DOCUMENTS
(INCLUDING, WITHOUT LIMITATION, ANY AMENDMENTS, WAIVERS OR OTHER MODIFICATIONS
RELATING TO ANY OF THE FOREGOING), OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. EACH PARTY HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS PARAGRAPH.
13.9. 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 agreement. A set of counterparts
executed by all the parties hereto shall be lodged with the Company and the
Administrative Agent.
13.10. Effectiveness; Integration. This Agreement shall become
effective on the date (the "Effective Date") on which each Borrower and each of
the Lenders shall have signed a copy hereof (whether the same or different
copies) and shall have delivered the same to the Administrative Agent at the
Notice Office of the Administrative Agent or, in the case of the Lenders, shall
have given to the Administrative Agent telephonic (confirmed in writing),
written telex or facsimile transmission notice (actually received) at such
office that the same has been signed and mailed to it. This Agreement, the other
Credit Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent, for its own account and benefit and/or for the
account, benefit of, and distribution to, the Lenders, constitute the entire
contract among the parties relating to the subject matter hereof and thereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof or thereof.
13.11. Headings Descriptive. The headings of the several sections and
other portions 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.
13.12. Amendment or Waiver. (a) Neither this Agreement nor any terms
hereof may be amended, changed, waived or otherwise modified unless such
amendment, change, waiver or other modification is in writing and signed by the
Borrowers and the Administrative Agent, and also signed (or consented to in
writing) by the Required Lenders, provided that
(i) no change in, or waiver or other modification otherwise
affecting, the amount or time of payment of the Scheduled Repayments or
mandatory prepayments provided for in section 5.2 to which a Term A Lender shall
be entitled, shall be made without the written consent of (1) each Term A Lender
and (2) the Required Lenders;
(ii) no change in, or waiver or other modification otherwise
affecting, the amount or time of payment of the Scheduled Repayments or
mandatory prepayments provided for in section 5.2 to which a Term B Lender shall
be entitled, shall be made without the written consent of (1) each Term B Lender
and (2) the Required Lenders;
(iii) no change in, or waiver or other modification otherwise
affecting, the amount or time of payment of the Scheduled Repayments or
mandatory prepayments provided for in section 5.2 to which an Asset Sale Term
Lender shall be entitled, shall be made without the written consent of (1) each
Asset Sale Term Lender and (2) the Required Lenders;
(iv) no change in, or waiver or other modification otherwise
affecting, the amount or time of payment of the Scheduled Repayments or
mandatory prepayments provided for in section 5.2 to which an Incremental Term
Lender shall be entitled, shall be made without the written consent of (1) each
Incremental Term Lender and (2) the Required Lenders;
(v) no change, waiver or other modification affecting the rights and
benefits of Revolving Lenders, Term A Lenders, Term B Lenders, Asset Sale Term
Lenders or Incremental Term Lenders, as applicable, and not all Lenders in a
like or similar manner, shall be made without the written consent of the
Required Revolving and Term A Lenders, the Required Term B Lenders, the Required
Asset Sale Term Lenders or Required Incremental Term Lenders, as the case may
be, which are affected thereby;
(vi) no change, waiver or other modification shall:
(A) increase the Commitment of any Lender hereunder, without the
written consent of such Lender;
(B) extend or postpone any Maturity Date provided for herein which is
applicable to any Loan of any Lender, extend or postpone the expiration date of
any Letter of Credit as to which such Lender is a Participant pursuant to
section 13.4 beyond the latest expiration date for a Letter of Credit provided
for herein, or extend or postpone any scheduled expiration or termination date
provided for herein which is applicable to a Commitment of any Lender, without
the written consent of such Lender;
(C) reduce the principal amount of any Loan made by any Lender, or
reduce the rate or extend the time of payment of, or excuse the payment of,
interest thereon (other than as a result of waiving the applicability of any
post-default increase in interest rates), without the written consent of such
Lender;
(D) reduce the amount of any Unpaid Drawing as to which any Revolving
Lender is a Participant as provided in section 3.4, or reduce the rate or extend
the time of payment or reimbursement thereof, or excuse the payment of, interest
thereon (other than as a result of waiving the applicability of any post-default
increase in interest rates), without the written consent of such Revolving
Lender; or
(E) reduce the rate or extend the time of payment of, or excuse the
payment of, any Fees to which any Lender is entitled hereunder, without the
written consent of such Lender; and
(vii) no change, waiver or other modification termination shall,
without the written consent of each Lender (other than a Defaulting Lender)
affected thereby,
(A) release any Borrower from any obligations as a guarantor of its
Subsidiaries' obligations under any Credit Document;
(B) release any Credit Party from the Subsidiary Guaranty, except in
connection with a transaction permitted by section 9.2(d);
(C) release all or any substantial portion of the Collateral, except
in connection with a transaction permitted by section 9.2(d) or (e);
(D) change the definition of the term "Change of Control" or any of
the provisions of section 4.3 or 5.2 which are applicable upon a Change of
Control;
(E) amend, modify or waive any provision of this section 13.12, or
section 10.3, 11.7, 13.1, 13.4, 13.6 or 13.7(b), or any other provision of any
of the Credit Documents pursuant to which the consent or approval of all
Lenders, or a number or specified percentage or other required grouping of
Lenders or Lenders having Commitments under a particular Facility, is by the
terms of such provision explicitly required;
(F) reduce the percentage specified in, or otherwise modify, the
definition of Required Term B Lenders, Required Revolving and Term A Lenders,
Required Asset Sale Term Lenders, Required Incremental Term Lenders or Required
Lenders; or
(G) consent to the assignment or transfer by any Borrower of any of
its rights and obligations under this Agreement.
Any waiver, consent, amendment or other modification with respect to this
Agreement given or made in accordance with this section 13.12 shall be binding
on the parties hereto and their successors and assigns, but shall be effective
only in the specific instance and for the specific purpose for which it was
given or made.
(b) No provision of section 3 or 11 may be amended without the
consent of (x) any Letter of Credit Issuer adversely affected thereby or (y) the
Administrative Agent, respectively. No provision of this Agreement affecting
only the Swing Line Lender may be amended without the consent of the Swing Line
Lender.
(c) If, in connection with any proposed change, waiver, discharge or
termination of any of the provisions of this Agreement which requires the
consent of all the Lenders, and the consent of the Required Lenders is obtained
but the consent of one or more of such other Lenders whose consent is sought is
not obtained, then the Borrowers shall have the right, so long as all
non-consenting Lenders whose individual consent is sought are treated as
described in either clauses (A) or (B) below, to either (A) replace each such
non-consenting Lender or Lenders with one or more replacement Lenders in
accordance with the provisions of section 2.11 so long as at the time of such
replacement, each such replacement Lender consents to the proposed change,
waiver, discharge or termination or (B) terminate each such non-consenting
Lender's Commitments and repay the outstanding Loans of each such non-consenting
Lender in accordance with section 2.11, provided that, unless the Commitments
that are terminated and the Loans that are repaid pursuant to preceding clause
(B) are immediately replaced in full at such time through the addition of new
Lenders or the increase of the Commitments and/or outstanding Loans of existing
Lenders (who in each case must specifically consent thereto), then in the case
of any action pursuant to preceding clause (B) each Lender (determined after
giving effect to the proposed action) shall specifically consent thereto,
provided further, that in any event the Borrowers shall not have the right to
replace a Lender, terminate its Commitments or repay its Loans solely as a
result of the exercise of such Lender's rights (and the withholding of any
required consent by such Lender) permitting it to not consent to any amendment
which would have the effect of adversely affecting the rights of the Lenders
holding one class of Loans in respect of payments due to Lenders holding Loans
of such class differently than Lenders holding Loans of any other class without
the consent of Lenders holding in excess of 51% of the outstanding Loans and/or
Commitments of Loans of such class, and provided further that in any event the
Borrowers shall not have the right to replace a Lender if, immediately after the
termination of such Lender's Commitment and the repayment of such Lender's
Loans, if immediately thereafter the sum of (i) the aggregate outstanding
principal amount of Revolving Loans plus (ii) the aggregate outstanding
principal amount of Swing Line Loans plus (iii) the aggregate amount of Letter
of Credit Outstandings, exceeds the Total Revolving Commitment as then in
effect.
(d) Anything in this Agreement to the contrary notwithstanding, no
waiver or modification of any provision of this Agreement that has the effect
(either immediately or at some future time) of enabling the Borrowers to satisfy
a condition precedent contained in section 6 to the making of a Loan under a
Facility shall be effective against any Lender with a Commitment under such
Facility, unless the Required Revolving and Term A Lenders, the Required Term B
Lenders, the Required Asset Sale Term Lenders or Required Incremental Term
Lenders (whichever is applicable for the particular Facility involved) shall
have consented in writing to such waiver or modification.
(e) The Administrative Agent and the Collateral Agent will not enter
into any amendment, change, waiver, discharge or termination of any of the other
Credit Documents, except as specifically provided therein or as authorized as
contemplated by a written request or consent of the Required Lenders (or all of
the Lenders, or all of the Lenders (other than any Defaulting Lender), as
applicable, as to any matter which, pursuant to this section 13.12, can only be
effectuated with the written consent of the Required Lenders, all Lenders, or
all Lenders (other than any Defaulting Lender), as the case may be).
13.13. Survival of Indemnities. All indemnities set forth herein
including, without limitation, in section 2.9, 2.10, 3.5, 5.4, 11.7 or 13.1
shall survive the execution and delivery of this Agreement and the making and
repayment of Loans.
13.14. Domicile of Loans. Each Lender may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Lender, provided that the Borrowers shall not be responsible for costs arising
under section 2.9 resulting from any such transfer (other than a transfer
pursuant to section 2.11) to the extent not otherwise applicable to such Lender
prior to such transfer.
13.15. Confidentiality. (a) Each of the Administrative Agent, each
Letter of Credit Issuer and the Lenders agrees to maintain the confidentiality
of the Confidential Information (as defined below), except that Confidential
Information may be disclosed (1) to its and its Affiliates' directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the persons to whom such disclosure is made will be
informed of the confidential nature of such Confidential Information and
instructed to keep such Confidential Information confidential), (2) to any
direct or indirect contractual counterparty in any swap, hedge or similar
agreement (or to any such contractual counterparty's professional advisor, so
long as such contractual counterparty (or such professional advisor) agrees to
be bound by the provisions of this section 13.15, (3) to the extent requested by
any regulatory authority, (4) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (5) to any other party
to this Agreement, (6) to any other creditor of any Borrower or any other Credit
Party which is a direct or intended beneficiary of any of the Credit Documents,
(7) in connection with the exercise of any remedies hereunder or under any of
the other Credit Documents, or any suit, action or proceeding relating to this
Agreement or any of the other Credit Documents or the enforcement of rights
hereunder or thereunder, (8) subject to an agreement containing provisions
substantially the same as those of this section 13.15, to any assignee of or
participant in, or any prospective assignee of or participant in, any of its
rights or obligations under this Agreement, (9) with the consent of the Company,
or (10) to the extent such Confidential Information (i) becomes publicly
available other than as a result of a breach of this section 13.15, or
(ii) becomes available to the Administrative Agent, any Letter of Credit Issuer
or any Lender on a nonconfidential basis from a source other than the Company.
(b) For the purposes of this section 13.15, "Confidential
Information" means all information received from the Company relating to the
Borrowers or their business, other than any such information that is available
to the Administrative Agent, any Letter of Credit Issuer or any Lender on a
nonconfidential basis prior to disclosure by the Company; provided that, in the
case of information received from the Company after the date hereof, such
information is clearly identified at the time of delivery as confidential.
(c) Any person required to maintain the confidentiality of
Confidential Information as provided in this section 13.15 shall be considered
to have complied with its obligation to do so if such person has exercised the
same degree of care to maintain the confidentiality of such Confidential
Information as such person would accord to its own confidential information. The
Company hereby agrees that the failure of the Administrative Agent, any Letter
of Credit Issuer or any Lender to comply with the provisions of this section
13.15 shall not relieve the Company, or any other Credit Party, of any of its
obligations under this Agreement or any of the other Credit Documents.
13.16. Lender Register. Each Borrower hereby designates the
Administrative Agent to serve as its agent, solely for purposes of this section
13.16, to maintain a register (the "Lender Register") on or in which it will
record the names and addresses of the Lenders, and the Commitments from time to
time of each of the Lenders, the Loans made to the Borrowers by each of the
Lenders and each repayment and prepayment in respect of the principal amount of
such Loans of each such Lender. Failure to make any such recordation, or (absent
manifest error) any error in such recordation, shall not affect any Borrower's
obligations in respect of such Loans. With respect to any Lender, the transfer
of the Commitment of such Lender and the rights to the principal of, and
interest on, any Loan made pursuant to such Commitment shall not be effective
until such transfer is recorded on the Lender Register maintained by the
Administrative Agent with respect to ownership of such Commitment and Loans and
prior to such recordation all amounts owing to the transferor with respect to
such Commitment and Loans shall remain owing to the transferor. The registration
of assignment or transfer of all or part of any Commitments and Loans shall be
recorded by the Administrative Agent on the Lender Register only upon the
acceptance by the Administrative Agent of a properly executed and delivered
Assignment Agreement pursuant to section 13.4(c). Each Borrower agrees to
indemnify the Administrative Agent 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 Administrative Agent in performing its duties under
this section 13.16, except to the extent attributable to the gross negligence or
wilful misconduct of the Administrative Agent. The Lender Register shall be
available for inspection by the Borrowers or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
13.17. Limitations on Liability of the Letter of Credit Issuers. Each
Borrower assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of such Letters of
Credit. Neither any Letter of Credit Issuer nor any of its officers or directors
shall be liable or responsible for: (a) the use which may be made of any Letter
of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of documents,
or of any endorsement thereon, even if such documents should prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (c) payment by a
Letter of Credit Issuer against presentation of documents that do not comply
with the terms of a Letter of Credit, including failure of any documents to bear
any reference or adequate reference to such Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, except that the Borrowers (or a Subsidiary which is the account party
in respect of the Letter of Credit in question) shall have a claim against a
Letter of Credit Issuer, and a Letter of Credit Issuer shall be liable to the
Borrowers (or such Subsidiary), to the extent of any direct, but not
consequential, damages suffered by any Borrower (or such Subsidiary) which such
Borrower (or such Subsidiary) proves were caused by (i) such Letter of Credit
Issuer's willful misconduct or gross negligence in determining whether documents
presented under a Letter of Credit comply with the terms of such Letter of
Credit or (ii) such Letter of Credit Issuer's willful failure to make lawful
payment under any Letter of Credit after the presentation to it of documentation
strictly complying with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, a Letter of Credit Issuer
may accept documents that appear on their face to be in order, without
responsibility for further investigation.
13.18. General Limitation of Liability. No claim may be made by any
Borrower, any Lender, the Administrative Agent, any Letter of Credit Issuer or
any other person against the Administrative Agent, any Letter of Credit Issuer,
or any other Lender or the Affiliates, directors, officers, employees, attorneys
or agents of any of them for any damages other than actual compensatory damages
in respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement or
any of the other Credit Documents, or any act, omission or event occurring in
connection therewith; and each Borrower, each Lender, the Administrative Agent
and each Letter of Credit Issuer hereby, to the fullest extent permitted under
applicable law, waives, releases and agrees not to sue or counterclaim upon any
such claim for any special, consequential or punitive damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
13.19. No Duty. All attorneys, accountants, appraisers, consultants
and other professional persons (including the firms or other entities on behalf
of which any such person may act) retained by the Administrative Agent or any
Lender with respect to the transactions contemplated by the Credit Documents
shall have the right to act exclusively in the interest of the Administrative
Agent or such Lender, as the case may be, and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to the Borrowers, to any of their Subsidiaries, or to any other
person, with respect to any matters within the scope of such representation or
related to their activities in connection with such representation. The Company
agrees, on behalf of itself and its Subsidiaries, not to assert any claim or
counterclaim against any such persons with regard to such matters, all such
claims and counterclaims, now existing or hereafter arising, whether known or
unknown, foreseen or unforeseeable, being hereby waived, released and forever
discharged.
13.20. Lenders and Agent Not Fiduciary to Borrowers, etc. The
relationship among the Borrowers and their Subsidiaries, on the one hand, and
the Administrative Agent, each Letter of Credit Issuer and the Lenders, on the
other hand, is solely that of debtor and creditor, and the Administrative Agent,
each Letter of Credit Issuer and the Lenders have no fiduciary or other special
relationship with the Borrowers and their Subsidiaries, and no term or provision
of any Credit Document, no course of dealing, no written or oral communication,
or other action, shall be construed so as to deem such relationship to be other
than that of debtor and creditor.
13.21. Survival of Representations and Warranties. All representations
and warranties herein shall survive the making of Loans and the issuance of
Letters of Credit hereunder, the execution and delivery of this Agreement, the
Notes and the other documents the forms of which are attached as Exhibits
hereto, the issue and delivery of the Notes, any disposition thereof by any
holder thereof, and any investigation made by the Administrative Agent or any
Lender or any other holder of any of the Notes or on its behalf. All statements
contained in any certificate or other document delivered to the Administrative
Agent or any Lender or any holder of any Notes by or on behalf of the Borrowers
or of its Subsidiaries pursuant hereto or otherwise specifically for use in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrowers hereunder, made as of the
respective dates specified therein or, if no date is specified, as of the
respective dates furnished to the Administrative Agent or any Lender.
13.22. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
13.23. Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action, event, condition or
circumstance is not permitted by any of such covenants, the fact that it would
be permitted by an exception to, or would otherwise be within the limitations or
restrictions of, another covenant, shall not avoid the occurrence of a Default
or an Event of Default if such action is taken or event, condition or
circumstance exists.
13.24. Judgment Currency. (a) The Credit Parties' obligations
hereunder and under the other Credit Documents to make payments in Dollars or
Euros, as the case may be, shall not be discharged or satisfied by any tender or
recovery pursuant to any judgment expressed in or converted into any currency
other than Dollars or Euros, as the case may be, except to the extent that such
tender or recovery results in the effective receipt by the Administrative Agent
or the applicable Lender of the full amount of Dollars or Euros, as the case may
be, expressed to be payable to the Administrative Agent or such Lender under
this Agreement or the other Credit Documents. If, for the purpose of obtaining
or enforcing judgment against any Credit Party in any court or in any
jurisdiction, it becomes necessary to convert into or from any currency other
than Dollars or Euros, as the case may be, (such other currency being
hereinafter referred to as the "Judgment Currency") an amount due in Dollars,
the conversion shall be made at the equivalent thereof in Dollars or Euros, as
the case may be, determined as of the Business Day immediately preceding the day
on which the judgment is given (such Business Day being hereinafter referred to
as the "Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the Borrowers covenant and agree to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount) as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of Dollars which could have been purchased with the amount of
Judgment Currency stipulated in the judgment or judicial award at the rate of
exchange prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining the equivalent in Dollars or Euros,
as the case may be, for this section, such amount shall include any premium and
costs payable in connection with the conversion into or from the Judgment
Currency.
13.25. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Prime Rate to the date of repayment, shall have
been received by such Lender.
13.26. Separate Obligations of Foreign Borrowers. For the avoidance of
doubt, each of the Borrowers and Lenders acknowledges and agrees that,
notwithstanding anything to the contrary in this Agreement or any of the Credit
Documents, the Obligations of any Foreign Borrower under this Agreement or any
of the Credit Documents shall be separate and distinct from the Obligations of
any other Borrower including, without limitation, the Company, and shall be
expressly limited to the extent of such Obligations directly attributable to
such Foreign Borrower. In furtherance of the foregoing, each of the parties
acknowledges and agrees that the liability of any Foreign Borrower for the
payment and performance of its covenants, representations and warranties set
forth in this Agreement and the other Credit Documents shall be several from but
not joint with the Obligations of any other Borrower.
[The balance of this page is intentionally blank;
the next pages are signature pages.]
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
OM GROUP, INC.
By:_______________________________
James M. Materna
Chief Financial Officer
OMG AG & CO. KG
By:_______________________________
Title:
NATIONAL CITY BANK,
individually as a Lender, the Swing Line
Lender, the Letter of Credit Issuer, and in its
capacity as the Administrative Agent and
the Collateral Agent
, and a Joint Lead Arranger
By:_______________________________
Vice President
CREDIT SUISSE FIRST BOSTON,
individually as a Lender, and in its
capacity as the Syndication Agent
and a Joint Lead Arranger
By:_______________________________
Title:
ABN AMRO Bank N. V.,
individually as a Lender and
as a Documentation Agent
By:_______________________________
Title:
By:_______________________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
individually as a Lender and as a Documentation Agent
By:_______________________________
Title:
KEYBANK NATIONAL ASSOCIATION,
individually as a Lender and as a Documentation Agent
By:_______________________________
Title:
ALLIED IRISH BANKS, p.l.c.,
as a Lender
By:_______________________________
Title:
BANK OF AMERICA, N.A.
as a Lender
By:_______________________________
Title:
THE BANK OF NEW YORK
,
as a Lender
By:_______________________________
Title:
THE BANK OF NOVA SCOTIA
,
as a Lender
By:_______________________________
Title:
THE BANK OF TOKYO-MITSUBISHI, LTD.,
Chicago Branch,
as a Lender
By:_______________________________
Title:
BANK ONE, MICHIGAN
,
as a Lender
By:_______________________________
Title:
BARCLAYS BANK PLC
,
as a Lender
By:_______________________________
Title:
CHASE MANHATTAN BANK ,
as a Lender
By:_______________________________
Title:
GENERAL ELECTRIC CAPITAL CORPORATION ,
as a Lender
By:_______________________________
Title:
HARRIS TRUST AND SAVINGS BANK ,
as a Lender
By:_______________________________
Title:
IKB CAPITAL CORPORATION ,
as a Lender
By:_______________________________
Title:
ANNEX I-A
INFORMATION AS TO LENDERS AND COMMITMENTS
Name of Lender
______________________________
Revolving
Commitment
_____________
Term A
Commitment
____________
Term B
Commitment
___________
Asset Sale
Term
Commitment
___________
National City Bank
$38,858,695.65
Swing Line Commitment: $15,000,000
$16,141,304.35
$238,000,000
$175,000,000
Credit Suisse First Boston
$38,858,695.65
$16,141,304.35
$238,000,000
$175,000,000
ABN AMRO Bank N. V.
$26,494,565.22
$11,005,434.78
0
0
KeyBank National Association
$22,961,956.52
$9,538,043.48
0
0
Credit Lyonnais New York Branch
$26,494,565.22
$11,005,434.78
$5,000,000
0
Allied Irish Banks, p.l.c.
$7,065,217.39
$2,934,782.61
$2,000,000
0
Bank of America, N.A.
$21,195,652.17
$8,804,347.83
$5,000,000
0
The Bank of New York
$10,597,826.09
$4,402,173.91
0
0
The Bank of Nova Scotia
$21,195,652.17
$8,804,347.83
$7,000,000
0
The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch
$17,663,043.48
$7,336,956.52
0
0
Bank One, Michigan
$22,961,956.52
$9,538,043.48
0
0
Barclays Bank plc
$21,195,652.17
$8,804,347.83
0
0
Chase Manhattan Bank
$21,195,652.17
$8,804,347.83
0
0
General Electric Capital Corporation
$3,532,608.70
$1,467,391.30
$3,000,000
0
Harris Trust and Savings Bank
$21,195,652.17
$8,804,347.83
0
0
IKB Capital Corporation
$3,532,608.71
____________
$1,467,391.29
____________
$2,000,000
___________
0
___________
TOTAL
$325,000,000
============
$135,000,000
============
$500,000,000
===========
$350,000,000
===========
ANNEX I-B
EXISTING LOANS
Existing Revolving Loans
_____________________________
Existing Term A Loans
_______________________
Existing Term B Loans
________________________
$316,048,162.40 (principal, interest and applicable breakage fees)
_____________________________
$130,243,750 (principal and interest)
_______________________
$198,043,125 (principal and interest)
________________________
_____________________________
_______________________
________________________
_____________________________
_______________________
________________________
_____________________________
_______________________
________________________
ANNEX II
INFORMATION AS TO SUBSIDIARIES
Name of Subsidiary
__________________________
Type of Organization
_____________
Jurisdiction
Where
Organized
_____________
Percentage of Outstanding
Stock or Other Equity
Interests Owned (Indicating
whether owned by the
Company of a specified
Subsidiary)
_________________________
OMG Americas, Inc.
Corporation
Ohio
100%, by the Company
OMG Fidelity, Inc.
Corporation
Delaware
100%, by the Company
OM Holdings, Inc.
Corporation
Delaware
100%, by the Company
OMG Jett, Inc.
Corporation
Ohio
100%, by the Company
SCM Metal Products, Inc.
Corporation
Delaware
100%, by the Company
OMG Kokkola Chemicals Oy
Company
Finland
100% by OMG Harjavalta Chemicals Holding B.V.
OMG Harjavalta Nickel Oy
Company
Finland
100%, by OMG Harjavalta Chemicals Holding B.V.
OMG Asia Pacific Co., Ltd.
Company
Taiwan
100%, by the Company
[Sales Office]
OMG Belleville, Ltd.
Company
Canada
100%, by the Company
OMG Europe GmbH
GmbH
Germany
100%, by the Company
[Sales Office]
OM Group Export, Ltd.
Company
Barbados
100%, by the Company
OMG Kokkola Chemicals Holding B.V.
Company
Netherlands
100%, by Harko C.V.
OMG Thailand Co., Ltd.
Company
Thailand
100%, by the Company
Vasset S.A.
societe anonyme
France
100%, by the Company
Fidelity Chemical Products (Malaysia) SDN.BDH
Company
Malaysia
100%, by OMG Fidelity, Inc.
OMG Microbond PTE, Ltd.
Company
Singapore
70% by SCM Metal Products, Inc.
Groupement Pour Le Traitment Du Terril DeLubumbashi
Company
Isle of Jersey
55% by OMG Kokkola Chemical Holding B.V. [Third Tier]
OMG Finland Oy
Company
Finland
100% by OMG Kokkola Chemicals Holding B.V. [Third Tier]
OMG Japan, Inc.
Company
Japan
100%, by the Company
O.M.G. Chemical(s) Pte. ltd.
Company
Singapore
100%, by the Company
OMG Harjavalta Chemical Holding B.V.
Company
Netherlands
100%, by OMG Finland Oy
Harko C.V.
Partnership
USA through General Partner
10%, by the Company;
90% by OM Holdings, Inc.
Societe De Traitement du Terril de Lubumbashi
Company
Democratic Republic of Congo
100% by Groupement Pour Le Traitement Du Terril De Lumbumbashi
OM Acquisition Holdings, Inc.
Corporation
Delaware
100%, by the Company
OMG KG Holdings, Inc.
Corporation
Delaware
100%, by the Company
ANNEX III
DESCRIPTION OF EXISTING INDEBTEDNESS
$10,000,000 guaranty by OM Group, Inc. of the indebtedness of GGF Luxembourg,
S.A. to Banque Belgolaise.
$10,000,000 guaranty by OM Group, Inc. for the benefit of Western Mining
Corporation to guaranty payment of invoices related to nickel concentrate and
matte sales under related product supply agreements.
Hedge Agreements consist of Interest Rate swap agreements with OM Group, Inc. as
fixed rate payer in a total notional amount of $175,000,000 with fixed rates
ranging from 5.18% to 6.8925% in accordance with the requirement of the existing
Credit Agreement.
Synthetic Lease obligation for corporate aircraft with a present value of
$19,954,000 with an expiration date of October 1, 2010.
ANNEX IV
DESCRIPTION OF EXISTING LIENS
Liens on substantially all domestic assets, 100% of stock of domestic
subsidiaries, and 65% of stock of foreign subsidiaries as provided for in
connection with the existing $675,000,000 Credit Agreement dated as of April 3,
2000.
Lien provided in connection with Synthetic Lease of aircraft securing
indebtedness with a present value of $19,954,000.
UCC filings and Standard Permitted Liens.
ANNEX V
DESCRIPTION OF EXISTING ADVANCES, LOANS, INVESTMENTS AND GUARANTEES
$10,000,000 guaranty by OM Group, Inc. of the indebtedness of GGF Luxembourg,
S.A. to Banque Belgolaise.
$10,000,000 guaranty by OM Group, Inc. for the benefit of Western Mining
Corporation to guaranty payment of invoices related to nickel concentrate and
matte sales under related product supply agreements.
Loans from OMG Kokkola Chemicals Holding B.V. to Weda Bay Minerals, Inc.
amounting to $4,000,000 and equity investment of $4,620,000 in Weda Bay
Minerals, Inc. in connection with Loan and Subscription Agreement to fund
feasibility study and an equity investment of $4,620,000.
Existing investments in Subsidiaries.
Intercompany Loans as follows:
Loan From
____________
Loan To
_______________________
Amount
_______________
OM Group, Inc.
OMG Americas, Inc.
$61,390,810
OM Group, Inc.
OMG Belleville Co., Ltd.
$6,654,645
OM Group, Inc.
OMG Fidelity, Inc.
$81,326,099
OM Group, Inc.
OMG Jett, Inc.
$4,628,000
OM Group, Inc.
OMG Thailand
$1,408,080
OM Group, Inc.
SCM Metal Products, Inc.
$105,585,384
OM Group, Inc.
SCM Metal Products, Inc.
$18,840,000
Intercompany receivable balances as follows:
Owing From
________________________
Owing To
_____________
Balance
____________
OMG Americas, Inc.
OM Group, Inc.
$168,028,204
OMG Belleville Co., Ltd.
OM Group, Inc.
$116,315
OMG Export, Inc.
OM Group, Inc.
$111,865
OMG Fidelity, Inc.
OM Group, Inc.
$2,289,580
OMG Finland Oy
OM Group, Inc.
$175,000
OMG Jett, Inc.
OM Group, Inc.
$110,949
OMG Harjavalta Nickel Oy
OM Group, Inc.
$16,770,502
OM Holdings, Inc.
OM Group, Inc.
$47,262
OMG Kokkola BV
OM Group, Inc.
$60,145,760
OMG Kokkola Chemicals, Inc.
OM Group, Inc.
$11,074,451
OMG Thailand
OM Group, Inc.
$1,015,026
SCM Metal Products, Inc.
OM Group, Inc.
$3,959,538
OM Group, Inc.
OMG Europe GmbH
$150,000
ANNEX VI
DESCRIPTION OF LETTERS OF CREDIT DEEMED ISSUED UNDER
THE CREDIT AGREEMENT
Letter of
Credit Issuer
_______________
Original
Applicant
_____________
Date and No./Beneficiary
_______________
Amount
______________
Expiration
Date
_______________
National City Bank
$173,500
_______________
_____________
_______________
______________
_______________
_______________
_____________
_______________
______________
_______________
EXHIBIT A-1
TERM A NOTE
$____________
Cleveland, Ohio
, 20__
FOR VALUE RECEIVED, the undersigned OM GROUP, INC., a Delaware
corporation (herein, together with its successors and assigns, the "Borrower"),
hereby promises to pay to the order of ____________________ (the "Lender"), in
lawful money of the United States of America, as provided in the Credit
Agreement referred to below, and in immediately available funds, at the Payment
Office (such terms and certain other capitalized terms used herein without
definition shall have the respective meanings ascribed thereto in the Credit
Agreement referred to below), of National City Bank (the "Administrative
Agent"), the principal sum of ________________ DOLLARS AND ____ CENTS
($ ), which amount represents the unpaid principal amount of all Term A
Loans made by the Lender (or any of its predecessors in interest with respect
hereto) to the Borrower pursuant to the Credit Agreement, on the Term A Maturity
Date, and prior thereto, in installments on the dates and in the amounts
provided in section 5.2(a) of the Credit Agreement.
The Borrower promises also to pay interest in like currency and funds
at the Payment Office on the unpaid principal amount of each Term A Loan made by
the Lender from the date of such Term A Loan until paid at the rates and at the
times provided in section 2.7 of the Credit Agreement.
This Note is one of the Term A Notes referred to in the Amended and
Restated Credit Agreement, dated as of August 10, 2001, among the Borrower, OMG
AG & Co. KG, the financial institutions from time to time party thereto
(including the Lender), and National City Bank, as Administrative Agent (as from
time to time in effect, the "Credit Agreement"), and is entitled to the benefits
thereof and of the other Credit Documents. As provided in the Credit Agreement,
this Note is subject to mandatory prepayment prior to the Term A Maturity Date,
in whole or in part.
In case an Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may 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. No failure to exercise, or delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of any such rights.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF OHIO.
OM GROUP, INC.
By:___________________________________
Title:
LOANS AND PAYMENTS OF PRINCIPAL
Date of
Notation
________
Amount
of Loan
__________
Type of
Loan
_______
Interest
Period
_______
Amount of
Principal
Paid or
Prepaid
__________
Unpaid
Principal
Balance
________
Made By
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
EXHIBIT A-2
TERM B NOTE
$____________
Cleveland, Ohio
, 20__
FOR VALUE RECEIVED, the undersigned OM GROUP, INC., a Delaware
corporation (herein, together with its successors and assigns, the "Borrower"),
hereby promises to pay to the order of
(the "Lender"), in lawful money of the United States of America and in
immediately available funds, at the Payment Office (such terms and certain other
capitalized terms used herein without definition shall have the respective
meanings ascribed thereto in the Credit Agreement referred to below), of
National City Bank (the "Administrative Agent"), the principal sum of
which amount represents the unpaid principal amount of all Term B Loans made by
the Lender (or any of its predecessors in interest with respect hereto) to the
Borrower pursuant to the Credit Agreement, on the Term B Maturity Date, and
prior thereto, in installments on the dates and in the amounts provided in
section 5.2(a) of the Credit Agreement.
The Borrower promises also to pay interest in like currency and funds
at the Payment Office on the unpaid principal amount of each Term B Loan made by
the Lender from the date of such Term B Loan until paid at the rates and at the
times provided in section 2.7 of the Credit Agreement.
This Note is one of the Term B Notes referred to in the Amended and
Restated Credit Agreement, dated as of August 10, 2001, among the Borrower, OMG
AG & Co. KG, the financial institutions from time to time party thereto
(including the Lender), and National City Bank, as Administrative Agent (as from
time to time in effect, the "Credit Agreement"), and is entitled to the benefits
thereof and of the other Credit Documents. As provided in the Credit Agreement,
this Note is subject to mandatory prepayment prior to the Term B Maturity Date,
in whole or in part.
In case an Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may 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. No failure to exercise, or delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of any such rights.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF OHIO.
OM GROUP, INC.
By:____________________________________
Title:
LOANS AND PAYMENTS OF PRINCIPAL
Date of
Notation
________
Amount
of Loan
__________
Type of
Loan
_______
Interest
Period
_______
Amount of
Principal
Paid or
Prepaid
__________
Unpaid
Principal
Balance
________
Made By
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
EXHIBIT A-3
ASSET SALE TERM NOTE
$____________
Cleveland, Ohio
, 20__
FOR VALUE RECEIVED, the undersigned OM GROUP, INC., a Delaware
corporation (herein, together with its successors and assigns, the "Borrower"),
hereby promises to pay to the order of ____________________ (the "Lender"), in
lawful money of the United States of America and in immediately available funds,
at the Payment Office (such terms and certain other capitalized terms used
herein without definition shall have the respective meanings ascribed thereto in
the Credit Agreement referred to below), of National City Bank (the
"Administrative Agent"), the principal sum of ________________ DOLLARS AND ____
CENTS ($ ), which amount represents the unpaid principal amount of all
Term A Loans made by the Lender (or any of its predecessors in interest with
respect hereto) to the Borrower pursuant to the Credit Agreement, on the Asset
Sale Term Maturity Date, and prior thereto, in installments on the dates and in
the amounts provided in section 5.2(a) of the Credit Agreement.
The Borrower promises also to pay interest in like currency and funds
at the Payment Office on the unpaid principal amount of each Asset Sale Term
Loan made by the Lender from the date of such Asset Sale Term Loan until paid at
the rates and at the times provided in section 2.7 of the Credit Agreement.
This Note is one of the Asset Sale Term Notes referred to in the
Amended and Restated Credit Agreement, dated as of August 10, 2001, among the
Borrower, OMG AG & Co. KG, the financial institutions from time to time party
thereto (including the Lender), and National City Bank, as Administrative Agent
(as from time to time in effect, the "Credit Agreement"), and is entitled to the
benefits thereof and of the other Credit Documents. As provided in the Credit
Agreement, this Note is subject to mandatory prepayment prior to the Asset Sale
Term Maturity Date, in whole or in part.
In case an Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may 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. No failure to exercise, or delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of any such rights.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF OHIO.
OM GROUP, INC.
By:____________________________________
Title:
LOANS AND PAYMENTS OF PRINCIPAL
Date of
Notation
________
Amount
of Loan
__________
Type of
Loan
_______
Interest
Period
_______
Amount of
Principal
Paid or
Prepaid
__________
Unpaid
Principal
Balance
________
Made By
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
EXHIBIT A-4
REVOLVING NOTE
$________________
Cleveland, Ohio
, 20__
FOR VALUE RECEIVED, the undersigned [OM GROUP, INC., a Delaware
corporation] [OMG AG & CO. KG, a partnership organized under the laws of the
Federal Republic of Germany] (herein, together with its successors and assigns,
the "Borrower"), hereby promises to pay to the order of _______________________
(the "Lender"), in lawful money of the United States of America, provided that
Revolving Loans denominated in Euros shall be payable in the Euros, and in
immediately available funds, at the Payment Office (such term and certain other
terms used herein without definition shall have the meanings ascribed thereto in
the Credit Agreement referred to below) of National City Bank (the
"Administrative Agent"), the [principal sum of ________________ DOLLARS AND ____
CENTS ($ ) (or the substantial equivalent in Euros) or, if less, the then
unpaid principal amount of all Revolving Loans made by the Lender (or any of its
predecessors in interest with respect hereto) to the Borrower pursuant to ] [the
principal sum of the aggregate principal amount of all Loans made by the Lender
to the Borrower pursuant to section 2.1 of ]the Credit Agreement, on the
Revolving Maturity Date.
The Borrower promises also to pay interest in like currency and funds
at the Payment Office on the unpaid principal amount of each Revolving Loan made
by the Lender from the date of such Revolving Loan until paid at the rates and
at the times provided in section 2.7 of the Credit Agreement.
This Note is one of the Revolving Notes referred to in the Amended and
Restated Credit Agreement, dated as of August 10, 2001, among the Borrower, [OM
Group, Inc.] [OMG AG & Co. KG], the financial institutions from time to time
party thereto (including the Lender), and National City Bank, as Administrative
Agent (as from time to time in effect, the "Credit Agreement"), and is entitled
to the benefits thereof and of the other Credit Documents. As provided in the
Credit Agreement, this Note is subject to mandatory prepayment prior to the
Revolving Maturity Date, in whole or in part.
In case an Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may 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. No failure to exercise, or delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of any such rights.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF OHIO.
[OM GROUP, INC.] [OMG AG & CO. KG]
By: ____________________________________
Title:
LOANS AND PAYMENTS OF PRINCIPAL
Date of
Notation
________
Amount
of Loan
__________
Type of
Loan
_______
Interest
Period
_______
Amount of
Principal
Paid or
Prepaid
__________
Unpaid
Principal
Balance
________
Made By
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
EXHIBIT A-5
SWING LINE NOTE
$________________
Cleveland, Ohio
, 20__
FOR VALUE RECEIVED, the undersigned OM GROUP, INC., a Delaware
corporation (herein, together with its successors and assigns, the "Borrower"),
hereby promises to pay to the order of _______________________ (the "Lender"),
in lawful money of the United States of America and in immediately available
funds, at the Payment Office (such term and certain other terms used herein
without definition shall have the meanings ascribed thereto in the Credit
Agreement referred to below) of National City Bank (the "Administrative Agent"),
the principal sum of ________________ DOLLARS AND ____ CENTS ($ ) or, if
less, the then unpaid principal amount of all Swing Line Loans made by the
Lender (or any of its predecessors in interest with respect hereto) to the
Borrower pursuant to the Credit Agreement. The Borrower will pay the principal
amount of any Swing Line Loan on the maturity date specified therefor in the
Notice of Borrowing relating thereto, which maturity date shall in no event be
more than one Business Day following the date such Swing Line Loan was made.
The Borrower promises also to pay interest in like currency and funds
at the Payment Office on the unpaid principal amount of each Swing Line Loan
made by the Lender from the date of such Swing Line Loan until paid at the rates
and at the times provided in section 2.7 of the Credit Agreement.
This Note is one of the Swing Line Notes referred to in the Amended
and Restated Credit Agreement, dated as of August 10, 2001, among the Borrower,
OMG AG & Co. KG, the financial institutions from time to time party thereto
(including the Lender), and National City Bank, as Administrative Agent (as from
time to time in effect, the "Credit Agreement"), and is entitled to the benefits
thereof and of the other Credit Documents. As provided in the Credit Agreement,
this Note is subject to mandatory prepayment prior to the maturity date of any
Swing Line Loan or the Revolving Maturity Date, in whole or in part.
In case an Event of Default shall occur and be continuing, the
principal of and accrued interest on this Note may 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. No failure to exercise, or delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of any such rights.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF OHIO.
OM GROUP, INC.
By: ____________________________________
Title:
LOANS AND PAYMENTS OF PRINCIPAL
Date of
Notation
________
Amount
of Loan
__________
Type of
Loan
_______
Interest
Period
_______
Amount of
Principal
Paid or
Prepaid
__________
Unpaid
Principal
Balance
________
Made By
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
________
__________
_______
_______
__________
________
_________
EXHIBIT B-1
NOTICE OF BORROWING
[Date]
National City Bank,
as Administrative Agent for the Lenders party
to the Credit Agreement referred to below
1900 East Ninth Street
Cleveland, Ohio 44114
Attention: Agency Services Group
Re: Notice of Borrowing under the Credit Agreement,
dated as of August 10, 2001
Ladies and Gentlemen:
The undersigned, [OM Group, Inc.] [OMG AG & Co. KG] (the "Borrower"),
refers to the Amended and Restated Credit Agreement, dated as of August 10, 2001
(as amended from time to time, the "Credit Agreement", the terms defined therein
being used herein as therein defined), among the Borrower,[OM Group, Inc.] [OMG
AG & Co. KG] the financial institutions from time to time party thereto (the
"Lenders"), and National City Bank, as Administrative Agent for such Lenders,
and hereby gives you notice, irrevocably, pursuant to section 2.3(a) of the
Credit Agreement, that the undersigned hereby requests one or more Borrowings
under the Credit Agreement, and in that connection sets forth in the schedule
attached hereto the information relating to each such Borrowing (collectively
the "Proposed Borrowing") as required by section 2.3(a) of the Credit Agreement.
The undersigned hereby specifies that the Proposed Borrowing will
consist of Loans as indicated in the schedule attached hereto.
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 of the Credit Parties
contained in the Credit Agreement and the other Credit Documents are and will be
true and correct in all material respects, before and after giving effect to the
Proposed Borrowing and to the application of the proceeds thereof, as though
made on such date, except to the extent that such representations and warranties
expressly relate to an earlier specified date, in which case such
representations and warranties were true and correct in all material respects as
of the date when made; and
(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,
OM GROUP, INC.
By: ____________________________________
Title:
OMG AG & Co. KG
By: ____________________________________
Title:
BORROWING SCHEDULE
Proposed Borrowing #1:
Business
Day of
Proposed
Borrowing
______________
Facility
___________
Type of
Loans
_________________
Aggregate
Amount
of Loans
______________
Interest Period and Currency
if Loans are
Eurocurrency
Loans
______________
______, 20___
Revolving Facility
Swing Line Facility
Term A Facility
Term B
Facility
Asset Sale Term Facility
[Circle one of
above]
Prime Rate Loans
Eurocurrency Loans
Money Market Rate Loans with an interest rate of ___% and a maturity of one
Business Day
[Circle and/or
complete one of
above]
$____________
One Month
Two Months
Three Months
Six Months
[Circle one of
above]
Dollars
Euros
[Circle one of
above]
Proposed Borrowing #2:
Business
Day of
Proposed
Borrowing
______________
Facility
___________
Type of
Loans
_________________
Aggregate
Amount
of Loans
______________
Interest Period and Currency
if Loans are
Eurocurrency
Loans
______________
______, 20___
Revolving Facility
Swing Line Facility
Term A Facility
Term B
Facility
Asset Sale Term Facility
[Circle one of
above]
Prime Rate Loans
Eurocurrency Loans
Money Market Rate Loans with an interest rate of ___% and a maturity of one
Business Day]
[Circle and/or
complete one of
above]
$____________
One Month
Two Months
Three Months
Six Months
[Circle one of
above]
Dollars
Euros
[Circle one of
above]
Proposed Borrowing #3:
Business
Day of
Proposed
Borrowing
______________
Facility
___________
Type of
Loans
_________________
Aggregate
Amount
of Loans
______________
Interest Period and Currency
if Loans are
Eurocurrency
Loans
______________
______, 20___
Revolving Facility
Swing Line Facility
Term A Facility
Term B
Facility
Asset Sale Term
Facility
[Circle one of
above]
Prime Rate Loans
Eurocurrency Loans
Money Market Rate Loans with an interest rate of ___% and a maturity of one
Business Day
[Circle and/or
complete one of
above]
$____________
One Month
Two Months
Three Months
Six Months
[Circle one of
above]
Dollars
Euros
[Circle one of
above]
Proposed Borrowing #4:
Business
Day of
Proposed
Borrowing
______________
Facility
___________
Type of
Loans
_________________
Aggregate
Amount
of Loans
______________
Interest Period and Currency
if Loans are
Eurocurrency
Loans
______________
______, 20___
Revolving Facility
Swing Line Facility
Term A Facility
Term B
Facility
Asset Sale Term
Facility
[Circle one of
above]
Prime Rate Loans
Eurocurrency Loans
Money Market Rate Loans with an interest rate of ___% and a maturity of one
Business Day
[Circle and/or
complete one of
above]
$____________
One Month
Two Months
Three Months
Six Months
[Circle one of
above]
Dollars
Euros
[Circle one of
above]
EXHIBIT B-2
NOTICE OF CONVERSION
[Date]
National City Bank,
as Administrative Agent for the Lenders party
to the Credit Agreement referred to below
1900 East Ninth Street
Cleveland, Ohio 44114
Attention: Agency Services Group
Re: Notice of Conversion of Loans of one Type
into another Type, pursuant to the Credit Agreement,
dated as of August 10, 2001
Ladies and Gentlemen:
The undersigned, [OM Group, Inc.] [OMG AG & Co. KG] (the "Borrower"),
refers to the Amended and Restated Credit Agreement, dated as of August 10, 2001
(as amended from time to time, the "Credit Agreement", the terms defined therein
being used herein as therein defined), among the Borrower, [OM Group, Inc.] [OMG
AG & Co. KG] , the financial institutions from time to time party thereto (the
"Lenders"), and National City Bank, as Administrative Agent for such Lenders,
and hereby gives you notice, irrevocably, pursuant to section 2.6 of the Credit
Agreement, that the undersigned hereby requests one or more Conversions of
Loans, outstanding pursuant to a Borrowing under a Facility, consisting of one
Type of Loan, into Loans under the same Facility of another Type, pursuant to
section 2.6 of the Credit Agreement, and in that connection sets forth in the
schedule attached hereto the information relating to each such Conversion.
Very truly yours,
[OM GROUP, INC.] [OMG AG & Co. KG]
By: ____________________________________
Title:
CONVERSION SCHEDULE
Proposed Conversion #1
[of the Loans described in the first table below
into the Loans described in the second table below]
Date of Loans
____________
Facility
_____________
Type of Loans
______________
Aggregate
Amount
of Loans
____________
Interest Period
if Loans are
Eurocurrency Loans
__________________
____, 20__
Revolving Facility
Term A Facility
Term B Facility
Asset Sale Term
Facility
[Circle one of
Above]
Prime Rate Loans
Eurocurrency Loans
[Circle one of
Above]
$________
One Month
Two Months
Three Months
Six Months
[Circle one of above]
Date of Loans
____________
Facility
_____________
Type of Loans
______________
Aggregate
Amount
of Loans
____________
Interest Period
if Loans are
Eurocurrency Loans
__________________
____, 20__
Revolving Facility
Term A Facility
Term B Facility
Asset Sale Term Facility
[Circle one of
Above]
Prime Rate Loans
Eurocurrency Loans
[Circle one of
Above]
$________
One Month
Two Months
Three Months
Six Months
[Circle one of above]
Proposed Conversion #2
[of the Loans described in the first table below
into the Loans described in the second table below]
Date of Loans
____________
Facility
_____________
Type of Loans
______________
Aggregate
Amount
of Loans
____________
Interest Period
if Loans are
Eurocurrency Loans
__________________
____, 20__
Revolving Facility
Term A Facility
Term B Facility
Asset Sale Term
Facility
[Circle one of
Above]
Prime Rate Loans
Eurocurrency Loans
[Circle one of
Above]
$________
One Month
Two Months
Three Months
Six Months
[Circle one of above]
Date of Loans
____________
Facility
_____________
Type of Loans
______________
Aggregate
Amount
of Loans
____________
Interest Period
if Loans are
Eurocurrency Loans
__________________
____, 20__
Revolving Facility
Term A Facility
Term B Facility
Asset Sale Term
Facility
[Circle one of
Above]
Prime Rate Loans
Eurocurrency Loans
[Circle one of
Above]
$________
One Month
Two Months
Three Months
Six Months
[Circle one of above]
EXHIBIT B-3
LETTER OF CREDIT REQUEST
No. ______________
Dated __________
National City Bank,
as Administrative Agent for the Lenders party
to the Credit Agreement referred to below
1900 East Ninth Street
Cleveland, Ohio 44114
Attention: International Department/ Letter of Credit Operations
Ladies and Gentlemen:
The undersigned, [OM Group, Inc.] [OMG AG & Co. KG] (the "Borrower"),
refers to the Amended and Restated Credit Agreement, dated as of August 10, 2001
(as amended, modified or supplemented from time to time, the "Credit Agreement",
the capitalized terms defined therein being used herein as therein defined),
among the Borrower, [OM Group, Inc.] [OMG AG & Co. KG], the financial
institutions from time to time party thereto (the "Lenders"), and National City
Bank, as Administrative Agent for such Lenders.
The undersigned hereby requests that , as a Letter of Credit Issuer,
issue a Letter of Credit on , 20___ (the "Date of Issuance") in the aggregate
amount of [U.S.$ ] [amount in Euros], for the account of ____________________.
The beneficiary of the requested Letter of Credit will be
, and such Letter of Credit will be in support of
and will have a stated termination date of .
Letter of Request Number.
2
Date of Letter of Request (at least five Business Days prior to the
Date of Issuance or such lesser number as may be agreed by the relevant Letter
of Credit Issuer).
3
Insert name and address of beneficiary.
4
Insert description of the supported obligations, name of agreement
and/or the commercial transaction to which this Letter of Credit Request
relates.
5
Insert last date upon which drafts may be presented (which may not be
beyond the 15th Business Day next preceding the Revolving Maturity Date).
The undersigned hereby certifies that after giving effect to the
requested issuance of the Letter of Credit:
(i) $_________ principal amount of Revolving Loans will be outstanding; and
(ii) the Letter of Credit Outstandings will be $___________.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the Date of Issuance:
(A) the representations and warranties of the Credit Parties
contained in the Credit Agreement and the other Credit Documents are and will be
true and correct in all material respects, before and after giving effect to the
Proposed Borrowing and to the application of the proceeds thereof, as though
made on such date, except to the extent that such representations and warranties
expressly relate to an earlier specified date, in which case such
representations and warranties were true and correct in all material respects as
of the date when made; and
(B) no Default or Event of Default has occurred and is continuing, or
would result after giving effect to the issuance of the Letter of Credit
requested hereby.
Copies of all documentation with respect to the supported transaction
are attached hereto.
Very truly yours,
[OM GROUP, INC.] [OMG AG & Co. KG]
By: ____________________________________
Title:
EXHIBIT C-1
_________________________________
FORM OF
SUBSIDIARY GUARANTY
_________________________________
______________________________________________________
EXHIBIT C-2
_________________________________
FORM OF
SECURITY AGREEMENT
_________________________________
EXHIBIT C-3
_________________________________
FORM OF
COLLATERAL ASSIGNMENT OF PATENTS
_________________________________
EXHIBIT C-4
_________________________________
FORM OF
COLLATERAL ASSIGNMENT OF TRADEMARKS
_________________________________
EXHIBIT C-5
_________________________________
FORM OF
PLEDGE AGREEMENT
_________________________________
EXHIBIT D-1
_________________________________
FORM OF
OPINION OF COUNSEL
TO THE BORROWER
_________________________________
EXHIBIT D-2
_________________________________
FORM OF
SOLVENCY CERTIFICATE
_________________________________
SOLVENCY CERTIFICATE OF
OM GROUP, INC.
OM GROUP, INC., a Delaware corporation (the "Borrower"), hereby
certifies that the officer executing this Solvency Certificate is the Chief
Financial Officer of the Borrower and that such officer is duly authorized to
execute this Solvency Certificate, which is hereby delivered on behalf of the
Borrower pursuant to section 6.1(o) of the Amended and Restated Credit
Agreement, dated as of August 10, 2001 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"; terms defined or referenced
therein and not otherwise defined or referenced herein being used herein as
therein defined or referenced), among the Borrower, the Lenders named therein,
and National City Bank, as Administrative Agent.
The Borrower further certifies that such officer is generally familiar
with the properties, businesses and assets of the Borrower and has carefully
reviewed the Credit Documents, the documents relating to the Target Acquisition
and the other Contemplated Transactions (as defined below) and the contents of
this Solvency Certificate and, in connection herewith, has reviewed such other
documentation and information and has made such investigations and inquiries as
the Borrower and such officer deem necessary and prudent therefor. The Borrower
further certifies that the financial information and assumptions that underlie
and form the basis for the representations made in this Solvency Certificate
were reasonable when made and were made in good faith and continue to be
reasonable as of the date hereof.
The Borrower will apply a portion of the proceeds from the Loans under
the Credit Agreement, together with [the proceeds of the Bridge Notes]
internally generated funds, to finance the Target Acquisition, to retire
approximately $___ million of other Indebtedness of the Borrower, and to pay
fees and expenses incurred in connection with the consummation of the Target
Acquisition and the Credit Documents, including fees and expenses incident to
such transactions. All of the transactions referred to in this paragraph are
herein sometimes called the "Contemplated Transactions".
The Borrower understands that the Lenders are relying on the truth and
accuracy of this Solvency Certificate in connection with the Credit Documents.
The Borrower hereby further certifies that:
1. The Borrower has reviewed the Financial Projections which were
prepared on the basis of the estimates and assumptions stated therein, a copy of
which Financial Projections were furnished to the Lenders. The Financial
Projections were prepared in good faith and represent reasonable estimates of
future financial performance and are reasonable in light of the business
conditions existing on the date hereof. However, the Borrower can provide no
assurances as to the outcome of any such projections. On the date hereof,
immediately before and immediately after giving effect to the Contemplated
Transactions, to the best of the Borrower's knowledge, the fair value of the
property and assets of the Borrower is greater than the total amount of
liabilities (including contingent, subordinated, absolute, fixed, matured or
unmatured and liquidated or unliquidated liabilities) of the Borrower.
2. In reaching the conclusions set forth in this Solvency Certificate,
the Borrower has considered, among other things:
(a) as they related to the business and operations of the Target (the
"Target Business and Operations"), the financial statements and other financial
information pertaining to the Target which was delivered to the Borrower
pursuant to the Target Acquisition Documents or acquired by the Borrower during
its "due diligence" investigation of the Target;
(b) the Financial Projections;.
(c) historical and anticipated growth in the sales volume of the
Target Business and Operations and in the income stream generated by the Target
Business and Operations as reflected in, among other things, the consolidated
cash flow statements of the Borrower and its Subsidiaries contained in the
Financial Projections;
(d) the customary sales terms and trade payables of the Target
Business and Operations;
(e) the amount of the credit extended by and to suppliers and
customers of the Target Business and Operations;
(f) the customer base, the mix and volume of products, and the
sources of supply of the Target Business and Operations;
(g) the existing management and employees of the Target Business and
Operations, and the Target's labor relations generally;
(h) the Target's liabilities (including any actual or potential
Environmental Claims), as disclosed in the financial statements and disclosure
documents furnished to the Borrower in connection with its acquisition of the
Target; and
(i) the Borrower's ability to integrate the Target Business and
Operations with its own business and operations, including potential cost
savings and growth opportunities incident thereto.
3. On the date hereof, immediately before and immediately after giving
effect to the Contemplated Transactions, the present fair salable value of the
property and assets of the Borrower exceeds the amount that will be required to
pay the probable liabilities of the Borrower on its debts as they become
absolute and matured.
4. The Borrower does not currently intend or believe that it will
incur debts and liabilities that will be beyond its ability to pay as such debts
and liabilities mature.
5. On the date hereof, immediately before and immediately after giving
effect to the Contemplated Transactions, the Borrower is not engaged in business
or in a transaction, and is not about to engage in business or in a transaction,
for which its property and assets would constitute unreasonably small capital.
6. The Borrower does not intend, in consummating the Contemplated
Transactions, to hinder, delay or defraud either present or future creditors or
any other person to which the Borrower is or, on or after the date hereof, will
become indebted.
IN WITNESS WHEREOF, the Borrower has caused this Solvency Certificate
to be executed by its Chief Financial Officer thereunto duly authorized, on and
as of this ___ day of August 10, 2001.
OM GROUP, INC.
By:__________________________________
James M. Materna
Chief Financial Officer
EXHIBIT E
___________________________
FORM OF
ASSIGNMENT AGREEMENT
___________________________
ASSIGNMENT AGREEMENT
DATE:_____________
Reference is made to the Credit Agreement described in Item 2 of Annex I annexed
hereto (as such Credit Agreement may hereafter be amended, modified or
supplemented from time to time, the "Credit Agreement"). Unless defined in Annex
I attached hereto, terms defined in the Credit Agreement are used herein as
therein defined.
_____________ (the "Assignor") and ______________ (the "Assignee") hereby agree
as follows:
1. The Assignor hereby sells and assigns to the Assignee without
recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof which represents the percentage
interest specified in Item 4 of Annex I (the "Assigned Share") of all of
Assignor's outstanding rights and obligations under the Credit Agreement
indicated in Item 4 of Annex I, including, without limitation, all rights and
obligations with respect to the Assigned Share of the Assignor's Commitment and
of the Loans, Unpaid Drawings and the Notes held by the Assignor. After giving
effect to such sale and assignment, the Assignee's Commitment will be as set
forth in Item 4 of Annex I.
2. The Assignor (i) represents and warrants that it is duly authorized
to enter into and perform the terms of this Assignment Agreement, that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any liens or security interests; (ii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Credit Agreement or the other Credit Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any of its Subsidiaries or the performance or observance by the
Borrower or any of the other Credit Parties of any of its obligations under the
Credit Agreement or the other Credit Documents or any other instrument or
document furnished pursuant thereto.
3. The Assignee (i) represents and warrants that it is duly authorized
to enter into and perform the terms of this Assignment Agreement; (ii) confirms
that it has received a copy of the Credit Agreement and the other Credit
Documents, together with copies of the financial statements referred to therein
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment Agreement;
(iii) agrees that it will, independently and without reliance upon the
Administrative Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iv) appoints and authorizes each Agent to take such action as agent
on its behalf and to exercise such powers under the Credit Agreement and the
other Credit Documents as are delegated to such Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; [and] (v) agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of the Credit Agreement are required to be performed by it as a
Lender[; and (vi) to the extent legally entitled to do so, attaches the forms
described in section 5.4(b)(ii) of the Credit Agreement.1
4. Following the execution of this Assignment Agreement by the
Assignor and the Assignee, an executed original hereof (together with all
attachments) will be delivered to the Administrative Agent. The effective date
of this Assignment Agreement shall be the date of execution hereof by the
Assignor, the Assignee and the consent hereof by the Administrative Agent and
the Joint Lead Arrangers and the receipt by the Administrative Agent of the
administrative fee referred to in section 13.4(c) of the Credit Agreement,
unless otherwise specified in Item 5 of Annex I hereto (the "Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment
Agreement, have the rights and obligations of a Lender thereunder and under the
other Credit Documents and (ii) the Assignor shall, to the extent provided in
this Assignment Agreement, relinquish its rights (except for those rights which
expressly survive the termination of the Credit Agreement) and be released from
its obligations under the Credit Agreement and the other Credit Documents.
6. It is agreed that upon the effectiveness hereof, the Assignee shall
be entitled to (x) all interest on the Assigned Share of the Loans at the rates
specified in Item 6 of Annex I, (y) all Commitment Fee (if applicable) on the
Assigned Share of the Commitment at the rate specified in Item 7 of Annex I, and
(z) all Letter of Credit Fees (if applicable) on the Assignee's participation in
all Letters of Credit at the rate specified in Item 8 of Annex I hereto, which,
in each case, accrue on and after the Settlement Date, such interest and, if
applicable, Commitment Fee and Letter of Credit Fees, to be paid by the
Administrative Agent, upon receipt thereof from the Borrower, directly to the
Assignee. It is further agreed that all payments of principal made by the
Borrower on the Assigned Share of the Loans which occur on and after the
Settlement Date will be paid directly by the Administrative Agent to the
Assignee. Upon the Settlement Date, the Assignee shall pay to the Assignor an
amount specified by the Assignor in writing which represents the Assigned Share
of the principal amount of the respective Loans made by the Assignor pursuant to
the Credit Agreement which are outstanding on the Settlement Date, net of any
closing costs, and which are being assigned hereunder. The Assignor and the
Assignee shall make all appropriate adjustments in payments under the Credit
Agreement for periods prior to the Settlement Date directly between themselves
on the Settlement Date.
7. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
[NAME OF ASSIGNEE],
as Assignee
By:
Title:
[NAME OF ASSIGNOR],
as Assignor
By:
Title:
Acknowledged and Agreed:
NATIONAL CITY BANK,
as Administrative Agent
By:
Vice President
CREDIT SUISSE FIRST BOSTON,
as Joint Lead Arranger
By:
Vice President
NATIONAL CITY BANK,
as Joint Lead Arranger
By:
Vice President
ANNEX I
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. The Borrowers:
OM GROUP, INC. and OMG AG & CO. KG
2. Name and Date of Credit Agreement:
Amended and Restated Credit Agreement, dated as of August 10, 2001, among OM
Group, Inc., OMG AG & Co. KG, the Lenders from time to time party thereto, and
National City Bank, as Administrative Agent.
3. Date of Assignment Agreement:
_________ ___, _____
4. Amounts (as of date of item #3 above):
Revolving Commit-
ment
Revolving Loans
Term A Commit-
ment
Term A Loans
Term B Commit-
ment
Term B Loans
Asset Sale Term
Commit-
ment
Asset Sale Term Loans
Aggregate Amount for all Lenders
$_____
$_____
$_____
$_____
$_____
$_____
$_____
$___
Assigned Share
_____%
_____%
_____%
_____%
_____%
_____%
_____%
___%
Amount of Assigned Share
$_____
$_____
$_____
$_____
$_____
$_____
$_____
$___
Amount Retained by Assignor
$_____
$_____
$_____
$_____
$_____
$_____
$_____
$___
[modify above table if the Swing Line Lender is transferring
its Swing Line Commitment.]
5. Settlement Date:
________ ___, ___
6. Rate of Interest to the Assignee:
As set forth in section 2.7 of the Credit Agreement (unless otherwise agreed to
by the Assignor and the Assignee).2
7. Commitment
Fee: As set forth in section 4.1(a) of the Credit Agreement (unless
otherwise agreed to by the Assignor and the Assignee).3
8. Letter of Credit Fees:
As set forth in section 4.1(b) of the Credit Agreement (unless otherwise agreed
to by the Assignor and the Assignee).4
9. Notices:
ASSIGNOR:
______________________
______________________
______________________
Attention:
Telephone No.:
Facsimile No.:
ASSIGNEE:
______________________
______________________
______________________
Attention:
Telephone No.:
Facsimile No.:
10. Payment Instructions:
ASSIGNOR:
______________________
______________________
______________________
ABA No.
Account No.:
Reference:
Attention:
Telephone No.:
Facsimile No.:
ASSIGNEE:
______________________
______________________
______________________
ABA No.
Account No.:
Reference:
Attention:
Telephone No.:
Facsimile No.:
1
If the Assignee is organized under the laws of a jurisdiction outside the United
States.
2
The Borrower and the Administrative Agent shall direct the entire amount of the
interest to the Assignee at the rate set forth in section 2.7 of the Credit
Agreement, with the Assignor and Assignee effecting any agreed upon sharing of
interest through payments by the Assignee to the Assignor.
3
The Borrower and the Administrative Agent shall direct the entire amount of the
Commitment Fee to the Assignee at the rate set forth in section 4.1(a) of the
Credit Agreement, with the Assignor and the Assignee effecting any agreed upon
sharing of Commitment Fee through payment by the Assignee to the Assignor.
4
The Borrower and the Administrative Agent shall direct the entire amount of the
Letter of Credit Fees to the Assignee at the rate set forth in section 4.1(b) of
the Credit Agreement, with the Assignor and the Assignee effecting any agreed
upon sharing of the Letter of Credit Fees through payment by the Assignee to the
Assignor.
EXHIBIT F
SECTION 5.4(b)(ii) CERTIFICATE
Reference is hereby made to the Amended and Restated Credit Agreement,
dated as of August 10, 2001, among OM Group, Inc., OMG AG & Co. KG, the
financial institutions party thereto from time to time, and National City Bank,
as Administrative Agent (the "Credit Agreement"). Pursuant to the provisions of
section 5.4(b)(ii) of the Credit Agreement, the undersigned hereby certifies
that it is not a "bank" as such term is used in section 881(c)(3)(A) of the
Internal Revenue Code of 1986, as amended.
[NAME OF LENDER]
By:_________________________________
Title:
Dated:__________
EXHIBIT G
_________________________
FORM OF
ADDITIONAL
BORROWER
JOINDER
_________________________ |
Exhibit 10.25
SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT ("Second Amendment"), dated as of the 16th day of October,
2001, is entered into with reference to that certain Amended and Restated Credit
Agreement dated as of August 15, 2000 (the "Original Credit Agreement"), as
amended by First Amendment to Amended and Restated Credit Agreement dated as of
July 30, 2001 (the "First Amendment" and together with the Original Credit
Agreement, collectively the "Existing Credit Agreement") executed by and among
MTR GAMING GROUP, INC., a Delaware corporation, MOUNTAINEER PARK, INC., a West
Virginia corporation, SPEAKEASY GAMING OF LAS VEGAS, INC., a Nevada corporation,
SPEAKEASY GAMING OF RENO, INC., a Nevada corporation and PRESQUE ISLE DOWNS,
INC., a Pennsylvania corporation (collectively referred to as the "Borrowers"),
WELLS FARGO BANK, National Association, PNC BANK, N.A., BANK OF SCOTLAND and
NATIONAL CITY BANK OF PENNSYLVANIA (each individually a "Lender" and
collectively the "Lenders"), WELLS FARGO BANK, National Association, as the
swingline lender (herein in such capacity, together with its successors and
assigns, the "Swingline Lender") and WELLS FARGO BANK, National Association, as
administrative and collateral agent for the Lenders and Swingline Lender
(herein, in such capacity, called the "Agent Bank" and, together with the
Lenders and Swingline Lender collectively referred to as the "Banks").
Capitalized terms used herein not otherwise defined shall have the meaning set
forth for such terms in the Existing Credit Agreement.
Borrowers and Agent Bank, acting with the
consent of the Requisite Lenders as required under Section 10.01 of the Existing
Credit Agreement and acting on behalf of the Banks as authorized under
Section 10.11 of the Existing Credit Agreement, agree as follows:
1. Restatement of Share Repurchases Limitations. Section 6.08(i) of
the Existing Credit Agreement shall be and is hereby amended and restated in its
entirety, effective as of September 27, 2001, as follows:
"i. Other than during
each Expanded Share Repurchase Period as described below, Share Repurchases
shall be limited to the maximum cumulative aggregate amount of Three Million
Dollars ($3,000,000.00) during the period commencing on December 20, 1999 and
ending at Credit Facility Termination. Provided, however, that: (i) in the
event the Borrower Consolidation achieves EBITDA of Forty Million Dollars
($40,000,000.00), or more, during any fiscal period consisting of four (4)
consecutive Fiscal Quarters, the limitation for Share Repurchases shall be
increased to the maximum cumulative aggregate amount of Eight Million Dollars
($8,000,000.00) during the Fiscal Quarter immediately following such four (4)
consecutive Fiscal Quarter period, and (ii) in the event the Borrower
Consolidation achieves EBITDA of Fifty Million Dollars ($50,000,000.00), or
more, during any fiscal period consisting of four (4) consecutive Fiscal
Quarters, the limitation for Share Repurchases shall be increased to the maximum
cumulative aggregate amount of Ten Million Dollars ($10,000,000.00) during the
Fiscal Quarter immediately following such four (4)consecutive Fiscal Quarter
period. The Fiscal Quarter immediately following any such four (4) consecutive
Fiscal Quarter period in which the Borrower Consolidation has achieved EBITDA in
excess of Forty Million Dollars ($40,000,000.00) or Fifty Million Dollars
($50,000,000.00) as provided above, shall herein be referred to as an "Expanded
Share Repurchase Period". Share Repurchases made during any Expanded Share
Repurchase Period which result in the cumulative aggregate amount of Share
Repurchases to exceed Three Million Dollars ($3,000,000.00) shall be deemed made
in compliance with the provisions contained in this Section 6.08(i) so long as
made within the limitations set forth above. In the event EBITDA of the
Borrower Consolidation falls below Forty Million Dollars ($40,000,000.00) for
any four (4) consecutive Fiscal Quarter period and as of the end of such four
(4) Fiscal Quarter period the Borrower Consolidation has made Share Repurchases
in excess of the cumulative aggregate amount of Three Million Dollars
($3,000,000.00), no further Share Repurchases may be made until the Borrower
Consolidation again achieves EBITDA for a four (4) consecutive Fiscal Quarter
period in excess of Forty Million Dollars ($40,000,000.00), at which time Share
Repurchases shall be permitted in accordance with the provisions set forth
above; and"
2. Modification of Definitions. Section 1.01 of the Existing Credit
Agreement shall be and is hereby amended to include the following definitions.
Those terms which are currently defined by Section 1.01 of the Existing Credit
Agreement and which are also defined below shall be defined as set forth below:
"Compliance Certificate" shall
mean a compliance certificate as described in Section 5.08(b) and (d) which is
more particularly described on "Exhibit D", affixed to the Second Amendment and
by this reference incorporated herein and made a part hereof, which shall fully
restate and supersede the "Compliance Certificate" affixed as Exhibit D to the
Existing Credit Agreement.
"Credit Agreement" shall mean
the Existing Credit Agreement as amended by the Second Amendment, as it may be
further amended, modified, extended, renewed or restated from time to time.
"Existing Credit Agreement"
shall have the meaning set forth in the Preamble to the Second Amendment.
"First Amendment" shall have the
meaning set forth in the Preamble to the Second Amendment.
"Original Credit Agreement"
shall have the meaning set forth in the Preamble to the Second Amendment.
"Second Amendment" shall have
the meaning set forth in the Preamble of the Second Amendment to Amended and
Restated Credit Agreement dated as of September 27, 2001, executed by Borrowers
and Agent Bank on behalf of the Banks.
3. Conditions Precedent to Second Amendment. The effectiveness of
this Second Amendment is subject to Agent Bank having received the following
documents and payments, in each case in a form and substance reasonably
satisfactory to Agent Bank, and the occurrence of each other condition precedent
set forth below:
a. due execution by
Borrowers and Agent Bank of six (6) duplicate originals of this Second
Amendment;
b. an original
Certificate of Corporate Resolution for each of the Borrowers authorizing each
respective Borrower to enter into this Second Amendment and further authorizing
and empowering the officer or officers who will execute such documents and
agreements with the authority and power to execute such documents and agreements
on behalf of each respective corporation;
c. payment to Agent
Bank for the account of the Lenders of a non-refundable fee (the "Amendment
Fee") in the following amounts:
(i) a non-refundable
fee to the Lenders which have expressly consented to this Second Amendment in
the amount of eight-tenths of one percent (0.08%) based on their respective
proportionate shares of the Aggregate Commitment under the Existing Credit
Agreement.
d. reimbursement to
Agent Bank by Borrowers for all reasonable fees and out-of-pocket expenses
incurred by Agent Bank in connection with the Second Amendment, but not limited
to, reasonable attorneys' fees of Henderson & Morgan, LLC; and
e. such other
documents, instruments or conditions as may be reasonably required by Agent
Bank.
4. Representations of Borrowers. Borrowers hereby represent to the
Banks, which representations shall survive the execution and delivery of the
Second Amendment and shall be deemed incorporated into Article IV of the Credit
Agreement, that:
a. the
representations and warranties contained in Article IV of the Existing Credit
Agreement and contained in each of the other Loan Documents (other than
representations and warranties which expressly speak only as of a different
date, which shall be true and correct in all material respects as of such date)
are true and correct on and as of the execution and delivery of the Second
Amendment in all material respects as though such representations and warranties
had been made on and as of the execution and delivery of the Second Amendment,
except to the extent that such representations and warranties are not true and
correct as a result of a change which is permitted by the Credit Agreement or by
any other Loan Document or which has been otherwise consented to by Agent Bank
or, where applicable, the Requisite Lenders;
b. since the date of
the most recent financial statements referred to in Section 5.08 of the Existing
Credit Agreement, no Material Adverse Change has occurred and no event or
circumstance which could reasonably be expected to result in a Material Adverse
Change has occurred;
c. after giving effect to the Second Amendment, no event has
occurred and is continuing which constitutes a Default or Event of Default under
the terms of the Credit Agreement; and
d. the execution, delivery and performance of this Second Amendment
has been duly authorized by all necessary action of Borrowers and this Second
Amendment and each of the related documents constitute valid, binding and
enforceable obligation of Borrowers.
5. Incorporation by Reference. This Second Amendment shall be and
is hereby incorporated in and forms a part of the Existing Credit Agreement.
6. Governing Law. This Second Amendment shall be governed by the
internal laws of the State of Nevada without reference to conflicts of laws
principles.
7. Counterparts. This Second Amendment may be executed in any
number of separate counterparts with the same effect as if the signatures hereto
and hereby were upon the same instrument. All such counterparts shall together
constitute one and the same document.
8. Continuance of Terms and Provisions. All of the terms and
provisions of the Credit Agreement shall remain unchanged except as specifically
modified herein.
9. Replacement Exhibit Attached. The following additional and
replacement Exhibit is attached hereto and incorporated herein and made a part
of the Credit Agreement as follows:
Exhibit D - Compliance
Certificate - Form
IN WITNESS WHEREOF, Borrowers and Agent Bank on
behalf of the Banks have executed this Second Amendment as of the day and year
first above written by their duly authorized representatives.
BORROWERS:
MTR GAMING GROUP, INC.,
a Delaware corporation
By
/s/ Edson R. Arneault
Edson R. Arneault,
President
MOUNTAINEER PARK, INC.,
a West Virginia corporation
By
/s/ Edson R. Arneault
Edson R. Arneault,
President
SPEAKEASY GAMING OF LAS VEGAS, INC.,
a Nevada corporation
By
/s/ Edson R. Arneault
Edson R. Arneault,
President
SPEAKEASY GAMING OF RENO, INC.,
a Nevada corporation
By
/s/ Edson R. Arneault
Edson R. Arneault,
President
PRESQUE ISLE DOWNS, INC.,
a Pennsylvania corporation
By
/s/ Edson R. Arneault
Edson R. Arneault,
President
AGENT BANK:
WELLS FARGO BANK,
National Association
By
/s/ Virginia Christenson
Virginia Christenson,
Vice President
|
Exhibit 10.1
[Pursuant to Rule 24b-2, certain information has been deleted and filed
separately with the Commission.]
AMENDED AND RESTATED GENERAL CREDIT AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED GENERAL CREDIT AND SECURITY AGREEMENT,
dated as of March 29, 2001, between Bremer Business Finance Corporation, a
Minnesota corporation, having its mailing address and principal place of
business at 445 Minnesota Street, St. Paul, MN 55101-2107 (herein called
“Lender”), and MBC Holding Company, a Minnesota corporation f/k/a Minnesota
Brewing Company, having offices at 882 West Seventh Street, St. Paul, Minnesota
55102, (herein called “Borrower”).
RECITALS
A. Borrower and Lender are the parties to that certain
General Credit and Security Agreement dated as of June 30, 2000 (the “Original
Agreement”).
B. Borrower has requested that Lender make a Term Loan to
Borrower and Lender has agreed to do so subject to the terms and conditions of
this Agreement amending and restating the Original Agreement.
NOW THEREFORE, Borrower and Lender agree to amend and restate the
Original Agreement in its entirety to read as follows:
1. Agreement. This Agreement states the terms and
conditions under which Borrower may obtain certain loans from Lender.
2. Certain Definitions. For purposes of this Agreement,
the following terms shall have the following meanings:
“Account Debtor” shall mean any Person who is or who may become
obligated to the Borrower under, with respect to, or on account of a
Receivable, General Intangible or other Collateral and shall include, without
limitation, all “Account Debtors” as defined in the Commercial Code.
“Adjusted Net Income” shall mean, for any period, the Borrower’s
Net Income for such period but excluding therefrom: (a) non–operating gains and
losses (including extra–ordinary or unusual gains and losses, gains and losses
from discontinuance of operations, gains and losses arising from the sale of
assets other than Inventory and other non–recurring gains and losses) during
such period; and (b) any income attributable to the Borrower’s Investment in
Gopher State Ethanol, LLC, a Delaware limited liability company “Gopher”) and
MG CO2 St. Paul, LLC, a Delaware limited liability company (MGSP”) which is not
distributed in cash during such period.
“Advance(s)” shall have the meaning provided in Paragraph 4A(a).
“Affiliate” shall include, with respect to any party, any Person
which directly or indirectly controls, is controlled by, or is under common
control with such party and, in addition, in the case of Borrower, each officer,
director or shareholder of Borrower, and each joint venturer and partner of
Borrower.
“Agreement” shall mean this Agreement as originally executed and as
it may be amended, modified, supplemented or restated from time to time.
“Approved Project Budget” shall mean the budget approved by Lender
setting forth the costs (the “Project Costs”) for the acquisition and
installation of a bottling line and canning line upgrade (the “Project”) as
amended from to time to time in accordance with Paragraph 17(n) hereof to
incorporate changes in Project Costs.
“Borrower” shall have the meaning provided in the preamble hereto.
“Borrowing Base” shall mean, at any date of determination, the sum
of: (a) 80% of Eligible Receivables; plus (b) the lesser of: (i) the sum of:
(A) 60% of Eligible Inventory comprised of raw materials and finished goods;
plus (B) 50% of Eligible Inventory comprised of keg Inventory; plus (C) 25% of
Eligible Inventory comprised of packaging Inventory; or (ii)$1,500,000.00. The
determination of the Borrowing Base and each of its components, including
without limitation, the advance percentage, may be re-evaluated at each
Collateral audit following the Closing Date in Lender’s reasonable business
judgment.
“Borrowing Base Certificate” shall have the meaning provided in
Paragraph 17(a)(iv).
“Business Day” shall mean any day on which commercial banks in St.
Paul, Minnesota are open for the transaction of business of the kind
contemplated by this Agreement.
“Capital Base” shall mean, at any Measurement Date, the sum of:
(a) the Borrower’s Tangible Net Worth; plus (b) the outstanding principal
amount of the Borrower’s Subordinated Debt.
“Change of Control” shall mean the occurrence after the date of
this Agreement of an event where: (a) Bruce Hendry shall cease to own, directly
or indirectly, at least 100% of the general partnership interests in Minnesota
Brewing Limited Partnership (“MBLP”) and 69% of the limited partnership
interests therein; (b) MBLP shall cease to own, directly or directly, at least
52 % of all of the issued and outstanding equity securities of the Borrower or,
if a greater percentage, the minimum number of shares necessary to elect a
majority of the members of the Borrower’s board of directors; (c) Bruce Hendry
shall cease, directly or indirectly, to elect a majority of the members of the
Borrower’s board of directors; or (d) one or more of the Borrower’s Key Officers
(as hereinafter defined) shall cease to hold the office ascribed to them herein,
or shall cease to perform the duties that, as of the date of this Agreement, are
associated with such office. For purposes of this definition, the Key Officers
shall be deemed to be John J. Lee – President and Michael Hime– Chief Financial
Officer.
“Chattel Paper” shall have the meaning ascribed to such term in the
Commercial Code.
“Closing Date” shall mean the day specified by Borrower on which
all of the conditions precedent specified in Paragraphs 21 and 22 shall have
been satisfied.
“Collateral” shall have the meaning given such term in Paragraph 3.
“Collateral Account” shall have the meaning given such term in
Paragraph 7(a).
“Commercial Code” shall mean the Uniform Commercial Code as enacted
in the State of Minnesota, as amended from time to time, including, without
limitation, on and after the effective date of Minn. Laws 2000, Chapter 399,
substantially adopting Revised Article 9 of the Uniform Commercial Code as
approved by the National Conference of Commissioners on Uniform State Law Laws
in July, 1998 (as so adopted being sometimes hereinafter referred to as “Revised
Article 9”) by Revised Article 9.
“Compliance Certificate” shall have the meaning provided in
Paragraph 17(a)(iii).
“Completion” shall mean that the Project is completed and
operating in accordance with the Borrower’s requirements and the contracts and
subcontracts therefor, in compliance with any applicable requirements and all
applicable governmental requirements, that all Project Costs have been paid and
that Borrower has delivered to the Lender copies of all licenses and permits
needed to operate the Project.
“Completion Deadline” shall mean July 31, 2001.
“Contingent Obligations” shall mean, with respect to any Person,
all of such Person’s liabilities and obligations which are contingent upon and
will not mature unless and until the occurrence of some event or circumstance
and which are not included within the definition of Liabilities of such Person.
“Current Assets” shall mean, at any date of determination, the
aggregate amount of assets appearing on the Borrower’s balance sheet at such
date which, in accordance with GAAP, should be properly classified as current
assets, after deducting adequate reserves where proper but in no event including
notes receivable or any amounts due from employees or Affiliates.
“Current Liabilities” shall mean , at any date of determination,
the aggregate amount of Liabilities appearing on the Borrower’s balance sheet at
such date which, in accordance with GAAP, should be properly classified as
current Liabilities; provided, however, that the Revolving Credit Loan shall be
deemed to be a Current Liability for all purposes.
“Current Ratio” shall mean, at any Measurement Date, the ratio of
the Borrower’s Current Assets to Current Liabilities.
“Default” shall mean any event which, with the giving of notice or
passage of time, or both, would constitute an Event of Default.
“Default Rate” shall mean with respect to any: (a) Note, a rate per
annum equal to two percent (2%) per annum in excess of the interest rate which
would otherwise be in effect on such Note; or (b) other Obligation, a
fluctuating rate per annum equal all times to the sum of the Reference Rate plus
2.00% per annum.
“EBITDA” shall mean, for any period, the sum of: (a) the after–tax
Adjusted Net Income for such period; plus (b) the sum of the following amounts
deducted in arriving at the Net Income included in such Adjusted Net Income
(but without duplication for any item): (i) Interest Expense;
(ii) depreciation, amortization and other non–cash expenses (to the extent not
included in clause (i) or (iii)); and (iii) federal, state and local income
taxes.
“Eligible Receivables” shall mean a Receivable owing to the
Borrower which meets the following requirements:
(a) it is genuine and in all respects what it purports to
be;
(b) it arises from either (i) the performance of services by
the Borrower, which services have been fully performed and, if applicable,
acknowledged and/or accepted by the Account Debtor with respect thereto; or (ii)
the sale or lease of goods by the Borrower and (A) such goods comply with such
Account Debtor’s specifications (if any) and have been shipped to, or delivered
to and accepted by, such Account Debtor except that, notwithstanding that
Borrower is storing production of Mike’s Hard Lemonade for Mark Anthony Brands
Inc., the Receivables owed to Borrower by such Account Debtor (the “MHL
Receivable(s)”)shall be included in the Borrowing Base up to the amount of the
standby letter of credit delivered to Borrower by such Account Debtor securing
the payment of such Receivables and subject to a perfected security interest
in favor of the Lender and such Receivables are otherwise Eligible Receivables,
(B) the Borrower has possession of, or has delivered to Lender, at the Lender’s
request, shipping and delivery receipts evidencing such shipment, delivery and
acceptance, and (C) such goods have not been returned to the Borrower;
(c) it is evidenced by an invoice rendered to the Account
Debtor with respect thereto which (i) is dated not earlier than the date of
shipment or performance and (ii) has payment terms reasonably acceptable to the
Lender;
(d) (i) it must not be unpaid on the date that is 90 days
or, in the case of any MHL Receivable, 45 days, from the original invoice date
evidencing such Receivable; and (ii) it must not be an Receivable owed by any
Account Debtor which has 10% or more of its Receivables beyond the time period
specified in subsection (i) above;
(e) it is not subject to any assignment, claim or Security
Interest other than (i) a Security Interest in favor of Lender; and (ii) other
Security Interests consented to by Lender in writing;
(f) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto and is not subject to
setoff, counterclaim, credit or allowance (except any credit (including without
limitation, credits for returned kegs or pallets ) or allowance which has been
deducted in computing the net amount of the applicable invoice as shown in the
original schedule or Borrowing Base Certificate furnished to Lender identifying
or including such Receivable) or adjustment by the Account Debtor with respect
thereto, or to any claim by such Account Debtor denying liability thereunder in
whole or in part, and such Account Debtor has not refused to accept any of the
goods or services which are the subject of such Receivable or offered or
attempted to return any of such goods;
(g) there are no proceedings or actions which are then
threatened or pending against the Account Debtor with respect thereto or to
which such Account Debtor is a party which might result in any material adverse
change in such Account Debtor’s financial condition or in its ability to pay
any Receivable in full when due;
(h) it does not arise out of a contract or order which, by
its terms, forbids, restricts or makes void or unenforceable the assignment by
the Borrower to Lender of such Receivable;
(i) the Account Debtor with respect thereto is not a
Subsidiary or Affiliate, or a director, officer, employee or agent of the
Borrower, a Subsidiary or Affiliate;
(j) the Account Debtor with respect thereto is a resident
or citizen of and is located within the United States of America unless the sale
of goods giving rise to such Receivable is on letter of credit, banker’s
acceptance or other credit support terms satisfactory to Lender;
(k) it does not arise from a “sale on approval,” “sale or
return” or “consignment,” nor is it subject to any other repurchase or return
agreement;
(l) it is not a Receivable with respect to which
possession and/or control of the goods sold giving rise thereto is held,
maintained or retained by the Borrower, any Subsidiary or Affiliate (or by any
agent or custodian of the Borrower, any Subsidiary or Affiliate) for the account
of or subject to further and/or future direction from the Account Debtor with
respect thereto;
(m) it does not, in any way, violate or fail to meet any
warranty, representation or covenant contained in the Loan Documents relating
directly or indirectly to the Borrower’s Receivables;
(n) the Account Debtor with respect thereto is not located
in the States of Minnesota, Indiana, New Jersey or Alabama or any other state
which prohibits a Person from availing itself of the benefits of that state’s
courts unless such Person is qualified to do business or has filed a notice of
business activities; provided, however, that such restriction shall not apply
if: (i) the Borrower is qualified to do business in such state; (ii) such owner
has filed and has effective a notice of business activities report with the
appropriate office or agency of such state for the then current year or is
exempt from the filing of such report; or (iii) upon the Borrower’s written
request and at the Borrower’s sole cost and expense (including, without
limitation, the payment of Lender’s reasonable attorneys’ fees), Lender
determines, that it can avail itself of the benefits of the relevant state’s
courts to collect such Account Debtor’s Receivables, regardless of whether such
owner can do so;
(o) it arises in the ordinary course of the Borrower’s
business;
(p) if the Account Debtor with respect thereto is the United
States of America or any department, agency or instrumentality thereof (a
“Federal Governmental Authority”), or any state, county or local governmental
authority, or any department, agency or instrumentality thereof, the Borrower
has assigned its right to payment of such Account to Lender pursuant to the
Assignment of Claims Act of 1940 as amended in the case of the a Federal
Governmental Authority, or pursuant to applicable state law, if any, in all
other instances, and such assignment has been accepted and acknowledged by the
appropriate government officers;
(q) if Lender, in its reasonable business judgment, has
established a credit limit for the Account Debtor with respect thereto, the
aggregate dollar amount of Receivables due from such Account Debtor, including
such Receivable, does not exceed such credit limit; and
(r) if it is evidenced by Chattel Paper or Instruments, (i)
Lender shall have specifically agreed to include such Receivable as an Eligible
Receivable, (ii) only payments then due and payable under such Chattel Paper or
Instrument shall be included as an Eligible Receivable and (iii) the originals
of such Chattel Paper or Instruments have been assigned and delivered to Lender
in a manner satisfactory to Lender.
A Receivable which is at any time an Eligible Receivable but which subsequently
fails to meet any of the foregoing requirements shall forthwith cease to be an
Eligible Receivable. Further, with respect to any Receivable, if Lender at any
time or times hereafter determines, in its reasonable business judgment, that
the prospect of payment or performance by the Account Debtor with respect
thereto is or will be impaired for any reason whatsoever, notwithstanding
anything to the contrary contained above, such Receivable shall forthwith cease
to be an Eligible Receivable. The amount of Eligible Receivables shall be the
net United States dollar amount (as determined by Lender after deduction of such
reserves and allowances as Lender in its reasonable business judgment deems
proper and necessary) computed no less frequently than monthly from the
Borrowing Base Certificate delivered to Lender pursuant to Paragraph 17(a)(iv).
“Eligible Inventory” shall mean the Borrower’s Inventory which
meets the following requirements:
(a) it is owned by the Borrower and is not subject to any
prior assignment, claim or Security Interest other than (i) a Security Interest
in favor of Lender; and (ii) other Security Interests consented to by Lender in
writing;
(b) it is: (i) finished goods Inventory of the Borrower
held for sale under binding and enforceable purchase orders from a Person who is
not a Subsidiary or Affiliate and complies with such purchase order’s
specifications except that up to $100,000.00 of the Borrower’s inventory (prior
to application of the Borrowing Base percentage) may consist of safety stock
produced by the Borrower in the ordinary course of business; (ii) raw
materials Inventory; (iii) keg Inventory; or (iv) packaging Inventory;
(c) it is located at one of the Borrower’s facilities
described on Schedule A attached hereto;
(d) Lender has determined, in its reasonable business
judgment, that it is not unacceptable due to age, type, category, quality and/or
quantity;
(e) it is not held by the Borrower on “consignment” and is
not subject to any other repurchase or return agreement;
(f) it complies with all standards imposed by any
governmental agency having regulatory authority over such goods and/or their
use, manufacture or sale; and
(g) it does not, in any way, violate or fail to meet any
warranty, representation or covenant contained in the Loan Documents relating
directly or indirectly to the Borrower’s Inventory.
Inventory which is at any time Eligible Inventory but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be Eligible
Inventory. The value of Eligible Inventory shall be the U.S. dollar amount
thereof computed at the lower of the cost, determined on a first in first out
basis, or market value of such Inventory, as determined by Lender after
deduction of such reserves and allowances as Lender in its reasonable business
judgment deems proper and necessary and shall be computed no less frequently
than monthly from the Borrowing Base Certificate delivered to Lender pursuant to
Paragraph 17(a)(iv).
“Equipment” shall have the meaning provided in Paragraph 3(c).
“ERISA” shall mean the Employee Retirement Income Security Act of
1974, as the same may from time to time be amended, and the rules and
regulations promulgated thereunder by any governmental agency or authority, as
from time to time in effect.
“ERISA Affiliate shall mean, with respect to any Person, any trade
or business (whether or not incorporated) which is a member of a group of which
such Person is a member and which is under common control within the meaning of
Section 414 of the Code, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
“ERISA Event” shall mean: (a) a Reportable Event described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
Reportable Event not subject to the provision for 30-day notice to the PBGC
under such regulations); (b) the withdrawal of Borrower or any ERISA Affiliate
from a Plan during a plan year in which it was a “substantial employer” as
defined in Section 4001(a)(2) of ERISA; (c) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a termination under
Section 4041 of ERISA; (d) the institution of proceedings to terminate a Plan by
the PBGC under Section 4042 of ERISA; or (e) any other event or condition that
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
“Event of Default” shall have the meaning provided in Paragraph 20.
“Fixed Charge Coverage Ratio” shall mean, at any Measurement Date,
the ratio of: (a) the Borrower’s EBITDA for the Measurement Period ending on
such Measurement Date; to (b) the sum of the following for the same
Measurement Period: (i) Interest Expense; plus (ii) the principal payments
(including the portion of any payment on any capitalized lease allocable to
principal in accordance with GAAP) regularly scheduled to have been made by the
Borrower during such period on its capitalized leases and other interest–bearing
Indebtedness; plus (iii) the Capital Expenditures which were not financed during
such period by the Borrower entering into a capitalized lease or incurring other
long–term Indebtedness permitted by Paragraph 18(c)(iii); plus (iv) income taxes
paid in cash.
“GAAP” shall mean generally accepted accounting principles
consistently applied and maintained throughout the period indicated and
consistent with the audited financial statements delivered to Lender pursuant to
Paragraph 16(h). Whenever any accounting term is used herein which is not
otherwise defined, it shall be interpreted in accordance with GAAP.
“General Intangibles” shall have the meaning given such term in the
Commercial Code.
“Independent Public Accountants” shall mean McGladrey & Pullen or
any other firm of independent public accountants which is acceptable to Lender.
“Interest Coverage Ratio” shall mean, at any date of
determination, the ratio of: (a) the Borrower’s EBITDA for the Measurement
Period ending at such date; to (b) the Interest Expense during such Measurement
Period.
“Interest Expense” shall mean, for any period, the aggregate
interest expense (including capitalized interest) of the Borrower for such
period including, without limitation, the interest portion of any Capitalized
Lease; provided, however, that the foregoing shall be adjusted to reflect only
the net effect of any interest rate swap, interest hedging transaction, or other
similar arrangement entered into by the Borrower in order to reduce or eliminate
variations in its interest expenses.
“Inventory” shall have the meaning provided in Paragraph 3(b).
“Leverage Ratio” shall mean, at any Measurement Date, the ratio of
the Borrower’s Liabilities to the Borrower’s Capital Base.
“Liabilities” of any Person shall mean those items which, in
accordance with GAAP, appear as liabilities on a balance sheet.
“Loan(s)” shall mean the Revolving Credit Loan and the Term Loans.
“Loan Document(s)” shall mean individually or collectively, as the
case may be, this Agreement, the Notes, the Support Agreements, the Project
Letter of Credit and any and all other documents executed, delivered or referred
to herein or therein, as originally executed and as amended, modified or
supplemented from time to time.
“Material Adverse Occurrence” shall mean any occurrence of
whatsoever nature (including, without limitation, any adverse determination in
any litigation, arbitration or governmental investigation or proceeding) which
Lender shall determine, in its sole discretion, could adversely affect the
present or prospective financial condition or operations of Borrower or impair
the ability of Borrower to perform its obligations under this Agreement or any
other Loan Document.
“Maturity Date” shall mean the earlier of: (a) the date upon which
the Obligations are declared to be due and payable (or automatically become due
and payable) upon the occurrence of an Event of Default as provided in Paragraph
20; or (b) (i) June 30, 2001, with respect to the Revolving Credit Loan; (ii)
April 1, 2006 with respect to the Term Loan A; or (iii) April 1, 2006 with
respect to the Term Loan B.
“Measurement Date” shall mean the last day of each month of the
Borrower’s fiscal year.
“Measurement Period” shall mean, at any Measurement Date, the
Borrower’s two consecutive fiscal quarters ending on such Measurement Date.
“Monthly Payment Date” shall mean the first day of each month.
“Multiemployer Plan” shall mean a “multiemployer plan” as defined
in Section 4001(a)(3) of ERISA to which Borrower is making or accruing an
obligation to make contributions, or has within any of the preceding three plan
years made or accrued an obligation to make contributions.
“Net Income” shall mean, for any period, the Borrower’s after-tax
net income for such period determined in accordance with GAAP.
“Note(s)” shall mean the Revolving Credit Note and the Term Notes.
“Obligations” shall have the meaning provided in Paragraph 3.
“Original Agreement” shall have the meaning provided in the
recitals hereto.]
“PBGC” shall mean the Pension Benefit Guaranty Corporation or any
successor board, authority, agency, officer or official of the United States
administering the principal functions assigned on the date hereof to the Pension
Benefit Guaranty Corporation under ERISA.
“Participant” shall mean each Person who purchases a participation
interest from Lender in the obligations.
“Person” shall mean any natural person, corporation, firm,
partnership, association, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.
“Plan” shall mean each employee benefit plan or other class of
benefits covered by Title IV of ERISA, in either case whether now in existence
or hereafter instituted, of Borrower or any of its Subsidiaries.
“Project Letter of Credit” shall mean a letter of credit in the
initial amount of [Confidential Treatment Requested] securing the payment of the
Term Loan A issued for the account of Mark Anthony Brands Inc. in favor of
Lender by a bank and in form and substance satisfactory to Lender, in its sole
discretion, or any replacement letter of credit issued in favor of Lender by a
bank and in form and substance satisfactory to Lender, in its sole discretion.
“Receivables” shall have the meaning provided in Paragraph 3(a).
“Reference Rate” shall mean the publicly announced base rate (or
other publicly announced reference rate) charged by Bremer Financial
Corporation; Borrower acknowledges that the Reference Rate may not be the lowest
rate made available by Lender to its customers and that Lender may lend to its
customers at rates that are at, above or below the Reference Rate.
“Reportable Event” shall have the meaning given to that term in
Title IV of ERISA.
“Revolving Credit Commitment” shall mean $3,500,000.00 and, as the
context may require, the agreement of the Lender to make Advances to the
Borrower up to the Revolving Credit Commitment subject to the terms and
conditions of this Agreement.
“Revolving Credit Loan” shall mean, at any date of determination,
the aggregate outstanding principal amount of all Advances.
“Revolving Credit Note” shall mean promissory note in the form of
Exhibit A attached hereto and made a part hereof made by Borrower payable to the
order of Lender to evidence the Advances and each renewal, replacement or
substitute note therefor.
“Revolving Credit Termination Date” shall mean the Maturity Date of
the Revolving Credit Loan.
“Security Interest” shall mean any lien, pledge, mortgage,
encumbrance, charge or security interest of any kind whatsoever (including,
without limitation, the lien or retained security title of a conditional vendor)
whether arising under a security instrument or as a matter of law, judicial
process or otherwise or the agreement by Borrower to grant any lien, security
interest or pledge, mortgage or encumber any asset.
“Subordinated Debt” shall mean indebtedness of Borrower for
borrowed money which is subordinated to the Obligations on terms satisfactory to
Lender in its sole discretion.
“Subordination Agreement” shall mean each Subordination Agreement
relating to any Subordinated Debt, in each case as originally executed and as
amended, modified, supplemented or restated from time to time.
“Support Agreement” shall mean each Support Agreement executed by a
Key Officer, in each case as originally executed and as amended, modified,
supplemented or restated from time to time.
“Tangible Net Worth” shall mean, at any date of determination, the
difference between: (a) the total assets appearing on Borrower’s balance sheet
at such date prepared in accordance with GAAP after deducting adequate reserves
in each case where, in accordance with GAAP, a reserve is proper; and (b) the
total liabilities appearing on such balance sheet (the “Total Liabilities”);
excluding, however, from the determination of total assets: (i) goodwill,
organizational expenses, research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses and rights in any
thereof, covenants not to compete, training costs and other similar intangibles;
(ii) all deferred charges or unamortized debt discount and expense other than
deferred income taxes; (iii) securities which are not readily marketable other
than Borrower’s equity Investment in Gopher and MGSP ; (iv) any write-up in the
book value of any assets resulting from a re-evaluation thereof subsequent to
the date of Borrower’s annual financial statement described in Paragraph16(h);
(v) amounts due from officers or Affiliates; and (vi) any asset acquired
subsequent to the date of this Agreement which the Lender, in its reasonable
business judgment, determines to be an intangible asset.
“Term Loan(s)” shall mean Term Loan A and Term Loan B.
“Term Loan A” shall mean the loan described in Paragraph 4B.
“Term Loan A Commitment” shall mean the lesser of: (a)
$4,400,000.00; or (b) the sum of: (i) an amount up to 70 % of the appraised
orderly liquidation value of the Equipment described in Part II of Schedule J
attached hereto to be acquired and installed in the Project as determined by an
appraisal satisfactory in form and substance to the Lender, in its sole
discretion; plus (iii) the amount available to be drawn on the Project Letter of
Credit.
“Term Loan A Commitment Termination Date” shall mean the earlier
of: (a) July 31, 2001; or (b) the Maturity Date of the Term Loan A.
“Term Note(s)” shall mean Term Note A and Term Note B.
“Term Note A” shall mean the promissory note in the form of Exhibit
B attached hereto and made a part hereof made by Borrower payable to the order
of Lender to evidence Term Loan A and each renewal, replacement or substitute
note therefor.
“Term Loan B “ shall mean the loan described in Paragraph 4C.
“Term Loan B Commitment” shall mean the lesser of: (a)
$600,000.00; or (b) an amount up to 70 % of the appraised orderly liquidation
value of the Equipment described in Part I of Schedule J attached hereto
previously acquired, as determined by an appraisal satisfactory in form and
substance to the Lender, in its sole discretion.
“Term Loan B Commitment Termination Date” shall mean the earlier
of: (a) April 30, 2001; or (b) the Maturity Date of the Term Loan B.
“Term Note B” shall mean the promissory note in the form of Exhibit
C attached hereto and made a part hereof made by Borrower payable to the order
of Lender to evidence Term Loan B and each renewal, replacement or substitute
note therefor.
3. Security. As security for all present and future sums
loaned or advanced by Lender to Borrower and for all other obligations now or
hereafter chargeable to Borrower’s loan account hereunder, and all other
obligations and liabilities of any and every kind of Borrower to Lender, due or
to become due, direct or indirect, absolute or contingent, joint or several,
howsoever created, arising or evidenced, now existing or hereafter at any time
created, arising or incurred including, without limitation, the Loans (herein
called “Obligations”), Borrower hereby grants to Lender a security interest in
and to the following property (any quoted term used in this Paragraph which is a
defined term under the Commercial Code is being used as defined in the
Commercial Code except as otherwise defined herein):
(a) All Receivables of Borrower, whether now owned or
existing, or owned, acquired or arising hereafter, together with all customer
lists, original books and records, ledger and account cards, computer tapes,
discs, printouts and records, whether now in existence or hereafter created.
“Receivables” means all rights of Borrower to the payment of money, whether or
not earned and howsoever evidenced or arising, including (without limitation)
all present and future “Accounts”, “Chattel Paper” including, without
limitation, all “Electronic Chattel Paper” and “Tangible Chattel Paper”,
“Instruments,” and rights to payment which are “General Intangibles” including,
without limitation, all “Payment Intangibles”, all security therefor including,
without limitation, all “Supporting Obligations” and all of Borrower’s rights as
an unpaid seller of goods (including rescission, replevin, reclamation and
stopping in transit) and all of Borrower’s rights to any goods represented by
any of the foregoing including returned or repossessed goods;
(b) All “Inventory” of Borrower, whether now owned or
existing, or owned, acquired or arising hereafter and wherever located
including, without limitation, all “Goods” leased to Borrower as a lessor, all
“Goods” intended for sale or lease or to be furnished under contracts of
service, all “Goods” furnished by Borrower under a contract for service, all raw
materials and work in process therefor, all finished goods thereof, all
materials and supplies of every nature used or usable or consumed or consumable
in connection with the manufacture, packing, shipping, advertising, selling,
leasing or furnishing of such “Goods”, and all accessories thereto and all
documents of title therefor evidencing the same;
(c) All “Equipment” of Borrower, whether now owned or
existing, or owned, acquired or arising hereafter and wherever located
including, without limitation, all of Borrower’s “Goods” other than “Inventory”,
all replacements and substitutions therefor and all accessions thereto, and
specifically includes, without limitation, all present and future machinery,
equipment, vehicles, manufacturing equipment, shop equipment, office and record
keeping equipment, furniture, “Fixtures”, parts, tools and all other “Goods”
(except “Inventory”) used or acquired for use by Borrower for any business or
enterprise;
(d) All “General Intangibles” of Borrower not comprising a
Receivable, whether now owned or existing, or owned, acquired or arising
hereafter, including without limitation, all present and future domestic and
foreign patents, patent applications, trademarks, trademark applications,
copyrights, trade names, trade secrets, patent and trademark licenses (whether
Borrower is licensor or licensee), shop drawings, engineering drawings,
blueprints, specifications, parts lists, manuals, operating instructions,
customer and supplier lists, licenses, permits, franchises, the right to use
Borrower’s corporate name and the goodwill of Borrower’s business;
(e) All “Deposit Accounts” of Borrower, whether now owned
or existing, or owned, acquired or arising hereafter;
(f) the “Commercial Tort Claims” of Borrower described on
Schedule I attached hereto;
(g) All “Investment Property” of Borrower, whether now
owned or existing, or owned, acquired or arising hereafter excluding, however,
“Investment Property” pledged to secure Borrower’s bond in favor of the Bureau
of Alcohol, Tobacco and Firearms;
(h) All “Letter of Credit Rights” of Borrower, whether now
owned or existing, or owned, acquired or arising hereafter; and
(i) All products and “Proceeds” of any and all of the
foregoing and all products and “Proceeds” of any other Collateral (as
hereinafter defined) including the “Proceeds” of any insurance covering any of
the Collateral.
All such Receivables, “Inventory”, “Equipment”, “General Intangibles”, “Deposit
Account”, “Commercial Tort Claims”, “Investment Property”, “Letter of Credit
Rights”, products and “Proceeds”, together with all other assets and properties
of Borrower in or on which Lender is now or hereafter granted a security
interest, mortgage, lien or encumbrance pursuant to this Agreement or otherwise,
are hereinafter sometimes referred to as “Collateral”.
4. Terms of Lending
4A. Revolving Credit Loan; Advances
(a) At the request of Borrower, Lender agrees, subject to
the terms and conditions of this Agreement, to make loans (each such loan being
herein sometimes called individually an “Advance” and collectively the
“Advances”) to Borrower from time to time on any Business Day during the period
from the date hereof and ending on the Revolving Credit Termination Date;
provided, however, that Lender shall not be required to make any Advance if,
after giving effect to such Advance, the Revolving Credit Loan would exceed the
lesser of the Revolving Credit Commitment or the Borrowing Base. The amount of
each such Advance shall be charged to Borrower’s loan account.
(b) In order to obtain an Advance, Borrower shall give
written or telephonic notice to Lender, by not later than 11:00 a.m.
(Minneapolis time) on the date the requested Advance is to be made. Lender,
shall make such Advance by transferring the amount thereof in immediately
available funds for credit to an account (other than a payroll account) of
Borrower at Lender, as specified in such notice. At the request of Lender,
Borrower shall confirm in writing any telephonic notice.
(c) The obligation of Lender to make Advances shall
terminate on the Revolving Credit Termination Date.
(d) If at any time the Revolving Credit Loan exceeds the
lesser of the Revolving Credit Commitment or the Borrowing Base, then Borrower
agrees to make, on demand, a principal repayment on the Revolving Credit Loan in
an amount equal to such excess together with accrued interest on the amount
repaid to the date of repayment. Borrower agrees that, on the Maturity Date of
the Revolving Credit Loan, it will repay the entire outstanding principal
balance of the Revolving Credit Loan together with accrued interest thereon and
all accrued fees without presentment or demand for payment, notice of dishonor,
protest or notice of protest, all of which are hereby waived.
(e) The Advances shall be evidenced by the Revolving Credit
Note made by Borrower payable to the order of Lender; subject, however, to the
provisions of such Note to the effect that the principal amount payable
thereunder at any time shall not exceed the then unpaid principal amount of the
Revolving Credit Loan made by Lender. Borrower hereby irrevocably authorizes
Lender to make or cause to be made, at or about the time of each Advance made by
Lender, an appropriate notation on the records of Lender, reflecting the
principal amount of such Advance, and Lender shall make or cause to be made, on
or about the time of receipt of payment of any principal of the Revolving Credit
Note, an appropriate notation on its records reflecting such payment. The
aggregate amount of all Advances set forth on the records of Lender shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on the
Revolving Credit Note.
4B. Term Loan A.
(a) At the request of Borrower made prior to the Term Loan
A Commitment Termination Date, Lender agrees, subject to the terms and
conditions of this Agreement, to make a term loan (the “Term Loan A”) to
Borrower in an amount up to the Term Loan A Commitment. Term Loan A proceeds
shall be disbursed by the Lender solely for the purpose of paying, or
reimbursing Borrower for the payment of, Project Costs.
(b) In order to obtain Term Loan A proceeds, Borrower shall
give written or telephonic notice to Lender, by not later than close of Lender’s
business at least one (1) Business Day prior to the date on which Borrower
desires that Term Loan A proceeds be disbursed to Borrower. Each request for a
disbursement of Term Loan A proceeds shall be in the form of Exhibit B-1
attached hereto. On the requested date but subject to the terms and conditions
of this Agreement, Lender shall make Term Loan A proceeds available to Borrower
by transferring the amount thereof in immediately available funds for credit to
an account (other than a payroll account) of Borrower at Bremer Bank, National
Association.
(c) The obligation of Lender to make further disbursements
of Term Loan A proceeds shall terminate on the Term Loan A Commitment
Termination Date.
(d) The Term Loan A shall be evidenced by, and payable in
accordance with, the Term Note A made by Borrower payable to the order of
Lender; subject, however, to the provisions of such Note to the effect that the
principal amount payable thereunder at any time shall not exceed the then unpaid
principal amount of the Term Loan A made by Lender. Borrower hereby irrevocably
authorizes Lender to make or cause to be made, at or about the time on which the
Term Loan A proceeds are advanced to the Borrower, an appropriate notation on
the records of Lender, reflecting the principal amount of the Term Loan A, and
Lender shall make or cause to be made, on or about the time of receipt of
payment of any principal of the Term Note A , an appropriate notation on its
records reflecting such payment. The outstanding principal amount of Term
Loan A set forth on the records of Lender shall be rebuttable presumptive
evidence of the principal amount owing and unpaid on the Term Note A.
(e) Lender shall not be obligated to advance any Term Loan
A proceeds unless and until Borrower has provided Lender with evidence that
Borrower has paid sufficient Project Costs so that all remaining unpaid Project
Costs do not exceed the un-advanced balance of the Term Loan A Commitment. If
the Lender or Borrower determines that the un-advanced balance of the Term Loan
A Commitment is insufficient to cover any Project Cost, it shall notify the
other party of such determination, and Borrower shall, within five (5) Business
Days after such notice, deposit with the Lender funds equal to the amount of the
deficiency and/or directly pay such deficiency and deliver evidence of such
payment to Lender. Borrower hereby assigns and pledges to the Lender all funds
so deposited as additional security for the Obligations. Borrower may not
reallocate items of Project Costs without the consent of the Lender.
4C. Term Loan B.
(a) At the request of Borrower made prior to the Term Loan
B Commitment Termination Date, Lender agrees, subject to the terms and
conditions of this Agreement, to make a term loan (the “Term Loan B”) to
Borrower in an amount up to the Term Loan B Commitment.
(b) In order to obtain Term Loan B proceeds, Borrower shall
give written or telephonic notice to Lender, by not later than close of Lender’s
business at least one (1) Business Day prior to the date on which Borrower
desires that Term Loan B proceeds be disbursed to Borrower. On the requested
date but subject to the terms and conditions of this Agreement, Lender shall
make Term Loan B proceeds available to Borrower by transferring the amount
thereof in immediately available funds for credit to an account (other than a
payroll account) of Borrower at Bremer Bank, National Association.
(c) The obligation of Lender to make the Term Loan B shall
terminate on the Term Loan B Commitment Termination Date.
(d) The Term Loan B shall be evidenced by, and payable in
accordance with, the Term Note B made by Borrower payable to the order of
Lender; subject, however, to the provisions of such Note to the effect that the
principal amount payable thereunder at any time shall not exceed the then unpaid
principal amount of the Term Loan B made by Lender. Borrower hereby irrevocably
authorizes Lender to make or cause to be made, at or about the time on which the
Term Loan B proceeds are advanced to the Borrower, an appropriate notation on
the records of Lender, reflecting the principal amount of the Term Loan B, and
Lender shall make or cause to be made, on or about the time of receipt of
payment of any principal of the Term Note B , an appropriate notation on its
records reflecting such payment. The outstanding principal amount of Term
Loan B set forth on the records of Lender shall be rebuttable presumptive
evidence of the principal amount owing and unpaid on the Term Note B.
5. Interest. Borrower agrees to pay interest on the
outstanding principal amount of each Loan at the rates and at the times
specified in the Note evidencing such Loan. Each change in the interest rates
due to a change in the Reference Rate shall take effect simultaneously with the
corresponding change in the Reference Rate. Interest may be charged to
Borrower’s loan account as an Advance at Lender’s option, whether or not
Borrower then has a right to obtain an Advance pursuant to the terms of this
Agreement.
5B. Late Fee. If any amount due hereunder or under any Note
or other Obligations (whether principal, interest, fees, costs, expenses or
otherwise) is paid more than fifteen (15) days after the stated due date for
such payment, the Borrower shall pay to the Lender, on demand, a late payment
fee equal to four percent (4.00%) of the past due amount.
6. Set-Off; etc. Upon the occurrence of a Default or an
Event of Default, Lender and each of its Affiliates are hereby authorized at any
time and from time to time, without notice to Borrower (any such notice being
expressly waived by Borrower), to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by Lender or any Participant to or for the
credit or the account of Borrower, any amounts held in any account maintained at
Lender, such Affiliate or any Participant, against any and all amounts which
may be owed to Lender or any Participant by Borrower whether in connection with
this Agreement or otherwise and irrespective of whether Borrower shall have made
any requests under this Agreement. The Borrower hereby grants to the Lender,
each of its Affiliates and each Participant a Security Interest in all such
deposits, accounts or monies.
7. Reports and Collection.
(a) Immediately upon the occurrence and during the
continuance of a Default or an Event of Default, unless otherwise consented to
by the Lender in writing, the Borrower will, forthwith upon receipt by the
Borrower of any and all checks, drafts, cash and other remittances in payment or
as proceeds of, or on account of, any of the Accounts Receivable or other
Collateral, deposit the same in a special bank account in Lender’s name
designated for receipt of Borrower’s funds (the “Collateral Account”) maintained
at Bremer Bank, National Association over which the Lender alone has power of
withdrawal, and will designate with each such deposit the particular Receivable
or other item of Collateral upon which the remittance was made. The Borrower
acknowledges that the maintenance of the Collateral Account is solely for the
convenience of the Lender in facilitating its own operations and the Borrower
does not and shall not have any right, title or interest in the Collateral
Account or in the amounts at any time appearing to the credit thereof. Said
proceeds shall be deposited in precisely the form received except for the
Borrower’s endorsement where necessary to permit collection of items, which
endorsement the Borrower agrees to make. Borrower shall be liable as endorsee
on all items deposited in the Collateral Account, whether or not in fact
endorsed by Borrower. Pending such deposit, the Borrower agrees not to
commingle any such checks, drafts, cash and other remittances with any of its
funds or property, but will hold them separate and apart therefrom and upon an
express trust for the Lender until deposit thereof is made in the Collateral
Account. Upon the full and final liquidation of all Obligations and termination
of the Revolving Credit Commitment, the Lender will pay over to the Borrower any
excess amounts received by the Lender as payment or proceeds of Collateral,
whether received by the Lender as a deposit in the Collateral Account or
received by the Lender as a direct payment on any of the sums due hereunder.
(b) The Borrower will irrevocably direct all present and
future Account Debtors and other Persons obligated to make payments on
Receivables or other Collateral to make such payments to a special lockbox (the
“Lockbox”) under the control of Lender or an Affiliate. All of Borrower’s
invoices, account statements and other written or oral communication directing,
instructing, requesting or demanding payment of any Receivable or other amount
constituting Collateral shall direct that all payments be made to the Lockbox
and shall include the Lockbox address. All payments received in the Lockbox
prior to the occurrence and during the continuance of a Default or an Event of
Default shall be processed to the Borrower’s primary operating account at Bremer
Bank, National Association so long as such bank has entered into a blocked
account or control agreement with the Lender in form and substance satisfactory
to the Lender. All payments received in the Lockbox following the occurrence and
during the continuance of a Default or an Event of Default shall be processed to
the Collateral Account. Borrower agrees to execute and deliver all documentation
required by Lender related to the establishment and maintenance of the Lockbox.
(c) The Borrower authorizes the Lender to, and the Lender
will, subject to the provisions of this Paragraph 7(c), apply the whole or any
part of any amounts received by the Lender or any Affiliate (whether deposited
in the Collateral Account or otherwise received by the Lender or any Affiliate)
following the occurrence and during the continuance of an Event of Default from
the collection of items of payment and proceeds of any Collateral against the
principal and/or interest of any Advances made hereunder and/or any other
Obligations, whether or not then due, in such order of application as the Lender
may determine, unless such payments or proceeds are, in the Lender’s sole and
absolute discretion, released to the Borrower. No checks, drafts or other
instruments received by the Lender, or any Affiliate, shall constitute final
payment to the Lender unless and until such item of payment has actually been
collected. Following the occurrence and during the continuance of an Event of
Default, Lender, upon receipt of finally collected funds for any item or amount
which is delivered to the Lender by or on behalf of the Borrower or any Account
Debtor on account of partial or full payment or otherwise as proceeds of any of
the Collateral (including any items or amounts which may have been deposited to
the Collateral Account), may from time to time, in the Lender’s sole and
absolute discretion, release such collected amount to the Borrower or apply
such amount towards such of the Obligations, whether or not then due, in such
order of application as the Lender may determine.
(d) At any time following the occurrence and during the
continuance of an Event of Default, Lender may notify the Borrower’s Account
Debtors at any time that Receivables have been assigned to Lender and collect
them directly in Lender’s own name but unless and until Lender does so or gives
Borrower other instructions, Borrower shall make collection for Lender at
Borrower’s sole cost and expense. Borrower shall advise Lender promptly of any
goods which are returned by Account Debtors or otherwise recovered involving an
amount in excess of $75,000.00 and, unless instructed to deliver such goods to
Lender, Borrower shall resell them for Lender and assign or deliver to Lender
the resulting Receivables or other proceeds. Borrower shall also advise Lender
promptly of all disputes and claims by Account Debtors involving an amount in
excess of $75,000.00 and settle or adjust them at no expense to Lender. At any
time after the occurrence and during the continuance of an Event of Default,
Lender may at all times settle or adjust such disputes and claims directly with
the Account Debtors for amounts and upon terms which Lender considers
advisable. If Lender so directs at any time after an Event of Default, no
discount, credit or allowance shall be granted by Borrower to any Account Debtor
and no return of goods shall be accepted by Borrower without Lender’s written
consent.
8. Warranty as to Collateral. Borrower warrants that:
(a) all Receivables listed in Borrower’s financial
statements or schedules will, when Borrower delivers such financial statements
or the schedules to Lender, be bona fide existing obligations created by the
sale and actual delivery of goods or the rendition of services to Account
Debtors in the ordinary course of business, which Borrower then owns free of any
Security Interest except for the Security Interest in favor of Lender created by
this Agreement and which are then unconditionally owing to Borrower without
defense, offset or counterclaim; and that all shipping or delivery receipts,
invoice copies and other documents furnished to Lender in connection therewith
will be genuine; and
(b) all Inventory and Equipment is and shall be owned by
Borrower, free of any Security Interest except for the Security Interest of
Lender created by this Agreement or Security Interests permitted by Paragraph
18(d).
Lender’s rights to and security interest in the Collateral will not be impaired
by the ineligibility of any such Collateral for Advances and will continue to be
effective until all Obligations chargeable to Borrower’s loan account have been
fully satisfied.
9. Power of Attorney. Borrower appoints Lender, or any
other person whom Lender may from time to time designate, as Borrower’s attorney
with power: (a) to endorse Borrower’s name on any checks, notes, acceptances,
drafts or other forms of payment or security that may come into Lender’s
possession; (b) to sign Borrower’s name on any invoice or bill of lading
relating to any Receivables, on drafts against Account Debtors, on schedules and
confirmatory assignments of Receivables, on notices of assignment, financing
statements and amendments under the Commercial Code and other public records, on
verifications of Receivable and on notices to Account Debtors; (c) to notify the
post office authorities to change the address for delivery of Borrower’s mail to
an address designated by Lender; (d) to receive, open and dispose of all mail
addressed to Borrower; (e) to send requests for verification of Receivables to
Account Debtors; and (f) to do all things necessary to carry out this
Agreement. Borrower ratifies and approves all acts of the attorney taken within
the scope of this power-of-attorney. Neither Lender nor the attorney will be
liable for any acts of commission or omission nor for any error in judgment or
mistake of fact or law. This power, being coupled with an interest, is
irrevocable so long as any Receivable in which Lender has a security interest or
any Obligation remains unpaid. Borrower waives presentment and protest of all
instruments and notice thereof, notice of default and dishonor and all other
notices to which Borrower may otherwise be entitled.
10. Location of Collateral. Borrower warrants that its
chief executive office is at the address stated in the opening paragraph of this
Agreement and that its books and records concerning Receivables are located
there. Borrower’s Inventory, Equipment and other goods are at the location or
locations as designated on Schedule A annexed hereto. Borrower shall
immediately notify Lender if any additional locations for Collateral are
subsequently established. Borrower shall not change the location of its chief
executive office, the place where it keeps its books and records, or the
location of any Collateral (except for sales of Inventory or obsolete Equipment
in the ordinary course of business) until Borrower has obtained the written
consent of Lender and all necessary filings have been made and other actions
taken to continue the perfection of Lender’s Security Interest in such new
location. Lender’s Security Interest attaches to all the Collateral wherever
located, and the failure of Borrower to inform Lender of the location of any
item or items of Collateral shall not impair Lender’s Security Interest therein.
11. Ownership and Protection of Collateral. Borrower
warrants, represents and covenants to Lender that the Collateral is now and, so
long as Borrower is obligated to Lender, will be, owned by Borrower free and
clear of all Security Interests except for the Security Interest in favor of
Lender created by this Agreement and except the Security Interests, if any,
permitted by Paragraph 18(d). Borrower will not sell, lease or otherwise
dispose of the Collateral, or attempt so to do (except for sales of Inventory or
obsolete Equipment in the ordinary course of business) without the prior written
consent of Lender and unless the proceeds of any such sale are paid to Lender
for application on Borrower’s Obligations. After the occurrence of a Default or
an Event of Default, Lender will at all times have the right to take physical
possession of any tangible Collateral and to maintain such possession on
Borrower’s premises or to remove the same or any part thereof to such other
places as Lender may wish. If Lender exercises Lender’s right to take
possession of such Collateral, Borrower shall on Lender’s demand, assemble the
same and make it available to Lender at a place reasonably convenient to
Lender. Borrower shall at all times keep the Equipment constituting Collateral
in good condition and repair. All expenses of protecting, storing, warehousing,
insuring, handling and shipping of the Collateral, all costs of keeping the
Collateral free of any Security Interests prohibited by this Agreement and of
removing the same if they should arise, and any and all excise, property, sales
and use taxes imposed by any state, federal or local authority on any of the
Collateral or in respect of the sale thereof, shall be borne and paid by
Borrower and if Borrower fails to promptly pay any thereof when due, Lender may,
at its option, but shall not be required to, pay the same and charge Borrower’s
loan account therefor. Borrower agrees to renew all insurance required by this
Paragraph 11 or Paragraph 13 at least 30 days prior to its expiration.
12. Perfection of Security Interest. Borrower agrees to
execute such financing statements together with any and all other instruments or
documents and take such other action, including delivery, as may be required to
create, evidence, perfect and maintain Lender’s Security Interest in the
Collateral and Borrower shall not in any manner do any act or omit to do any act
which would in any manner impair or invalidate Lender’s Security Interest in the
Collateral or the perfection thereof.
13. Insurance. Borrower shall maintain insurance coverage
on any Collateral including Receivables and other rights to payment with such
companies, against such hazards, and in such amounts as may from time to time be
acceptable to Lender and shall deliver such policies or copies thereof to Lender
with satisfactory lender’s loss payable endorsements naming Lender. Each policy
of insurance shall contain a clause requiring the insurer to give not less than
30 days prior written notice to Lender in the event of any anticipated
cancellation of the policy for any reason and a clause that the interest of
Lender shall not be impaired or invalidated by any act or neglect of Borrower
nor by the occupation of the premises wherein such Collateral is located for
purposes more hazardous than are permitted by said policy. Borrower will
maintain, with financially sound and reputable insurers, insurance with respect
to its properties and business against such casualties and contingencies of such
types (which may include, without limitation, public and product liability,
larceny, embezzlement, or other criminal misappropriation insurance) and in such
amounts as may from time to time be required by Lender.
14. Borrower’s Loan Account. Lender may charge to
Borrower’s loan account at any time the amounts of all Obligations (and
interest, if any, thereon) owing by Borrower to Lender, including (without
limitation) the Loans, debts, liabilities, obligations acquired by purchase,
assignment or participation and all other obligations, whenever arising, whether
absolute or contingent and whether due or to become due; also the amount of all
costs and expenses and all attorneys’ fees and legal expenses incurred in
connection with efforts made to enforce payment of such obligations, or to
obtain payment of any Receivables, or the foreclosure of any Collateral or in
the prosecution or defense of any actions or proceedings relating in any way to
this Agreement whether or not suit is commenced, including reasonable attorneys’
fees and legal expenses incurred in connection with any appeal of a lower
court’s order or judgment; and also the amounts of all unpaid taxes and the
like, owing by Borrower to any governmental authority or required to be
deposited by Borrower, which Lender pays or deposits for Borrower’s account.
All sums at any time standing to Borrower’s credit on Lender’s books and all of
Borrower’s property at any time in Lender’s possession or upon or in which
Lender has a Security Interest, may be held by Lender as security for all
obligations which are chargeable to Borrower’s loan account. Subject to the
foregoing, Lender, at Borrower’s request, will remit to Borrower any net balance
standing to Borrower’s credit on Lender’s books. Lender will account to
Borrower monthly and each monthly accounting will be fully binding on Borrower,
unless, within thirty days thereafter, Borrower gives Lender specific written
notice of exceptions. All debit balances in Borrower’s loan account will bear
interest as provided in Paragraph 5 of this Agreement. In any event, Borrower
covenants to pay all Loans, debts, accounts and interest when due.
15. Participations. If any Person shall acquire a
participation in any Loan made to Borrower hereunder, Borrower hereby grants to
any such Person holding a participation, and such Person shall have and is
hereby given a continuing Security Interest in any money, securities and other
property of Borrower in the custody or possession of such Participant, including
the right of set-off as fully as if such Participant had lent directly to
Borrower the amount of such participation.
16. General Representations and Warranties. To induce
Lender to make Advances and the Term Loans hereunder, Borrower makes the
following representations and warranties, all of which shall survive the
occurrence of the Closing Date, the making of the initial Advance and the Term
Loans:
(a) Borrower is a corporation duly organized, existing, and
in good standing under the laws of the State of Minnesota, has power to own its
property and to carry on its business as now conducted, and is duly qualified to
do business in all states in which the nature of its business requires such
qualification.
(b) The execution and delivery of this Agreement and the
other Loan Documents and the performance by Borrower of its obligations
hereunder and thereunder do not and will not conflict with any provision of law,
or of the charter or bylaws of Borrower, or of any agreement binding upon
Borrower.
(c) The execution and delivery of this Agreement and the
other Loan Documents have been duly authorized by all necessary official action
by the Board of Directors and shareholders of Borrower; and this Agreement and
the other Loan Documents have in fact been duly executed and delivered by
Borrower and constitute its lawful and binding obligations, legally enforceable
against it in accordance with their respective terms.
(d) Except as set forth on Schedule H attached hereto, there
is no action, suit or proceeding at law or equity, or before or by any federal,
state, local or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, pending or, to the knowledge of
Borrower, threatened against Borrower or the property of Borrower which, if
determined adversely, would be a Material Adverse Occurrence or would affect the
ability of Borrower to perform its obligations under the Loan Documents; and the
Borrower is not in default with respect to any final judgment, writ, injunction,
decree, rule or regulation of any court or federal, state, local or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, where the effect of such default would be a Material
Adverse Occurrence.
(e) The authorization, execution and delivery of this
Agreement, and the payment of the Loans and interest thereon, is not, and will
not be, subject to the jurisdiction, approval or consent of any federal, state
or local regulatory body or administrative agency.
(f) Except as set forth on Schedule B attached hereto, all
of the assets of Borrower are free and clear of Security Interests.
(g) Borrower has filed all federal, state and local tax
returns which, to the knowledge of Borrower, are required to be filed, and
Borrower has paid all taxes shown on such returns and all assessments which are
due. Borrower has made all required withholding deposits. No federal income
tax returns of Borrower have been examined and approved or adjusted by the
applicable taxing authorities or closed by applicable statutes for any prior
fiscal year. Borrower does not have knowledge of any objections to or claims for
additional taxes by federal, state or local taxing authorities for subsequent
years which would be a Material Adverse Occurrence.
(h) Borrower has furnished to Lender the financial
statements described on Schedule C attached hereto. These statements were
prepared in accordance with GAAP and present fairly the financial condition of
Borrower and its consolidated Subsidiaries. There has been no material adverse
change in the condition of Borrower, financial or otherwise, since the date of
the most recent of such financial statements.
(i) The value of the assets and properties of Borrower at
a fair valuation and at their then present fair salable value is and, after
giving effect to any pending Advance and the application of the amount advanced,
will be materially greater than its total liabilities, including Contingent
Obligations, and Borrower has (and has no reason to believe that it will not
have) capital sufficient to pay its liabilities, including Contingent
Obligations, as they become due.
(j) Borrower is in compliance with all requirements of law
relating to pollution control and environmental regulations in the respective
jurisdictions where Borrower is presently doing business or conducting
operations except where the failure to comply does not constitute a Material
Adverse Occurrence.
(k) All amounts obtained pursuant to Advances will be used
for Borrower’s working capital purposes or to fund Borrower’s capital
expenditures. The Term Loan A proceeds will be used solely to partially finance
the Project Costs. The Term Loan B proceeds will be used to finance certain of
the Capital Expenditures made by Borrower during its 2000 fiscal year. No part
of any Loan shall be used at any time by Borrower to purchase or carry margin
stock (within the meaning of Regulation U promulgated by the Board of Governors
of the Federal Reserve System) or to extend credit to others for the purpose of
purchasing or carrying any margin stock. Borrower is not engaged principally,
or as one of its important activities, in the business of extending credit for
the purposes of purchasing or carrying any such margin stock. No part of the
proceeds of any Loan will be used by Borrower for any purpose which violates, or
which is inconsistent with, any regulations promulgated by the Board of
Governors of the Federal Reserve System.
(l) Except for the trademarks, patents, copyrights and
franchise rights listed on Schedule D attached hereto, Borrower is not the owner
of any patent, trademark, copyright or franchise rights. Borrower is not an
“investment company”, or an “affiliated person” of, or a “promoter” or
“principal underwriter” for, an “investment company”, as such terms are defined
in the Investment Company Act of 1940, as amended. The making of the Loan, the
application of the proceeds and repayment thereof by Borrower and the
performance of the transactions contemplated by this Agreement will not violate
any provision of said Act, or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder.
(m) (i) Each Plan is in compliance in all material respects
with all applicable provisions of ERISA and the Code; (ii) the aggregate present
value of all accrued vested benefits under all Plans (calculated on the basis of
the actuarial assumptions specified in the most recent actuarial valuation for
such Plans) did not exceed as of the date of the most recent actuarial valuation
for such Plans the fair market value of the assets of such Plans allocable to
such benefits; (iii) Borrower is not aware of any information since the date of
such valuations which would materially affect the information contained therein;
(iv) no Plan which is subject to Part 3 of Subtitle B of Title I of ERISA or
Section 412 of the Code has incurred an accumulated funding deficiency, as that
term is defined in Section 302 of ERISA or Section 412 of the Code (whether or
not waived); (v) no liability to the PBGC (other than required premiums which
have become due and payable, all of which have been paid) has been incurred with
respect to any Plan, and there has not been any Reportable Event which presents
a material risk of termination of any Plan by the PBGC; and (vi) Borrower has
not engaged in a transaction which would subject it to tax, penalty or liability
for prohibited transactions imposed by ERISA or the Code. Borrower does not
contribute to any Multiemployer Plan.
(n) Bruce Hendry directly or indirectly controls the number
of shares and classes of the capital stock of Borrower and partnership interests
in MBLP set forth on Schedule E attached hereto and except as set forth on said
Schedule E, no other Person directly or indirectly controls 5% or more of any
class of the Borrower’s capital stock. Borrower has not: (i) issued any
unregistered securities in violation of the registration requirements of Section
5 of the Securities Act of 1933, as amended, or any other law; or (ii) violated
any rule, regulation or requirement under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, in either case
where the effect of such violation would be a Material Adverse Occurrence. No
proceeds of the Advances will be used to acquire any security in any transaction
which is subject to Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended.
(o) Except as set forth on Schedule F attached hereto,
Borrower does not have any Contingent Obligations.
(p) All factual information heretofore or herewith furnished
by or on behalf of Borrower to Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such factual
information hereafter furnished by or on behalf of Borrower to Lender will be,
true and accurate in every material respect on the date as of which such
information is dated or certified and no such information contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the statements contained therein not misleading.
(q) Each representation and warranty shall be deemed to be
restated and reaffirmed to Lender on and as of the date of the making of each
Advance and each disbursement of any Term Loan proceeds under this Agreement
except that any reference to the financial statements referred to in Paragraph
16(h) shall be deemed to refer to the financial statements then most recently
delivered to Lender pursuant to Paragraphs 17(a)(i) and (ii).
(r) The un-advanced balance of the Term Loan A Commitment
equals or exceeds the total of all remaining unpaid Project Costs.
17. Affirmative Covenants. Borrower agrees that it will do all of the
following:
(a) Furnish to Lender in form satisfactory to Lender:
(i) Within 90 days after the end of each fiscal year of
Borrower, a complete audited financial report prepared and certified without
qualification or explanatory language by Independent Public Accountants;
together with a copy of the management letter or memorandum, if any, delivered
by such Independent Public Accountants to Borrower and Borrower’s response
thereto. If Borrower shall fail to supply the report within such time limit,
Lender shall have the right (but not the duty) to employ certified public
accountants acceptable to Lender to prepare such report at Borrower’s expense.
(ii) Within 20 days after the end of each month, a balance
sheet and operating figures as to that month and year-to date prepared in
accordance with GAAP on a Consolidated and consolidating basis for Borrower and
any Consolidated Subsidiaries of Borrower and certified as correct by the
Borrower’s chief financial officer or treasurer but subject to adjustments as to
inventories or other items to which an officer of Borrower directs attention in
writing.
(iii) With the financial statements described in Paragraph
17(a)(i) and (ii), a compliance certificate in the form attached as Exhibit D (a
“Compliance Certificate”) certified as true and accurate by the Borrower’s chief
financial officer or treasurer.
(iv) By no later than 12:00 noon on Tuesday of each week, a
Borrowing Base Certificate in the form attached as Exhibit E (a “Borrowing Base
Certificate”) showing the relevant information for the Borrower as of the end
of business on the last Business Day of the preceding week, each Borrowing Base
Certificate shall be accompanied by such supporting reports such as, but not
limited to, any Receivables aging, inventory certificate and sales reports and
collection reports required by the Lender and the Borrowing Base Certificate
and such supporting reports shall be in form and content acceptable to the
Lender and certified as accurate by the Borrower’s chief financial officer or
treasurer.
(v) Within 15 days after the end of each month, (A) a
detailed aging of all Receivables by invoice, including, without limitation, a
reconciliation to the aging report delivered to the Lender for the preceding
month, (b) a certification of ineligible Accounts Receivable, (c) an aging of
all accounts payable as of the end of the preceding month, and (d) a
reconciliation of Receivables to the Borrower’s general ledger and Lender’s
records, each in form and content acceptable to the Lender.
(vi) Within 15 days after the end of each month, an Inventory
certification report for all Inventory locations in form and content acceptable
to Lender and certified as true and accurate by the Borrower’s chief financial
officer or treasurer.
(vii) By no later than April 30, of each year, projections for
Borrower’s then current fiscal year consisting of projected month–end balance
sheets and month–end and year–to–date statements of earnings and cash flows, all
in a form acceptable to Lender and certified by Borrower’s chief financial
officer or treasurer as having been prepared in good faith and representing the
most probable course of Borrower’s business during such fiscal year.
(viii) Immediately upon and in any event within five (5) days
after any officer of Borrower becomes aware of any Default or Event of Default,
a notice describing the nature thereof and what action Borrower proposes to
take with respect thereto
(ix) As soon as available and in event within ten (10) days
after the filing thereof, a copy of each report filed with the Securities and
Exchange Commission.
(x) Immediately upon becoming aware of the occurrence, with
respect to any Plan, of any Reportable Event or any “prohibited transaction” (as
defined in Section 4975 of the Code), a notice specifying the nature thereof and
what action the Borrower proposes to take with respect thereto, and, when
received, copies of and notice from PBGC of intention to terminate or have a
trustee appointed for any Plan.
(xi) From time to time, at Lender’s request, any and all
other material, reports, information, or figures required by Lender.
(b) Permit Lender and its representatives access to, and the
right to make copies of, the books, records, and properties of Borrower at all
reasonable times and reimburse the Lender for all examination fees and expenses
incurred in connection with such examinations at its then current rate for such
services (currently $70.00 per hour or portion thereof) and for its
out-of-pocket expenses incurred in connection therewith; provided, however
that so long as no Default or Event of Default has occurred and is continuing,
Borrower’s obligations to pay for such inspections and/or audits shall not
exceed $2,500.00 per calendar year plus its out-of-pocket expenses incurred in
connection therewith with the initial survey fees not counting against the
annual cap in the first calendar year; and permit Lender and its representatives
to discuss Borrower’s financial matters with officers of Borrower and with its
independent certified public accountant (and, by this provision, Borrower
authorizes its independent certified public accountant to participate in such
discussions).
(c) Pay when due all taxes, assessments, and other
liabilities against it or its properties except those which are being contested
in good faith so long as the Borrower’s title to its property is not materially
adversely affected, its use of such property in the ordinary course of its
business is not materially interfered with and adequate reserves with respect
thereto have been set aside on the Borrower’s books in accordance with GAAP.
(d) Promptly notify Lender in writing of any substantial
change in present management of Borrower.
(e) Pay when due all amounts necessary to fund in
accordance with its terms any Plan.
(f) Comply in all material respects with all laws, acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to Borrower’s business operation or Collateral or
any part thereof; provided, however, that Borrower may contest any such law,
act, rule, regulation or order in good faith by appropriate proceedings so long
as (i) Borrower first notifies Lender of such contest, and (ii) such contest
does not, in Lender’s sole discretion, adversely affect Lender’s right or
priority in the Collateral or impair Borrower’s ability to pay the Obligations
when due.
(g) Promptly notify Lender in writing of: (x) any litigation
which: (i) involves an amount in dispute in excess of $25,000.00; (ii) relates
to the matters which are the subject of this Agreement; or (iii) if determined
adversely to Borrower would be a Material Adverse Occurrence; and (y) any
adverse development in any litigation described in clause (x).
(h) Maintain all of Borrower’s primary operating accounts at
Bremer Bank, National Association.
(i) Maintain, at each Measurement Date commencing with the
Measurement Date occurring on March 31, 2002, the Borrower’s Current Ratio at
not less than 1.05 to 1.0.
(j) Maintain, at each Measurement Date, the Borrower’s
Interest Coverage Ratio at not less than 2.0 to 1.0.
(k) Maintain, at each Measurement Date, the Borrower’s
Capital Base at not less than: (i) $3,500,000.00 during the Borrower’s 2001
fiscal year; or (ii) during any fiscal year thereafter, the greater of: (1) the
Borrower’s Capital Base at the beginning of the immediately preceding fiscal
year; or (2) the sum of: (i) the preceding fiscal year’s Capital Base
requirement calculated in accordance with this Paragraph 17(k); plus (ii) 50% of
the Borrower’s Net Income (but without any deductions for losses) during such
preceding fiscal year.
(l) Maintain, at each Measurement Date, the Borrower’s
Fixed Charge Coverage Ratio at not less than 1.25 to 1.0.
(m) Maintain, at each Measurement Date, the Borrower’s
Leverage Ratio at not more than 4.0 to 1.0.
(n) At all times, keep Lender advised of the name of each
vendor, contractor or sub-contractor for the Project and of the type of work,
material or services and the dollar amount covered by their respective contracts
with Borrower or any of Borrower’s other vendors, contractors or
subcontractors. If requested by Lender, Borrower shall also furnish to the
Lender a copy of each contract with each of the vendors, contractors or
sub–contractors.
(o) Expeditiously complete the Project in a good and
workmanlike manner in accordance with the Borrower’s requirements and the
contracts and subcontracts therefor, in compliance with all applicable
governmental requirements, so that Completion of the Project occurs on or before
the Completion Deadline. Borrower shall correct or cause to be corrected any
departure in the construction of the Project from the Borrower’s requirements
and the contracts and subcontracts therefor or from governmental requirements.
(p) Deliver to Lender revised actual and estimated Project
Costs showing changes in or variations from the Project Costs set forth on the
Approved Project Budget as then most recently revised with any prior written
consent of Lender as soon as such changes or variations are known to Borrower.
At Lender’s request, Borrower shall furnish Lender with copies of all changes
or modifications in the contracts or subcontracts for the Project, prior to
incorporation of any such change or modification into the Project, whether or
not Lender’s consent to such change or modification is required. Borrower
shall not make or consent to any change or modification in the contracts or
subcontracts, and no work shall be performed with respect to any such change or
modification, without the prior written consent of Lender, if such change or
modification affects any of the Equipment shown on Part II of Schedule J.
(q) Upon Completion of the Project, and prior to the final
disbursement of the Term Loan A proceeds to pay for Project Costs, and as a
condition of the same, furnish the Lender with all items required to evidence
Completion.
(r) So long as Term Loan A is outstanding, either cause
the bank issuing the Project Letter of Credit to extend the expiration date
thereof for at least a succeeding one year period within 60 days prior to the
then current expiration date thereof or deliver a replacement Project Letter of
Credit not later than 10 Business Days prior to the end of such 60 day period;
provided, however, that Borrower’s failure to do so shall not be deemed to be an
Event of Default hereunder if the relevant issuing bank timely honors Lender’s
draw on the Project Letter of Credit resulting from Borrower’s failure to comply
with this Paragraph 17(r) and the proceeds of such draw are applied to prepay
the corresponding outstanding principal amount of Term Loan A. The Lender agrees
to make a draw on the Project Letter of Credit for the full amount thereof or,
if less, the outstanding principal amount and accrued unpaid interest on Term
Loan A. The Borrower specifically authorizes the Lender to apply the proceeds
of such draw to such prepayment and amounts so prepaid shall be applied to
installments due on the Term Note A in the inverse order of their maturities.
18. Negative Covenants. Borrower agrees that it will not do
any of the following, without first obtaining Lender’s prior written consent:
(a) Expend or contract to expend for fixed assets in any
fiscal year of Borrower an aggregate amount in excess of $750,000.00 (exclusive
of Project Costs) whether by way of purchase, lease or otherwise, and whether
payable currently or in the future.
(b) Purchase or redeem any shares of Borrower’s capital
stock; or declare or pay any dividends (other than dividends payable in capital
stock); or make any distribution to stockholders of any assets of Borrower.
(c) Incur or permit to exist any interest-bearing
indebtedness, secured or unsecured, including without limitation, indebtedness
for money borrowed or capitalized leases, except (i) borrowings under this
Agreement; (ii) borrowings, if any, which are existing on the date of this
Agreement and which are disclosed on Schedule G attached hereto; or (iii)
indebtedness, not exceeding $750,000.00 at any one time in the aggregate
outstanding incurred to acquire fixed assets but only to the extent that such
fixed asset acquisition is permitted by Paragraph 18(a) and does not comprise a
Project Cost.
(d) Create or permit to exist any Security Interest on any
Collateral now owned or hereafter acquired except: (i) those created in Lender’s
favor and held by Lender; (ii) liens of current taxes not delinquent or taxes
which are being contested in good faith for which an adequate reserve has been
established; (iii) purchase money security interests securing indebtedness
permitted by Paragraph 18(c)(iii); provided, however, that such Security
Interest extends only to the fixed assets acquired with the proceeds of such
indebtedness and secures only such indebtedness; and (iv) Security Interests
disclosed on Schedule B attached hereto, securing only debt outstanding on the
date of this Agreement and disclosed on Schedule G.
(e) Effect any recapitalization; or be a party to any
merger or consolidation; or sell, transfer, convey or lease all or any
substantial part of its property; or sell or assign (except to Lender), with or
without recourse, any Receivables or General Intangibles.
(f) Enter into a new business or purchase or otherwise
acquire any business enterprise or any substantial assets of any person or
entity; or make any loans to any person or entity except for loans and advances
to officers for expenses to be incurred in the ordinary course of business so
long as the aggregate outstanding principal amount thereof does not exceed the
amount permitted by Paragraph 18(g) at any time; or purchase any shares of stock
of, or similar investment in, any entity.
(g) Permit more than $10,000.00 to be owing at any one time
to Borrower by all of Borrower’s employees, officers, directors, or
shareholders, or members of their families, as a result of any borrowings,
purchases, travel advances or other transactions or events.
(h) Become a guarantor or surety or pledge its credit or its
assets on any undertaking of another except for that certain guaranty dated as
of March 29, 1999, made by the Borrower in favor of Stearns Bank National
Association to guarantee the payment of the obligations of Gopher so long as:
(i) the aggregate outstanding principal amount of the guarantied indebtedness
does not exceed $16,300,000.00 at any time; and/or (ii) such guaranty is not
amended, modified or supplemented subsequent to the date of this Agreement to
impose any greater financial burden on the Borrower than exists on the date of
this Agreement.
(i) In any fiscal year pay excessive or unreasonable
salaries, bonuses, fees, commissions, fringe benefits or other forms of
compensation (such salaries, bonuses, fees, commissions, fringe benefits or
other forms of compensation being “Compensation”) to any of its officers or
directors; or, if any Default or Event of Default has occurred and is
continuing, increase the Compensation of any officers or directors.
(j) Make any substantial change in present management or
policy or in its present business or enter into a new business.
(k) Enter into any agreement providing for the leasing by
Borrower of property which has been or is to be sold or transferred by Borrower
to the lessor thereof, or which is substantially similar in purpose to the
property so sold or transferred.
(l) Change its terms of trade with respect to the due date
of any Receivable.
(m) Change its fiscal year.
(n) (i) Permit or suffer any Plan maintained for employees
of Borrower or any commonly controlled entity to engage in any transaction which
results in a liability of Borrower under Section 409 or 502(i) of ERISA or
Section 4975 of the Code; (ii) permit or suffer any such Plan to incur any
“accumulated funding deficiency” (within the meaning of Section 302 of ERISA and
Section 412 of the Code), whether or not waived; (iii) terminate, or suffer to
be terminated, any Plan covered by Title IV of ERISA maintained by Borrower or
any commonly controlled entity or permit or suffer to exist a condition under
which PBGC may terminate any such Plan; or (iv) permit to exist the occurrence
of any Reportable Event (as defined in Title IV of ERISA) which represents
termination by the PBGC of any Plan.
(o) Either: (i) Enter into any transaction with any
Affiliate of Borrower upon terms and conditions less favorable to Borrower than
the terms and conditions which would apply in a similar transaction with an
unrelated third party; or (ii) amend, modify or supplement any provision of, or
waive any other party’s compliance with any of the terms of, the Facilities and
Services Sharing Agreement dated as of March 29, 1999, between the Borrower and
Gopher or of the Lease dated as of March 29, 1999, between Gopher, as landlord,
and the Borrower, as tenant, covering the Borrower’s premises at 882 West
Seventh Street, St. Paul, MN, which: (A) requires the Borrower to pay any
additional consideration under such agreement or otherwise imposes any financial
obligation or burden on the Borrower; (B) could result in an Adverse Event; or
(C) is materially adverse to the rights and benefits of the Lender under the
Loan Documents.
(p) Enter into, or permit to exist, any agreement, bond,
note or other instrument with or for the benefit of any Person other than the
Lender which would (i) prohibit the Borrower from granting, or otherwise limit
the ability of the Borrower to grant, to the Lender any Security Interest on any
assets or properties of the Borrower, (ii) require the Borrower to grant a
Security Interest to any other Person if the Borrower grants any Security
Interest to the Lender (iii) be violated or breached by Borrower under any Loan
Document or by the performance by Borrower of its obligations under any Loan
Document.
(q) (i) Make any payment of, or purchase, redeem, or
acquire, any Subordinated Debt except as permitted by the Subordination
Agreement pertaining to such Subordinated Debt; (ii) give security for all or
any part of any Subordinated Debt; (iii) take or omit to take any action whereby
the subordination of any Subordinated Debt or any part thereof to the
Obligations might be terminated, impaired or adversely affected; (iv) settle,
compromise, discharge or otherwise reduce the outstanding principal amount of
any Subordinated Debt or exercise any right to convert the Subordinated Debt to
equity except for payments made on such Subordinated Debt in accordance with the
Subordination Agreement pertaining thereto; or (v) omit to give the Lender
prompt written notice of any default or event which, with the giving of notice
or lapse of time, would constitute a default under any other agreement or
instrument relating to any Subordinated Debt.
19. Availability of Collateral. Lender may from time to
time, for its convenience, segregate or apportion the Collateral for purposes of
determining the amounts and maximum amounts of Loans which may be made
hereunder. Nevertheless, Lender’s security interest in all such Collateral, and
any other collateral rights, interests and properties which may now or hereafter
be available to Lender, shall secure and may be applied to the payment of any
and all loans, Advances, and other Obligations secured by Lender’s Security
Interest, in any order or manner of application and without regard to the method
by which Lender determines to make Advances hereunder.
20. Default and Remedies. It shall be an Event of Default
under this Agreement if:
(a) Borrower fails to make any payment required under this
Agreement or any present or future supplements hereto or under any other
agreement between Borrower and Lender when due, or if payable upon demand, upon
demand; or
(b) Borrower fails to perform or observe any covenant,
condition or agreement contained in this Agreement or any Loan Document on its
part to be performed (other than those failures covered by other subparagraphs
of this Paragraph) and such default shall continue for a period of 30 days after
whichever of the following dates is the earliest: (i) the date the Borrower
gives notice of such failure to the Lender, (ii) the date the Borrower should
have given notice of such failure to the Banks pursuant to Paragraph
17(a)(viii);or (iii) the date the Lender gives notice of such failure to the
Borrower; or
(c) Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower proves to have been false in a
material respect when made; or
(d) A proceeding seeking an order for relief under the
Bankruptcy Code is commenced by or against Borrower; or
(e) Borrower becomes insolvent or generally fails to pay,
or admit in writing its inability to pay, its debts as they become due; or
(f) Borrower applies for, consents to, or acquiesces in,
the appointment of a trustee, receiver or other custodian for it or for any of
its property, or makes a general assignment for the benefit of creditors; or, in
the absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for Borrower or for a substantial part of
Borrower’s property; or
(g) Any other reorganization, debt arrangement, or other
case or proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding is commenced in respect of Borrower; or
(h) Borrower takes any action to authorize, or in
furtherance of, any of the events described in the foregoing clauses (d) through
(g); or
(i) Any judgments, writs, warrants of attachment,
executions or similar process (not covered by insurance) is issued or levied
against Borrower or any of its assets in excess of an aggregate amount of
$50,000.00 for any or all of such judgments, writs, warrants, executions or
similar process and is not released, vacated or fully bonded prior to any sale
and in any event within 90 days after its issue or levy; or
(j) Borrower shall fail to comply with Paragraph 13, any
of Paragraphs 17(a), (c), (i), (j) or (k) through (r) (both inclusive) or any
of Paragraphs 18(a) through (q) (both inclusive); or
(k) The maturity of any indebtedness of the Borrower (other
than indebtedness under this Agreement or the other Loan Documents) shall be
accelerated, or Borrower shall fail to pay any such indebtedness when due or, in
the case of such indebtedness payable on demand; or
(l) Any Change of Control shall occur except that if the
Change of Control occurs under subsection (b) of the definition of “Change of
Control”, then no Event of Default under this Paragraph 20(l)shall be deemed to
have occurred if, within 60 days after the occurrence of such Change of
Control, Borrower appoints a successor thereto acceptable to Lender, in its
sole discretion, or: (ii) if an acceptable successor is not timely appointed,
Borrower pays all Obligations in full and terminates this Agreement within 120
days after the occurrence of such Change of Control; provided, however, that
such Change of Control shall constitute a Default during such 120 day period; or
(m) Any Key Officer fails to perform or observe any
covenant, condition or agreement contained in his Support Agreement on his
part to be performed; or
(n) Any Material Adverse Occurrence shall occur; or
(o) Work on the Project shall be substantially abandoned, or
shall by reason of Borrower’s fault, be unreasonably delayed or discontinued for
a period of ten (10) days, or construction shall be delayed for any reason
whatsoever to the extent that the Project cannot, in the reasonable judgment of
the Lender, be accomplished prior to the Completion Deadline; or
(p) Lender determines that the remaining un-advanced balance
of the Term Loan Commitment is insufficient to fully pay all of the then unpaid
Project Costs and Borrower fails to deposit with the Lender, within five (5)
Business Days after demand, sufficient funds to cover such deficiency.
Upon the occurrence of any Event of Default described in Paragraphs 20(d), (e),
(f), (g) or (h), all Obligations shall be and become immediately due and payable
without any declaration, notice, presentment, protest, demand or dishonor of any
kind (all of which are hereby waived) and Borrower’s ability to obtain any
additional Advance or any additional proceeds of any Term Loan under this
Agreement shall be immediately and automatically terminated. Upon the
occurrence of any other Event of Default, Lender, without notice to Borrower,
may terminate Borrower’s ability to obtain any additional Advance or any
additional proceeds of any Term Loan under this Agreement and may declare all or
any portion of the Obligations to be due and payable, without notice,
presentment, protest or demand or dishonor of any kind (all of which are hereby
waived), whereupon the full unpaid amount of the obligations which shall be so
declared due and payable shall be and become immediately due and payable. Upon
the occurrence of an Event of Default, Lender shall have all the rights and
remedies of a secured party under the Commercial Code and may require Borrower
to assemble the Collateral and make it available to Lender at a place designated
by Lender, and Lender shall have the right to take immediate possession of the
Collateral and may enter any of the premises of Borrower or wherever the
Collateral is located with or without process of law and to keep and store the
same on said premises until sold (and if said premises be the property of
Borrower, Borrower agrees not to charge Lender or a purchaser from Lender for
storage thereof for a period of at least 90 days). Upon the occurrence of an
Event of Default, Lender, without further demand, at any time or times, may sell
and deliver any or all of the Collateral at public or private sale, for cash,
upon credit or otherwise, at such prices and upon such terms as Lender deems
advisable, at its sole discretion. Any requirement under the Commercial Code or
other applicable law of reasonable notice will be met if such notice is mailed
to Borrower at its address set forth in the opening paragraph of this Agreement
at least ten (10) days before the date of sale. Lender may be the purchaser at
any such sale, if it is public. The proceeds of sale will be applied first to
all expenses of retaking, holding, preparing for sale, selling and the like,
including attorneys’ fees and legal expenses (whether or not suit is commenced)
including, without limitation, reasonable attorneys’ fees and legal expenses
incurred in connection with any appeal of a lower court’s order or judgment and
second to the payment (in whatever order Lender elects) of all other obligations
chargeable to Borrower’s loan account hereunder. Subject to the provisions of
the Commercial Code, Lender will return any excess to Borrower and Borrower
shall remain liable to Lender for any deficiency. Borrower agrees to give
Lender immediate notice of the existence of any Default or Event of Default.
21. Conditions Precedent to Closing Date. The occurrence of
the Closing Date and the obligation of Lender to make the initial Advance or any
Term Loan is subject to the condition precedent that Lender shall have received
on or before the Closing Date or the date of the initial Advance or any Term
Loan copies of all of the following, unless waived by Lender:
(a) A favorable opinion of counsel to Borrower in form and
substance satisfactory to Lender;
(b) UCC-1 Financing Statements in a form acceptable to
Lender appropriately completed and duly executed by Borrower;
(c) Recent UCC searches from the filing offices in all
states required by Lender which reflect that no other Person holds a Security
Interest in any Collateral of Borrower, except for Security Interests permitted
by Paragraph 18(d);
(d) The Notes, in form and substance satisfactory to Lender,
appropriately completed and duly executed by the Borrower;
(e) A certified copy of all documents evidencing any
necessary consent or governmental approvals (if any) with respect to the Loan
Documents or any other documents provided for in this Agreement;
(f) A certificate by the Secretary or any Assistant
Secretary of Borrower certifying as to: (i) attached resolutions of Borrower’s
Board of Directors authorizing or ratifying the execution, delivery and
performance of the Loan Documents to which Borrower is a party and any other
documents provided for by this Agreement, (ii) the names of the officers of
Borrower authorized to sign the Loan Documents together with a sample of the
true signature of such officers, and (iii) attached bylaws of Borrower;
(g) A copy of Borrower’s articles of incorporation certified
by the Secretary of State;
(h) Certificates of Good Standing for Borrower issued by its
state of incorporation and by those states requested by Lender;
(i) Evidence of insurance for all insurance required by
the Loan Documents;
(j) An officer certificate, in form and substance
satisfactory to Lender, executed by the President of Borrower;
(k) A Restricted Access Lockbox; Collateral Account and
Disbursement Account Agreement, substantially in the form provided by the
Lender, appropriately completed and duly executed by Borrower and the bank party
thereto;
(l) Such landlord lien waivers and mortgage consents as
Lender, in its sole discretion, may require, in form and substance satisfactory
to Lender in its sole discretion, appropriately completed and duly executed;
(m) An Acknowledgment and Agreement in the form provided by
the Lender appropriately completed and duly executed by Key Officer who has
executed and delivered a Support Agreement;
(n) An Acknowledgment and Agreement in the form provided by
the Lender appropriately completed and duly executed by each holder of
Subordinated Debt including, without limitation, MBLP and Stearns Bank National
Association;
(o) An Acknowledgment and Agreement in the form provided by
the Lender appropriately completed and duly executed by Stearns Bank National
Association, as the party to an Intercreditor Agreement dated as of the date of
the Original Agreement;
(p) An origination fee of $50,000.00 in immediately
available funds; and
(q) Such other approvals, opinions or documents as Lender may require.
22. Conditions Precedent to All Advances; Etc. The
occurrence of the Closing Date and the obligation of Lender to make any Advance
(including the initial Advance) or to disburse any proceeds of any Term Loan
shall be subject to the satisfaction of each of the following conditions, unless
waived in writing by Lender:
(a) the representations and warranties of Borrower set
forth in this Agreement are true and correct on the date of such credit
extension (and after giving effect to these then being made); and
(b) No Default, no Event of Default and no Material Adverse
Occurrence shall then have occurred and be continuing on the date of such credit
extension or result therefrom.
22B. Additional Conditions Precedent to Term Loan A. The
obligation of Lender to disburse any proceeds of the Term Loan A is subject to
the condition precedent that Lender shall have received on or before the date of
initial disbursement of the Term Loan A, copies of all of the following, unless
waived by Lender:
(a) The Approved Project Budget;
(b) The Project Letter of Credit but only if, after giving
effect to the disbursement of proceeds of Term Loan A, the aggregate principal
amount of all such disbursements would exceed the Term Loan A Commitment
excluding the amount thereof attributable to the Project Letter of Credit;
(c) Copies of all building permits required to complete
construction of the Project or evidence satisfactory to Lender that such
permits will be obtained;
(d) The Lender shall have obtained a participant in the
Term Loan A for not less than $2,000,000.00 but only if, after giving effect to
the disbursement of proceeds of Term Loan A, the aggregate principal amount of
all such disbursements would exceed the Term Loan A Commitment excluding the
amount thereof attributable to the Project Letter of Credit; and
(e) Such other approvals, opinions or documents as Lender may require.
23. Termination. Subject to automatic termination of
Borrower’s ability to obtain additional Advances or additional disbursements of
any Term Loan proceeds under this Agreement upon the occurrence of any Event of
Default specified in Paragraphs 20(d), (e), (f), (g) or (h) and to Lender’s
right to terminate Borrower’s ability to obtain additional Advances or
additional disbursement of any Term Loan proceeds under this Agreement upon the
occurrence of any other Event of Default, this Agreement shall have a term
ending on the Revolving Credit Termination Date. Lender’s rights with respect
to outstanding Obligations owing on or prior to the Revolving Credit Termination
Date will not be affected by termination and all of said rights including
(without limitation) Lender’s Security Interest in the Collateral existing on
such Revolving Credit Termination Date or acquired by Borrower thereafter.
24. Grant of License to Use Patents and Trademarks
Collateral. For the purpose of enabling Lender to exercise rights and remedies
under this Agreement, Borrower hereby grants to Lender an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to Borrower) to use, license or sublicense any patent or trademark
now owned or hereafter acquired by Borrower and wherever the same may be
located, and including in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and to all computer and
automatic machinery software and programs used for the compilation or printout
thereof.
25. Miscellaneous.
(a) The performance or observance of any affirmative or
negative covenant or other provision of this Agreement and any supplement hereto
may be waived by Lender in a writing signed by Lender but not otherwise. No
delay on the part of Lender in the exercise of any remedy, power or right shall
operate as a waiver thereof, nor shall any single or partial exercise of any
remedy, power or right preclude other or further exercise thereof or the
exercise of any other remedy, power or right. Each of the rights and remedies
of Lender under this Agreement will be cumulative and not exclusive of any other
right or remedy which Lender may have hereunder or as allowed by law.
(b) Any notice, demand or consent authorized by this
Agreement to be given to Borrower shall be deemed to be given when transmitted
by telex or telecopier or personally delivered, or three days after being
deposited in the U.S. mail, postage prepaid, or one day after delivery to
Federal Express or other overnight courier service, in each case addressed to
Borrower at its address shown in the opening paragraph of this Agreement, or at
such other address as Borrower may, by written notice received by Lender,
designate as Borrower’s address for purposes of notice hereunder. Any notice or
request authorized by this Agreement to be given to Lender shall be deemed to be
given when transmitted by telex or telecopier or personally delivered, or three
days after being deposited in the U.S. mail, postage prepaid, or one day after
delivery to Federal Express or other overnight courier, in each case addressed
to Lender at its address shown in the opening paragraph of this Agreement, or at
such other address as Lender may, by written notice received by Borrower,
designate as Lender’s address for purposes of notice hereunder; provided,
however, that any notice to Lender given pursuant to Paragraph 4A(b), 4B(b) or
4C(b) shall not be deemed given until received.
(c) This Agreement, including exhibits and schedules and
other agreements referred to herein, is the entire agreement between the parties
supersedes and rescinds all prior agreements relating to the subject matter
herein, cannot be changed, terminated or amended orally, and shall be deemed
effective as of the date it is accepted by Lender.
(d) Borrower agrees to pay and will reimburse Lender on
demand for all out-of-pocket expenses incurred by Lender arising out of this
transaction including without limitation filing and recording fees and
attorneys’ fees and legal expenses (whether or not suit is commenced) incurred
in the protection and perfection of Lender’s security interest in the
Collateral, in the enforcement of any of the provisions of this Agreement or of
Lender’s rights and remedies hereunder and against the Collateral, in the
defense of any claim or claims made or threatened against Lender arising out of
this transaction or otherwise, including, without limitation, in each instance,
all reasonable attorneys’ fees and legal expenses incurred in connection with
any appeal of a lower court’s order or judgment. Lender is authorized to deduct
any such expenses from any amount due Borrower and/or to add such expenses to
Borrower’s loan account hereunder.
(e) Borrower hereby agrees to indemnify, exonerate and hold
Lender and its officers, directors, employees and agents (the “Indemnified
Parties”) free and harmless from and against any and all actions, causes of
action, suits, losses, liabilities and damages, and expenses in connection
therewith including, without limitation, reasonable attorneys’ fees and
disbursements (the ‘Indemnified Liabilities”), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to:
(1) any transaction financed or to be financed in whole or
in part directly or indirectly with proceeds of any Credit extension hereunder,
or
(2) the execution, delivery, performance or enforcement of
this Agreement or any document executed pursuant hereto by any of the
Indemnified Parties, except for any such Indemnified Liabilities arising on
account of any Indemnified Party’s gross negligence or willful misconduct.
If and to the extent that the foregoing undertaking may be unenforceable for any
reason, Borrower hereby agrees to make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. The provisions of this Paragraph shall survive
termination of this Agreement.
(f) This Agreement is made under and shall be governed by
and interpreted in accordance with the internal laws of the State of Minnesota,
except to the extent that the perfection of the Security Interest hereunder, or
the enforcement of any remedies hereunder with respect to any particular
Collateral, shall be governed by the laws of a jurisdiction other than the State
of Minnesota. Captions herein are for convenience only and shall not be deemed
part of this Agreement.
(g) This Agreement shall be binding upon Borrower and Lender
and their respective successors, assigns, heirs, and personal representatives
and shall inure to the benefit of Borrower, Lender and the successors and
assigns of Lender, except that Borrower may not assign or transfer its rights
hereunder without the prior written consent of Lender, and any assignment or
transfer in violation of this provision shall be null and void. In connection
with the actual or prospective sale by Lender of any interest or participation
in the obligations, Borrower authorizes Lender to furnish any information in its
possession, however acquired, concerning Borrower or any of its Affiliates to
any person or entity.
(h) Borrower hereby irrevocably submits to the jurisdiction
of any Minnesota state court or federal court sitting in Minneapolis or St.
Paul, Minnesota, over any action or proceeding arising out of or relating to the
Agreement, and Borrower hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such Minnesota State or
Federal court. Borrower hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding. Borrower irrevocably consents to the service of
copies of the summons and complaint and any other process which may be served in
any such action or proceeding by the mailing by United States certified mail,
return receipt requested, of copies of such process to Borrower’s address stated
in the preamble hereto. Borrower agrees that judgment final by appeal, or
expiration of time to appeal without an appeal being taken, in any such action
or proceeding shall be conclusive and may be enforced in any other jurisdictions
by suit on the judgment or in any other manner provided by law. Nothing in this
Paragraph shall affect the right of Lender to serve legal process in any other
manner permitted by law or affect the right of Lender to bring any action or
proceeding against Borrower or its property in the courts of any other
jurisdiction. Borrower agrees that, if it brings any action or proceeding
arising out of or relating to this Agreement, it shall bring such action or
proceeding in Hennepin County or Ramsey County, Minnesota.
(i) Limitation of Liability. Neither the Lender nor any
affiliate of the Lender shall have any liability with respect to, and Borrower
hereby waives, releases and agrees not to sue upon, any claim for any special,
indirect or consequential damages suffered by Borrower in connection with,
arising out of, or in any way related to, this Agreement, any Note or any other
Loan Document, or the transactions contemplated and the relationship established
hereby or thereby, or any act, omission or event occurring in connection
herewith or therewith.
(j) Effect on Original Agreement. On the Closing Date, the
Original Agreement shall be completely amended and restated by this Agreement,
and each reference to the “Credit Agreement,” “Loan Agreement,”“therein,”
“thereof,” “thereby,” or words of like import referring to the Original
Agreement in any Loan Document shall mean and be a reference to the Original
Agreement as amended and restated by this Agreement and the $3,032,243.43
aggregate principal balance of the “Advances” made thereunder which are
outstanding on the Closing Date shall be deemed to be Advances made hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
LENDER: BREMER BUSINESS FINANCE CORPORATION By
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Its
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BORROWER: MBC HOLDING COMPANY By
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Its
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|
EXHIBIT 10.22
RELEASE AND SEVERANCE COMPENSATION AGREEMENT
THIS RELEASE AND SEVERANCE COMPENSATION AGREEMENT (the “Agreement”) is between
ProAssurance Corporation, a Delaware corporation (“ProAssurance”), MEEMIC
Insurance Company, a Michigan insurance company (“MEEMIC Insurance”), MEEMIC
Holdings, Inc., a Michigan corporation (“MEEMIC Holdings”) and William P.
Sabados, an individual (the “Executive”). ProAssurance, MEEMIC Insurance, and
MEEMIC Holdings and their respective majority-owned subsidiaries are hereinafter
collectively referred to as the “Companies.”
RECITALS:
The Executive is currently rendering valuable services to MEEMIC Insurance,
which is a wholly-owned subsidiary of MEEMIC Holdings. ProAssurance has
acquired, or will acquire, control of MEEMIC Holdings and MEEMIC Insurance in a
transaction (the “Consolidation”) that will result in a “change of control” (the
“Change of Control”) under the terms and conditions of the Change of Control
Agreement among MEEMIC Insurance, MEEMIC Holdings and the Executive effective as
of July 1, 2000 (the “Change of Control Agreement”). The Companies have offered
to employ the Executive in an at will employment relationship after the
Consolidation and to expand protection to the Executive in the form of severance
benefits payable on termination of employment under certain circumstances after
the Consolidation on the condition that the Executive releases the Companies
from any past or future liability under the Change of Control Agreement. The
Executive desires to continue employment with the Companies under such terms and
conditions, and with the protection afforded to the Executive by this Agreement.
AGREEMENT
NOW, THEREFORE, These Premises Considered, and in consideration of the mutual
covenants and promises in this Agreement, the sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Term of Agreement. This Agreement is subject to, and
conditioned upon, the closing (the “Closing”) of the transactions (the
“Consolidation”) contemplated by the Agreement to Consolidate by and between
Medical Assurance, Inc. and Professionals Group, Inc. dated June 22, 2000, as
amended November 1, 2000. This Agreement is effective on the date of Closing
which is scheduled to occur on June 27, 2001, and shall continue in effect for a
period of two years from the date of Closing (the “Initial Term”). Thereafter,
this Agreement shall automatically be extended for successive terms of one year
(a “Renewal Term”), except this Agreement may be terminated after the first
Renewal Term upon delivery of written notice of the termination of this
Agreement by any of the Companies at least six months prior to the expiration of
any Renewal Term. If the Executive’s employment is terminated during the term
of the Agreement, the date on which the Executive’s employment terminates shall
be referred to as the “Date of Termination.”
2. Severance Benefits. If during the term of this Agreement the
Executive leaves the employment of the Company for Good Reason, as explained in
Section 4 of this Agreement, and the Executive signs the release (the “Release”)
that is attached to and incorporated in this Agreement, the Executive shall
receive the following benefits (the “Severance Benefits”):
(a) An amount equal to either of whichever the following is
applicable: (i) if the Date of Termination occurs during the Initial Term, two
(2) times the Executive’s annual base salary; or (ii) if the Date of Termination
occurs during a Renewal Term, one (1) times the Executive’s annual base salary.
The “annual base salary” of the Executive shall be defined as the Executive’s
base rate of compensation in effect as of the Date of Termination, but in no
event less than the Executive’s base rate of compensation in effect as of the
end of the last calendar quarter preceding the Date of Termination;
(b) An amount equal to either of whichever of the following is
applicable: (i) if the Date of Termination occurs during the Initial Term, two
(2) times the average total annual incentive award(s) or bonus(es); or (ii) if
the Date of Termination occurs during a Renewal Term, one (1) times the average
total annual incentive award(s) or bonus(es). The “average total annual
incentive award(s) or bonus(es)” shall mean the average of the sum of (i) cash
awards or bonuses earned with the Companies by the Executive, plus (ii) the
value of stock awarded to the Executive by the Companies for each complete
fiscal year during the last three years (whether or not deferred) or, if
shorter, over the Executive’s entire period of employment with the Companies.
The value of stock awarded to the Executive shall be calculated based on the
value of the stock as of the date the stock was awarded to the Executive as
annual incentive compensation. Notwithstanding the foregoing, the Executive’s
actual total annual incentive awards or bonuses shall be calculated excluding
the value of options to purchase stock which may have been awarded to the
Executive;
(c) Payment of the Executive’s monthly COBRA premiums for continued
health and dental insurance coverage for the shorter of the following: (i) 18
months if the Date of Termination occurs in the Initial Term; (ii) 12 months if
the Date of Termination occurs in the Renewal Term; (iii) until the Executive no
longer has coverage under COBRA; or (iv) until the Executive becomes eligible
for substantially similar coverage under a subsequent employer’s group health
plan; and
(d) Outplacement services that are customary to Executive’s
position.
The cash severance benefits described in subparagraphs (a) and (b) above shall
be paid in equal monthly installments during the period that the covenants set
forth in Section 7 shall be in effect commencing upon the Date of Termination;
provided that the obligation of the Companies to pay such cash severance
benefits to the Executive shall be subject to termination under the provisions
of Section 7 hereof in the event the Executive should violate the covenants set
forth therein; and provided further that the payment of such cash severance
benefits shall be accelerated and payable in lump sum by the Companies upon a
breach of this Agreement as a result of the failure of a successor (herein
defined) to assume this Agreement as required in Section 10 of this Agreement.
The Companies shall withhold from any amounts payable under this Agreement all
federal, state, city or other income and employment axes that shall be required.
The Companies shall fund the obligation to pay cash Severance Benefits by
depositing in escrow an amount equal to the sum of the amounts payable to the
Executive under subparagraphs (a) and (b) hereof (the “Escrow Funds”) with
SouthTrust Bank (or another financial institution with total assets of more than
$1,000,000,000) as escrow agent (the “Escrow Agent”). The Escrow Funds shall be
held, invested and distributed by Escrow Agent in accordance with the following
provisions. At the time of delivery of the Escrow Funds, the Escrow Agent shall
acknowledge receipt of the Escrow Funds and agree to be bound by the provisions
of this Agreement in a separate written document. The Escrow Agent shall invest
the Escrow Funds in a money market account. Unless and until the Escrow Agent
receives notice from ProAssurance that the Executive has breached this
Agreement, the Escrow Agent shall distribute the Escrow Funds to the Executive
in the same number of equal monthly installments as the number of whole calendar
months in the Restricted Period (as defined in Section 7 hereof). The monthly
installments shall be distributed to the Executive on the first day of each
calendar month in the Restricted Period together with accrued and undistributed
earnings on the Escrow Funds. If the Company delivers written notice to the
Escrow Agent and Executive that the cash Severance Benefits payable to Executive
are subject to termination under Section 7 of this Agreement, the Escrow Agent
shall distribute the balance of the Escrow Funds and accrued and undistributed
earnings thereon to ProAssurance unless the Escrow Agent receives a written
notice of objection from the Executive within 15 days after delivery of
ProAssurance’s notice. If Executive provides a timely notice of objection, the
Escrow Agent shall hold the Escrow Funds until it receives a written notice of
distribution from the arbitrator appointed pursuant to Section 13 hereof or a
joint written notice of distribution from the Executive and ProAssurance. The
failure of the Executive or the Company to deliver notice to the Escrow Agent as
herein provided shall not be a waiver of any of their respective rights under
this Agreement.
The Executive shall be entitled to the following in addition to and not in
limitation of the Severance Benefits: (i) accrued and unpaid base salary as of
the Date of Termination; (ii) accrued vacation and sick leave, if any, on Date
of Termination in accordance with the then current policy of the Companies with
respect to terminated employees generally; and (iii) vested benefits under the
Companies’ employee benefit plans in which the Executive was a participant on
Date of Termination, which vested benefits shall be paid or provided for in
accordance with the terms of said employee benefit plans. If the Executive has
regular use of a vehicle provided by the Companies for business and personal use
on Date of Termination, the Companies shall offer for sale to the Executive the
vehicle at a purchase price equal to either of the following: (x) if owned by
any of the Companies, the then current book value of the vehicle (cost less
accumulated depreciation), or (y) if leased by any of the Companies, the
purchase price upon the exercise of the purchase option, if any, under the
lease.
The Executive shall not be entitled to receive Severance Benefits if employment
with the Companies is terminated by reason of death of Executive, retirement of
Executive pursuant to the Company’s retirement plan as then in effect, the
Executive having reached the age of mandatory retirement (if such requirement
then exists for bona fide executives) or Disability of Executive (herein
defined); or by reason of termination of employment by the Executive without
Good Reason (herein defined); or by reason of termination of employment by the
Companies with Cause (herein defined).
The Executive shall be under no duty or obligation to seek or accept other
employment and shall not be required to mitigate the amount of the Severance
Benefits provided under the Agreement by seeking employment or otherwise;
provided, however, that the Executive shall be required to notify the Companies
if the Executive becomes covered by a health or dental care program providing
substantially similar coverage, at which time health or dental care continuation
coverage provided under this Agreement shall cease.
3. Parachute Payments. Subject to Section 280G of the Internal
Revenue Code of 1986, as amended (“Code”), if the board of directors of
ProAssurance determines that an excise tax under Section 4999 (“Excise Tax”)
would be due, the Executive’s Severance Benefits under this Agreement shall be
limited to the amount necessary to avoid the Excise Tax only if applying such a
limit results in a greater net benefit to the Executive than would have resulted
had the benefits not been limited and an Excise Tax paid. For purposes of
making such computation:
(a) Any other payments or benefits received or to be received by the
Executive in connection with the Change of Control or the Executive’s
termination of employment (whether pursuant to the terms of this Agreement or
any other plan, arrangement, or agreement with the Companies, or with any person
whose actions result in the Change of Control) shall be treated as “parachute
payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess
parachute payments” within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless, in the opinion of tax counsel
selected by ProAssurance’s independent auditors, such other payments or benefits
(in whole or in part) do not constitute parachute payments, or such other
payments or benefits (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of the Code
in excess of the base amount within the meaning of Section 280G(b)(3) of the
Code, or such other payments or benefits (in whole or in part) are otherwise not
subject to the Excise Tax. In the event an Excise Tax is due, because of
payments made under this Agreement, the Executive shall be responsible for
paying said Excise Tax.
(b) The amount of the Severance Benefits that will be treated as
subject to the Excise Tax shall be equal to the lesser of: (i) the total amount
of the Severance Benefits; or (ii) the amount of excess parachute payments
within the meaning of Section 280G(b)(1) (after applying subparagraph (a)
above).
(c) The value of any noncash benefits or any deferred payment or
benefit shall be determined by ProAssurance’s independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.
(d) The Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in a calendar year in which the
Severance Benefits are to be paid, and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive’s
residence on the Date of Termination, net of the maximum reduction in federal
income taxes that could be obtained from deduction of such state and local
taxes.
In the event the Internal Revenue Service adjusts the computation in
subparagraphs (a) through (d) above, so that the Executive did not receive the
greatest net benefit, the Companies shall reimburse the Executive for the amount
necessary to make the payment of Severance Benefits to the Executive to the
extent permitted hereunder, plus a market rate of interest as determined by the
Board of Directors of ProAssurance.
4. Good Reason for Termination. In the event that the
Executive’s employment relationship with the Companies is terminated for any of
the reasons described in this Section 4, the Executive shall be entitled to
Severance Benefits, subject to and described in Section 2 of this Agreement.
“Good Reason” shall constitute any of the following circumstances if they occur
without the Executive’s express written consent during the term of this
Agreement:
(a) The Executive no longer holds an executive level position with
executive level responsibilities with the Companies consistent with the
Executive’s training and experience;
(b) The Companies require that the Executive’s primary location of
employment be more than 50 miles from the location of the Executive’s primary
location of employment on June 27, 2001;
(c) The failure of the Companies to provide the Executive, at a
level commensurate with the Executive’s position, the incentive compensation
opportunities and employee benefits that are provided to other executives of
comparable rank with the Companies;
(d) A breach by the Companies of any provision of
this Agreement. including without limitation, the failure of a successor to
assume this Agreement as required in Section 10 hereof;
(e) The termination of the Executive’s employment
by the Companies for a reason other than: (i) death; (ii) retirement pursuant to
the Companies’ retirement plan as then in effect; (iii) Disability as explained
in Section 5 of this Agreement; (iv) the Executive has reached the age of
mandatory retirement (if such requirement then exists for bona fide executives);
(v) for Cause, as explained in Section 6 of this Agreement;
(f) A reduction by the Companies in the Executive’s base salary in
effect as of the date of this Agreement; or
(g) The termination or non-renewal of this Agreement by the
Companies.
The Executive must provide the Companies with written notice no later than 45
calendar days after the Executive knows or should have known that Good Reason
has occurred. Following the Executive’s Notice, the Companies shall have 45
calendar days to rectify the circumstances causing the Good Reason. If the
Company fails to rectify the event(s) causing the Good Reason within the 45 day
period after the Executive’s Notice, or if any of the Companies delivers to the
Executive written notice stating that the circumstances cannot or shall not be
rectified, the Executive shall be entitled to assert Good Reason and terminate
employment on or before 90 days after the delivery of the Executive’s Notice.
Should Executive fail to provide the required Notice in a timely manner, Good
Reason shall not be deemed to have occurred as a result of that event. The
Initial Term or a Renewal Term shall not be deemed to have expired during the
Notice period, however, as long as the Executive has provided Notice within the
Term.
5. Disability. For purposes of this Agreement, Disability means
a serious injury or illness that requires the Executive to be under the regular
care of a licensed medical physician and renders the Executive incapable of
performing the essential functions of the Executive’s position for 12 months as
determined by the Board of Directors of the Companies in good faith and upon
receipt of and in reliance on competent medical advice from one or more
individuals selected by the Board of Directors, who are qualified to give
professional medical advice.
6. Cause. If the Executive’s employment is terminated for Cause,
as described below in this Section, the Executive shall not be eligible for
severance benefits and all rights of the Executive and obligations of the
Companies under this Agreement shall expire. Cause means:
(a) The Executive has been convicted in a federal or state court of
a crime classified as a felony;
(b) Action or inaction by the Executive (i) that constitutes
embezzlement, theft, misappropriation or conversion of assets of the Companies
which alone or together with related actions or inactions involve assets of more
than a de minimis amount, or that constitutes fraud, gross malfeasance of duty,
or conduct grossly inappropriate to Executive’s office; and (ii) such action or
inaction has adversely affected or is likely to adversely affect the business of
the Companies or has resulted or is intended to result in direct or indirect
gain or personal enrichment of the Executive to the detriment of the Companies;
(c) The Executive has been grossly inattentive to, or in a grossly
negligent manner failed to competently perform, Executive’s job duties and the
failure was not cured within 45 days after written notice from the Companies.
Any termination of the Executive’s employment by the Companies for Cause shall
be communicated by a notice of termination (the “Notice of Termination”) to the
Executive. The Notice of Termination shall be a written notice indicating the
specific termination provision of this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under this provision.
7. Non-Competition.
(a) In the event the Date of Termination occurs during the Initial
Term, the Executive (i) will be bound by and subject to any covenant not to
compete or noncompetition agreement with the Companies (or any of them) to which
the Executive was subject as of the Date of Termination (other than the
noncompetition agreement set forth in Section 7(b) hereof), or (ii) in the
alternative if the Executive is not subject to a covenant not to compete or
noncompetition agreement with the Companies (or any of them) as of the Date of
Termination (other than a covenant not to compete or noncompetition agreement
contained in an employee handbook or otherwise applicable to employees
generally), the Executive will be bound by and subject to the noncompetition
agreement set forth in subparagraph 7(b) of this Agreement. Upon the expiration
of the Initial Term, any and all covenants not to compete or noncompetition
agreements between the Executive and the Companies (or any of them) then in
effect shall be superseded by the noncompetition agreement set forth in Section
7(b) hereof and the Executive and the Companies shall not be bound by the
provisions of any covenant not to compete or noncompetition agreement other than
the provisions of Section 7(b) hereof unless specifically agreed to in a written
document executed by the Executive and the Companies (or any of them) after the
Closing.
(b) In the event that either (i) the Date of Termination occurs
during the Initial Term and the provisions of Section 7(a)(ii) hereof are
binding on the Executive, or (ii) the Date of Termination occurs during a
Renewal Term, the Executive will not during the Restricted Period (herein
defined):
(i) become employed by a competitor company that is underwriting,
selling or marketing insurance products that target educators in MEEMIC’s
primary market area; or
(ii) assist a competitor company to develop insurance products
that target educators and that will be marketed or sold in MEEMIC’s primary
area; or
(iii) solicit or induce any other employees of the Companies to
leave such employment or accept employment with any other person or entity, or
solicit or induce any insurance agent of the Companies to offer, sell or market
insurance products that target educators in MEEMIC’s primary market area, other
than on behalf of MEEMIC.
“Competitor company” means an insurance company, insurance agency, business, for
profit or not for profit organization (other than the Companies) which is
engaged directly or indirectly in underwriting, selling or marketing any
insurance product that targets educators.
“Educators” means teachers, administrators and other employees of public and
private school systems (including colleges and universities).
“Primary market area” means the state of Michigan and any other state in which
MEEMIC Insurance derived more than $5 million in direct written premiums from
the sale of personal auto and homeowners insurance in the most recent complete
fiscal year prior to the Date of Termination.
“Restricted Period” means as applicable either (i) if the Date of Termination
occurs within the Initial Term, a period of 24 months from such Date of
Termination; or (ii) if the Date of Termination occurs within a Renewal Term, a
period of 12 months from such Date of Termination.
“Employed” includes activities as an owner, proprietor, employee, agent,
solicitor, partner, member, manager, principal, shareholder (owning more than 1%
of the outstanding stock), consultant, officer, director or independent
contractor.
“Companies” means any company that is a subsidiary of ProAssurance, now or in
the future, and any other company that has succeeded to the business of any of
the Companies.
If the Executive is deemed to have materially breached the non-competition
covenants set forth in Section 7 of this Agreement, the Companies may, in
addition to seeking an injunction or any other remedy they may have, withhold or
cancel any remaining payments or benefits due to the Executive pursuant to
Section 2 of this Agreement. The Companies shall give prior or contemporaneous
written notice of such withholding or cancellation of payments in accordance
with Section 2 hereof. If the Executive violates any of these restrictions, the
Companies shall be further entitled to an immediate preliminary and permanent
injunctive relief, without bond, in addition to any other remedy which may be
available to the Companies.
Both parties agree that the restrictions in this Agreement are fair and
reasonable in all respects, including the geographic and temporal restrictions,
and that the benefits described in this Agreement, to the extent any separate or
special consideration is necessary, are fully sufficient consideration for the
Executive’s obligations under this Agreement.
8. Confidentiality. Executive will remain obligated under any
confidentiality or nondisclosure agreement with the Companies (or any of them)
that is currently in effect or to which the Executive may in the future be
bound. In the event that the Executive is at any time not the subject of a
separate confidentiality or nondisclosure agreement with the Companies (or any
of them), Executive expressly agrees that Executive shall not use for the
Executive’s personal benefit, or disclose, communicate or divulge to, or use for
the direct or indirect benefit of any person, firm, association or company any
confidential or competitive material or information of the Companies or their
subsidiaries, including without limitation, any information regarding insureds
or other customers, actual or prospective, and the contents of their files;
marketing, underwriting or financial plans or analyses which is not a matter of
public record; claims practices or analyses which are not matters of public
record; pending or past litigation in which the Companies have been involved and
which is not a matter of public record; and all other strategic plans, analyses
of operations, computer programs, personnel information and other proprietary
information with respect to the Companies which are not matters of public
record. Executive shall return to the Companies promptly, and in no event later
than the Date of Termination, all items, documents, lists and other materials
belonging to the Companies or their subsidiaries, including but not limited to,
credit, debit or service cards, all documents, computer tapes, or other business
records or information, keys and all other items in the Executive’s possession
or control.
9. Release of Change of Control Agreement. In consideration of
the continued employment of the Executive by the Companies after the Change of
Control and the obligation of the Companies to pay the Executive Severance
Benefits as herein provided, the Executive hereby waives, releases and forever
discharges the Companies and each of their direct or indirect parents,
subsidiaries, affiliates and related entities, and all present or former
employees, officers, agents, directors or representatives of any of them, from
any and all claims, charges, suits, causes of action, demands, expenses and
compensation whatsoever, known or unknown, direct or indirect, on account of or
growing out of the Executive’s Change of Control Agreement, including, without
limitation, the payment of severance benefits as provided thereunder. Executive
hereby further agrees that he will not institute any suit or action at law, in
equity or otherwise against the Companies or any of their direct or indirect
parents, subsidiaries, affiliates and related entities, or the present or former
employees, officers, agents, directors, or representatives of any of them and
their respective successors and assigns, nor will the Executive ever institute,
prosecute, or in any way aid in the institutional prosecution of any claim,
demand, action or cause of action for damages, costs, expenses, penalties,
fines, compensation or equitable relief, for or on account of any damage, loss
or injury to either person or property or both, whether developed or
undeveloped, resulting or to result, known or unknown, which Executive ever had,
now has, or which Executive or his successors and assigns may in the future have
against any of said persons in connection with the Change of Control Agreement
of the Executive.
The Executive acknowledges and agrees that Executive has been advised in writing
by this Agreement, and otherwise, to CONSULT WITH AN ATTORNEY before Executive
enters into this Agreement. The Executive agrees that the Executive received
and read a copy of this Agreement prior to executing the same.
10. Successors of ProAssurance. ProAssurance will require any
successor (herein defined) to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Companies would be
required to perform this Agreement if no such succession had taken place.
Failure of ProAssurance to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to terminate employment for Good Reason and receive Severance Benefits
as provided in Section 2 hereof. Reference to the Companies in this Agreement
shall include any successor which assumes and agrees to perform this Agreement
by operation of law or otherwise.
The term “successor” means any Person, as defined by Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) other than a
Person in control of the Companies immediately after completion of the Change of
Control transaction, that either (i) becomes the Beneficial Owner, as defined by
Rule 13d-3 of the General Rules and Regulations under the Exchange Act, directly
or indirectly, of the securities of ProAssurance representing more than 50.1% of
the combined voting power of the then outstanding securities of ProAssurance;
(ii) purchases or otherwise acquires substantially all of the assets of the
Companies such that the Companies cease to function on a going forward basis as
an insurance holding company system that provides medical professional liability
insurance; or (iii) survives a merger, consolidation or reorganization that
results in less than 50.1% of the combined voting power of ProAssurance or such
surviving entity being owned by stockholders of ProAssurance immediately
preceding such merger, consolidation or reorganization.
11. Notice. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered by hand or commercial
courier or mailed by certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses as set forth below or to
such other address as one party may have furnished to the other in writing in
accordance herewith.
Notice to the Executive:
William P. Sabados
MEEMIC Insurance Company
691 Squirrel Road
Suite 200
Auburn Hills, MI 48326
Notice to the Companies:
ProAssurance Corporation
Mailing Address:
P. O. Box 590009
Birmingham, Alabama 35259-0009
Street Address:
100 Brookwood Place
Birmingham, Alabama 35209
Attention: Chairman of the Board
12. Claims Procedure.
(a) The administrator for purposes of this Agreement shall be
ProAssurance (“Administrator”), whose address is 100 Brookwood Place,
Birmingham, Alabama 35209; Telephone: (205) 877-4400. The “Named Fiduciary” as
defined in Section 402(a)(2) or ERISA, also shall be ProAssurance. ProAssurance
shall have the right to designate one or more employees of the Companies as the
Administrator and the Named Fiduciary at any time, and to change the address and
telephone number of the same. ProAssurance shall give the Executive written
notice of any change in the Administrator and Named Fiduciary, or in the address
or telephone number of the same.
(b) The Administrator shall make all determinations as to the right
of any person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive (“the claimant”) shall be
stated in writing by the Administrator and delivered or mailed to the claimant
within ten (10) days after receipt of the claim, unless special circumstances
require an extension of time for processing the claim. If such an extension is
required, written notice of the extension shall be furnished to the claimant
prior to the termination of the initial 10-day period. In no event shall such
extension exceed a period of ten (10) days from the end of the initial period.
Any notice of denial shall set forth the specific reasons for the denial,
specific reference to pertinent provisions of this Agreement upon which the
denial is based, a description of any additional material or information
necessary for the claimant to perfect the claim, with an explanation of why such
material or information is necessary, and any explanation of claim review
procedures, written to the best of the Administrator’s ability in a manner that
may be understood without legal or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or partially
denied by the Administrator may request, within ten (10) days following the
receipt of such denial, in a writing addressed to the Administrator, a review of
such denial. The claimant shall be entitled to submit such issues or comments
in writing or otherwise, as the claimant shall consider relevant to a
determination of the claim, and the claimant may include a request for a hearing
in person before the Administrator. Prior to submitting the request, the
claimant shall be entitled to review such documents as the Administrator shall
agree are pertinent to the claim. The claimant may, at all stages of review, be
represented by counsel, legal or otherwise, of the claimant’s choice. All
requests for review shall be promptly resolved. The Administrator’s decision
with respect to any such review shall be set forth in writing and shall be
mailed to the claimant not later than ten (10) days following receipt by the
Administrator of the claimant’s request unless special circumstances, such as
the need to hold a hearing, require an extension of time for processing, in
which case the Administrator’s decision shall be so mailed not later than twenty
(20) days after receipt of such request.
13. Arbitration. The parties to this Agreement agree that final
and binding arbitration shall be the sole recourse to settle any claim or
controversy arising out of or relating to a breach or the interpretation of this
Agreement, except as either party may be seeking injunctive relief. Either
party may file for arbitration. A claimant seeking relief on a claim for
benefits, however, must first follow the procedure in Section 12 hereof and may
file for arbitration within sixty (60) days following claimant’s receipt of the
Administrator’s written decision on review under Section 12(c) hereof, or if the
Administrator fails to provide any written decision under Section 12 hereof,
within 60 days of the date on which such written decision was required to be
delivered to the claimant as therein provided. The arbitration shall be held at
a mutually agreeable location, and shall be subject to and in accordance with
the arbitration rules then in effect of the American Arbitration Association;
provided that if the location cannot be agreed upon the arbitration shall be
held in either Atlanta, Georgia, or Chicago, Illinois, whichever location is
closer to the principal office where the Executive was employed on Date of
Termination. The arbitrator may award any and all remedies allowable by the
cause of action subject to the arbitration, but the arbitrator’s sole authority
shall be to interpret and apply the provisions of this Agreement. In reaching
its decision the arbitrator shall have no authority to change or modify any
provision of this Agreement or other written agreement between the parties. The
arbitrator shall have the power to compel the attendance of witnesses at the
hearing. Any court having jurisdiction may enter a judgment based upon such
arbitration. All decisions of the arbitrator shall be final and binding on the
parties without appeal to any court. Upon execution of this Agreement, the
Executive shall be deemed to have waived any right to commence litigation
proceedings regarding this Agreement outside of arbitration or injunctive relief
without the express consent of ProAssurance. The Companies shall pay all
arbitration fees and the arbitrator’s compensation. If the Executive prevails
in the arbitration proceeding, the Companies shall reimburse to the Executive
the reasonable fees and expenses of Executive’s personal counsel for his or her
professional services rendered to the Executive in connection with the
enforcement of this Agreement.
14. Miscellaneous.
(a) Except insofar as this provision may be contrary to applicable
law, no sale, transfer, alienation, assignment, pledge, collateralization or
attachment of any benefits under this Agreement shall be valid or recognized by
the Companies.
(b) This Agreement is an unfunded deferred compensation arrangement
for a member of a select group of the Companies’ management and any exemptions
under ERISA, as applicable to such arrangement, shall be applicable to this
Agreement. Nothing in this Agreement shall require or be deemed to require the
Companies or any of them to segregate, earmark or otherwise set aside any funds
or other assets to provide for any payments made or required to be made
hereunder.
(c) Nothing in this Agreement shall be deemed to create an
employment agreement between the Executive and the Companies or any of them
providing for Executive’s employment for any fixed duration, nor shall it be
deemed to modify or undercut the Executive’s at will employment status with the
Companies.
(d) Neither the provisions of this Agreement nor the severance
benefits provided hereunder shall reduce any amounts otherwise payable, or in
any way diminish the Executive’s rights as an employee of the Companies, whether
existing now or hereafter, under any benefit, incentive, retirement, stock
option, stock bonus or stock purchase plan, or any employment agreement or other
plan or arrangement.
(e) This Agreement sets forth the entire agreement between the
parties with respect to the matters set forth herein. This Agreement may not be
modified or amended except by written agreement intended as such and signed by
all parties.
(f) This Agreement shall benefit and be binding upon the parties and
their respective directors, officers, employees, representatives, agents, heirs,
successors, assigns, devisees, and legal or personal representatives.
(g) The Companies, from time to time, shall provide government
agencies with such reports concerning this Agreement as may be required by law,
and shall provide Executive with such disclosure concerning this Agreement as
may be required by law or as the Companies may deem appropriate.
(h) Executive and the Companies respectively acknowledge that
each of them has read and understand this Agreement, that they have each had
adequate time to consider this Agreement and discuss it with each of their
attorneys and advisors, that each of them understands the consequences of
entering into this Agreement, that each of them is knowingly and voluntarily
entering into this Agreement, and that they are each competent to enter into
this Agreement.
(i) If any provision of this Agreement is determined to be
unenforceable, at the discretion of ProAssurance the remainder of this Agreement
shall not be affected but each remaining provision shall continue to be valid
and effective and shall be modified so that it is enforceable to the fullest
extent permitted by law. Moreover, in the event this Agreement is determined to
be unenforceable against any of the Companies, it shall continue to be valid and
enforceable against the other Companies.
(j) This Agreement will be interpreted as a whole according to its
fair terms. It will not be construed strictly for or against either party.
(k) Except to the extent that federal law controls, this Agreement
is to be construed according to Michigan law.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of this
14th day of June, 2001.
EXECUTIVE:
/s/ William P. Sabados
William P. Sabados
PROASSURANCE CORPORATION
By:
/s/ Victor T. Adamo
Its: President
MEEMIC INSURANCE COMPANY
By:
/s/ R. Kevin Clinton
Its: President
MEEMIC HOLDINGS, INC.
By:
/s/ R. Kevin Clinton
Its: President
RELEASE IN CONJUNCTION WITH SEVERANCE COMPENSATION
This Release of Claims (“Release”) is between ProAssurance Corporation
(“ProAssurance”), MEEMIC Insurance Company, MEEMIC Holdings, Inc., and any
successor company that has assumed the Agreement to which this Release was an
attachment (all such organizations being referred to in this Release as the
"Companies") and William P. Sabados ("Executive”).
The Companies and Executive have agreed to terminate their employment
relationship. To effect an orderly termination, the Executive, and the Companies
are entering into this Release.
1. For the purposes of this Release, “Date of Termination” is the effective
date of Executive’s termination of employment from Companies. Executive hereby
waives any and all rights Executive may otherwise have to continued employment
with or re-employment by the Companies or any parent, subsidiary or affiliate of
Companies.
2. Effective with the Date of Termination, Executive is relieved
of all duties and obligations to the Companies, except as provided in this
Release or any applicable provisions of the Release and Severance Compensation
Agreement between Companies and Executive, effective as of June 27, 2001 (the
“Severance Agreement”), which survive termination of the employment
relationship.
3. Executive agrees that this Release and its terms are
confidential and shall not be disclosed or published directly or indirectly to
third persons, except as necessary to enforce its terms, by Executive or to
Executive’s immediate family upon their agreement not to disclose the fact or
terms of this Release, or to Executive’s attorney, financial consultant or
accountant, except that Executive may disclose, as necessary, the fact that
Executive has terminated Executive’s employment with the Companies.
4. Any fringe benefits that Executive has received or currently is receiving
from the Companies or its affiliates shall cease effective with the Date of
Termination, except as otherwise provided for in this Release, in the Severance
Agreement or by law.
5. The parties agree that the terms contained and payments provided for in
the Severance Agreement are compensation for and in full consideration of
Employee's release of claims under this Release, and Executive’s
confidentiality, non-compete, non-solicitation and non-disclosure agreements
contained in the Severance Agreement.
6. The Executive shall be under no duty or obligation to seek or accept
other employment and shall not be required to mitigate the amount of the
Severance Benefits (as defined and provided under the Severance Agreement) by
seeking employment or otherwise, provided, however, that the Executive shall be
required to notify the Companies if the Executive becomes covered by a health or
dental care program providing substantially similar coverage, at which time
health or dental care continuation coverage provided under the Agreement shall
cease.
7. Except for claims arising under the Severance Agreement,
Executive waives, releases, and forever discharges the Companies and each of
their direct or indirect parents, subsidiaries, affiliates, and any
partnerships, joint ventures or other entities involving or related to any of
the Companies, their parents, subsidiaries or affiliates, and all present or
former employees, officers, agents, directors, successors, assigns and attorneys
of any of these corporations, persons or entities (all collectively referred to
in this Release as the "Released") from any and all claims, charges, suits,
causes of action, demands, expenses and compensation whatsoever, known or
unknown, direct or indirect, on account of or growing out of Executive’s
employment with and termination from the Companies, or relationship or
termination of such relationship with any of the Released, or arising out of
related events occurring through the date on which this Release is executed.
This includes, but is not limited to, claims for breach of any employment
contract; handbook or manual; any express or implied contract; any tort;
continued employment; loss of wages or benefits; attorney fees; employment
discrimination arising under any federal, state, or local civil rights or
anti-discrimination statute, including specifically any claims Executive may
have under the federal Age Discrimination in Employment Act, as amended, 29 USC
§§ 621, et seq.; emotional distress; harassment; defamation; slander; and all
other types of claims or causes of action whatsoever arising under any other
state or federal statute or common law of the United States.
8. The Executive does not waive or release any rights or claims that may
arise under the federal Age Discrimination in Employment Act, as amended, after
the date on which this Release is executed by the Executive.
9. The Executive acknowledges and agrees that Executive has been advised in
writing by this Release, and otherwise, to CONSULT WITH AN ATTORNEY before
Executive executes this Release.
10. The Executive agrees that Executive received a copy of this Release prior
to executing the Agreement, that this Release incorporates the Companies’ FINAL
OFFER; that Executive has been given a period of at least twenty-two (22)
calendar days within which to consider this Release and its terms and to consult
with an attorney should Executive so elect.
11. The Executive shall have seven (7) calendar days following Executive’s
execution of this Release to revoke this Release. Any revocation of this Release
shall be made in writing by the Executive and shall be received on or before the
time of close of business on the seventh calendar day following the date of the
Employee's execution of this Release at ProAssurance’s address at 100 Brookwood
Place, P. O. Box 590009, Birmingham, Alabama 35259-0009, Attention: Chairman, or
such other place as the Companies may notify Executive in writing. This Release
shall not become effective or enforceable until the eighth (8th) calendar day
following the Executive’s execution of this Release.
12. Executive and the Companies acknowledge that they have read
and understand this Release, that they have had adequate time to consider this
Release and discuss it with their attorneys and advisors, that they understand
the consequences of entering into this Release, that they are knowingly and
voluntarily entering into this Release, and that they are competent to enter
into this Release.
13. This Release shall benefit and be binding upon the parties and their
respective directors, officers, employees, agents, heirs, successors, assigns,
devisees and legal or personal representatives.
14. This Release, along with the attached Severance Agreement, sets forth the
entire agreement between the parties at the time and date these documents are
executed, and fully supersedes any and all prior agreements or understandings
between them pertaining to the subject matter in this Release. This Release may
not be modified or amended except by a written agreement intended as such, and
signed by all parties.
15. Except to the extent that federal law controls, this Release
is to be construed according to the law of the state of Michigan.
16. If any provision of this Release is determined to be unenforceable, at the
discretion of ProAssurance the remainder of this Release shall not be affected
but each remaining provision or portion shall continue to be valid and effective
and shall be modified so that it is enforceable to the fullest extent permitted
by law.
17. To signify their agreement to the terms of this Release, the parties have
executed it on the date set forth opposite their signatures, or those of their
authorized agents, which follow.
EXECUTIVE
Dated:
William P. Sabados
PROASSURANCE CORPORATION
Dated:
By:
Its:
MEEMIC HOLDINGS, INC.
Dated:
By:
Its:
MEEMIC INSURANCE COMPANY
Dated:
By:
Its:
|
Exhibit 10.39(c)
AMENDMENT 3 TO EMB-135 FINANCING
LETTER OF AGREEMENT
This Amendment 3 to EMB-135 Financing Letter of Agreement ("Amendment 3") is
dated October 27, 2000, and is an agreement among Continental Express, Inc.
("Coex" or [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]), with its principal place of business at 1600 Smith Street, Houston,
Texas; Continental Airlines, Inc. ("Continental" or [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]), with its principal place of
business at 1600 Smith Street, Houston, Texas; and EMBRAER-Empresa Brasileira de
AeronAutica S.A. ("Embraer"), with its principal place of business at Sao Jose
dos Campos, SAo Paulo, Brazil, as it relates to the EMB-135 Financing Letter of
Agreement dated March 23, 2000 executed by Coex, Continental and Embraer
("EMB-135 Financing LOA").
Coex and Continental have entered into [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Section 3 of the EMB-135 Financing LOA opposite the caption [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] shall be amended to
replace "October 16, 2000" with "November 15, 2000" in each instance in which it
appears in the two paragraphs under such caption.
2. Section 7 of the EMB-135 Financing LOA shall be amended as follows:
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]
3. All capitalized terms used herein and not otherwise defined in this Amendment
3 shall have the meaning provided for in the EMB-135 Financing LOA. Furthermore
all other terms and conditions contained in the EMB-135 Financing LOA not
specifically referred to herein shall remain in full force and effect and in the
event of any conflict between the terms of this Amendment 3 and the EMB-135
Financing LOA the terms of this Amendment 3 shall control.
[INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment 3 to be duly
executed and delivered by their proper and authorized officers and to be
effective as of the day and year first above written.
CONTINENTAL EXPRESS, INC.
CONTINENTAL AIRLINES, INC.
By: /s/ Fred Cromer
By: /s/ Gerald Laderman
Name: Fred Cromer
Name: Gerald Laderman
Title: VP Finance & CFO
Title: Senior Vice President Finance
Witness: /s/ Amy K. Sedano
Witness: /s/ Amy K. Sedano
Name: Amy K. Sedano
Name: Amy K. Sedano
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
By: /s/ Frederico Fleury Curado
By: /s/ Flavio Rimoli
Name: Frederico Fleury Curado
Name: Flavio Rimoli
Title: Executive Vice President
Airline Market
Title: Director of Contracts
Witness: /s/ Brasil Areco
Witness: /s/ Carlos Maria Dutra
Name: Brasil Areco
Name: Carlos Maria Dutra
|
EXHIBIT : A
UFP TECHNOLOGIES, INC.
1998 DIRECTOR STOCK OPTION INCENTIVE PLAN
(AS AMENDED AS OF JULY 2, 2001)
1. Statement of Purpose. This 1998 Non-employee Director Stock Option Plan (the
"Plan") intended to promote the interests of UFP Technologies, Inc., a Delaware
corporation (the "Company") by offering non-employee members of the Board of
Directors of the Company (individually a "Non-employee Director" and
collectively "Non-employee Directors") the opportunity to participate in a
special stock option program designed to provide them with significant
incentives to remain in the service of the Company.
2. Administration. The Plan shall be administered by the Board of Directors of
the Company or by any committee of the Board of Directors, including the
Compensation Committee (the "Committee"). The Committee shall have full and
plenary authority to interpret the terms and provisions of the Plan.
3. Eligibility. Non-employee Directors of the Company shall be eligible to
receive grants of non-statutory options under this Plan (individually an
"Option" and collectively "Options") pursuant to the provisions of Section 5
hereof.
4. Stock Subject to Plan. The stock issuable under this Plan shall be shares of
the Company's Common Stock, par value $.01 per share (the Common Stock). Such
shares may be made available from authorized but unissued shares of Common Stock
or shares of Common Stock reacquired by the Company. The aggregate number of
shares of Common Stock issuable upon exercise of Options under this Plan shall
not exceed 175,000 shares, subject to adjustment from time to time in accordance
with Section 9 hereof.
5. Granting of Options.
a. Automatic Granting of Options.
(i) Commencing July 1, 1999, and continuing in effect on July 1, in each
subsequent calendar year, each individual who is at the time serving as a
Non-employee Director shall receive an automatic grant of an Option to purchase
2,500 shares of Common Stock (subject to adjustment as provided in Section 10
hereof). Each Option granted pursuant to this Section 5(a)(herein referred to
individually as an "Automatic Option" or collectively as "Automatic Options")
shall be for a term of ten (10) years. Each Option shall become exercisable for
any or all of the shares covered by such Option on the later of the date on
which this Plan is ratified by the shareholders of the Company or on the date of
automatic grant pursuant to this Section 5(a). The Automatic Option shall
thereafter remain so exercisable until the expiration or sooner termination of
the Option term. The foregoing automatic grant dates under this Section 5(a)
are herein referred to individually as an "Automatic Grant Date" and
collectively as "Automatic Grant Dates".
(ii) Should an Optionee cease to be a member of the Board of Directors of the
Company for any reason other than death or permanent disability, such Optionee's
Automatic Options may be exercised (to the extent they were exercisable on the
date of such termination) by the Optionee or, if he or she is not living, by his
or her heirs, legatees or legal representative, as the case may be, during their
specified term but not later than three (3) months after the date of such
termination.
(iii) Should an Optionee cease to be a member of the Board of Directors of the
Company because of death or permanent disability (as that term is defined in
Section 22(e)(3) of the Code, as now in effect or as subsequently amended), such
Automatic Options may be exercised in full, by the Optionee or, if he or she is
not living, by his or her heirs, legatees or legal representatives, as the case
may be, during their specified term but not later than one (1) year after the
date of death or permanent disability.
b. Options in Lieu of Director Fees.
(i) Each Non-Employee Director may elect to receive any or all of his or her
annual director fees or fees for serving as a member of any committee of the
Board of Directors earned during the second half of 1998 and each subsequent
calendar year in the form of Non-Qualified Stock Options under this Section
5(b). Each Option granted pursuant to this Section 4(b) is herein referred to
individually as an "Elective Option" or collectively as "Elective Options".
Each such election must be irrevocable, and made in writing and filed with the
Secretary of the Company by June 30, 1998 (for fees earned in the second half of
1998) and (for fees earned in subsequent calendar years) by December 31 of each
year for fees to be received in the following calendar year.
(ii) A Non-Employee Director may file a new election each calendar year
applicable to fees earned in the immediately succeeding calendar year. If no
new election or revocation of a prior election is received by December 31 of any
calendar year, the election, if any in effect for such calendar year shall
continue in effect for the immediately succeeding calendar year. If a director
does not elect to receive his or her fees in the form of Non-Qualified Stock
Options, the fees otherwise due such director shall be paid in accordance with
the normal payment dates of director fees, as the same may be amended from time
to time by the Company.
(iii) The number of common shares covered by each Elective Option granted in
any year under this Section 5(b) shall be determined based on an independent
appraisal for such year of the intrinsic value of options granted hereunder and
the amount of fees covered by the director's election for such year. The number
of common shares covered by options granted in 1998 and 1999 (as determined
under this procedure) shall be the number of whole shares equal to (A) the
product of three (3) times the amount of fees which the director has elected
under subsection (i) to receive in the form of Elective Options, divided by (B)
One Hundred percent (100%) of the fair market value of one common share on the
grant date. Any fraction of a share shall be disregarded, and the remaining
amount of the fees corresponding to such option shall be paid in cash.
(iv) Each Elective Option due a director under this Section 5(b) shall be
issued as of the date of the Annual Meeting of Stockholders of the Company held
in the calendar year during which the corresponding fees otherwise due the
director would have been paid and at a purchase price equal to One Hundred
percent (100%) of the fair market value of the common shares covered by such
option on the grant date, provided, however, that with respect to fees earned
during the second half of 1998, the date of grant shall be July 15, 1998. Each
Elective Option shall have a term of ten (10) years and shall become exercisable
for any or all of the shares covered by such Elective Option on the later of the
date on which this plan is ratified by the shareholders of the Company or on the
date of grant pursuant to this Section 5(b). The Elective Option shall
thereafter remain so exercisable until the expiration or sooner termination of
the Option term. The foregoing elective grant dates under this Section 5(b) are
herein referred to individually as an "Elective Grant Date" and collectively as
"Elective Grant Dates".
(v) Each Elective Option shall remain in effect for the remainder of the option
term following the termination of the Optionee's service on the Board of
Directors of the Company. In the event of the death or permanent disability (as
that term is defined in Section 22(e)(3) of the Code, as now in effect or as
subsequently amended) of the Optionee, such Elective Options may be exercised in
full, by the Optionee or, if he or she is not living, by his or her heirs,
legatees or legal representatives, as the case may be, during their specified
term.
c. Discretionary Granting of Options.
(i) In addition to the Automatic Options and Elective Options, the Committee
may grant non-qualified options to Non-Employee Directors from time to time in
the discretion of the Committee subject to the provisions of this Section 5(c)
and the other provisions of this Plan. Each Option granted pursuant to this
Section 5(c) is herein referred to individually as a "Discretionary Option" or
collectively as "Discretionary Options". The grant of a Discretionary Option
pursuant to this Section 5(c) shall be evidenced by a written Non–Qualified
Stock Option Agreement, executed by the Company and the Non-Employee Director,
stating the number of shares of Common Stock subject to such Option evidenced
thereby and in such form and with such restrictions and subject to such
conditions as the Committee may from time to time determine, which need not be
the same for each grant or for each participant.
(ii) Each Discretionary Option shall be for a term of not more than ten years.
Each Discretionary Option shall become exercisable in such installments as may
be determined from time to time by the Committee but not earlier than the date
on which this Plan is ratified by the shareholders of the Company. In addition,
subject to such shareholders ratification, the Committee may, in its discretion
(i) accelerate the exercisability of such option subject to such terms as the
Committee deems necessary and appropriate to effectuate the purpose of the Plan;
or (ii) at any time prior to the expiration or termination of any Option
previously granted, extend the term of any such option for such period as the
Committee in its discretion shall determine. In no event, however, shall the
aggregate option period with respect to any option, including the original term
of the option and any extensions thereof, exceed ten years. Subject to the
foregoing, all or any part of the shares to which the right to purchase has
accrued may be purchased at the time of such accrual or at any time or times
thereafter during the option period.
(d) The Non-employee Directors receiving Options are herein referred to
individually as an "Optionee" and collectively as "Optionees." Options granted
under this Plan are not intended to be treated as incentive stock options as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
(e) In the event that an Option expires or is terminated or canceled
unexercised as to any shares of Common Stock, the shares subject to the Option,
or portion thereof not so exercised, shall be available for subsequent grants of
Automatic Options, Elective Options or Discretionary Options under this Plan.
(f) Should the total number of shares of Common Stock at the time available
under this Plan not be sufficient for the automatic or elective grants to be
made at that particular time, the available shares shall be allocated
proportionately among all Automatic and Elective Option grants to be made at
that time.
6. Exercise Price. The exercise price of a Discretionary Option shall be
determined by the Committee in its discretion, and may be greater than, but not
less than the fair market value, at the time the option is granted, of the
shares of Common Stock subject to the option. The exercise price of an
Automatic Option or an Elective Option shall be 100% of the fair market value of
Common Stock as of the applicable Automatic Grant Date or Elective Grant Date.
Such fair market value shall be deemed to be the last trading price of the
Common Stock on the trading day next preceding the date of the grant of the
option except that if the Common Stock is then listed on any national exchange,
fair market value shall be the mean between the high and low sales price on the
trading day next preceding the date of grant of the option. If shares of the
Common Stock shall not have been traded on any national exchange or interdealer
quotation system for more than 10 days immediately preceding the date of grant
of such option or if deemed appropriate by the Committee for any other reason,
the fair market value of shares of Common Stock shall be determined by the
Committee in such manner as it may deem appropriate. In no event shall the
exercise price of any share of Common Stock be less than its par value.
7. Exercise of Option.
a. A Discretionary Option may be exercised in such manner as may be provided in
the applicable Non-Qualified Stock Option Agreement referred to in Section
5(c)(i) hereof. An Automatic Option or an Elective Option may be exercised by
giving written notice to the Company, attention of the Secretary, specifying the
number of shares to be purchased, accompanied by the full purchase price for the
shares to be purchased either in cash, or its equivalent, or by tendering
previously owned shares of the Common Stock of the Company, or by a combination
of these methods. Payment may also be made by delivery (including delivery by
facsimile transmission) to the Company or its designated agent of an executed
irrevocable option exercise form together with irrevocable instructions to a
broker-dealer to sell a sufficient portion of the shares and deliver the sale
proceeds directly to the Company to pay for the exercise price, or by any other
means which the Committee, in its discretion, determines to be consistent with
the Plan’s purpose and applicable law. For the purpose of this Section 7, the
per share value of the Common Stock of the Company shall be the fair market
value determined in accordance with Section 6 hereof, except using the trading
day next preceding the date of exercise. Any Optionee holding two or more
options that are partially or wholly exercisable at the same time may exercise
said options (to the extent they are then exercisable) in any order the Optionee
chooses, regardless of the order in which said options were granted.
b. In connection with the exercise of options granted under the Plan, the
Company may make loans to the Optionees as the Committee, in its discretion, may
determine. Such loans shall be subject to the following terms and conditions
and such other terms and conditions as the Committee shall determine not
inconsistent with the Plan. Such loans shall bear interest at such rates as the
Committee shall determine from time to time, which rates may be below then
current market rates or may be made without interest. In no event may any such
loan exceed the fair market value, at the date of exercise, of the shares
covered by the Option, or portion thereof, exercised by the Optionee. No loan
shall have an initial term exceeding two years, but any such loan may be
renewable at the discretion of the Committee. When a loan shall have been made,
shares of the Common Stock having a fair market value at least equal to 150
percent of the principal amount of the loan shall be pledged by the Optionee to
the Company as security for payment of the unpaid balance of the loan.
c. At the time of exercise of any Option, the Company may, if it shall
determine it necessary or desirable for any reason, require the Optionee (or his
heirs, legatees or legal representative, as the case may be) as a condition upon
the exercise thereof, to deliver to the Company a written representation of
present intention to purchase the shares for investment and not for
distribution. In the event such representation is required to be delivered, an
appropriate legend may be placed upon each certificate delivered to the Optionee
(or his or her heirs, legatees or legal representative, as the case may be) upon
his or her exercise of part or all of the Option and a stop transfer order may
be placed with the transfer agent. Each Option shall also be subject to the
requirement that, if at any time the Company determines, in its discretion, that
the listing, registration or qualification of the shares subject to the Option
upon any securities exchange or under any state or federal law or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of or in connection with the issue or purchase of shares thereunder,
the Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.
8. Non-Transferability. Except as otherwise provided in an Optionee’s option
agreement, or as otherwise permitted by the Committee in its discretion, Options
shall not be assignable or transferable by the Optionee otherwise than by will
or by the laws of descent and distribution, or pursuant to a qualified domestic
relations order as defined by the Code, or Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or the rules thereunder.
Subject to the foregoing, during the lifetime of the Optionee, Options shall be
exercisable only by the Optionee.
9. Adjustments. The number of shares subject to this Plan and to Options
granted under this Plan shall be adjusted as follows: (a) in the event that the
number of outstanding shares of Common Stock is changed by any stock dividend,
stock split or combination of shares, the number of shares subject to this Plan
and to Options granted hereunder shall be proportionately adjusted; (b) in the
event of any merger, consolidation or reorganization of the Company with any
other corporation or corporations, there shall be substituted, on an equitable
basis for each share of Common Stock then subject to this Plan, whether or not
at the time subject to outstanding Options, the number and kind of shares of
stock or other securities to which the holders of shares of Common Stock will be
entitled pursuant to the transaction; and (c) in the event of any other relevant
change in the capitalization of the Company, an equitable adjustment shall be
made in the number of shares of Common Stock then subject to this Plan, whether
or not then subject to outstanding Options. In the event of any such adjustment
the exercise price per share shall be proportionately adjusted.
10. Amendment or Discontinuance of Plan. This Plan may from time to time be
amended or discontinued by action of the Board of Directors or by the
stockholders of the Company; provided that no such amendment or discontinuance
shall change or impair any Options previously granted without the consent of the
Optionee.
11. No Impairment of Rights. Nothing in this Plan or any Automatic Grant or
Elective Grant made pursuant to this Plan shall be construed or interpreted so
as to affect adversely or otherwise impair the Company's right to remove any
Optionee from service on the Board of Directors of the Company at any time in
accordance with the provisions of the Company's By-laws and applicable law.
12. Effective Date. This Plan was adopted and authorized by the Board of
Directors of the Company on June 3, 1998 and became effective on July 15, 1998.
The Plan was amended on February 24, 1999, and on July 2, 2001.
|
EXHIBIT 10.11
Silicon Valley Bank
Loan and Security Agreement
Borrower: The Cobalt Group, Inc.
PartsVoice, LLC
IntegraLink Corporation
Address:
2200 First Avenue South
Seattle, WA 98134
Date:
March 8, 2001
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK, COMMERCIAL FINANCE DIVISION ("Silicon"), whose address is
3003 Tasman Drive, Santa Clara, California 95054 and the borrower(s) named above
(jointly and severally, the "Borrower"), whose chief executive office is located
at the above address ("Borrower's Address"). The Schedule to this Agreement (the
"Schedule") shall for all purposes be deemed to be a part of this Agreement, and
the same is an integral part of this Agreement. (Definitions of certain terms
used in this Agreement are set forth in Section 8 below.)
1. LOANS.
1.1 Loans. Silicon will make loans to Borrower (the "Loans"), in amounts
determined by Silicon in its*, up to the amounts (the "Credit Limit") shown on
the Schedule, provided no Default or Event of Default has occurred and is
continuing, and subject to deduction of any Reserves for accrued interest and
such other Reserves as Silicon deems proper from time to time**.
*good-faith business judgment,
**including, without limitation, a deferred revenue reserve in an amount of
$542,000, which amount may be adjusted by Silicon, in its discretion, as it
deems proper from time to time
1.2 Interest. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement. Interest shall be payable monthly, on the last
day of the month. Interest may, in Silicon's discretion, be charged to
Borrower's loan account, and the same shall thereafter bear interest at the same
rate as the other Loans. Silicon may, in its discretion, charge interest to
Borrower's Deposit Accounts maintained with Silicon. Regardless of the amount of
Obligations that may be outstanding from time to time, Borrower shall pay
Silicon minimum monthly interest during the term of this Agreement in the amount
set forth on the Schedule (the "Minimum Monthly Interest").
1.3 Overadvances. If at any time or for any reason the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit (an
"Overadvance"), Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand. Without limiting Borrower's obligation to
repay to Silicon on demand the amount of any Overadvance, Borrower agrees to pay
Silicon interest on the outstanding amount of any Overadvance, on demand, at a
rate equal to the interest rate which would otherwise be applicable to the
Overadvance, plus an additional 2% per annum.
1.4 Fees. Borrower shall pay Silicon the fee(s) shown on the Schedule,
which are in addition to all interest and other sums payable to Silicon and are
not refundable.
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1.5 Letters of Credit. [Not Applicable]*
*1.6 Cash Management Services. Borrower may use up to $300,000 (the
"Cash Management Sublimit") for Silicon's Cash Management Services (as defined
below), including, merchant services, business credit card, ACH and other
services identified in the cash management services agreement related to such
service (the "Cash Management Services"). Silicon may, in its*, reserve against
Loans which would otherwise be available hereunder such sums as Silicon shall
determine in connection with the Cash Management Services, and Silicon may
charge to Borrower's Loan account, any amounts that may become due or owing to
Silicon in connection with the Cash Management Services. Borrower agrees to
execute and deliver to Silicon all standard form applications and agreements,
including without limitation, an indemnification and pledge agreement, of
Silicon in connection with the Cash Management Services and, without limiting
any of the terms of such applications and agreements, Borrower will pay all
standard fees and charges of Silicon in connection with the credit card services
and, without limiting any of the terms of such applications and agreements,
Borrower will pay all standard fees and charges of Silicon in connection with
the Cash Management Services. The Cash Management Services shall terminate on
the Maturity Date.
*good-faith business judgment
2. SECURITY INTEREST.
2.1 Security Interest. To secure the payment and performance of all of
the Obligations when due, Borrower hereby grants to Silicon a security interest
in all of Borrower's interest in the following, whether now owned or hereafter
acquired, and wherever located: All Inventory, Equipment, Receivables, and
General Intangibles, including, without limitation, all of Borrower's Deposit
Accounts, and all money, and all property now or at any time in the future in
Silicon's possession (including claims and credit balances), and all proceeds
(including proceeds of any insurance policies, proceeds of proceeds and claims
against third parties), all products and all books and records related to any of
the foregoing (all of the foregoing, together with all other property in which
Silicon may now or in the future be granted a lien or security interest, is
referred to herein, collectively, as the "Collateral").
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce Silicon to enter into this Agreement and to make Loans,
Borrower represents and warrants to Silicon as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants:
3.1 Corporate Existence and Authority. Borrower, if a corporation*, is
and will continue to be, duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation**. Borrower is and will
continue to be qualified and licensed to do business in all jurisdictions in
which any failure to do so would have a*** on Borrower. The execution, delivery
and performance by Borrower of this Agreement, and all other documents
contemplated hereby (i) have been duly and validly authorized, (ii) are
enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), and (iii) do not violate Borrower's articles or certificate
of incorporation, or Borrower's by-laws****, or any law or any material
agreement or instrument which is binding upon Borrower or its property, and
(iv) do not constitute grounds for acceleration of any material indebtedness or
obligation under any material agreement or instrument which is binding upon
Borrower or its property.
*or a limited liability company, as the case may be,
**or organization, as the case may be
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***Material Adverse Effect
****in the case of a corporation, or Borrower's certificate of formation, or
Borrower's operating agreement, in the case of a limited liability company,
3.2 Name; Trade Names and Styles. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Silicon 30 days' prior written notice before changing its
name or doing business under any other name. Borrower has complied, and will in
the future comply, with all laws relating to the conduct of business under a
fictitious business name.
3.3 Place of Business; Location of Collateral. The address set forth in
the heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business, and Collateral is located, only at the
locations set forth on the Schedule*. Borrower will give Silicon at least
30 days' prior written notice before opening any additional place of business,
changing its chief executive office, or moving any of the Collateral to a
location other than Borrower's Address or one of the locations set forth on the
Schedule.
*(except for laptop computers, and other portable Equipment in transit and
temporarily used away from such locations in the ordinary course of business
provided that the value of such laptop computers and other portable Equipment
is, and shall throughout the term of this Agreement be, deminimus)
3.4 Title to Collateral; Permitted Liens. Borrower is now, and will at
all times in the future be, the sole owner of all the Collateral, except for
items of Equipment which are leased by Borrower*. The Collateral now is and will
remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. Silicon now has,
and will continue to have, a first-priority perfected and enforceable security
interest in all of the Collateral, subject only to the Permitted Liens, and
Borrower will at all times defend Silicon and the Collateral against all claims
of others. **of the Collateral now is or will be affixed to any real property in
such a manner, or with such intent, as to become a fixture***. Borrower is not
and will not become a lessee under any real property lease pursuant to which the
lessor may obtain any rights in any of the Collateral and no such lease now
prohibits, restrains, impairs or will prohibit, restrain or impair Borrower's
right to remove any Collateral from the leased premises. Whenever any Collateral
is located upon premises in which any third party has an interest (whether as
owner, mortgagee, beneficiary under a deed of trust, lien or otherwise),
Borrower shall, whenever requested by Silicon, use its best efforts to cause
such third party to execute and deliver to Silicon, in form acceptable to
Silicon, such waivers and subordinations as Silicon shall specify, so as to
ensure that Silicon's rights in the Collateral are, and will continue to be,
superior to the rights of any such third party. Borrower will keep in full force
and effect, and will comply with all the terms of, any lease of real property
where any of the Collateral now or in the future may be located.
*and intellectual property Collateral licensed by Borrower from others and
the following jointly owned Collateral: (i) the MotorPlace Auto Exchange
software (jointly owned with General Electric) and (ii) various training
materials (jointly owned with JD Power and Associates)
**Except for Collateral with an aggregate maximum value of $25,000, none
***unless prior to such Collateral becoming a fixture, Borrower shall have
procured a landlord's subordination agreement in form and substance satisfactory
to Silicon in its sole discretion and all other documents (in form and substance
satisfactory to Silicon in its sole discretion) that Silicon deems necessary for
assuring its first priority perfected and enforceable security interest in such
Collateral have been executed and, if applicable, recorded
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3.5 Maintenance of Collateral. Borrower will maintain the Collateral in
good working condition, *and Borrower will not use the Collateral for any
unlawful purpose. Borrower will immediately advise Silicon in writing of any
material loss or damage to the Collateral.
*ordinary wear and tear excepted,
3.6 Books and Records. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with*.
*GAAP
3.7 Financial Condition, Statements and Reports. All financial
statements now or in the future delivered to Silicon have been, and will be,
prepared in conformity with* and now and in the future will **the financial
condition of Borrower, at the times and for the periods therein stated. Between
the last date covered by any such statement provided to Silicon and the date
hereof, there has been no material adverse change in the financial condition or
business of Borrower. Borrower is now and will continue to be solvent***.
*GAAP
**fairly represent in all material respects
***on a consolidated basis
3.8 Tax Returns and Payments; Pension Contributions. Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state and local law, and Borrower has timely paid, and will timely pay,
all foreign, federal, state and local taxes, assessments, deposits and
contributions now or in the future owed by Borrower. Borrower may, however,
defer payment of any contested taxes, provided that Borrower (i) in good faith
contests Borrower's obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (ii) notifies Silicon in
writing of the commencement of, and any material development in, the
proceedings, and (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of the Collateral. *Borrower is
unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
Borrower shall, at all times, utilize the services of an outside payroll service
providing for the automatic deposit of all payroll taxes payable by Borrower.
*Except as disclosed in the Schedule,
3.9 Compliance with Law. *Borrower has complied, and will comply, in all
material respects, with all provisions of all foreign, federal, state and local
laws and regulations relating to Borrower, including, but not limited to, those
relating to Borrower's ownership of real or personal property, the conduct and
licensing of Borrower's business, and all environmental matters.
*Except where the failure to so comply could not reasonably be expected to
have a Material Adverse Effect,
3.10 Litigation. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which* result,
either separately or in the aggregate, in any**, or in any
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material impairment in the ability of Borrower to carry on its business in
substantially the same manner as it is now being conducted. Borrower will
promptly inform Silicon in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted by or against Borrower
involving any single claim of $50,000 or more, or involving $100,000 or more in
the aggregate.
*could reasonably be expected to
**Material Adverse Change
3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for
lawful business purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to purchase
or carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."
4. Receivables.
4.1 Representations Relating to Receivables. Borrower represents and
warrants to Silicon as follows: Each Receivable with respect to which Loans are
requested by Borrower shall, on the date each Loan is requested and made,
(i) represent an undisputed* bona fide existing unconditional obligation of the
Account Debtor created by the sale, delivery, and acceptance of goods or the
rendition of services in the ordinary course of Borrower's business, and
(ii) meet the Minimum Eligibility Requirements set forth in Section 8 below.
*(except as otherwise permitted in the definition of Eligible Receivables
set forth in Section 8 below)
4.2 Representations Relating to Documents and Legal Compliance. Borrower
represents and warrants to Silicon as follows: All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing the Receivables are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to be,
and all signatories and endorsers* have the capacity to contract. All sales and
other transactions underlying or giving rise to each Receivable shall fully
comply with all applicable laws and governmental rules and regulations. All
signatures and endorsements on all documents, instruments, and agreements**
relating to all Receivables are and shall be genuine, and all such documents,
instruments and agreements are and shall be legally enforceable in accordance
with their terms***.
*signing on behalf of Borrower have the capacity to contract and, to the
best of Borrower's knowledge, all signatories and endorsers signing on behalf of
Persons other than Borrower
**signed or endorsed on behalf of Borrower (and, to the best of Borrower's
knowledge, all that are signed or endorsed on behalf of Persons other than
Borrower)
***except as enforceability may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
creditors' rights generally
4.3 Schedules and Documents relating to Receivables. Borrower shall
deliver to Silicon transaction reports and loan requests, schedules and
assignments* of all Receivables, and schedules of collections, all on Silicon's
standard forms; provided, however, that Borrower's failure to execute and
deliver the same shall not affect or limit Silicon's security interest and other
rights in all of Borrower's Receivables, nor shall Silicon's failure to advance
or lend against a specific Receivable affect or limit Silicon's security
interest and other rights therein. Loan requests received after 12:00 Noon will
not be considered by Silicon until the next Business Day. Together with each
such schedule and assignment*, or later if requested by Silicon, Borrower shall
furnish Silicon with
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copies (or, at Silicon's request, originals) of all contracts, orders, invoices,
and other similar documents, and all original shipping instructions, delivery
receipts, bills of lading, and other evidence of delivery, for any goods the
sale or disposition of which gave rise to such Receivables, and Borrower
warrants the genuineness of all of the foregoing. Borrower shall also furnish to
Silicon an aged accounts receivable trial balance in such form and at such
intervals as Silicon shall request. In addition, Borrower shall deliver to
Silicon the originals of all instruments, chattel paper, security agreements,
guarantees and other documents and property evidencing or securing any
Receivables,** receipt thereof and in the same form as received, with all
necessary indorsements, all of which shall be with recourse. Borrower shall also
provide Silicon with copies of all credit memos within two days after the date
issued.
*for security
**promptly after
4.4 Collection of Receivables. Borrower shall have the right to collect
all Receivables, unless and until a Default or an Event of Default has occurred.
Borrower shall hold all payments on, and proceeds of, Receivables in trust for
Silicon, and Borrower shall immediately deliver all such payments and proceeds
to Silicon in their original form, duly endorsed in blank, to be applied to the
Obligations in such order as Silicon shall determine. Silicon may, in its
discretion, require that all proceeds of Collateral be deposited by Borrower
into a lockbox account, or such other "blocked account" as Silicon may specify,
pursuant to a blocked account agreement in such form as Silicon may specify*. **
*except for amounts constituting the purchase price of an on-line
transaction collected pursuant to the Motorplace Vehicle Network Business
Agreement dated August 18, 2000 between General Electric Capital Auto Financial
Services, Inc. and Borrower; provided, however, that any transaction or other
fees collected by Borrower in connection with such on-line transactions shall be
deposited by Borrower as Silicon may specify as provided for above
**After a Default or Event of Default has occurred, Silicon or its designee
may, at any time, in its good faith business judgment notify Account Debtors
that the Receivables have been assigned to Silicon. Prior to a Default or Event
of Default occurring, Silicon or its designee may, at any time, in its good
faith business judgment notify Account Debtors that the Receivables have been
assigned for security to Silicon.
4.5. Remittance of Proceeds. All proceeds arising from the disposition
of any Collateral shall be delivered, in kind, by Borrower to Silicon in the
original form in which received by Borrower not later than the following
Business Day after receipt by Borrower, to be applied to the Obligations in such
order as Silicon shall determine; provided that, if no Default or Event of
Default has occurred*, Borrower shall not be obligated to remit to Silicon the
proceeds of the sale of worn out or obsolete equipment disposed of by Borrower
in good faith in an arm's length transaction for an aggregate purchase price of
$25,000 or less (for all such transactions in any fiscal year). Borrower agrees
that it will not commingle proceeds of Collateral with any of Borrower's other
funds or property, but will hold such proceeds separate and apart from such
other funds and property and in an express trust for Silicon. Nothing in this
Section limits the restrictions on disposition of Collateral set forth elsewhere
in this Agreement.
*and is continuing
4.6 Disputes. Borrower shall notify Silicon promptly of all disputes or
claims relating to Receivables. *Borrower shall not forgive (completely or
partially), compromise or settle any Receivable for less than payment in full,
or agree to do any of the foregoing, except that Borrower may do so, provided
that: (i) Borrower does so in good faith, in a commercially reasonable manner,
in the ordinary course of business, and in arm's length transactions, which are
reported to
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Silicon on the regular reports provided to Silicon; (ii) no Default or Event of
Default has occurred and is continuing; and (iii) taking into account all such
discounts settlements and forgiveness, the total outstanding Loans will not
exceed the Credit Limit. Silicon may, at any time after the occurrence of an
Event of Default, settle or adjust disputes or claims directly with Account
Debtors for amounts and upon terms which Silicon considers advisable in its
reasonable credit judgment and, in all cases, Silicon shall credit Borrower's
Loan account with only the net amounts received by Silicon in payment of any
Receivables.
*Except for the Promissory Note dated September 29, 2000 by Boats.com, Inc.
(as the same may be amended, modified, extended or restated) in favor of
Borrower in the amount of $4,788,438.00),
4.7 Returns. Provided no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to Borrower in the
ordinary course of its business, Borrower shall promptly determine the reason
for such return and promptly issue a credit memorandum to the Account Debtor in
the appropriate amount (sending a copy to Silicon). In the event any attempted
return occurs after the occurrence of any Event of Default, Borrower shall
(i) hold the returned Inventory in trust for Silicon, (ii) segregate all
returned Inventory from all of Borrower's other property, (iii) conspicuously
label the returned Inventory as Silicon's property, and (iv) immediately notify
Silicon of the return of any Inventory, specifying the reason for such return,
the location and condition of the returned Inventory, and on Silicon's request
deliver such returned Inventory to Silicon.
4.8 Verification. Silicon may, from time to time, verify directly with
the respective Account Debtors the validity, amount and other matters relating
to the Receivables, by means of mail, telephone or otherwise, either in the name
of Borrower or Silicon or such other name as Silicon may choose.
4.9 No Liability. Silicon shall not under any circumstances be
responsible or liable for any shortage or discrepancy in, damage to, or loss or
destruction of, any goods, the sale or other disposition of which gives rise to
a Receivable, or for any error, act, omission, or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any
Receivable, or for settling any Receivable in good faith for less than the full
amount thereof, nor shall Silicon be deemed to be responsible for any of
Borrower's obligations under any contract or agreement giving rise to a
Receivable. Nothing herein shall, however, relieve Silicon from liability for
its own gross negligence or willful misconduct.
5. ADDITIONAL DUTIES OF THE BORROWER.
5.1 Financial and Other Covenants. Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule.
5.2 Insurance. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as Silicon
may reasonably require*, and Borrower shall provide evidence of such insurance
to Silicon, so that Silicon is satisfied that such insurance is, at all times,
in full force and effect. All such insurance policies shall name Silicon as an
additional loss payee, and shall contain a lenders loss payee endorsement in
form reasonably acceptable to Silicon. Upon receipt of the proceeds of any such
insurance, Silicon shall apply such proceeds in reduction of the Obligations as
Silicon shall determine in its sole discretion, except that, provided no Default
or Event of Default has occurred and is continuing, Silicon shall release to
Borrower insurance proceeds with respect to Equipment totaling less than
$100,000, which shall be utilized by Borrower for the replacement of the
Equipment with respect to which the insurance proceeds were paid. Silicon may
require reasonable assurance that the insurance proceeds so released will be so
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used. If Borrower fails to provide or pay for any insurance, Silicon may, but is
not obligated to, obtain the same at Borrower's expense. Borrower shall promptly
deliver to Silicon copies of all reports made to insurance companies.
*and that are customary and in accordance with standard practices for
Borrower's industry and locations
5.3 Reports. Borrower, at its expense, shall provide Silicon with the
written reports set forth in the Schedule, and such other written reports with
respect to Borrower (including budgets, sales projections, operating plans and
other financial documentation), as Silicon shall from time to time reasonably
specify.
5.4 Access to Collateral, Books and Records. At reasonable times, and on
one Business Day's notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy Borrower's books and
records. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have the
right to disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process. The foregoing
inspections and audits shall be at Borrower's expense and the charge therefor
shall be $600 per person per day (or such higher amount as shall represent
Silicon's then current standard charge for the same), plus reasonable out of
pocket expenses*. Borrower will not enter into any agreement with any accounting
firm, service bureau or third party to store Borrower's books or records at any
location other than Borrower's Address, without first obtaining Silicon's
written consent, which may be conditioned upon such accounting firm, service
bureau or other third party agreeing to give Silicon the same rights with
respect to access to books and records and related rights as Silicon has under
this Loan Agreement. **Borrower waives the benefit of any accountant-client
privilege or other evidentiary privilege precluding or limiting the disclosure,
divulgence or delivery of any of its books and records (except that Borrower
does not waive any attorney-client privilege).
*provided that such charges shall not exceed $30,000 in any calendar year
(but said limit shall not apply if any Default or Event of Default has occurred)
**With respect to Silicon and its agents,
5.5 Negative Covenants. Except as may be permitted in the Schedule,
Borrower shall not, without Silicon's prior written consent, do any of the
following: (i) merge or consolidate with another corporation or entity*;
(ii) acquire any assets, except in the ordinary course of business**;
(iii) enter into any other transaction outside the ordinary course of
business***; (iv) sell or transfer any Collateral, except for the sale of
finished Inventory in the ordinary course of Borrower's business, and except for
the sale of obsolete or unneeded Equipment in the ordinary course of business;
(v) store any Inventory or other Collateral with any warehouseman or other third
party; (vi) sell any Inventory on a sale-or-return, guaranteed sale,
consignment, or other contingent basis; (vii) make any loans of any money or
other assets****; (viii) incur any debts, outside the ordinary course of
business, which would have a*****; (ix) guarantee or otherwise become liable
with respect to the obligations of another party or entity; (x) pay or declare
any dividends on Borrower's stock (except for dividends payable solely in stock
of Borrower); (xi) redeem, retire, purchase or otherwise acquire, directly or
indirectly, any of Borrower's stock******; (xii) make any change in Borrower's
capital structure which would have a***** or (xiv) dissolve or elect to
dissolve*******. Transactions permitted by the foregoing provisions of this
Section are only permitted if no Default or Event of Default would occur as a
result of such transaction.
*, except for Permitted Mergers
**and except as otherwise permitted under this Section 5.5
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***except as otherwise permitted under this Section 5.5
****except loans to employees in accordance with Borrower's usual and
customary practices not to exceed $50,000 per employee and $150,000 in the
aggregate outstanding at any time
*****Material Adverse Effect
******except for any such transactions relating to stock or stock options of
Borrower's employees in an amount not to exceed $50,000 per annum
*******, except Permitted Dissolutions
5.6 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to Silicon, make available
Borrower and its officers, employees and agents and Borrower's books and
records, to the extent that Silicon may deem them reasonably necessary in order
to prosecute or defend any such suit or proceeding*.
*, provided that Borrower shall not be required to provide litigation
cooperation that would waive any attorney-client privilege
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5.7 Further Assurances. Borrower agrees, at its expense, on request by
Silicon, to execute all documents and take all actions, as Silicon, may deem
reasonably necessary or useful in order to perfect and maintain Silicon's
perfected security interest in the Collateral, and in order to fully consummate
the transactions contemplated by this Agreement.
6. TERM.
6.1 Maturity Date. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the "Maturity Date"), subject to*
Section 6.3 below.
*Section 6.2 and
6.2 Early Termination. This Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective three Business Days after
written notice of termination is given to Silicon; or (ii) by Silicon at any
time after the occurrence of an Event of Default, without notice, effective
immediately. If this Agreement is terminated by Borrower or by Silicon under
this Section 6.2, Borrower shall pay to Silicon a termination fee in an amount
equal to* of the Maximum Credit Limit, provided that no termination fee shall be
charged if the credit facility hereunder is replaced with a new facility from
another division of Silicon Valley Bank. The termination fee shall be due and
payable on the effective date of termination and thereafter shall bear interest
at a rate equal to the highest rate applicable to any of the Obligations.
*one percent (1.0%)
6.3 Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or on
any earlier effective date of termination, there are any outstanding Letters of
Credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such Letters of Credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said Letters of Credit, pursuant to Silicon's then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided
that, without limiting the fact that Loans are subject to the discretion of
Silicon, Silicon may, in its sole discretion, refuse to make any further Loans
after termination. No termination shall in any way affect or impair any right or
remedy of Silicon, nor shall any such termination relieve Borrower of any
Obligation to Silicon, until all of the Obligations have been paid and performed
in full. Upon payment and performance in full of all the Obligations and
termination of this Agreement, Silicon shall promptly deliver to Borrower
termination statements, requests for reconveyances and such other documents as
may be required to fully terminate Silicon's security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower shall
give Silicon immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by Borrower or any
of Borrower's officers, employees or agents, now or in the future, shall be
untrue or misleading in a material respect*; or (b) Borrower shall fail to pay
when due any Loan or any interest thereon or any other monetary Obligation; or
(c) the total Loans and other Obligations outstanding at any time shall exceed
the Credit Limit;** or (d) Borrower shall fail to comply with any of the
financial covenants set forth in the Schedule or shall fail to perform
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any other non-monetary Obligation which by its nature cannot be cured; or
(e) Borrower shall fail to perform any other non-monetary Obligation, which
failure is not cured within 5 Business Days after the date due; or (f) any levy,
assessment, attachment, seizure, lien or encumbrance (other than a Permitted
Lien) is made on all or any part of the Collateral which is not cured within***
days after the occurrence of the same; or (g) any default or event of default
occurs under any obligation secured by a Permitted Lien, which is not cured
within any applicable cure period or waived in writing by the holder of the
Permitted Lien; or (h) Borrower breaches any material contract or obligation,
which has or may reasonably be expected to have a****; or (i) Dissolution,
termination of existence, insolvency or business failure of Borrower; or
appointment of a receiver, trustee or custodian, for all or any part of the
property of, assignment for the benefit of creditors by, or the commencement of
any proceeding by Borrower under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect; or (j) the commencement of any
proceeding against Borrower or any guarantor of any of the Obligations under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, which is not cured by the dismissal thereof within***** days
after the date commenced; or (k) revocation or termination of, or limitation or
denial of liability upon, any guaranty of the Obligations or any attempt to do
any of the foregoing, or commencement of proceedings by any guarantor of any of
the Obligations under any bankruptcy or insolvency law; or (l) revocation or
termination of, or limitation or denial of liability upon, any pledge of any
certificate of deposit, securities or other property or asset of any kind
pledged by any third party to secure any or all of the Obligations, or any
attempt to do any of the foregoing, or commencement of proceedings by or against
any such third party under any bankruptcy or insolvency law; or (m) Borrower
makes any payment on account of any indebtedness or obligation which has been
subordinated to the Obligations other than as permitted in the applicable
subordination agreement, or if any Person who has subordinated such indebtedness
or obligations terminates or in any way limits his subordination agreement; or
(n) there shall be a change in the record or beneficial ownership of an
aggregate of more than 20% of the outstanding shares of stock of Borrower, in
one or more transactions, compared to the ownership of outstanding shares of
stock of Borrower in effect on the date hereof******, without the prior written
consent of Silicon; or (o) Borrower shall generally not pay its debts as they
become due, or Borrower shall conceal, remove or transfer any part of its
property, with intent to hinder, delay or defraud its creditors, or make or
suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or (p) there shall be a*******
Silicon may cease making any Loans hereunder during any of the above cure
periods, and thereafter if an Event of Default has occurred.
*when made
**provided, however, if an Overadvance results directly from a change by
Silicon of either the amount of Reserves or of the Minimum Eligibility
Requirements, then if Borrower fails to pay such Overadvance within 3 Business
Days of such Overadvance occurring
***20
****Material Adverse Effect
*****60
******that results in either: (i) a change in the controlling ownership of
Borrower or (ii) any Person owning more than 20% of the outstanding shares of
stock of Borrower
*******Material Adverse Change
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7.2 Remedies. Upon the occurrence of any Event of Default, and at any
time thereafter, Silicon, at its option, and without notice or demand of any
kind (all of which are hereby expressly waived by Borrower), may do any one or
more of the following: (a) Cease making Loans or otherwise extending credit to
Borrower under this Agreement or any other document or agreement; (b) Accelerate
and declare all or any part of the Obligations to be immediately due, payable,
and performable, notwithstanding any deferred or installment payments allowed by
any instrument evidencing or relating to any Obligation; (c) Take possession of
any or all of the Collateral wherever it may be found, and for that purpose
Borrower hereby authorizes Silicon without judicial process to enter onto any of
Borrower's premises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain on the premises or
cause a custodian to remain on the premises in exclusive control thereof,
without charge for so long as Silicon deems it reasonably necessary in order to
complete the enforcement of its rights under this Agreement or any other
agreement; provided, however, that should Silicon seek to take possession of any
of the Collateral by Court process, Borrower hereby irrevocably waives: (i) any
bond and any surety or security relating thereto required by any statute, court
rule or otherwise as an incident to such possession; (ii) any demand for
possession prior to the commencement of any suit or action to recover possession
thereof; and (iii) any requirement that Silicon retain possession of, and not
dispose of, any such Collateral until after trial or final judgment; (d) Require
Borrower to assemble any or all of the Collateral and make it available to
Silicon at places designated by Silicon which are reasonably convenient to
Silicon and Borrower, and to remove the Collateral to such locations as Silicon
may deem advisable; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (f) Sell, lease or otherwise dispose of any of the Collateral, in its
condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Silicon shall have the right to
conduct such disposition on Borrower's premises without charge, for such time or
times as Silicon deems reasonable, or on Silicon's premises, or elsewhere and
the Collateral need not be located at the place of disposition. Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not
relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes Silicon to endorse or sign Borrower's name on all collections,
receipts, instruments and other documents, to take possession of and open mail
addressed to Borrower and remove therefrom payments made with respect to any
item of the Collateral or proceeds thereof, and, in Silicon's sole discretion,
to grant extensions of time to pay, compromise claims and settle Receivables and
the like for less than face value; (h) Offset against any sums in any of
Borrower's general, special or other Deposit Accounts with Silicon; and
(i) Demand and receive possession of any of Borrower's federal and state income
tax returns and the books and records utilized in the preparation thereof or
referring thereto. All reasonable attorneys' fees, expenses, costs, liabilities
and obligations incurred by Silicon with respect to the foregoing shall be added
to and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon's rights and remedies, from and
after the occurrence of any Event of Default, the interest rate applicable to
the Obligations shall be increased by an additional four percent per annum.
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7.3 Standards for Determining Commercial Reasonableness. Borrower and
Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to
Borrower at least* days prior to the sale, and, in the case of a public sale,
notice of the sale is published at least* days before the sale in a newspaper of
general circulation in the county where the sale is to be conducted; (ii) Notice
of the sale describes the collateral in general, non-specific terms; (iii) The
sale is conducted at a place designated by Silicon, with or without the
Collateral being present; (iv) The sale commences at any time between 8:00 a.m.
and 6:00 p.m; (v) Payment of the purchase price in cash or by cashier's check or
wire transfer is required; (vi) With respect to any sale of any of the
Collateral, Silicon may (but is not obligated to) direct any prospective
purchaser to ascertain directly from Borrower any and all information concerning
the same. Silicon shall be free to employ other methods of noticing and selling
the Collateral, in its discretion, if they are commercially reasonable.
*ten (10)
7.4 Power of Attorney. Upon the occurrence of any Event of Default,
without limiting Silicon's other rights and remedies, Borrower grants to Silicon
an irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents) at
any time, at its option, but without obligation, with or without notice to
Borrower, and at Borrower's expense, to do any or all of the following, in
Borrower's name or otherwise, but Silicon agrees to exercise the following
powers in a commercially reasonable manner: (a) Execute on behalf of Borrower
any documents that Silicon may, in its sole discretion, deem advisable in order
to perfect and maintain Silicon's security interest in the Collateral, or in
order to exercise a right of Borrower or Silicon, or in order to fully
consummate all the transactions contemplated under this Agreement, and all other
present and future agreements; (b) Execute on behalf of Borrower any document
exercising, transferring or assigning any option to purchase, sell or otherwise
dispose of or to lease (as lessor or lessee) any real or personal property which
is part of Silicon's Collateral or in which Silicon has an interest; (c) Execute
on behalf of Borrower, any invoices relating to any Receivable, any draft
against any Account Debtor and any notice to any Account Debtor, any proof of
claim in bankruptcy, any Notice of Lien, claim of mechanic's, materialman's or
other lien, or assignment or satisfaction of mechanic's, materialman's or other
lien; (d) Take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; endorse the name of Borrower upon any instruments, or
documents, evidence of payment or Collateral that may come into Silicon's
possession; (e) Endorse all checks and other forms of remittances received by
Silicon; (f) Pay, contest or settle any lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same;
(g) Grant extensions of time to pay, compromise claims and settle Receivables
and General Intangibles for less than face value and execute all releases and
other documents in connection therewith; (h) Pay any sums required on account of
Borrower's taxes or to secure the release of any liens therefor, or both;
(i) Settle and adjust, and give releases of, any insurance claim that relates to
any of the Collateral and obtain payment therefor; (j) Instruct any third party
having custody or control of any books or records belonging to, or relating to,
Borrower to give Silicon the same rights of access and other rights with respect
thereto as Silicon has under this Agreement; and (k) Take any action or pay any
sum required of Borrower pursuant to this Agreement and any other present or
future agreements. Any and all reasonable sums paid and any and all reasonable
costs, expenses, liabilities, obligations and attorneys' fees incurred by
Silicon with respect to the foregoing shall be added to and become part of the
Obligations, shall be payable on demand, and shall bear interest at a rate equal
to the highest interest rate applicable to any of the Obligations. In no event
shall Silicon's rights under the foregoing power of attorney or any of Silicon's
other rights under this
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Agreement be deemed to indicate that Silicon is in control of the business,
management or properties of Borrower.
7.5 Application of Proceeds. All proceeds realized as the result of any
sale of the Collateral shall be applied by Silicon first to the reasonable
costs, expenses, liabilities, obligations and attorneys' fees incurred by
Silicon in the exercise of its rights under this Agreement, second to the
interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as Silicon shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other persons legally entitled thereto;
Borrower shall remain liable to Silicon for any deficiency. If, Silicon, in its
sole discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, Silicon shall
have the option, exercisable at any time, in its sole discretion, of either
reducing the Obligations by the principal amount of purchase price or deferring
the reduction of the Obligations until the actual receipt by Silicon of the cash
therefor.
7.6 Remedies Cumulative. In addition to the rights and remedies set
forth in this Agreement, Silicon shall have all the other rights and remedies
accorded a secured party under the California Uniform Commercial Code and under
all other applicable laws, and under any other instrument or agreement now or in
the future entered into between Silicon and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.
8. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"Account Debtor" means the obligor on a Receivable.
"Affiliate" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
"Business Day" means a day on which Silicon is open for business.
"Code" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.
"Collateral" has the meaning set forth in Section 2.1 above.
"Default" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"Deposit Account" has the meaning set forth in Section 9105 of the Code.
"Eligible Inventory" [NOT APPLICABLE].
"Eligible Receivables" means Receivables arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services, which
Silicon, in its sole judgment, shall deem eligible for borrowing, based on such
considerations as Silicon may from time to time deem appropriate. Without
limiting the fact that the determination of which Receivables are eligible for
borrowing is a matter of Silicon's discretion, the following (the "Minimum
Eligibility Requirements") are the minimum requirements for a Receivable to be
an Eligible Receivable: (i) the Receivable must not be outstanding for more than
90 days from its invoice date, (ii) the Receivable must not represent progress
billings, or be due under a fulfillment or requirements contract with the
Account Debtor, (iii) the Receivable must
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not be subject to any contingencies (including Receivables arising from sales on
consignment, guaranteed sale or other terms pursuant to which payment by the
Account Debtor may be conditional), (iv) the Receivable must not be owing from
an Account Debtor with whom the Borrower has any dispute (whether or not
relating to the particular Receivable)*, (v) the Receivable must not be owing
from an Affiliate of Borrower**, (vi) the Receivable must not be owing from an
Account Debtor which is subject to any insolvency or bankruptcy proceeding, or
whose financial condition is not acceptable to Silicon, or which, fails or goes
out of a material portion of its business, (vii) the Receivable must not be
owing from the United States or any department, agency or instrumentality
thereof (unless there has been compliance, to Silicon's satisfaction, with the
United States Assignment of Claims Act), (viii) the Receivable must not be owing
from an Account Debtor located outside the United States or Canada (unless
pre-approved by Silicon in its discretion in writing, or backed by a letter of
credit satisfactory to Silicon, or FCIA insured satisfactory to Silicon),
(ix) the Receivable must not be owing from an Account Debtor to whom Borrower is
or may be liable for goods purchased from such Account Debtor or otherwise***.
Receivables owing from one Account Debtor will not be deemed Eligible
Receivables to the extent they exceed 25% of the total Receivables
outstanding****. In addition, if more than 50% of the Receivables owing from an
Account Debtor are outstanding more than 90 days from their invoice date
(without regard to unapplied credits) or are otherwise not eligible Receivables,
then all Receivables owing from that Account Debtor will be deemed ineligible
for borrowing. Silicon may, from time to time, in its discretion, revise the
Minimum Eligibility Requirements, upon***** written notice to the Borrower.
*but only to the extent of the amount subject to such dispute or claim
**(with the exception of DaimlerChrysler and General Electric, provided that
the respective ownership interests of DaimlerChrysler and General Electric in
Borrower remains less than 10% each and provided further no Default or Event of
Default has occurred)
***but only to the extent of any amounts owed to such Account Debtor
****provided, however, such percentage shall be 40% with respect to
Receivables for which DaimlerChrysler is the Account Debtor
*****one (1) Business Day's prior
"Equipment" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"Event of Default" means any of the events set forth in Section 7.1 of this
Agreement.*
*"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States.
"General Intangibles" means all general intangibles of Borrower, whether now
owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, inventions, designs, drawings, blueprints, patents,
patent applications, trademarks and the goodwill of the business symbolized
thereby, names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, rights in all
litigation presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all judgments now or hereafter arising
therefrom, all claims of Borrower against Silicon, rights to purchase or sell
real or personal property, rights as a licensor or licensee of any kind,
royalties, telephone numbers, proprietary information, purchase orders,
15
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and all insurance policies and claims (including without limitation life
insurance, key man insurance, credit insurance, liability insurance, property
insurance and other insurance), tax refunds and claims, computer programs,
discs, tapes and tape files, claims under guaranties, security interests or
other security held by or granted to Borrower, all rights to indemnification and
all other intangible property of every kind and nature (other than Receivables).
"Inventory" means all of Borrower's now owned and hereafter acquired goods,
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including without limitation
all raw materials, work in process, finished goods and goods in transit), and
all materials and supplies of every kind, nature and description which are or
might be used or consumed in Borrower's business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise or other personal property, and all warehouse receipts, documents of
title and other documents representing any of the foregoing.*
*"Material Adverse Effect" or "Material Adverse Change" means a material
adverse effect on (i) the business operations or condition (financial or
otherwise) of Borrower or (ii) the ability of Borrower to repay the Obligations
or otherwise perform its obligations under this Agreement or any other present
or future documents or agreements between Borrower and Silicon.
"Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Silicon, whether evidenced by this Agreement or any
note or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by Silicon in
Borrower's debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorney's
fees, expert witness fees, audit fees, letter of credit fees, collateral
monitoring fees, closing fees, facility fees, termination fees, minimum interest
charges and any other sums chargeable to Borrower under this Agreement or under
any other present or future instrument or agreement between Borrower and
Silicon.*
*"Permitted Dissolutions" means a dissolution whereby a Borrower may sell
all or substantially all of its assets (upon voluntary liquidation or otherwise)
to another Borrower.
"Permitted Liens" means the following: (i) purchase money security interests
in specific items of Equipment; (ii) leases of specific items of Equipment;
(iii) liens for taxes not yet payable*; (iv) additional security interests and
liens consented to in writing by Silicon, which consent shall not be
unreasonably withheld; (v) security interests being terminated substantially
concurrently with this Agreement; (vi) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course of
business and securing obligations which are not delinquent; (vii) liens incurred
in connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described** provided that any extension, renewal or
replacement lien is limited to the property encumbered by the existing lien and
the principal amount of the indebtedness being extended, renewed or refinanced
does not increase; (viii) Liens in favor of customs and revenue authorities
which secure payment of customs duties in connection with the importation of
goods***. Silicon will have the right to require, as a condition to its consent
under subparagraph (iv) above, that the holder of the additional security
interest or lien sign an intercreditor agreement on Silicon's then standard
form, acknowledge that the security interest is subordinate to the security
interest in favor of Silicon, and agree not to take any action to enforce its
subordinate security interest so long as any Obligations remain outstanding, and
that Borrower agree that any uncured default in any obligation secured by the
subordinate security interest shall also constitute an Event of Default under
this Agreement.****
16
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*or being contested in good faith by appropriate proceedings and for which
adequate reserves are being maintained provided such liens do not have priority
over any of Silicon's security interests
**in clauses (i), (ii), (ix) or (x) of the definition of Permitted Liens,
***, (ix) liens existing as of the effective date of this Agreement that are
not otherwise provided for above and that are disclosed on the Schedule, and
(x) liens on assets acquired by Borrower in accordance with Section 5.5 hereof,
provided such liens would otherwise be permitted pursuant to clauses (i) or
(ii) of the definition of Permitted Liens
****"Permitted Merger" means (a) any Borrower may merge with another
Borrower; and (b) any Borrower may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise) to another Borrower.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"Receivables" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities, securities accounts, investment
property, documents and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, all merchandise returned
to or repossessed by Borrower, and all rights of stoppage in transit and all
other rights or remedies of an unpaid vendor, lienor or secured party.
"Reserves" means, as of any date of determination, such amounts as Silicon
may from time to time establish and revise in good faith reducing the amount of
Loans, Letters of Credit and other financial accommodations which would
otherwise be available to Borrower under the lending formula(s) provided in the
Schedule: (a) to reflect events, conditions, contingencies or risks which, as
determined by Silicon in good faith, do or may affect (i) the Collateral or any
other property which is security for the Obligations or its value (including
without limitation any increase in delinquencies of Receivables), (ii) the
assets, business or prospects of Borrower or any Guarantor, or (iii) the
security interests and other rights of Silicon in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Silicon's
good faith belief that any collateral report or financial information furnished
by or on behalf of Borrower or any Guarantor to Silicon is or may have been
incomplete, inaccurate or misleading in any material respect; or (c) in respect
of any state of facts which Silicon determines in good faith constitutes an
Event of Default or may, with notice or passage of time or both, constitute an
Event of Default.
Other Terms. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with*
consistently applied. All other terms contained in this Agreement, unless
otherwise indicated, shall have the meanings provided by the Code, to the extent
such terms are defined therein.
*GAAP,
9. GENERAL PROVISIONS.
9.1 Interest Computation. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Silicon (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by Silicon on account of the Obligations three Business Days after
receipt by Silicon of immediately available funds, and, for purposes of the
foregoing, any such funds received after 12:00 Noon on any day shall be deemed
received on the next Business Day. Silicon shall not, however, be required to
credit Borrower's account for the amount of any item of payment which is
unsatisfactory to Silicon in its sole
17
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discretion, and Silicon may charge Borrower's loan account for the amount of any
item of payment which is returned to Silicon unpaid.
9.2 Application of Payments. All payments with respect to the
Obligations may be applied, and in Silicon's sole discretion reversed and
re-applied, to the Obligations, in such order and manner as Silicon shall
determine in its sole discretion.
9.3 Charges to Accounts. Silicon may, in its discretion, require that
Borrower pay monetary Obligations in cash to Silicon, or charge them to
Borrower's Loan account, in which event they will bear interest at the same rate
applicable to the Loans. Silicon may also, in its discretion, charge any
monetary Obligations to Borrower's Deposit Accounts maintained with Silicon.
9.4 Monthly Accountings. Silicon shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Silicon), unless Borrower
notifies Silicon in writing to the contrary within thirty days after each
account is rendered, describing the nature of any alleged errors or admissions.
9.5 Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, or certified mail return receipt
requested, addressed to Silicon or Borrower at the addresses shown in the
heading to this Agreement, or at any other address designated in writing by one
party to the other party. Notices to Silicon shall be directed to the Commercial
Finance Division, to the attention of the Division Manager or the Division
Credit Manager. All notices shall be deemed to have been given upon delivery in
the case of notices personally delivered, or at the expiration of one Business
Day following delivery to the private delivery service, or two Business Days
following the deposit thereof in the United States mail, with postage prepaid.
9.6 Severability. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
9.7 Integration. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Silicon and supersede
all prior and contemporaneous negotiations and oral representations and
agreements, all of which are merged and integrated in this Agreement. There are
no oral understandings, representations or agreements between the parties which
are not set forth in this Agreement or in other written agreements signed by the
parties in connection herewith.*
*Provided the Streamline Facility Agreement dated the date hereof between
Silicon and Borrower is in effect, the terms and provisions contained in the
Streamline Facility Agreement shall supersede any inconsistent terms and
provisions in this Agreement.
9.8 Waivers. The failure of Silicon at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between Borrower and Silicon shall not waive
or diminish any right of Silicon later to demand and receive strict compliance
therewith. Any waiver of any default shall not waive or affect any other
default, whether prior or subsequent, and whether or not similar. None of the
provisions of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to Silicon shall be deemed to have been
waived by any act or knowledge of Silicon or its agents or employees, but only
by a specific written waiver signed by an authorized officer of Silicon and
delivered to Borrower. Borrower waives demand, protest, notice of protest and
notice of default or
18
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dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, General
Intangible, document or guaranty at any time held by Silicon on which Borrower
is or may in any way be liable, and notice of any action taken by Silicon,
unless expressly required by this Agreement.
9.9 No Liability for Ordinary Negligence. Neither Silicon, nor any of
its directors, officers, employees, agents, attorneys or any other Person
affiliated with or representing Silicon shall be liable for any claims, demands,
losses or damages, of any kind whatsoever, made, claimed, incurred or suffered
by Borrower or any other party through the ordinary negligence of Silicon, or
any of its directors, officers, employees, agents, attorneys or any other Person
affiliated with or representing Silicon, but nothing herein shall relieve
Silicon from liability for its own gross negligence or willful misconduct.
9.10 Amendment. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by* Borrower and a duly
authorized officer of Silicon.
*a duly authorized officer of
9.11 Time of Essence. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.
9.12 Attorneys' Fees and Costs. Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to,
or in connection with, or relating to this Agreement (whether or not a lawsuit
is filed), including, but not limited to, any reasonable attorneys' fees and
costs Silicon incurs in order to do the following: prepare and negotiate this
Agreement and the documents relating to this Agreement; obtain legal advice in
connection with this Agreement or Borrower; enforce, or seek to enforce, any of
its rights; prosecute actions against, or defend actions by, Account Debtors;
commence, intervene in, or defend any action or proceeding; initiate any
complaint to be relieved of the automatic stay in bankruptcy; file or prosecute
any probate claim, bankruptcy claim, third-party claim, or other claim; examine,
audit, copy, and inspect any of the Collateral or any of Borrower's books and
records*; protect, obtain possession of, lease, dispose of, or otherwise enforce
Silicon's security interest in, the Collateral; and otherwise represent Silicon
in any litigation relating to Borrower. In satisfying Borrower's obligation
hereunder to reimburse Silicon for attorneys fees, Borrower may, for
convenience, issue checks directly to Silicon's attorneys, Levy, Small & Lallas,
but Borrower acknowledges and agrees that Levy, Small & Lallas is representing
only Silicon and not Borrower in connection with this Agreement. If either
Silicon or Borrower files any lawsuit against the other predicated on a breach
of this Agreement, the prevailing party in such action shall be entitled to
recover its reasonable costs and attorneys' fees, including (but not limited to)
reasonable attorneys' fees and costs incurred in the enforcement of, execution
upon or defense of any order, decree, award or judgment. All attorneys' fees and
costs to which Silicon may be entitled pursuant to this Paragraph shall
immediately become part of Borrower's Obligations, shall be due on demand, and
shall bear interest at a rate equal to the highest interest rate applicable to
any of the Obligations.
*(subject to the provisions of Section 5.4 of this Agreement)
9.13 Benefit of Agreement. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Silicon; provided,
however, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall release
Borrower from its liability for the Obligations.
19
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9.14 Joint and Several Liability. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
9.15 Limitation of Actions. Any claim or cause of action by Borrower
against Silicon, its directors, officers, employees, agents, accountants or
attorneys, based upon, arising from, or relating to this Loan Agreement, or any
other present or future document or agreement, or any other transaction
contemplated hereby or thereby or relating hereto or thereto, or any other
matter, cause or thing whatsoever, occurred, done, omitted or suffered to be
done by Silicon, its directors, officers, employees, agents, accountants or
attorneys, shall be barred unless asserted by Borrower by the commencement of an
action or proceeding in a court of competent jurisdiction by the filing of a
complaint within one year after the first act, occurrence or omission upon which
such claim or cause of action, or any part thereof, is based, and the service of
a summons and complaint on an officer of Silicon, or on any other person
authorized to accept service on behalf of Silicon, within thirty (30) days
thereafter. Borrower agrees that such one-year period is a reasonable and
sufficient time for Borrower to investigate and act upon any such claim or cause
of action. The one-year period provided herein shall not be waived, tolled, or
extended except by the written consent of Silicon in its sole discretion. This
provision shall survive any termination of this Loan Agreement or any other
present or future agreement.
9.16 Paragraph Headings; Construction. Paragraph headings are only used
in this Agreement for convenience. Borrower and Silicon acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against Silicon or Borrower under any rule
of construction or otherwise.
9.17 Governing Law; Jurisdiction; Venue. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and Borrower
shall be governed by the laws of the State of California. As a material part of
the consideration to Silicon to enter into this Agreement, Borrower (i) agrees
that all actions and proceedings relating directly or indirectly to this
Agreement shall, at Silicon's option, be litigated in courts located within
California, and that the exclusive venue therefor shall be Santa Clara County;
(ii) consents to the jurisdiction and venue of any such court and consents to
service of process in any such action or proceeding by personal delivery or any
other method permitted by law; and (iii) waives any and all rights Borrower may
have to object to the jurisdiction of any such court, or to transfer or change
the venue of any such action or proceeding.
9.18 Mutual Waiver of Jury Trial. BORROWER AND SILICON EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
20
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Borrower:
THE COBALT GROUP, INC.
By
/s/ DAVID S. SNYDER
--------------------------------------------------------------------------------
President or Vice President
By
/s/ LEE J. BRUNZ
--------------------------------------------------------------------------------
Secretary or Ass't Secretary
Borrower:
PARTSVOICE, LLC
By:
THE COBALT GROUP, INC.
Its:
Manager
By
/s/ DAVID S. SNYDER
--------------------------------------------------------------------------------
President or Vice President
By
/s/ LEE J. BRUNZ
--------------------------------------------------------------------------------
Secretary or Ass't Secretary
Borrower:
INTEGRALINK CORPORATION
By
/s/ DAVID S. SNYDER
--------------------------------------------------------------------------------
President or Vice President
By
/s/ LEE J. BRUNZ
--------------------------------------------------------------------------------
Secretary or Ass't Secretary
Silicon:
SILICON VALLEY BANK
By
/s/ DON CHANDLER
--------------------------------------------------------------------------------
Title
--------------------------------------------------------------------------------
21
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Silicon Valley Bank
Schedule to
Loan and Security Agreement
Borrower: The Cobalt Group, Inc.
PartsVoice, LLC
IntegraLink Corporation
Address:
2200 First Avenue South
Seattle, WA 98134
Date:
March 8, 2001
This Schedule forms an integral part of the Loan and Security Agreement
between Silicon Valley Bank and the above-borrower of even date.
1.
CREDIT LIMIT
(Section 1.1):
An amount not to exceed the lesser of: (i) $10,000,000 at any one time
outstanding (the "Maximum Credit Limit"); or (ii) 80% of the amount of
Borrower's Eligible Receivables (as defined in Section 8 above).
Loans will be made to each Borrower based on the Eligible Receivables of each
Borrower, subject to the Maximum Credit Limit set forth above for all Loans to
all Borrowers combined.
Cash Management Sublimit
(Section 1.6):
See Section 1.6 above.
2.
INTEREST.
Interest Rate
(Section 1.2):
A rate equal to the "Prime Rate" in effect from time to time, plus 2.0% per
annum. Interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. "Prime Rate" means the rate announced from time
to time by Silicon as its "prime rate;" it is a base rate upon which other rates
charged by Silicon are based, and it is not necessarily the best rate available
at Silicon. The interest rate applicable to the Obligations shall change on each
date there is a change in the Prime Rate.
Minimum Monthly Interest (Section 1.2):
N/A
3.
FEES (Section 1.4):
Loan Fee:
$125,000, payable as follows: $75,000, payable concurrently herewith and
$50,000, payable on or before the first anniversary of this Agreement.
Collateral Monitoring Fee:
$1,500, per month, payable in arrears (prorated for any partial month at the
beginning and at termination of this Agreement).
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Unused Line Fee:
Borrower shall pay Silicon an Unused Line Fee, in addition to all interest and
other fees payable hereunder. The amount of the Unused Line Fee shall be 0.25%
per annum multiplied by an amount equal to the Maximum Credit Limit minus the
average daily balance of the outstanding Loans. The Unused Line Fee shall be
computed and paid monthly, in arrears (prorated for any partial calendar month
at the beginning and at termination of this Agreement), and shall be due on the
last calendar day of each month.
4.
MATURITY DATE
(Section 6.1):
Two years from the date of this Agreement.
5.
FINANCIAL COVENANTS
(Section 5.1):
The Cobalt Group, Inc. shall, on a consolidated basis, comply with the following
covenant. Compliance shall be determined as of the end of each month, except as
otherwise specifically provided below:
Minimum Tangible Net Worth:
Borrower shall maintain a Tangible Net Worth of not less than the following:
For the months ending February 28, 2001 and March 31, 2001: $17,744,000 plus 50%
of the consideration received by Borrower after the date hereof for the issuance
of equity securities of Borrower.
For the months ending April 30, 2001, May 31, 2001 and June 30, 2001:
$12,754,000 plus 50% of the consideration received by Borrower after the date
hereof for the issuance of equity securities of Borrower.
For the months ending July 31, 2001, August 31, 2001 and September 30, 2001:
$9,695,000 plus 50% of the consideration received by Borrower after the date
hereof for the issuance of equity securities of Borrower.
For the months ending October 31, 2001, November 30, 2001 and December 31, 2001:
$8,302,000 plus 50% of the consideration received by Borrower after the date
hereof for the issuance of equity securities of Borrower.
For the months ending January 31, 2002, February 28, 2002 and March 31, 2002:
$9,695,000 plus 50% of the consideration received by Borrower after the date
hereof for the issuance of equity securities of Borrower.
For the months ending April 30, 2002, May 31. 2002 and June 30, 2002: $9,695,000
plus 50% of the consideration received by Borrower after the date hereof for the
issuance of equity securities of Borrower plus 50% of Borrower's quarterly net
income, if any, for the fiscal quarter ending March 31, 2002.
2
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For the months ending July 31, 2002, August 31. 2002 and September 30, 2002:
$9,695,000 plus 50% of the consideration received by Borrower after the date
hereof for the issuance of equity securities of Borrower plus 50% of Borrower's
quarterly net income, if any, for the fiscal quarters ending March 31, 2002 and
June 30, 2002.
For the months ending October 31, 2002, November 30. 2002 and December 31, 2002:
$9,695,000 plus 50% of the consideration received by Borrower after the date
hereof for the issuance of equity securities of Borrower plus 50% of Borrower's
quarterly net income, if any, for the fiscal quarters ending March 31, 2002,
June 30, 2002 and September 30, 2002.
For the month ending January 31, 2003 and each month ending thereafter:
$9,695,000 plus 50% of the consideration received by Borrower after the date
hereof for the issuance of equity securities of Borrower plus 50% of Borrower's
quarterly net income, if any, for the fiscal quarters ending March 31, 2002,
June 30, 2002, September 30, 2002 and December 31, 2002.
In no event shall the amount of this Minimum Tangible Net Worth financial
covenant be decreased.
Definitions.
For purposes of the foregoing financial covenant, the following term shall have
the following meaning:
"Current assets", "current liabilities" and "liabilities" shall have the meaning
ascribed thereto by generally accepted accounting principles.
"Tangible Net Worth" shall mean the excess of total assets over total
liabilities, determined in accordance with generally accepted accounting
principles, with the following adjustments:
(A) there shall be excluded from assets: (i) notes, accounts receivable and
other obligations owing to the Borrower from its officers or other Affiliates,
and (ii) all assets which would be classified as intangible assets under
generally accepted accounting principles, including without limitation goodwill,
licenses, patents, trademarks, trade names, copyrights, capitalized software and
organizational costs, licenses and franchises
(B) there shall be excluded from liabilities: all indebtedness which is
subordinated to the Obligations under a subordination agreement in form
specified by Silicon or by language in the instrument evidencing the
indebtedness which is acceptable to Silicon in its discretion.
3
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6.
REPORTING.
(Section 5.3):
Borrower shall provide Silicon with the following:
1.
Monthly Receivable agings, aged by invoice date, within fifteen days after the
end of each month.
2.
Monthly accounts payable agings, aged by invoice date, within fifteen days after
the end of each month.
3.
Monthly reconciliations of Receivable agings (aged by invoice date), transaction
reports, and general ledger, within thirty days after the end of each month.
4.
5.
Monthly consolidated and consolidating unaudited financial statements, as soon
as available, and in any event within thirty days after the end of each month.
6.
Monthly Compliance Certificates, within thirty days after the end of each month,
in such form as Silicon shall reasonably specify, signed by the Chief Financial
Officer of Borrower, certifying that as of the end of such month Borrower was in
full compliance with all of the terms and conditions of this Agreement, and
setting forth calculations showing compliance with the financial covenant set
forth in this Agreement and such other information as Silicon shall reasonably
request, including, without limitation, all outstanding or held check registers,
if any, or, if applicable, a statement that at the end of such month there were
no held checks.
7.
Quarterly unaudited financial statements, as soon as available, and in any event
within forty-five days after the end of each fiscal quarter of Borrower.
8.
Annual operating budgets (including income statements, balance sheets and cash
flow statements, by month) for the upcoming fiscal year of Borrower within
thirty days prior to the end of each fiscal year of Borrower; provided, however,
Borrower shall provide its fiscal year 2002 operating budgets to Silicon by no
later than September 30, 2001.
9.
Annual financial statements, as soon as available, and in any event within
90 days following the end of Borrower's fiscal year, certified by Price
Waterhouse Coopers, or other independent certified public accountants acceptable
to Silicon.
7.
COMPENSATION
(Section 5.5):
Not Applicable.
4
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8.
BORROWER INFORMATION:
Prior Names of Borrower
(Section 3.2):
See Representations and Warranties dated October 2, 2000.
Prior Trade Names of Borrower
(Section 3.2):
See Representations and Warranties dated October 2, 2000.
Existing Trade Names of Borrower
(Section 3.2):
See Representations and Warranties dated October 2, 2000.
Other Locations and Addresses
(Section 3.3):
7004 Bee Cave Road, Suite 100, Austin, TX 78746; 8305 SE Monterey, Suite 104,
Portland, OR 97266; 2701 Troy Center Drive, Suite 220, Troy, MI 48084; 2790
Fisher Road, Columbus, OH 43204.
Material Adverse Litigation
(Section 3.10):
None.
9.
OTHER COVENANTS
(Section 5.1):
Borrower shall at all times comply with all of the following additional
covenants:
(1)
Banking Relationship. Borrower shall at all times maintain its primary banking
relationship with Silicon.
(2)
Subordination of Inside Debt. All present and future indebtedness of the
Borrower to its shareholders, to whom it owes more than $25,000, its officers
and directors ("Inside Debt") shall, at all times, be subordinated to the
Obligations pursuant to a subordination agreement on Silicon's standard form
except for Unsubordinated Insider Indebtedness (defined as collectively,
(i) indebtedness for reimbursement of out of pocket expenses in the ordinary
course of business and (ii) indebtedness for liabilities in the nature of
indemnification, contribution and exoneration to the extent such liabilities of
Borrower are directly or indirectly funded by Persons other than Borrower, such
as insurers or indemnitors). Borrower represents and warrants that there is no
Inside Debt presently outstanding, except for the following: NONE. Prior to
incurring any Inside Debt in the future, Borrower shall cause the person to whom
such Inside Debt will be owed to execute and deliver to Silicon a subordination
agreement on Silicon's standard form.
5
--------------------------------------------------------------------------------
(3)
Copyright Filings. Concurrently, each Borrower is executing and delivering to
Silicon a Patent Mortgage and Security Agreement between Borrower and Silicon
(the "Intellectual Property Agreement"). Within 30 days after the date hereof,
Borrower shall (i) cause all of the following computer software, the licensing
of which results in Receivables, to be registered with the United States
Copyright Office: Cobalt Web Publishing System 1.0, Lead Manager 1.0, Lead
Manager Redirect 1.0, Lead Manager Reports 1.0, Auto Show 2.2, 2.4, myCarTools
1.0, AdWizards 2.3, Secure Prequal 1.0 and FSBO 1.0, (ii) complete the Exhibits
to the Intellectual Property Agreement with all of the information called for
with respect to such software, (iii) cause the Intellectual Property Agreement
to be recorded in the United States Copyright Office, and (iv) provide evidence
of such recordation to Silicon. Within 45 days after the date hereof, Borrower
shall (i) cause all remaining computer software, the licensing of which results
in Receivables, to be registered with the United States Copyright Office,
(ii) update the Exhibits to the Intellectual Property Agreement with all of the
information called for with respect to such software, (iii) execute a Supplement
to the Intellectual Property Agreement with respect to such software, (iv) cause
the Supplement to the Intellectual Property Agreement to be recorded in the
United States Copyright Office, and (v) provide evidence of such recordation to
Silicon. Notwithstanding anything to the contrary in the Intellectual Property
Agreement, with respect to computer software, the licensing of which results in
Receivables, developed by Borrower after the date hereof, Borrower shall
register such computer software on a quarterly basis with the United States
Copyright Office, cause the Intellectual Property Agreement to be amended to
include such software, cause such amendment to be recorded in the United States
Copyright Office and provide evidence of such recordation to Silicon.
(4)
Cobalt Group, L.L.C. Financing Statements. Borrower represents and warrants to
Silicon that "Cobalt Group, L.L.C." is not the same entity as The Cobalt
Group, Inc., the Borrower under this Agreement, and that the UCC-1 Financing
Statements filed in favor of The Laredo National Bank, or any other secured
party, listing "Cobalt Group, L.L.C." or "Cobalt Group, L.L.C. d/b/a Cobalt
Construction Co." as the debtor do not represent any liens or security interests
on the assets of the Borrower.
6
--------------------------------------------------------------------------------
10.
OTHER PERMITTED LIENS
(Clause (ix) of Permitted Liens):
Lien in favor of General Electric Capital Auto Financial Services, Inc. on all
of Borrower's right, title and interest in all computer software, programs and
information that consist of a modification, upgrade, enhancement, change, repair
or improvement of or to the computer software licensed by such secured party to
Borrower pursuant to that certain Software License, dated August 18, 2000
between Borrower and such secured party, and all proceeds thereof.
7
--------------------------------------------------------------------------------
Borrower: Silicon:
THE COBALT GROUP, INC.
SILICON VALLEY BANK
By
/s/ DAVID S. SNYDER
--------------------------------------------------------------------------------
President or Vice President
By
/s/ DON CHANDLER
--------------------------------------------------------------------------------
Title
--------------------------------------------------------------------------------
By
/s/ LEE J. BRUNZ
--------------------------------------------------------------------------------
Secretary or Ass't Secretary
Borrower:
PARTSVOICE, LLC
By:
THE COBALT GROUP, INC.
Its: Manager
By
/s/ DAVID S. SNYDER
--------------------------------------------------------------------------------
President or Vice President
By
/s/ LEE J. BRUNZ
--------------------------------------------------------------------------------
Secretary or Ass't Secretary
Borrower:
INTEGRALINK CORPORATION
By
/s/ DAVID S. SNYDER
--------------------------------------------------------------------------------
President or Vice President
By
/s/ LEE J. BRUNZ
--------------------------------------------------------------------------------
Secretary or Ass't Secretary
8
--------------------------------------------------------------------------------
Silicon Valley Bank
Certified Resolution and Incumbency Certificate
Borrower: The Cobalt Group, Inc.,
a corporation organized under the laws of the State of Washington
Date:
March 8, 2001
I, the undersigned, Secretary or Assistant Secretary of the above-named
borrower, a corporation organized under the laws of the state set forth above,
do hereby certify that the following is a full, true and correct copy of
resolutions duly and regularly adopted by the Board of Directors of said
corporation as required by law, and by the by-laws of said corporation, and that
said resolutions are still in full force and effect and have not been in any way
modified, repealed, rescinded, amended or revoked.
RESOLVED, that this corporation borrow from Silicon, from time to time, such sum
or sums of money as, in the judgment of the officer or officers hereinafter
authorized hereby, this corporation may require;
RESOLVED, that any officer of this corporation be, and he or she is hereby
authorized, directed and empowered, in the name of this corporation, to execute
and deliver to Silicon, and Silicon is requested to accept, the loan agreements,
security agreements, notes, financing statements, and other documents and
instruments providing for such loans and evidencing and/or securing such loans,
with interest thereon, and said authorized officers are authorized from time to
time to execute renewals, extensions and/or amendments of said loan agreements,
security agreements, and other documents and instruments;
RESOLVED, that said authorized officers be and they are hereby authorized,
directed and empowered, as security for any and all indebtedness of this
corporation to Silicon, whether arising pursuant to this resolution or
otherwise, to grant, transfer, pledge, mortgage, assign, or otherwise
hypothecate to Silicon, or deed in trust for its benefit, any property of any
and every kind, belonging to this corporation, including, but not limited to,
any and all real property, accounts, inventory, equipment, general intangibles,
instruments, documents, chattel paper, notes, money, deposit accounts,
furniture, fixtures, goods, and other property of every kind, and to execute and
deliver to Silicon any and all grants, transfers, trust receipts, loan or credit
agreements, pledge agreements, mortgages, deeds of trust, financing statements,
security agreements and other hypothecation agreements, which said instruments
and the note or notes and other instruments referred to in the preceding
paragraph may contain such provisions, covenants, recitals and agreements as
Silicon may require and said authorized officers may approve, and the execution
thereof by said authorized officers shall be conclusive evidence of such
approval; and
RESOLVED, that Silicon may conclusively rely upon a certified copy of these
resolutions and a certificate of the Secretary of this corporation as to the
officers of this corporation and their offices and signatures, and continue to
conclusively rely on such certified copy of these resolutions and said
certificate for all past, present and future transactions until written notice
of any change hereto or thereto is given to Silicon by this corporation by
certified mail, return receipt requested.
1
--------------------------------------------------------------------------------
The undersigned further hereby certifies that the following persons are the
duly elected and acting officers of the corporation named above as borrower and
that the following are their actual signatures:
NAMES
--------------------------------------------------------------------------------
OFFICE(S)
--------------------------------------------------------------------------------
ACTUAL SIGNATURES
--------------------------------------------------------------------------------
John W.P. Holt President & Chief Executive Officer x /s/ JOHN W.P. HOLT
--------------------------------------------------------------------------------
David S. Snyder
Executive Vice President & CFO
x
/s/ DAVID S. SNYDER
--------------------------------------------------------------------------------
Lee J. Brunz
General Counsel & Secretary
x
/s/ LEE J. BRUNZ
--------------------------------------------------------------------------------
x
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary on the
date set forth above.
/s/ LEE J. BRUNZ
--------------------------------------------------------------------------------
Secretary
2
--------------------------------------------------------------------------------
Silicon Valley Bank
Certified Resolution and Incumbency Certificate
Borrower: PartsVoice, LLC,
a limited liability company organized under the laws of the State of Oregon
Date:
March 8, 2001
I, the undersigned, Manager, Secretary or Assistant Secretary of the above-named
borrower, a limited liability company organized under the laws of the state set
forth above ("LLC"), do hereby certify that the following is a full, true and
correct copy of resolutions duly and regularly adopted by the Members of said
company as required by law, and by the operating agreement of said company, and
that said resolutions are still in full force and effect and have not been in
any way modified, repealed, rescinded, amended or revoked.
RESOLVED, that this LLC borrow from Silicon, from time to time, such sum or sums
of money as, in the judgment of the manager, this LLC may require;
RESOLVED, that the manager of this LLC be, and is hereby authorized, directed
and empowered, in the name of this LLC, to execute and deliver to Silicon, and
Silicon is requested to accept, the loan agreements, security agreements, notes,
financing statements, and other documents and instruments providing for such
loans and evidencing and/or securing such loans, with interest thereon, and said
authorized manager is authorized from time to time to execute renewals,
extensions and/or amendments of said loan agreements, security agreements, and
other documents and instruments;
RESOLVED, that said authorized manager be and is hereby authorized, directed and
empowered, as security for any and all indebtedness of this LLC to Silicon,
whether arising pursuant to this resolution or otherwise, to grant, transfer,
pledge, mortgage, assign, or otherwise hypothecate to Silicon, or deed in trust
for its benefit, any property of any and every kind, belonging to this LLC,
including, but not limited to, any and all real property, accounts, inventory,
equipment, general intangibles, instruments, documents, chattel paper, notes,
money, deposit accounts, furniture, fixtures, goods, and other property of every
kind, and to execute and deliver to Silicon any and all grants, transfers, trust
receipts, loan or credit agreements, pledge agreements, mortgages, deeds of
trust, financing statements, security agreements and other hypothecation
agreements, which said instruments and the note or notes and other instruments
referred to in the preceding paragraph may contain such provisions, covenants,
recitals and agreements as Silicon may require and said authorized manager may
approve, and the execution thereof by said authorized manager shall be
conclusive evidence of such approval; and
RESOLVED, that Silicon may conclusively rely upon a certified copy of these
resolutions and a certificate of the sole member of this LLC as to the manage of
this LLC and such manager's signatures, and continue to conclusively rely on
such certified copy of these resolutions and said certificate for all past,
present and future transactions until written notice of any change hereto or
thereto is given to Silicon by this LLC by certified mail, return receipt
requested.
1
--------------------------------------------------------------------------------
The undersigned further hereby certifies that the following person is the
duly elected and acting manager and sole member of the LLC named above as
borrower and that the following is the actual signature of the authorized chief
executive officer thereof:
NAMES
--------------------------------------------------------------------------------
OFFICE(S)
--------------------------------------------------------------------------------
ACTUAL SIGNATURES
--------------------------------------------------------------------------------
The Cobalt Group, Inc. Manager By x /s/ JOHN W.P. HOLT
--------------------------------------------------------------------------------
John W.P. Holt
President & CEO
IN WITNESS WHEREOF, I have hereunto set my hand as Secretary of such Manager
on the date set forth above.
/s/ LEE J. BRUNZ
--------------------------------------------------------------------------------
Secretary of Manager
2
--------------------------------------------------------------------------------
Silicon Valley Bank
Certified Resolution and Incumbency Certificate
Borrower: IntegraLink Corporation,
a corporation organized under the laws of the State of Washington
Date:
March 8, 2001
I, the undersigned, Secretary or Assistant Secretary of the above-named
borrower, a corporation organized under the laws of the state set forth above,
do hereby certify that the following is a full, true and correct copy of
resolutions duly and regularly adopted by the Board of Directors of said
corporation as required by law, and by the by-laws of said corporation, and that
said resolutions are still in full force and effect and have not been in any way
modified, repealed, rescinded, amended or revoked.
RESOLVED, that this corporation borrow from Silicon, from time to time, such sum
or sums of money as, in the judgment of the officer or officers hereinafter
authorized hereby, this corporation may require;
RESOLVED, that any officer of this corporation be, and he or she is hereby
authorized, directed and empowered, in the name of this corporation, to execute
and deliver to Silicon, and Silicon is requested to accept, the loan agreements,
security agreements, notes, financing statements, and other documents and
instruments providing for such loans and evidencing and/or securing such loans,
with interest thereon, and said authorized officers are authorized from time to
time to execute renewals, extensions and/or amendments of said loan agreements,
security agreements, and other documents and instruments;
RESOLVED, that said authorized officers be and they are hereby authorized,
directed and empowered, as security for any and all indebtedness of this
corporation to Silicon, whether arising pursuant to this resolution or
otherwise, to grant, transfer, pledge, mortgage, assign, or otherwise
hypothecate to Silicon, or deed in trust for its benefit, any property of any
and every kind, belonging to this corporation, including, but not limited to,
any and all real property, accounts, inventory, equipment, general intangibles,
instruments, documents, chattel paper, notes, money, deposit accounts,
furniture, fixtures, goods, and other property of every kind, and to execute and
deliver to Silicon any and all grants, transfers, trust receipts, loan or credit
agreements, pledge agreements, mortgages, deeds of trust, financing statements,
security agreements and other hypothecation agreements, which said instruments
and the note or notes and other instruments referred to in the preceding
paragraph may contain such provisions, covenants, recitals and agreements as
Silicon may require and said authorized officers may approve, and the execution
thereof by said authorized officers shall be conclusive evidence of such
approval; and
RESOLVED, that Silicon may conclusively rely upon a certified copy of these
resolutions and a certificate of the Secretary of this corporation as to the
officers of this corporation and their offices and signatures, and continue to
conclusively rely on such certified copy of these resolutions and said
certificate for all past, present and future transactions until written notice
of any change hereto or thereto is given to Silicon by this corporation by
certified mail, return receipt requested.
1
--------------------------------------------------------------------------------
The undersigned further hereby certifies that the following persons are the
duly elected and acting officers of the corporation named above as borrower and
that the following are their actual signatures:
NAMES
--------------------------------------------------------------------------------
OFFICE(S)
--------------------------------------------------------------------------------
ACTUAL SIGNATURES
--------------------------------------------------------------------------------
John W.P. Holt President x /s/ JOHN W.P. HOLT
--------------------------------------------------------------------------------
David S. Snyder Vice President x /s/ DAVID S. SNYDER
--------------------------------------------------------------------------------
Lee J. Brunz Secretary x /s/ LEE J. BRUNZ
--------------------------------------------------------------------------------
x
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary on the
date set forth above.
/s/ LEE J. BRUNZ
--------------------------------------------------------------------------------
Secretary
2
--------------------------------------------------------------------------------
Silicon Valley Bank
NOTICE OF SECURITY INTEREST
March 8, 2001
Certified Mail, Return Receipt Requested
BancBoston Robertson Stephens
555 California Street
San Francisco, CA 94104
Re: THE COBALT GROUP, INC.
Ladies and Gentlemen:
Notice is hereby given that your above-named customer has granted a security
interest in all of its present and future deposit accounts maintained with your
institution, general and special, and of every other kind, to Silicon Valley
Bank, 3003 Tasman Drive, Santa Clara, California 95054.
Please contact the undersigned at 408-654-1070, if you have any questions
about this matter.
Sincerely yours,
Silicon Valley Bank
By
--------------------------------------------------------------------------------
Title
--------------------------------------------------------------------------------
THE COBALT GROUP, INC.
By
/s/ DAVID S. SNYDER
--------------------------------------------------------------------------------
Title Chief Financial Officer,
Executive Vice President
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Silicon Valley Bank
NOTICE OF SECURITY INTEREST
March 8, 2001
Certified Mail, Return Receipt Requested
U.S. Bank
Private Financial Services
111 SW 5th Avenue, Suite 600
Portland, OR 97204
Re: PARTSVOICE, LLC
Ladies and Gentlemen:
Notice is hereby given that your above-named customer has granted a security
interest in all of its present and future deposit accounts maintained with your
institution, general and special, and of every other kind, to Silicon Valley
Bank, 3003 Tasman Drive, Santa Clara, California 95054.
Please contact the undersigned at 408-654-1070, if you have any questions
about this matter.
Sincerely yours,
Silicon Valley Bank
By
--------------------------------------------------------------------------------
Title
--------------------------------------------------------------------------------
PARTSVOICE, LLC
By:
The Cobalt Group, Inc.
By
/s/ DAVID S. SNYDER
--------------------------------------------------------------------------------
Title Chief Financial Officer,
Executive Vice President
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
|
RICHMOND COUNTY FINANCIAL CORP.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March 27, 2001, between New York
Community Bancorp, Inc. (“NYCB”), a Delaware corporation (“Grantee”), and
Richmond County Financial Corp., a Delaware corporation (“Issuer”).
W I T N E S S E T H:
WHEREAS, Grantee and Issuer are entering into an Agreement and Plan
of Merger (the “Merger Agreement”);
WHEREAS, as a condition and an inducement to Grantee’s entering into
the Merger Agreement, Issuer is granting Grantee the Option (as hereinafter
defined) and, as a condition and an inducement to Issuer’s entering into the
Merger Agreement, Grantee is granting Issuer a Reciprocal Option (as hereinafter
defined) on terms and conditions substantially identical to those of this
Agreement; and
WHEREAS, the Board of Directors of Issuer has approved the grant of
the Option and the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. Grant of Option. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the “Option”) to purchase, subject to the
terms hereof, up to an aggregate of 5,281,566 fully paid and nonassessable
shares of the common stock, par value $0.01 per share, of Issuer (“Common
Stock”) at a price per share equal to $26.50, (such price, as adjusted if
applicable, the “Option Price”); provided, however, that in no event shall the
number of shares for which this Option is exercisable exceed 19.9% of the issued
and outstanding shares of Common Stock without giving effect to any shares
subject to or issued pursuant to this Option. The number of shares of Common
Stock that may be received upon the exercise of the Option and the Option Price
are subject to adjustment as herein set forth.
2. Exercise of Option. (a) The Holder (as hereinafter defined) may
exercise the Option, in whole or part, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within six (6) months following such Subsequent Triggering Event (or
such
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
later period as provided in Section 10). Each of the following shall be an
Exercise Termination Event: (i) the Effective Time of the Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event
except a termination by Grantee pursuant to Section 8.4(a) due to a willful
breach by Issuer (a “Listed Termination”); or (iii) the passage of twelve (12)
months (or such longer period as provided in Section 10) after termination of
the Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a Listed Termination. The term “Holder” shall mean the
holder or holders of the Option. Notwithstanding anything to the contrary
contained herein, (i) the Option may not be exercised at any time when Grantee
shall be in material breach of any of its covenants or agreements contained in
the Merger Agreement such that Issuer shall be entitled to terminate the Merger
Agreement pursuant to Section 8.3(a) thereof and (ii) this Agreement shall
automatically terminate upon the proper termination of the Merger Agreement by
Issuer pursuant to Section 8.3(a) thereof as a result of the material breach by
Grantee of its covenants or agreements contained in the Merger Agreement.
(b) The term “Initial Triggering Event” shall mean any of the
following events or transactions occurring on or after the date hereof:
(i) Issuer or any of its Subsidiaries (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission (the
“SEC”)) (each an “Issuer Subsidiary”), without having received Grantee’s prior
written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the term
“person” for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”), and the rules and regulations thereunder) other than Grantee
or any of its Subsidiaries (each a “Grantee Subsidiary”) or the Board of
Directors of Issuer (the “Issuer Board”) shall have recommended that the
shareholders of Issuer approve or accept any Acquisition Transaction other than
the merger transaction contemplated by the Merger Agreement. For purposes of
this Agreement, “Acquisition Transaction” shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any Issuer
Subsidiary or group of Issuer Subsidiaries that is, or would on an aggregate
basis constitute, a Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X) (other than mergers, consolidations or similar transactions
(i) involving solely Issuer and/or one or more wholly-owned Subsidiaries of the
Issuer or (ii) after which the common shareholders of the Issuer immediately
prior thereto in the aggregate own or continue to own at least 60% of the common
stock of the Issuer or the publicly held surviving or successor corporation
immediately following consummation thereof, provided that any such transaction
is not entered into in violation of the terms of the Merger Agreement), (y) a
purchase, lease or other acquisition of all or any substantial part of the
assets or deposits of Issuer or any Issuer Subsidiary or group of Issuer
Subsidiaries that is, or would on an aggregate basis constitute, a Significant
Subsidiary, or (z) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities
-2-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
representing 25% or more of the voting power of Issuer or any Issuer
Subsidiary or group of Issuer Subsidiaries that is, or would on an aggregate
basis constitute, a Significant Subsidiary, provided that Acquisition
Transaction shall not include any transaction specifically disclosed in the
Issuer’s Reports filed prior to the date hereof;
(ii) Any person other than the Grantee or any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
business shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of Common Stock
(the term “beneficial ownership” for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iii) The shareholders of Issuer shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting shall
not have been held in violation of the Merger Agreement or shall have been
canceled prior to termination of the Merger Agreement if, prior to such meeting
(or if such meeting shall not have been held or shall have been canceled, prior
to such termination), it shall have been publicly announced that any person
(other than Grantee or any of its Subsidiaries) shall have made, or disclosed an
intention to make, a proposal to engage in an Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) or failed to make in any manner
adverse in any respect to Grantee its recommendation that the shareholders of
Issuer approve the transactions contemplated by the Merger Agreement after it
shall have been publicly announced that any person (other than Grantee or any of
its subsidiaries) shall have made, or disclosed an intention to make, or any
person (other than Grantee or any of its subsidiaries) shall have otherwise made
a bona fide proposal to engage in an Acquisition Transaction, or Issuer or the
Issuer Subsidiary shall have authorized, recommended, proposed (or publicly
announced its intention to authorize, recommend or propose) an agreement to
engage in an Acquisition Transaction with any person other than Grantee or a
Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer materials with
respect to a potential exchange or tender offer that would constitute an
Acquisition Transaction (or filed a preliminary proxy statement with the SEC
with respect to a potential vote by its shareholders to approve the issuance of
shares to be offered in such an exchange offer); or
(vi) Any person other than Grantee or any Grantee Subsidiary shall
have filed an application or notice with the Board of Governors of the Federal
Reserve System (the
-3-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
“Federal Reserve Board”) or other federal or state bank regulatory or
antitrust authority for approval to engage in an Acquisition Transaction.
(c) The term “Subsequent Triggering Event” shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2.
(d) The term “Reciprocal Option” shall mean the option granted
pursuant to the option agreement dated the date hereof between the Grantee, as
issuer of such option, and Issuer, as grantee of such option.
(e) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
“Triggering Event”), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(f) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the “Notice Date”) specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the “Closing Date”);
provided that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(g) At the closing referred to in subsection (f) of this Section 2,
the Holder shall (i) pay to Issuer the aggregate purchase price for the shares
of Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option .
-4-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(h) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (g) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(i) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
“The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of _________, 2001,
between the registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy of such agreement
is on file at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request therefor.”
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the “1933 Act”) in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of Counsel to the Holder;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(j) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (f) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Authorized Shares. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but unissued or
treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase
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Common Stock; (ii) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to time
be required (including (x) complying with any applicable premerger notification,
reporting and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the “BHCA”), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms “Agreement” and “Option” as
used herein include any Agreements and related Options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
5. Adjustment upon Certain Changes in Capitalization. In the event
of any change in, or distributions in respect of, the Common Stock by reason of
stock dividends (excluding any stock dividend announced prior to the date hereof
but not yet effective), split-ups, recapitalizations, stock combinations,
subdivisions, conversions, exchanges of shares or the like, this Option shall be
automatically adjusted so that Grantee shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
Grantee would have received in respect of Common Stock if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable and the exercise price shall be, if necessary, appropriately
adjusted. Notwithstanding the foregoing, if the provisions of Section 10 are
applicable, the adjustments provided for in the preceding sentence shall not be
made and the adjustments set forth in Section 10 shall be made.
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6. Registration Rights. Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise Termination Event, Issuer
shall, at the request of Grantee delivered within twelve (12) months (or such
later period as provided in Section 10) of such Subsequent Triggering Event
(whether on its own behalf or on behalf of any subsequent holder of this Option
(or part thereof) or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a registration statement under the 1933
Act covering any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
any shares of Common Stock issued upon total or partial exercise of this Option
(“Option Shares”) in accordance with any plan of disposition requested by
Grantee. Issuer will use its reasonable best efforts to cause such registration
statement promptly to become effective and then to remain effective for such
period not in excess of 180 days from the day such registration statement first
becomes effective or such shorter time as may be reasonably necessary to effect
such sales or other dispositions. Grantee shall have the right to demand two
such registrations. The Issuer shall bear the costs of such registrations
(including, but not limited to, Issuer’s attorneys’ fees, printing costs and
filing fees, except for underwriting discounts or commissions, brokers’ fees and
the fees and disbursements of Grantee’s counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and provided further, however, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for Issuer. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is
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obligated to effect be increased by reason of the fact that there shall be more
than one Holder as a result of any assignment or division of this Agreement.
7. Repurchase of Option at the Election of Grantee. (a) At any time
after the occurrence of a Repurchase Event (as defined below) and prior to the
date that is twelve (12) months immediately thereafter (i) at the request of the
Holder, delivered prior to an Exercise Termination Event (or such later period
as provided in Section 10), Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the “Option Repurchase Price”) equal to
the amount by which (A) the market/offer price (as defined below) exceeds
(B) the Option Price, multiplied by the number of shares for which this Option
may then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the “Owner”), delivered prior to an Exercise Termination Event (or
such later period as provided in Section 10), Issuer (or any successor thereto)
shall repurchase such number of the Option Shares from the Owner as the Owner
shall designate at a price (the “Option Share Repurchase Price”) equal to the
market/offer price multiplied by the number of Option Shares so designated. The
term “market/offer price” shall mean the highest of (i) the price per share of
Common Stock at which a tender or exchange offer therefor has been made,
(ii) the price per share of Common Stock to be paid by any third party pursuant
to an agreement with Issuer, (iii) the highest closing price for shares of
Common Stock within the one-month period immediately preceding the date the
Holder gives notice of the required repurchase of this Option or the Owner gives
notice of the required repurchase of Option Shares, as the case may be, or (iv)
in the event of a sale of all or any substantial part of Issuer’s assets or
deposits, the sum of the net price paid in such sale for such assets or deposits
and the current market value of the remaining net assets of Issuer as determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be divided by the number of shares of Common Stock of
Issuer outstanding at the time of such sale. In determining the market/offer
price, the value of consideration other than cash shall be determined by a
nationally recognized investment banking firm selected by the Holder or Owner,
as the case may be.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
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(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth day after such
date, the Holder shall nonetheless have the right to exercise the Option until
the expiration of such 30-day period.
(d) Issuer shall not enter into any agreement relating to or
facilitating an Acquisition Transaction, unless the other party or parties
thereto agree that, if the Issuer is prohibited from repurchasing (in whole or
in part) the Option and/or Option Shares pursuant to Section 7(c) or the
Substitute Option and/or Substitute Option Shares pursuant to Section 9(c) or
from paying (in whole or in part) the Surrender Price pursuant to Section 14(c),
such other party or parties will make such payment unless it or they is
prohibited from doing so by applicable law or regulation.
(e) For purposes of this Section 7, a “Repurchase Event” shall be
deemed to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Common Stock; or
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(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause (z)
shall be 50%.
8. Substitute Option. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee or a Grantee Subsidiary, or engage
in a plan of exchange with any person, other than Grantee or a Grantee
Subsidiary and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger or the acquirer in such plan of exchange, (ii) to
permit any person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer or be acquired by Issuer in a plan of exchange and Issuer shall be the
continuing or surviving or acquiring corporation, but, in connection with such
merger or plan of exchange, the then outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of Common Stock shall
after such merger or plan of exchange represent less than 60% of the outstanding
shares and share equivalents of the merged or acquiring company, or (iii) to
sell or otherwise transfer all or a substantial part of its or the Issuer
Subsidiary’s assets or deposits to any person, other than Grantee or a Grantee
Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the “Substitute
Option”), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) “Acquiring Corporation” shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) the Issuer in a merger or plan of exchange in which Issuer is
the continuing or surviving or acquiring person, and (iv) the transferee of all
or a substantial part of Issuer's consolidated assets or deposits.
(ii) “Substitute Common Stock” shall mean the common stock issued
by the issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) “Assigned Value” shall mean the market/offer price, as
defined in Section 7.
(iv) “Average Price” shall mean the average closing price of a
share of the Substitute Common Stock for one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to a share
of common stock issued by the person merging into
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Issuer or by any company which controls or is controlled by such person, as
the Holder may elect.
(c) Subject to paragraph (d) of this Section 8, the Substitute Option
shall have the same terms as the Option, provided that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option, such
terms shall be as similar as possible and in no event less advantageous to the
Holder. The issuer of the Substitute Option shall also enter into an agreement
with the then Holder or Holders of the Substitute Option in substantially the
same form as this Agreement (after giving effect for such purpose to the
provisions of Section 9), which agreement shall be applicable to the Substitute
Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the “Substitute Option
Issuer”) shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8, or into any agreement that is designed to, or
has the purpose of facilitating such a transaction, unless the Acquiring
Corporation and any person that controls the Acquiring Corporation assume in
writing all the obligations of Issuer hereunder.
9. Repurchase of Substitute Option. (a) At the request of the holder
of the Substitute Option (the “Substitute Option Holder”), the issuer of the
Substitute Option (the “Substitute Option Issuer”) shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the “Substitute
Option Repurchase Price”) equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the
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Substitute Option may then be exercised, and at the request of the owner (the
“Substitute Share Owner”) of shares of Substitute Common Stock (the “Substitute
Shares”), the Substitute Option Issuer shall repurchase the Substitute Shares at
a price (the “Substitute Share Repurchase Price”) equal to the Highest Closing
Price multiplied by the number of Substitute Shares so designated. The term
“Highest Closing Price” shall mean the highest closing price for shares of
Substitute Common Stock within the one-month period immediately preceding the
date the Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as
the case may be, may exercise its respective rights to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute Option
(or, in the absence of such an agreement, a copy of this Agreement) and/or
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the provisions
of this Section 9. As promptly as practicable and in any event within five
business days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or the portion thereof which the Substitute Option Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from repurchasing the Substitute Option and/or the Substitute Shares in
part or in full, the Substitute Option Issuer shall immediately so notify the
Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Option Repurchase Price and/or the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within five (5)
business days after the date on which the Substitute Option Issuer is no longer
so prohibited; provided, however, that if the Substitute Option Issuer is at any
time after delivery of a notice of repurchase pursuant to subsection (b) of this
Section 9 prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of prohibition, whereupon, in
the latter case,
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the Substitute Option Issuer shall promptly (i) deliver to the Substitute Option
Holder or Substitute Share Owner, as appropriate, that portion of the Substitute
Option Repurchase Price or the Substitute Share Repurchase Price that the
Substitute Option Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Substitute Option Holder, a new Substitute Option
evidencing the right of the Substitute Option Holder to purchase that number of
shares of the Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the surrendered Substitute
Option was exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Substitute Option Repurchase Price less
the portion thereof theretofore delivered to the Substitute Option Holder and
the denominator of which is the Substitute Option Repurchase Price, and/or (B)
to the Substitute Share Owner, a certificate for the Substitute Option Shares it
is then so prohibited from repurchasing. If an Exercise Termination Event shall
have occurred prior to the date of the notice by the Substitute Option Issuer
described in the first sentence of this subsection (c), or shall be scheduled to
occur at any time before the expiration of a period ending on the thirtieth day
after such date, the Substitute Option Holder shall nevertheless have the right
to exercise the Substitute Option until the expiration of such 30-day period.
10. Certain Time Periods. The 30-day, 6-month, 12-month, 18-month or
24-month periods for exercise of certain rights under Sections 2, 6, 7, 9, 12
and 14 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights (for so long as the Holder, Owner,
Substitute Option Holder or Substitute Share Owner, as the case may be, is using
commercially reasonable efforts to obtain such regulatory approvals), and for
the expiration of all statutory waiting periods; (ii) to the extent necessary to
avoid liability under Section 16(b) of the 1934 Act by reason of such exercise
and (iii) during any period in which Grantee is precluded from exercising such
rights due to an injunction or other legal restriction, plus in each case, such
additional period as is reasonably necessary for the exercise of such rights
promptly following the obtaining of such approvals or the expiration of such
periods.
11. Representations and Warranties. (a) Issuer hereby represents and
warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board prior to the date hereof and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(ii) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the
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exercise of the Option, that number of shares of Common Stock equal to the
maximum number of shares of Common Stock at any time and from time to time
issuable hereunder, and all such shares, upon issuance pursuant thereto, will be
duly authorized, validly issued, fully paid, nonassessable, and will be
delivered free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that the Option
is not being, and any shares of Common Stock or other securities acquired by
Grantee upon exercise of the Option will not be, acquired with a view to the
public distribution thereof and will not be transferred or otherwise disposed of
except in a transaction registered or exempt from registration under the 1933
Act.
12. Assignment. Neither of the parties hereto may assign any of its
rights or obligations under this Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that in the event an Initial Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder; provided,
however, that until the date 15 days following the date on which the Federal
Reserve Board has approved an application by Grantee to acquire the shares of
Common Stock subject to the Option, Grantee may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of Issuer, (iii) an assignment to a single party (e.g., a
broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on Grantee’s behalf or (iv) any other manner approved by the
Federal Reserve Board.
13. Further Assurances. Each of Grantee and Issuer will use its
reasonable best efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
applying to the Federal Reserve Board under the BHCA for approval to acquire the
shares issuable hereunder, but Grantee shall not be obligated to apply to state
banking authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
14. Surrender of Options. (a) Grantee may, at any time following a
Repurchase Event and prior to the occurrence of an Exercise Termination Event
(or such later period as provided in Section 10), relinquish the Option
(together with any Option Shares issued to and then owned by Grantee) to Issuer
in exchange for a cash fee equal to the Surrender Price; provided, however, that
Grantee may not exercise its rights pursuant to this Section 14 if Issuer has
repurchased the Option (or any portion thereof) or any Option Shares pursuant to
Section 7. The “Surrender Price” shall be equal to $22 million (i) plus, if
applicable, Grantee’s purchase price with respect to any Option Shares being so
relinquished and (ii) minus, if applicable, the sum of (1) the excess of (A) the
net cash amounts, if any, received
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by Grantee pursuant to the arms’ length sale of Option Shares (or any other
securities into which such Option Shares were converted or exchanged) to any
unaffiliated party, over (B) Grantee’s purchase price of such Option Shares, and
(2) the net cash amounts, if any, received by Grantee pursuant to an arms’
length sale of any portion of the Option sold.
(b) Grantee may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 14 by surrendering to Issuer, at its
principal office, a copy of this Agreement together with certificates for Option
Shares, if any, accompanied by a written notice stating (i) that Grantee elects
to relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (c) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice of revocation, the
Exercise Termination Date shall be extended to a date six months from the date
on which the Exercise Termination Date would have occurred if not for the
provisions of this Section 14(c) (during which period Grantee may exercise any
of its rights hereunder, including any and all rights pursuant to this Section
14).
(d) Grantee shall have rights substantially identical to those set
forth in Sections 14(a), 14(b) and 14(c) with respect to the Substitute Option
and the Substitute Option Issuer during any period in which the Substitute
Option Issuer would be required to repurchase the Substitute Option pursuant to
Section 9.
15. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties hereto shall be enforceable
by either party hereto through injunctive or other equitable relief. In
connection therewith both parties waive the posting of any bond or similar
requirement.
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16. Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7 (or the Substitute Issuer to
repurchase pursuant to Section 9), the full number of shares of Common Stock (or
Substitute Common Stock) provided in Section l(a) hereof (as adjusted pursuant
to Section l(b) or Section 5 hereof), it is the express intention of Issuer to
allow the Holder to acquire or to require Issuer (or the Substitute Issuer) to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
17. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by fax, telecopy, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to the
conflict of law principles thereof (except to the extent that mandatory
provisions of Federal law are applicable).
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
20. Expenses. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
21. Entire Agreement; No Third-Party Beneficiaries. Except as
otherwise expressly provided herein, in the Reciprocal Option or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
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22. Interpretation. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the Merger Agreement.
Nothing contained in this Agreement shall be deemed to authorize Issuer to issue
shares in breach of (or otherwise act in breach of) any provision of the Merger
Agreement.
[next page is a signature page]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
RICHMOND COUNTY
FINANCIAL CORP.
By: /s/ Michael F. Manzulli
--------------------------------------------------------------------------------
Name:
Title: Michael F. Manzulli
Chairman and Chief Executive Officer
NEW YORK COMMUNITY
BANCORP, INC.
By: /s/ Joseph R. Ficalora
--------------------------------------------------------------------------------
Name:
Title: Joseph R. Ficalora
Chairman, Chief Executive Officer and President
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QuickLinks -- Click here to rapidly navigate through this document
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of September 1, 2000, by and between
PerfectData Corporation, a California corporation with offices at 110 West Easy
Street, Simi Valley California 03065 (the "Corporation"), and Harris Shapiro, an
individual residing at 245 East 63rd Street, New York, New York 10021 (the
"Executive").
W I T N E S S E T H
WHEREAS, the Executive currently serves as the Chairman of the Board of the
Corporation;
WHEREAS, the Corporation desires to employ and retain the unique experience,
ability and services of the Executive as a principal executive officer of the
Corporation; and
WHEREAS, the Executive and the Corporation desire to formalize in this
Agreement the terms and conditions under which the Executive shall be employed
by the Corporation.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Article I
Employment and Duties
1.1 Employment. The Corporation hereby agrees to employ the Executive, and
Executive hereby agrees to accept employment, as the Interim Chief Executive
Officer of the Corporation.
1.2 Duties. The Executive shall properly perform such duties as may be
assigned to him from time to time by the Board of Directors of the Corporation;
provided, however, that such duties must be commensurate with services to be
performed by a Chief Executive Officer of a public company. During the term of
this Agreement, the Executive shall devote as much of his business time to the
performance of his duties hereunder as he reasonably deems necessary. The
Corporation acknowledges that the Executive has other business interests,
investments and investment opportunities which he may continue to pursue on his
own behalf and from which the Corporation shall not benefit.
1.3 Base of Operations. The Executive's principal base of operations for
the performance of his duties and responsibilities under this Agreement shall be
the offices of the Corporation established for him at his request in either
California or New York, New York or the Executive's personal offices in New
York, New York.
Article II
Term
2.1 Term. The term of this Agreement (the "Term") shall commence on
September 1, 2000 and shall terminate on August 31, 2000.
Article III
Compensation, Benefits and Expenses
3.1 Salary. During the Term, the Corporation shall pay to the Executive a
salary at the rate of One Hundred Fifty Thousand Dollars ($150,000) per annum.
Such compensation shall be paid to the Executive with the same frequency as
other executives of the Corporation are compensated. Any fees paid to Millennium
Capital Corporation pursuant to the financial advisor agreement, dated
January 20, 2000, with the Corporation shall be credited against the salary
payments due hereunder.
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3.2 Benefits. The Executive shall participate during the Term in such
pension, life insurance, health, disability and major medical insurance plans,
and in such other employee benefit plans and programs, for the benefit of the
employees of the Corporation, as may be maintained from time to time during the
Term, in each case to the extent and in the manner available to other senior
officers of the Corporation and subject to the terms and provisions of such
plans or programs.
3.3 Expenses. The Corporation will reimburse the Executive for reasonable
business-related expenses incurred by him in connection with the performance of
his duties hereunder during the Term, subject, however, to the Corporation's
policies relating to business related expenses as in effect from time to time
during the Term.
Article IV
Miscellaneous
4.1 Entire Agreement. This Agreement constitutes and embodies the full and
complete understanding and agreement of the parties with respect to the
Executive's employment by the Corporation, supersedes all prior understandings
and agreements, whether oral or written, between the Executive and the
Corporation and shall not be amended, modified or changed except by an
instrument in writing executed by the party to be charged. The invalidity or
partial invalidity of one or more provisions of this Agreement shall not
invalidate any other provision of this Agreement. No waiver by either party of
any provision or condition to be performed shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time. This Agreement does not supercede the financial advisor letter
agreement, dated January 20, 2000 (the "Consulting Agreement"), between the
Corporation, JDK Associates, Inc. and Millennium Capital Corporation, which
shall survive this Agreement. The Corporation acknowledges that the Executive is
the sole shareholder of Millennium Capital Corporation and shall continue to
render services on behalf of Millennium Capital Corporation and derive the
benefits of the Consulting Agreement, subject to Section 3.1 hereof.
4.2 Benefit of Agreement; Assignment; Beneficiary. This Agreement shall
inure to the benefit of, and be binding upon, the Corporation and the Executive
and their respective successors and assigns.
4.3 Headings. The headings contained in this Agreement are for convenience
of reference only and shall not affect in any way the meaning or interpretation
of this Agreement.
4.4 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by registered or
certified mail, return receipt requested, postage prepaid, or by private
overnight mail service (e.g., Federal Express) to the Executive or the
Corporation, at the address set forth below:
Executive: c/o Millennium Capital Corporation, 110 East 59th Street, New
York, New York 10022.
Corporation: 110 West Easy Street, Simi Valley, California 03065
Notice shall be deemed given on the date actually received, if personally
delivered, three (3) business days after mailing or one (1) business day after
sending by overnight mail service. A party may change the address to which
notice is to be sent by sending a notice to such effect as set forth above.
4.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to such
State's conflicts of laws provisions and each of the parties hereto irrevocably
consents to the jurisdiction and venue of the federal and state courts located
in the State of New York, County of New York.
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4.6 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.7 Agreement to Take Actions. Each party hereto shall execute and deliver
such documents, certificates, agreements and other instruments, and shall take
such other actions, as may be reasonably necessary or desirable in order to
perform his or its obligations under this Agreement or to effectuate the
purposes hereof.
4.8 Review of this Agreement; No Conflicting Agreements; Termination of
Prior Agreements. The Executive acknowledges that he has carefully read this
Agreement and he hereby represents and warrants to the Corporation that his
entering into this Agreement, and the obligations and duties undertaken by him
hereunder, will not conflict with, constitute a breach of or otherwise violate
the terms of any employment or other agreement to which he is a party and that
he is not required to obtain the consent of any person, firm, corporation or
other entity in order to enter into this Agreement.
4.9 Construction. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the antecedent person or persons or entity or entities may require.
4.10 Conflict of Interest. The parties hereto acknowledge that this
Agreement has been prepared by Wachtel & Masyr, LLP, counsel to the Executive
and the Corporation, and the Executive and the Corporation waive any conflict of
interest resulting from Wachtel & Masyr, LLP, acting for both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
PERFECTDATA CORPORATION
By:
/s/ IRENE J. MARINO
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Irene J. Marino
Vice President, Finance
By:
/s/ HARRIS SHAPIRO
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HARRIS SHAPIRO
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QuickLinks
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
Article I Employment and Duties
Article II Term
Article III Compensation, Benefits and Expenses
Article IV Miscellaneous
|
ASSET PURCHASE AND SALE AGREEMENT
(Boone, Kanawha and Lincoln County Properties)
among
PEN HOLDINGS, INC., PEN COAL CORPORATION D/B/A FORK CREEK MINING COMPANY and
THE ELK HORN COAL CORPORATION
and
PENN VIRGINIA COAL COMPANY
Dated as of May 31, 2001
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT ("Agreement"), made as of May 31, 2001,
by and among PEN HOLDINGS, INC., a Tennessee corporation ("Pen Holdings"), PEN
COAL CORPORATION D/B/A/ FORK CREEK MINING COMPANY, a Tennessee corporation
("Fork Creek"), and THE ELK HORN COAL CORPORATION, a West Virginia corporation
("Elk Horn"), and PENN VIRGINIA COAL COMPANY, a Virginia corporation ("Buyer").
Elk Horn and Fork Creek shall be referred to together herein as " Sellers" or
individually as a "Seller."
BACKGROUND
WHEREAS, Sellers desire to sell, assign and transfer to Buyer, and Buyer desires
to purchase from Sellers, the Assets (as defined in Section 1 hereof) in
accordance with the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the mutual covenants and promises contained
in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sellers and Buyer hereby agree as
follows:
Sale and Purchase of Assets
. Subject to the terms and conditions of this Agreement, at the Closing (as
defined in Section 7.1 hereof), Sellers agree to sell, assign and transfer to
Buyer, and Buyer agrees to purchase from Sellers, the following assets of
Sellers (collectively, the "Assets"):
Real Property
. All of each Seller's right, title and interest in, to and under the fee lands,
surface estates, coal and other mineral estates and other real estate interests
owned by such Seller in Boone, Kanawha and Lincoln counties, West Virginia
commonly referred to as the Fork Creek properties and conveyed to such Seller by
the deeds described on Schedule 1.1 and as generally depicted on the map
included as a part thereof, which schedule and map are attached hereto and
hereby made a part hereof (the "Real Property") except for the Retained Assets
as hereinafter defined).
Leases and Other Contracts
. All right, title and interest of each Seller in, to and under all leases,
subleases, deeds, contracts, easements, licenses, assignments, rights-of-way,
instruments and other agreements or rights relating to or associated with the
use of the Real Property, or benefiting the Real Property (other than agreements
and/or rights included in the Retained Assets) and as described on Schedule 1.2
attached hereto and hereby made part hereof (collectively, the " Contracts").
Data, Books and Records
. All engineering, geological, operational, coal measurement, feasibility and
coal data and analyses, charts, surveys, maps, plans, drawings, computer files,
drilling logs, reserve reports, mining information, permit applications, books,
records, data, title and other reports, tax tickets, tax appraisals, documents,
papers, instruments and other materials of all kinds relating to the Assets
(collectively, the "Data") other than Data relating per se to the Retained
Assets; provided, Sellers may retain copies of the Data.
Coal Inventories
. All coal inventories located on the Real Property on the date of Closing.
Liabilities and Assets Retained
. The parties agree that:
Liabilities Retained
. Buyer does not hereby and shall not assume or accept any liabilities,
obligations, or responsibilities of any Seller or any Affiliate (as hereinafter
defined), Predecessor (as hereinafter defined), successor in interest (as
hereinafter defined), related person (as hereinafter defined), lessee, sublessee
or contractor relating to the Assets or any Seller's business. For purposes of
this Agreement, "Affiliate" shall mean any shareholder, director or officer of
any Seller or any other person or entity that controls, is controlled by or is
or was under common control with such Seller. "Predecessor" shall mean any
predecessor-in-interest to any Seller, including any person or entity which
owned or controlled the Assets prior to such Seller taking title thereto, and
"related person" and "successor in interest" shall have the meanings ascribed to
such terms in or in connection with the Coal Industry Retiree Health Benefits
Act of 1992 (the "Coal Act").
Retained Assets
. Sellers and Pen Holdings hereby retain and except from the Assets and the
terms of this Agreement all right, title, and interest in and to the following
assets (collectively, the "Retained Assets"): (a) all current and future
improvements, structures, fixtures, and personal property and the property
conveyed to Fork Creek from Glen Anderson by deed dated February 3, 1999, and
recorded in Deed Book 2463, page 620, Kanawha County Clerk's Office (the
"Anderson Property"), all as described on Schedule 2.2(b) hereto; (b) all
agreements pertaining per se to the assets described in Subsection 2.2(a) above
and/or the mining operations conducted on the Real Property by Fork Creek and
which are agreements typically held by coal mining operators such as, by way of
example, leases for mobile equipment, vehicles or office equipment, coal sales
contracts and agreements pertaining to infrastructure located on and mining
operations conducted on the Real Property. Such agreements shall include, but
not be limited to, those agreements described on Schedule 2.2(b) hereto it being
acknowledged and agreed that Retained Assets shall not include any real property
(other than the Anderson Property) or mineral estate or any easement,
right-of-way, license or other agreement regarding real property ownership or
rights to use real property on what is commonly referred to as the Fork Creek
properties; (c) all amounts paid to any Seller prior to the Closing under the
three Timber Agreements dated March 24, 2000, July 10, 2000 and November 2,
1999, respectively, each between Fork Creek and Gilbert-PLC Lumber Company; and
(d) the right to recoup all minimum production rentals paid by any Seller under
the agreements described on Schedule 2.2(d) hereto prior to the Closing related
to the Assets and which are recoupable after the Closing, it being acknowledged
that no production royalties payable after Closing under the Sublease (as
defined in Section 7.3(h) hereof) shall be recouped against any minimum rentals
paid prior to Closing under the Prime Lease (as defined in the Sublease) to the
extent the production royalties due under the Sublease exceed any production
royalties due under the Prime Lease.
Purchase Price
. At Closing, Buyer shall pay to Pen Holdings Thirty-Three Million Dollars
($33,000,000) as the purchase price (the "Purchase Price") for the Assets which
shall be allocated as described on Schedule 3 hereto.
Representations and Warranties of Sellers
. Sellers and Pen Holdings hereby jointly and severally represent and warrant to
Buyer as follows:
Organization and Good Standing
. Each of Pen Holdings, Fork Creek and Elk Horn is a corporation duly
organized, validly existing, and in good standing under the laws of the
state of its organization with the corporate power to own its property,
conduct its business as currently conducted and, with respect to each
Seller, to sell the Assets to Buyer in accordance with this Agreement. Each
Seller and Pen Holdings is qualified or registered as a foreign entity in
each jurisdiction where it is required to be so qualified or registered and
where the failure to so qualify would have a material adverse effect on the
value of the Assets.
Authorization
. All corporate action of each Seller and Pen Holdings necessary to
authorize the execution, delivery and performance of this Agreement, the
Assignment (as defined in Section 7.3(f) hereof), the Lease (as defined in
Section 7.3(g) hereof) and the Sublease (as defined in Sections 7.3(h)
hereof), and/or any other agreement, document or instrument executed by any
of them in connection herewith (the "Other Documents"), has been taken and
this Agreement, the Assignment, the Lease, the Subleases and the Other
Documents (collectively, the "Seller Agreements") constitute the valid and
binding obligations of Pen Holdings, Elk Horn and/or Fork Creek, as the case
may be, enforceable against Pen Holdings, Fork Creek and/or Elk Horn, as the
case may be, in accordance with their respective terms except as enforcement
may be limited by bankruptcy, insolvency, moratorium, reorganization,
liquidation or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
Compliance with Other Instruments
. Neither the execution or delivery of any of the Seller Agreements by any
Seller or Pen Holdings nor the consummation by any Seller or Pen Holdings of
the transactions contemplated therein (a) violates or conflicts with or
constitutes a default under the terms of the Articles of Incorporation or
Bylaws of any Seller or Pen Holdings or, subject to the Consents (as defined
in Section 4.4 hereof), any agreement or instrument, or any judgment, decree
or order applicable to any of them, or the Assets, or of any corporation,
limited liability company or securities law, (b) will result in the creation
at or after the Closing of any Encumbrance (as defined in Section 4.5
hereof) upon all or any part of the Assets or (c) will give rise to any
right of rescission or similar remedy under any corporation, limited
liability company or securities law with respect to any of the transactions
contemplated in this Agreement.
Approvals and Consents
. Except for the consents (the "Consents") required under the agreements
described on Schedule 4.4 attached hereto and hereby made a part hereof, no
permit, consent, approval, waiver, easement, license or other authorization
of or declaration to or filing with or by any person, entity, court,
governmental or regulatory or other authority is required in connection with
the execution or performance of the Seller Agreements by any Seller or Pen
Holdings or the consummation by any Seller or Pen Holdings of the
transactions contemplated therein.
Title to Assets
. Except as set forth on Schedule 4.5 and Schedule 1.1, Sellers own the
Assets free and clear of all mortgages, claims, liens, security interests,
charges, pledges, options, grants, reversionary rights or other encumbrances
caused or created by Sellers or any Affiliate of Sellers or, to Sellers'
Knowledge (as hereinafter defined), any third party (collectively, the
"Encumbrances"). Except for the agreements set forth on Schedule 4.5 and
Schedule 1.1 that are not otherwise required to be released under the terms
of this Agreement, Sellers will forever warrant and defend title to the
Assets unto Buyer, its successors and assigns, against all claims and
demands of all parties claiming by, through or under Sellers (provided, the
warranty set out in this sentence is intended to grant the same warranty as
is included in the Deed (as defined in Section 7.3(e) hereof) and no more).
Except for the Retained Assets actually listed on Schedule 2.2(b), there are
no assignments, licenses, leases, easements, rights-of-way, or other
agreements, rights or interests of whatever kind or character which are
material to the use or operation, or both, of any of the Assets as used or
operated on the date hereof by Sellers that are not included in the Assets.
Except for the Andersen Property, neither
Sellers nor any Affiliate owns, leases or utilizes any real property,
reserves of coal or other minerals material to the generation of the
Revenues (as defined in Section 4.12(b) hereof) other than the Assets. The
map attached hereto as part of Schedule 1.1 has been prepared by Sellers
and, to Sellers' Knowledge, accurately shows the boundary lines of the Real
Property as well as all real property or mineral interests leased by
Sellers. For purposes of this Agreement, the term " Knowledge" shall mean
all information which was known or, in light of their respective positions
with the Sellers and/or Pen Holdings, should have been known, by William
Beckner, Steven Capelli, James Cook and Phillip Sims.
Contracts
. To Sellers' and Pen Holdings' Knowledge, Schedule 1.2 is a true, correct
and complete list of the Contracts, including all amendments and
modifications thereto. As of the date of this Agreement, no Seller is and
will not be at Closing, a party to or bound by the terms of any other
agreements with respect to the Assets other than agreements entered into by
Sellers in connection with the Retained Assets. True, complete and correct
copies of all of the Contracts have been delivered previously to Buyer. To
Sellers' and Pen Holdings' Knowledge, each of the Contracts is now valid, in
full force and effect, enforceable in accordance with its respective terms
against the parties thereto, except as enforcement may be limited by
bankruptcy, insolvency, moratorium, reorganization, liquidation or similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles, and is free and clear of all Encumbrances created by,
through or under Sellers. No Seller nor any Affiliate of any Seller is in
material default under any of the Contracts and, to the best of Sellers' and
Pen Holdings' Knowledge, no other party thereto is in material default
thereunder, nor to Sellers' and Pen Holdings' Knowledge does there exist any
state of facts which constitutes, or with the passage of time will
constitute a material default under any of the Contracts. If any consent is
necessary for the transfer or assignment of the Contracts to Buyer at the
Closing, such consent will be obtained by Sellers prior to the Closing in
order that the Contracts can be validly and effectively transferred to Buyer
except as otherwise agreed to by Buyer in writing.
Litigation
. Except as otherwise set forth on Schedule 4.7 attached hereto and hereby
made a part hereof, as of the date hereof, there is no action, proceeding,
arbitration, investigation or claim pending or, to Sellers' or Pen Holdings'
Knowledge, threatened, and no basis is known to any Seller or Pen Holdings
for any action, proceeding, arbitration, investigation or claim (a) against
or involving or which would have a material adverse effect on any of the
Assets or (b) which questions the validity of Sellers' Agreements, or of the
transaction contemplated herein, or of any action taken or to be taken by
any Seller or Pen Holdings in connection with this Agreement.
Compliance with Applicable Laws
. Except as otherwise disclosed on the Schedule 4.8 attached hereto,
Sellers' ownership of the Assets, the conduct by Sellers of their businesses
(insofar as such businesses involve the Assets or any Seller's ownership of
the Assets), and the Assets themselves do not violate or fail to comply in
any material respect with any federal, state or local statute, law,
ordinance, decree, order, rule or regulation including, but not limited to,
those relating to zoning, environmental matters, reclamation, permits,
bonding, employees, wages, and occupational health and safety currently in
effect (collectively "Laws and Regulations"). Except as disclosed on
Schedule 4.8 attached hereto, no Permit (as defined in Section 4.10 hereof)
holder's use or operation of the Assets violates any Laws and Regulations.
Except as described on Schedule 4.8 attached hereto and hereby made a part
hereof, no Seller or Pen Holdings has received any written notice or other
written communication from any court or governmental agency or
instrumentality of any violation of any Laws and Regulations applicable to
any of the Assets.
Remedial Work
. Except as described on Schedule 4.9 attached hereto and hereby made a part
hereof, there is no water treatment, reclamation, or other remedial work or
condition related to coal mining which is existing on the Real Property,
except with regard to the Permits.
Permits
. The only permits of any type currently in effect or applied for with
respect to or affecting any of the Assets held by any party are described on
Schedule 4.10 attached hereto and hereby made a part hereof (collectively,
"Permits"). The holders of the Permits are in material compliance with all
terms, provisions and conditions of the Permits, and no outstanding
violations, assessments, orders or notices of non-compliance issued by any
federal, state or local agency or other governmental entity exists which
materially affects or relates to the Permits. No Seller or Pen Holdings has
any Knowledge of any condition or the occurrence of any event that would,
either with or without notice or the lapse of time, permit the suspension or
revocation of, or the issuance of any notice of violation against or the
imposition of any penalty with respect to the Permits.
Environmental Matters
. Except as described on Schedule 4.11 attached hereto and hereby made a
part hereof, no Seller or Pen Holdings has, and no Seller or Pen Holdings
has Knowledge that any other person or entity has (a) generated, stored,
treated, recycled, or disposed of any Hazardous Substance (as hereinafter
defined) on the Real Property or (b) released or discharged any Hazardous
Substance into the soil, surface water, groundwater, land or subsurface
strata, ambient air or other environmental medium on the Real Property. No
Seller or Pen Holdings has received, and no Seller or Pen Holdings has
Knowledge that any other person or entity has received, any notice,
complaint, order, or action from any governmental authority or private or
public entity or person relating to any Hazardous Substance or environmental
health or safety problems, impairments, or liabilities with respect to the
Real Property or other Assets. For purposes of this Section, the term
"Hazardous Substance" shall mean each and every element, compound, chemical
mixture, petroleum and gas product, contaminant, pollutant, or substance,
including without limitation, substances which are toxic, carcinogenic,
ignitable, reactive, explosive, radioactive, or otherwise dangerous and any
other substance defined as a hazardous substance, hazardous waste, hazardous
material, toxic material, toxic waste, or special waste under any federal,
state, or local statute, order, rule, or regulation.
Financial Statements
. Sellers have delivered to Buyer true and complete copies of the following
financial statements:
a. Audited consolidated balance sheet and related statements of income and
expense and changes in financial position of Pen Holdings and its
subsidiaries for the year ended December 31, 2000, each of which
financial statements has been audited and certified by Price Waterhouse
LLP. Each of such financial statements has been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods indicated, is in accordance with the books and
records of Pen Holdings and its subsidiaries and fairly presents the
financial position and results of operations of Pen Holdings and its
subsidiaries as of the dates and for the periods indicated;
b. Pen Holdings Coal Group - Fork Creek Division - January - March Actual,
April - December Projected Production, Revenues and Expenses, which to
the extent such financial information reflects actual periods, has been
prepared in accordance with the books and records of Pen Holdings and
its subsidiaries and fairly presents the financial position and results
of operations of the Fork Creek Division of Pen Holdings as of and for
the periods indicated. For purposes of this Agreement, the term "
Revenues" shall mean the revenues reflected in the financial statements
described in this Section 4.12(b) for the period ended December 31, 2001
as well as revenues reflected for the Fork Creek properties in any other
statement, projection or summary described in this Section 4.12.
c. Long term financial projections of Pen Holdings and its subsidiaries
covering the fiscal years through December 31, 2002. Such projections
were prepared by Pen Holdings and are based on all information known to
Pen Holdings as of the date of the projections and the date of Closing
and represent the good faith estimate of Pen Holdings regarding the
course of Pen Holdings' business for the periods covered by such
projections. Pen Holdings believes that the assumptions set forth in the
projections are reasonable based on economic conditions as of the date
of the projections and the date of Closing; and
d. Incremental Revenue Summary prepared by Houlihan Lokey Howard & Zukin
("Houlihan") for the years 2001 - 2008.
Financial Condition and Related Matters
. After giving effect to the purchase by Buyer of the Assets and the
application of the Purchase Price by Sellers and Pen Holdings and their
Affiliates and to the closing on the Amended and Restated Credit Agreement
by Sellers, Pen Holdings, and other affiliates and Ableco Finance LLC,
Foothill Capital Corporation and certain other lenders, (i) the financial
condition of each Seller and Pen Holdings is such that the sum of all of
each such entity's assets, at a fair valuation, is greater than the sum of
each such entity's debts, (ii) neither Pen Holdings nor any Seller is
engaged, ever has been engaged, or is about to engage in a business or
transaction for which the remaining assets of such entity constitute an
unreasonably small capital, and (iii) neither Pen Holdings or any Seller
intends to incur, ever intended to incur, or believes that it will incur in
the future, debts beyond its ability to pay as such debts matured. Neither
Pen Holdings or any Seller has engaged in the transactions contemplated by
this Agreement with actual intent to hinder, delay, or defraud any entity to
which it was, or expects to be after the closing of the transactions
contemplated by this Agreement, indebted. Sellers and Pen Holdings agree and
acknowledge that this Agreement has been negotiated in good faith between
the parties and that the Purchase Price represents fair consideration and
reasonably equivalent value for the Assets.
Labor Liabilities and Obligations
. Except as set out on Schedule 4.14, no Seller nor any Affiliate is or has
ever been a party to any collective bargaining agreement and does not and
never has had any obligation to bargain or negotiate with any union or
collective bargaining representative.
Intentionally Omitted
.
Intentionally Omitted.
1. Accuracy of Information. No statement made or condition or event described
in any Seller Agreement or in any schedules or exhibits attached thereto, or
in any other written information, documents, statements or materials
furnished by Sellers to Buyer in connection therewith contains any material
misrepresentation or untrue statement of a material fact by Sellers, or
omits any fact required to be stated therein necessary to make such
statement by Sellers not misleading.
Reliance of Buyer
. Any due diligence or other investigation by or on behalf of Buyer shall
not affect its reliance or right to rely on any representation or warranty
made by any Seller or Pen Holdings in this Agreement. Buyer shall endeavor
to disclose to Sellers, prior to the date of Closing, any fact or facts that
Buyer knows would make any of the covenants, representations and warranties
made by Sellers and Pen Holdings hereunder untrue and misleading in any
material manner so that Sellers may correct such untrue and/or misleading
covenants, representations and/or warranties; provided, however, that
Buyer's failure to make such disclosure shall in no case be deemed to be a
waiver of any right of Buyer whatsoever hereunder, including, without
limitation, any right to indemnification under Section 9.1 hereof.
Duration of Representations and Warranties
. The representations and warranties of Sellers and Pen Holdings shall
continue and remain in effect until the first anniversary of the date
hereof; provided that, notwithstanding the foregoing, the representations
and warranties contained in Section 4.10 shall terminate and expire upon the
final and complete release of all of the Permits and their associated bonds
by the appropriate governmental authorities and the representations and
warranties contained in Sections 4.11, 4.12, and 4.13 shall have perpetual
existence.
Effect of Disclosure Schedules
. Any information disclosed on one schedule hereunder shall also be
considered to be disclosed on any other schedule hereunder to the extend
such information also applies to such other schedule.
Representations and Warranties of Buyer
. Buyer hereby represents and warrants to Sellers as follows:
Organization and Standing of Buyer
. Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Virginia.
Authorization by Buyer
. All corporate action of Buyer necessary to authorize the execution, delivery
and performance of this Agreement, the Assignment, the Lease, the Subleases and
any other agreement, document or instrument executed by Buyer in connection
herewith (the "Other Buyer Documents") has been taken and this Agreement, the
Assignment, the Lease, the Sublease and the Other Buyer Documents (collectively,
the "Buyer Agreements") constitute the valid and binding obligations of Buyer
enforceable against Buyer in accordance with their respective terms except as
enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization, liquidation or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
Compliance with Other Instruments
. Neither the execution and delivery of the Buyer Agreements nor the
consummation at Closing by Buyer of the transactions contemplated therein (a)
will violate or conflict with or constitute a default under the terms of the
Articles of Incorporation or the bylaws of Buyer, or of any agreement or
instrument, or any judgment, decree or order applicable to Buyer or any of its
properties or (b) will give rise to any right of rescission or similar remedy
under any corporation or securities law with respect to any of the transactions
contemplated by this Agreement.
Intentionally Omitted.
Closing
.
Date and Place
. The closing (the "Closing") of the transactions contemplated by this Agreement
shall take place at such time and place as the parties shall mutually agree.
Closing Costs
. Sellers and Buyer shall each pay one half of all sales and transfer taxes due
and payable in connection with the sales, conveyances, assignments, transfers,
and deliveries to be made by Sellers to the Buyer under this Agreement.
Conditions to Obligations of Buyer
. The obligations of Buyer to consummate the transactions contemplated by this
Agreement shall be subject to Sellers' fulfillment of the following conditions:
Representations and Warranties True
. All representations and warranties made by Sellers and Pen Holdings under
this Agreement shall be true and correct in all material respects on the
date of Closing and Sellers and Pen Holdings shall deliver to Buyer a
Certificate to that effect.
Approvals and Consents
. Sellers shall have obtained and delivered the Consents to Buyer except as
otherwise agreed to by Buyer in writing.
Liens Released
. Sellers shall have delivered to Buyer evidence reasonably satisfactory to
Buyer that the lien of Mellon Bank, N.A. existing on the Assets has been
released.
Other Certificates
. Each Seller and Pen Holdings shall deliver or cause to be delivered to
Buyer:
i. a Certificate signed by a Secretary or Assistant Secretary of such
Seller and Pen Holdings certifying as to the truthfulness,
completeness and accuracy of attached copies of resolutions of
Seller's and Pen Holdings' Board of Directors and, if necessary,
shareholders authorizing the execution hereof and all actions
contemplated herein; and
ii. a good standing certificate for each Seller issued by the Secretary of
State of West Virginia dated not more than three days prior to
Closing; and
iii. a certificate of existence for Pen Holdings issued by the Secretary of
State of Tennessee dated not more than three days prior to Closing.
Special Warranty Deed
. Delivery of a duly executed special warranty deed (the "Deed") conveying
and transferring to Buyer title to the Real Property in substantially the
form of Exhibit 7.3(e) attached hereto and hereby made a part hereof.
Assignment of Contracts
. Delivery of a duly executed assignment (the "Assignment") conveying and
transferring to Buyer all of the right, title and interest of Sellers in, to
and under the Contracts in substantially the form of Exhibit 7.3(f) attached
hereto and hereby made a part hereof.
Lease
. Delivery of a duly executed lease by Pen Land Company (the "Lease") in the
form of Exhibit 7.3 (g) hereto. In addition, Pen Land Company shall have
entered into a mining agreement with Fork Creek to mine the coal on the Real
Property.
Sublease
. Delivery of a duly executed sublease by Pen Land Company (the "Sublease")
in the form of Exhibit 7.3(h) hereto.
Fairness Opinion
. Sellers shall have obtained from Houlihan a fairness opinion indicating
that the sale contemplated by this Agreement is fair to Pen Holdings from a
financial point of view and shall have delivered a true and complete copy
thereof to Buyer.
Opinion of Counsel
. Sellers shall deliver to Buyer the opinion of Buchanan Ingersoll
Professional Corporation in the form of Exhibit 7.3(j) hereto.
a. Other Documents. Execution and delivery of such other documents or
instruments as may be reasonably necessary in order to consummate the
transactions contemplated by this Agreement.
Conditions to Obligations of Sellers
. The obligations of Sellers to consummate the transactions contemplated by this
Agreement shall be subject to Buyer's fulfillment of the following conditions:
Representations and Warranties True
. All representations and warranties made by Buyer under this Agreement shall be
true and correct in all material respects on the date of Closing and Buyer shall
deliver to Sellers a Certificate to that effect .
Other Certificates
. Buyer shall deliver to Sellers:
i. A Certificate signed by the Secretary or an Assistant Secretary of Buyer
certifying as to the truthfulness, completeness and accuracy of attached
copies of resolutions of Buyer's board of directors authorizing the
execution of this Agreement and all transactions contemplated herein; and
ii. A good standing certificate issued by the Secretary of the State of West
Virginia dated not more than three days prior to Closing.
Purchase Price Payment
. Payment in the amount of Thirty-Three Million dollars ($33,000,000) by
electronic funds transfer to such accounts as Seller shall direct Buyer in
writing.
Assignment, Lease and Sublease
. Delivery of a duly executed Assignment, Lease and Sublease.
Other Documents
. Execution and delivery of such other documents or instruments as may be
reasonably necessary in order to consummate the transactions contemplated by
this Agreement.
Other Agreements
.
Taxes
. Any and all ad valorem real property taxes, personal property taxes, fees or
assessments for the calendar year 2001 due with respect to the Assets, or
payable by any Seller pursuant to the terms of any leases, subleases, licenses,
rights-of-way, instruments, or other agreements by which such Seller holds the
Real Property or any other of the Assets shall be prorated between Sellers on
the one hand and Buyer on the other hand, as of the Closing on a calendar year
basis, using the calendar year 2000 tax rates and assessments by the appropriate
governmental entity. If any party shall pay such taxes for which it is entitled
to be reimbursed because of such proration, the other party responsible therefor
shall promptly reimburse the party so paying upon notice of the amount paid by
such party.
Specific Performance
. Sellers and Buyer each acknowledge that the other will have no adequate remedy
at law if the acknowledging party fails to perform any of its obligations under
this Agreement. If either party fails to perform any of its obligations under
this Agreement, the other party shall have the right, in addition to any other
rights it may possess, to the specific performance of this Agreement.
Expenses
. Each of the parties hereto shall pay its own expenses and the fees and
expenses of its counsel, accountants, consultants and other experts and
representatives associated with this Agreement and the transactions contemplated
herein.
Waivers
. The waiver by any party to this Agreement of compliance by any other party
with, or a breach of any other party of, any provision of this Agreement shall
be made in writing executed by the party waiving such compliance or breach which
shall be delivered to the party whose compliance or breach is being waived. The
waiver by any party hereto of compliance with or breach of any provision of this
Agreement shall not operate, or be construed, as a waiver of any subsequent
breach or failure to comply with any other provision of this Agreement.
Further Assurances
. At or after the Closing, any party, at the request of the other party, will
execute and deliver to the requesting party all such further assignments, deeds,
agreements, contracts, instruments and other documents as the requesting party
may reasonably request in order to perform, accomplish, perfect or record, if
reasonably necessary, the sale, assignment, transfer and delivery to Buyer of
the Assets as contemplated by this Agreement and to otherwise carry out the
intention of this Agreement.
Assistance in Title Matters
. Sellers shall execute and deliver all documents, make all truthful and
appropriate affirmations, testify in any proceedings and do all other acts that
may be necessary or desirable, in the opinion of counsel for Buyer, to perfect
of record the title of Buyer to the Assets.
Cessation of Existence
. No Seller or Pen Holdings shall
not
voluntarily dissolve or otherwise seek to end its existence as a corporate
entity at any time prior to the fifth anniversary of the date hereof.
Indemnification and Right to Defend
.
Indemnification by Sellers and Pen Holdings
. Sellers and Pen Holdings each jointly and severally agree to indemnify, defend
and hold Buyer and its shareholders, directors, officers, employees and agents
and each of its and their respective successors and assigns harmless from and
against any and all claims, demands, actions, suits, proceedings, judgments,
losses, liabilities, damages, costs, and expenses of every kind and nature,
including, but not limited to, reasonable attorneys' fees and disbursements, and
any and all related litigation costs and expenses (collectively, "Damages"),
directly or indirectly arising from, as a result of or in connection with any of
the following:
a. Subject to the provisions of Section 4.18 of this Agreement, the material
breach of any representation or warranty made by Sellers and Pen Holdings
under this Agreement;
b. The breach of or default in the performance by any Seller or Pen Holdings of
any covenant, agreement, or obligation under this Agreement;
c. Any liability not expressly assumed by Buyer irrespective of whether or not
any Seller or any Affiliate of any Seller had Knowledge of such liability;
d. Any retiree health benefit obligation of any Seller or its Predecessors or
its successors, including but not limited to (i) any obligations for Coal
Act liabilities or similar premiums currently existing or which may be
imposed pursuant to any successor statute or amendment to the Coal Act, (ii)
any black lung and other liabilities arising under the Federal Mine Safety
and Health Act of 1977 currently existing or which may be imposed pursuant
to any successor statute or amendment thereto, or (iii) any workers
compensation benefits, which may ever be imposed on Buyer or any of its
Affiliates with respect to the Assets; and
e. Any liability arising on account of the coal mining operations conducted, or
other action taken or failed to be taken, by any Seller or any Affiliate of
any Seller after the date of Closing.
f. Any Damages not to exceed $1 Million in the aggregate which may be incurred
by Buyer in connection with the matters listed under Roman Numeral I on
Schedule 4.7 hereto.
Indemnification by Buyer
. Buyer agrees to indemnify, defend and hold each of Seller and Pen Holdings and
its shareholders, directors, officers, employees and agents and each of its and
their respective successors and assigns harmless from and against any and all
Damages, directly or indirectly arising from, as a result of or in connection
with any of the following:
a. The breach of any representation or warranty made by Buyer in any Buyer
Agreement;
b. The breach or default in performance by Buyer of any covenant, agreement or
obligation under this Agreement or any other Buyer Agreement; and
c. Any liability the cause of action with respect to which first arose after
Closing and resulting solely from actions taken or failed to be taken by
Buyer in connection with Buyer's ownership of the Assets.
Procedures for Establishment of Damages for Third Party Claims
. Promptly after the receipt by any party seeking indemnification hereunder (an
"Indemnitee") of a notice of any claim, action, suit or proceeding by any third
party that may be subject to indemnification hereunder such Indemnitee shall
give written notice of such claim to the indemnifying party (the "Indemnitor")
stating the nature and basis of the claim and the amount thereof, to the extent
known, along with copies of the relevant documents evidencing the claim and the
basis for indemnification sought. Failure of the Indemnitee to give such notice
shall not relieve the Indemnitor from liability on account of this
indemnification, except if and to the extent that the Indemnitor is actually
prejudiced thereby. The Indemnitor, at its own expense, shall have the right to
assume the defense of the Indemnitee against the third party claim so long as
the Indemnitor proceeds in good faith and in a timely manner. So long as the
Indemnitor has assumed the defense of the third party claim in accordance
herewith and notified the Indemnitee in writing thereof, (i) the Indemnitee may
retain separate co-counsel at its sole cost and expense and participate in the
defense of the third party claim, it being understood the Indemnitor shall pay
all costs and expenses of counsel for the Indemnitee for all periods prior to
such time as the Indemnitor has notified the Indemnitee that it has assumed the
defense of such third party claim, (ii) the Indemnitee shall not file any papers
or consent to the entry of any judgment or enter into any settlement with
respect to the third party claim without the prior written consent of the
Indemnitor (not to be unreasonably withheld or delayed), and (iii) the
Indemnitor will not consent to the entry of any judgment or enter into any
settlement with respect to the third party claim without the prior written
consent of the Indemnitee (not to be unreasonably withheld or delayed). The
parties shall use commercially reasonable efforts to minimize losses from claims
by third parties and shall act in good faith and in a timely manner in
responding to, defending against, settling or otherwise dealing with such
claims. The parties shall also cooperate in any such defense and give each other
reasonable access to all information relevant thereto. Whether or not the
Indemnitor shall have assumed the defense such party shall not be obligated to
indemnify the Indemnitee hereunder for any settlement entered into without the
Indemnitor's prior written consent, which consent shall not unreasonably
withheld or delayed.
Procedures for Indemnification Claims by Buyer
. In the event that Buyer shall otherwise assert the incurrence of damages which
may be subject to indemnification hereunder, Buyer shall give written notice to
the Indemnitor of the nature and amount of the Damages asserted. If the
Indemnitor, within a period of forty-five (45) days after the date of the
Buyer's notice, shall not give written notice to Buyer contesting such
assertion, Buyer's assertion shall be deemed accepted and the amount of Damages
shall be deemed established and shall be paid promptly. In the event, however,
that contest notice is given to Buyer within such forty-five (45) day period,
then the contested assertion of Damages shall be settled in a court of competent
jurisdiction in accordance with the terms hereof.
Miscellaneous
.
Assignment
. The rights and obligations of any party arising under this Agreement, or any
interest therein, shall not be assigned or otherwise transferred, in whole or in
part, without obtaining the prior written consent of the other parties hereto,
which consent shall not be unreasonably withheld.
Broker
. Each Seller and Pen Holdings, on the one hand, and Buyer on the other,
represent that all negotiations relevant to this Agreement and the transactions
contemplated herein have been carried on by them directly with the other without
the intervention of any person other than their respective employees, agents and
consultants, and each agrees to indemnify the other and to hold it harmless
against and in respect of any claim against the other for brokerage or other
commissions relative to this Agreement, the sale of the Assets hereunder and the
transactions contemplated herein.
Notice
. Except as otherwise specified in this Agreement, all notices, requests,
demands and other communications under this Agreement shall be in writing and
shall be deemed to have been duly given on the date when personally delivered to
the party to whom notice is to be given, on the date of transmission if sent by
confirmed facsimile transmission, or on the second day after mailing, if mailed
to the party to whom notice is to be given, by certified mail, postage prepaid,
and property addressed as follows:
TO SELLERS OR
PEN HOLDINGS AT: PEN HOLDINGS, INC.
5110 Maryland Way, Suite 300
Brentwood, TN 37027
Attention: President
Telecopy No. 615 371-7388
WITH A COPY TO: Timothy Lowe, Esquire
TIMOTHY K. LOWE, P.C.
415 Broad Street, Suite 650
Kingsport, TN 37660
Telecopy No. 423 392-1860
TO BUYER AT: PENN VIRGINIA COAL COMPANY
6907 Duff-Patt Road
P.O. Box 386
Duffield, VA 24244
Attention: Keith D. Horton, President
Telecopy No. 540-431-4132
WITH A COPY TO: Nancy M. Snyder, Esquire
Vice President and General Counsel
Penn Virginia Corporation
One Radnor Corporate Center, Suite 200
Radnor, PA 19087
Telecopy No. 610-687-3688
Any party may change its address for the purposes of this section by giving the
other party hereto written notice of the new address in the manner set forth
above.
Waiver of Warranties
. Except as specifically set out in this Agreement, SellerS make no warranty,
express or implied, whether of merchantability, quality, quantity,
recoverability, title, or otherwise as to the Assets or interest therein, or
coal reserves, or mining rights owned by SellerS and included in the Assets or
as to the condition of the Assets, and Buyer shall rely upon its own examination
thereof through engineers and other representatives selected and employed solely
by Buyer.
Third Parties
. Nothing in this Agreement, whether expressed or implied, is intended to confer
any rights or remedies under or by reason of this Agreement on any persons other
than the parties to this Agreement and their respective successors and assigns,
nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third person to any party to this Agreement, nor
shall any provision give any third person any right of subrogation or action
over or against any party to this Agreement.
Governing Law
. This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of West Virginia.
Entire Agreement
. This Agreement, together with the attached Schedules and Exhibits, constitutes
the entire Agreement between the parties with respect to the subject matter
hereof and may not be changed, terminated or discharged except by writing duly
executed by the parties hereto.
Benefit
. This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, their respective successors and assigns.
Headings
. The table of contents and headings contained in this Agreement are included
for purposes of convenience of reference only and shall not affect the
construction or interpretation of any of its provisions.
Construction
. When used in this Agreement, the number and gender of each pronoun or other
term shall be construed to mean such number and gender as the context,
circumstance or antecedent may require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
Severability
. In the event one or more of the provisions of this Agreement shall, for any
reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision of this Agreement, and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision was not a part of this Agreement.
Drafting
. No inference shall be drawn in favor of or against any party based upon its
participation in the drafting of this Agreement or any of the other documents
referenced herein.
Counterparts
. This Agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers duly authorized.
PEN HOLDINGS, INC.
By: ___________________________
Name: _______________________
Title: _______________________
THE ELK HORN COAL CORPORATION
By: ____________________________
Name: _______________________
Title: ________________________
PEN COAL CORPORATION D/B/A
FORK CREEK MINING COMPANY
By: ____________________________
Name: _______________________
Title: ________________________
BUYER:
PENN VIRGINIA COAL COMPANY,
A Virginia corporation
By: ____________________________
Name: _______________________
Title: ________________________
|
Exhibit 10.39(b)
AMENDMENT 2 TO EMB-135 FINANCING
LETTER OF AGREEMENT
This Amendment 2 to EMB-135 Financing Letter of Agreement ("Amendment 2") is
dated August __, 2000, and is an agreement among Continental Express, Inc.
("Coex" or [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]), with its principal place of business at 1600 Smith Street, Houston,
Texas; Continental Airlines, Inc. ("Continental" or [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]), with its principal place of
business at 1600 Smith Street, Houston, Texas; and Embraer-Empresa Brasileira de
Aeronáutica S.A. ("Embraer"), with its principal place of business at São José
dos Campos, São Paulo, Brazil, as it relates to the EMB-135 Financing Letter of
Agreement dated March 23, 2000, as amended, executed by Coex, Continental and
Embraer ("EMB-135 Financing LOA").
WHEREAS, the Parties desire to amend the EMB-135 Financing LOA so as to extend
the date for execution of the [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] for the Aircraft;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties agree as follows:
1. Section 3 of the
EMB-135 Financing LOA opposite the caption [CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT]
2. The date of August 15, 2000 contained in Section 7 of the EMB-135 Financing
LOA opposite the caption [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT] shall be deleted and replaced with the date "September
30, 2000".
3. All capitalized terms used herein and not otherwise defined in this Amendment
2 shall have the meaning provided for in the EMB-135 Financing LOA. Furthermore
all other terms and conditions contained in the EMB-135 Financing LOA not
specifically referred to herein shall remain in full force and effect and in the
event of any conflict between the terms of this Amendment 2 and the EMB-135
Financing LOA the terms of this Amendment 2 shall control.
[INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment 2 to be duly
executed and delivered by their proper and authorized officers and to be
effective as of the day and year first above written.
CONTINENTAL EXPRESS, INC. CONTINENTAL AIRLINES, INC.
By:__________________________ By: _________________________
Name:________________________ Name: _______________________
Title:_________________________ Title: ________________________
Witness: _____________________ Witness: _____________________
Name: ______________________ Name: _______________________
EMBRAER - EMPRESA BRASILEIRA DE
AERONAUTICA S.A
By:___________________________ By:___________________________
Name:_________________________ Name:_________________________
Title:__________________________ Title:__________________________
Witness:_______________________ Witness:_______________________
Name:_________________________ Name:_________________________
|
EXHIBIT 10.48
CONSULTING SERVICES TERM SHEET
between
INFOCAST CORPORATION & TEAMCEO CORPORATION
================================================================================
SERVICES & PERSONNEL
InfoCast Corporation desires to engage the services of TeamCEO to provide the
following services:
o Build a Sales infrastructure
o Build a distribution channel
o Manage the AT&T relationship
o Expand revenue opportunities through direct sales and vertical markets
o Assist in building and implementation of the Development process
o Assist in building a Sales and Marketing process
o Open, build and manage the infrastructure of the InfoCast Chicago office
o Introduce and assist in investment fund raising activities
o Assist in closing an intellectual property acquisition by InfoCast
o Assist in hiring personnel for the Sales, Marketing and Development areas
o Assist in running the operations of the business
TeamCEO agrees that this InfoCast agreement will be the primary focus of TeamCEO
for the duration of this agreement and that we will assign the resources of
Malcolm Lotzof, Drew VanVooren, Richard Hawkinson to the project. TeamCEO will
make all of its current employees, employees of InfoCast. These employees will
receive InfoCast stock options approved by the InfoCast Board of Directors.
1
CONSULTING SERVICES TERM SHEET
between
INFOCAST CORPORATION & TEAMCEO CORPORATION
================================================================================
COMPENSATION & OVERHEAD EXPENSE
All TeamCEO employees assigned, as employees of InfoCast will receive the same
compensation and benefits from InfoCast that they currently receive from
TeamCEO.
This agreement assumes Malcolm Lotzof, Drew Van Vooren and Rich Hawkinson are on
a contract basis. It is possible that they and InfoCast will recommend that they
will become employees at some future point.
In either case, compensation for Malcolm Lotzof, Drew Van Vooren and Rich
Hawkinson will be as follows:
COMPENSATION/COMMISSION:
a) As Base Salary, $50,000 USD per month for
duration of contract paid on last business
day of the month
AND
b) A target Commission of 300,000 USD per year
will be based on achievement of revenue
objectives
c) This Commission will be paid based on 20% of
all NET revenue generated on the first three
sales of Contact and 14% on sales thereafter
on Contact and E-learning revenue
d) Target revenue that supports this Commission
plan will be agreed between TeamCEO and
InfoCast at the beginning of each year. Over
achievement of target will be contemplated
in this plan.
COMMISSION PAYMENT: Commissions will be paid in line with cash receipts on
all sales. In the event where a deposit is received
greater than the revenue recognized, commission will
still be paid on the cash receipts. In the event that
cash is received after the term of this agreement as a
result of a sale closed prior to the end of the term of
this agreement, commissions will continue to be paid as
cash is received until all cash receipts on that sale
are completed.
FINDERS FEES: Team CEO will receive a fee for any professional hired
into InfoCast as a result of TeamCEO. The fee will equal
20% of the annual compensation of the resource, payable
50% on the hire and 50% 90 days after hire. (This does
not apply to current TeamCEO employees).
2
CONSULTING SERVICES TERM SHEET
between
INFOCAST CORPORATION & TEAMCEO CORPORATION
TeamCEO will receive a fee for new funds raised as a
result of introduction by TeamCEO. The fee will equal 6%
of the funds raised payable in full on receipt of the
funds.
TeamCEO will receive a fee for VAR partners acquired by
InfoCast as a result of TeamCEO. The fee paid to TeamCEO
will be InfoCast stock with the number of shares and the
effective date of the stock to be mutually agreed to
between InfoCast and TeamCEO based on the expected
contributions of the VAR.
EXPENSES: InfoCast will pay for all general and business expenses
in addition to travel, living and entertainment costs
incurred by TeamCEO in conjunction with InfoCast. Travel
policy for Hawkinson, VanVooren and Lotzof will be the
same as Bill Lowe and other senior InfoCast executives
[InfoCast will consider using Bannockburn Travel
Management as their travel service provider].
STOCK OPTION INCENTIVE: TeamCEO will be granted 3.6 million stock options in
InfoCast Corporation (1.2 Million each for Malcolm, Drew
and Rich) and will vest according to the following
schedule:
o 200,000 Shares each on signing of this
agreement
o 100,000 Shares each vesting quarter for
quarters 1, 2, 3 & 4 and 150,000 Shares per
quarter for quarters 5, 6, 7 & 8
The strike price of the options to be $1.00 per Share.
The options will be registered in 3Q 2001 or before.
In the event of a change in control of the company, all
stock options will vest immediately.
3
CONSULTING SERVICES TERM SHEET
between
INFOCAST CORPORATION & TEAMCEO CORPORATION
Agreement Term
This agreement will become effective after being signed by both parties, and
both parties agree on the Revenue Target as well as the Stock Option Strike
Price.
The term of this agreement is for two (2) years starting April 1, 2001 and
running through April 1, 2003. Either party can terminate this agreement with 60
days written notice. This agreement will be mutually reviewed for continuation
at the end of the contract term.
--------------------------------------------------------------------------------
AGREED AND ACCEPTED
--------------------------------------- -----------------------------------
TEAMCEO CORPORATION INFOCAST CORPORATION
--------------------------------------- -----------------------------------
BY: /S/ MALCOLM LOTZOF BY: /S/ BILL LOWE
--------------------------------------- -----------------------------------
NAME: NAME:
MALCOLM LOTZOF BILL LOWE
--------------------------------------- -----------------------------------
TITLE: TITLE:
--------------------------------------- -----------------------------------
DATE: DATE:
--------------------------------------------------------------------------------
4
|
SUPPLEMENTAL AGREEMENT
to a loan agreement
in the equivalent amount of NOK 125,000,000.- of
18 April 2000
BETWEEN
Trico Shipping AS
(as borrower)
AND
DEN NORSKE BANK ASA
Nedship Bank N.V.
acting through its Norwegian branch
Nedship Bank (Nordic)
(as banks)
and
DEN NORSKE BANK ASA
(as Agent)
Wikborg, Rein & Co
Olav Kyrresgt. 11
P.O.Box 1233 Sentrum
5811 Bergen
Norway
Telefax 47 55 21 52 03
Telephone 47 55 21 52 00
SUPPLEMENTAL AGREEMENT
THIS SUPPLEMENTAL AGREEMENT IS MADE THE 19TH DAY OF JUNE 2000 BETWEEN
> > 1) TRICO SHIPPING AS
> >
> > (organisation no 976 854 020)
> >
> > P.O.Box 85
> >
> > 6090 Fosnavag
> >
> > Telephone No. +
> >
> > Telefax No. +
> >
> > (hereinafter called the "Borrower")
> >
> > 2) DEN NORSKE BANK ASA
> >
> > P.O.Box 7100
> >
> > 5020 Bergen
> >
> > Norway
> >
> > Telephone No. +4755 21 10 00
> >
> > Telefax No. +4755 21 19 24 and
> >
> > NEDSHIP BANK N.V.
> >
> > acting through its Norwegian branch
> >
> > Nedship Bank (Nordic)
> >
> > P.O.Box 701 Sentrum
> >
> > 5807 Bergen
> >
> > Norway
> >
> > Telephone No. +47 55 30 94 00
> >
> > Telefax No. +47 55 30 94 50
> >
> > (hereinafter called the "Banks"), and
> >
> > 3) DEN NORSKE BANK ASA
> >
> > P.O.Box 7100
> >
> > 5020 Bergen
> >
> > Norway
> >
> > Telephone No. +4755 21 10 00
> >
> > Telefax No. +4755 21 19 24
> >
> > (as "Agent")
> >
> >
> >
> >
WHEREAS
> > A. The Banks have entered into a loan agreement with the Borrower in the
> > equivalent amount of NOK 125,000,000.- dated the 18 April 2000 (hereinafter
> > called the "Loan Agreement").
> >
> >
> >
> >
> >
> > B. The Borrower has the 2 May 2000 prepaid in full the amount drawn under
> > the Loan Agreement being USD 14,673,765.97 and in connection with the said
> > prepayment the Borrower has requested the Banks to be allowed to draw the
> > Loan again. The Banks have accepted the Borrower's request on the condition
> > that this Agreement is entered into between the Borrower, the Banks and the
> > Agent.
> >
> > C. This Agreement shall be construed as being in all respects supplemental
> > to the Loan Agreement.
> >
> >
> >
> >
NOW IT IS HEREBY AGREED AS FOLLOWS
> > 1. Definitions
1.01.
In this agreement unless the context otherwise requires, terms defined in the
Loan Agreement shall bear the same meaning when used herein. In addition the
Loan Agreement means the Loan Agreement as supplemental and amended by this
Agreement.
> > 2. Conditions
2.01.
The obligation of the Bank to accept the Borrower's requests set forth in
Recital B above shall be subject to the condition that the Bank has received the
following documents in a form satisfactory to the Bank and its legal advisors.
> > a. a Company Certificate in respect of the Borrower, and
> >
> > b. a Company Certificate in respect of the Guarantor, and
> >
> > c. confirmation from the Guarantor that the Guarantee remains in full force
> > and effect, and
> >
> > d. evidence that the Borrower has paid all costs (including breakage costs)
> > in connection with the prepayment of the Loan, and
> >
> > e. such legal opinions as the Bank may require in respect of UK and
> > Norwegian law.
2.02.
In consideration of the Banks' agreement to the Borrower's request set forth in
Recital B the Borrower shall pay to the Banks (i) a commitment fee of 0,50% per
annum calculated from 2 May 2000 until the "new" Drawdown Date, payable on the
"new" Drawdown Date" and (ii) on demand all cost, expenses and disbursement
(including, but not limited to legal fees and printing, publication and
travelling expenses) incurred by the Banks in the negotiation, preparation and
completion of this Agreement and the maintenance, protection and enforcement of
any of its rights hereunder.
> > 3. Amendments to the Loan Agreement
3.01.
With effect on and from 2 May 2000 the Loan Agreement shall be amended in the
following respects:
> > A. In Clause 2 ("Definitions") in the definition of "Commitment Period" the
> > date "30 April 2000" to be deleted and substituted by "31 July 2000".
> >
> >
> >
> > B. The provision of Clause 8.03 shall not be applied for the prepayment made
> > by the Borrower the 2 May 2000.
> >
> >
3.02.
All references in the Security Documents to "the Loan Agreement" shall be
interpreted as references to the Loan Agreement as amended hereby.
3.03.
By construing references herein to "this Loan Agreement", "this Agreement",
"herein", "hereunder" in like terms as if the same referred to the Loan
Agreement as amended hereby.
3.04.
Subject only to the modifications set out in this Agreement, the Loan Agreement
shall remain in full force and effect and binding upon the Bank and the
Borrower.
> > 4. Applicable law
This Agreement shall be governed by and construed in accordance with Norwegian
law.
The parties accept Bergen Town Court as venue.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed the day and the year above written.
For and on behalf of For and on behalf of
TRICO SHIPPING AS p.p. DEN NORSKE BANK ASA
_____________________. _____________________.
For and on behalf of
NEDSHIP BANK N.V
. acting through its Norwegian branch Nedship Bank (Nordic)
___________________.
For and on behalf of
p.p. DEN NORSKE BANK ASA
___________________.
(as Agent)
As guarantor for the Borrower's obligations under the Loan Agreement, we hereby
confirm that we have no objections to the prepayment and subsequent redraw of
the Loan and to this Agreement, and we further confirm that the Guarantee
remains in full force and effect.
For and on behalf of
TRICO SUPPLY ASA
____________________. |
Exhibit 10.1
EXCHANGE AND REDEMPTION AGREEMENT
This EXCHANGE AND REDEMPTION AGREEMENT (this “Agreement”) is made as of
December 4, 2001 (the “Execution Date”) by and between HEARx Ltd., a Delaware
corporation (the “Company”) and Advantage Fund II Ltd. (the “Investor”).
RECITALS
A. Pursuant to a Convertible Preferred Stock Purchase Agreement
dated as of May 9, 2000 (the “Original Purchase Agreement”), the Company issued
and sold to the Investor, and the Investor purchased from the Company, 500
shares of the Company’s 7% Series I Convertible Preferred Stock, par value $1.00
per share (the “Original Preferred Stock”), which are convertible into shares of
the Company’s common stock, par value $.10 per share (the “Common Stock”), and
warrants to purchase 203,390 shares of Common Stock (the “Original Warrants”).
B. Simultaneous with the execution of the Purchase Agreement,
the Company and the Investor entered into a Registration Rights Agreement dated
as of May 9, 2000 (the “Original Registration Rights Agreement”).
C. The Investor currently holds 418 shares of the Original
Preferred Stock and all of the Original Warrants and 129,470 shares of Common
Stock (the “Existing Common Stock”) which were issued upon the exercise of
certain shares of the Original Preferred Stock (collectively, the “Existing
Investor Securities”).
D. The Investor and the Company desire that (i) the Investor
exchange certain of its Existing Investor Securities for shares of the Company’s
newly designated non-convertible preferred stock and shares of Common Stock (the
“Exchange”) and (ii) the Company redeem, for cash, certain other of the Existing
Investor Securities, all upon the terms and conditions set forth herein.
E. The Exchange is intended to qualify as a private placement
transaction under Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”).
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy are hereby acknowledged, the Company and the Investor agree as follows:
--------------------------------------------------------------------------------
ARTICLE I
THE EXCHANGE
1.1 Closing. Subject to the terms and conditions set forth in
this Agreement, the Company and the Investor shall redeem 185 shares of Original
Preferred Stock and the Original Warrants for $1,951,136.36 in cash (the
“Cash”), and exchange 233 shares of Original Preferred Stock for (i) 233 shares
of preferred stock described in Section 1.4 below (the “Exchange Preferred
Stock”) and (ii) 470,530 shares of Common Stock (the “Exchange Common Stock”
and, together with the Exchange Preferred Stock, the “Exchange Securities”). The
closing of the Exchange (the “Closing”) shall take place at the offices of Bryan
Cave LLP, 700 Thirteenth Street, N.W., Washington, DC 20005, on December 14,
2001 or such earlier date as the parties shall agree (the “Closing Date”).
1.2 Exchange. On the Execution Date, the Investor shall deliver
to or as directed by the Company an executed copy of this Agreement and the
Company shall deliver to the Investor an executed copy of this Agreement and
shall pay to the Investor $500,000 (“Partial Cash Payment”). At the Closing,
(i) the Investor shall (A) deliver to or as directed by the Company (1) an
executed copy of the escrow agreement in the form attached hereto as Exhibit A
(the “Escrow Agreement”), the release agreement in the form attached hereto as
Exhibit B (the “Release”) and the registration rights agreement in the form
attached hereto as Exhibit C (the “Registration Rights Agreement”), (2)
certificates representing 418 shares of the Original Preferred Stock, and (3)
the Original Warrants, and (B) deposit with the escrow agent pursuant to the
Escrow Agreement, by electronic delivery through DTC, the Existing Common Stock,
and (ii) the Company shall deliver to the Investor (1) an executed copy of the
Escrow Agreement, the Release and the Registration Rights Agreement, (2) the
legal opinion of Bryan Cave LLP in the form of Exhibit D, (3) the Cash less the
Partial Cash Payment, (4) stock certificates, registered in the name of the
Investor, representing the Exchange Preferred Stock, and (5) four stock
certificates in denominations of 100,000 each and one stock certificate in the
denomination of 70,530 evidencing the Exchange Common Stock (which shall be
delivered to the escrow agent pursuant to the terms of the Escrow Agreement).
1.3 Delivery of Cash on Execution Date and at Closing. The Cash
payable by the Company on the Execution Date and at the Closing shall be paid in
United States dollars in immediately available funds in cash or by wire transfer
to an account designated in writing by the Investor for such purpose.
1.4 Terms of Exchange Preferred Stock. The Exchange Preferred
Stock shall have the rights, preferences and privileges set forth in Exhibit E,
and shall be incorporated into a Certificate of Designation (the “Certificate of
Designation”) to be filed prior to the Closing by the Company with the Secretary
of State of Delaware, in form and substance mutually agreed to by the parties.
1.5 Original Agreements. Simultaneous with the Closing, the
Original Purchase Agreement and the Original Registration Rights Agreement shall
be automatically
2
--------------------------------------------------------------------------------
terminated in their entirety and shall be of no further force or effect.
Effective on the date of the Closing, all shares of Original Preferred Stock and
all Original Warrants shall be canceled.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 The Investor hereby represents and warrants to the Company
as follows on the Execution Date and the Closing Date:
(a) Organization; Authority. The Investor is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with the requisite power and authority to
enter into and to consummate the transactions contemplated this Agreement, the
Certificate of Designation, the Escrow Agreement, the Release and the
Registration Rights Agreement (collectively, the “Transaction Documents”) and
otherwise to carry out its obligations thereunder. The Exchange has been duly
authorized by all necessary action on the part of the Investor. Each of this
Agreement, the Escrow Agreement, the Release and the Registration Rights
Agreement has been duly executed by the Investor, and when delivered by the
Investor in accordance with the terms hereof, will constitute the valid and
legally binding obligation of the Investor, enforceable against it in accordance
with its terms.
(b) Ownership of Existing Investor Securities. The
Investor is the sole owner of all of the Existing Investor Securities free and
clear of any and all liens, claims and encumbrances of any kind.
(c) Investment Intent. The Investor is acquiring the
Exchange Preferred Stock and the Exchange Common Stock as principal for its own
account for investment purposes only and not with a view to or for distributing
or reselling such Exchange Securities or any part thereof. The Investor does not
have any agreement or understanding, directly or indirectly, with any person or
entity to distribute Exchange Securities.
(d) Investor Status. At the time the Investor was
offered the Exchange Securities, it was, and at the date hereof it is, an
“accredited investor” as defined in Rule 501(a) under the Securities Act. The
Investor is not a registered NASD broker-dealer.
(e) Investor Experience. The Investor has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective investment
in the Exchange Securities, and has so evaluated the merits and risks of such
investment.
(f) Ability of Investor to Bear Risk of Investment.
The Investor is able to bear the economic risk of an investment in the Exchange
Securities and, at the present time, is able to afford a complete loss of such
investment.
(g) Access to Information. The Investor acknowledges
that it has reviewed the Disclosure Materials (as defined below) and has been
afforded (i) the opportunity to
3
--------------------------------------------------------------------------------
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Exchange Securities and the merits and risks of investing in the
Exchange Securities; (ii) access to information about the Company and the
Company’s financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the investment
and to verify the accuracy and completeness of the information contained in the
Disclosure Materials. Neither such inquiries nor any other investigation
conducted by or on behalf of the Investor or its representatives or counsel
shall modify, amend or affect the Investor’s right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained herein.
(h) General Solicitation. The Investor is not
purchasing the Exchange Securities as a result of or subsequent to any
advertisement, article, notice or other communication regarding the Exchange
Securities published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(i) Ownership of Common Stock. The Investor does not
have a short position in the Common Stock.
(j) Reliance. The Investor understands and
acknowledges that (i) the Exchange Securities are being offered and sold to it
without registration under the Securities Act in a transaction that is exempt
from the registration provisions of the Securities Act and (ii) the availability
of such exemption depends in part on, and the Company will rely upon the
accuracy and truthfulness of, the foregoing representations, and the Investor
hereby consents to such reliance.
2.2 The Company hereby makes the following representations and
warranties to the Investor on the Execution Date and on the Closing Date:
(a) Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. The Company has only those subsidiaries identified in
Schedule 2.2 attached hereto. The Company is duly qualified to do business and
is in good standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate,
(x) adversely affect the legality, validity or enforceability of the Exchange
Securities or any of the Transaction Documents, (y) have or result in a material
adverse effect on the results of operations, assets or condition (financial or
otherwise) of the Company, or (z) adversely impair the Company’s ability to
perform fully on a timely basis its obligations under any of the Transaction
Documents (any of (x), (y) or (z), a “Material Adverse Effect”).
4
--------------------------------------------------------------------------------
(b) Authorization; Enforcement. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company. Each of the Transaction Documents has been duly executed by the Company
and, when delivered (or filed, in the case of the Certificate of Designation) in
accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
(c) Capitalization. The number of authorized, issued
and outstanding capital stock of the Company is set forth in Schedule 2.2. No
shares of Common Stock are entitled to preemptive or similar rights, nor is any
holder of the Common Stock entitled to preemptive or similar rights arising out
of any agreement or understanding with the Company by virtue of any of the
Transaction Documents. Except as a result of the purchase and sale of the
Exchange Securities and except as disclosed in Schedule 2.2, there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any person or entity
any right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock.
(d) Issuance of the Exchange Securities. The
Exchange Securities are duly authorized and, when issued at the Closing and paid
for in accordance with the terms hereof, will be duly and validly issued, fully
paid and nonassessable. The Exchange Preferred Stock, when issued at the
Closing, will be duly authorized, validly issued, fully paid and non-assessable.
(e) No Conflicts. The execution, delivery and
performance of the Transaction Documents by the Company and the consummation by
the Company of the transactions contemplated thereby do not and will not
(i) conflict with or violate any provision of the Company’s certificate of
incorporation or bylaws (each as amended through the date hereof), or
(ii) except as set forth on Schedule 2.2, conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of any agreement,
credit facility, debt or other instrument or other understanding to which the
Company is a party or by which any property or asset of the Company is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject, or by which any property or asset of
the Company is bound or affected; except in the case of each of clauses (ii) and
(iii), as could not, individually or in the aggregate, reasonably be expected to
have or result in a Material Adverse Effect.
5
--------------------------------------------------------------------------------
(f) No Registration. The offer, issuance, sale and
delivery of the Exchange Securities to the Investor as contemplated hereby are
exempt from the registration requirements of the Securities Act. Neither the
Company nor any person or entity acting on its behalf has taken or is, to the
knowledge of the Company, contemplating taking any action which could subject
the offering, issuance or sale of the Exchange Securities to the registration
requirements of the Securities Act including soliciting any offer to buy or sell
the Exchange Securities by means of any form of general solicitation or
advertising.
(g) SEC Documents; Financial Statements. The Company
has filed all reports required to be filed by it under the Exchange Act of 1934,
as amended (the “Exchange Act”), including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (the foregoing materials
being collectively referred to herein as the “SEC Documents” and, together with
the Schedules to this Agreement, the “Disclosure Materials”) on a timely basis
or has received a valid extension of such time of filing and has filed any such
SEC Documents prior to the expiration of any such extension. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and none of the SEC Documents, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. All
material agreements to which the Company is a party or to which the property or
assets of the Company are subject have been filed as exhibits to the SEC
Documents as required. The financial statements of the Company included in the
SEC Documents comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with generally accepted accounting principles (“GAAP”)
applied on a consistent basis during the periods involved except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
Since December 31, 2000, except as specifically disclosed in the SEC Documents,
(a) there has been no event, occurrence or development that has had or that
could reasonably be expected to result in a Material Adverse Effect, (b) the
Company has not incurred any liabilities (contingent or otherwise) other than
(x) liabilities incurred in the ordinary course of business consistent with past
practice and (y) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (c) the Company has not altered its method of
accounting or the identity of its auditors and (d) the Company has not declared
or made any payment or distribution of cash or other property to its
stockholders or officers or directors (other than in compliance with existing
Company stock option plans) with respect to its capital stock, or purchased,
redeemed (or made any agreements to purchase or redeem) any shares of its
capital stock.
(h) Filings, Consents and Approvals. The Company is
not required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or
6
--------------------------------------------------------------------------------
registration with, any court or other federal, state, local or other
governmental authority or other person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
the filing of the Certificate of Designation with the Secretary of State of
Delaware, as set forth on Schedule 2.2 and applicable state Blue Sky filings
and, in all other cases where the failure to obtain such consent, waiver,
authorization or order, or to give such notice or make such filing or
registration could not reasonably be expected to have or result in, individually
or in the aggregate, a Material Adverse Effect (collectively, the “Required
Approvals”).
(i) No Default or Violation. The Company (i) is not
in default under or in violation of (and no event has occurred which has not
been waived which, with notice or lapse of time or both, would result in a
default by the Company under), nor has the Company received notice of a claim
that it is in default under or that it is in violation of, any indenture, loan
or credit agreement, (ii) is in violation of any order of any court, arbitrator
or governmental body, or (iii) is in violation of any statute, rule or
regulation of any governmental authority, in each case of clause (i), (ii) or
(iii) above, except as could not individually or in the aggregate, be reasonably
expected to have or result in a Material Adverse Effect.
(j) Certain Fees . Except for certain compensation
payable to Kennebeck Resources, Inc. by the Company, no fees or commissions will
be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by this Agreement. The Investor shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement. The
Company shall indemnify and hold harmless the Investor, its employees, officers,
directors, agents, and partners, and their respective Affiliates, from and
against all claims, losses, damages, costs (including the costs of preparation
and attorney’s fees) and expenses suffered in respect of any such claimed or
existing fees, as such fees and expenses are incurred.
(k) Form S-3 Eligibility . The Company is eligible
to register securities for resale with the Commission on Form S-3 promulgated
under the Securities Act.
(l) Registration Rights; Rights of Participation.
Except as set forth on Schedule 2.2, the Company has not granted or agreed to
grant to any Person any rights (including “piggy-back” registration rights) to
have any securities of the Company registered with the Commission or any other
governmental authority which has not been satisfied. No Person has any right of
first refusal, right of participation or any similar right to participate in the
transactions contemplated by this Agreement.
(m) Disclosure. All disclosure provided to the
Investor regarding the Company, its business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on behalf of
the Company are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
7
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ARTICLE III
OTHER AGREEMENTS
3.1 Escrow Arrangement. The shares of Exchange Common Stock
issued to the Investor hereunder and the Existing Common Stock (together, the
“Escrowed Shares”) will be held by the Escrow Agent for so long as required
pursuant to and in accordance with the terms of the Escrow Agreement.
3.2 Trading Restrictions of Escrowed Shares. Except as
otherwise provided in this Section 3.2 and subject to applicable securities
laws, the Investor may not sell, transfer, encumber or otherwise dispose of any
Escrowed Shares. The restrictions set forth in this Section 3.2 shall apply
irrespective of the status of the Escrowed Shares as restricted or unrestricted
for purposes of applicable securities laws.
(a) If the closing price of the Company’s Common
Stock as reported by The Wall Street Journal (the “Closing Price”) for five
consecutive trading days equals or exceeds $2.46 per share (subject to equitable
adjustment in the event of any stock split, stock combination or similar event
affecting the Common Stock), the Investor may thereafter sell Escrowed Shares in
any period of five (5) consecutive trading days in an amount up to 15% of the
average weekly trading volume of the Company’s Common Stock over the previous
four weeks as reported by The Wall Street Journal; provided, however, that if at
any time the Closing Price falls below $2.46 (subject to equitable adjustment in
the event of any stock split, stock combination or similar event affecting the
Common Stock) for five consecutive trading days, the Investor shall no longer be
permitted to make sales under this Section 3.2(a); provided, further, however,
that if at any time following the five consecutive trading days when the closing
price of the common stock is less than $2.46 per share (subject to equitable
adjustment in the event of any stock split, stock combination or similar event
affecting the common stock) the closing price of the Company’s common stock
shall again equal or exceed $2.46 per share (subject to equitable adjustment in
the event of any stock split, stock combination or similar event affecting the
common stock) for any five consecutive trading days, the Investor may again
continue to sell the Escrowed Shares in accordance with the first clause of this
Section 3.2(a).
(b) If the Investor holds 200,000 or more shares of
Common Stock on January 1, 2004, then commencing on January 1, 2004, the
Investor may sell such number of shares of Escrowed Shares in any five
(5) consecutive trading day period in an amount up to 15% of the average of the
prior four weeks trading volume as reported by the Wall Street Journal. At such
time following January 1, 2004 as the Investor holds fewer than 200,000 shares,
the restrictions set forth in this Section 3.2 shall no longer apply.
(c) For so long as the restrictions set forth in
this Section 3.2 apply to the Investor, the Investor will provide to the Company
a monthly brokerage statement in a form reasonably satisfactory to the Company
relating to each account from which the Investor sells the Company’s securities
for each month in which sales of the Company’s securities are made. Such
statement may omit information unrelated to sales of the Company’s securities.
8
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3.3 Securities Laws. The Investor acknowledges that the
Exchange Securities have not been registered under the Securities Act and may
only be disposed of pursuant to an available exemption from or in a transaction
not subject to the registration requirements of the Securities Act. The Company
may require the transferor of any of the Exchange Securities to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Exchange
Securities under the Securities Act.
3.4 Rule 144. With a view to making available to the Investor
the benefits of Rule 144 promulgated under the Securities Act, the Company
agrees, until such time as all of the Exchange Common Stock may be freely sold
under Rule 144(k), (i) to make and keep public information available, as those
terms are understood and defined in Rule 144, and (ii) to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements.
3.5 Restrictive Legend. The Investor agrees to the imprinting
of the following legend on the Exchange Securities:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
When there is an effective registration statement covering the resale of the
Exchange Common Stock or if such shares may be resold without volume
restrictions under Rule 144(k), the Exchange Common Stock shall not contain the
legend set forth above nor any other legend. The Company shall cause its counsel
to issue a legal opinion to the Company’s transfer agent on the day that the
Registration Statement is declared effective by the Commission (the “Effective
Date”) stating that the Registration Statement covering the resale of the
Exchange Common Stock has been declared effective by the Commission and the
certificates representing the Exchange Common Stock may be issued or reissued
(as the case may be) without any restrictive legend. The Company agrees that, it
will, within three Business Days after request therefor by the Investor, provide
the Investor (or deliver to the Escrow Agent to be held in accordance with the
terms of the Escrow Agreement) with a certificate or certificates representing
such Exchange Common Stock, free from such legend at such time as such legend
would not have been required under this Section 3.5 had such issuance occurred
on the date of such request. The Company
9
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may not make any notation on its records or give instructions to any transfer
agent of the Company which enlarge the restrictions of transfer set forth in
this Section.
3.6 Short Sales. For so long as it holds shares of Common Stock
or Exchange Securities, the Investor agrees that it will not at any time hold a
net short position in the Common Stock. For clarification, the foregoing shall
permit the Investor to hold a short position in the Common Stock so long as it
does not exceed the lesser of (i) the number of shares of Exchange Common Stock
registered for resale and then held by the Investor, and (ii) the volume
limitations set forth in Section 3.2(a).
3.7 Disclosures of Confidential Information. After the Closing
contemplated by this Agreement, the Company shall not and shall cause each of
its officers, directors, employees and affiliates and other persons acting on
its behalf not to divulge to the Investor any information which the Company
believes to be material non-public information unless the Investor has agreed in
advance in writing to receive such information.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses. At the Closing, the Company shall
reimburse the Investor for legal fees and expenses actually and reasonably
incurred by it in connection with the review and negotiation of the Transaction
Documents up to $20,000. Other than this amount, each party shall pay the fees
and expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
issuance of the Exchange Securities.
4.2 Entire Agreement; Amendments. The Transaction Documents,
together with the Exhibits and Schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
4.3 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 8:00 p.m. (New York City
time) on a business day, against electronic confirmation thereof, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Agreement later than 8:00 p.m. (New York City time) on any date, against
electronic confirmation thereof, (iii) the business day following the date of
mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual
10
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receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as follows:
If to the Company: HEARx Ltd. 1250 Northpoint Parkway West Palm Beach, FL
33407 Facsimile No.: (561) 688-8883 Attn: Chairman With copies to: Bryan Cave
LLP 700 Thirteenth Street, N.W. Suite 700 Washington, DC 20005-3960 Facsimile
No.: (202) 508-6200 Attn: LaDawn Naegle, Esq. If to the Investor: c/o CITCO
Kaya Flamboyan 9 Curacao, Netherlands Antilles Facsimile: 011-599-9732-2008
Attention: W.R. Weber With copies to: Genesee International Inc. 10500 NE 8th
Street Suite 1920 Bellevue, WA 98004 Facsimile: (425) 462-4645 Attention: Howard
Coleman Robinson Silverman Pearce Aronsohn & Berman LLP 1290 Avenue of the
Americas New York, NY 10104 Facsimile No.: (212) 541-4630 and (212) 541-1432
Attn: Eric L. Cohen, Esq.
or such other address as may be designated in writing hereafter, in the same
manner, by such person or entity.
4.4 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Investor or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission
11
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of either party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.
4.5 Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
4.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns. Neither party may assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other party.
4.7 No Third-Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective successors and
permitted assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person or entity.
4.8 Governing Law. The corporate laws of Delaware shall govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof.
4.9 Survival. The representations and warranties contained
herein shall survive until the expiration of the first anniversary following the
Closing. The agreements and covenants contained herein shall survive the Closing
and the delivery of the Exchange Securities until the expiration of the
applicable statute of limitations (if any) therefor.
4.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 Severability. In case any one or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affected or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.12 Remedies. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, each
party will be entitled to seek specific performance of the obligations of the
other party(s) under the Transaction Documents. The Company and the Investor
agree that monetary damages may not be adequate compensation
12
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for any loss incurred by reason of any breach of its obligations described in
the foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.
4.13. Replacement of Stock Certificate. If any stock certificate
representing Exchange Securities issued to an Investor pursuant to this
Agreement is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for such stock certificate, a new stock
certificate, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and indemnity, if requested,
satisfactory to it. Any certificates lost by the Transfer Agent shall be
replaced immediately without such evidence or indemnity. Applicants for a new
stock certificate under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges as
the Company may prescribe.
4.14 Further Assurances. The parties hereto agree that each
shall execute and deliver any and all further agreements, instruments,
certificates and other documents, and shall take any and all action, as any of
the parties hereto may reasonably deem necessary or desirable in order to carry
out the intent of the parties to this Agreement.
4.15 Press Releases. The Company and the Investor shall consult
with each other in issuing any press releases or otherwise making public
statements or filings and other communications with the Commission or any
regulatory agency with respect to the transactions contemplated hereby, and
neither party shall issue any such press release or otherwise make any such
public statement, filing or other communication without the prior consent of the
other, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement, filing or other communication.
4.16 Attorneys’ Fees. If either party shall commence an action
or proceeding to enforce any provisions relating to the obligations to close the
transactions contemplated by this Agreement prior to the Closing, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
13
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IN WITNESS WHEREOF, the parties hereto have caused this Exchange Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
HEARx LTD By: /s/ Paul A. Brown, M.D.
--------------------------------------------------------------------------------
Paul A. Brown, M.D.
Chairman and Chief Executive Officer ADVANTAGE FUND II LTD. By: Genesee
International Inc. as General Manager /s/ Donald R. Morken
--------------------------------------------------------------------------------
Donald R. Morken
President
14 |
EXHIBIT 10(z)(1)
EXECUTIVE PROTECTION POLICY
DECLARATIONS
EXECUTIVE LIABILITY AND
INDEMNIFICATION COVERAGE SECTION Item 1. Parent Organization:
RICHARDSON ELECTRONICS, LTD. Item 2.
Limits of Liability:
(A) Each Loss $15,000,000.
(B) Each Policy Period $15,000,000. Note that the limits of liability and any
deductible or retention are reduced or exhausted by Defense Costs. Item 3.
Coinsurance Percent: NONE Item 4. Deductible Amount:
Insuring Clause 2 $100,000. Item 5. Insured Organization:
RICHARDSON ELECTRONICS, LTD. AND ITS SUBSIDIARIES. Item 6.
Insured Persons:
ANY PERSON WHO HAS BEEN NOW IS, OR SHALL BECOME A DULY ELECTED DIRECTOR OR A
DULY ELECTED OR APPOINTED OFFICER OF THE INSURED ORGANIZATION AND WITH RESPECT
TO ANY SUBSIDIARY INCORPORATED OUTSIDE THE UNITED STATES OF AMERICA, ITS
FUNCTIONAL EQUIVALENT.
Item 7.
Extended Reporting Period:
(A) Additional Premium: 75% OF THE ANNUAL PREMIUM
(B) Additional Period: ONE YEAR
Item 8. Pending or Prior Date: OCTOBER 12, 1983 Item 9. Continuity Date: OCTOBER
12, 1983
--------------------------------------------------------------------------------
EXECUTIVE PROTECTION POLICY ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Effective date of this endorsement: MAY 31, 2001
Issued to: RICHARDSON ELECTRONICS, LTD.
Company: FEDERAL INSURANCE COMPANY
Endorsement No. 1
To be attached to and form part of Policy No. 8125-64-60I
--------------------------------------------------------------------------------
ILLINOIS AMENDATORY ENDORSEMENT
It is agreed that:
Subsection 4, "Extended Reporting Period", shall be deleted and replaced by the
following:
EXTENDED REPORTING PERIOD
4. If the Company or the Insured terminates or refuses to renew this coverage
section, the Parent Organization and the Insured Persons shall have the right,
upon payment of the additional premium set forth in Item 7(A) of the
Declarations for this coverage section, to an extension of the coverage granted
by the coverage section for a period of one year as set forth in Item 7(B) of
the Declarations for this coverage section (Extended Reporting Period) following
the effective date of termination or nonrenewal, but only for any Wrongful Act
committed, attempted, or allegedly committed or attempted, prior to the
effective date of termination or nonrenewal. This right of extension shall lapse
unless written notice of such election, together with payment of the additional
premium due, is received by the Company within 30 days following the effective
date of termination or nonrenewal. Any Claim made during the Extended Reporting
Period shall be deemed to have been made during the immediately preceding Policy
Period.
It is further agreed that Subsection 18, "Definitions", shall be amended by
deleting Defense Costs and replacing it with the following:
Defense Costs means that part of Loss consisting of reasonable costs, charges,
fees (including but not limited to attorneys= fees and experts= fees) and
expenses (other than regular or overtime wages, salaries or fees of the
directors, officers or employees of the Insured Organization or the salaries of
the employees, officers or staff attorneys of the Company) incurred in defending
or investigating Claims and the premium for appeal, attachment or similar bonds.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
Robert Hamburger
Authorized Representative
May 28, 1998
Date
--------------------------------------------------------------------------------
EXECUTIVE PROTECTION POLICY ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Effective date of this endorsement: MAY 31, 1998
Issued to: RICHARDSON ELECTRONICS, LTD.
Company: FEDERAL INSURANCE COMPANY
Endorsement No. 2
To be attached to and form part of Policy No. 8125-64-60F
OPTIONAL GUARANTEED DEFENSE COSTS ALLOCATION
In consideration of the premium paid, it is agreed that subsection 12,
Allocation, is deleted in its entirety and the following is inserted:
Allocation
12. If both Loss covered by this coverage section and loss not covered by this
coverage section are incurred, either because a Claim against an Insured Person
includes both covered and uncovered matters or because a Claim is made against
both an Insured Person and others, including the Insured Organization, the
Insureds and the Company shall allocate such amount as follows:
> (a) with respect to Defense Costs, to create certainty in determining a fair
> and proper allocation of Defense Costs, 80% of all Defense Costs which must
> otherwise be allocated as described above shall be allocated to covered Loss
> and shall be advanced by the Company on a current basis; provided, however,
> that no Defense Costs shall be allocated to the Insured Organization to the
> extent the Insured Organization is unable to pay by reason of Financial
> Impairment.
>
> This Defense Cost allocation shall be the final and binding allocation of such
> Defense Costs and shall not apply to or create any presumption with respect to
> the allocation of any other Loss;
>
> (b) with respect to Loss other than Defense Costs:
>
> > (i) the Insureds and the Company shall allocate such amount between covered
> > Loss and uncovered loss based upon the relative legal exposures of the
> > parties to such matters; and
> >
> > (ii) If the Insureds and the Company cannot agree on any allocation, no
> > presumption as to allocation shall exist in any arbitration, suit or other
> > proceeding. The Company, if requested by shall submit the allocation dispute
> > to binding arbitration. The rules of the American Arbitration Association
> > shall apply except with respect to the selection of the arbitration panel,
> > which shall consist of one arbitrator selected by the Insureds, one
> > arbitrator selected by the Company third independent arbitrator selected by
> > the first two arbitrators.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
Robert Hamburger
Authorized Representative
May 28, 1998
Date
--------------------------------------------------------------------------------
EXECUTIVE PROTECTION POLICY ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Effective date of this endorsement: MAY 31, 1998
Issued to: RICHARDSON ELECTRONICS, LTD.
Company: FEDERAL INSURANCE COMPANY
Endorsement No. 3
To be attached to and form part of Policy No.8125-64-60F
It is agreed that Item 6, Insured Persons of the Declarations page is amended to
include the following:
Any Employee of the Insured Organization with the title, Manager.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
Robert Hamburger
Authorized Representative
May 28, 1998
Date
--------------------------------------------------------------------------------
EXECUTIVE PROTECTION POLICY ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Effective date of this endorsement: MAY 31, 1998
Issued to: RICHARDSON ELECTRONICS, LTD.
Company: FEDERAL INSURANCE COMPANY
Endorsement No. 4
To be attached to and form part of Policy No.8125-64-60F
It is agreed that subsection 5, EXCLUSIONS: EXCLUSIONS APPLICABLE TO INSURING
CLAUSES 1 AND 2, is amended by deleting para graph (f) in its entirety with
respect to a CLAIM brought and maintained:
1. Solely and entirely in a jurisdiction other than the United States of
America, its territories and possessions; and
2. Subject to the substantive and prodedural laws of a jurisdiction other than
the United States of America, its territories and possessions.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
Robert Hamburger
Authorized Representative
May 28, 1998
Date
--------------------------------------------------------------------------------
EXECUTIVE PROTECTION POLICY ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Effective date of this endorsement: MAY 31, 1998
Issued to: RICHARDSON ELECTRONICS, LTD.
Company: FEDERAL INSURANCE COMPANY
Endorsement No. 5
To be attached to and form part of Policy No.8125-64-60F
It is agreed that with respect to each loss on account any claim, which in whole
or in part, is based upon, arising from or in consequence of any securities
transaction, the deductible amount specified in Item 4 of the Declarations is
increased as follows:
FROM TO
INSURING CLAUSE 2 AND/OR 3: $100,000. $250,000.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
Robert Hamburger
Authorized Representative
May 28, 1999
Date
--------------------------------------------------------------------------------
EXECUTIVE PROTECTION POLICY ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Effective date of this endorsement: MAY 31, 1998
Issued to: RICHARDSON ELECTRONICS, LTD.
Company: FEDERAL INSURANCE COMPANY
Endorsement No. 6
To be attached to and form part of Policy No. 8125-64-60F
It is agreed that:
1. This coverage section is amended by adding the following:
Insured Organization Coverage insuring Clause 3
The Company shall pay on behalf of any Insured Organization all Loss for
which it becomes legally obligated to pay on account of any Claim first
made against it during the Policy Period or, if exercised, during the
Extended Reporting Period, for a Wrongful Act committed, attempted, or
allegedly committed or attempted, by any Insured before or during the
Policy Period.
2. Subsection 18, Definitions, is amended as follows:
a. The definitions of Claim and Wrongful Act are deleted in their entirety
and the following is inserted:
Claim means:
(a) For purposes of coverage under Insuring Clauses 1 or 2: (i) a
written demand for monetary or non-monetary damages; (ii) a civil
proceeding commenced by the service of a complaint or similar pleading;
(iii) a criminal proceeding commenced by the return of an
indictment; or
(iv) a formal administrative or regulatory proceeding commenced
by the filing of a notice of charges, formal investigative order or similar
document,
against any Insured Person for a Wrongful Act, including any appeal
therefrom;
(b) For purposes of coverage under Insuring Clause 3:
(i) a written demand for monetary or non-monetary damages;
(ii) a civil proceeding commenced by the service of a complaint
or similar pleading; or
(iii) a criminal proceeding commenced by the return of an
indictment;
against any Insured Organization for a Wrongful Act, including any
appeal therefrom.
Wrongful Act means:
(a) For purposes of coverage under Insuring Clauses 1 or 2, any error,
misstatement, misleading statement, act, omission, neglect, or breach of
duty committed, attempted, or allegedly committed or attempted, by any
Insured Person, individually or otherwise, in his Insured Capacity, or
matter claimed against him solely by reason of serving in such Insured
Capacity;
(b) For purposes of coverage under Insuring Clause 3, any error,
misstatement, misleading state act, omission, neglect, or breach of duty
committed, attempted, or allegedly committed or attempted by any Insured
based upon, arising from, or in consequence of any Securities Transaction.
b. The following definition is added:
Securities Transaction means the purchase or sale of, or offer to purchase
or sell, any securities issued by any Insured Organization.
c. The definitions of Insured Person and Loss are amended by adding the
following:
Insured Person also means:
(i) For purposes of coverage under Insuring Clause 1 or 2, any past,
present or future employee of the Insured Organization, but only for
Wrongful Acts based upon, arising from or in consequence of any Securities
Transaction; and
(ii) For purposes of coverage under Insuring Clause 3, the Insured
Organization
Loss does not include any amount allocated to uncovered loss pursuant to
subsection 12, Allocation. For purposes of coverage under Insuring Clause
3, Loss includes punitive or exemplary damages which any Insured
Organization becomes legally obligated to pay, provided the punitive or
exemplary damages are other wise covered under Insuring Clause 3 and are
insurable under the law pursuant to which this coverage section is
construed.
3. The heading for subsection 5 is deleted in its entirety and the following
is inserted:
Exclusions Applicable to all Insuring Clauses
4. Subsection 5, Exclusions: Exclusions Applicable to all Insuring Clauses, is
amended by adding the following to paragraph (c):
(iv) a Claim that is brought by any Insured Person identified in section
2c(i) of this endorsement for any Wrongful Act based upon, arising from or
in consequence of any Securities Transaction.
5. Exclusions is amended by adding the following subsections:
Exclusions Applicable to Insuring Clause 3 Only
6. 1 The Company shall not be liable under Insuring Clause 3 for Loss on
account of any Claim made against any Insured Organization based upon,
arising from, or in consequence of any deliberately fraudulent act or
omission or any willful violation of any statute or regulation by any past.
present or future chief financial officer, President or Chairman if a
judgment or other final adjudication adverse to the Insured Organization
establishes such a deliberately fraudulent act or omission or willful
violation.
6.2 The Company shall not be liable under Insuring Clause 3 for that part
of Loss, other than Defense Costs:
(a) which is based upon, arises from, or is in consequence of the
actual or proposed payment by any Insured Organization of allegedly
inadequate or excessive consideration in connection with its purchase of
securities issued by any Insured Organization; or
(b) which is based upon, arises from, or is in consequence of any
Insured Organization having gained in fact any profit or advantage to which
it was not legally entitled.
6. The second, third and fourth paragraphs of subsection 8, Limit of
Liability, Deductible and Coinsurance, are deleted in their entirety and
the following is inserted:
The Company's maximum liability for each Loss, whether covered under one or
more Insuring Clauses, shall be the Limit of Liability for each Loss set
forth in Item 2(a) of the Declarations for this coverage section. The
Company's maximum aggregate liability for all Loss on account of all Claims
first made during the same Policy Period, whether covered under one or more
Insuring Clauses, shall be the Limit of Liability for each Policy Period
set forth in Item 2(B) of the Declarations for this coverage section.
The Company's liability under Insuring Clause 2 or Insuring Clause 3 shall
apply only to that part of each Loss which is excess of the Deductible
Amount set forth in Item 4 of the Declarations for this coverage section,
and such Deductible Amount shall be borne by the Insureds uninsured and at
their own risk. However, the Deductible Amount applicable to each Loss on
account of any Claim for any Wrongful Acts based upon, arising from or in
consequence of any Securities Transaction shall:
(a) apply to that part of Loss which constitutes Defense Costs; and
(b) not apply if:
(i) a final adjudication with prejudice pursuant to a trial,
motion to dismiss or motion for summary judgment in such Claim, or
(ii) a complete and final settlement of such Claim with
prejudice,
establishes that no Insured in such Claim is liable for any Loss, other
than Defense Costs. The Company shall reimburse any Insured which has
funded a Deductible Amount if such amount subsequently becomes inapplicable
based upon (i) or (ii) above.
The maximum Deductible Amount applicable to a single Loss which is covered
under more than one Insuring Clause shall be the amount set forth in Item 4
of the Declarations for this coverage section.
7. The first paragraph of subsection 12, Allocation, is deleted in its
entirety and the following is inserted:
(a) If a Claim based on, arising from or in consequence of a Securities
Transaction covered, in whole or in part, under Insuring Clauses 2 or 3
results in any Insured Person under Insuring Clause 2 or any Insured
Organization under Insuring Clause 3 incurring both Loss covered by this
coverage section and loss not covered by this coverage section, because
such Claim includes both covered and uncovered matters or is made against
both covered and uncovered parties, the Insureds and the Company shall
allocate such amount to Loss as follows:
(i) 100% of such amount constituting defense costs shall be allocated
to covered Loss; and
(ii) 100 % of such amount other than defense costs shall be allocated
to covered Loss.
(b) If any other Claim results in both Loss covered by this coverage
section and loss not covered by this coverage section, because such Claim
includes both covered and uncovered matters or is made against both covered
and such uncovered parites, the Insureds and the Company shall allocate
amount between covered Loss and uncovered loss based upon the relative
legal exposures of the parties to such matters.
8. For purposes of coverage under Insuring Clause 3 only, the second paragraph
of subsection 17, Representations and Severability, is deleted in its
entirety and the following is inserted:
With respect to the declarations and statements contained in the written
application(s) for coverage, all declarations and statements contained in
such application and knowledge possessed by any Insured Person identified
in Item 6 of the Declarations shall be imputed to any Insured Organization
for the purpose of determining if coverage is available.
9. For purposes of coverage under Insuring Clause 3 only, subsection 7,
Severability of Exclusions, is deleted in its entirety and the following is
inserted:
With respect to the exclusions in subsections 5, 6.1 and 6.2, only facts
pertaining to and knowledge possessed by any past, present or future chief
financial officer, President or Chairman of any Insured Organization shall
be imputed to any Insured Organization to determine if coverage is
available for such Insured Organization.
10. For purposes of coverage for employees who are Insured Persons pursuant to
paragraph 2c(i) of this endorsement, subsection 9 Presumptive
Indemnification, is amended as follows:
a. Paragraph (b) is deleted in its entirety and the following is inserted:
(b) is permitted or required to indemnify the Insured Person for such Loss
pursuant to common or statutory law,
b. The final paragraph in the subsection is deleted in its entirety and the
following is inserted:
For purposes of this subsection 9, the shareholder and board of director
resolutions of the Insured Organization shall be deemed to provided
indemnification for such Loss to the fullest extent permitted by common or
statutory law.
ALL OTHER TERMS REMAIN UNCHANGED.
Robert Hamburger
Authorized Representative
May 28, 1998
Date
--------------------------------------------------------------------------------
EXECUTIVE PROTECTION POLICY ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Effective date of this endorsement: MAY 31, 1998
Issued to: RICHARDSON ELECTRONICS, LTD.
Company: FEDERAL INSURANCE COMPANY
Endorsement No. 7
To be attached to and form part of Policy No. 8125-64-60F
It is agreed that:
1. The following is added to this coverage section:
Investigative Costs Coverage
Insuring Clause 4
The Company shall pay on behalf of the insured Organization all
Investigation Costs which such Insured Organization becomes legally
obligated to pay on account of any Shareholder Derivative Demand first made
during the Policy Period or, if exercised, the Extended Reporting Period,
for a Wrongful Act committed, attempted, or allegedly committed or
attempted, by an Insured Person before or during the Policy Period.
2. Subsection 5, Exclusions Applicable to Insuring Clauses 1 and 2, is amended
by deleting the subsection heading in its entirety and inserting the
following:
Exclusions Applicable to Insuring Clauses 1, 2 and 4
3. Subsection 8, Limit of Liability, Deductible and Coinsurance, is amended as
follows:
a. The following is added to paragraph two:
The Company's maximum liability for all Investigative Costs covered under
Insuring Clause 4 on account of all Shareholder Derivative Demands first
made during the same Policy Period shall be $250,000. This is a sublimit
which further limits and does not increase the Company's maximum liability
under this coverage section as set forth in Item 2(B) of the Declarations
for this coverage section.
b. The following is added to paragraph three:
No deductible amount shall apply to Investigation Costs covered under
Insuring Clause 4.
4. Subsection 11, Defense and Settlement, is amended for purposes of coverage
under Insuring Clause 4 by deleting the first paragraph in its entirety and
inserting the following:
Subject to this subsection, it shall be the duty of the Insured Organization
and not the duty of the Company to investigate and evaluate any Shareholder
Derivative Demand.
5. Subsection 18, Definitions, is amended by adding the following:
Investigation Costs means reasonable costs, charges, fees (including but not
limited to attorneys= fees and experts= fees) and expenses (other than
regular or overtime wages, salaries or fees of the directors, officers or
employees of the Insured Organization) incurred by the Insured Organization
(including its board of directors or any committee of the board of
directors) in connection with the investigation or evaluation of any
Shareholder Derivative Demand.
Shareholder Derivative Demand means any written demand, by one or more
shareholders of an Insured Organization, upon the board of directors of such
Insured Organization, to bring a civil proceeding in a court of law against
any Insured Person for a Wrongful Act committed, attempted or allegedly
committed or attempted by an Insured Person before or during the Policy
Period.
6. For purposes of coverage under Insuring Clause 4 only,
(a) all references in this coverage section to Loss or Defense Costs shall
only mean Investigation Costs;
(b) all references in this coverage section to Claim or to AClaim against
any Insured Person@ shall only mean any Shareholder Derivative Demand.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED
Robert Hamburger
Authorized Representative
May 28, 1998
Date
--------------------------------------------------------------------------------
EXECUTIVE PROTECTION POLICY ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Effective date of this endorsement: MAY 31, 1998
Issued to: RICHARDSON ELECTRONICS, LTD.
Company: FEDERAL INSURANCE COMPANY
Endorsement No 8
To be attached to and form part of Policy No. 8125-64-60F
It is agreed that:
1. Item 6 of the Declarations, Insured Persons, is amended by adding the
following:
... and any elected or appointed officer of the Insured Organization in an
Outside Directorship.
2. Subsection 18, "Definitions", is amended by adding the following:
Outside Directorship means the position of director, officer, trustee,
governor, or equivalent executive position with an Outside Entity if service
by an Insured Person in such position was at the specific request of the
Insured Organization or was part of the duties regularly assigned to the
Insured Person by the Insured Organization.
Outside Entity means any non-profit corporation, community chest, fund
organization or foundation exempt from federal income tax as an organization
described in Section 501 (c)(3), Internal Revenue Code of 1986, as amended.
3. The following subsection is added to this coverage section:
OUTSIDE DIRECTORSHIPS
19. Coverage provided to any Insured Person in an Outside Directorship
shall:
(a) not extend to the Outside Entity or to any director, officer,
trustee, governor or any other equivalent executive or employee of the
Outside Entity, other than the Insured Person serving in the Outside
Directorship;
(b) be specifically excess of any indemnity (other than any indemnity
provided by the Insured Organization) or insurance available to such Insured
Person by reason of serving in the Outside Directorship, including any
indemnity or insurance available from or provided by the Outside Entity;
(c) not extend to Loss on account of any Claim made against any
Insured Person for a Wrongful Act committed, attempted, or allegedly
committed or attempted by such Insured Person while serving in the Outside
Directorship if such Wrongful Act is committed, attempted, or allegedly
committed or attempted, after the date
(i) such Insured Person ceases to be an officer of the Insured
Organization, or
(ii) service by such Insured Person in the Outside Directorship
ceases to be at the specific request of the Insured Organization or a part
of the duties regularly assigned to the Insured Person by the Insured
Organization;
(d) not extend to Loss on account of any Claim made against any
Insured Person for a Wrongful Act committed, attempted or allegedly
committed or attempted by such Insured Person while serving in the Outside
Directorship where such Claim is
(i) by the Outside Entity, or
(ii) on behalf of the Outside Entity and a director, officer,
trustee, governor or equivalent executive of the Outside Entity instigates
such Claim, or
(iii) by any director, officer, trustee, governor or equivalent
executive of the Outside Entity.
4. The Company's maximum liability to pay Loss under this coverage section,
including this endorsement, shall not exceed the amount set forth in Item 2
of the Declarations. This endorsement does not increase the Company's
maximum liability beyond the Limits of Liability set forth in Item 2 of the
Declarations.
5. Payment by the Company or any of its subsidiaries or affiliated companies
under another policy on account of a Claim also covered pursuant to this
endorsement shall reduce by the amount of the payment the Company's Limits
of Liability under this coverage section with respect to such Claim.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
Robert Hamburger
Authorized Representative
May 28, 1998
Date
--------------------------------------------------------------------------------
EXECUTIVE PROTECTION POLICY ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Effective date of this endorsement: MAY 31, 1998
Issued to: RICHARDSON ELECTRONICS, LTD.
Company: FEDERAL INSURANCE COMPANY
Endorsement No. 9
To be attached to and form part of Policy No. 8125-64-60F
It is agreed that if a Claim against an Insured Person includes a claim against
the Insured Person's lawful spouse solely by reason of (i) such spouse's status
as a spouse of the Insured Person, or (ii) such spouse's ownership interest in
property which the claimant seeks as recovery for alleged Wrongful Acts of the
Insured Person, all loss which such spouse becomes legally obligated to pay on
account of such Claim shall be treated for purposes of this coverage section as
Loss which the Insured Person becomes legally obligated to pay on account of the
Claim made against the Insured Person. All limitations, conditions, provisions
and other terms of coverage (including the deductible) applicable to the Insured
Person's Loss shall also be applicable to such spousal loss.
The coverage extension afforded by this Endorsement does not apply to any Claim
alleging any wrongful act or omission by the Insured Person's spouse.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
Robert Hamburger
Authorized Representative
May 28, 1998
Date
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EXHIBIT 10.45
FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER
THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER (the "Amendment") is
made and dated as of the 30th day of January, 2001 by and among PAULA FINANCIAL,
a California corporation (the "Borrower"), and SANWA BANK CALIFORNIA, a
California banking corporation (the "Lender").
RECITALS
A. Pursuant to that certain Credit Agreement dated as of March 31, 1997 by
and between the Borrower and the Lender (as amended, extended and replaced from
time to time, the "Credit Agreement," and with capitalized terms used herein and
not otherwise defined used with the meanings given such terms in the Credit
Agreement), the lender agreed to extend credit to the Borrower on the terms and
subject to the conditions set forth therein.
B. There have occurred certain Events of Default under the Credit
Agreement, which the Borrower has requested that the Lender waive. The Lender
has agreed to provide such waiver on the terms and subject to the conditions set
forth more particularly herein, including the condition that the Borrower agree
to certain amendments to the Credit Agreement and pledge to the Lender the stock
of PICO as collateral security for the Obligations.
NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Modification of Amortization Schedule. The Lender and the Borrower
hereby agree that notwithstanding anything contained in Paragraph 1(b) of the
Credit Agreement to the contrary, the outstanding principal balance of the Term
Loan as of January 26, 2001, which is $11,250,000.00, shall be payable in
consecutive quarterly installments as follows:
Payment Date
--------------------------------------------------------------------------------
Required Principal Payment
--------------------------------------------------------------------------------
March 31, 2001 $4,500,000.00 June 30, 2001 $ 937,000.00 September 30, 2001
$ 937,000.00 October 31, 2001 $ 250,000.00 November 30, 2001 $ 250,000.00
December 31, 2001 Remaining Principal Balance
2. Modification of Applicable Interest Rate. The Lender and the Borrower
hereby agree that:
(a) Effective January 1, 2001, notwithstanding anything in Paragraph 1(c) of
the Credit Agreement to the contrary:
(1) The outstanding principal balance of the Term Loan shall bear interest
at a floating rate per annum equal to the Reference Rate plus two percent (2%);
(2) The Borrower shall no longer have any right to elect that the Term Loan
and portions thereof bear interest at the Applicable COF Rate, the Applicable
LIBOR Rate or the Applicable Eurodollar Rate; and
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(3) The Term Loan shall be treated for all purposes of the Credit Agreement
as a Reference Rate Loan.
(b) The Borrower hereby represents and warrants and confirms that there are
no Fixed Rate Loans outstanding at the date hereof.
(c) Any and all provisions relating to the COF Rate, the LIBOR Rate and/or
the Eurodollar Rate contained in the Credit Agreement, including, without
limitation, the provisions of Paragraph 2(g)(1) relating to Fixed Rate Loans,
shall have no further application.
(d) Effective January 1, 2001, Paragraph 2(e) of the Credit Agreement is
hereby amended to read in its entirety as follows:
"2(e) Default Interest. Upon the occurrence and during the continuance of an
Event of Default, the Obligations shall bear interest at a per annum rate equal
to the Reference Rate plus four percent (4%)."
3. Reporting Requirements. To reflect the agreement of the Borrower to
provide certain additional information to the Lender from time to time:
(a) Subparagraph (2) of Paragraph 5(a) of the Credit Agreement is hereby
amended to delete the phrase "each of the first three fiscal quarters of the
Borrower" set forth in lines 2 and 3 thereof and to replace the same with the
phrase "each fiscal quarter of the Borrower, including the fourth fiscal
quarter."
(b) Subparagraph (5) of Paragraph 5(a) of the Credit Agreement is hereby
amended to add the following parenthetical immediately preceding the semi-colon
at the end of said subparagraph: "; provided, however, that the annual budgets
and projections provided for fiscal year 2001 shall be delivered by February 28,
2001 and shall be broken down by fiscal quarter."
(b) Subparagraphs (10), (11) and (12) of Paragraph 5(a) of the Credit
Agreement are hereby renumbered as subparagraphs (12), (13) and (14),
respectively, and new subparagraphs (10) and (11) are hereby added to the Credit
Agreement to read in their entirely as follows:
"(10) Within sixty (60) days after the last day of each of the calendar
months ending December 31, 2000, January 31, 2001 and February 28, 2001, and
thirty (30) days after the last day of each subsequent calendar month,
consolidated statements of income and changes in financial position for such
calendar month and balance sheets as of the end of each such calendar month for
the Borrower and its consolidated Subsidiaries, accompanied in each case by a
certificate of the chief financial officer of the Borrower stating that such
financial statements are presented fairly in accordance with GAAP;
(11) Concurrently with the delivery of the quarterly financial statements
pursuant to subparagraph (a)(2) above, commencing with the quarterly financial
statements dated as of March 31, 2001, a certificate of the chief financial
officer of the Borrower, in form and detail reasonably satisfactory to the
lender, setting forth calculations certified to be true, complete and correct
comparing losses and loss expenses incurred and net income of the Borrower and
its consolidated Subsidiaries for such fiscal quarter and for the fiscal year to
date, against such items as set forth in the budget for fiscal year 2001
delivered pursuant to subparagraph (a)(5) above (as such budget shall be
permitted to be adjusted by the Company following the end of each fiscal
quarter, commencing with the fiscal quarter ending March 31, 2001, to reflect
actual performance of the Borrower and its consolidated Subsidiaries during such
fiscal quarter and other anticipated changes in such budget, such revised
budgets, accompanied by backup information supporting the bases for the
adjustments reflected therein, to be delivered no later than forty five (45)
days following the end of each fiscal quarter);"
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4. Modification of Financial Covenants. To reflect the agreement of the
Lender and the Borrower to modify certain of the financial covenants set forth
in the Credit Agreement, Paragraph 6(o) of the Credit Agreement is hereby
amended as follows:
(a) Subparagraph (1) of Paragraph 6(o) is hereby amended to read in its
entirety as follows:
"(1) PICO'S ratio, determined in accordance with SAP, of net premiums
written during the most recent ending four fiscal quarters to surplus plus
excess statutory reserves as of the last day of the most recent ending fiscal
quarter, to exceed 5.00:1.00; or"
(b) Subparagraph (2) of Paragraph 6(o) is hereby amended to read in its
entirety as follows:
"(2) At and as of the end of any fiscal quarter, PICO's surplus at such
date plus excess statutory reserves, to be less than two hundred percent (200%)
of the outstanding principal balance of the Term Loan at such date; or"
(c) Subparagraph (3) of Paragraph 6(o) is hereby deleted and replaced with
the following:
"(3) INTENTIONALLY OMITTED"
(d) Subparagraph (4) of Paragraph 6(o) is hereby deleted and replaced with
the following:
"(4) INTENTIONALLY OMITTED"
(e) Subparagraph (5) of Paragraph 6(o) is hereby deleted and replaced with
the following:
"(5) INTENTIONALLY OMITTED"
(f) Subparagraph (6) of Paragraph 6(o) is hereby deleted and replaced with
the following:
"(6) INTENTIONALLY OMITTED"
5. A.M. Best Rating. To reflect the agreement of the Lender to delete the
requirement of Paragraph 5(m), Paragraph 5(m) is hereby deleted and replaced
with the following:
"5(m) INTENTIONALLY OMITTED"
6. Additional Mandatory Prepayment Requirement. To reflect the agreement of
the Lender and the Borrower that the proceeds of the sale or other disposition
of certain assets of the Borrower and its Subsidiaries be applied as a mandatory
prepayment of principal on the Term Loan:
(a) Paragraph 2(g) of the Credit Agreement is hereby amended to read in its
entirety as follows:
"2(g) Prepayments.
(1) The Borrower may prepay Loans hereunder, other than Fixed Rate Loans, in
whole or in part at any time, without premium or penalty.
(2) The Borrower shall, and shall cause each of its Subsidiaries to
(subject, in the case of PICO and PACO, to regulatory restrictions prohibiting
the taking of such action), remit to the Lender for application against the Term
Loan, immediately upon receipt thereof, one hundred percent (100% of Net Cash
Proceeds received from the sale, transfer, lease or other disposition of any and
all Substantial Assets of the Borrower or any Subsidiary; provided, however,
that nothing contained herein shall be construed to permit any such sale or
other disposition unless the same is permitted pursuant to Paragraph 6(h) below
and, provided further, that Net Cash Proceeds of the sale of PACO shall only be
required to be delivered hereunder to the extent the same are in excess of
$4,500,000, it being agreed and understood that the first $4,500,000.00 of Net
Cash Proceeds from the sale of PACO shall have been used to make the March 31,
2001
3
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payment required pursuant to Paragraph 1 above (or to reimburse the Borrower for
the amount of such payment if made from other sources).
(3) Principal amounts prepaid on the Term Loan shall be applied to
installments thereon in inverse order of maturity; provided, however, that
portion of Net Cash Proceeds of the sale of PACO required to be delivered to the
Bank as a mandatory prepayment under subparagraph (2) above shall be applied
against interest and/or principal payments on the Term Loan in such order as the
Borrower may direct in writing at the date of delivery of such Net Cash
Proceeds, or, if the Borrower shall not so direct, shall be applied to principal
installments in direct order of maturity.
(4) The Borrower shall pay in connection with any prepayment hereunder all
interest accrued but unpaid on Loans to which such prepayment is applied and any
prepayment premium payable pursuant to Paragraph (i) above concurrently with any
payment to the Lender of any principal amounts."
(b) Paragraph 6(h) of the Credit Agreement is hereby amended to read in its
entirety as follows:
"6(h) Sale of Assets. And shall not permit any Subsidiary to, sell, lease,
assign, transfer or otherwise dispose of any of its assets (other than obsolete
or worn out property), whether now owned or hereafter acquired, other than:
(1) In the ordinary course of business as presently conducted and at fair
market value; and
(2) Dispositions of Substantial Assets of the Borrower or any Subsidiary;
provided, however, that: (i) the Lender shall have approved such disposition in
writing in advance (which approval shall not be unreasonably withheld), and
(ii) there shall be delivered to the Lender concurrently with the consummation
of such disposition the mandatory prepayment required pursuant to
Paragraph 2(g)(2) above."
(c) The following new defined terms are added, in correct alphabetical
order, to Paragraph 9 of the Credit Agreement to read in their entirety as
follows:
"Net Cash Proceeds" shall mean with respect to the sale or other disposition
of any Substantial Asset, the gross cash proceeds received less reasonable and
customary transaction costs and less taxes due as a result of any gain on such
sale or disposition.
"Substantial Asset" shall mean any assets, taken alone or with other assets
disposed of in the same or a series of related transactions, with an aggregate
value in excess of $75,000.00; provided, however, that in any event "Substantial
Assets" shall include the stock of any Subsidiary of the Borrower or all or
substantially all of the assets of any such Subsidiary."
7. Restriction on Repurchase of Borrower Stock. The Lender and the Borrower
hereby agree to amend Paragraph 6(f) to read in its entirety as follows:
"6(f) Purchase or Retirement of Stock. And shall not permit any Subsidiary
to, acquire, purchase, redeem or retire any shares of its capital stock now or
hereafter outstanding at any time at which there shall exist an Event of Default
or Potential Default; provided, however, that in no event shall the Borrower
acquire, purchase, redeem or retire any shares of its capital stock now or
hereafter outstanding at any time."
8. Additional Event of Default. Paragraph 7 of the Credit Agreement is
hereby amended to insert the word "or" at the end of Paragraph 7(j) and to add a
new Paragraph 7(k) to read in its entirety as follows"
4
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"7(k) Any quarterly certificate delivered by the chief financial officer of
the Borrower, commencing with the certificate delivered in connection with the
quarterly financial statements dated June 30, 2001, shall show a negative
variance of more than ten percent (10%) from the budget for such fiscal quarter
(as such budget may have been modified to reflect actual performance during the
previous fiscal quarter as permitted pursuant to subparagraph (11) of
subparagraph (a)(2), but prior to giving effect to the further modification of
such budget based upon actual performance during the fiscal quarter for which
such certificate is being delivered);"
9. Pledge of PICO Stock. As collateral security for the Obligations, the
Borrower shall execute and deliver to the Lender a stock pledge agreement in the
form of that attached hereto as Amendment Exhibit A (the "Stock Pledge
Agreement"), pursuant to which the Borrower shall grant to the Lender, on the
terms and subject to the conditions set forth therein, a first priority,
perfected lien on all outstanding capital stock of PICO. The Stock Pledge
Agreement and all documents, instruments and agreements from time to time
delivered in connection therewith shall constitute "Loan Documents" for all
purposes of the Credit Agreement and the other Loan Documents.
10. Waiver of Existing Events of Default. Events of Default are existing
under the Credit Agreement at the date hereof by virtue of the failure of the
Borrower to be in compliance with the requirements of Paragraphs 5(m), 6(o)(1),
6(o)(2), 6(o)(4), 6(o)(5) and 6(o)(6). The Lender hereby agrees to waive, on a
one time basis, the Events of Default existing under the Credit Agreement at the
date hereof described above; provided, however, that nothing contained herein
shall in any manner or to any extent constitute any agreement of the Lender:
(a) to waive any other Event of Default or Potential Default existing at the
date hereof, whether or not the Lender knew or should have known of the
existence of such Event of Default or Potential Default, or (b) to waive any
Event of Default occurring following the execution and delivery of this
Amendment, whether under the enumerated Paragraphs or otherwise.
11. Reaffirmation of Loan Documents. The Borrower hereby affirms and agrees
that (a) the execution and delivery by the Borrower of and the performance of
its obligations under this Amendment shall not in any manner or to any extent
amend, impair, invalidate or otherwise affect any of the obligations of the
Borrower or the rights of the Lender under the Credit Agreement or any other
Loan Document, except as expressly set forth herein, (b) the term "Obligations"
as used in the Loan Documents includes, without limitation, the Obligations of
the Borrower under the Credit Agreement as amended hereby, including, without
limitation, under the Stock Pledge Agreement, and (c) the Credit Agreement as
amended hereby and the other Loan Documents remain in full force and effect.
12. Release. The Borrower, on behalf of itself and each of its successors
and assigns, agrees as follows:
(a) The Borrower hereby forever releases, discharges and acquits the Lender
and its parent, subsidiary and affiliated corporations, and their officers,
directors, shareholders, agents, representatives, and employees, and their
successors, heirs, and assigns, and each of them (collectively and severally,
the "Releasees"), of and from any and all of the following (collectively and
severally, "Claims"): All claims, demands, obligations, liabilities,
indebtedness, breaches of contract, breaches of duty or any relationship, acts,
omissions, misfeasance, malfeasance, cause or causes of actions, debts, sums of
money, accounts, compensations, contracts, controversies, promises, damages,
costs, losses and expenses, of every type, kind nature, description or
character, and irrespective of how, why, or by reason of what facts, whether
heretofore, now existing or hereafter arising, or which could, might, or may be
claimed to exist, or whatever kind or name, whether known or unknown, suspected
or unsuspected, liquidated or unliquidated, each as though fully set forth
herein at length, which in any way arise out of, are connected with or relate to
the
5
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Credit Agreement and the other Loan Documents and the transactions contemplated
thereby, including, without limitation, any action or inaction of any of the
Releasees.
(b) The Borrower hereby agrees, represents and warrants that the matters
released herein are not limited to matters which are known or disclosed, and the
Borrower hereby waives any and all rights and benefits which it now has, or in
the future may have, conferred upon it by virtue of the provisions of
Section 1542 of the Civil Code of the State of California which provides as
follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITORS DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
In this connection, the Borrower hereby agrees, represents, and warrants that it
realizes and acknowledges that factual matters now unknown to it may have given
or may hereafter give rise to causes of action, claims, demands, debts,
controversies, damages, costs, losses and expenses which are presently unknown,
unanticipated and unsuspected, and it further agrees, represents and warrants
that this release has been negotiated and agreed upon in light of that
realization and that it nevertheless hereby intends to release, discharge and
acquit the Releasees from any such unknown claims which would be Claims if known
on the date hereof.
(c) The Borrower hereby acknowledges and agrees that the acceptance of
delivery of this Amendment, including, without limitation, the releases set
forth in this Paragraph 12, shall not be deemed or construed as an admission of
liability by any Releasee, and each Releasee shall be automatically be deemed to
have expressly denied liability of any nature whatsoever arising from or related
to the subject of this release.
(d) The Borrower hereby represents and warrants that it has had advice of
counsel of its own choosing in negotiations for and the preparation of this
Amendment, that, in particular, it has read this Paragraph 12, that it has had
this release fully explained by such counsel and that it is fully aware of its
contents and legal effect.
13. Amendment Effective Date. This Amendment shall be effective as of the
day and year first above written on the date (the "Amendment Effective Date")
that there has been delivered to Lender each of the following:
(a) A copy of this Amendment, duly executed by each of the Lender and the
Borrower;
(b) A copy of the Stock Pledge Agreement, duly executed by the Borrower,
accompanied by the original stock certificates evidencing all outstanding
capital stock of PICO held by the Borrower and stock powers therefor, executed
in blank by the Borrower;
(c) A copy of a Reaffirmation of Guaranties and Guarantor Subordination
Agreements in the form of that attached hereto as Amendment Exhibit B, duly
executed by each of the Guarantors;
(d) A non-refundable amendment fee in the amount of $50,000.00;
(e) The fees and expenses of Morrison & Foerster LLP incurred by the Lender
and payable by the Borrower pursuant to Paragraph 5(f) of the Credit Agreement;
and
(f) Such corporate resolutions, incumbency certificates and other
authorizing documentation for the Borrower and the Guarantors as the Lender may
request.
14. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender that at the date hereof and at and as of the Amendment
Effective Date:
(a) The Borrower has the corporate power and authority and the legal right
to execute, deliver and perform this Amendment, the Stock Pledge Agreement and
other documents,
6
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instruments and agreements required to be delivered by it hereunder (the
"Amendment Documents") and has taken all necessary corporate action to authorize
the execution, delivery and performance of the Amendment Documents. The
Amendment Documents have been duly executed and delivered on behalf of the
Borrower and constitute the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms.
(b) The representations and warranties of the Borrower contained in the Loan
Documents are accurate and complete in all respects, and there has not occurred
and Event of Default or Potential Default which has not been waived pursuant to
Paragraph 9 above.
(c) The Guarantors executing the Reaffirmation of Guaranties and Guarantor
Subordination Agreements are all of the Subsidiaries of the Borrower existing at
the date hereof.
14. No Other Amendment. Except as expressly amended hereby, the Loan
Documents shall remain in full force and effect as written and amended to date.
15. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first above written.
PAULA FINANCIAL, a California corporation
By:
/s/ JAMES A. NICHOLSON
--------------------------------------------------------------------------------
Name: James A. Nicholson
Title: Sr. V.P./C.F.O.
SANWA BANK CALIFORNIA
By:
/s/ JERRY MCDERMOTT
--------------------------------------------------------------------------------
Name: Jerry McDermott
Title: V.P.
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SCHEDULE OF EXHIBITS
EXHIBIT
--------------------------------------------------------------------------------
DOCUMENT
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A Form of Stock Pledge Agreement B Form of Reaffirmation of Guaranties and
Guarantor Subordination Agreements
8
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AMENDMENT EXHIBIT A
FORM OF
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Stock Pledge Agreement") is made and dated
as of the 30th day of January, 2001 by and between PAULA FINANCIAL, a California
corporation (the "Borrower"), and SANWA BANK CALIFORNIA, a California banking
corporation (the "Lender").
RECITALS
A. Pursuant to that certain Credit Agreement dated as of March 31, 1997 by
and between the Borrower and the Lender (as amended, extended and replaced from
time to time, the "Credit Agreement," and with capitalized terms used herein and
not otherwise defined used with the meanings given such terms in the Credit
Agreement), the Lender agreed to extend credit to the Borrower on the terms and
subject to the conditions set forth therein.
B. There have occurred certain Events of Default under the Credit
Agreement, which the Borrower has requested that the Lender waive, and the
Lender has agreed to do so on the terms and subject to the conditions set forth
more particularly in that certain First Amendment to Credit Agreement and Waiver
dated concurrently herewith by and between the Debtor and the Lender.
C. Such conditions, include, without limitation, that the Borrower execute
and deliver to the Lender this Stock Pledge Agreement pursuant to which the
Borrower shall pledge and grant to the Lender a first priority, perfected
security interest in the outstanding capital stock of PAULA Insurance Company, a
California corporation ("PICO").
NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledge, the parties hereto hereby agree as follows:
AGREEMENT
1. Grant of Security Interest. The Borrower hereby pledges, mortgages,
assigns and grants to the Lender a first priority perfect security interest in
the property described in Paragraph 2 below (collectively and severally, the
"Collateral") to secure payment and performance of the Obligations.
2. Collateral. The Collateral shall consist of all now existing and
hereafter arising right, title and interest of the Borrower in each of the
following:
(a) All now existing and hereafter outstanding capital stock of PICO, and
all new substituted and additional documents, instruments, and general
intangibles issued with respect thereto (collectively and severally, the
"Pledged Shares") and all now existing and hereafter arising rights of the
holder of the Pledged Shares, including, without limitation, all voting and
rights to and interest in all cash an noncash dividends and all other property
now or hereafter distributable on account of or receivable with respect to any
of the foregoing; and
(b) All proceeds of the foregoing Collateral. For purposes of this Stock
Pledge Agreement, the term "proceeds" shall mean whatever is receivable or
received when Collateral or proceeds are sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes,
without limitation, all rights to payment, including return premiums, with
respect to any insurance relating thereto.
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3. Representations and Warranties. In addition to all representations and
warranties of the Borrower set forth in the Loan Documents, which are
incorporated herein by this reference, the Borrower hereby represents and
warrants that:
(a) The Borrower is the sole owner of and has good and marketable title to
the Pledged Shares and the other Collateral (or, in the case of after-acquired
Collateral, at the time the Borrower acquires rights in the Collateral, will be
the sole owner thereof) and is the record and beneficial owner of the Pledged
Shares;
(b) Except for the security interest in favor of the Lender granted pursuant
hereto, no person has (or, in the case of after-acquired Collateral, at the time
the Borrower acquires rights therein, will have) any right, title, claim or
interest (by way of security interest or other lien or charge) in, against or to
the Collateral;
(c) All information heretofore, herein or hereafter supplied to the Lender
by or on behalf of the Borrower with respect to the Collateral is accurate and
complete;
(d) The Borrower has delivered to the Lender all instruments, chattel paper
and other items of Collateral in which a security interest is or may be
perfected by possession, and any certificate Pledged Shares together with such
additional writings, including, without limitation, assignments and stock
powers, with respect thereto as the Lender shall request; and
(e) The Pledged Shares in the aggregate constitute one hundred percent
(100%) of the issued and outstanding shares of PICO, have been validly issued
and are fully paid and nonassessable, and there are no outstanding options,
warrants or other agreements with respect thereto.
4. Covenants and Agreements of the Borrower. In addition to all covenants
and agreements of the Borrower set forth in the Loan Documents, which are
incorporated herein by this reference, the Borrower hereby agrees:
(a) To do all acts that may be necessary to maintain, preserve and protect
the Collateral;
(b) Not to use or permit any Collateral to be used unlawfully or in
violation of any provision of this Stock Pledge Agreement, any other agreement
with the Lender related hereto, or any Requirement of Law or Contractual
Obligation affecting the Collateral;
(c) To pay promptly when due all taxes, assessments, charges, encumbrances
and Liens now or hereafter imposed upon or affecting any Collateral;
(d) To appear in and defend any action or proceeding which may affect its
title to or the Lender's interest in the Collateral;
(e) Not to surrender or lose possession of (other than to the Lender), sell,
encumber, lease, rent, or otherwise dispose of or transfer any Collateral or
right or interest therein and to keep the Collateral free of all levies and
security interests or other Liens or charges except the security interest in
favor of the Lender granted hereunder;
(f) To account fully for and promptly deliver to the Lender, in the form
received, all documents, chattel paper, instruments and agreements constituting
Collateral hereunder and all proceeds of the Collateral received, all endorsed
to the Lender or in blank, as requested by the Lender, and accompanied by such
stock powers as appropriate and until so delivered all such documents,
instruments, agreements and proceeds shall be held by the Borrower in trust for
the Lender, separate from all other property of the Borrower;
(g) To keep separate, accurate and complete records of the Collateral and to
provide the Lender with such records and such other reports and information
relating to the Collateral as the Lender may request from time to time;
10
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(h) To keep the records concerning the Collateral at the location referred
to in Paragraph 7 below and not to remove such records from such location
without the prior written consent of the Lender; and
(i) To account fully for and promptly deliver to the Lender, in the form
received, any dividend or any other distribution on account of the Pledged
Shares whether in securities or property by way of stock-split, spin-off,
split-up or reclassification, combination of shares or the like, or in case of
any reorganization, consolidation or merger; provided, however, that until there
shall have occurred an Event of Default, the Borrower shall be entitled to
retain any cash dividends paid on account of the Pledged Shares.
5. Authorized Action by Secured Party. The Borrower hereby agrees that,
from time to time, without presentment, notice or demand, and without affecting
or impairing in any way the rights of the Lender with respect to the Collateral,
the obligations of the Borrower hereunder of the Obligations, the Lender may,
but shall not be obligated to and shall incur no liability to the Borrower or
any third party for failure to, take any action which the Borrower is obligated
by this Stock Pledge Agreement to do and to exercise such rights and powers as
the Borrower might exercise with respect to the Collateral, and the Borrower
hereby irrevocably appoints the Lender as its attorney-in-fact to exercise such
rights and powers, including, without limitation, to: (a) collect by legal
proceedings or otherwise and endorse, receive and receipt for all dividends,
interest, payments, proceeds and other sums and property now or hereafter
payable on or on account of the Collateral; (b) enter into any extension,
reorganization, deposit, merger, consolidation or other agreement pertaining to,
or deposit, surrender, accept, hold or apply other property in exchange for the
Collateral; (c) insure, process and preserve the Collateral; (d) transfer the
Collateral to its own or its nominee's name; (e) make any compromise or
settlement, and take any action it deems advisable, with respect to the
Collateral; and (f) notify any obligor on any Collateral to make payment
directly to the Lender. The Borrower hereby grants to the Lender and exclusive,
irrevocable power of attorney, with full power and authority in the place and
stead of the Borrower to take all such action permitted under this Paragraph 5.
6. Remedies. Upon the occurrence of an Event of Default the Lender may,
without notice to or demand on the Borrower and in addition to all rights and
remedies available to the Lender under the other Loan Documents, at law, in
equity or otherwise, do any one or more of the following:
(a) Foreclose or otherwise enforce the Lender's security interest in any
manner permitted by law, or provided for in this Stock Pledge Agreement;
(b) Sell or otherwise dispose of any Collateral at one or more public or
private sales at the Lender's place of business or any other place or places,
including, without limitation, any broker's board or securities exchange,
whether or not such Collateral is present at the place of sale, for cash or
credit or future delivery, on such terms and in such manner as the Lender may
determine;
(c) Recover from the Borrower all costs and expenses, including, without
limitation, reasonable attorneys' fees (including the allocated cost of internal
counsel), incurred or paid by the Lender in exercising any right, power or
remedy provided by this Stock Pledge Agreement;
(d) Vote or consent, and in connection therewith the Borrower hereby grants
to the Lender a proxy to vote or to consent, with respect to Pledged Shares; and
(e) Restrict the prospective bidders or purchaser of Pledged Shares to
persons or entities who (1) will represent and agree that they are purchasing
for their own account, for investment, and not with a view to the distribution
or sale of any of the Pledged Shares; and (2) satisfy the offeree and purchaser
requirements for a valid private placement transaction under Section 4(2) of the
Securities Act of 1933, as amended (the "Act"), and under Securities and
Exchange Commission Release Nos. 33-6383; 34-18524; 35-22407; 39-700; IC-12264;
AS-306, or under any similar statute, rule or regulation. The Borrower agrees
that disposition of the Pledged Shares pursuant to any
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private sale made as provided above may be at prices and on other terms less
favorable that if the Pledged Shares were sold at public sale, and that the
Lender has no obligation to delay the sale of any Pledged Shares for public sale
under the Act. The Borrower agrees that a private sale or sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner. In the event that the Lender elects to sell the Pledged
Shares, or part of them, and there is a public market for the Pledged Shares, in
a public sale, the Borrower shall use its best efforts to register and qualify
the Pledged Shares, or applicable part thereof, under the Act and all state Blue
Sky or securities laws required by the proposed terms of sale, and all expenses
thereof shall be payable by the Borrower, including, but not limited to, all
costs of (i) registration or qualification of, under the Act or any state Blue
Sky in securities laws or pursuant to any applicable rule or regulation issued
pursuant thereto, any Pledged Shares, and (ii) sale of such Pledged Shares,
including, but not limited to, brokers' or underwriters' commissions, fees or
discounts, accounting and legal fees (including the allocated cost of internal
counsel) and disbursements, costs of printing and other expenses of transfer and
sale. If any consent, approval or authorization of any state, municipal or other
governmental department, agency or authority shall be necessary to effectuate
any sale or other disposition of Pledge Shares, or any part thereof, the
Borrower will execute such applications and other instruments as may be required
in connection with securing any such consent, approval or authorization, and
will otherwise use its best effort to secure the same.
Upon any sale or other disposition pursuant to this Stock Pledge Agreement, the
Lender shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral or portion thereof so sold or disposed of. Each purchaser
at any such sale or other disposition (including the Lender) shall hold the
Collateral free from any claim or right of whatever kind, including any equity
or right of redemption of the borrower and the Borrower specifically waives (to
the extent permitted by law) all rights of redemption, stay or appraisal which
it has or may have under any rule of law or statute now existing or hereafter
adopted.
THE LENDER HEREBY AGREES THAT IT WILL NOT, EITHER DIRECTLY AS TO PICO OR
INDIRECTLY AS TO PICO, BY WAY OF ACTIONS AS TO DIRECT OR INDIRECT HOLDING
Default occurs and the Lender provides notice to the Borrower of such occurrence
(which notice may be given by electronic transmission), notify any Governmental
Authority having direct regulatory jurisdiction over PICO of the intention of
Lender to initiate a foreclosure proceeding or other enforcement action with
respect to the Pledge Shares or otherwise make such intention public (other than
to the extent required under law or legal process applicable to the Lender or to
the extent such information has otherwise become public through no violation by
the Lender of its agreement of confidentiality hereunder); provided, however,
that nothing contained herein shall to any manner or to any extent: (a) restrict
the Lender's right: (1) to exercise any other rights, powers and remedies
available to it under the Credit Agreement and the Loan Documents, at law, in
equity or otherwise, or (2) to commence to prepare for such foreclosure on or
other enforcement action against the Pledged Shares in consultation with its
attorneys and internal management, including, without limitation, the
preparation (but not the submission) of such filings as may be required under
Section 1215.2 of the California Insurance Code, or (b) affect the obligation of
the Borrower to cooperate with the Lender in connection with such preparation,
or (c) to constitute a waiver by the Lender of any such Event of Default.
7. Residence; Collateral Location; Records Location. The Borrower
represents that its chief place of business is located at 300 North Lake Avenue,
Suite 300, Pasadena, California 91101 and that the Borrower's records concerning
the Collateral are located at its chief place of business.
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EXECUTED as of the day and year first above written.
PAULA FINANCIAL, a California corporation
By:
/s/ JAMES A. NICHOLSON
--------------------------------------------------------------------------------
Name: James A. Nicholson
Title: Sr. V.P./C.F.O.
SANWA BANK CALIFORNIA
By:
/s/ JERRY MCDERMOTT
--------------------------------------------------------------------------------
Name: Jerry McDermott
Title: V.P.
13
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AMENDMENT EXHIBIT B
FORM OF:
REAFFIRMATION OF
GUARANTIES AND GUARANTOR SUBORDINATION AGREEMENTS
THIS REAFFIRMATION OF GUARANTIES AND GUARANTOR SUBORDINATION AGREEMENTS (the
"Reaffirmation") is made and dated as of the 30th day of January, 2001, by the
undersigned (the "Guarantors") in favor of SANWA BANK CALIFORNIA (the "Lender").
RECITALS
A. Pursuant to that certain Credit Agreement dated as of March 31, 1997 by
and between PAULA FINANCIAL, a California corporation (the "Borrower"), and the
Lender (as amended, extended and replaced from time to time, the "Credit
Agreement," and with capitalized terms not otherwise defined herein used with
the meanings given such terms in the Credit Agreement), the Lender agreed to
extend credit to the Borrower on the terms and subject to the conditions set
forth therein, including, without limitation, the condition that each of the
undersigned execute and deliver to the Lender a Guaranty and a Guarantor
Subordination Agreement.
B. In connection with the execution and delivery of that certain First
Amendment and Waiver to the Credit Agreement dated concurrently herewith (the
"First Amendment") and as a condition to the effectiveness of such First
Amendment, the undersigned are required to reaffirm the continuing effectiveness
of the Guaranties and Guarantor Subordination Agreements executed by them.
NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the undersigned hereby agrees as follows:
AGREEMENT
1. Approval of First Amendment. Each of the Guarantors hereby confirms that
it has reviewed and approved the First Amendment, including, without limitation,
all Exhibits thereto.
2. Reaffirmation of Guaranties and Guarantor Subordination Agreements. Each
of the Guarantors hereby affirms and agrees that:
(a) The execution and delivery by the Borrower of the First Amendment and
the performance by the Borrower of its obligations under the Credit Agreement as
amended to thereby, including, without limitation, under the Stock Pledge
Agreement executed in connection therewith, shall not in any way amend, impair,
invalidate or otherwise affect any of the obligations of the Guarantors under
its respective Guaranty and Guarantor Subordination Agreement or any other
document or instrument made or given by it in connection therewith;
(b) The term "Obligations" as used in each Guaranty and Guarantor
Subordination Agreement include, without limitation, the "Obligations" of the
Borrower under the Credit Agreement as amended to date, including, without
limitation, pursuant to the First Amendment and the Stock Pledge Agreement;
(c) Each Guaranty and each Guarantor Subordination Agreement remains in full
force and effect; and
(d) Each Guaranty continues to constitute an absolute and unconditional
guaranty of the Obligations of the Borrower as set forth more particularly
therein.
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11. Release. Each of the Guarantors, on behalf of itself and each of its
successors and assigns, agrees as follows:
(a) Each of the Guarantors hereby forever releases, discharges and acquits
the Lender and its parent, subsidiary and affiliate corporations, and their
officers, directors, shareholders, agents, representatives and employees, and
their successors, heirs, and assigns, and each of them (collectively and
severally, "Claims"): All Claims, demands, obligations, liabilities,
indebtedness, breaches of contract, breaches of duty or any relationship, acts,
omissions, misfeasance, malfeasance, cause or causes of actions, debts, sums of
money, accounts, compensations, contracts, controversies, promises, damages,
costs, losses and expenses, of every type, kind, nature, description or
character, and irrespective of how, why, or by reason of what facts, whether
heretofore, now existing or hereafter arising, or which could, might, or may be
claimed to exist, or whatever kind or name, whether known or unknown, suspected
or unsuspected, liquidated or unliquidated, each as though fully set forth
herein at length, which in any way arise out of, are connected with or relate to
the Credit Agreement and the other Loan Documents and the transaction of any of
the Releasees.
(b) Each of the Guarantors hereby agrees, represents and warrants that the
matters released herein are not limited to matters which are known or disclosed,
and each of the Guarantors hereby waives any and all rights and benefits which
it now has, or in the future may have, conferred upon it by virtue of the
provisions of Section 1542 of the Civil Code of the State of California which
provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITORS DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
In this connection, each of the Guarantors hereby agrees, represents, and
warrants that it realizes and acknowledges that factual matters now unknown to
it may have given or may hereafter give rise to Claims which are presently
unknown, unanticipated and unsuspected, and it further agrees, represents and
warrants that this release has been negotiated and agreed upon in light of that
realization and that it nevertheless hereby intends to release, discharge and
acquit the Releasees from any such unknown claims which would be Claims if known
on the date hereof.
(c) Each of the Guarantors hereby acknowledges and agrees that the
acceptance of delivery of this Amendment, including, without limitation, the
release set forth in this Paragraph 11, shall not be deemed or construed as an
admission of liability by any Releasee, and each Releasee shall be automatically
be deemed to have expressly denied liability of any nature whatsoever arising
from or related to the subject of this release.
(d) Each of the Guarantors hereby represents and warrants that it has advice
of counsel of its own choosing in negotiations for and the preparation of this
Amendment, that, in particular, it has read this Paragraph 11, that it has had
this release fully explained by such counsel and that it is fully aware of its
contents and legal effect.
4. Representations and Warranties. Each of the Guarantors hereby represents
and warrants to the Lender that:
(a) Such person has the corporation power and authority and the legal right
to execute, deliver and perform this Reaffirmation and has taken all necessary
corporate action to authorize the execution, delivery and performance of it;
(b) This Reaffirmation has been duly executed and delivered on behalf of
such Person and constitutes a legal, valid and binding obligation of such
Person, enforceable against such Person in
15
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accordance with its terms subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights of creditors generally and the effect of equitable principles whether
applied in an action at law or a suit in equity; and
(c) Such Person has no claim, by way of direct claim, counterclaim, offset
or otherwise, against the Lender or any of its directors, officers, affiliates
or representatives, arising out of or relating to the Credit Agreement or the
transactions contemplated thereby, including, without limitation, under such
Person's Guaranty or Guarantor Subordination Agreement.
5. Counterparts. This Reaffirmation may be executed in counterparts, all of
which taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the Guarantors have caused this Reaffirmation to
be executed as of the day and year first above written.
PAN AMERICAN UNDERWRITERS, INC.,
a Nevada corporation
By:
/s/ JAMES A. NICHOLSON
--------------------------------------------------------------------------------
Name: James A. Nicholson
Title: Sr. V.P./C.F.O.
PAN AMERICAN UNDERWRITERS INSURANCE
AGENTS & BROKERS, INC., an Arizona corporation
By:
--------------------------------------------------------------------------------
Name:
Title:
AGRI-COMP INSURANCE AGENCY, INC.,
an Oregon corporation
By:
/s/ JAMES A. NICHOLSON
--------------------------------------------------------------------------------
Name: James A. Nicholson
Title: Sr. V.P./C.F.O.
PAN PACIFIC BENEFIT ADMINISTRATORS,
INC., a California corporation
By:
/s/ JAMES A. NICHOLSON
--------------------------------------------------------------------------------
Name: James A. Nicholson
Title: Sr. V.P./C.F.O.
PAULA TRADING COMPANY INSURANCE
AGENTS & BROKERS, INC.,
a California corporation
By:
/s/ JAMES A. NICHOLSON
--------------------------------------------------------------------------------
Name: James A. Nicholson
Title: Sr. V.P./C.F.O.
[INSERT SIGNATURE BLOCKS FOR ANY SUBSIDIARIES OF PAULA FINANCIAL
FORMED FOLLOWING THE CLOSING DATE OF THE ORIGINAL AGREEMENT WHO
ARE GUARANTORS]
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QuickLinks
FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER
SCHEDULE OF EXHIBITS
FORM OF STOCK PLEDGE AGREEMENT
REAFFIRMATION OF GUARANTIES AND GUARANTOR SUBORDINATION AGREEMENTS
|
PERFORMANCE-BASED COMPENSATION AGREEMENT
THIS AGREEMENT, dated as of the 1st day of January, 2001, between FAHNESTOCK
VINER HOLDINGS INC. ("Holdings") and ALBERT G. LOWENTHAL ("Lowenthal").
W I T N E S S E T H :
WHEREAS, Lowenthal is employed by Fahnestock & Co. Inc., a wholly-owned
subsidiary of Holdings (the "Company"), and Holdings as their respective Chief
Executive Officer and serves as Chairman of their respective Boards of
Directors; and
WHEREAS, the Compensation and Stock Option Committee (the "Committee") of the
Board of Directors of Holdings (the "Board") has determined that it is in the
best interests of the Company and Holdings to provide a portion of the
compensation for Lowenthal’s services during the Term hereof in a manner that
aligns the compensation of Lowenthal with the performance of the Company and
Holdings, the long-term interests of the shareholders of Holdings and the
compensation paid to other chief executive officers of comparable financial
service companies;
NOW, THEREFORE, in consideration of the premises set forth in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Holdings and Lowenthal agree as follows:
1. Definitions.
(a) Class A Stock means the Class A non-voting shares of Holdings.
(b) Market Value of a share of Class A Stock as of a determination date means
its closing price on the New York Stock Exchange on such date or, if such date
is not a trading day, on the trading day next preceding such determination date.
(c) Performance Award means the written performance goal established with
respect to a Performance Year pursuant to Section 2.
(c) Performance Award Amount means the amount of performance-based compensation
determined pursuant to the terms of a Performance Award.
(d) Performance Year means a calendar year during the Term.
(e) Term means the period commencing on January 1, 2001 and ending on December
31, 2005.
2. Performance Awards.
On or before the 90th day of each Performance Year, the Committee shall
establish a written performance goal (the "Performance Award") with respect to
such Performance Year. Such Performance Award shall be in the form of a written
formula pursuant to which the Performance Award Amount shall be determined based
upon the degree of attainment in such Performance Year of targets expressed in
terms of one or more of the following factors: Holdings’ return on equity,
Holdings’ consolidated net profit, and the increase in the Market Value of a
share of Class A Stock from the date the Committee establishes the performance
goal (or, if later, January 1 of the Performance Year) to December 31 of the
Performance Year. Except to the extent otherwise provided in this Agreement, the
Company shall pay Lowenthal in cash the Performance Award Amount within five (5)
days after the Committee’s certification for each goal in accordance with
Section 3 following the end of each Performance Year.
3. Administration.
The procedures with respect to Performance Awards made under this Agreement
shall be administered by the Committee. The Committee shall at all times consist
of two or more members and shall be constituted in such a manner as to satisfy
the requirements of applicable law, the provisions of Rule 16b-3 under the
Securities Exchange Act of 1934 or any successor rule, and the provisions of
Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Committee shall have full power and authority to grant awards
hereunder and to administer and interpret this Agreement and to adopt such
rules, regulations and guidelines as it deems necessary or advisable to give
effect to the purpose and intent of this Agreement. Prior to payment of any
Performance Award payable hereunder with respect to any Performance Year the
Committee shall certify as to the degree to which the performance goals
underlying the Performance Award have been attained for such Performance Year.
Certification by the Committee shall be made within ten (10) days after
Holdings’ issuance of its annual audited financial statements with respect to
each Performance Year.
4. Performance Award Amount Limitation.
In no event may the Performance Award Amount with respect to any Performance
Year during the Term exceed $5,000,000.
5. Termination of Employment.
(a) If prior to the end of a Performance Year Lowenthal’s employment with the
Company or Holdings terminates for any reason (including death or permanent
disability) other than the termination of his employment for Cause (as defined
in subsection (b)), in lieu of any payments otherwise payable under this
Agreement with respect to such Performance Year Lowenthal or his estate, within
five (5) days after the Committee’s certification in accordance with Section 3
following the end of the Performance Year in which termination occurs, shall be
paid the sum of the following: (i) the amount that would be owed to Lowenthal
with respect to the Performance Award (other than the portion thereof described
in clause (ii) ) for such Performance Year multiplied by a fraction, the
numerator of which is the number of actual days of the year to the date of such
termination and the denominator of which is 365, and (ii) with respect to the
portion (if any) of the Performance Award attributable to appreciation in the
Market Value of Class A Stock, the amount that would be owed to Lowenthal with
respect to the stock appreciation amount using the Market Value of the Class A
Stock on such termination date rather than December 31 of the Performance Year;
provided, however, that any such payment of a Performance Award Amount shall be
subject to the limit set forth in Section 4 and the prior certification of the
Committee as set forth in Section 3.
(b) If prior to the end of a Performance Year, Lowenthal’s employment is
terminated for Cause, his right to receive any payment under this Agreement with
respect to such Performance Year shall be forfeited. For purposes of this
Agreement, "Cause" means (i) conviction of a felony involving theft or moral
turpitude, or (ii) a determination by the Board that Lowenthal has engaged in
conduct that constitutes willful gross neglect or willful gross misconduct with
respect to his duties which results in material economic harm to Holdings or the
Company; provided, however, that for purposes of determining whether conduct
constitutes willful gross misconduct, no act on Lowenthal’s part shall be
considered "willful" unless it is done by him in bad faith and without
reasonable belief that his action was in the best interests of Holdings and the
Company.
6. Deferral Election.
Notwithstanding anything to the contrary herein, to the extent that Lowenthal
makes an election in accordance with the terms of the Fahnestock & Co. Inc.
Executive Deferred Compensation Plan (the "Plan") to defer payment of all or a
portion of a Performance Award Amount, such deferred portion (together with
interest and earnings thereon as determined pursuant to the terms of the Plan)
to be paid at the time and in the manner provided under the Plan.
7. Effectiveness of Agreement.
This Agreement shall be effective as of the date of its adoption by the
Committee, subject to approval thereof at a meeting of shareholders by the
holders of a majority of the Class B voting shares of Holdings (the "Class B
Shares") present and entitled to vote at the meeting. This Agreement replaces
the Performance-Based Compensation Agreement between Holdings and Lowenthal
dated as of March 25, 1997, which shall be of no further force and effect after
December 31, 2000 except as it applies to performance years ending on or before
such date.
8. Interpretation.
No provision of this Agreement may be altered or waived except in a writing
executed by the parties hereto. This Agreement constitutes the entire agreement
between the parties hereto and no party shall be bound by any warranties,
representations or guarantees, except as specifically set forth in this
Agreement. This Agreement shall be interpreted under the law of the State of New
York without giving effect to the conflict of law provisions thereof.
9. Arbitration.
Any controversy or claim arising out of or relating to this Agreement or the
breach of this Agreement which cannot be resolved by Lowenthal and Holdings
shall, at the instance of either Lowenthal or Holdings, be submitted to
arbitration in accordance with New York law and the procedures of the New York
Stock Exchange. The determination of the arbitrator shall be conclusive and
binding on Holdings and Lowenthal and judgment may be entered on the
arbitrator’s award in any court having jurisdiction.
10. Assignability.
The respective rights and obligations of Lowenthal and Holdings under this
Agreement shall inure to the benefit of and be binding upon the heirs and legal
representatives of Lowenthal and the successors and assigns of Holdings.
IN WITNESS WHEREOF, Holdings and Lowenthal have executed this Agreement as of
the day and year first above written.
> > > > > FAHNESTOCK VINER HOLDINGS INC.
> > > > >
> > > > > By: [signed: E.K. Roberts]
> > > > > Name: Elaine K. Roberts
> > > > > Title: President
> > > > >
> > > > >
> > > > >
> > > > > [signed: A.G. Lowenthal]
> > > > > Albert G. Lowenthal, individually
|
Exhibit 10.03
Amendment No. 2 to Employment Agreement
WHEREAS, on January 24, 2000, Intuit Inc. (the “Company”) and Stephen
M. Bennett entered into an Employment Agreement (the “Agreement”); and
WHEREAS, the Agreement provides that Mr. Bennett has a target bonus of
150% of his annual base salary;
WHEREAS, on October 23, 2001 the Compensation Committee of the Board of
Directors of Intuit Inc. determined that Mr. Bennett’s target percentage under
the Incentive Plan for Leaders for the August 1, 2001 through July 31, 2002
fiscal year shall be 160%;
RESOLVED, that Paragraph (a) of Section 3 of the Agreement that details
Mr. Bennett’s annual incentive bonus compensation is hereby amended and restated
in its entirety to read as follows:
(a) Your bonus for Intuit’s 2002 fiscal year will be determined
pursuant to Intuit’s Incentive Plan for Leaders, the executive incentive bonus
compensation program in effect for Intuit’s 2002 fiscal year. Your Incentive
Plan for Leaders target percentage for Intuit’s 2002 fiscal year is 160%. For
each fiscal year thereafter, the Compensation Committee will determine your
target percentage under the then existing executive incentive bonus compensation
program. Your bonus will not be less than 80% of your target percentage in any
year. The maximum percentage of target that you may be paid in any year will be
determined by the then existing executive incentive bonus compensation program.
The Incentive Plan for Leaders does not limit the bonus that may be payable for
performance that exceeds expectations.
This Amendment No. 2 is entered into as of October 23, 2001.
INTUIT INC.
By: /s/ Greg Santora
Chief Financial Officer /s/ Stephen M. Bennett
|
PROMISSORY NOTE
Borrower: Industrial Services of America, Inc. Lender: Bank of Louisville
7100 Grade Lane a Kentucky banking corporation Louisville, KY 40232 500
West Broadway P.O. Box 1101 Louisville, KY 40201-1101 Principal
Amount: $1,500,000.00
Date of Note: May 31, 2001
PROMISE TO PAY: Industrial Services of America, Inc. ("Borrower") promises to
pay to Bank of Louisville ("Lender"), or order, in lawful money of the United
States of America, the principal amount of One Million Five Hundred Thousand &
00/100 Dollars ($1,500,000.00), together with interest on the unpaid principal
balance from May 31, 2001, until paid in full. PAYMENT: Subject to any payment
changes resulting from changes in the Index, Borrower will pay this loan in 59
regular payments of $30,000.00 each and one irregular last payment estimated at
$13,833.48. Borrower's first payment is due June 30, 2001, and all subsequent
payments are due on the last day of each month after that. Borrower's final
payment will be due on May 31, 2006, and will be for all principal and all
accrued interest not yet paid. Payments including principal and interest. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, and any remaining amount to any
unpaid collection costs and late charges. The annual interest rate for this Note
is computed on a 365/360 basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding. Borrower will pay Lender at Lender's address shown above or at such
other place as Lender may designate in writing. VARIABLE INTEREST RATE: The
interest rate on this Note is subject to change from time to time based on
changes in an index which is Lender's Prime Rate (the "Index"). This is the rate
Lender charges, or would charge, on 90-day unsecured loans to the most
creditworthy corporate customers. This rate may or may not be the lowest rate
available from Lender at any given time. Lender will tell Borrower the current
Index rate upon Borrower's request. The interest rate change will not occur more
often than each day. The rate of interest shall be adjusted from time to time on
the same day of which the "prime rate" is changed by Lender. Borrower
understands that Lender may make loans based on other rates as well. Prior to
adding or subtracting any margin to the Index, the Index is rounded up to the
nearest 0.001 per cent, resulting in a current rounded Index of 7.000%. The
interest rate to be applied to the unpaid principal balance of this Note will be
at a rate equal to the Index, rounded up to the nearest 0.001 percent. NOTICE:
Under no circumstances will the interest rate on this Note be more than the
maximum rate allowed by applicable law. Whenever increases occur in the interest
rate, Lender, at its option, may do one or more of the following: (A) increase
Borrower's payments to ensure Borrower's loan will pay off by its original final
maturity date, (B) increase Borrower's payments to cover accruing interest, (C)
increase the number of Borrower's payments, and (D) continue Borrower's payments
at the same amount and increase Borrower's final payment. PREPAYMENT: Borrower
may pay without penalty all or a portion of the amount owed earlier than it is
due. Early payments will not, unless agreed to by lender in writing, relieve
Borrower of Borrower's obligation to continue to make payments under the payment
schedule. Rather, early payments will reduce the principal balance due and may
result in Borrower's making fewer payments. Borrower agrees not to send Lender
payments marked "paid in full," "without recourse," or similar language. If
Borrower sends such a payment, lender may accept it without losing any of
Lender's rights under this Note, and Borrower will remain obligated to pay any
further amount owed to Lender. All written communications concerning disputed
amounts, including any check or other payment instrument that indicates that the
payment constitutes "payment in full" of the amount owed or that is tendered
with other conditions or limitations or as full satisfaction of a disputed
amount must be mailed or delivered to: Bank of Louisville, a Kentucky banking
corporation, 500 West Broadway, P.O. Box 1101, Louisville, KY 40201-1101. LATE
CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of
the regularly scheduled payment or $20.00, whichever is greater. INTEREST
AFTER DEFAULT. Upon default, including failure to pay upon final maturity,
Lender, at its option, may, if permitted under applicable law, increase the
variable interest rate on this Note to 6.000 percentage points over the Index.
The interest rate will not exceed the maximum rate permitted by applicable law.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note: Payment Default. Borrower fails to make any
payment when due under this Note. Other Defaults. Borrower fails to comply
with or to perform any other term, obligation, covenant or condition contained
in this Note or in any of the related documents or to comply with or to perform
any term, obligation, covenant or condition contained in any other agreement
between Lender and Borrower. False Statements. Any warranty,
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf, or made by Guarantor, or any other guarantor, endorser,
surety, or accommodation party, under this Note or the related documents in
connection with the obtaining of the loan evidenced by this Note or any security
document directly or indirectly securing repayment of this Note is false or
misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter. Insolvency. The
dissolution or termination of Borrower's existence as a going business, the
insolvency of Borrower, the appointment of a receiver for any part of Borrower's
property, any assignment for the benefit of creditors, any type of creditor
workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws or against Borrower. Creditor or Forfeiture Proceedings.
Commencement of foreclosure or forfeiture proceedings, whether by judicial
proceeding, self-help, repossession or any other method, by any creditor of
Borrower or by any governmental agency against any collateral securing the loan.
This includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply if there
is a good faith dispute by Borrower as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding and if
Borrower gives Lender written notice of the creditor or forfeiture proceeding
and deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion, as being
an adequate reserve or bond for this dispute. Events Affecting Guarantor.
Any of the preceding events occurs with respect to any guarantor, endorser,
surety, or accommodation party of any of the indebtedness or any guarantor,
endorser, surety, or accommodation party dies or becomes incompetent, or revokes
or disputes the validity of, or liability under, any guaranty of the
indebtedness evidenced by this Note. In the event of a death, Lender, at its
option, may, but shall not be required to, permit the guarantor's estate to
assume unconditionally the obligations arising under the guaranty in a manner
satisfactory to lender, and, in doing so, cure any Event of Default.
Change In Ownership. Any change in the ownership of twenty-five percent (25%) or
more of the common stock of Borrower. Adverse Change. A material adverse
change occurs in Borrower's financial condition, or Lender believes the prospect
of payment or performance of this Note is impaired. Cure Provisions. If
any default, other than a default in payment is curable and if Borrower has not
been given a notice of a breach of the same provision of this Note within the
preceding twelve (12) months, it may be cured (and no event of default will have
occurred) if Borrower, after receiving written notice from Lender demanding cure
of such default: (1) cures the default within fifteen (15) days; or (2) if the
cure requires more than fifteen (15) days, immediately initiates steps which
Lender deems in Lender's sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical. LENDER'S
RIGHTS. Upon default, Lender may declare the entire unpaid principal balance on
this Note and all accrued unpaid interest immediately due, and then Borrower
will pay that amount. ATTORNEYS' FEES; EXPENSES. Lender may hire or pay
someone else to help collect this Note if Borrower does not pay. Borrower will
pay Lender that amount. This includes, subject to any limits under applicable
law, Lender's reasonable attorneys' fees and Lender's legal expenses whether or
not there is a lawsuit, including reasonable attorneys' fees and legal expenses
for bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), and appeals. If not prohibited by applicable law, Borrower
also will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other. GOVERNING LAW. This note will be governed by, construed and
enforced in accordance with federal law and the laws of the Commonwealth of
Kentucky. This Note has been accepted by Lender in the Commonwealth of Kentucky.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon lender's request
to submit to the jurisdiction of the courts of Jefferson County, Commonwealth of
Kentucky. DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $20.00 if
Borrower makes a payment on Borrower's loan and the check or preauthorized
charge with which Borrower pays is later dishonored. RIGHT OF SETOFF. To the
extent permitted by applicable law, Lender reserves a right of setoff in all
Borrower's accounts with lender (whether checking, savings, or some other
account). This includes all accounts Borrower holds jointly with someone else
and all accounts Borrower may open in the future. However, this does not include
any IRA or Keogh accounts, or any trust accounts for which setoff would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the indebtedness against
any and all such accounts, and, at Lender's option, to administratively freeze
all such accounts to allow Lender to protect Lender's charge and setoff rights
provided in this paragraph. FINAL AGREEMENT. THE UNDERSIGNED REPRESENTS AND
AGREES THAT: (A) THIS AGREEMENT, TOGETHER WITH THE OTHER DOCUMENTS EXECUTED IN
CONNECTION HEREWITH AND/OR REFERRED TO HEREIN (COLLECTIVELY, THE "LOAN
DOCUMENTS") REPRESENT THE FINAL AGREEMENT BETWEEN THE UNDERSIGNED AND THE LENDER
WITH RESPECT TO THE SUBJECT MATTER HEREOF, (B) THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES, AND (C) THE LOAN DOCUMENTS MAY NOT BE
CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES. THE TERM "PARTIES" MEANS BANK OF
LOUISVILLE AND ANY AND ALL ENTITIES OR INDIVIDUALS WHO ARE OBLIGATED, DIRECTLY
OR INDIRECTLY, TO REPAY THE INDEBTEDNESS REPRESENTED BY THIS NOTE OR HAVE
PLEDGED PROPERTY AS SECURITY FOR THE INDEBTEDNESS REPRESENTED BY THIS NOTE.
FURTHER TO FINANCIAL STATEMENTS COVENANT. Upon Lender's request, monthly no
later than the 15th of each month, Borrower will provide Lender with the
periodic financial statements described in the provisions above marked
"Financial Statements". CROSS-COLLATERALIZATION. The Note and loan documents
executed in connection with the Note shall be consolidated and coordinated such
that the collateral held by the Lender with respect to any other loans or
promissory note shall extend and secure the repayment in full to the Lender of
any and all loans and promissory notes from Borrower, notwithstanding the fact
that the Lender may hold separate notes, commitment letter, liens security
agreements, guaranties, mortgages, assignments of rents, or other documents with
respect to any other loans. ADDITIONAL PROVISION. Notwithstanding any
provisions to the contrary in the Section titled "PAYMENT," Borrower understands
that if the interest rate applicable to this Note goes up or down, Lender may
recalculate the monthly principal and interest payment so as to fully and evenly
amortize the outstanding principal balance of this Note over the remainder of
its term. LOAN DOCUMENTS. This Note is and shall continue to be governed by
the Loan Agreement dated November 20, 2000 and the Security Agreement dated May
31, 2001. SUCCESSOR INTERESTS. The terms of this Note shall be binding upon
Borrower, and upon Borrower's heirs, personal representatives, successors and
assigns, and shall inure to the benefit of Lender and its successors and
assigns. GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive presentment, demand for payment, and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan or release any party or guarantor or collateral; or impair, fail
to realize upon or perfect Lender's security interest in the collateral; and
take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made. The obligations under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF
THIS PROMISSORY NOTE. BORROWER: INDUSTRIAL SERVICES OF AMERICA, INC. By:
/s/ Timothy W. Myers
Timothy W. Myers, President of Industrial Services of America,
Inc. |
[Execution Copy]
As of June 29, 2001
The Prudential Insurance Company of America
c/o Prudential Capital Group
2200 Ross Avenue, Suite 4200E
Dallas, TX 75201
Attention: Managing Director
U.S. Private Placement Fund
Prudential Private Placement Investors, Inc.
Four Gateway Center
100 Mulberry Street
Newark, NJ 07102-4069
Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Attention: Securities Division, Private Placements
CIG & Co.
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Attention: Private Securities Division - S-307
United of Omaha Life Insurance Company
Mutual of Omaha Insurance Company
Companion Life Insurance Company
United World Life Insurance Company
Mutual of Omaha Plaza
Omaha, NE 68175
Attention: Investment Division
First Colony Life Insurance Company
General Electric Capital Assurance Company
GE Life and Annuity Assurance Company
c/o GE Financial Assurance
Two Union Square
601 Union Street
Seattle, WA 98101-2336
Re: Lennox International Inc.
7.06% Senior Promissory Notes Due 2005; 6.73% Senior Promissory Notes
Due 2008; 6.56% Senior Notes Due 2005; and 6.75% Senior Notes Due 2008
Ladies and Gentlemen:
Reference is made to:
(i) nine separate Note Purchase Agreements, dated as of December 1, 1993
(as each has been amended, the “1993 Note Agreements”), between the Company and
each of The Prudential Insurance Company of America, Connecticut General Life
Insurance Company, Connecticut General Life Insurance Company, on behalf of One
or More Separate Accounts, United of Omaha Life Insurance Company, Mutual of
Omaha Insurance Company, Companion Life Insurance Company, United World Life
Insurance Company, First Colony Life Insurance Company, General Electric Capital
Assurance Company (as a successor), and GE Life and Annuity Assurance Company
(as a successor) (collectively, and together with their respective successors
and assigns, the “1993 Holders”);
(ii) the Note Purchase Agreement, dated as of July 6, 1995 (as each has
been amended, the “1995 Note Agreements”), between the Company and Teachers
Insurance and Annuity Association of America (together with its successors and
assigns, the “1995 Holder”);
(iii) eight separate Note Purchase Agreements, dated as of April 3, 1998
(as each has been amended, the “1998 Note Agreements”), between the Company and
each of The Prudential Insurance Company of America, U.S. Private Placement
Fund, Teachers Insurance and Annuity Association of America, Connecticut General
Life Insurance Company, Connecticut General Life Insurance Company, on behalf of
One or More Separate Accounts, CIGNA Property and Casualty Insurance Company,
United of Omaha Life Insurance Company and Companion Life Insurance Company
(collectively, and together with their respective successors and assigns, the
“1998 Holders”);
(iv) the letter agreement dated July 29, 1999 (the “1999 Amendment
Agreement”) among the Company and the Holders (as defined below) amending the
Note Agreements (as defined below) to add the "Additional Covenants" set forth
in Schedule A to the 1999 Amendment;
2
(v) the letter agreement dated January 23, 2001 among the Company and
the Holders amending certain definitions and covenants in the Note Agreements;
(vi) the Fourth Amendment to Revolving Credit Facility dated as of June
29, 2001, which amends the Revolving Credit Facility Agreement dated as of July
29, 1999 (as amended or otherwise modified by the First Amendment to Revolving
Credit Facility Agreement dated as of August 6, 1999, the Second Amendment to
Revolving Credit Facility Agreement dated as of January 25, 2000 and the Third
Amendment to Revolving Credit Facility Agreement dated as of January 23, 2001,
the “1999 Credit Agreement”), entered into among the Company, the lenders listed
in Schedule 2.01 thereto (the “1999 Lenders”), The Chase Manhattan Bank, as
administrative agent, Wachovia Bank, N.A., as syndication agent, and The Bank of
Nova Scotia, as documentation agent;
(vii) the 364 Day Revolving Credit Facility Agreement dated as of January
25, 2000 (as so amended, the “364 Day Facility”), entered into among the
Company, Chase Bank of Texas, National Association [now The Chase Manhattan
Bank], as administrative agent, the other agents named therein and the lenders
named therein (the “2000 Lenders”, and together with the 1999 Lenders, the
“Lenders”), as the same has been and may hereafter be amended or otherwise
modified; and
(viii the Letter Amendment No. 3 to Master Shelf Agreement dated as of
June 29, 2001, which amends the Master Shelf Agreement dated as of October 15,
1999 (as so amended, the “Shelf Agreement”), entered into between the Company
and The Prudential Insurance Company of America;
The 1993 Note Agreements, 1995 Note Agreement and 1998 Note Agreements are
collectively referred to herein as the “Note Agreements”. The 1993 Holders, 1995
Holder and 1998 Holders are collectively referred to herein as the “Holders”.
The senior notes issued and outstanding under each of the Note Agreements are
collectively referred to herein as the “Notes”. Capitalized terms used herein
and not otherwise defined herein shall have the respective meanings set forth in
the Note Agreements (including Schedule A to the 1999 Amendment Agreement).
The Company has requested the Holders to enter into this letter agreement (this
“Second 2001 Amendment Agreement”) to evidence amendment of the Note Agreements
as set forth herein. Such amendment shall become effective as set forth in
Section 3. Therefore, the Holders and the Company hereby agree as follows:
1. Amendment to Definitions. Subject to Section 3 hereof, the definitions
in each of the Note Agreements are hereby modified as follows:
3
“Adjusted EBITDA”" Clause (ii) of the definition of the term Adjusted
EBITDA is hereby amended to read as follows:
"(ii) to the extent deducted in computing such consolidated
net income (or loss), without duplication, the sum of (a) any
deduction for (or less any gain from) income or franchise taxes
included in determining such consolidated net income (or loss);
plus (b) interest expense (including the interest portion of
Capital Leases) deducted in determining such consolidated net
income (or loss); plus (c) amortization and depreciation expense
deducted in determining such consolidated net income (or loss);
>plus (d) any non-recurring and non cash charges resulting from
the application of GAAP that requires a charge against earnings
for the impairment of goodwill to the extent not already added
back or not included in determining such consolidated net income
(or loss); “minus,”
“Consolidated Net Income” Clauses (f) and (g) of the definition
of the term “Consolidated Net Income” are hereby amended to read as
follows, and clause (h) is hereby added to the end of such definition
to read as follows:
“(f)any non-recurring loss arising from the sale or other
disposition of assets recorded (i) during the fiscal quarter
ended June 30, 2001, but only to the extent that the aggregate
amount of such losses plus the restructuring charges allowed in
clause (g)(i) hereof for such fiscal quarter is less than
$32,400,000; and (ii) after June 30, 2001, in an aggregate amount
not to exceed $25,000,000;
(g)any non-recurring restructuring charges recorded (i) during
the fiscal quarter ended June 30, 2001, but only to the extent
that the aggregate amount of such restructuring charges plus the
losses allowed in clause (f)(i) hereof for such fiscal quarter is
less than $32,400,000; and (ii) after June 30, 2001, in an
aggregate amount not to exceed $25,000,000 provided that cash
charges included in such restructuring charges shall not exceed
$12,500,000; and
(h)any non-recurring and non-cash charges resulting from the
application of GAAP that requires a charge against earnings for
the impairment of goodwill.”
“EBITDA” The definition of the term EBITDA is hereby amended to
read as follows:
“EBITDA” means, for any period, the total of the following
calculated for the Company and the Restricted Subsidiaries
without duplication on a consolidated basis in accordance with
GAAP consistently applied for such period: (a) Consolidated Net
Income from operations; plus (b) any deduction for (or less any
gain from) income or franchise taxes included in determining
4
Consolidated Net Income; plus (c) interest expense (including the
interest portion of Capital Leases) deducted in determining
Consolidated Net Income; plus (d) amortization and depreciation
expense deducted in determining Consolidated Net Income; plus (e)
any non-recurring and non-cash charges resulting from application
of GAAP that requires a charge against earnings for the
impairment of goodwill to the extent not already added back or
not included in determining Consolidated Net Income.
“Existing Note Purchase Agreements” The definition of the term
Existing Note Purchase Agreements is hereby amended to read as follows:
“Existing Note Purchase Agreements” means (i) the Note
Purchase Agreements dated as of December 1, 1993 between the
Company and the institutional investors parties thereto, (ii) the
Note Purchase Agreement dated as of July 6, 1995 between the
Company and the institutional investor party thereto and (iii)
the Note Purchase Agreements dated as of April 3, 1998 between
the Company and the institutional investors parties thereto.
“Material Adverse Effect” The definition of the term Material Adverse
Effect is hereby amended to read as follows:
“Material Adverse Effect” shall mean a material adverse
effect on (a) the business, operations, affairs, financial
condition, assets or properties of the Company and its Restricted
Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement and the Notes and
the ability of the Material Restricted Subsidiaries to perform
their respective obligations under the Subsidiary Guaranty, taken
as a whole, or (c) the validity or enforceability of this
Agreement, the Notes, the Pledge Agreement or the Subsidiary
Guaranty.
The following definitions are hereby added to the Note Agreements:
“1999 Lenders” means the lenders listed in Schedule 2.01 to
the Revolving Credit Facility Agreement dated as of July 29,
1999, as amended, among the Company, The Chase Manhattan Bank, as
administrative agent, Wachovia Bank, N.A., as syndication agent,
and The Bank of Nova Scotia, as documentation agent.
“364 Day Facility” means that certain 364 Day Revolving
Credit Facility Agreement dated as of January 25, 2000 among the
Company, Chase Bank of Texas, National Association [now The Chase
Manhattan Bank], as administrative agent, the other agents named
therein and the lenders named therein, as the same has been and
may hereafter be amended or otherwise modified.
5
“Approved Receivables Securitization” means one or more
receivables securitizations or other receivables sale programs as
long as the aggregate amount of the commitments to purchase
receivables under all such programs does not at any time exceed
$225,000,000.
“Collateral Agent” means The Chase Manhattan Bank, as
collateral agent under the terms of the Intercreditor Agreement
(for the benefit of the holders of the Notes, the holders of the
Shelf Notes, the 1999 Lenders and the lenders under the 364 Day
Facility and any other lenders which become entitled to the
benefits of the Liens granted in the Pledge Agreement under the
terms of the Intercreditor Agreement), and its successors and
assigns in such capacity.
“Credit Agreement” means the Revolving Credit Facility Agreement
dated as of July 29, 1999, entered into among the Company, the lenders
listed in Schedule 2.01 thereto, The Chase Manhattan Bank, as
administrative agent, Wachovia Bank, N.A., as syndication agent, and
The Bank of Nova Scotia, as documentation agent, as the same has been
and may hereafter be amended or otherwise modified.
“Intercreditor Agreement” means that certain Intercreditor
Agreement to be executed pursuant to Section 9.11 hereof initially
among the Company, the Material Restricted Subsidiaries, The Chase
Manhattan Bank, as collateral agent thereunder, the administrative
agent for the 1999 Lenders and the lenders under the 364 Day Facility,
the holders of the Notes and the holders of the Shelf Notes, as the
same may be amended or otherwise modified from time to time.
“Master Shelf Agreement” means that certain Master Shelf
Agreement, dated as of October 15, 1999, between the Company and The
Prudential Insurance Company of America, as the same may be amended or
otherwise modified from time to time.
“Material Restricted Subsidiary” means Lennox Industries Inc.,
Armstrong Air Conditioning Inc., Excel Comfort Systems Inc., Service
Experts Inc. and each other Restricted Subsidiary (except LPAC Corp.)
the book value (determined in accordance with GAAP) of whose total
assets equals or exceeds ten percent (10%) of the book value
(determined in accordance with GAAP) of the consolidated total assets
of the Company and all Subsidiaries as determined as of the last day
of each fiscal quarter.
“Material Transfer” means, with respect to the Company or any
Restricted Subsidiary, any transaction or group of related
transactions having a
6
value in excess of $10,000,000 in which such Person sells,
conveys, transfers or leases (as lessor) any of its property,
including capital stock of, or a Security issued by, a
Subsidiary; provided, that the term “Material Transfer” shall not
include the sale of receivables sold by the Company and the
Restricted Subsidiaries under an Approved Receivables
Securitization. For purposes of this definition the term “value”
of any property transferred shall be equal to the transfer price
specified in the applicable sale, lease or other transfer
documents for the property in question.
“Pledge Agreement” means that certain Pledge Agreement to be
executed by the Company and in favor of the Collateral Agent
pursuant to Section 9.11 hereof, as the same may be modified from
time to time.
“Second 2001 Amendment” means the letter agreement dated as
of June 29, 2001, as the same may be modified from time to time,
among the Company and the holders of the Notes to amend certain
provisions and covenants of this Agreement and the Existing Note
Purchase Agreements.
“Shelf Notes” means the senior notes issued from time to
time pursuant to the Master Shelf Agreement.
“Subsidiary Guaranty” means the guaranty of the Material
Restricted Subsidiaries in favor of the holders of the Notes and
the holders of the Shelf Notes, substantially in the form of
Exhibit A to the Second 2001 Amendment, as the same may be
modified pursuant to one or more Subsidiary Joinder Agreements
and as the same may otherwise be modified from time to time.
“Subsidiary Joinder Agreement” means an agreement which has
been or will be executed by a Material Restricted Subsidiary
adding it as a party to the Subsidiary Guaranty.
2. Amendments to Additional Covenants and Additional Defaults. Subject to
Section 3 hereof, the 1998 Note Agreements, Schedule A to the letter agreement
dated April 3, 1998 (the “1998 Schedule A”) and Schedule A to the 1999 Amendment
Agreement (the “1999 Schedule A”) are hereby amended as follows:
(a) The first paragraph of Section 3(a) of the 1999 Schedule A is hereby
amended to read in its entirety as follows:
“Coverage Ratio. As of the end of each fiscal quarter, the
Company shall not permit the ratio of Cash Flow for the four (4)
fiscal quarters then ending to Interest Expenses for such period to be
less than (i) 2.65 to 1.00 for the fiscal quarter ended June 30, 2001;
(ii) 2.75 to 1.00 for the fiscal quarter ended
7
September 30, 2001; and (iii) 3.00 to 1.00 for all fiscal quarters
ending thereafter. As used herein the following terms have the
following meanings:"
(b) Section 3(b) of the 1999 Schedule A is hereby amended to read in its
entirety as follows:
“Consolidated Indebtedness to Adjusted EBITDA. As of the last day
of each fiscal quarter during the periods described below, the Company
shall not permit the ratio of Consolidated Indebtedness outstanding as
of such day to the Adjusted EBITDA for the four (4) fiscal quarters
then ended to exceed: (i) 3.90 to 1.00 for the fiscal quarter ended
June 30, 2001; (ii) 3.75 to 1.00 for the fiscal quarters ended
September 30, 2001 and December 31, 2001; (iii) 3.50 to 1.00 for the
fiscal quarters ended March 31, 2002 and June 30, 2002; (iv) 3.25 to
1.00 for the fiscal quarters ended September 30, 2002 and December 31,
2002; and (v) 3.00 to 1.00 for all fiscal quarters ending after
December 31, 2002."
(c) Section 7.2(a) of the 1998 Note Agreements and the 1998 Schedule A are
hereby amended by adding the phrase "the then existing Material Restricted
Subsidiaries and" immediately after the phrase "in order to establish".
(d) A new Section 9.10 is hereby added to the 1998 Note Agreements and the
1998 Schedule A as follows:
“9.10. Interest Rate. Effective as of June 29, 2001, the interest
rates prior to the occurrence of any Event of Default with respect to all
Notes shall be immediately and automatically increased by 0.25% per annum
for so long as any amount shall remain outstanding under such Notes. If
upon any subsequent delivery of the compliance certificate pursuant to
Section 7.2(a) of the 1998 Note Agreements and the 1998 Schedule A in
connection with the financial statements of the Company and its Restricted
Subsidiaries required to be delivered pursuant to Section 7.1 of such
Schedule, the Consolidated Indebtedness to Adjusted EBITDA Ratio of the
Company as set forth in Section 3(b) of the 1999 Schedule A shall be less
than or equal to 3.00 to 1.00 (the “Reset Event”), then the interest rates
with respect to such Notes shall be immediately and automatically reduced
by 0.25% per annum commencing upon the date such compliance certificate is
delivered, with such interest rates to be subject to increase again by
0.25% per annum at any time that such ratio exceeds 3.00 to 1.00 (and, if
so increased then reduced again when such ratio shall be less than or equal
to 3.00 to 1.00), and with such interest rates never to be less than the
respective interest rates in effect with respect to the Notes on June 28,
2001. If an Event of Default occurs prior to any Reset Event, then the
Default Rate shall also be increased by 0.25% for so long as such Event of
Default is continuing.
8
(e) A new Section 9.11 is hereby added to the 1998 Note Agreements and the
1998 Schedule A as follows:
“9.11. Post-Closing Agreements; New Material Restricted Subsidiaries.
(a) Items Due by August 15, 2001. On or before August 15, 2001, the
Company shall deliver or cause to be delivered each of the following items,
each of which must be in form and substance satisfactory to the Required
Holders:
(i) to the Holders, the Intercreditor Agreement executed
by all the parties thereto, and the Pledge Agreement executed by
the Company pursuant to which the Company shall have pledged to
the Collateral Agent all the capital stock of each Material
Restricted Subsidiary; to the Collateral Agent, certificates
representing all shares of the capital stock of the Material
Restricted Subsidiaries pledged pursuant to the Pledge Agreement
together with undated stock powers duly executed in blank for all
such certificates; to counsel for the Holders, UCC, tax and
judgment Lien search reports listing all documentation on file
against the Company and each Material Restricted Subsidiary in
each jurisdiction in which it has its principal place of business
and jurisdiction of organization; to the Collateral Agent, such
executed documentation as the Collateral Agent may deem necessary
to perfect or protect the Liens under the Pledge Agreement,
including, without limitation, financing statements under the UCC
and other applicable documentation under the laws of any
jurisdiction with respect to the perfection of such Liens; and
duly executed UCC-3 Termination Statements and such other
documentation as shall be necessary to terminate or release all
Liens encumbering the collateral pledged pursuant to the Pledge
Agreement. To assist the Company in complying with the
requirements of this paragraph, the Holders agree to use
commercially reasonable efforts to cause the Required Lenders to
approve an Intercreditor Agreement which is in form and substance
satisfactory to them on or before August 15, 2001.
(ii) a favorable written opinion from counsel to the
Company and the Material Restricted Subsidiaries addressed to the
holders as to such matters relating to the Intercreditor
Agreement, the Pledge Agreement, the collateral pledged pursuant
thereto and the capitalization of the Material Restricted
Subsidiaries as the Required Holders may request (and the Company
hereby instructs its counsel to deliver such opinion to the
holders for their benefit);
9
(iii) a certificate of the Secretary or an Assistant
Secretary of the Company certifying that attached thereto is a
true and complete copy of resolutions, duly adopted by the Board
of Directors authorizing the execution, delivery and performance
of the Pledge Agreement, the Intercreditor Agreement and the
transactions contemplated thereby, and that such resolutions have
not been modified, rescinded or amended and are in full force and
effect; and
(iv) a certificate of the Secretary or an Assistant
Secretary of each Material Restricted Subsidiary certifying that
attached thereto is a true and complete copy of resolutions, duly
adopted by the Board of Directors authorizing the execution,
delivery and performance of the Intercreditor Agreement and that
such resolutions have not been modified, rescinded or amended and
are in full force and effect.
(b) New Material Restricted Subsidiaries. Within forty-five (45)
days after the end of each fiscal quarter, the Company shall cause
each Material Restricted Subsidiary created or acquired during the
fiscal quarter then ending, and each Restricted Subsidiary that, as a
result of a change in assets became a Material Restricted Subsidiary
during such fiscal quarter (any such Material Restricted Subsidiary,
herein a “New Material Subsidiary”), to execute and deliver to the
Holders a Subsidiary Joinder Agreement joining it as a guarantor under
the Subsidiary Guaranty and such other documentation, including, but
not limited to, corporate resolutions, charter and bylaws of such New
Material Subsidiary and an opinion of counsel for such New Material
Subsidiary, as the Required Holders may reasonably request in order to
cause such New Material Subsidiary to evidence or otherwise implement
the guaranty of the repayment of the obligations contemplated by the
Subsidiary Guaranty and this Agreement. In addition, within forty-five
(45) days after the end of a fiscal quarter in which a New Material
Subsidiary has been created, acquired or comes into existence, the
Company shall take such action as the Collateral Agent may request to
cause the capital stock of each such New Material Subsidiary to be
pledged to the Collateral Agent under the Pledge Agreement, including
without limitation, the proper completion, execution and delivery of
an amendment under the terms of the Pledge Agreement, the delivery of
the stock certificates evidencing the stock to be pledged, along with
stock powers executed in blank, Uniform Commercial Code Financing
Statements and such other documentation as the Collateral Agent may
reasonably request to cause such stock to be pledged under the Pledge
Agreement and for such pledge to be perfected and protected."
(f) A new Section 9.12 to the 1998 Note Agreements and 1998 Schedule
A is hereby added as follows:
10
“9.12. Use of Material Transfer Proceeds. Immediately after giving
effect to a Transfer authorized under Section 10.3(c) that is a Material
Transfer, 60% of the net, after tax proceeds of such Transfer shall be used
to reduce the outstanding indebtedness under any Senior Secured Credit
Facility or Facilities. The Company shall have the option of determining
the Senior Secured Credit Facility or Facilities to which to apply such
proceeds. The term “Senior Secured Credit Facilities” means the Note
Agreements, the Master Shelf Agreement, the Credit Agreement, the 364 Day
Facility and any other facility providing Indebtedness which refinances any
of the foregoing or is entitled under the Intercreditor Agreement to the
benefits of the Liens granted under the Pledge Agreement.”
(g) A new Section 9.13 to the 1998 Note Agreements and 1998 Schedule A is
hereby added as follows:
“9.13. Subsequent Indebtedness. If the Company wants any Indebtedness
that is hereafter incurred to be entitled under the Intercreditor Agreement
to the benefits of the Liens granted under the Pledge Agreement, the
Company shall use the proceeds of such Indebtedness to reduce the
commitments under the revolving Senior Secured Credit Facilities in
existence on June 29, 2001 and/or the outstanding indebtedness under any
other Senior Secured Credit Facilities in existence on June 29, 2001. The
Company shall have the option of determining which Senior Secured Credit
Facility or Facilities to which to apply such proceeds.”
(h) The last sentence of Section 10.3 is deleted in its entirety, the
“.” at the end of clause (c) is deleted and replaced with “; or” and a new
clause (d) is added to the end of Section 10.3, to read as follows:
“(d) such Transfer is the sale of receivables, or undivided
interests therein, pursuant to an Approved Receivables
Securitization.”
(i) The last paragraph of Section 10.4 is deleted in its entirety
from the 1998 Note Agreements and the 1998 Schedule A and replaced with the
following:
“In addition to and not in limitation of the other provisions of
this Section 10.4, from June 29, 2001 until the date that the
Consolidated Indebtedness to Adjusted EBITDA Ratio is less than 3.00
to 1.00 as calculated for any fiscal quarter after March 31, 2001 and
established by the delivery of a Covenant Compliance Certificate under
Section 7.2(a) (such period being the “Restriction Period”), the
Company shall not permit any Restricted Subsidiary to, directly or
indirectly, create, incur, assume, guarantee, or otherwise become
11
directly or indirectly liable with respect to or otherwise permit any
Indebtedness, except Indebtedness of such Subsidiaries disclosed on
Schedule 10.4 and additional Indebtedness in an aggregate amount not
to exceed $10,000,000 for all Restricted Subsidiaries during the
Restriction Period. For purposes of this Section 10.4 any Person
becoming a Restricted Subsidiary after the date of this Agreement
shall be deemed to have incurred all of its then outstanding
Indebtedness at the time it becomes a Restricted Subsidiary.”
(j) Sections 10.5(f), (g) and (i) are deleted in their entirety from
the 1998 Note Agreements and the 1998 Schedule A and replaced with the
following:
“(f) Liens on property or assets of the Company (other than the
capital stock of the Material Restricted Subsidiaries) or any of its
Restricted Subsidiaries securing Indebtedness or other obligations
owing to the Company or to a Wholly Owned Restricted Subsidiary;”
“(g) financing statements filed in respect of operating leases,
liens granted under capital leases in existence as of June 29, 2001
provided that the amount secured thereby does not exceed $25,000,
other Liens existing on June 29, 2001 and described on Schedule 10.5
and Liens granted to the Collateral Agent under the Pledge Agreement;”
“(i) other Liens not otherwise permitted by Subsections (a)
through (h) above, provided that (i) the fair market value of the
assets subject to such other Liens shall not exceed $15,000,000, (ii)
such Liens secure Indebtedness of the Company or a Restricted
Subsidiary permitted hereby, (iii) the aggregate principal amount of
the Indebtedness secured by all Liens granted under the permissions of
this clause (i) does not exceed $10,000,000 and (iv) immediately after
giving effect to the creation thereof, no Default or Event of Default
shall exist.”
(k) Section 10.6 of the 1998 Note Agreements and the 1998 Schedule A
is amended to add the following to the end thereof:
“In addition to the foregoing restrictions, the Company will not,
and will not permit any of its Restricted Subsidiaries to, redeem or
otherwise acquire any of its stock or other equity interests or any
warrants, rights or other options to purchase such stock or other
equity interests except:
(a) when solely in exchange for such stock or other equity
interests;
(b) when made contemporaneously from the net proceeds of a
sale of such stock or other equity interests;
12
(c) the repurchase of up to 577,500 shares of the Company's
capital stock for an aggregate purchase price not to
exceed $7,500,000 in connection with its obligation to
do so arising in connection with the documentation of
its acquisition of James N Kirby Pty Ltd;
(d) the repurchase by LPAC Corp. from Restricted
Subsidiaries of LPAC Corp.'s preferred stock with
proceeds of collections on accounts receivable in
connection with an Approved Receivables Securitization;
and
(e) other redemptions or acquisitions of such stock or
equity interests if, as of the date of the payment
thereof, the Consolidated Indebtedness to Adjusted
EBITDA Ratio is less than 3.00 to 1.00 as calculated
for any fiscal quarter: (i) that has elapsed since
March 31, 2001; (ii) that has ended before the date of
payment; and (iii) for which a Covenant Compliance
Certificate under Section 7.2(a) has been delivered.”
(l) A new Section 10.12 to the 1998 Note Agreements and the 1998 Schedule
A is hereby added as follows:
“10.12. Restrictions On Transfers to Unrestricted
Subsidiaries. In addition to the other limitations of this
Agreement, from June 29, 2001 until the date that the
Consolidated Indebtedness to Adjusted EBITDA Ratio is less than
3.00 to 1.00 as calculated for any fiscal quarter after March 31,
2001 and established by the delivery of a Covenant Compliance
Certificate under Section 7.2(a) (such period, herein the
“Section 10.12 Restriction Period”), the Company will not, and
will not permit any Restricted Subsidiary to, consummate any
Unrestricted Subsidiary Transfer except:
(a) the sale of inventory to Unrestricted Subsidiaries
in the ordinary course of business;
(b) payments made to Unrestricted Subsidiaries after
June 30, 2001 in an aggregate amount not to exceed
$30,500,000 to be used to satisfy the obligations owed to
the seller(s) arising under the documentation governing the
acquisition of James N Kirby Pty Ltd; and
(c) if no Default or Event of Default exists or would
result therefrom, Unrestricted Subsidiary Transfers, in
addition to the Transfers described in clauses (a) and (b)
above, provided that the aggregate amount of the
Unrestricted Subsidiary Transfers consummated during the
Section 10.12 Restriction Period under this clause (c) shall
not exceed
13
$60,000,000. The aggregate amount of the Unrestricted
Subsidiary Transfers for purposes of determining compliance
with this clause (c) as of any date shall equal the sum of
the following: (i) the aggregate outstanding amount of all
loans, advances and extensions of credit made by the Company
and the Restricted Subsidiaries to Unrestricted Subsidiaries
and outstanding on such date; plus (ii) the aggregate amount
of all obligations of the Unrestricted Subsidiaries
outstanding on such date that are guaranteed by the Company
or any Restricted Subsidiary or secured by a Lien granted by
the Company or a Restricted Subsidiary; plus (iii) the
aggregate Fair Market Value (determined for each
Unrestricted Subsidiary Transfer as of the date of the
applicable Unrestricted Subsidiary Transfer) of all other
property (i.e., other than the property described in clauses
(i) and (ii) of this sentence) disposed of during the
Restriction Period in Unrestricted Subsidiary Transfers
consummated under this clause (c).
The term “Unrestricted Subsidiary Transfer” means, a
transaction in any form in which an Unrestricted Subsidiary
receives (either directly or indirectly) anything (including
money or other property) of value from the Company or any
Restricted Subsidiary, including, any loan, advance or other
extension of credit; any sale, lease, or other disposition of
assets; any merger, consolidation or other corporate combination;
any purchase or repurchase of stocks, bonds, notes, debentures or
other securities or any other capital contribution or investment;
any transaction in which a Person provides a Guaranty or grants
Liens to secure obligations or Indebtedness of another Person.
All covenants in this Agreement shall be given independent effect
so that if a particular action or condition is not permitted by
any of such covenants (including this Section 10.12), the fact
that it would be permitted by an exception to, or be otherwise
within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or such condition
exists.”
(m) Section 11(c) is deleted in its entirety from the 1998 Note
Agreements and the 1998 Schedule A and replaced with the following:
“the Company defaults in the performance of or compliance with
any term applicable to the Company and contained in Sections 7.1(d),
9.6, 9.11, 10.2 through 10.12 or in Sections 3(a), 3(b) or 4 of the
1999 Schedule A, or contained in the Pledge Agreement, or any Material
Restricted Subsidiary defaults in the performance of or compliance
with any term applicable to it contained in clause (c) of paragraph 6
of the Subsidiary Guaranty; or”
(n) Section 11(d) is deleted in its entirety from the 1998 Note
Agreements and the 1998 Schedule A and replaced with the following:
14
“(i) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) or contained in the
Intercreditor Agreement or with any Additional Covenant and such
default is not remedied within 30 days after the earlier of (A) a
Responsible Officer obtaining actual knowledge of such default and (B)
the Company receiving written notice of such default from any holder
of a Note (any such written notice to be identified as a “notice of
default” and to refer specifically to this paragraph (d) of Section
11) or (ii) any Material Restricted Subsidiary defaults in the
performance of or compliance with any term contained in the Subsidiary
Guaranty (other than those referred to in paragraphs (a), (b) and (c)
of this Section 11) or contained in the Intercreditor Agreement or
with any Additional Covenant and such default is not remedied within
30 days after the earlier of (A) a Responsible Officer obtaining
actual knowledge of such default and (B) the Company receiving written
notice of such default from any holder of a Note (any such written
notice to be identified as a “notice of default” and to refer
specifically to this paragraph (d) of Section 11); or"
(o) Section 11(e) is deleted in its entirety from the 1998 Note
Agreements and the 1998 Schedule A and replaced with the following:
“(e) any representation or warranty made in writing by or on
behalf of the Company or any Material Restricted Subsidiary or by any
officer of the Company or any Material Restricted Subsidiary in this
Agreement, the Pledge Agreement, the Intercreditor Agreement, the
Subsidiary Guaranty or any writing furnished in connection with the
transactions contemplated hereby proves to have been false or
incorrect in any material respect on the date as of which made; or”
(p) A new Section 11(k) is hereby added to the 1998 Note Agreements and the
1998 Schedule A as follows:
“the occurrence of an Event of Default (as defined in the
Intercreditor Agreement); or”
(q) A new Section 11(l) is hereby added to the 1998 Note Agreements
and the 1998 Schedule A as follows:
“either the Subsidiary Guaranty or the Pledge Agreement shall for
any reason cease to be in full force and effect and valid,
binding and enforceable in accordance with its terms, or the
Company or any Material Restricted Subsidiary shall so state in
writing.”
15
(r) A new sentence is added to end of Section 12.2 of the 1998 Note
Agreements and the 1998 Schedule A as follows:
“In addition to the other rights and remedies that the holders of
Notes may have upon the occurrence of an Event of Default, the
Required Holders may direct the Collateral Agent to exercise the
rights and remedies available to the Collateral Agent under the
Intercreditor Agreement and the Pledge Agreement.”
3. Effectiveness of Amendment Agreement; Counsel Fees and Expenses. This
Second 2001 Amendment Agreement shall be effective upon the satisfaction of the
following conditions:
(a) the Required Holders under each of the 1993 Note Agreements, 1995
Note Agreement and 1998 Note Agreements at the time outstanding shall have
executed a counterpart of this Second 2001 Amendment Agreement;
(b) the Company shall have furnished to each of the Holders evidence
of the satisfaction of clause (a);
(c) the Holders shall have received a Subsidiary Guaranty executed by
each of the Material Restricted Subsidiaries as of the date hereof;
(d) the Holders shall have received a favorable legal opinion or
opinions from Bennack & Lowden L.L.P., special counsel to the Company and
the Material Restricted Subsidiaries, satisfactory to such Holder;
(e) the Holders shall have received certified copies of the
resolutions of the Board of Directors of the Company authorizing this
Second 2001 Amendment Agreement, and of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect
to this Second 2001 Amendment Agreement;
(f) the Holders shall have received certified copies of the
resolutions of the Board of Directors of each Material Restricted
Subsidiary authorizing the Subsidiary Guaranty, and of all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to the Subsidiary Guaranty;
(g) the Holders shall have received a certificate of the Secretary or
Assistant Secretary of the Company certifying the names and true signatures
of the officers of the Company authorized to sign this Second 2001
Amendment Agreement and the other documents to be delivered by the Company
hereunder;
(h) the Holders shall have received evidence satisfactory to them
that the 1999 Credit Agreement, the 364 Day Facility and the Master Shelf
Agreement shall have been
16
amended in a manner similar to the manner in which the Note Agreements are
proposed to be amended as herein contemplated and the amendments of the
1999 Credit Agreement, 364 Day Facility and Master Shelf Agreement shall be
in form and substance satisfactory to the Holders; and
(i) the Company shall have paid to each of the Holders an amendment
fee by wire transfer of immediately available funds in an amount equal to
the product of 0.25% and the aggregate principal amount of such Holder's
outstanding Notes on the date on which this Second 2001 Amendment Agreement
becomes effective.
4. Continued Effectiveness of Second 2001 Amendment Agreement; Release.
(a) Except for Sections 9.10, each of the Additional Covenants and
Additional Defaults set forth in Section 2 hereof shall remain in effect
only as long as the Company is bound by a substantially similar covenant or
event of default contained in the 1999 Credit Agreement or the 364 Day
Facility or any other agreement creating or evidencing Indebtedness
(collectively, the “Additional Agreements”), including but not limited to
any covenant or event of default contained in any amendment to or
refinancing of the 1999 Credit Agreement, the 364 Day Facility or any
Additional Agreement. If the Company ceases to be bound by any such
Additional Covenant or Additional Default in all Additional Agreements,
this Second 2001 Amendment Agreement shall, without further action on the
part of the Company or any Holder, be deemed to be amended automatically to
delete such Additional Covenant or Additional Default.
(b) The Holders agree that if the Lenders release the obligations of
the guarantors under their respective guaranty of Material Restricted
Subsidiaries and no new guaranties of Material Restricted Subsidiaries are
executed in favor of the Lenders, then the Holders agree to release the
obligations of the Guarantors under the Subsidiary Guaranty.
5. Representations and Warranties. The Company represents and
warrants to the Holders that:
(a) The Company has all requisite corporate power to execute, deliver
and perform its obligations under this Second 2001 Amendment Agreement. The
Company has duly executed and delivered this Second 2001 Amendment
Agreement, and this Second 2001 Amendment Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
(b) Neither the execution and delivery of this 2001 Second Amendment
Agreement by the Company, nor the consummation of the transactions
contemplated hereby, nor fulfillment of nor compliance with the terms and
provisions hereof or thereof will conflict with, or result in a breach of
the terms, conditions or provisions of, or
17
constitute a default under, or result in any violation of, or, except as
contemplated by the Pledge Agreement or herein, result in the creation of
any security interest, lien or other encumbrance upon any of the properties
or assets of the Company or any of its Subsidiaries pursuant to, the
charter or bylaws of the Company or any of its Subsidiaries, any award of
any arbitrator or any agreement, instrument, order, judgment, decree,
statute, law, rule or regulation to which the Company or any of its
Subsidiaries is subject.
(c) Except for notice given to and consents required from the 1999
Lenders, the lenders under the 364 Day Facility and the holders of the
Shelf Notes, neither the nature of the business conducted by the Company,
nor any of its properties, nor any relationship between the Company and any
other Person, nor any circumstance in connection with the transactions
contemplated by this Second 2001 Amendment Agreement is such as to require
any authorization, consent, approval, exemption or other action by or
notice to or filing with any court or administrative or governmental body
or any other Person in connection with the execution and delivery of this
Second 2001 Amendment Agreement or the fulfillment of or compliance with
the terms and provisions hereof.
(d) Upon the effectiveness of this Second 2001 Amendment Agreement,
no Event of Default or Default shall have occurred and be continuing.
6. Miscellaneous.
(a) Except as expressly amended by this Second 2001 Amendment
Agreement, the Note Agreements shall remain in full force and effect. This
Second 2001 Amendment Agreement shall be binding upon and inure to the
benefit of the Holders and their respective successors and permitted
assigns.
(b) Other than as expressly set forth herein, the execution, delivery
and effectiveness of this Second 2001 Amendment Agreement shall not operate
as a waiver of any right, power or remedy of any Holder nor constitute a
waiver of any provision of the Note Agreements, the Notes or any other
document, instrument or agreement executed and delivered in connection with
this Second 2001 Amendment Agreement.
(c) The Company confirms its agreement, pursuant to each of the Note
Agreements, to pay all costs and expenses of the Holders related to this
Second 2001 Amendment Agreement, the Intercreditor Agreement, the Pledge
Agreement and the Subsidiary Guaranty and all matters contemplated herein,
including without limitation the reasonable fees and expenses of the
Holders' special counsel.
(d) This Second 2001 Amendment Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be
governed by, the law of the State
18
of New York, excluding choice-of-law principles of the law of such State
that would require the application of the laws of a jurisdiction other than
such State.
(e) This Second 2001 Amendment Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all
of which taken together shall constitute one and the same document.
Delivery of this Second 2001 Amendment Agreement may be made by facsimile
transmission of a duly executed counterpart copy hereof.
[signature pages follow]
If the foregoing correctly describes our understanding with respect to the
subject matter of this Second 2001 Amendment Agreement, please execute this
letter in the place indicated below.
Very truly yours,
LENNOX INTERNATIONAL INC.
By:
-------------------------------
Name: Richard A. Smith
Title: Executive Vice President and
Chief Financial Officer
ACCEPTED AND AGREED:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:
-----------------------------
Name: Ric E. Abel
Title: Vice President
U.S. PRIVATE PLACEMENT FUND
By: Prudential Private Placement Investors, L.P.,
Investment Advisor
By: Prudential Private Placement Investors, Inc.,
its General Partner
By:
--------------------------------------
Name: Ric E. Abel
Title: Vice President
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By:
-------------------------------
Name:
---------------------------
Title:
---------------------------
CIG & CO.
By:
-------------------------------
Name:
---------------------------
Title:
---------------------------
UNITED OF OMAHA LIFE INSURANCE COMPANY
By:
-------------------------------
Name: Curtis R. Caldwell
Title: First Vice President
MUTUAL OF OMAHA INSURANCE COMPANY
By:
-------------------------------
Name: Curtis R. Caldwell
Title: First Vice President
COMPANION LIFE INSURANCE COMPANY
By:
-------------------------------
Name: Curtis R. Caldwell
Title: Authorized Signer
UNITED WORLD LIFE INSURANCE COMPANY
By:
-------------------------------
Name: Curtis R. Caldwell
Title: Authorized Signer
FIRST COLONY LIFE INSURANCE COMPANY
By:
-------------------------------
Name: Morian C. Mooers
Title: Assistant Vice President and Investment Officer
GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY
By:
-------------------------------
Name: Morian C. Mooers
Title: Investment Officer
GE LIFE AND ANNUITY ASSURANCE COMPANY
By:
-------------------------------
Name: Morian C. Mooers
Title: Investment Officer
cc: Companion Life Insurance Company
Attention: Financial Division
401 Theodore Fremd Avenue
Rye, NY 10580-1493
Exhibit A
Form of Subsidiary Guaranty
A-1
--------------------------------------------------------------------------------
Schedule 10.4
LENNOX INTERNATIONAL INC.
AND RESTRICTED SUBSIDIARIES
INDEBTEDNESS AS OF
May 26, 2001 (except as noted)
A. LENNOX INTERNATIONAL INC.
(1) Note Purchase Agreement dated as of December 1, 1993 $88,889,000
among Lennox International Inc. and the Noteholders
identified at the end thereof, pursuant to which Lennox
International Inc. delivered its 6.73% Senior
Promissory Notes due 2008
(2) Note Purchase Agreement dated as of July 6, 1995 20,000,000
between Lennox International Inc. and Teachers
Insurance and Annuity Association of America, pursuant
to which Lennox International Inc. delivered its 7.06%
Senior Promissory Notes due 2005.
(3) Guaranty dated September 19, 1995 from Lennox 475,000
International Inc. to First Bank of Natchitoches &
Trust Company and Regions Bank of Louisiana
guaranteeing 50% of debt of Alliance Compressors to
such Banks under a Promissory Note dated September 19,
1995.
(4) Guaranty of 50% of amounts due from Alliance Compressors 176,762
under a master Equipment Lease Agreement dated March
28, 1995 with NationsBanc Leasing Corporation
(5) Note Purchase Agreement dated as of April 3, 1998,
between Lennox International Inc. and the Noteholders
identified therein, pursuant to which Lennox
International Inc. delivered its:
6.56% Senior Notes due April 3, 2005 25,000,000
6.75% Senior Notes due April 3, 2008 50,000,000
(6) Revolving Credit Facility Agreement dated as of July 29, 240,000,000
1999
(7) Revolving Credit Facility Agreement dated as of January 115,700,000
25, 2000
(8) Master Shelf Agreement dated as of October 15, 1999
between Lennox International Inc. and Prudential
Insurance Company of America, pursuant to which Lennox
International Inc. delivered its:
7.75% Senior Notes due August 25, 2005 25,000,000
8.00% Senior Notes due June 1, 2010 35,000,000
(9) Promissory Note dated April 18, 2001 from Lennox
International Inc to Mizuho Financial Group 5,000,000
B. SERVICE EXPERTS INC.
Convertible Notes and miscellaneous debt 9,981,479
related to original
acquisitions of centers
C. MISCELLANEOUS OTHER DEBT -(estimate)] 125,000
TOTAL OUTSTANDING INDEBTEDNESS OF LENNOX INTERNATIONAL
INC. AND RESTRICTED SUBSIDIARIES $615,347,241
SCHEDULE 10.5
EXISTING LIENS
Jurisdiction Secured Party Ucc-1 File No. Date Filed
DEBTOR: LENNOX INDUSTRIES INC.
Texas Secretary of Wachovia Bank, N.A., 00-00521016 6/16/00
State as Administrative Agent
for the Secured Parties
191 Peachtree Street, N.E
Mail Code GA 04-23
Atlanta, GA 30303
DEBTOR: ARMSTRONG AIR CONDITIONING INC
Ohio Secretary of State Wachovia Bank, N.A., AP322733 3/27/01
as Administrative Agent
for the Secured Parties
191 Peachtree Street, N.E
Mail Code GA 04-23
Atlanta, GA 30303
Huron County, Ohio Wachovia Bank, N.A., 000084073 3/27/01
as Administrative Agent
for the Secured Parties
191 Peachtree Street, N.E
Mail Code GA 04-23
Atlanta, GA 30303
|
Exhibit 10.2
SECOND AMENDMENT TO
EMPLOYMENT AND SEVERANCE BENEFITS AGREEMENT
SECOND AMENDMENT TO EMPLOYMENT AND SEVERANCE BENEFITS AGREEMENT
(the "Agreement"), dated as of August 28, 2001, between CHESAPEAKE CORPORATION,
a Virginia corporation (the "Company"), and THOMAS H. JOHNSON (the "Executive").
WHEREAS, the Company and the Executive entered into an Employment and Severance
Benefits Agreement dated as of July 17, 1997; and
WHEREAS, the Company and the Executive executed the First Amendment to
Employment and Severance Benefits Agreement on September 13, 1999, in order to
conform the Agreement with certain provisions to the terms of agreements between
the Company and other officers of the Company; and
WHEREAS, the Board of Directors and the Executive Compensation Committee
("Committee") of the Board of Directors desire to further amend the Agreement to
(1) revise the definition of "Cause" for terminations prior to a Change in
Control (as defined in the Agreement), (2) reflect a change in the Executive's
title, and (3) reflect the Executive's current base salary.
NOW, THEREFORE, the Agreement is hereby amended in the following respects:
FIRST
: Section 1(a) of the Agreement is amended to read as follows:
(a) Cause. For terminations on or following a Change in Control, "Cause" means
the Executive's conviction by a court of competent jurisdiction for, or pleading
no contest to, a felony.
For terminations prior to a Change in Control, "Cause" means the Executive's (i)
conduct involving dishonesty or fraud or activities that may reasonably be
expected to have a material adverse effect on the property, business or
reputation of the Company; (ii) conviction or admission of, or a plea of guilty
or not contest to, a felony; (iii) breach of any material obligation to the
Company; or (iv) willful failure to perform duties to the Company which is not
corrected within thirty (30) days of prior written notice by the Company to the
Executive or willful misconduct in the performance of such duties.
SECOND
: Section 3(a) of the Agreement is amended to replace the first sentence thereof
with the following:
(a) The Company agrees to employ the Executive throughout the Employment Term as
its President and Chief Executive Officer, and effective April 26, 2000,
Chairman of the Board of Directors, with a job description, responsibilities and
duties commensurate with such position; provided, however, that the Company may
terminate the Executive's employment hereunder at any time in accordance with
Section 7 hereof.
THIRD
: Section 4(a) of the Agreement is amended to replace the first sentence thereof
with the following:
(a) Pay the Executive as compensation for his services hereunder an annual base
salary of not less than five hundred thousand dollars ($500,000), increased
effective July 1, 2001 to not less than six hundred and ten thousand dollars
($610,000) (it being understood that the parties contemplate a good faith review
of such base salary on an annual basis for possible increase in light of
business conditions, competitive considerations, increases given to other
employees of the Company and the Executive's performance).
Except as provided above, the terms of the Agreement, dated July 17, 1997, and
the terms of the First Amendment to Employment Severance Benefits Agreement,
dated September 19, 1999, shall remain in effect.
IN WITNESS WHEREOF, the Company has cause this Second Amendment to Employment
and Severance Benefits Agreement to be duly executed on its behalf and the
Executive has duly executed this Second Amendment to Employment and Severance
Benefits Agreement, all as of the date first written above.
EXECUTIVE
CHESAPEAKE CORPORATION
(Registrant)
BY:
/s/ Thomas H. Johnson
BY:
/s/ Richard G. Tilghman
Thomas H. Johnson
Richard G. Tilghman
Director
BY:
/s/ John Gillespie
John Gillespie
Senior Vice President
Human Resources &
Organizational Development
|
EX 10.46
SENIOR MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of January 1, 2001, between GLOBAL VACATION
GROUP, INC., a New York corporation (the “Company"), and DEBBIE LUNDQUIST
(“Executive").
Recitals
A. The Company and Executive desire to enter into an agreement pursuant to
which Executive will be employed as the Executive Vice President and Chief
Financial Officer of the Company on the terms and conditions set forth in this
Agreement.
B. Certain definitions are set forth in Section 4 of this Agreement.
Agreement
The parties hereto agree as follows:
1. Employment. The Company hereby engages Executive to serve as Executive
Vice President and Chief Financial Officer of the Company, and Executive agrees
to serve the Company, during the Service Term (as defined in Section 1(d)
hereof) in the capacities, and subject to the terms and conditions, set forth in
this Agreement.
(a) Services. During the Service Term, Executive, as Executive Vice
President and Chief Financial Officer of the Company, shall have all the duties
and responsibilities customarily rendered by Executive Vice Presidents and Chief
Financial Officers of companies of similar size and nature and as may be
delegated from time to time by the Board in its sole discretion or the Company’s
Chief Executive Officer. Executive will devote her best efforts and
substantially all of her business time and attention (except for vacation
periods and periods of illness or other incapacity) to the business of the
Company and its Affiliates.
(b) Salary, Bonus and Benefits.
(i) Salary and Bonus. During the Service Term, the Company will pay
Executive a base salary (the “Annual Base Salary”) as the Board may designate
from time to time, at the rate of not less than $200,000 per annum; provided,
however, that the Annual Base Salary shall be subject to review annually by the
Board for upward increases thereon. The Executive will have the potential to
earn an annual bonus of up to 100% (or a greater percentage if approved by the
Board for a specific year) of Executive’s Annual Base Salary for such year, as
determined by the Board based upon the Company’s and Executive’s achievement of
budgetary and other objectives set by the Board. During the Service Term,
Executive shall be entitled to participate, to the extent of her eligibility, in
the standard health and welfare benefit programs made available by the Company
to its employees. Executive shall also be eligible to receive (1) four weeks
paid vacation per annum; (2) a car allowance of $1,000 per month; and (3)
$10,000 per year of aggregate face value in airline tickets or rental car
credits received by the Company in “soft Dollars” from the Company’s suppliers.
(c) Termination.
(i) Events of Termination. During the Service Term, Executive’s
employment with the Company shall cease upon the occurrence of any of the
following events:
(A) Executive’s death.
(B) Executive’s voluntary retirement in accordance with the
Company’s retirement policies.
(C) Executive’s disability, which means her incapacity due
to physical or mental illness such that she is unable to perform the essential
functions of her previously assigned duties for a period of six months in any
twelve month period and such incapacity has been determined to exist by either
(x) the
15
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Company’s disability insurance carrier or (y) by the Board in good faith based
on competent medical advice in the event that the Company does not maintain
disability insurance on the Executive.
(D) Termination by the Company by the delivery to Executive of a written
notice from the Board that Executive has been terminated (“Notice of
Termination”) with or without Cause or with Performance Cause. “Cause” shall
mean:
(1) Executive’s (aa) conviction of a felony or Executive’s commission
of any other act or omission involving dishonesty or fraud with respect to the
Company or any of its Affiliates or any of their customers, vendors or suppliers
or involving harassment or discrimination with respect to the employees of the
Company or its Subsidiaries, (bb) misappropriation of funds or assets of the
Company for personal use or (cc) engaging in any conduct relating to the
Company’s business or involving moral turpitude that actually brought the
Company or any of its Affiliates into public disgrace or disrepute;
(2) Executive’s continued substantial and repeated neglect of her
duties, after written notice thereof from the Board, and such neglect has not
been cured within 30 days after Executive receives notice thereof from the
Board;
(3) Executive’s gross negligence or willful misconduct in the
performance of her duties hereunder that results, or is reasonably expected to
result, in material damage to the Company; or
(4) Executive’s engaging in conduct constituting a breach of
Sections 2 or 3 hereof.
“Performance Cause” shall mean Executive’s termination within 120 days after
the Company’s failure to achieve at least 80% of its budgeted net income as
determined in accordance with generally accepted accounting principles for any
nine-month period for which financial statements are available, provided,
however, that the Board shall determine in good faith if any adjustments thereto
are necessary or appropriate to account for extraordinary or nonrecurring events
(including but not limited to Acts of God, substantive travel industry events
(e.g., materially adverse tax or regulatory changes), travel industry strikes,
wars, terrorism) or other circumstances that should be included or disregarded
in order to fairly determine whether the Company has failed to achieve such
budgeted net income.
In order for the termination to be effective, Executive must be notified in
writing (which writing shall specify the cause in reasonable detail) of any
termination of her employment for Cause or Performance Cause. Notwithstanding
anything to the contrary contained in this paragraph, Executive shall have the
right after termination has occurred to appeal such termination to arbitration
in accordance with the provisions of Section 6(g) hereof.
(E) Executive’s voluntary resignation by the delivery to the Board of a
written notice from Executive that Executive has resigned with or without Good
Reason. “Good Reason” shall mean Executive’s resignation from employment with
the Company within 45 days after the occurrence of any one of the following:
(1) the failure of the Company to pay an amount owing to Executive
hereunder after Executive has provided the Company with written notice of such
failure and such payment has not thereafter been made within 15 days of the
delivery of such written notice; or
(2) the relocation of Executive’s work location to an office that is
more than fifty miles from One North First Street, San Jose, California, without
Executive’s consent.
The delivery by the Executive or the Company of a non-renewal notice as
provided in Section 1(d) shall constitute a resignation by the Executive without
Good Reason.
(ii) Rights on Termination.
(A) In the event that termination is by Executive with Good Reason or by
the Company without either Cause or Performance Cause, the Company will continue
to pay Executive a
16
--------------------------------------------------------------------------------
monthly portion of the Annual Base Salary for a period equal to twelve-months
commencing on the date of termination on regular salary payment dates. In the
event that termination is by the Company for Performance Cause, the Company will
continue to pay Executive a monthly portion of the Annual Base Salary for a
period equal to three-months commencing on the date of termination on regular
salary payment dates. The payments to Executive pursuant to the foregoing two
sentences are referred to as the “Severance Payments.”
(B) If the Company terminates Executive’s employment for Cause, if
Executive retires or if Executive resigns without Good Reason (including by
operation of the last paragraph of Section 1(c)(i)(E)), the Company’s
obligations to pay any compensation or benefits under this Agreement will cease
effective as of the date of termination. Executive’s right to receive any health
or other benefits will be determined under the provisions of applicable plans,
programs or other coverages.
(C) If Executive’s employment terminates because of Executive’s death or
disability, the Company will pay Executive or her estate an amount, if any,
equal to Executive’s Annual Base Salary for the current year prorated to reflect
the number of days Executive has worked during the year in which she dies or
becomes disabled (such amount to be paid after the end of such year when bonuses
are normally paid to other senior executives of the Company).
Notwithstanding the foregoing, the Company’s obligation to Executive for
severance pay or other rights under either subparagraphs (A), (B), or (C) above
(the “Severance Pay”) shall cease if Executive is in violation of the provisions
of Sections 2 or 3 hereof. Until such time as Executive has received all of her
Severance Payments, she will be entitled to continue to receive any health,
life, accident and disability insurance benefits provided by the Company to
Executive under this Agreement.
(d) Term of Employment. Unless Executive’s employment under this Agreement
is sooner terminated as a result of Executive’s termination in accordance with
the provisions of Section 1(c) above, Executive’s employment under this
Agreement shall commence on January 1, 2001 and shall terminate on the second
anniversary of the date hereof (the “Service Term”); provided, however, that
Executive’s employment under this Agreement, and the Service Term, shall be
automatically renewed for one-year periods commencing on the second anniversary
of the date hereof and, thereafter, on each successive anniversary of such date
unless either the Company or Executive notifies the other party in writing
within sixty (60) days prior to any such anniversary that it or she desires to
terminate Executive’s employment under this Agreement. All references herein to
“Service Term” shall include any renewals thereof after the second anniversary
of the date hereof.
2. Confidential Information and Goodwill; Inventions. Executive acknowledges and
agrees that:
(a) As a necessary function of Executive’s employment hereunder, Executive
will have access to and utilize Confidential Information which constitutes a
valuable and essential asset of the Company’s business.
(b) The Confidential Information, observations and data obtained by her
during the course of her performance under this Agreement concerning the
business and affairs of the Company are the property of the Company, including
information concerning the acquisition opportunities in or reasonably related to
the Business of which Executive becomes aware during the Service Term.
Therefore, Executive agrees that she will not disclose to any unauthorized
person or use for her own account any of the Confidential Information without
the Board’s written consent. Executive agrees to deliver to the Company at the
termination of her employment, or at any other time the Company may request, all
memoranda, notes, plans, records, reports and other documents (including copies
or computer files thereof) relating to the Company, the Business or any other
Confidential Information.
(c) All inventions, innovations, developments, improvements, methods,
designs, analyses, drawings, software, reports and all similar or related
information (whether or not patented or patentable) developed by Executive
during the Service Term which (i) directly or indirectly relate to the Company
or its Affiliates or the Business, or (ii) result from any work performed by
Executive while employed by the Company or its Affiliates shall belong to the
Company and its Affiliates. Executive shall promptly disclose all such
inventions to the Board and perform all actions reasonably requested by the
Board (whether during or after the Service Term) to establish and confirm such
ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
3. Noncompetition and Nonsolicitation.
(a) Noncompetition. Executive acknowledges that in the course of her
employment with the Company she has or will become familiar with the Company’s
and its Affiliates’ trade secrets and with other confidential information
concerning the Company and that her services will be of special, unique and
extraordinary value to the Company and its Affiliates. Therefore, Executive
agrees that, during the Service Term and for a period of one (1) year after
termination thereof (collectively, the
17
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“Noncompete Period”), she shall not directly or indirectly own, manage, control,
participate in, consult with, render services for, or in any manner engage in
any business competing with the business of the Company or its Subsidiaries or
any businesses with which the Company or its Subsidiaries have firm plans to
engage in at the time of the termination of the Executive’s employment with the
Company.
(b) Nonsolicitation. During the Noncompete Period and for a period of one
(1) year thereafter, Executive shall not directly or indirectly through another
entity (i) induce or attempt to induce any senior management employee of the
Company or any Subsidiary or, to the actual knowledge of the Executive, any
other employee of the Company or any Subsidiary, to leave the employ of the
Company or such Subsidiary, or in any way interfere with the relationship
between the Company or any Subsidiary and any employee thereof; (ii) induce or
attempt to induce any customer, supplier, vendor, licensee or other business
relation of the Company or any Subsidiary to cease doing business with the
Company or such Subsidiary, or to modify its business relationship with the
Company in a manner adverse to the Company or any Subsidiary; or (iii) in any
way disparage the Company or its Subsidiaries to any customer, supplier, vendor,
licensee or business relation of the Company or any Subsidiary.
(c) Enforcement. The Executive understands and agrees that the terms and
conditions of Executive’s employment hereunder are in consideration for
Executive’s covenants contained in Section 2 and 3 of this Agreement. If, at the
time of enforcement of Section 2 or 3 of this Agreement, a court holds that the
restrictions stated herein are unreasonable under circumstances then existing
the parties hereto agree that the maximum duration, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area and that the court shall be allowed to revise the restrictions
contained herein to cover the maximum duration, scope and area permitted by law.
Because Executive’s services are unique and because Executive has access to
confidential information, the parties hereto agree that money damages would be
an inadequate remedy for any breach of this Agreement. Therefore, in the event
of a breach or threatened breach of this Agreement, the Company or its
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any violations of, the provisions hereof (without posting a bond or other
security).
GENERAL PROVISIONS
4. Definitions.
“Affiliate” of any Person means any other Person which directly or
indirectly controls, is controlled by or is under common control with such
Person.
“Board” means the Company’s board of directors or the board of directors
or similar management body of any successor of the Company.
“Business” means any business of the Company or its Subsidiaries now or
hereafter engaged in, including without limitation the business of providing
travel products and/or services.
“Confidential Information” means all confidential information and trade
secrets of the Company and its Affiliates including, without limitation, the
following: the identity, written lists, or descriptions of any customers,
vendors, referral sources or Organizations; financial statements, cost reports,
or other financial information; contract proposals or bidding information;
business plans; training and operations methods and manuals; personnel records;
fee structures; and management systems, policies or procedures, including
related forms and manuals. “Confidential Information” shall not include any
information or knowledge which: (a) is in the public domain other than by
Executive’s breach of this Agreement or (b) is disclosed to Executive lawfully
by a third party who is not under any obligation of confidentiality with respect
to such information or knowledge.
“Organization” means any organization that has contracted with the Company
for the performance of services or delivery of products in connection with the
Business.
“Person” means an individual, a partnership, a limited liability company,
a corporation, an association, a joint stock company, a trust, a joint venture,
an unincorporated organization and a governmental entity or any department,
agency or political subdivision thereof.
“Subsidiary” means any corporation of which the Company owns, directly or
indirectly through one or more Persons, securities having a majority of the
ordinary voting power in electing such corporations’ board of directors.
5. Notices. Any notice provided for in this Agreement must be in writing and
must be personally delivered, mailed by first class United States mail (postage
prepaid, return receipt requested), sent by reputable overnight courier service
(charges prepaid) or sent by facsimile to the recipient at the address below
indicated:
18
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If to the Executive:
Debbie Lundquist
c/o Classic Custom Vacations, Inc.
One North First Street
San Jose, CA 95113
Tel No.:(408) 287-4550
Fax No.: (408) 287-5953
If to the Company:
Global Vacation Group
C/o Classic Custom Vacations, Inc.
One North First Street
San Jose, CA 95113
Attention: Chief Executive Officer
Tel No.:(408) 287-4550
Fax No.: (408) 993-8547
with a copy to:
Hogan & Hartson, LLP
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: Christopher J. Hagan
Tel No.:(202) 637-5771
Fax No.: (202) 637-5910
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
6. General Provisions.
(a) Expenses. Each party shall bear her or its own expenses in connection
with the negotiation and execution of this Agreement.
(b) Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law.
If any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement, subject to
the provisions of Section 3(c) above, will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
(c) Complete Agreement. This Agreement embodies the complete agreement and
understanding among the parties and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
(d) Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective successors and assigns; provided
that the rights and obligations of Executive under this Agreement shall not be
assignable.
(f) Choice of Law. This Agreement will be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
(g) Remedies and Arbitration. Each of the parties to this Agreement will
be entitled to enforce its rights under this Agreement to recover damages and
costs (including reasonable attorney’s fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. Except for the remedies of the Company provided in Section 3(c) hereof,
the parties hereto agree to submit any disputes arising out of or relating to
this Agreement to binding arbitration in Washington,
19
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D.C. administered by the American Arbitration Association under its Commercial
Arbitration Rules, before a panel of three arbitrators, and judgment on the
award rendered by the arbitrators may be entered into any court having
jurisdiction thereof. The prevailing party in any arbitration shall be entitled
to recover its reasonable attorneys’ fees and costs from the other party or
parties.
(h) Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive.
(i) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company’s chief executive office is located, the time period shall
be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
(j) Termination. This Agreement (except for the provisions of Section 1)
shall survive the termination of Executive’s employment with the Company and
shall remain in full force and effect after such termination.
[THIS SPACE INTENTIONALLY LEFT BLANK]
20
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
GLOBAL VACATION GROUP, INC. By: /s/ Ronald M. Letterman
Ron Letterman
Chief Executive Officer /s/ Debbie Lundquist
DEBBIE LUNDQUIST
21 |
Exhibit 10.6
COLLATERALIZED GUARANTY
This Collateralized Guaranty (as amended, supplemented or otherwise modified
from time to time, this “Collateralized Guaranty”) which supercedes and replaces
any previous guaranty by and between the parties is hereby executed as of the
23rd day of May, 2001 by each of the parties listed on the signature pages
hereof (individually a “Guarantor” and jointly the “Guarantors”), on behalf of
APPLIED DIGITAL SOLUTIONS, INC. (“Borrower”), in favor of IBM Credit Corporation
(“IBM Credit”) with an office located at North Castle Drive, Armonk, NY 10504.
1. In consideration of credit and financing accommodations
granted or to be granted by IBM Credit to Borrower which is in the best interest
of each Guarantor and for other good and valuable consideration received, the
Guarantors jointly and severally guaranty to IBM Credit, from property held
separately, jointly or in community, the prompt and unconditional performance
and payment by Borrower of the “Obligations” within the meaning of the Second
Amended and Restated Term and Revolving Credit Agreement dated as of October 17,
2000 as amended, supplemented or otherwise modified from time to time hereafter,
the “Credit Agreement”) between the Borrower and others, on the one hand, and
IBM Credit, on the other and the obligations of each Guarantor hereunder
(collectively the “Obligations”), whether the Obligations are individual, joint,
several, primary, secondary, direct, contingent or otherwise, provided, however,
that if IBM Credit shall enforce this Guaranty, the total liability of the
Guarantors taken together to IBM Credit shall not exceed the aggregate amount
owed by the Guarantors to the Borrower on the day IBM Credit delivers written
notice to Borrower that an Event of Default exists under the Credit Agreement
(the “Guarantors’ Obligations”). Subject to such limitation, each Guarantor
hereby agrees to indemnify IBM Credit and hold harmless IBM Credit, its
affiliates that are parties to the Credit Agreement, and each of its officers,
directors, agents and assigns (collectively, the “Indemnified Persons”) against
all losses, claims, damages, liabilities or other expenses (including reasonable
attorneys’ fees and court costs now or hereinafter arising from the enforcement
of this Agreement, the “Losses”) to which any of them may become subject insofar
as such Losses arise out of or are based upon any event, circumstance or
condition in respect to the Credit Agreement. Notwithstanding the foregoing, no
Guarantor shall be obligated to indemnify the Indemnified Persons for any Losses
incurred by it to the extent caused by Indemnified Persons’ gross negligence or
willful misconduct.
2. Upon the occurrence and during the continuance of an Event of
Default pursuant to Section 6 of this Collateralized Guaranty which has not been
waived in writing by IBM Credit, IBM Credit may, in its sole discretion, take
any or all of the following actions, without prejudice to any other rights it
may have at law or under the Credit Agreement to enforce its claims against the
Borrower: declare all Obligations to be immediately due and payable (except that
in the Event of Default consists of an entry of an order for relief under the
Bankruptcy Code with respect to any Event of Default set forth in Section 9.1(E)
of the Credit Agreement, in which case all Obligations shall automatically
become immediately due and payable, and the Guarantors shall then pay upon
demand the full amount of the Guarantors’ Obligations owed to IBM Credit by
Borrower, together with all apportioned expenses, including reasonable
attorney’s fees.
3. The liability of each Guarantor is direct and unconditional
and shall not be affected by any extension, renewal or other change in the terms
of payment of any security agreement or any other agreement between IBM Credit
and Borrower, or any change to the manner, place or terms of payment or
performance thereof, or the release, settlement or compromise of or with any
party liable for the payment or performance thereof, the release or
non-perfection of any security thereunder, any change in Borrower’s financial
condition, or the interruption of business relations between IBM Credit and
Borrower. This Guaranty shall continue for so long as any sums owing to IBM
Credit by Borrower remain outstanding and unpaid, unless terminated in the
manner provided below. Each Guarantor acknowledges that its obligations
hereunder are in addition to and independent of any agreement or transaction
between IBM Credit and Borrower or any other person creating or reserving any
lien, encumbrance or security interest in any property of Borrower or any other
person as security for any obligation of Borrower. IBM Credit needs not exhaust
its rights or recourse against Borrower or any other person or any security IBM
Credit may have at any time before being entitled to payment from any of the
Guarantors.
Page 1 of 9
4. To secure payment of all of the Guarantors’ current and
future debts and obligations to IBM Credit, whether under this Guaranty or any
other agreement between IBM Credit and any of the Guarantors, whether direct or
contingent, each Guarantor grants to IBM Credit a security interest in all of
its inventory, equipment, fixtures, accounts, chattel paper, instruments,
documents of title, deposit accounts and general intangibles now owned or
hereafter acquired, and all attachments, parts, accessories, accessions,
substitutions, and replacements thereto and all proceeds thereof, and to the
extent related to the property described above, all books, correspondence,
credit files, records, invoices and other papers and documents, including
without limitation, to the extent so related, all tapes, cards, computer runs,
computer programs and other papers and documents in its possession or control or
any computer bureau from time to time acting for it, and, to the extent so
related, all rights in, to and under all polities of insurance, including claims
of rights to payments thereunder and proceeds therefrom, including, any credit
insurance, and all proceeds thereof (the “Collateral”). This security interest
is also granted to secure any Guarantor’s debts to IBM Credit.
5. (A) Each Guarantor hereby agrees to maintain books and
records pertaining to the Collateral in such detail, form and scope as is
consistent with good business practice, and agree that such books and records
will reflect IBM Credit’s interest in the Collateral.
(B) Each Guarantor hereby agrees that IBM Credit or its agents
may enter upon the premises of any of the Guarantors at any time and from time
to time, during normal business hours and upon reasonable notice under the
circumstances, and at any time at all on and after the occurrence and during the
continuance of an Event of Default for the purposes of (i) inspecting the
Collateral, (ii) inspecting and/or copying (at such Guarantor’s expense) any and
all records pertaining thereto, (iii) discussing the affairs, finances and
business of such Guarantor with its officers or with the Guarantor’s auditors
and (iv) verifying Collateral. Each Guarantor hereby also agrees to provide IBM
Credit with such reasonable information and documentation that IBM Credit may
reasonably deem necessary to conduct the foregoing activities, including,
without limitation, reasonably requested samplings of purchase orders, invoices
and evidences of delivery or other performance. IBM Credit shall exercise their
rights under this section with a view towards not interrupting any Guarantor’s
routine business operations and functions.
Upon the occurrence and during the continuance of an Event of Default pursuant
to Section 6 of the Collateralized Guaranty which has not been waived by IBM
Credit in writing, IBM Credit may conduct any of the foregoing activities upon
twenty four hours notice and beginning during normal business hours in any
manner that IBM Credit deem reasonably necessary.
6. The occurrence of an Event of Default within the meaning of
the Credit Agreement shall constitute an Event Default with the meaning of this
Collateralized Guaranty.
(A) Upon the occurrence and during the continuance of any Event
of Default which has not been waived in writing by IBM Credit and the
acceleration of the Obligations in accordance with Section 2 of this
Collateralized Guaranty, IBM Credit may, subject to the limitations
herein-above, exercise all rights and remedies of a secured party under the
U.C.C., or any other provisions, laws or statutes as applicable. Without
limiting the generality of the foregoing, IBM Credit may: (i) remove from any
premises where same may be located any and all documents, instruments, files and
records (including the copying of any computer records), and any receptacles or
cabinets containing same, relating to the accounts, or IBM Credit may use (at
the expense of the Guarantors) such of the supplies or space of any Guarantor at
such Guarantor’s place of business or otherwise, as may be necessary to properly
administer and control the accounts or the handling of collections and
realizations thereon provided in all events, IBM Credit shall not hinder or
limit access by any Guarantor to all of such records and shall make all of such
records available to the Guarantor; (ii) bring suit, in the name of any
Guarantor or IBM Credit and generally have all other rights respecting said
accounts, including without limitation the right to accelerate or extend the
time of payment, settle, compromise, release in whole or in part any amounts
owing on any accounts and issue credits in the name of such Guarantor or IBM
Credit; (iii) sell, assign and deliver the accounts and any returned, reclaimed
or repossessed merchandise, with or without advertisement, at public or private
sale, for cash, on credit or otherwise, at IBM Credit’s sole option and
discretion, and IBM Credit may bid or become a purchaser at any such sale; and
(iv) foreclose the security interests created pursuant to this Collateralized
Guaranty by any available judicial procedure, or to take possession of any or
all of the Collateral without judicial process and to enter any premises where
any Collateral may be located for the purpose of taking possession of or
removing the same.
Page 2 of 9
(B) Upon the occurrence of any Event of Default, each Guarantor
hereby agrees to provide to IBM Credit (i) within three (3) business days after
request by IBM Credit, any written certificates, schedules and reports together
with all supporting documents relating to the Collateral or any Guarantor or any
Guarantor’s business affairs and financial condition; and (ii) the name, address
and phone number of each of its account debtors’ primary contacts for each
account if requested by IBM Credit. Upon the occurrence and during the
continuance of any Event of Default which has not been waived in writing by IBM
Credit, and the acceleration of the Obligations in accordance with Section 2 of
this Collateralized Guaranty, IBM Credit shall have the right to sell, lease, or
otherwise dispose of all or any part of the Collateral, whether in its then
condition or after further preparation or processing, in the name of any
Guarantor or IBM Credit, or in the name of such other party as IBM Credit may
designate, either at public or private sale or at any broker’s board, in lots or
in bulk, for cash or for credit, with or without warranties or representations,
and upon such other terms and conditions as IBM Credit in its sole discretion
may deem advisable, and IBM Credit shall have the right to purchase at any such
sale.
If IBM Credit, in its sole discretion determines that any of the Collateral
requires rebuilding, repairing, maintenance or preparation, IBM Credit shall
have the right, at its option, to do such of the aforesaid as it deems necessary
for the purpose of putting such Collateral in such saleable form as IBM Credit
shall deem appropriate. Each Guarantor hereby agrees that any disposition by IBM
Credit of any Collateral to and in accordance with the terms of a repurchase
agreement between IBM Credit and the manufacturer or any supplier of such
Collateral constitutes a commercially reasonable sale. Each Guarantor hereby
agrees, at the request of IBM Credit, to assemble the Collateral and to make it
available to IBM Credit at places which IBM Credit shall select, whether at the
premises of the Guarantor or elsewhere, and to make available to IBM Credit the
premises and facilities of the Guarantor for the purpose of IBM Credit’s taking
possession of, removing or putting such Collateral in saleable form. If notice
of intended disposition of any Collateral is required by law, it is agreed that
ten (10) business days notice shall constitute reasonable notification.
(C) Unless expressly prohibited by the licensor thereof, if any,
IBM Credit is hereby granted by each Guarantor, upon the occurrence and during
the continuance of any Event of Default which has not been waived in writing by
IBM Credit, an irrevocable, non-exclusive license to use, assign, license or
sublicense all computer software programs, data bases, processes and materials
used by the Guarantor in its businesses or in connection with any of the
Collateral.
(D) The net cash proceeds resulting from IBM Credit’s exercise
of any of the foregoing rights (after deducting all charges, costs and expenses,
including reasonable attorneys’ fees) shall be applied by IBM Credit to the
payment of the Guarantors’ Obligations, whether due or to become due, in such
order as IBM Credit may in its sole discretion elect. Each Guarantor shall
remain liable to IBM Credit for any deficiencies only for the Guarantor’s
Obligations, and IBM Credit in turn agrees to remit to the Guarantors or their
successors or assigns, any surplus resulting therefrom.
(E) The enumeration of the foregoing rights is not intended to
be exhaustive and the exercise of any right shall not preclude the exercise of
any other rights, all of which shall be cumulative.
(F) Each Guarantor waives and releases: (i) any and all claims
and causes of action which it may now or ever have against IBM Credit as a
result of any possession, repossession, collection or sale by IBM Credit of any
of the Collateral, notwithstanding the effect of such possession, repossession,
collection or sale upon its business; (ii) all rights of redemption from any
such sale; and (iii) the benefit of all valuation, appraisal and exemption laws.
Page 3 of 9
(G) Each Guarantor appoints IBM Credit or any person IBM Credit
may delegate as its duly authorized Attorney-in-Fact (without notifying any
Guarantor) to do, in IBM Credit’s sole discretion, any of the following: (i)
sell, assign, transfer, negotiate or pledge any and all accounts, chattel paper,
or contract rights; (ii) endorse the Guarantors name on any and all notes,
checks, drafts, or other forms of exchange received as payment on any accounts,
chattel paper and contract rights, for deposit in IBM Credit’s account; (iii)
grant any extension, rebate or renewal on any and all accounts, chattel paper or
contract rights, or enter into any settlement thereof; (iv) demand, collect and
receive any and all amounts due on accounts, chattel paper and contract rights;
and (v) exercise any and all rights it has in the Collateral; and
(H) In the event any Guarantor brings any action or asserts any
claim against IBM Credit which arises out of this Guaranty, any other agreement
or any business dealings between it and IBM Credit, in which such Guarantor does
not prevail, such Guarantor agrees to pay IBM Credit all court costs and all
costs and expenses of IBM Credit’s defense of such action of claim, including,
but not limited to, attorney’s fees.
IBM Credit agrees that it shall exercise the power of attorney granted to it
under paragraph (G) above only after the occurrence and during the continuance
of an Event of Default.
7. IBM Credit has and will always possess all the rights and
remedies of a secured party under law, and IBM Credit’s rights and remedies are
and will always be cumulative. Each Guarantor acknowledges and agrees that the
Collateral is the subject of widely distributed standard price quotations and is
customarily sold in a recognized market. Each Guarantor agrees that a private
sale by IBM Credit of any of the Collateral to a dealer in those types of
Collateral is a commercially reasonable sale. Further, each Guarantor agrees
that IBM Credit’s delivery of any of the Collateral to a distributor or
manufacturer, with a request that it repurchase Collateral, as provided in any
repurchase agreement with IBM Credit, is a commercially reasonable disposition
or sale.
8. Each Guarantor represents, warrants and covenants that (a)
the Collateral is and shall remain free from all claims and liens other than
Permitted Liens as defined in Section 13 of this Guaranty; (b) it shall defend
the Collateral against all other claims and demands; and (c) it shall notify IBM
Credit before it signs, or authorizes the signing of any financing statement
regardless of its coverage. IBM Credit may perfect IBM Credit’s security
interest in the Collateral by filing a financing statement signed only by IBM
Credit. Each Guarantor will execute any and all documents IBM Credit may request
to confirm or perfect IBM Credit’s title or security interest in the Collateral.
9. Each Guarantor’s principal place of business and chief
executive office are listed in Exhibit A attached hereto. Each Guarantor agrees
to notify IBM Credit immediately of any change in identity, name, form of
ownership or executive management, and of any change in its principal place of
business, chief executive office or any additions or discontinuances of other
business locations at which a material amount of tangible Collateral is located.
10. The Collateral shall be kept at each Guarantor’s principal
places of business and at the locations listed in Exhibit A attached hereto.
Each Guarantor will immediately notify IBM Credit if a material amount of
tangible Collateral is kept at or the chief executive office of any Guarantor is
moved to any other address. This paragraph is for IBM Credit’s informational
purposes only, and is not in any way or manner intended to limit the extent of
IBM Credit’s security interest in the Collateral.
11. Except as set forth in Exhibit A, no Guarantor has done
business during the last six (6) months only under the corporate names first
written above.
Page 4 of 9
12. Each Guarantor will pay all taxes, license fees, assessments
and charges on the Collateral when due except where: the due date therefor has
been extended; the subject item is being contested in good faith by appropriate
proceedings; or the failure to make such payment will not have a Material
adverse effect (as that term is defined in the Credit Agreement). Each Guarantor
will be responsible for any loss of Collateral for any reason whatsoever. Each
Guarantor will keep the Collateral insured for its full insurable value against
loss or damage by fire, wind, theft and for combined additional coverage,
including vandalism and malicious mischief, and for other risks as IBM Credit
may require from such companies, and in such amounts as is commercially
reasonably prudent to obtain and will cause IBM Credit to be named lender loss
payee on any insurance which covers any of the Collateral. Each Guarantor
further agrees to provide IBM Credit with written evidence of the required
insurance coverage and endorsement clause. From and after the occurrence of an
Event of Default and the acceleration of the Obligations (or the entry of an
order for relief under the Bankruptcy Code with respect to Guarantor) or if any
Guarantor fails to initiate an insurance claim within sixty (60) days of any
Guarantor’s knowledge of any loss, theft or destruction of or damage to all or a
substantial portion of the Collateral, IBM Credit may, upon notice to such
Guarantor, thereupon file all papers, forms and documents to file such claim on
such Guarantor’s behalf, and each Guarantor gives IBM Credit a limited power of
attorney for that purpose. If any Guarantor fails to pay any of the
above-referenced costs, charges or any insurance premiums, or if it fails to
insure the Collateral, IBM Credit may pay such costs, charges or any insurance
premiums, and the amounts paid shall be considered an additional debt owed by
the Guarantors to IBM Credit.
13. Each Guarantor:
(i) will keep the Collateral owned by that
Guarantor free and clear of all liens or encumbrances other than Permitted
liens,
(ii) will conduct its business in all material
respects in compliance with all applicable laws including environmental and
labor laws,
(iii) will not change its general line of business
without prior written notice to IBM Credit,
(iv) will not sell, transfer or dispose of any
assets other than (a) sale or rental of inventory in the ordinary course of
business, (b) voluntary disposition of assets obsolete and worn out in the
ordinary course of business, and (c) Permitted Dispositions provided, however,
that no Permitted Disposition shall represent an amount in excess of fifteen
percent of the combined assets of the Customers and Subsidiaries without the
prior consent of IBM Credit, and
(v) will not maintain or acquire any investment in
any Person other than those Investments permitted under Section 8.6 of the
Credit Agreement with the understanding Customer used in that Section of the
Credit Agreement shall mean the Guarantor for the purpose hereof.
Capitalized terms used in this Section 13 not otherwise defined in this
Collateralized Guaranty shall have the meanings ascribed to such terms in the
Credit Agreement.
14. This Guaranty is assignable by IBM Credit, shall be
construed liberally in IBM Credit’s favor, and shall inure to the benefit of and
bind IBM Credit’s and each Guarantor’s respective successor, personal
representatives and assigns.
15. If Borrower hereafter is acquired by a corporation,
dissolved, or otherwise undergoes any change in its management, ownership,
identity, or organizational structure, this Guaranty shall continue to extend to
any Obligations of the Borrower or such resulting corporation, dissolved
corporation, or new or changed legal entity, or identity to IBM Credit.
Page 5 of 9
16. Each Guarantor waives: notice of the acceptance of this
Guaranty, and of presentment, demand and protest; notices of nonpayment,
nonperformance, any right of contribution from other guarantors, and dishonor;
notices of amount of indebtedness of Borrower outstanding at any time; notices
of the number and amount of advances made by IBM Credit to Borrower in reliance
on this Guaranty; notices of any legal proceedings against Borrower; notice and
hearing as to any prejudgment remedies; and any other demands and notices
required by law. Each Guarantor further waives all rights of setoff and all
counterclaims against IBM Credit or Borrower. Each Guarantor also waives any and
all rights in and notices or demands relating to any collateral now or hereafter
securing any of the Obligations, including, but not limited to, all rights,
notices or demands relating, whether directly or indirectly, to the sale or
other disposition of any or all of such collateral or the manner of such sale or
other disposition. All waivers by each Guarantor herein shall survive any
termination or revocation of this Guaranty.
17. Each Guarantor authorizes IBM Credit, following the
occurrence of an Event of Default and the acceleration of the Obligations (or
the entry of any order of relief under the Bankruptcy Code with respect to the
Guarantors), to sell at public or private sale or otherwise realize upon the
collateral now or hereafter securing any of the Obligations, in such manner and
upon such terms and conditions as IBM Credit deems to be in a commercially
reasonable manner. Each Guarantor further authorizes IBM Credit to deal with the
proceeds of such Collateral as provided in IBM Credit’s agreement with Borrower,
without prejudice to IBM Credit’s claim for any deficiency and free from any
right or redemption on the part of Borrower, any Guarantor or any third parties,
which right or redemption is hereby waived together with every formality
prescribed by custom or by law in relation to any such sale or other
realization.
18. Each Guarantor further agrees that all of its right, title
and interest in, to and under any loans, notes, debts and all other liabilities
and obligations whatsoever owed by Borrower to such Guarantor, whether
heretofore or hereafter created or incurred and for whatever amount, and all
security therefor, shall be now and hereafter at all times fully subordinated to
all Obligations. No Guarantor, following the occurrence of an Event of Default
and the acceleration of the Obligations (or the entry of any order of relief
under the Bankruptcy Code with respect to the undersigned), will ask, demand or
sue for, or take or receive payment of, all or any part of such loans, notes,
debts or any other liabilities or obligations whatsoever or any security
therefor, until and unless all of the obligations are paid, performed and fully
satisfied.
19. Each Guarantor has made an independent investigation of the
financial condition of Borrower and gives this Guaranty based on that
investigation and not upon any representations made by IBM Credit. Each
Guarantor acknowledges that it has access to current and future Borrower
financial information which will enable each Guarantor to continuously remain
informed of Borrower’s financial condition. Each Guarantor also consents to and
agrees that the obligations under this Guaranty shall not be affected by IBM
Credit’s subsequent increases or decreases in the credit line that IBM Credit
may grant to Borrower; substitutions, exchanges or releases of all or any part
of the collateral now or hereafter securing any of the Obligations; sales or
other dispositions of any or all of the collateral now or hereafter securing any
of the Obligations without demands, advertisement or notice of the time or place
of the sales or other dispositions; realizing on the Collateral to the extent
IBM Credit, in its sole discretion, deems proper; or purchases of all or any
part of the Collateral for IBM Credit’s own account.
20. Upon the execution and delivery by any other Person of an
instrument in the form of Annex I hereto, such Person shall become a “Guarantor”
hereunder with the same force and effect as if originally named as a “Guarantor”
herein. The execution and delivery of any such instrument shall not require the
consent of any Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new “Guarantor” as a party to this Collateralized Guaranty.
21. This Guaranty and any and all obligations, liabilities,
terms and provisions herein shall survive any and all bankruptcy or insolvency
proceedings, actions and/or claims brought by or against Borrower, whether such
proceedings, actions and/or claims are federal and/or state.
Page 6 of 9
22. This Guaranty is submitted by each Guarantor to IBM Credit
(for IBM Credit’s acceptance or rejection thereof) at IBM Credit at its address
first written above; as an offer by each Guarantor to guaranty the credit and
financial accommodations provided by IBM Credit to Borrower. If accepted, this
Guaranty shall be deemed to have been made at IBM Credit’s above-specified
office. This Guaranty and all obligations pursuant thereto, shall be governed
and controlled as to interpretation, enforcement, validity, construction, effect
and, in all other respects by the laws of the state of New York. Each Guarantor,
to induce IBM Credit to accept this Guaranty, agrees that all actions or
proceedings arising directly or indirectly in connection with, out of, related
to or from this Guaranty may be litigated, at IBM Credit’s sole discretion and
election, in courts located in New York City, New York. Each Guarantor consents
and submits to the jurisdiction of any local, state or federal court located
within that state. Each Guarantor waives any right to transfer or change the
venue of any litigation brought against any Guarantor by IBM Credit in
accordance with this paragraph.
23. Any delay by IBM Credit, or IBM Credit’s successors,
affiliates or assigns in exercising any or all rights granted IBM Credit under
this Guaranty shall not operate as a waiver of those rights. Furthermore, any
failure by IBM Credit, IBM Credit’s successors, affiliates or assigns, to
exercise any or all rights granted IBM Credit under this Guaranty shall not
operate as a waiver of IBM Credit’s right to exercise any or all of them later.
24. This document contains the full agreement of the parties
concerning the guaranty of Borrower’s Obligations and can be varied only by a
document signed by all of the parties hereto. Any Guarantor may terminate this
Guaranty by notice to IBM Credit in writing, the termination to be effective
sixty (60) days after receipt and acknowledgment thereof by IBM Credit, but the
termination shall in no manner terminate such Guarantor’s guaranty of
Obligations arising prior to the effective date of termination. “Guarantor”
shall be deemed to refer to all thereof and the obligations of all thereof
hereunder shall be joint and several.
25. EACH GUARANTOR AGREES THAT ANY ACTION, SUIT OR PROCEEDING,
RELATING DIRECTLY OR INDIRECTLY TO THIS GUARANTY, OR THE RELATIONSHIP BETWEEN
IBM CREDIT AND ANY GUARANTOR, WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION
BY A JUDGE WITHOUT A JURY. THUS, EACH GUARANTOR HEREBY WAIVES ANY RIGHT TO A
JURY TRIAL IN ANY SUCH ACTION, SUIT OR PROCEEDING.
WITNESS SYSCOMM INTERNATIONAL CORPORATION
/s/ M. BROOKS By: /s/ DAVID A. LOPPERT
Print Name: M. Brooks Print Name: David A. Loppert
Address: 107 Pembroke Dr. Title: Chief Executive Officer Palm Beach
Gardens, FL 33418
WITNESS
INFORMATION TECHNOLOGY SERVICES, INC.
/s/ M. BROOKS By: /s/ DAVID A. LOPPERT
Print Name: M. Brooks Print Name: David A. Loppert
Address: Title: Chief Executive Officer
WITNESS
INFORMATION PRODUCTS CENTER, INC.
/s/ M. BROOKS By: /s/ DAVID A. LOPPERT
Print Name: M. Brooks Print Name: David A. Loppert
Address: Title: Chief Executive Officer
Page 7 of 9
ATTACHMENT A TO
COLLATERALIZED GUARANTY
I. Locations of Offices, Books and Records and Collateral:
(A) Principal Place of Business and Chief Executive Office:
SysComm International Corporation
20 Precision Drive
Shirley, NY 1 1987
Information Technology Services, Inc.
20 Precision Drive
Shirley, NY 11967
Information Products Center, Inc.
7 Kingsbridge Road
Fairfield, NJ 10774
(B) Locations of Other Assets, Inventory and Equipment (including
warehouses):
Guarantor Location Leased (Y/N) Information
Technology
Services 420 Lexington Avenue, Suite 2450
New York City, NY 10170
Y
1 Greentree Center, Suite 201
Marlton, NJ 08053
Y
II. Fictitious Names:
Information Technology Services. Inc. d/b/a InfoTech or InfoTech USA
Information Products Center. Inc. d/b/a ADS-Information Products Center or IPC
or Applied Digital Solutions
Page 8 of 9
ANNEX I TO COLLATERALIZED GUARANTY
SUPPLEMENT, dated as of (this “Supplement”), to the Collateralized Guaranty
dated as of May ___, 2001 (as amended, supplemented or otherwise modified from
time to time, the “Collateralized Guaranty”) executed by the Guarantors
thereunder in favor of IBM Credit Corporation (“IBM Credit”).
WHEREAS, pursuant to paragraph 20 of the Collateralized Guaranty, the
undersigned is becoming a Guarantor under the Collateralized Guaranty, and
WHEREAS, the undersigned Guarantor desires to become a Guarantor under the
Collateralized Guaranty in order to induce IBM Credit to continue to extend
financing under the Credit Agreement (as defined in the Collateralized
Guaranty):
NOW, THEREFORE, in consideration of the premises and for other consideration
(the receipt and sufficiency of which is hereby acknowledged), the undersigned
agrees, for the benefit of IBM Credit, as follows:
1. All capitalized terms used herein without definition shall have the
meanings ascribed to such terms in or pursuant to the Collateralized Guaranty.
2. In accordance with the terms of the Collateralized Guaranty, by its
signature below, the undersigned hereby irrevocably agrees to become a Guarantor
under the Collateralized Guaranty with the same force and effect as if it were
an original signatory thereto, and the undersigned Guarantor hereby (a) agrees
to be bound by and comply with all of the terms and provisions of the
Collateralized Guaranty applicable to it as a Guarantor and (b) represents and
warrants that the representations and warranties made by it as a Guarantor
thereunder are true and correct as of the date hereof. Each reference to a
Guarantor in the Collateralized Guaranty shall be deemed to include the
undersigned Guarantor.
3. The undersigned Guarantor hereby represents and warrants that this
Supplement has been duly authorized, executed and delivered by it and that this
Supplement and the Collateralized Guaranty constitute the legal, valid and
binding obligation of the undersigned, enforceable against it in accordance with
its terms.
4. Except as expressly supplemented hereby, the Collateralized Guaranty
shall remain in full force and effect in accordance with its terms.
5. This Supplement is executed and shall be construed in accordance with
the local laws of New York.
6. This Supplement may be executed by the Parties hereto in several
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same agreement. IN WITNESS WHEREOF,
the Parties hereto have caused this Supplement to be duly executed and delivered
by their respective officers as of the date and year first above written.
[Name of the Additional SysComm Subsidiary Guarantor
By:____________________________
Name:_________________________
Title:___________________________
Accepted by:
IBM Credit Corporation
By:____________________________
Name:_________________________
Title:___________________________
Page 9 of 9 |
EXHIBIT 10.(iii)A
FY 2002 CORPORATE EMPLOYEE COMPENSATION PLAN
(SEPTEMBER 1, 2001 - AUGUST 31, 2002)
OBJECTIVE
To pay additional cash beyond base salary to eligible employees of Farmland Industries, Inc. This plan
applies for the employees who are not tied to any single business or service unit, and for those employees
who have a portion of their variable compensation plan contingent upon the company's financial
performance. Farmland Industries, Inc. ("Corporate") must achieve a threshold or minimum net income before
taxes and extraordinary items, or no payout occurs, for this portion of the plan.
This plan includes four important exhibits which are an integral part of the plan structure. Please be
aware of and consult them. They include the following:
Exhibit A - Corporate financial performance criteria
and levels
Exhibit B - A summary schedule of payout opportunities by
earnings level
Exhibit C - Additional detail on determination of payout
Exhibit D - Descriptions and definitions of accounting terms and
methodologies relevant to this plan
PLAN STRUCTURE
The plan provides the opportunity for a cash payment following the conclusion of FY 2002 to eligible
employees for the attainment of corporate objectives. The corporate standard measure is net income before
taxes and extraordinary items.
The structure and format of the Corporate Employee compensation plan may differ in some respects from unit
customized plans. Plan requirements and rules for such items as eligibility for participation, pro-ration
of payout, etc., supersede those of any customized plans should conflicts occur (Note: some details in
sales incentive plans may vary given the difference in nature between sales and non-sales variable pay
plans.)
ELIGIBILITY
The following types of employees are ineligible for payout under the Corporate Employee Compensation Plan:
-----------
o Employees whose terms and conditions of employment are subject to collective bargaining.
o Employees hired after June 1, 2002 (waived if the employee is a former regular full time employee during FY 2002; payout is
prorated).
o Regular part time employees with less than 500 hours of service during FY 2002.
o Temporary employees with less than 1000 hours of service during FY 2002.
o Employees terminated for cause prior to 8/31/2002.
o Employees who terminate voluntarily prior to 8/31/2002 (employees who terminate to accept a position with a member
cooperative may be eligible for a prorated payout).
o Employees included in variable compensation plans other than the standard corporate employee compensation plan. Exceptions
must be approved by the Chief Executive Officer, and by the VP, Human Resources.
Certain classes of employees who terminate prior to 8/31/2002 will receive payout based on their eligible
earnings during the year:
Death/Disability
Retirement
Reduction in Force
Focus Team member obtaining outside employment
Layoff
Leave of Absence
Hired after 9/1/2001 but on or before 6/1/2002
Involuntary separations, other than for reasons included in the list above, which are not for performance
or for cause, may result in prorated payout.
---
Employees who voluntarily terminate prior to 8/31/2002 for the purpose of assuming a position with a system
member cooperative may be eligible to receive a payout. To secure eligibility, the employee must notify
Corporate Human Resources, in writing, at the time of separation and ensure that the system member
cooperative notifies Farmland's Corporate Human Resources Department, in writing, to verify employment from
the point of separation through the conclusion of the plan year.
Employees on formal disciplinary or performance probation are ineligible for that portion of the fiscal
year.
DETERMINATION
OF PAYOUT
Payout is determined as a percentage of eligible gross wages or salary paid during the fiscal year, as
shown in Exhibits B and C. Corporate performance measurements are labeled "threshold", "target", and
"maximum".
Threshold - The minimal performance level required for the plan to pay out. No payout occurs for
----------
achievement below threshold.
Target - Identifies the actual performance objective.
------
Maximum - A performance level exceeding target at which the payout as a percentage of eligible gross wages
-------
or salary is frozen. No payout occurs beyond these percentages regardless of performance.
Payout for performance between threshold and target or target and maximum is prorated.
In the event of a merger, change of control, or other major organizational structure change (as determined
by the CEO) during the course of the plan year, the rate of earnings for the year up to the effective date
of the change, would be projected to the end of the quarter in order to derive a net income performance
estimate.
MODIFICATION
OF THE PLAN
Farmland Management and/or the Board of Directors reserve the right to modify this plan, including changing
details, temporarily suspending the plan, or terminating the plan altogether prior to the conclusion of the
fiscal year. They reserve the same right relative to any business or service unit variable pay plan.
APPROVED:
----------------------------------------
Robert Honse
President and CEO
EXHIBIT A
FY 2001 PERFORMANCE CRITERIA AND GOALS
Corporate Net Income before taxes and extraordinary items (full fiscal year):
-----------------------------------------------------------------------------
Threshold $63,140,000
Target $90,200,000
Maximum $126,280,000
EXHIBIT B
FY 2002 Variable Compensation Program Annual Payout Schedule
------------------------------------------ ---------------------------------------- ----------------------------------------
Non-Sales Annual
------------------------------------------ ---------------------------------------- ----------------------------------------
------------------------------------------ ---------------------------------------- ----------------------------------------
eshold - Target - Maximum Earnings V Comp Calculation Point
---------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
3 - 5 - 8 All Non - Exempt* Any Earnings
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
3 - 5 - 8 Below $37,130 Exempt Actual Earnings
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
3 - 6 - 10 $37,130 - $40,844 $38,990
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
4 - 7 - 12 $40,845 - $44,929 $42,890
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
5 - 8 - 15** $44,930 - $51,669 $48,300
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
5 - 10 - 18 $51,670 - $59,419 $55,545
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
6 - 12 - 22 $59,420 - $68,334 $63,880
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
7 - 15 - 27 $68,335 - $78,584 $73,460
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
8 - 18 - 33 $78,585 - $90,374 $84,480
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
10 - 22 - 40 $90,375 - $103,929 $97,155
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
12 - 25 - 46 $103,930 - $119,519 $111,725
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
12 - 25 - 46 $119,520 - $137,449 $128,485
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
12 - 25 - 46 $137,450 - $158,064 $147,760
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
14 - 28 - 52 $158,065 + Actual Earnings
(Non - FII Executives)
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
* Includes Truck Drivers
-----------------------------------------------------------------------------------
--------------------------------------------------------------------------------
** Production Supervisors identified with a v-comp code of ??8 will be calculated at least at the
--------
--------------------------------------------------------------------------------
---------------------------------------------------------------------------------
5-8-15 opportunity, using the calc point that corresponds with their earnings.
---------------------------------------------------------------------------------
----------------------------------------------------------------------------------
---------------------------------------------------------------------------------
------------------------------------------ -------------------------------------
EXECUTIVES Annual
------------------------------------------ -------------------------------------
------------------------------------------ -------------------------------------
Threshold - Target - Maximum Earnings V Comp Calculation Point
---------------------------------------------------------- ----------------------
---------------------------------------------------------------------------------------
18 - 36 - 67 Designated FII Executives
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
22 - 45 - 83 Designated FII Executives
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
25 - 50 - 92 President and CEO
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$95,480 - $114,574 $105,030
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$114,575 - $137,489 $126,035
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$137,490 - $164,989 $151,240
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$164,990 - $197,989 $181,490
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$197,990 - $237,589 $217,790
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$237,590 - $285,109 $261,350
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$285,110 - $342,129 $313,620
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$342,130 - $410,554 $376,345
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$410,555 - $492,664 $451,610
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$492,665 - $591,199 $541,935
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$591,200 - $709,439 $650,320
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$709,440 - $851,329 $780,385
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
$851,330 + Actual Earnings
--------------------------------------------------------- -------------------------
EXHIBIT C
DETAIL ON DETERMINATION OF PAYOUT
Non-Exempt Employees:
Payout is determined as a percentage of eligible gross earnings paid during
fiscal year 2002.
Note: Eligible gross wages may exclude some lump sums.
Exempt/Management Employees:
Payout is determined as a percentage of the Variable Comp Calculation Point based on eligible
gross wages during fiscal year 2002. Exhibit B grid lists the percentage opportunities
assigned to each Variable Comp Calculation Point.**
NOTE: Lump Sum amounts given during the fiscal year will not be
included in Eligible gross wages unless they were given in lieu of
merit increase.
Eligible Earnings:
Base earnings, merit increase pay, lump sum in lieu of a merit increase, shift
differential, bridge differential, and geographic differential.
Production supervisor flat rate overtime payments.
Non-exempt overtime payments.
Non-eligible Earnings:
The following is list of the most common items not included as earnings:
---
Vacation balance lump sum payments at termination
Previous FY variable compensation payment
Sales Commission, SPIFF payment, bonus, etc.
Severance pay
Relocation reimbursements
Exceptions to normal eligibility or ineligibility of earnings must be
approved in advance by the Vice President, Human Resources.
EXHIBIT D
DETERMINATION OF EXTRAORDINARY ITEM
-----------------------------------
If Farmland achieves its performance goals, but experiences a loss year due to extraordinary items, the Board of Directors of
Farmland Industries, Inc. maintains the discretion to authorize, adjust, or deny payout of any portion of the Corporate Variable
Compensation Plan. This also applies to employees who participate in customized business or service unit plans. Employees on sales
incentive plans are not affected by this provision unless specific portions of their plans are tied to corporate performance.
---
GUIDELINES FOR "EXTRAORDINARY" DESIGNATION
The Chief Financial Officer and the Chief Executive Officer must approve the classification of any item as "extraordinary."
Transactions deemed as "extraordinary" include:
o The punitive portion of litigation results in favor of or against Farmland, excluding redemptive payments on normal business
matters where the intent is to substantially restore net income to where it would have been had the incident not occurred.
o The loss generated from the impairment of asset value of a major asset, group of assets, or investments.
o The loss from any new business activity or business unit added subsequent to the approval of the Business Plan, provided
--------------------------------------
that the acquisition was such that it required specific Board of Director approval outside of the business plan.
o Other items as approved.
Specific requests by an operating unit for treatment of an item as "extraordinary" must be approved by the Senior Management
representative before review by the Chief Financial Officer and the Chief Executive Officer.
The Chief Financial Officer and the Chief Executive Officer will determine how individual extra-ordinary items shall affect the final
determination of quarterly and/or annual net income.
|
EXHIBIT 10.30
CONSENT AND AMENDMENT NO. 5 TO
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of December 31, 1997
THIS CONSENT AND AMENDMENT NO. 5 TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT ("Amendment") is made as
of the 28th day of December, 2000 by and among SOUTH CENTRAL POOL SUPPLY, INC., a Delaware corporation (the
"Borrower"), the financial institutions listed on the signature pages hereof (the "Lenders") and LASALLE BANK
NATIONAL ASSOCIATION, in its individual capacity as a Lender and in its capacity as agent ("Agent") under that
certain Third Amended and Restated Credit Agreement dated as of December 31, 1997 by and among the Borrower, the
Lenders and the Agent (as amended, the "Credit Agreement") and each of the Persons identified on the signature
pages hereto as a Loan Party (individually, a "Loan Party" and collectively, the "Loan Parties"). Capitalized
terms used herein and not otherwise defined herein shall have the meaning given to them in the Credit Agreement.
WITNESSETH:
WHEREAS, the Borrower, the Lenders and the Agent are parties to the Credit Agreement;
WHEREAS, Agent and the Required Lenders desire to consent to (i) the acquisition by Borrower of
substantially all of the assets of Pool Rite, Inc., a Florida corporation ("Pool Rite"), and Pool Rite II, Inc.,
a Florida corporation ("Pool Rite II"), in accordance with the terms of the Asset Purchase Agreement dated
October 26, 2000 (the "Pool Rite Acquisition"), (ii) the conversion of Borrower (the "Conversion") from a
Delaware corporation to a Delaware limited liability company pursuant to Section 266 of the Delaware General
Corporation Law and the renaming of Borrower to SCP Distributors, LLC, and (iii) the merger of SCP Finance Co.
with and into SCP Property Co. (the "Merger"), all on the terms and subject to the conditions set forth herein;
and
WHEREAS, the Borrower, the Lenders and the Agent have agreed to amend the Credit Agreement on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the agreements, provisions and covenants herein
contained, Borrower, Agent, and the Lenders agree as follows:
1. Consent. Subject to the terms and provisions of this Amendment, Agent and Lenders hereby
consent to the following:
a. the Pool Rite Acquisition and Borrower's use of proceeds of Revolving Loans to complete the
same;
b. the Conversion; and
8
c. the Merger, it being understood and agreed that upon consummation of the Merger, the
Subordinated Intercompany Indebtedness will be owned by, and owed to, SCP Property Co.
2. Amendments to Credit Agreement. Subject to the prior satisfaction of the conditions set forth
in Section 3 below, Agent, the Lenders, and Borrower hereby agree to amend the Credit Agreement as follows:
1. Section 1.1 is amended by deleting the definitions of Capital Stock and Restricted Junior Payment and
substituting the following therefor:
"Capital Stock", with respect to any Person, means any capital stock, partnership interests,
limited liability company interests or units or other equity security of such Person,
regardless of class or designation, and all warrants, options, purchase rights, conversion or
exchange rights, voting rights, calls or claims of any character with respect thereto."
"Restricted Junior Payment" means (i) any dividend or other distribution, direct or indirect,
on account of any Capital Stock of the Borrower now or hereafter outstanding, except a dividend
payable solely in shares, interests, units or the like of that class of security or in any
junior class of security to the holders of that class, (ii) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or indirect, of any
Capital Stock of the Borrower or any of its Subsidiaries now or hereafter outstanding, (iii)
any payment or prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, repurchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to any Permitted
Subordinated Indebtedness, (iv) any payment made to redeem, purchase, repurchase or retire, or
to obtain the surrender of, any outstanding warrants, options or other rights to acquire any
Capital Stock of the Borrower or any of its Subsidiaries now or hereafter outstanding, (v) any
payment of a claim for the rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of any Permitted Subordinated Indebtedness or any Capital
Stock of Holdings, Borrower or any of Borrower's Subsidiaries or of a claim for reimbursement,
indemnification or contribution arising out of or related to any such claim for damages or
recission and (vi) any payment of management fees to Holdings, CHS or any of their Affiliates."
2. Section 5.1 is deleted in its entirety and the following is substituted therefor:
"5.1 Organization; Corporate Powers. The Borrower and each of its Subsidiaries (i) is a
corporation, partnership, limited liability company or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation,
formation or organization, (ii) is duly qualified to do business as a foreign corporation,
partnership, limited liability company or other entity and its in good standing under the laws
of each jurisdiction in which failure to be so qualified and in good standing will have a
Material Adverse Effect, (iii) has filed and maintained effective (unless exempt from the
requirements for filing) a current Business Activity Report with the appropriate Governmental
Authority in the States in which it is required to do and (iv) has all requisite corporate,
partnership, limited liability company or other requisite power and authority to own operate
and encumber its property and to conduct its business as presently conducted and as proposed to
be conducted."
3. Sections 5.2(A) and (B) are deleted in their entirety and the following is substituted therefor:
"5.2 Authority.
(A) The Borrower and each of its Subsidiaries have or had, as applicable, the
requisite corporate, partnership, limited liability company or other requisite power and
authority (i) to execute, deliver and perform each of the Transaction Documents to which it is
a party and (ii) to file the Transaction Documents which must be filed by it with any
Governmental Authority.
(B) The execution, delivery, performance and filing, as the case may be, of each
of the Transaction Documents to which the Borrower or any of its Subsidiaries is a party, and
the consummation of the transactions contemplated thereby, have been duly approved by the
respective boards of directors or other governing body and, if necessary, the shareholders,
partners, members or other equity security holders, as applicable, of the Borrower and its
Subsidiaries, and such approvals have not been rescinded. No other corporate, partnership,
limited liability company or other requisite action or proceedings on the part of the Borrower
or its Subsidiaries are necessary to consummate such transactions."
4. Section 5.3 is deleted in its entirety and the following is substituted therefor:
"5.3 No Conflict, Governmental Consents. The execution, delivery and performance of each
of the Loan Documents and other Transaction Documents to which the Borrower or any of its
Subsidiaries is a party do not and will not (i) conflict with the certificate or articles of
incorporation, by-laws, partnership agreement, limited liability company agreement or other
organizational document of the Borrower or any such Subsidiary, (ii) constitute a tortious
interference with any Contractual Obligation of any Person or conflict with, result in a breach
of or constitute (with or without notice or lapse of time or both) a default under any
Requirement of Law (including, without limitation, any Environmental Property Transfer Act) or
Contractual Obligation of the Borrower or any such Subsidiary, or require termination of any
Contractual Obligation, except such interference, breach, default or termination which
individually or in the aggregate would not reasonably be expected to have a Material Adverse
Effect, (iii) with respect to the Loan Documents and, to the best of Borrower's and its
Subsidiaries' knowledge with respect to the other Transaction Documents, result in or require
the creation or imposition of any Lien whatsoever upon any of the property or assets of the
Borrower or any such Subsidiary, other than Liens permitted by the Loan Documents, or (iv)
require any approval of the Borrower's or any such Subsidiary's shareholders, partners, members
or other equity security holders except such as have been obtained. Except as set forth on
Schedule 5.3 to this Agreement, the execution, delivery and performance of each of the
Transaction Documents to which the Borrower or any of its Subsidiaries is a party do not and
will not require any registration with, consent or approval of, or notice to, or other action
to, with or by any Governmental Authority, including under any Environmental Property Transfer
Act, except filings, consents or notices which have been made, obtained or given, or which, if
not made, obtained or given, individually or in the aggregate would not reasonably be expected
to have a Material Adverse Effect."
5. Section 5.8 is deleted in its entirety and the following is substituted therefor:
"5.8 Subsidiaries. Schedule 5.8 to this Agreement (i) contains a description of the
corporate, partnership, limited liability company or other organizational structure of
Holdings, the Borrower, its Subsidiaries and any other Person in which Holdings, the Borrower
or any of its Subsidiaries holds an equity interest; and (ii) accurately sets forth (A) the
correct legal name, the jurisdiction of incorporation, organization or formation and the
jurisdiction in which each of the Borrower and the direct and indirect Subsidiaries of the
Borrower is qualified to transact business as a foreign corporation, partnership, limited
liability company or other entity, (B) the authorized, issued and outstanding shares,
interests, units or the like of each class of Capital Stock of the Borrower and each of its
Subsidiaries and the owners of such shares, interests, units or the like, and (C) a summary of
the direct and indirect partnership, joint venture, or other equity interests, if any, of
Holdings, the Borrower and each Subsidiary of the Borrower in any Person that is not a
Subsidiary. None of the issued and outstanding Capital Stock of the Borrower or any of its
Subsidiaries is subject to any vesting, redemption, or repurchase agreement, and there are no
warrants or options outstanding with respect to such Capital Stock. The outstanding Capital
Stock of the Borrower and each of its Subsidiaries is duly authorized, validly issued, fully
paid and non-assessable and its not margin stock (as defined in Regulation U). The Borrower
has no direct Subsidiaries other than Alliance, SCP International, Inc., SCP Property Co., SCP
Barbados, Inc. and Superior Pool Products, LLC, all of the Capital Stock of which is owned by
the Borrower. Except as described in Schedule 5.8, Alliance has no assets or Indebtedness and
does not conduct any active business. Holdings has no Subsidiaries other than the Borrower and
its Subsidiaries and, upon its creation in accordance with Section 6.3(G), the Finance
Subsidiary, which Finance Subsidiary will merge with and into SCP Property Co."
6. Section 6.2(A) is deleted in its entirety and the following is substituted therefor:
"(A) Corporate Existence, Etc. The Borrower shall, and shall cause each of its Subsidiaries
(other than Alliance) to, at all times maintain its corporate, partnership, limited liability
company or other organizational existence and preserve and keep, or cause to be preserved and
kept, in full force and effect its rights and franchises material to its business.
7. Section 6.3(F)(iv) is amended by adding the phrase "and distributions" after the word "dividends" in the
third line thereof.
8. Section 6.3(N) is deleted in its entirety and the following is substituted therefor:
"(N) Corporate Documents. Neither the Borrower nor any of its Subsidiaries shall amend, modify
or otherwise change any of the terms or provisions in any of their respective organizational
documents, including without limitation, articles or certificates of incorporation, by-laws,
partnership agreement or limited liability agreement (other than the by-laws and, in the case
of by-laws, any of the material terms or provisions thereof) as in effect on the date hereof
or, if later, on the date on which any such document is initially adopted or executed as
permitted herein, in any manner adverse to the interests of the Lenders without the prior
written consent of the Required Lenders (which consent shall not be unreasonably withheld).
9. Section 6.3(Q) is amended by deleting the word "stock" in the fourth line therefor and substituting
"Capital Stock" therefor.
10. The parties acknowledge and agree that SCP Finance Co. constitutes the Finance Subsidiary. From and
after the effectiveness of the Merger, Holdings shall not thereafter create, capitalize (other
than Borrower) or acquire any Subsidiary.
3. Conditions of Effectiveness. This Amendment shall not become effective unless the Agent shall
have received the following on or before December 31, 2000:
11. the written consent of the holders of the Subordinated Intercompany Indebtedness, in form and substance
satisfactory to Agent; and
12. the documents and other items identified in the Closing Checklist, a copy of which is attached hereto as
Exhibit A, all in form and substance reasonably satisfactory to Agent, Lenders and Borrower.
4. Representations and Warranties of the Borrower. The Borrower hereby represents and warrants as
follows:
13. This Amendment and the Credit Agreement as amended hereby, constitute legal, valid and binding
obligations of the Borrower and are enforceable against the Borrower in accordance with their
terms.
14. Upon the effectiveness of this Amendment, the Borrower hereby reaffirms all covenants, representations
and warranties made in the Credit Agreement and the other Loan Documents to the extent the same
are not amended hereby, and agrees that all such covenants, representations and warranties
shall be deemed to have been remade as of the effective date of this Amendment.
15. After giving effect to the consent in Section 1a hereof, no Default or Unmatured Default has occurred
and is continuing or would result from the execution of this amendment or the transactions
contemplated hereby.
16. The execution, delivery and performance of this Amendment (i) has been duly authorized by all necessary
corporate action and (ii) does not conflict with, result in a breach of, or constitute (with or
without notice or lapse of time or both) a default under any Contractual Obligation of
Holdings, Borrower or any of its Subsidiaries.
17. SCP Finance Co. owns no assets other than the Subordinated Intercompany Indebtedness and has no
liabilities or obligations. The principal place of business and chief executive office of SCP
Finance is 2325-B Renaissance Drive, Las Vegas, Nevada 89119.
18. Consummation of the Conversion and Merger do not and will not (i) conflict with the certificate or
articles of incorporation or by-laws of the Borrower or any Subsidiary, (ii) constitute a
tortious interference with any Contractual Obligations of any Person or conflict with, result
in a breach of or constitute (with or without notice or lapse of time or both) a default under
any Requirement of Law (including, without limitation, any Environmental Property Transfer Act)
or Contractual Obligation of the Borrower or any such Subsidiary, or require termination of any
Contractual Obligation, (iii) result in or require the creation or imposition of any Lien
whatsoever upon any of the property or assets of the Borrower or any such Subsidiary, other
than Liens permitted by the Loan Documents, or (iv) require any approval of the Borrower's or
any Subsidiary's shareholders except such as have been obtained. Except for the filing with
the Secretary of State of Delaware of a Certificate of Conversion and Certificate of Formation
in connection with the Conversion and the filing with the Secretary of State of Delaware of
Articles of Merger in connection with the Merger, the Conversion and Merger do not and will not
require any registration with, consent or approval of, or notice to, or other action to, with
or by any Governmental Authority, including under any Environmental Property Transfer Act,
except filings, consents or notices which have been made, obtained or given.
2. Reference to the Effect on the Credit Agreement.
1. Upon the effectiveness of this Amendment, on and after the date hereof, each reference in the Credit
Agreement and other Loan Documents to (i) "this Credit Agreement," "hereunder," "hereof,"
"herein" or words of like import shall mean and be a reference to the Credit Agreement as
amended hereby and (ii) South Central Pool Supply, Inc., as borrower, debtor, assignor or
pledgor, as applicable, shall mean and be a reference to SCP Distributors LLC, a Delaware
limited liability company, it being the express intent and understanding of the parties that
SCP Distributors LLC constitute a continuation of the existence of South Central Pool Supply
Inc. and that the Obligations of South Central Pool Supply, Inc. constitute continuing
Obligations under the Credit Agreement and other Loan Documents.
2. Except as specifically amended above, the Credit Agreement and all other documents, instruments and
agreements executed and/or delivered in connection therewith, shall remain in full force and
effect, and are hereby ratified and confirmed.
3. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right,
power of remedy of the Agent or the Lenders, nor constitute a waiver of any provision of the
Credit Agreement or any other documents, instruments and agreements executed and/or delivered
in connection therewith.
5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF ILLINOIS.
6. Headings. Section headings in this Amendment are included herein for convenience of reference
only and shall not constitute a part of this Amendment for any other purpose.
7. Counterparts. This Amendment may be executed by one or more of the parties to the Amendment on
any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. This Amendment may be executed by facsimile and a facsimile transmission of a signature
to the Agent or the Agent's counsel shall be effective as though an original signature had been so delivered.
8. No Strict Construction. The parties hereto have participated jointly in the negotiation and
drafting of this Amendment and the Credit Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Amendment and the Credit Agreement as hereby amended shall be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any provisions of this Amendment or the Credit Agreement.
9. Reaffirmation. Each of the Loan Parties as debtor, grantor, pledgor, guarantor, assignor, or in
other any other similar capacity in which such Loan Party grants liens or security interests in its property or
otherwise acts as accommodation party or guarantor, as the case may be, hereby (i) ratifies and reaffirms all of
its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is
a party (after giving effect hereto) and (ii) to the extent such Loan Party granted liens on or security
interests in any of its property pursuant to any such Loan Document as security for or otherwise guaranteed the
Borrower's Obligations under or with respect to the Loan Documents, ratifies and reaffirms such guarantee and
grant of security interests and liens and confirms and agrees that such security interests and liens hereafter
secure all of the Obligations as amended hereby. Each of the Loan Parties hereby consents to this Amendment and
acknowledges that each of the Loan Documents remains in full force and effect and is hereby ratified and
reaffirmed. The execution of this Amendment shall not operate as a waiver of any right, power or remedy of the
Agent or Lenders, constitute a waiver of any provision of any of the Loan Documents or serve to effect a novation
of the Obligations.
[remainder of page intentionally left blank; signature pages follow]
9
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.
LASALLE BANK NATIONAL ASSOCIATION, as a Lender and as Agent
By: /S/
Its: ___________________________________
HIBERNIA NATIONAL BANK, as a Lender
By: /S/
Its: ___________________________________
NATIONAL CITY BANK, as a Lender
By: /S/
Its: ___________________________________
BANK ONE, N.A., formerly known as THE FIRST NATIONAL BANK OF
CHICAGO, as a Lender
By: /S/
Its: ___________________________________
AGREED AND ACKNOWLEDGED THIS
28th Day of December, 2000
BORROWER:
SOUTH CENTRAL POOL SUPPLY, INC.
By: /S/
Its: ___________________________________
LOAN PARTIES:
SCP POOL CORPORATION
By: /S/
Its: ___________________________________
10
ALLIANCE PACKAGING, INC.
By: /S/
Its: ___________________________________
SCP INTERNATIONAL, INC.
By: /S/
Its: ___________________________________
SUPERIOR POOL PRODUCTS, LLC
By: /S/
Its: ___________________________________
SCP PROPERTY CO.
By: /S/
Its: ___________________________________
|
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EXHIBIT 10.3
PREVIEW SYSTEMS, INC.
OFFICER RETENTION, SEVERANCE, AND ACCELERATED VESTING AGREEMENT
Name: Jeff Brown Date: March 16, 2001
Preview Systems wishes to provide you with an incentive to continue in the
service of the Company through certain potential transactions and for a
reasonable period of time thereafter. If you wish to receive the Retention Bonus
and Severance Agreement, please sign the bottom of this letter indicating your
acknowledgement and agreement to the terms described in this letter, and return
it to HR no later than 5:00 p.m. on March , 2001.
Retention Bonus Amount:
Lump sum payment equal to three months of your base salary, reduced by
applicable withholding taxes.
Severance Amount:
If you are terminated without cause prior to June 30, 2001, a lump sum
payment equal to six months of your base salary, reduced by applicable
withholding taxes.
If you are terminated without cause on or after June 30, 2001, a lump sum
payment equal to three months of your base salary, reduced by applicable
withholding taxes.
Accelerated Vesting: 50% of unvested options or unvested stock subject to
repurchase
Conditions for Receipt of the Retention Bonus: You will receive the Retention
Bonus if
One of the following circumstances applies to you:
•You accept an offer of employment with an acquiring company, and you continue
in your active full time Preview Systems employment until the closing of the
transaction; or
•You don't receive an offer from an acquiring company that provides for at least
equal base salary and similar responsibilities, and you continue in your active
full time Preview Systems employment until June 30, 2001.
And you meet each of the following conditions:
•You do not apply for employment or engage in discussions regarding future
employment with Digital River, Inc., Intraware Inc., Macrovision Inc., Corporate
Software & Technology Inc., Microsoft Corp., RealNetworks Inc., Intertrust
Technologies Corp., Software Spectrum Inc., Liquid Audio Inc., AOL Time Warner
Inc., Verity Inc., or Virage Inc. prior to the closing date of a transaction
with an acquiring company or June 30, 2001, whichever is applicable to you under
the above conditions; and
•You maintain the confidentiality of "this Retention Bonus offer.
•You sign and return a general release of claims in a form provided by Preview
Systems (a copy of which is attached) within the time frame described on the
release.
Conditions for Receipt of the Severance Amount:
•Your employment with the Company is terminated by the Company without cause,
other than on account of your commencement of employment with an acquiring
company.
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And you meet each of the following conditions:
•You do not apply for employment or engage in discussions regarding future
employment with Digital River, Inc., Intraware Inc., Macrovision Inc., Corporate
Software & Technology Inc., Microsoft Corp., RealNetworks Inc., Intertrust
Technologies Corp., Software Spectrum Inc., Liquid Audio Inc., AOL Time Warner
Inc., Verity Inc., or Virage Inc. prior to the closing date of a transaction
with an acquiring company or June 30, 2001, whichever is applicable to you under
the above conditions; and
•You maintain the confidentiality of this Severance offer.
•You sign and return a general release of claims in a form provided by Preview
Systems (a copy of which is attached) within the time frame described on the
release.
Condition for Receipt of Accelerated Vesting: Termination of employment for
other than cause.
Preview Systems, Inc.
By:
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Title: President & CEO
ACKNOWLEDGED AND ACCEPTED:
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Date:
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EXHIBIT 10.3
PREVIEW SYSTEMS, INC. OFFICER RETENTION, SEVERANCE, AND ACCELERATED VESTING
AGREEMENT
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Exhibit 10.10
AMENDMENT NO. 9
TO
REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS AMENDMENT NO. 9 TO REAL ESTATE PURCHASE AND SALE AGREEMENT (this
"Amendment") dated as of June 13, 2001, is made by and between Pope Resources, a
Delaware limited partnership, its wholly owned subsidiary Olympic Property Group
LLC, a Washington limited liability company, and its wholly owned subsidiaries
Olympic Real Estate Development LLC, a Washington limited liability company,
Olympic Real Estate Management, Inc., a Washington corporation, and Olympic
Resorts LLC, a Washington limited liability company (collectively "Seller"), HCV
Pacific Partners LLC, a California limited liability company (or its assigns as
permitted herein) ("Buyer"), and Port Ludlow Associates LLC, a Washington
limited liability company (or its assigns as permitted herein) ("Assignee"),
regarding that certain Real Estate Purchase and Sale Agreement dated January 12,
2001, between Buyer and Seller, as amended by Amendment No. 1 dated February 8,
2001, Amendment No. 2 dated February 14, 2001, Amendment No. 3 dated
February 27, 2001, Amendment No. 4 dated March 26, 2001, Amendment No. 5 dated
May 15, 2001, Amendment No. 6 dated May 18, 2001, Amendment No. 7 dated May 25,
2001, and Amendment No. 8 dated June 1, 2001 (as amended, the "Agreement"), for
the purchase and sale of certain property located in Jefferson and Pierce
Counties, Washington, described therein (the "Property").
I. EFFECT OF AMENDMENT. This Amendment amends and modifies the Agreement.
In the event of any conflict between the Agreement and this Amendment, this
Amendment shall control. Except as contained within the Agreement and this
Amendment, there are no other agreements or understandings between Buyer and
Seller relating to the Property. Capitalized terms not otherwise defined herein
shall have the meanings given them under the Agreement.
II. REVIVAL OF AGREEMENT. The Agreement is hereby revived.
III. EXTENSION OF TIME. In Sections XII and XIII of Amendment No. 5 (as
amended) and in Section 16.9 of the Agreement (as amended), the date "June 8,
2001," is hereby replaced in each instance by the date "June 22, 2001." In
Section XIX of Amendment No. 5 (as amended), the date "June 8, 2001," is hereby
replaced by the date "June 22, 2001."
IV. BOND OBLIGATIONS. A new Section 7.10 is hereby added to the Agreement,
providing as follows:
7.10 Bond Obligations. Seller has obtained certain bonds (the "Bonds")
relating to the DNR Lease, the Property, and certain Employees who are licensed
notaries public, for the benefit of certain government agencies. The Bonds are
described on Schedule 7.10. Within thirty (30) days after Closing, Buyer and
Seller shall use best efforts and due diligence to cause the Bonds to be
released to Seller, provided that if any of the Bonds must be replaced by a new
bond obtained by Buyer prior to its release, then Buyer shall be required to
obtain the new bond only if Seller otherwise would be subject to a material
contingent liability under the Bond to be replaced for matters arising after
Closing. In any event, Buyer shall defend, indemnify, and hold Seller harmless
from and against any and all loss, damage, claims, penalties, liability, suits,
costs, and expenses (including, without limitation, reasonable attorneys fees
and costs) suffered or incurred by Seller after Closing arising out of or
related to any act or omission after Closing of Buyer, its agents, contractors,
and employees, bonded against under any of the Bonds.
V. ELIMINATION OF CERTAIN SCHEDULES. References to the following schedules
to the Agreement are hereby deleted: 8.1.1(e)-2, 8.1.1(f), and 16.15.
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VI. BUYER'S CONDITIONS PRECEDENT TO CLOSING SATISFIED OR
WAIVED. Section XI of Amendment No. 5 is amended to provide as follows:
Seller represents and warrants to Buyer that Seller has caused the
termination of the Hotel Management Agreement dated April 3, 1991, between Pope
Resources and CRG Hospitality, Inc., as amended, under the Termination Agreement
and Release dated March 6, 2001, between Pope Resources and Columbia
Hospitality, Inc., and that Columbia Hospitality, Inc. (f/k/a CRG
Hospitality, Inc.), has vacated the Heron Beach Inn.
Buyer is satisfied with the results of its inspection of Seller's Documents
and the Real Property. Buyer approves the Preliminary Commitment and the ESM
Survey, provided that if the inability of Buyer or Seller to cause the removal
or modification of any of the matters described on Schedule 3.1 ("Buyer's Title
and Survey Objections") will have a material and adverse effect on the use or
value of the lot or parcel affected by the objection, or if Seller has failed to
use best efforts and due diligence to resolve Buyer's Title and Survey
Objections to Buyer's satisfaction prior to the Closing Date, then Buyer shall
not be obligated to complete its purchase of the Property. Seller shall use best
efforts and due diligence to resolve Buyer's Title and Survey Objections to
Buyer's satisfaction prior to the Closing Date. Seller's inability to resolve
Buyer's Title and Survey Objections to Buyer's satisfaction prior to the Closing
Date shall not constitute a default of Seller under this Agreement, provided
that Seller used best efforts and due diligence to resolve such objections.
After Closing, Seller covenants to cooperate with Buyer and provide reasonable
assurances to Buyer regarding any of Buyer's Title and Survey Objections not
resolved on or before the Closing Date. The second and third paragraphs of
Section 3.1of the Agreement (regarding the process for resolution of title
issues) are hereby deleted.
All conditions precedent to Buyer's obligation to complete the purchase of
the Property under the Agreement (including without limitation those described
at Sections 3.1, 5.2, 5.6, 5.8, and 5.10 of the Agreement) except those
described at Sections 5.1, 5.3, 5.4, 5.5, 5.7, 5.9, and 5.11 of the Agreement
are hereby declared satisfied or waived by Buyer, provided, however, that if
Seller does not resolve Buyer's Title and Survey Objections to Buyer's
satisfaction prior to the Closing Date, then the Earnest Money shall be returned
to Buyer and the parties shall have no further obligations hereunder except
under those provisions intended to survive the termination of this Agreement.
VII. BAY CLUB. Seller has provided Buyer a copy of the Agreement Regarding
Bay Club dated May 29, 2001, between Olympic Property Group LLC and South Bay
Community Association. Seller represents and warrants to Buyer that Seller has
no current builder, declarant, or developer liabilities or obligations regarding
the Bay Club except as owner of any lot subject to the South Bay Master
Declaration (A.F. No. 325175) as amended.
VIII. CONDITION OF PROPERTY. Section 8.1.1(e) of the Agreement is amended
to provide as follows:
(e) Condition of Property. To Seller's current actual knowledge and except
as set forth on Schedule 8.1.1(e)-1, the Property is free from material defects
that would materially impair the use or value of the Property, ordinary wear and
tear excepted. As used within this section, "material defects" means a defect
resulting in a liability or loss to Buyer of more than One Hundred Thousand
Dollars (US$100,000.00) in each instance and One Million Dollars
(US$1,000,000.00) in the aggregate, which aggregate shall include and be
satisfied by liabilities and losses to Buyer resulting from material defects in
the Property under Section 3.4.3(a) of the Stock Purchase Agreement. The
inclusion of a defect on Schedule 8.1.1(e)-1 does not mean that the defect is
material.
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IX. INDEMNIFICATION LIABILITIES. The first paragraph of Section 11.3of the
Agreement is amended to provide as follows:
Certain of Seller's Indemnification Liabilities shall be limited as
described in this subsection. Seller's Indemnification Liabilities under
Section 11.2.1(i) above (as to breach of any representation or warranty made
herein, and as to breach of any agreement or covenant to be performed by Seller
at or before Closing) shall apply and be enforced only to the extent that the
aggregate liability or loss to Buyer together with the aggregate liability, loss
or cost to Buyer as Purchaser for the breach by Olympic Property Group LLC of
any representation or warranty made in the Stock Purchase Agreement (except
those relating to environmental matters under Section 3.4.7 therein, those
arising under Section 3.6 therein, and those relating to tax liabilities under
Section 3.3.10 therein) exceeds Fifty Thousand Dollars (US$50,000.00) and is
asserted against or incurred by Buyer within two (2) year after the Closing
Date. Seller's Indemnification Liabilities under Sections 11.2.1(iii) and
11.2.1(iv) above shall apply and be enforced only to the extent that the
liability or loss to Buyer is asserted against or incurred by Buyer within four
(4) years after the Closing Date.
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Except as expressly amended by this Amendment, the Agreement is hereby
ratified and confirmed and shall take full force and effect.
BUYER: PORT LUDLOW ASSOCIATES LLC, a Washington limited liability company
By West Coast Northwest Pacific Partners LLC, a Washington limited liability
company, its manager
By:
/s/ RANDALL J. VERRUE
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Print Name: Randall J. Verrue
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Its: President
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Date:
6/13/01
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SELLER:
POPE RESOURCES L.P., a Delaware limited partnership, by POPE MGP, Inc., a
Delaware corporation, its managing general partner
By:
/s/ GREGORY M. MCCARRY
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Print Name: Gregory M. McCarry
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Its: V.P. Real Estate
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Date:
6/13/01
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OLYMPIC PROPERTY GROUP LLC, a Washington limited liability company
By:
/s/ GREGORY M. MCCARRY
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Print Name: Gregory M. McCarry
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Its: C.O.O.
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Date:
6/13/01
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OLYMPIC REAL ESTATE DEVELOPMENT LLC, a Washington limited liability company
By:
/s/ GREGORY M. MCCARRY
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Print Name: Gregory M. McCarry
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Its: C.O.O.
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Date:
6/13/01
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OLYMPIC REAL ESTATE MANAGEMENT, INC., a Washington corporation By: /s/ TOM
GRIFFIN
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Print Name: Tom Griffin
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Its: Vice President
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Date:
6/13/01
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OLYMPIC RESORTS LLC, a Washington limited liability company
By:
/s/ GREGORY M. MCCARRY
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Print Name: Gregory M. McCarry
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Its: Vice President
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Date:
6/13/01
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Exhibit 10.10
AMENDMENT NO. 9 TO REAL ESTATE PURCHASE AND SALE AGREEMENT
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