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EXHIBIT 4.4
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SENIOR SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT
BY AND AMONG
MCE COMPANIES, INC.,
ROCKY MOUNTAIN MEZZANINE FUND II, L.P.
GREAT LAKES CAPITAL INVESTMENTS I, LLC
and
NATIONAL CITY CAPITAL CORPORATION
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Dated as of July 28, 1999
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TABLE OF CONTENTS
Page
ARTICLE 1.........................................................................................................1
1.01. Definitions.......................................................................................1
1.02. Accounting Terms; Financial Statements...........................................................14
1.03. Other Definitional Provisions....................................................................14
ARTICLE 2........................................................................................................14
2.01. Purchase and Sale of Notes.......................................................................15
2.02. Purchase and Sale of Warrants....................................................................15
2.03. Purchase Price Allocation........................................................................15
2.04. Closing..........................................................................................15
2.05. Several Obligations..............................................................................15
ARTICLE 3........................................................................................................16
3.01. Representations and Warranties...................................................................16
3.02. Corporate Proceedings............................................................................16
3.03. No Defaults......................................................................................16
3.04. Legal Opinions...................................................................................16
3.05. Fees, Expenses, etc..............................................................................17
3.06. Material Adverse Change..........................................................................17
3.07. Capitalization, etc..............................................................................17
3.08. Documents........................................................................................17
3.09. Purchase Permitted by Applicable Laws............................................................17
3.10. Consents and Approvals...........................................................................17
3.11. Execution and Delivery of this Agreement.........................................................17
3.12. Registration Rights Agreement....................................................................18
3.13. Stockholder Agreement............................................................................18
3.14. Notes and Warrants...............................................................................18
3.15. SBIC Certificates................................................................................18
3.17. Disbursement Instructions........................................................................18
3.18. [Intentionally Omitted.].........................................................................18
3.20. Officer's Certificate............................................................................18
3.21. Financial Statements.............................................................................18
ARTICLE 4........................................................................................................19
4.01. Representations and Warranties True..............................................................19
4.02. Compliance with This Agreement...................................................................19
4.03. Issuance Permitted by Applicable Laws............................................................19
4.04. Consents and Approvals...........................................................................19
4.05 Execution and Delivery of this Agreement.........................................................19
ARTICLE 5........................................................................................................19
5.01. Existence and Power..............................................................................20
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5.02. Corporate and Governmental Authorization; No Contravention.......................................20
5.03. Binding Effect...................................................................................20
5.04. Financial Information............................................................................20
5.05. Litigation.......................................................................................21
5.06. Ownership of Property............................................................................21
5.07. No Default.......................................................................................21
5.08. No Burdensome Restrictions.......................................................................22
5.09. Subsidiaries; Other Equity Investments...........................................................22
5.10. Investment Company Act...........................................................................22
5.11. Margin Regulations...............................................................................22
5.12. Taxes............................................................................................22
5.13. Brokers..........................................................................................23
5.14. Related Transactions.............................................................................23
5.15. Full Disclosure..................................................................................23
5.16. Representations and Warranties Incorporated from Other Operative
Documents.......................................................................................23
5.17. Private Offering.................................................................................23
5.18. Capitalization...................................................................................24
5.19. Senior Loan Documents............................................................................24
5.20. Operative Documents..............................................................................24
5.21. Small Business Matters...........................................................................24
5.22. Compliance with Environmental Requirements; No Hazardous Materials...............................24
5.23. Compliance with ERISA............................................................................26
ARTICLE 6........................................................................................................26
6.01. Existence; Authorization; No Contravention.......................................................26
6.02. Binding Effect...................................................................................27
6.03. Investment Representation........................................................................27
6.04. Accredited Investor..............................................................................27
ARTICLE 7........................................................................................................27
7.01. Closing Fees.....................................................................................27
7.02. Computation of Interest..........................................................................27
7.03. General Provisions Regarding Payments............................................................27
7.04. Indemnification..................................................................................28
7.05. Registration Rights Agreement....................................................................29
ARTICLE 8........................................................................................................29
8.01. Financial Statements and Other Reports...........................................................30
8.02. Payment of Obligations...........................................................................31
8.03. Insurance........................................................................................32
8.04. Inspection of Property, Books and Records........................................................32
8.05. Notice...........................................................................................32
8.06. Conduct of Business and Maintenance of Licenses..................................................33
8.07. Compliance with Laws.............................................................................33
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8.08. Certificates.....................................................................................33
8.09. Use of Proceeds..................................................................................34
8.10. Further Assurances...............................................................................34
8.11. Board Meetings...................................................................................34
8.12. SBIC Regulatory Provisions.......................................................................34
8.13. Reservation of Shares............................................................................35
8.14. Compliance with Agreements.......................................................................35
8.15. Environmental Provisions.........................................................................35
8.16. Maintain Consolidated Adjusted Net Worth.........................................................36
8.17. Maintain Total Debt to EBITDA Ratio..............................................................36
8.18. Maintain Fixed Charge Coverage Ratio.............................................................37
8.19. Maintain Senior Debt to EBITDA Ratio.............................................................37
8.20. Acquisition and Senior Loans.....................................................................37
ARTICLE 9........................................................................................................38
9.01. Capital Stock....................................................................................38
9.02. Consolidations, Mergers and Sales of Assets......................................................38
9.03. Guarantees.......................................................................................38
9.04. Debt.............................................................................................39
9.05. Purchase of Assets...............................................................................39
9.06. Investments......................................................................................40
9.07. Negative Pledge..................................................................................40
9.08. Security Interest................................................................................41
9.09. Business Purposes................................................................................41
9.10. Extensions of Credit.............................................................................41
9.11. Distributions....................................................................................41
9.12. ERISA............................................................................................41
9.13. Transactions with Affiliates.....................................................................42
9.14. Fiscal Year......................................................................................42
9.15. Amendments or Waivers............................................................................42
9.16. No Inconsistent Agreements; Amendments...........................................................42
9.18. Prepayment of Debts..............................................................................43
ARTICLE 10.......................................................................................................43
10.01. Events of Default................................................................................43
ARTICLE 11.......................................................................................................46
11.01. Certain Definitions..............................................................................46
11.02. General..........................................................................................47
11.03. Limitation on Payment and Remedies...............................................................47
11.04. Subordination upon Certain Events................................................................49
11.05. Payments and Distributions Received..............................................................49
11.06. Subrogation......................................................................................49
11.07. Relative Rights..................................................................................50
11.08. Subordination May Not Be Impaired by the Company.................................................50
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11.09. Payments........................................................................................50
11.10. Subordination Not to Prevent Events of Default..................................................50
11.11. Subordination Not Impaired; Benefit of Subordination............................................50
11.12. Miscellaneous...................................................................................51
ARTICLE 12.......................................................................................................51
ARTICLE 13.......................................................................................................51
13.01. Survival of Agreements, Representations and Warranties..........................................51
13.02. Notices.........................................................................................51
13.03. Successors and Assigns..........................................................................53
13.04. Assignments and Participations..................................................................53
13.05. Amendment and Waiver............................................................................53
13.06. Counterparts....................................................................................53
13.07. Headings; Section References....................................................................53
13.08. Governing Law...................................................................................54
13.09. Jurisdiction....................................................................................54
13.10. Severability....................................................................................54
13.11. Rules of Construction...........................................................................54
13.12. Entire Agreement................................................................................54
13.13. Certain Expenses................................................................................54
13.14. Further Assurances..............................................................................54
13.15. Waiver of Jury Trial............................................................................55
13.16. Required Purchasers.............................................................................55
13.17. Confidentiality.................................................................................55
Schedule 5.06 - Ownership of Property, Liens
Schedule 5.07 - Defaults
Schedule 5.09 - Subsidiaries
Schedule 5.18 - Capitalization
Schedule 5.22 - Environmental Matters
Schedule 9.01 - Outstanding Debt
Exhibit A NCCC Note
Exhibit B GLCI Note
Exhibit C RMMF Note
Exhibit D Form of Warrant
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SENIOR SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT
THIS AGREEMENT, dated as of July 28, 1999, by and among MCE
COMPANIES, INC., a Michigan corporation (the "COMPANY"), Great Lakes Capital
Investments I, LLC, a Delaware limited liability company ("GLCI"), National City
Capital Corporation, a Delaware corporation ("NCCC"), and Rocky Mountain
Mezzanine Fund II, L.P., a Colorado limited partnership ("RMMF") (GLCI, NCCC and
RMMF collectively, with their respective successors and the permitted assignees
and transferees, the "PURCHASERS").
STATEMENT OF PURPOSE
The Company proposes to issue and sell to the Purchasers (a)
its 8% Promissory Notes due July 28, 2004 in the aggregate principal amount of
$4,000,000, dated as of the date hereof, as the same may be amended, modified or
supplemented from time to time (the "NOTES"), and (b) a warrant or warrants to
purchase 13,130 shares of its Common Stock, which Common Stock is without par
value, as the same may be amended, modified or supplemented from time to time
(the "WARRANTS"), in each case, pursuant to the terms and subject to the
conditions of this Agreement, the proceeds of which are to be used by the
Company for the payment of certain indebtedness to facilitate the continued
growth of the Company and for working capital.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
Definitions
1.01. Definitions.
As used in this Agreement the following terms have the meanings indicated:
"1996 Agreement" has the meaning assigned to that term in Section 8.11.
"Accredited Investor" has the meaning assigned to that term under Rule 501
of the rules and regulations promulgated by the Commission under the Securities
Act.
"Acquisition" means all of the transactions contemplated by the Acquisition
Documents to be consummated on or before the Closing Date.
"Acquisition Documents" means the Stock Purchase Agreement, including the
exhibits and schedules thereto, and all agreements, documents and instruments
executed and delivered pursuant thereto or in connection therewith, as any of
the foregoing agreements, documents and instruments may from time to time be
amended, modified or supplemented in accordance with the
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terms thereof and hereof.
"Affiliate" means (i) any Person that, directly or indirectly through
one or more intermediaries, controls the Company (a "Controlling Person") or
(ii) any Person (other than the Company or any of its Subsidiaries) which is
controlled by or is under common control with a Controlling Person. As used
herein, except in the definition of "Investor Affiliate", the term "control" of
a Person means the possession, directly or indirectly, of the power to vote 10%
or more of any class of voting securities of such Person or to direct or cause
the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan.
"Business Day" means any day other than a Saturday, Sunday, public
holiday under the laws of the State of Ohio, or other day on which banking
institutions generally are authorized or obligated to close in Cleveland, Ohio.
"Capital Expenditure" means, without duplication, any payment made
directly or indirectly for the purpose of acquiring or constructing fixed
assets, real property or equipment which in accordance with GAAP would be added
as a debit to the fixed asset account of the Person making such expenditure,
including, without limitation, amounts paid or payable under any conditional
sale or other title retention agreement or under any lease or other periodic
payment arrangement which is of such a nature that payment obligations of the
lessee or obligor thereunder would be required by GAAP to be capitalized and
shown as liabilities on the balance sheet of such lessee or obligor.
"Capital Lease" means for any Person any lease of any property
(whether real, personal or mixed) by such Person as lessee which, in conformity
with GAAP, is, or is required to be accounted for as a capital lease on the
balance sheet of such Person, together with any renewals of such leases (or
entry into new leases) on substantially similar terms.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as amended from
time to time, and regulations promulgated thereunder.
"Change in Control" has the meaning assigned to that term in Section
10.01(l).
"Closing" has the meaning assigned to that term in Section 2.04.
"Closing Date" means July 28, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor
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statute of similar import, and regulations thereunder, in each case as in effect
from time to time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means the Common Stock without par value of the
Company and any other capital stock into which such Common Stock is reclassified
or reconstituted.
"Company" is defined in the preamble to this Agreement.
"Company Account" means the account specified on the signature
pages hereof into which the Loans to the Company shall be made available, or
such other account as the Company shall from time to time specify by notice to
the Purchasers.
"Consolidated" or "Consolidating" shall mean, when used with
reference to any financial term in this Agreement, the aggregate for two or more
Persons of the amounts signified by such term for all such Persons determined on
a consolidated basis in accordance with GAAP. Unless otherwise specified herein,
references to Consolidated financial statements or data of Company includes
consolidation with its Subsidiaries in accordance with GAAP.
"Consolidated Adjusted Net Worth" shall mean as of any date of
determination, stockholders' equity in the Company as of such date, plus, to the
extent not included in stockholders' equity, preferred stock and convertible and
redeemable warrants issued and outstanding as of such date, plus the outstanding
principal amount of the Subordinated Debt as of such date, all as determined in
accordance with GAAP.
"Consolidated EBITDA" shall mean for any period of
determination, Consolidated Net Income for such period, less the aggregate
amounts included in determining Consolidated Net Income for extraordinary gains
during such period, plus the aggregate amounts deducted in determining
Consolidated Net Income in respect of (a) income taxes for such period, (b)
interest expense for such period, (c) depreciation and amortization expense and
other non-cash charges for such period, and (d) extraordinary losses for such
period, in each case determined on a Consolidated basis in accordance with GAAP
plus the EBITDA Adjustment.
"Consolidated Net Income" shall mean, for any period of
determination, the net income (but not loss) of Company and its Consolidated
Subsidiaries for such period determined in accordance with GAAP including any
extraordinary gains during such period; provided, however, for purposes of
determining Consolidated Net Income for any period, if under GAAP any Subsidiary
is treated as a Consolidated Subsidiary for part of such period, such Subsidiary
shall be deemed to be a Consolidated Subsidiary for such entire period.
"Contractual Obligations" means, as to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust
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or other instrument to which such Person is a party or by which it or any of its
property (now or hereafter acquired) is bound.
"Credit Agreement" means the Credit Agreement between the Company and
the Lenders, to be entered into no later than ten days from the date hereof, as
the same may be amended, modified and supplemented from time to time in
accordance with the terms thereof.
"Debt" means, as of any applicable date of determination, all items of
indebtedness, obligation or liability of a Person, whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, joint or
several, that should be classified as liabilities in accordance with GAAP,
including without limitation, any items so classified on a balance sheet and any
reimbursement obligations in respect of letters of credit, obligations in
respect of bankers acceptances, provided, however that for purposes of
calculating the aggregate Debt of such Person and its Subsidiaries (if any), the
direct and indirect and absolute and contingent obligations of such Person
(whether direct or contingent) shall be determined without duplication.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Dollar," "Dollars" and the symbol "$" means lawful money of the
United States of America.
"Domestic Subsidiary" shall mean those Subsidiaries of the Company
incorporated under the laws of the United States or any state thereof and such
other Subsidiaries of the Company that are treated as disregarded entities for
U.S. tax purposes. The term "Domestic Subsidiary" shall not include Densitron
Microwave Limited.
"EBITDA Adjustment" shall mean (i) if the date of determination is
September 30, 1999, $1,000,000; (ii) if the date of determination is December
31, 1999, $700,000; (iii) if the date of determination is March 31, 2000,
$400,000; (iv) if the date of determination is June 30, 2000, $100,000; and (v)
if the date of determination is after June 30, 2000, $0.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and governmental restrictions, whether
now or hereafter in effect, relating to human health, the environment or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Materials or wastes into the environment, including ambient air, surface water,
groundwater or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Materials 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, or any successor statute.
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"ERISA Group" means the Company and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company, are treated as a single
employer under Section 414 of the Code.
"Event of Default" has the meaning assigned to such term in Section
10.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Financing Documents" means this Agreement, the Credit Agreement, the
Senior Notes, the Notes and the Senior Security Documents.
"Fiscal Year" means a fiscal year of the Company, or of the Company
and its Subsidiaries, or of any Subsidiary of the Company, as the case may be.
"Fixed Charge Coverage Ratio" shall mean as of any date of
determination a ratio the numerator of which shall equal Consolidated Net Income
for the four preceding fiscal quarters ending on such date, plus to the extent
deducted in determining Consolidated Net Income, (a) extraordinary losses during
such period, (b) depreciation, amortization and other non-cash charges for such
period, and (c) the EBITDA Adjustment, less the aggregate Capital Expenditures
by Company and its Consolidated Subsidiaries during such period, less dividends
and distributions paid or declared by Company during such period and less, to
the extent added in determining Consolidated Net Income, extraordinary gains
during such period, and the denominator of which shall equal Fixed Charge
Principal Payments.
"Fixed Charge Principal Payments" shall mean (i) if the date of
determination is September 30, 1999 or December 31, 1999, $3,000,000, (ii) if
the date of determination is March 31, 2000, June 30, 2000 or September 30,
2000, $3,500,000 and (iii) if the date of determination is after September 30,
2000, the sum of all principal payments which become due and payable by Company
and its Consolidated Subsidiaries during the four quarter period ending on such
date on indebtedness for borrowed money.
"GAAP" shall have the meaning set forth in Section 1.02.
"Governmental Authority" means any government or political subdivision
or any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or public or
private mediator or arbitrator, in each case whether foreign or domestic.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
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payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hazardous Materials" means (i) any "hazardous substance" as
defined in CERCLA; (ii) asbestos; (iii) polychlorinated biphenyls; (iv)
petroleum, its derivatives, by-products and other hydrocarbons; and (v) any
other toxic, radioactive, caustic or otherwise hazardous substance regulated
under Environmental Laws.
"Hazardous Materials Contamination" means contamination (whether now
existing or hereafter occurring) of the improvements, buildings, facilities,
personalty, soil, groundwater, air or other elements on or of the relevant
property by Hazardous Materials, or any derivatives thereof, or on or of any
other property as a result of Hazardous Materials, or any derivatives thereof,
generated on, emanating from or disposed of in connection with the relevant
property at levels or in amounts that could cause a violation of Environmental
Laws.
"Hedging Transaction" means each interest rate swap transaction, basis
swap transaction, forward rate transaction, commodity swap transaction, equity
transaction, equity index transaction, foreign exchange transaction, cap
transaction, floor transaction (including any option with respect to any of
these transactions and any combination of any of the foregoing) entered into by
the Borrowers from time to time; provided that such transaction is entered into
for risk management purposes and not for speculative purposes.
"Indemnified Party" has the meaning set forth in Section 7.04.
"Inmet" means Inmet Corporation, a Michigan corporation and a wholly
owned subsidiary of the Company, together with its successors.
"Inmet Cap Ex" shall mean Capital Expenditures during 1999 and 2000
incurred for the acquisition of land and the making of building improvements for
the addition to Inmet's plant located in Ann Arbor, Michigan and the
construction of a headquarters building for the Company to the extent not
exceeding $2,500,000 in the aggregate.
"Interest Rate Protection Agreement" means any Hedging Transaction
entered into between Company and any bank or an Affiliate of a bank; provided
that such transaction is entered into for risk management purpose and not for
speculative purposes.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, time deposit or otherwise.
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"Investor Affiliate" means any Person that directly, or indirectly,
through one or more intermediaries, controls an Investor or is controlled by or
is under common control with any such Person. As used in this definition, the
term "control" of a Person means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Investors" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"KDI Plan" has the meaning assigned to that term in Section 9.12.
"Law" means any law (including common law), constitution, statute,
treaty, convention, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.
"Lenders" means Comerica Bank, National City Bank of Michigan/Illinois
and each other Person that becomes a holder of a Senior Note in accordance with
the terms of the Credit Agreement and their respective successors.
"Letters of Credit" means any standby or documentary letters of credit
issued by the Lender at the request of or for the account of the Company,
individually, and/or a Subsidiary (jointly and severally with the Company)
pursuant to Article 3 of the Credit Agreement and those existing letters of
credit issued by the Lender on behalf of the Company or any Subsidiary, as
identified on Schedule 2 of the Credit Agreement.
"Liabilities" has the meaning set forth in Section 7.04.
"Lien" means, any pledge, assignment, hypothecation, mortgage,
security interest, trust receipt, conditional sale or title retaining contract,
sale and leaseback transaction, financing statement or comparable notice or
other filing or recording, Capital Lease, subordination or any claim or right,
or any other type of lien, charge, encumbrance, preferential or priority
arrangement or other claim or right, whether based on common law or statute.
"Loans" means the loans to the Company evidenced by the Notes.
"Material Adverse Effect" means a material adverse effect on (a) the
business or financial condition of the Company and its Subsidiaries taken as a
whole, (b) the ability of the Company to perform its obligations under any of
the Transaction Documents, or (c) the validity or enforceability of any of the
Transaction Documents or the rights or remedies of the Purchasers hereunder or
thereunder.
"Material Plan" means at any time a Plan having unfunded liabilities,
which means the amount (if any) by which (i) the value of all benefit
liabilities under such Plan, determined on a plan termination basis using the
assumptions prescribed by the PBGC for purposes of Section 4044 of
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ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued but unpaid
contributions), all determined as of the then most recent valuation date for
such Plan, but only to the extent that such excess represents a potential
liability of a member of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA.
"Material Subsidiary" means each Domestic Subsidiary of the Company
that has assets having a fair market value of $100,000 or more or that has
annual gross income of $250,000 or more.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA.
"Net Income" means the net income (or loss) of the Company and its
Consolidated Subsidiaries for any period determined in accordance with GAAP but
excluding in any event any extraordinary gains or losses and any taxes on the
excluded gains and any tax deductions or credits on account of any excluded
losses.
"Notes" has the meaning assigned to that term in the recitals of this
Agreement.
"Officers' Certificate" means a certificate executed on behalf of a
Person by its chairman of the board (if an officer), chief executive officer or
president or one of its vice presidents or a senior financial officer or
treasurer.
"Operative Documents" means the Financing Documents, the Acquisition
Documents, the Senior Loan Documents, the Warrants, the Stockholder Agreement,
and the Registration Rights Agreement and all other Transaction Documents, as
the same may be amended, modified, supplemented from time to time in accordance
with the terms thereof and hereof.
"Payment Account" means with respect to the Purchasers, the account
specified on the signature pages hereof into which all payments from the
Company, shall be made, or such other account as the Purchasers shall from time
to time specify by notice to the Company.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan(s)" shall mean all employee pension benefit plans of
Company or its Subsidiaries, as defined in Section 3(2) of ERISA.
"Permitted Acquisitions" shall mean the Acquisition and any
acquisition by the Company or any of its Subsidiaries of assets, businesses or
business interests or shares of stock or other ownership interests of or in any
Person ("target") which operates in the United States in substantially the same
line of business as Company or the Subsidiary which is a party to the
acquisition and which is conducted in accordance with the following
requirements:
(a) not more than five days after the signing of any letter of intent
for such
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proposed acquisition, the Company shall have provided a copy of such letter of
intent to the Purchasers and promptly upon signing the definitive acquisition
documents, the Company shall have provided copies thereof to the Purchasers;
(b) on the date of any such acquisition, all necessary or appropriate
governmental, quasi-governmental, agency, regulatory or similar approvals of
applicable jurisdictions (or the respective agencies, instrumentalities or
political subdivisions, as applicable, of such jurisdictions) and all necessary
or appropriate non-governmental and other third-party approvals which, in each
case, are material to such acquisition have been obtained and are in effect, and
the Company and its Subsidiaries are in full compliance therewith, and all
necessary or appropriate declarations, registrations or other filings with any
court, governmental or regulatory authority, securities exchange or any other
person have been made;
(c) the total cash consideration of each such acquisition conducted while
this Agreement remains in effect as Permitted Acquisitions (but excluding any
acquisition conducted with the specific written approval of the Purchasers, and
not as a Permitted Acquisition hereunder), computed on the basis of total
acquisition consideration paid or incurred, or to be paid or incurred, by the
Company or its Subsidiaries with respect thereto, including all indebtedness
which is assumed or to which such assets, businesses or business or ownership
interests or shares, or any Person so acquired, is subject, shall not exceed
$5,000,000;
(d) within 30 days after any such acquisition has been completed Company
shall deliver to the Purchasers executed copies of all material documents
pertaining to such acquisition, and the Company, its Subsidiaries and any of the
corporate entities involved in such acquisition shall execute or cause to be
executed, and provide or cause to be provided to the Purchasers, such documents
and instruments (including without limitation, the joinder agreement, security
agreements and mortgages required by the Credit Agreement and mortgages of all
real property acquired by the Company or any existing Domestic Subsidiary as a
result of such acquisition, and opinions of counsel, amendments,
acknowledgments, consents and evidence of approvals or filings) as reasonably
requested by the Purchasers, if any;
(e) within 60 days prior to the effective date of the acquisition, the
Company shall deliver to target, (i) a pro forma financial statement for the
target, as of the effective date of the acquisition, (ii) a pro forma financial
statement of the Company and its Consolidated Subsidiaries for the 12 month
period ending on the effective date of the acquisition prepared as if the
acquisition became effective on the first day of such period; and (iii)
financial projections for the three year period commencing on the effective date
of the acquisition, including financial covenant compliance projections; and
(f) both immediately before and after such acquisition, no Potential
Default or Event of Default (whether or not related to such acquisition), has
occurred and is continuing
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and on the date of consummation of such acquisition, the Company shall have
provided to the Purchasers a certificate of a Responsible Officer as to
such effect.
"Permitted Contest" means a contest maintained in good faith by
appropriate proceedings promptly instituted and diligently conducted and with
respect to which such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made; provided that
compliance with the obligation that is the subject of such contest is
effectively stayed during such challenge.
"Permitted Liens" means with respect to any Person:
(a) the Liens granted under or established by the Credit
Agreement or the Loan Documents (as defined in the Credit Agreement) and
described on SCHEDULE 5.06;
(b) Liens for taxes not yet delinquent or which are being
contested in good faith by appropriate proceedings diligently pursued, provided
that provision for the payment of all such taxes has been made on the books of
such Person as may be required by GAAP;
(c) Mechanics', materialmen's, banker's, carriers',
warehousemen's and similar Liens arising in the ordinary course of business and
securing obligations of such Person that are not overdue for a period of more
than 60 days or are being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such contest (i) any
proceedings commenced for the enforcement of such Liens shall have been duly
suspended; and (ii) such provision for the payment of such Liens has been made
on the books of such Person as may be required by GAAP;
(d) Liens arising in connection with worker's compensation,
unemployment insurance, old age pensions and social security benefits and
similar statutory obligations which are not overdue or are being contested in
good faith by appropriate proceedings diligently pursued, provided that in the
case of any such contest (i) any proceedings commenced for the enforcement of
such Liens shall have been duly suspended; and (ii) such provision for the
payment of such Liens has been made on the books of such Person as may be
required by GAAP;
(e)(i) Liens incurred in the ordinary course of business to
secure the performance of statutory obligations arising in connection with
progress payments or advance payments due under contracts with the United States
government or any agency thereof entered into in the ordinary course of business
and (ii) Liens incurred or deposits made in the ordinary course of business to
secure the performance of statutory obligations, bids, leases, fee and expense
arrangements with trustees and fiscal agents and other similar obligations
(exclusive of obligations incurred in connection with the borrowing of money,
any lease-purchase arrangements or the payment of the deferred purchase price of
property), provided that full provision for the payment of all such obligations
set forth in clauses (i) and (ii) has been made on the books of such Person as
may be required by GAAP;
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(f) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real properties,
which do not materially interfere with the business of such Person, including,
without limitation the matters disclosed in the surveys and title policies
relating to the real property mortgaged to the Lenders; and
(g) interests of lessors in leased equipment, including filings
for notification purposes.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust or other organization,
whether or not a legal entity, and any government agency or political
subdivision thereof.
"Plan" means at any time an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code.
"Post-Closing Documents" means the Acquisition Documents, other than
the Stock Purchase Agreement, and the Senior Loan Documents.
"Potential Default" means any event or condition which with notice,
passage of time, or both, would constitute an Event of Default.
"Preferred Stock" means the Company's Series A Preferred Stock, with
$1,000 liquidation value per share.
"Pro Forma Combined Projected Financial Information" means, as to any
acquisition, pro forma combined projected financial information for the Company
and the acquisition candidate, consisting of projected consolidated balance
sheets as at the end of at least the next succeeding two fiscal years of the
Company following the acquisition and projected consolidated statements of
income for each of those years, including sufficient detail to permit
calculation of the amounts and ratios described in Sections 8.16 through 8.19,
inclusive, as projected for those years and accompanied by (i) a statement
setting forth a calculation of the ratios described in Sections 8.16 through
8.19, inclusive, and (ii) a statement in reasonable detail specifying all
material assumptions underlying the projections.
"RCRA" means the Resource Conservation and Recovery Act of 1976 (42
U.S.C. Sections 6901 et seq.) as amended from time to time and the rules and
regulations promulgated thereunder.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, by and among the Company and the
Purchasers, as the same may be amended, modified and supplemented from time to
time in accordance with the terms thereof.
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"Requirements of Law" means as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or governing
documents of such Person, and any Law, right, privilege, qualification, license
or franchise or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable or binding upon such Person or any of its
property (now owned or hereafter acquired) or to which such Person or any of its
property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Company, or any other officer having substantially the same
authority and responsibility; or with respect to compliance with financial
covenants, the chief financial officer or the treasurer of the Company, or any
other officer having substantially the same authority and responsibility.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Company's capital stock (except dividends payable solely in
shares of its capital stock of the same class) or (ii) any payment on account of
the purchase, redemption, retirement or acquisition of (A) any shares of the
Company's capital stock or (B) any option, warrant or other right to acquire
shares of the Company's capital stock.
"Securities" means, collectively, the Notes and the Warrants.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Seller" means Densitron International, plc, a public limited
company registered in England and Wales (company number 1982726).
"Senior Debt" means as of any date of determination all Total
Debt as of such date less all Subordinated Debt as of such date.
"Senior Debt to EBITDA Ratio" shall mean, as of any date of
determination, a ratio, the numerator of which shall equal Senior Debt as of
such date and the denominator of which shall equal Consolidated EBITDA for the
four quarter period ending on such date.
"Senior Loans" means the revolving and term loans made by the
Lenders to the Company pursuant to the Credit Agreement, subject to the terms
hereof.
"Senior Loan Documents" means, collectively, the Credit
Agreement, the Senior Notes and the Senior Security Documents.
"Senior Notes" means the Revolving Credit Note and the Term Note
each dated within five days of the date hereof, issued by the Company and
payable to the order of the Lenders (as those terms are defined in the Credit
Agreement) to be issued by the Company and payable to the order of the Lenders,
as the same may be amended, modified and supplemented from time to time in
accordance with the terms thereof and hereof.
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"Senior Security Documents" means any agreement pursuant to which
the Company or any of its Subsidiaries or Affiliates provides a Lien on its
assets in favor of the Lenders, and all supplementary assignments, security
agreements, pledge agreements, guarantees, acknowledgments or other documents
delivered or to be delivered pursuant to the terms of the Credit Agreement or
any Senior Security Document, including, without limitation, the guarantee
provided to the Lenders by the Subsidiaries, and all amendments, modifications
and supplements made from time to time to any of the foregoing, in accordance
with the terms hereof and thereof.
"State Regulatory Laws" means the Laws of any Governmental
Authority of any state, including "blue sky" laws, for which any consent,
approval or expiration of any waiting period is necessary in connection with the
proposed purchase and sale of Securities contemplated hereby.
"Stock Purchase Agreement" means the Sale and Purchase Agreement,
dated as of June 29, 1999, among the Company, DML Microwave Limited, a private
limited company registered in England and Wales (company number 3719966), and
the Seller.
"Stockholder Agreement" means the Stockholder Agreement, dated as
July 23, 1996, as amended as of the date hereof, among the Company, the
Purchasers, the other parties thereto and any other Person who becomes a party
thereto pursuant to the terms thereof, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"Subordinated Debt" means Debt of the Company or any of its
Subsidiaries that has been subordinated in right of payment and priority to such
Person's indebtedness to the Lenders, all on terms and conditions satisfactory
to the Lenders in the exercise of their sole discretion, including the Debt of
the Company evidenced by the Notes.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Company. Unless otherwise
specified to the contrary herein, Subsidiary or Subsidiaries shall refer to the
Company's Subsidiary or Subsidiaries.
"Total Debt" means as of any date of determination, the sum,
without duplication, of (a) all indebtedness of the Company and its Consolidated
Subsidiaries for borrowed money or for the deferred purchase price of property
or services as of such date (other than trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices)
or which is evidenced by a note, bond, debenture or similar instrument, (b) all
obligations of the Company and its Consolidated Subsidiaries under Capital
Leases as of such date, (c) without duplication, all obligations of the Company
and its Consolidated Subsidiaries in respect of Letters of Credit, acceptances
or similar obligations issued or created for the account of the Company or any
of its Consolidated Subsidiaries as of such date, (d) all liabilities secured by
any lien on any property owned by the Company and its Consolidated Subsidiaries
as of such date even though the Company or its Subsidiaries, as applicable, have
not assumed or otherwise become liable for the payment thereof, and
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(e) without duplication, all guarantee obligations of the Company and its
Consolidated Subsidiaries as of such date. For purposes of determining Total
Debt, the Company's guaranty obligation to Densitron International Limited shall
be disregarded to the extent such obligation is secured by the Densitron Letter
of Credit (as defined in the Credit Agreement on the date that it is entered
into by the parties thereto).
"Total Debt to EBITDA Ratio" shall mean, as of any date of
determination, a ratio, the numerator of which shall equal Total Debt as of such
date and the denominator of which shall equal Consolidated EBITDA for the four
quarter period ending on such date.
"Transaction Documents" means collectively, this Agreement, the
Notes, the Warrants, the Registration Rights Agreement, and the Stockholder
Agreement, and all other agreements, instruments, certificates and documents
executed by the Company with or in favor of or for the benefit of any of the
Purchasers, as the same may be amended, modified, supplemented from time to time
in accordance with the terms thereof and hereof.
"Warrants" has the meaning ascribed to such term in the recitals
of this Agreement.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
1.02. Accounting Terms; Financial Statements. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time ("GAAP"), applied on a
basis consistent (except for changes concurred in by the Company's independent
public accountants) with the most recent audited consolidated financial
statements of the Company and its Subsidiaries delivered to the Purchasers;
provided that, if the Company notifies the Purchasers that the Company wishes to
amend any covenant in Article 8 or any related definition to eliminate the
effect of any change in GAAP on the operation of such covenant (or if the
Purchasers notify the Company that the Purchasers wish to amend Article 8 or any
related definition for such purpose), then the Company's compliance with such
covenant, shall be determined on the basis of GAAP in effect immediately before
the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Company
and the Purchasers.
1.03. Other Definitional Provisions. References in this Agreement to "Articles",
"Sections", "Schedules" or "Exhibits" shall be to Articles, Sections, Schedules
or Exhibits of or to this Agreement unless otherwise specifically provided. Any
of the terms defined in Section 1.01 may, unless the context otherwise requires,
be used in the singular or plural depending on the reference. "Include",
"includes" and "including" shall be deemed to be followed by "without
limitation" whether or not they are in fact followed by such words or words of
like import. "Writing", "written" and comparable terms refer to printing, typing
and other means of reproducing words in a visible form. References to any
agreement or contract are to such agreement or contract as amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.
References to any
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Person include the successors and assigns of such Person. References "from" or
"through" any date mean, unless otherwise specified, "from and including" or
"through and including", respectively.
ARTICLE 2
Purchase and Sale of Notes and Warrants
2.01. Purchase and Sale of Notes. Subject to the terms and conditions herein set
forth, the Company agrees that it will issue to: (a) NCCC, and NCCC agrees that
it will acquire from the Company, on the Closing Date, Notes in the original
principal amount of $2,176,000, with such Notes being substantially in the form
attached hereto as EXHIBIT A, appropriately completed in conformity herewith;
(b) GLCI, and GLCI agrees that it will acquire from the Company, on the Closing
Date, Notes in the original principal amount of $384,000, with such Notes being
substantially in the form attached hereto as EXHIBIT B, appropriately completed
in conformity herewith and (c) RMMF, and RMMF agrees that it will acquire from
the Company, on the Closing Date, Notes in the original principal amount of
$1,440,000, with such Notes being substantially in the form attached hereto as
EXHIBIT C, appropriately completed in conformity herewith. At the Closing, the
Company shall execute and deliver to each of the Purchasers a single Note in
each such principal amount. The obligations of the Company under the Notes shall
be pari passu with the obligations of the Company under the notes issued
pursuant to the 1996 Agreement.
2.02. Purchase and Sale of Warrants. Subject to the terms and conditions herein
set forth, the Company agrees that it will issue to each of the Purchasers, and
each of the Purchasers agrees that it will acquire from the Company, on the
Closing Date, simultaneously with the purchase by the Purchasers of the Notes, a
warrant to purchase the number of shares of Common Stock set forth opposite such
Purchaser's name on the signature page hereof, with each Warrant being
substantially in the form attached hereto as EXHIBIT D, appropriately completed
in conformity herewith. The Warrants shall be duly executed and registered in
the name or names of the Purchasers or one or more Affiliates of the Purchasers
and in such denominations as the Purchasers shall have notified the Company.
2.03. Purchase Price Allocation. Unless agreed to otherwise by the Company and
the Purchasers prior to October 31, 1999, the Company and the Purchasers hereby
agree that for each $1,000 of the $4,000,000 paid by the Purchasers to acquire
the Notes and the Warrants hereunder, $187.50 shall be allocated to the Company
for the purchase of Warrants; consequently, of the aggregate total $4,000,000
purchase price for the Securities, $750,000 shall be allocated to the Warrants.
2.04. Closing. The closing (the "CLOSING") of this Agreement shall be held at
the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, at 10:00 a.m., Cleveland, Ohio Time, on
the Closing Date, or at such other time and place as the Company and the
Purchasers may agree in writing.
2.05. SEVERAL OBLIGATIONS. The failure of any Purchaser to purchase the
Securities to be purchased by it on the Closing Date shall not relieve the other
Purchaser of its obligation to purchase Securities
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on the Closing Date. No Purchaser shall be responsible for the failure of the
other Purchaser to purchase the Securities to be purchased by such other
Purchaser, and no Purchaser shall have any obligation to the other Purchaser for
the failure by such Purchaser to purchase the Securities required to be
purchased by such Purchaser.
ARTICLE 3
Conditions to the Obligation Of the Purchasers to Close
The obligation of each Purchaser to purchase the Securities, to
pay the purchase price therefor and to perform any obligations hereunder shall
be subject to the satisfaction as determined by, or waiver by, that Purchaser of
the following conditions on or before the Closing Date. No Purchaser shall be
obligated to purchase any Security unless the purchase and sale of all the other
Securities occurs simultaneously therewith.
3.01. Representations and Warranties. The representations and warranties of the
Company contained in this Agreement or made by the Company or any Subsidiary in
each other Operative Document shall be true and correct at and as of the Closing
Date as if made at and as of such date.
3.02. Corporate Proceedings. The Purchasers shall have received certificates of
the Secretary of the Company as of the Closing Date as to (i) true copies of the
certificate or articles of incorporation and by-laws (or other constituent
documents) of the Company in effect on such date (which, in the case of
certificates or articles of incorporation or other constituent documents filed
or required to be filed with the Secretary of State or other Governmental
Authority in its jurisdiction of incorporation, shall be certified to be true,
correct and complete by such Secretary of State or other Governmental Authority
not more than 10 days before the Closing Date), which, in each case, shall be in
form and substance reasonably satisfactory to the Purchasers, (ii) true copies
of all corporate action taken by the Company approving and otherwise relating to
this Agreement and the other Operative Documents, and (iii) the incumbency and
signature of the officers of the Company executing this Agreement and the other
Transaction Documents, together with the satisfactory evidence of the incumbency
of such Secretary or Assistant Secretary. The Purchasers shall have received
certificates from the appropriate Secretaries of State or other applicable
Governmental Authorities dated not more than 10 days before the Closing Date
showing the good standing of the Company in its state of incorporation and each
state in which it does business.
3.03. No Defaults. No Event of Default or Potential Default shall have occurred
and be continuing on the Closing Date or after giving effect to the purchases
and transactions required to be made on the Closing Date.
3.04. Legal Opinions. The Purchasers shall have received the opinion, addressed
to the Purchasers dated the Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC, counsel to the
Company and its Subsidiaries, as to such matters as may be requested by the
Purchasers and in form and substance satisfactory to the Purchasers. In
addition, the Purchasers shall have received all opinions of counsel for the
Company and its Subsidiaries required under or in connection with the Credit
Agreement,
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which opinions must be in form and content reasonably acceptable to
the Purchasers and their counsel and permit the Purchasers to rely on the
opinions expressed therein.
3.05. Fees, Expenses, etc. All fees and other compensation required to be paid
to the Purchasers or their counsel pursuant to this Agreement and any other
written agreement on or prior to the Closing Date shall have been paid or
received.
3.06. Material Adverse Change. The Purchasers shall be satisfied in their sole
good faith discretion as to the absence of any material adverse change in any
aspect of the business, operations, properties, prospects or condition
(financial or otherwise) of the Company or any of its Subsidiaries, or any event
or condition which is reasonably likely to result in such a material adverse
change.
3.07. Capitalization, etc. The corporate and capital structure of each of the
Company and its Subsidiaries, the certificates or articles of incorporation and
bylaws (or other constituent documents) of each of them, and the terms,
conditions, amounts and holders of all equity, debt and other indebtedness,
obligations and liabilities of each of them, shall be reasonably satisfactory to
the Purchasers.
3.08. Documents. The Purchasers shall have received true, complete and correct
copies of such documents as they may reasonably request in connection with or
relating to the purchase and sale of the Securities and the transactions
contemplated hereby, all in form and substance satisfactory to the Purchasers,
and the Purchasers shall have received all documents they may reasonably request
relating to the existence of the Company and its Subsidiaries, the corporate
authority for and the validity of the Operative Documents (other than the
Post-Closing Documents), the most current drafts of the Post-Closing Documents,
and any other matters relevant hereto, all in form and substance satisfactory to
the Purchasers in their sole good faith discretion.
3.09. Purchase Permitted by Applicable Laws. The acquisition of and payment for
the Securities to be acquired by the Purchasers hereunder and the consummation
of the transactions contemplated hereby and by the Transaction Documents (i)
shall not be prohibited by any Requirement of Law and (ii) shall not subject any
Purchaser to any penalty or, in its reasonable judgment, other onerous condition
under or pursuant to any Requirement of Law.
3.10. Consents and Approvals. All consents, exemptions, authorizations, or other
actions by, or notices to, or filings with, Governmental Authorities and other
Persons in respect of all Requirements of Law, including without limitation with
respect to those Contractual Obligations of the Company and with respect to
State Regulatory Laws, excluding any state securities laws, necessary or
required in connection with the execution, delivery or performance (including,
without limitation, the payment of interest on the Notes and the issuance of the
Common Stock upon exercise of the Warrants) by the Company or enforcement
against the Company of the Transaction Documents to which they are parties shall
have been obtained and be in full force and effect, and the Purchasers shall
have been furnished with appropriate evidence thereof, and all waiting periods
shall have lapsed without extension or the imposition of any conditions or
restrictions.
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3.11. Execution and Delivery of this Agreement. The Company shall have duly
executed and delivered to the Purchasers this Agreement.
3.12. Registration Rights Agreement. The Company shall have duly executed and
delivered to the Purchasers the Registration Rights Agreement.
3.13. Stockholder Agreement. The Company and the other parties thereto shall
have duly executed and delivered to the Purchasers the second amendment to the
Stockholder Agreement.
3.14. Notes and Warrants. The Company shall have duly executed and delivered to
the Purchasers the Notes in the forms provided for herein and the Warrants in
the form provided herein, all duly executed and registered in such name or names
and in such denominations as the Purchasers shall have requested in accordance
with the terms of the Transaction Documents and the Financing Documents.
3.15. SBIC Certificates. The Company shall have executed and delivered to the
Purchasers forms and information required by the rules and regulations of the
United States Small Business Administration and as reasonably requested by the
Purchasers, including, without limitation, a Size Status Declaration on SBA Form
480, a certificate by the Company that it will not illegally discriminate on SBA
Form 652, a certificate with respect to the intended use of the proceeds and
information necessary for the preparation of a Portfolio Financing Report on SBA
Form 1031.
3.16. [Intentionally Omitted.]
3.17. Disbursement Instructions. The Purchasers shall have received written
instructions from the Company to the Purchasers directing the payment of the
purchase price for the Notes and the Warrants that is to be paid on the Closing
Date.
3.18. [Intentionally Omitted.]
3.19. [Intentionally Omitted.]
3.20. Officer's Certificate. The Purchasers shall have received a certificate
signed by a senior financial officer or treasurer of the Company to the effect
that, both before and immediately after the making of the Loans and the purchase
of the Warrants and the consummation of the Acquisition and the other
transactions contemplated to take place on the Closing Date, (i) no Default
shall have occurred and be continuing and (ii) the representations and
warranties of the Company and the Subsidiaries made in or pursuant to the
Operative Documents are true, correct and complete.
3.21. Financial Statements. The Purchasers shall have received (i) the financial
statements and pro forma balance sheet referred to in Sections 5.04(a), (b) and
(c), (ii) a statement of sources and uses of funds covering all payments
reasonably expected to be made by the Company and the Subsidiaries in connection
with the transactions contemplated by the Operative Documents to be consummated
on or within 10 days after the Closing Date, including an itemized estimate of
all fees, expenses and other closing costs, and (iii) payment instructions with
respect to each wire transfer to
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be made by the Purchasers or the Company on the Closing Date setting forth the
amount of such transfer, the purpose of such transfer, the name and number of
the account to which such transfer is to be made, the name and ABA number of the
bank or other financial institution where such account is located and the name
and telephone number of an individual that can be contacted to confirm receipt
of such transfer.
ARTICLE 4
Conditions to the Obligation of the Company to Close
The obligations of the Company to issue and sell the
Securities and to perform any other obligations hereunder shall be subject to
the satisfaction as determined by, or waiver by, the Company of the following
conditions on or before the Closing Date:
4.01. Representations and Warranties True. The representations and warranties of
the Purchasers contained in Article 6 shall be true and correct at and as of the
Closing Date as if made at and as of such date.
4.02. Compliance with This Agreement. The Purchasers shall have performed and
complied with all of their agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Purchasers on
or before the Closing Date.
4.03. Issuance Permitted by Applicable Laws. The issuance of the Securities to
be issued by the Company hereunder and the consummation of the transactions
contemplated hereby (i) shall not be prohibited by any Requirement of Law, and
(ii) shall not subject the Company to any penalty or, in its reasonable
judgment, other onerous condition under or pursuant to any Requirement of Law.
4.04. Consents and Approvals. All consents, exemptions, authorizations, or other
actions by, or notices to, or filings with, Governmental Authorities and other
Persons in respect of all Requirements of Law necessary or required in
connection with the execution, delivery or performance by the Purchasers or
enforcement against the Purchasers of this Agreement shall have been obtained
and be in full force and effect, and the Company shall have been furnished with
appropriate evidence thereof.
4.05 EXECUTION AND DELIVERY OF THIS AGREEMENT. The Purchasers shall have
executed and delivered to the Company this Agreement.
ARTICLE 5
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers
(including, in the case of any such representation and warranty made or deemed
made before the consummation of the Acquisition,
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at the time such representation and warranty is made or deemed made and
immediately after giving effect to the consummation of the Acquisition) that:
5.01. Existence and Power. Each of the Company and its Subsidiaries is a
corporation duly incorporated, validly existing and in good standing, under the
laws of the jurisdiction of its organization. The Company and its Subsidiaries
are qualified to do business as foreign corporations or other business entities,
as the case may be, in each jurisdiction in which they are required to be so
qualified, except where failure to be qualified would not have a Material
Adverse Effect.
5.02. Corporate and Governmental Authorization; No Contravention. The
execution, delivery and performance by the Company and its Subsidiaries of the
Operative Documents to which each is a party are within the Company's and its
Subsidiaries' corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
governmental body, agency or official (all of which have been made and are in
full force and effect), and do not contravene, or constitute a default under,
any provision of applicable law or regulation or of the articles of
incorporation or bylaws of the Company and its Subsidiaries or of any judgment,
injunction, order or decree or of any material agreement or other material
instrument binding upon the Company and its Subsidiaries or result in the
creation or imposition of any Lien (other than the Permitted Liens) on any asset
of the Company and any of its Subsidiaries.
5.03. Binding Effect. Each of the Operative Documents to which the Company or
any of its Subsidiaries is a party when executed and delivered will constitute a
valid and binding agreement of the Company or that Subsidiary, as the case may
be, and each of the Transaction Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Company and its Subsidiaries that are parties thereto, in each case
enforceable in accordance with its respective terms except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by general
principles of equity. The Company has reserved and will keep available for
issuance upon exercise of the Warrants the total number of Warrant Shares
deliverable upon exercise of all Warrants from time to time outstanding. The
issuance of the Warrant Shares has been duly and validly authorized and, when
issued and sold in accordance with the Warrants, the Warrant Shares will be duly
and validly issued, fully paid and nonassessable and free of preemptive rights.
5.04. Financial Information.
(a) The audited consolidated balance sheet of the Company and its
Subsidiaries as of December 31, 1998, December 31, 1997, and December 31, 1996,
and the related statement of income for the Fiscal Year then ended, copies of
which have been delivered to the Purchasers, fairly present, in conformity with
GAAP the financial position of the Company and its Subsidiaries as of such date
and its results of operations, for such period.
(b) The unaudited consolidated and consolidating balance sheet of the
Company and its Subsidiaries as of May 31, 1999, and the related unaudited
statement of income for the month and the portion
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of the Fiscal Year then ended, copies of which have been delivered to the
Purchasers, fairly present, in conformity with GAAP (subject to (i) the absence
of footnotes and (ii) year-end audit adjustments) applied on a basis consistent
with the financial statements referred to in Section 5.04(a), the financial
position of the Company and its Subsidiaries as of such date and its results of
operations for the month and the five months then ended (subject to normal
year-end adjustments).
(c) The pro forma balance sheet of the Company and its Subsidiaries as of
June 30, 1999, copies of which have been delivered to the Purchasers, fairly
presents in conformity with GAAP applied on a basis consistent with the
financial statements referred to in Section 5.04(a), the consolidated financial
position of the Company and its Subsidiaries as of such date, adjusted to give
effect (as if such events had occurred on such date) to (i) the transactions
contemplated by the Acquisition Documents, (ii) the making of the Loans and the
issuance of the Warrants, (iii) the application of the proceeds therefrom as
contemplated by the Acquisition Documents and the Financing Documents, and (iv)
the payment of all legal, accounting and other fees related thereto to the
extent known at the time of the preparation of such balance sheet. As of the
date of such balance sheet and the date hereof, the Company and its Subsidiaries
had and have no material liabilities, contingent or otherwise, including
liabilities for taxes, long-term leases or forward or long-term commitments,
which are not properly reflected on such balance sheet.
(d) Since December 31, 1998, there has been no material adverse change in
the business, operations, properties, prospects or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, except as
reflected in the financial statements described in Section 5.04(a) and (b).
5.05. Litigation. There is no action, suit or proceeding pending against, or to
the knowledge of the Company, threatened against or affecting, the Company or
any of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official in which there is a reasonable possibility of an adverse
decision which could have a Material Adverse Effect. There is no action, suit or
proceeding pending against, or to the knowledge of the Company threatened
against or affecting, any party to any of the Operative Documents (other than
the Company) before any court or arbitrator or any governmental body, agency or
official which in any manner draws into question the validity of any of the
Operative Documents.
5.06. Ownership of Property. Except as set forth on SCHEDULE 5.06, as reflected
in the financial statements described in Section 5.04(a) or (b), and for items
purchased in the ordinary course of business since the date of such financial
statements, on and as of the Closing Date, the Company owns no property or
assets and other than the common stock of its Subsidiaries, and none of its
properties and assets is subject to any Liens, except Permitted Liens.
5.07. No Default. No Default or Event of Default has occurred and is continuing.
Neither the Company nor any of its Subsidiaries is in default under or with
respect to any contract, agreement, lease or other instrument to which it is a
party or by which its property is bound or affected except for such defaults
that in the aggregate would not have a Material Adverse Effect.
5.08. No Burdensome Restrictions. No contract, lease, agreement or other
instrument to which the Company or any of its Subsidiaries is a party or by
which any of its property is bound or
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affected, no charge, corporate restriction, judgment, decree or order and no
provision of applicable law or governmental regulation materially adversely
affects the business, operations, properties, prospects or condition (financial
or otherwise) of the Company or any of its Subsidiaries.
5.09. Subsidiaries; Other Equity Investments. Except as described on SCHEDULE
5.09, the Company has no Subsidiaries on the date hereof. Neither the Company
nor any of its Subsidiaries is engaged in any joint venture or partnership with
any other Person, except for joint ventures or partnerships of any Subsidiary of
the Company related to the manufacture of products that are in the same line of
business as that Subsidiary so long as that Subsidiary's investment in any such
joint ventures or partnerships is not in excess of $500,000 individually and not
in excess of $1,000,000 in aggregate.
5.10. Investment Company Act. Neither the Company nor any of its Subsidiaries is
an "investment company" as defined in the Investment Company Act of 1940, as
amended. The consummation of the transactions contemplated by the Operative
Documents does not and will not violate any provision of such Act or any rule,
regulation or order issued by the Commission thereunder. Immediately following
the Closing and each purchase of Securities hereunder, after giving effect to
the transactions contemplated by the Transaction Documents, neither the Company
nor any Person controlling, controlled by or under common control with the
Company or the Company will be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. Neither the Company nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, as amended, the Federal Power Act, the Interstate Commerce Act, or
any federal or state statute or regulation limiting its ability to incur
Indebtedness.
5.11. Margin Regulations. None of the proceeds from the Loans have been or will
be used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock, for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any Margin Stock, or for any other
purpose which might cause any of the loans under this Agreement to be considered
a "purpose credit" within the meaning of Regulations G, U or X of the Board of
Governors of the Federal Reserve Board.
5.12. Taxes. The Company's federal tax identification number is ▇▇-▇▇▇▇▇▇▇. All
federal, state and local tax returns, reports and statements required to be
filed by or on behalf of the Company and its Subsidiaries have been filed with
the appropriate governmental agencies in all jurisdictions in which such
returns, reports and statements are required to be filed, and all taxes
(including real property taxes) and other charges shown to be due and payable
have been timely paid prior to the date on which any fine, penalty, interest,
late charge or loss may be added thereto for nonpayment thereof, except to the
extent such taxes are the subject of a Permitted Contest. All state and local
sales and use taxes required to be paid by the Company or any of its
Subsidiaries have been paid, except to the extent such taxes are the subject of
a Permitted Contest. All federal and state returns have been filed by the
Company and its Subsidiaries for all periods for which returns were due with
respect to employee income tax withholding, social security and unemployment
taxes, and the amounts shown thereon to be due and payable have been paid in
full or adequate provisions therefor have been made, except to the extent such
taxes are the subject of a Permitted Contest.
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5.13. Brokers. No broker, finder or other intermediary engaged by the Company or
any of its Subsidiaries has brought about the obtaining, making or closing of
the transactions contemplated by the Operative Documents, and neither the
Company, its Subsidiaries nor the Purchasers has or will have any obligation to
any Person (other than Persons engaged by the Purchasers) in respect of any
finders' or brokerage fees in connection herewith or therewith.
5.14. Related Transactions. A true and complete copy of the Stock Purchase
Agreement has been delivered to the Purchasers. True and complete copies of the
most current drafts of the Acquisition Documents (other than the Stock Purchase
Agreement), have been delivered to the Purchasers. Neither the Company nor any
of its Subsidiaries is in default under the Stock Purchase Agreement.
5.15. Full Disclosure. None of the information (financial or otherwise)
furnished by or on behalf of the Company or its Subsidiaries to the Purchasers
in connection with the consummation of the transactions contemplated by any of
the Operative Documents, when taken as a whole, contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in the light of the
circumstances under which such statements were made. All financial projections
delivered to the Lenders and the Purchasers have been prepared on the basis of
the assumptions stated therein. The most recent projections delivered to the
Purchasers represent the Company's best estimate (as of their date) of the
Company's and its Subsidiaries future financial performance and such assumptions
are believed by the Company to be fair in light of current business conditions.
5.16. Representations and Warranties Incorporated from Other Operative
Documents. Each of the representations and warranties made in the Operative
Documents by the Company or any of its Subsidiaries and, to the knowledge of the
Company, each of the parties thereto is true and correct in all material
respects as of the Closing Date, and such representations and warranties are
hereby incorporated herein by reference with the same effect as though set forth
in their entirety herein, as qualified therein.
5.17. Private Offering. Neither the Company nor any Person acting on its behalf
has offered the Notes, the Warrants, or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any Person other than the Purchasers.
Neither the Company nor any Person acting on its behalf has taken, or will take,
any action which would subject the issuance or sale of the Notes or the Warrants
or Warrant Shares to Section 5 of the Securities Act, other than as provided in
the Warrants or in the Registration Rights Agreement. No form of general
solicitation or general advertising was used by the Company or any of its
representatives in connection with the offer or sale of the Securities. No
registration of the Securities pursuant to the provisions of the Securities Act
or any State Regulatory Law will be required by the offer, sale or issuance of
the Securities pursuant to this Agreement.
5.18. Capitalization. Set forth on SCHEDULE 5.18 is a schedule of the equity
capitalization of the Company as of the Closing Date, after giving effect to the
transactions contemplated to take place on the Closing Date and the issuance of
the Warrant Shares upon exercise of the Warrants,
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specifying each class of interest held and the amount and holder thereof. The
Warrant Shares are equal in value to five percent (5.0%) of the Common Stock (on
a fully diluted basis) as of the Closing Date, subject to adjustment after the
date hereof as provided in Article VI of the Warrants. As of the Closing Date,
all outstanding shares of capital stock of the Company will be duly authorized
and validly issued, fully paid, nonassessable and free and clear of any Lien
created by the Company. Except as described in SCHEDULE 5.18, (a) no other class
of capital stock or other ownership interests of the Company are authorized or
outstanding and (b) the Company has no outstanding rights (either preemptive or
other) or options to subscribe for or purchase from the Company, or any warrants
or other agreements providing for or requiring the issuance by the Company of,
any of its capital stock or any securities convertible into or exchangeable for
its capital stock.
5.19. Senior Loan Documents. The Company has delivered to the Purchasers true,
complete and correct copies of the most current drafts of the Senior Loan
Documents. Such documents (including the schedules and exhibits thereto), once
executed and delivered by the parties thereto, shall be delivered to the
Purchasers and once delivered to the Purchasers shall comprise full and complete
copies of all material agreements between the parties thereto with respect to
the subject matter thereof and all transactions related thereto, and there are
no material agreements or understandings, oral or written, or material side
agreements not contained therein that relate to or modify the substance thereof.
5.20. Operative Documents. The Company has delivered to the Purchasers true,
complete and correct copies of the Operative Documents (other than the
Post-Closing Documents) together with all amendments, modifications and
supplements thereto.
5.21. Small Business Matters. The Company, together with its "affiliates" (as
that term is defined in Title 13, Code of Federal Regulations, ss.121.103), is a
"small business concern" within the meaning of Section 121.301(c)(1), Title 13,
Code of Federal Regulations, and as otherwise required by the applicable
provisions of Part 121 thereof. The information regarding the Company and its
affiliates set forth in the Small Business Administration Form 480, Form 652 and
Part A of Form 1031 delivered at the Closing (or promptly thereafter) is
accurate and complete. Copies of such forms shall have been completed and
executed by the Company and delivered to the Purchasers at the Closing together
with a written statement of the Company regarding their planned use of the
proceeds from the sale of the Notes and the Warrants.
5.22. Compliance with Environmental Requirements; No Hazardous Materials. After
giving effect to the Acquisition and except as provided on SCHEDULE 5.22:
(a) Other than in compliance in all material respects with all applicable
Environmental Laws, no Hazardous Materials have been released into the
environment, or deposited, discharged, placed or disposed of at, on, or under
any properties now or previously owned, leased or operated by the Company or
any of its Subsidiaries. No portion of any such property is being used, or has
been used at any previous time, for the disposal, storage, treatment, processing
or other handling of "hazardous wastes" as defined in RCRA (other than
processing or handling incidental to the generation of such hazardous wastes or
the storage of such wastes for a period of less than 180 days, in each case in
compliance in all material respects with all
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applicable Environmental Laws), nor is any such property affected by any
Hazardous Materials Contamination.
(b) No asbestos or asbestos-containing materials are present on any of the
properties now or previously owned, leased or operated by the Company or any of
its Subsidiaries in a condition that would reasonably be expected to result in a
material liability to the Company or its Subsidiaries.
(c) No polychlorinated biphenyls are located on or in any properties now or
previously owned, leased or operated by the Company or any of its Subsidiaries,
in the form of electrical transformers, fluorescent light fixtures with
ballasts, cooling oils or any other device or form other than any
polychlorinated biphenyls that would not reasonably be expected to result in a
material liability to the Company or its Subsidiaries.
(d) No underground storage tanks are located on any properties now or
previously owned, leased or operated by the Company or any of its Subsidiaries,
or were located on any such property and subsequently removed or filled, other
than any such tanks that would not reasonably be expected to result in a
material liability to the Company or its Subsidiaries.
(e) No notice, notification, demand, request for information, complaint,
citation, summons, investigation, administrative order, consent order and
agreement, litigation or settlement with respect to Hazardous Materials or
Hazardous Materials Contamination (each, an "Environmental Claim") has been
received by the Company, nor to the Company's knowledge, is any such
Environmental Claim proposed, threatened or anticipated with respect to or in
connection with the operation of any properties now or previously owned, leased
or operated by the Company or any of its Subsidiaries. All such properties and
their existing and prior uses comply and at all times have complied in all
material respects with any applicable governmental requirements relating to
Environmental Laws. There is no condition on any of such properties which is in
violation in any material respect of any applicable governmental requirements
relating to Environmental Laws, and neither the Company nor any of its
Subsidiaries has received any communication from or on behalf of any
governmental authority that any such condition exists. None of such properties
nor any property to which the Company and or any of its Subsidiaries has,
directly or indirectly, transported or arranged for the transportation of any
material is listed or, to the Company's knowledge, proposed for listing on the
National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined
in CERCLA) or on any similar federal, state or foreign list of sites requiring
investigation or cleanup, nor, to the knowledge of the Company, is any such
property anticipated or threatened to be placed on any such list.
(f) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any of the Company's
Subsidiaries or any property or facility now or previously owned, leased or
operated by the Company or any of its Subsidiaries which has not been delivered
to the Purchaser at least five days prior to the date hereof.
(g) For purposes of this Section 5.22, the terms "Company" and "Subsidiary"
shall include any business or business entity (including a corporation) which
is, in whole or in part, a predecessor of the Company or any Subsidiary.
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(h) For purposes of this Section 5.22, any representation or warranty made
with respect to properties not presently owned, leased or operated by the
Company or any of its Subsidiaries (other than the representations and
warranties made in the first sentence of clause (e) of this Section 5.22 and in
clause (f) of this Section 5.22) shall be limited to conditions existing,
activities occurring or compliance with governmental requirements during the
period of such ownership, leasing or operation.
5.23. Compliance with ERISA. Each member of the ERISA Group has fulfilled its
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Code with respect to each Plan.
No member of the ERISA Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement, or made 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 under ERISA or the Code, or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
ARTICLE 6
Representations and Warranties of the Purchasers
Each of NCCC, GLCI and RMMF, severally, and not jointly,
represents and warrants that it was not formed for the specific purpose of
acquiring the Securities pursuant to this Agreement. In addition, each Purchaser
hereby severally, and not jointly, represents and warrants with respect to
itself as follows:
6.01. Existence; Authorization; No Contravention. Such Purchaser is an entity
duly organized or formed, as the case may be, validly existing and in good
standing or in full force and effect, as the case may be, under the laws of the
jurisdiction of its organization. The execution, delivery and performance by
such Purchaser of this Agreement and the transactions contemplated hereby: (i)
is within such Purchaser's power and authority and has been duly authorized by
all necessary action of such Purchaser; (ii) does not contravene the terms of
such Purchaser's organizational documents (if any) or any amendment thereof;
(iii) will not violate, conflict with or result in any breach or contravention
of or the creation of any Lien under, any Contractual Obligation of such
Purchaser, or any order or decree directly relating to such Purchaser; and (iv)
will not violate any Requirement of Law or any Contractual Obligation of such
Purchaser.
6.02. Binding Effect. This Agreement has been duly executed and delivered by
such Purchaser, and this Agreement constitutes the legal, valid and binding
obligation of such Purchaser enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
6.03. Investment Representation.
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(a) Such Purchaser represents and warrants to the Company that such
Purchaser is acquiring the Securities for investment, and not with a view to
selling or otherwise distributing the Securities; provided, however, that the
disposition of such Purchaser's property shall at all times be and remain in
such Purchaser's control.
(b) Such Purchaser understands that the Securities have not been registered
under the Securities Act, on the grounds that the offer and sale of the
Securities to the Purchasers are exempt from the registration requirements of
the Securities Act under Section 4(2) thereof as a transaction not involving any
public offering of the Securities or under any State Regulatory Law. Such
Purchaser understands that the Company's reliance on such exemption is
predicated in part on the representations of such Purchaser which are contained
herein.
(c) Such Purchaser understands that such Purchaser must bear the economic
risk of its investment in the Securities for an indefinite period of time
because the Securities have not been registered under the Securities Act and,
therefore, cannot be sold unless they are subsequently registered under the
Securities Act or an exemption from such registration is available.
6.04. ACCREDITED INVESTOR. Such Purchaser represents and warrants to the Company
that it is an Accredited Investor.
ARTICLE 7
Fees, Expenses and Indemnities; General Provisions Relating to Payments
7.01. Closing Fees. On the Closing Date, the Company shall pay to the Purchasers
a fee in an aggregate amount equal to $80,000.
7.02. Computation of Interest. All interest hereunder and under the Notes shall
be calculated on the basis of a 360-day year for the actual number of days
elapsed.
7.03. General Provisions Regarding Payments. All payments (including
prepayments) to be made by the Company under any Transaction Document, including
payments of principal of and premium (if any) and interest on the Notes, fees,
expenses and indemnities, shall be made without set-off or counterclaim and in
immediately available funds. If any payment hereunder becomes due and payable on
a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day and, with respect to payments of principal, the interest
thereon shall be payable at the then applicable rate during such extension. The
Company shall make all payments in immediately available funds to each of the
Purchaser's Payment Account before 2:00 p.m. (Cleveland, Ohio Time) on the date
when due.
7.04. Indemnification. In addition to all other sums due hereunder or provided
for in this Agreement, the Company agrees to indemnify and hold harmless each of
the Purchasers and their affiliates and their respective officers, directors,
agents, employees, subsidiaries, partners and
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controlling persons (each, an "INDEMNIFIED PARTY") to the fullest extent
permitted by law from and against any and all losses, claims, damages, expenses
(including reasonable fees, disbursements and other charges of counsel,
including the reasonable allocation of the compensation, costs and expenses of
in-house counsel, based upon time spent) or other liabilities (collectively,
"LIABILITIES") resulting from or arising out of any breach of any representation
or warranty, covenant or agreement of the Company in this Agreement, the Notes
or the Warrants, including, without limitation, the failure to make payment when
due of amounts owing pursuant to the Notes on the due date thereof (whether at
the scheduled maturity, by acceleration or otherwise) or any legal,
administrative or other actions (including actions brought by the Purchasers or
the Company or any equity holders of the Company or derivative actions brought
by any Person claiming through or in the Company's name), proceedings or
investigations (whether formal or informal), or written threats thereof, based
upon, relating to or arising out of the Transaction Documents, the transactions
contemplated thereby, or Indemnified Party's role therein or in the transactions
contemplated thereby; provided, however, that the Company shall not be liable
under this Section 7.04 to an Indemnified Party: (a) for any amount paid in
settlement of claims without the Company's consent (which consent shall not be
unreasonably withheld), (b) to the extent that it is finally judicially
determined that such Liabilities resulted from the willful misconduct or gross
negligence of such Indemnified Party, or (c) to the extent that it is finally
judicially determined that such Liabilities resulted from the material breach by
such Indemnified Party of any representation, warranty, covenant or other
agreement of such Indemnified Party contained in this Agreement; provided,
further, that if and to the extent that such indemnification is unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of such indemnified liability which shall be permissible under
applicable laws. In connection with the obligation of the Company to indemnify
for expenses as set forth above, the Company further agrees, upon presentation
of appropriate invoices containing reasonable detail, to reimburse each
Indemnified Party for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by such
Indemnified Party; provided, however, that if an Indemnified Party is reimbursed
hereunder for any expenses, such reimbursement of expenses shall be refunded to
the extent it is finally judicially determined that the Liabilities in question
resulted primarily from (i) the willful misconduct or gross negligence of such
Indemnified Party or (ii) the material breach by such Indemnified Party of any
representation, warranty, covenant or other agreement of such Indemnified Party
contained in this Agreement.
(b) Notification. Each Indemnified Party under this Section 7.04 will,
promptly after the receipt of notice of the commencement of any action,
investigation, claim, or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the Company under this Section
7.04, notify the Company in writing of the commencement thereof. The omission of
any Indemnified Party so to notify the Company of any such action shall not
relieve the Company from any liability which it may have to such Indemnified
Party (i) other than pursuant to this Section 7.04 or (ii) under this Section
7.04 unless, and only to the extent that, such omission actually prejudices the
Company's substantive rights or defenses. In case any such action, claim or
other proceeding shall be brought against any Indemnified Party and it shall
notify the Company of the commencement thereof, the Company shall be entitled to
assume the defense thereof at its own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment; provided, however, that any
Indemnified Party may, at its own expense, retain separate counsel to
participate
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in such defense. Notwithstanding the foregoing, in any action, claim or
proceeding in which the Company, on the one hand, and an Indemnified Party, on
the other hand, is, or is reasonably likely to become, a party, such Indemnified
Party shall have the right to employ separate counsel at the Company's expense
and to control its own defense of such action, claim or proceeding if, in the
reasonable opinion of counsel to such Indemnified Party, a conflict or potential
conflict exists between the Company, on the one hand, and such Indemnified
Party, on the other hand, that would make such separate representation
advisable. The Company agrees that it will not, without the prior written
consent (which consent shall not unreasonably be withheld) of any Indemnified
Party, settle, compromise or consent to the entry of any judgment in any pending
or threatened claim, action or proceeding relating to the matters contemplated
hereby (if such Indemnified Party is a party thereto or has been actually
threatened to be made a party thereto) unless such settlement, compromise or
consent includes an unconditional release of such Indemnified Party from all
liability arising or that may arise out of such claim, action or proceeding. The
Company shall not be liable for any settlement of any claim, action or
proceeding effected against an Indemnified Party without its written consent,
which consent shall not be unreasonably withheld. The rights accorded to
Indemnified Parties hereunder shall be in addition to any rights that any
Indemnified Party may have at common law, by separate agreement or otherwise.
7.05. Registration Rights Agreement. Notwithstanding anything to the contrary in
Section 7.04, the indemnification and contribution provisions of the
Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
ARTICLE 8
Affirmative Covenants
Until the payment by the Company of all principal of and
interest on the Notes and all other amounts due at the time of payment of such
principal and interest to the Purchasers under this Agreement or the Notes,
including, without limitation, all fees, expenses and amounts due at such time
in respect of indemnity obligations under Article 7, and for so long as any of
the Warrants remain outstanding, the Company hereby covenants and agrees with
the Purchasers as follows:
8.01. Financial Statements and Other Reports. The Company will furnish to the
Purchasers:
(a) as soon as available, but in any event within 90 days after the end of
each fiscal year of the Company a copy of the audited Consolidated and unaudited
Consolidating financial statements of the Company as at the end of such year and
the related audited statements of income, accumulated earnings, and cash flows
for such year, setting forth in each case in comparative form the figures for
the previous year, certified as being fairly stated in all material respects by
one of the "Big Five" certified public accounting firms or by another nationally
recognized certified public accountant reasonably satisfactory to the
Purchasers; such financial statements shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in accordance
with GAAP throughout the periods reflected therein and with prior periods;
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(b) as soon as available, but in any event not later than 30 days after the
end of each month, the unaudited Consolidated and Consolidating financial
statements of the Company as at the end of such month and the related unaudited
statements of income, accumulated earnings and cash flows of the Company for the
portion of the fiscal year through the end of such month, setting forth in each
case in comparative form the figures for the previous year, and certified by a
Responsible Officer as being fairly stated in all material respects. Such
financial statements shall be complete and correct in all material respects and
shall be prepared in reasonable detail and in accordance with GAAP throughout
the periods reflected therein and with prior periods (except as approved by such
officer and disclosed therein), provided however that such financial statements
will not be required to include footnotes and will be subject to year-end
adjustments;
(c) not later than January 31 of each year, financial projections on a
month by month basis for the then current calendar year in form reasonably
acceptable to the Purchasers;
(d) such information as required by the terms and conditions of any Senior
Security Documents;
(e) together with each delivery of financial statements pursuant to (a)
above, a written statement by the independent public accountants giving the
report thereon (i) stating that their audit examination has included a review of
the terms of this Agreement as it relates to accounting matters, (ii) stating
whether, in connection with their audit examination, any Default has come to
their attention, and if such a condition or event has come to their attention,
specifying the nature and period of existence thereof, provided that the failure
to deliver the certificate described in this clause (ii) as to Defaults shall
not be a default if the Company has used its best commercially reasonable
efforts to obtain such a certification, and (iii) stating that based on their
audit examination nothing has come to their attention which causes them to
believe that the information contained in the certificates delivered therewith
pursuant to Section 8.08 is not correct and that the matters set forth in the
compliance certificate delivered therewith pursuant to clause (a) of Section
8.08 for the applicable Fiscal Year are not stated in accordance with the terms
of this Agreement;
(f) promptly upon receipt thereof, copies of all reports submitted to the
Company and any of its Subsidiaries by independent public accountants in
connection with each annual, interim or special audit of the financial
statements of the Company or any of its Subsidiaries made by such accountants,
including the comment letter submitted by such accountants to management in
connection with their annual audit;
(g) promptly upon their becoming available, copies of (i) all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company or its Subsidiaries to all holders of any class of
securities, (ii) all regular and periodic reports and all registration
statements and prospectuses filed by the Company or any of its Subsidiaries with
any securities exchange or with the Commission or any governmental authority
succeeding to any of its functions, and (iii) all press releases and other
statements made available generally by the Company or any of its Subsidiaries to
the public concerning material developments in the business of the Company or
any of its Subsidiaries;
(h) within 30 days after the conclusion of each Fiscal Year, the Company's
and each of its Subsidiaries' annual operating and Capital Expenditure budgets
and cash flow forecast for the following Fiscal Year presented on a monthly
basis, which shall be in a format reasonably consistent with projections,
budgets and
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forecasts theretofore provided to the Purchasers;
(i) promptly after the Company's receipt of the same, a copy of each bona
fide offer to purchase or sell any securities of the Company or any securities
of any of the Company's Subsidiaries for an aggregate consideration greater than
$100,000 or, in the case of securities of the Company, for a consideration per
share less than the Exercise Price then in effect or less than the Fair Market
Value of the Company per share of outstanding Common Stock on a Fully Diluted
Basis (as the foregoing terms are defined in the Warrants), or the material
assets of the Company or the material assets of any of the Company's
Subsidiaries (which has assets having a fair market value of $100,000 or more,
or which has annual gross income of $250,000 or more) with respect to which the
Company's management gives serious consideration; and
(j) promptly, and in form to be reasonably satisfactory to the Purchasers,
such other information as the Purchasers may reasonably request from time to
time.
8.02. Payment of Obligations. The Company shall pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all of its material obligations, excluding taxes, of whatever nature, except
where the amount or validity thereof is subject to a Permitted Contest and
reserves in conformity with GAAP with respect thereto have been provided on the
books of the Company.
8.03. Insurance. The Company shall maintain, and cause the Subsidiaries to
maintain, insurance coverage on their physical assets and against other business
risks in such amounts and of such types as are customarily carried by companies
similar in size and nature, and in the event of acquisition of additional
property, real or personal, or of incurrence of additional risks of any nature,
increase such insurance coverage in such manner and to such extent as prudent
business judgment and present practice would dictate. The Company shall also
furnish to the Purchasers from time to time upon reasonable request the policies
under which such insurance is issued, certificates of insurance and such other
information relating to such insurance as the Purchasers may reasonably request.
The Company shall maintain in effect at all times a keyman life insurance policy
naming the Company as the beneficiary, insuring the life of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ in
an amount not less than $3,000,000 in form and substance, and with an insurer,
satisfactory to the Purchasers.
8.04. Inspection of Property, Books and Records. The Company shall permit, and
cause the Subsidiaries to permit, the Purchasers at the Purchaser's expense and
through their respective authorized attorneys, accountants and representatives,
to examine the Company's and the Subsidiaries' books, accounts, records, ledgers
and assets of every kind and description at all reasonable times upon reasonable
prior oral or written request of a Purchaser, and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants, all at such reasonable times and as often as may
reasonably be desired, provided that following the occurrence and during the
continuance of an Event of Default, such examinations shall be at the Company's
cost and expense. The Company will keep, and will cause each of its Subsidiaries
to keep, proper books of record and account in which full, true and correct
entries shall be made of all material dealings and transactions in relation to
its business and activities.
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8.05. Notice. The Company shall promptly give notice to the Purchasers of:
(a) the occurrence of any Potential Default or Event of Default
of which the Company or any Subsidiary has knowledge;
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any Subsidiary or (ii) litigation,
investigation or proceeding which may exist at any time between the Company
or any Subsidiary and any governmental authority or any other third party,
which in the case of either (i) or (ii), if not cured or if it is
reasonably likely to be adversely determined, as the case may be, would
have a Material Adverse Effect;
(c) the following events, as soon as possible and in any event
within thirty (30) days after the Company knows thereof and to the extent
the same would have a Material Adverse Effect: (i) the occurrence of any
"reportable event" as defined in ERISA with respect to any Pension Plan, or
any withdrawal from or the termination, reorganization or insolvency of any
Multiemployer Plan or (ii) the institution of proceedings or the taking of
any other action by the Pension Benefit Guaranty Corporation or Borrowers
or any Commonly Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from or the terminating, reorganization or insolvency of any
Pension Plan;
(d) any event which is reasonably likely to have a Material
Adverse Effect;
(e) promptly after becoming aware of the taking by the Internal
Revenue Service or any foreign taxing jurisdiction of a written tax
position which could reasonably be expected to have a material adverse
effect on the business or financial condition of the Company and its
Subsidiaries (taken as a whole) (or any such tax position taken by the
Company) setting forth the details of such position and the financial
impact thereof; and
(f) not less than ten (10) days prior to the proposed effective
date thereof, copies of any proposed material amendments, restatements or
other modification to the Acquisition Documents.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action the Company proposes to take
with respect thereto.
8.06. Conduct of Business and Maintenance of Licenses. The Company will
continue, and will cause each of the Subsidiaries to continue,
(a) preserve, renew and keep in full force and effect its
existence.
(b) to take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of
its business.
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8.07. Compliance with Laws. The Company will comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including Environmental Laws and ERISA and the rules and regulations
thereunder), except where the necessity of compliance therewith is the subject
of a Permitted Contest.
8.08. Certificates. The Company shall furnish to the Purchasers concurrently
with the delivery of each of the financial statements required by Section
8.01(a) and (b) (and with respect to (b) for the months of March, June,
September and December) hereof, a statement prepared and certified by the chief
financial officer of the Company (or in such officer's absence, a responsible
senior officer of the Company) (a) setting forth all computations necessary to
show compliance by the Company with the financial covenants set forth in
Sections 8.16, 8.17, 8.18 and 8.19 as of the date of such financial statements,
(b) stating that as of the date thereof, no condition or event which constitutes
an Event of Default hereunder or which with the running of time and/or the
giving of notice would constitute an Event of Default hereunder has occurred and
is continuing, or if any such event or condition has occurred and is continuing
or exists, specifying in detail the nature and period of existence thereof and
any action taken with respect thereto taken or contemplated to be taken by the
Company and (c) stating that the signer has personally reviewed this Agreement
and that such certificate is based on an examination reasonably sufficient to
assure that such certificate is accurate.
8.09. Use of Proceeds. The Company will use the proceeds of the Loans borrowed
on the Closing Date solely to satisfy its existing Debt, for payment of
transaction fees and expenses incurred in connection with the Transaction
Documents and for working capital purposes.
8.10. Further Assurances. The Company will, at its own cost and expense, cause
to be promptly and duly taken, executed, acknowledged and delivered all such
further acts, documents and assurances as may from time to time be necessary or
as the Purchasers may from time to time reasonably request in order to carry out
the intent and purposes of the Transaction Documents and the transactions
contemplated thereby.
8.11. Board Meetings. The Company will hold at least four regular meetings of
the Board of Directors during each calendar year at such times and at such
places (or via telephone conference) as shall be determined by the Board of
Directors from time to time. The Company will notify the Purchasers of all
meetings and actions by written consent of its board of directors at the same
time and in the same manner as notice of any meetings of such board is required
to be given to its directors who do not waive such notice (or, if such action
requires no notice, then (if practicable) 10 days written notice thereof
describing the matters upon which action is to be taken). So long as the
purchasers (or their respective successor or assigns) under the Senior
Subordinated Note and Warrant Purchase Agreement, dated July 23, 1996, as
amended, modified or supplemented from time to time, among the Company, NCCC and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Mezzanine Fund, L.P. (the "1996 Agreement") have the right to
send two representatives selected by them to each such meeting, the Purchasers
shall have no additional rights to send representatives selected by them to such
meetings. If, however, such rights are no longer in full force and effect under
the 1996 Agreement, then the Purchasers shall have the right to send two
representatives selected by them to each such meeting,
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who shall be permitted to attend, at the expense of the Company, such meeting
and any adjournments thereof, provided that in no event shall the holders of the
Securities be entitled to send more than two representatives in the aggregate
(in addition to the number of Directors to which the Purchasers are entitled)
pursuant to the terms of this Agreement, the Warrants or the Stockholder
Agreement.
8.12. SBIC Regulatory Provisions.
(a) The Company hereby acknowledges that each Purchaser has informed it
that such Purchaser is a "small business investment company" under the Small
Business Investment Act of 1958, as amended, and the regulations thereunder,
including Title 13, Code of Federal Regulations, Part 107.
(b) At the same time the Company delivers its annual audited financial
statements under Section 8.01(b) hereof and at any time an SBIC Holder (as
defined below) may reasonably request, the Company shall deliver to such
Purchaser and each other holder of Notes or underlying Common Stock which
informs the Company in writing it is an SBIC (an "SBIC Holder") a written
statement certified by its president or chief financial officer describing in
reasonable detail the use of the proceeds of the financing hereunder by the
Company and its Subsidiaries. In addition to any other rights granted hereunder,
the Company shall grant each SBIC Holder and the United States Small Business
Administration (the "SBA") access to its and its Subsidiaries' records for the
purpose of verifying the use of such proceeds and the Company's status as a
"small concern."
(c) Promptly after the end of each Fiscal Year (but in any event prior to
20 days thereafter), the Company shall deliver to each SBIC Holder, specifying
the full-time equivalent jobs created or retained in connection with the
investment, the impact of the investment on the businesses of the Company in
terms of expanded revenue and taxes and other economic benefits resulting from
the investment (including, but not limited to, technology development or
commercialization, minority business development, urban or rural business
development and expansion of exports).
8.13. Reservation of Shares. The Company shall at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issue or
delivery upon exercise of the Warrants as provided therein, the maximum number
of shares of Common Stock that may be issuable or deliverable upon such
exercise. Such shares of Common Stock shall, when issued and delivered in
accordance with the Warrants, be duly and validly issued and fully paid and non-
assessable. The Company shall issue such Common Stock in accordance with the
provisions of the Warrants and shall otherwise comply with the terms thereof.
8.14. Compliance with Agreements. The Company shall comply, and shall cause each
of its Subsidiaries to comply, in all material respects with each Operative
Document to which it is a party.
8.15. Environmental Provisions.
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(a) The Company shall comply, and cause its Subsidiaries to comply, in all
material respects with all applicable Environmental Laws, except where the
failure to so comply would not have a Material Adverse Effect.
(b) The Company shall provide to the Purchasers, promptly after receipt,
copies of any correspondence, notice, pleading, citation, indictment, complaint,
order, decree, or other document from any source asserting or alleging a
circumstance or condition which requires or may require a financial contribution
by the Company or any Subsidiary or a cleanup, removal, remedial action, or
other response by or on the part of the Company or any Subsidiary under
applicable Environmental Laws or which seeks damages or civil, criminal or
punitive penalties from the Company for an alleged violation of Environmental
Laws.
(c) The Company shall promptly notify the Purchasers in writing as soon as
the Company becomes aware of any condition or circumstance which makes the
environmental warranties contained in this Agreement incomplete or inaccurate in
any material respect as of any date.
(d) In the event of any condition or circumstance that makes any
environmental warranty, representation and/or agreement contained herein
incomplete or inaccurate in any material respect as of any date regarding any
real property owned or operated by the Company or any Subsidiary, the Company
shall, at the reasonable request of the Purchasers, at the Company's sole
expense, retain an environmental professional consultant, reasonably acceptable
to the Purchasers, to conduct an environmental audit regarding the changed
condition and/or circumstance and any environmental concerns arising from that
changed condition and/or circumstance in form and scope recommended by such
consultant in light of the relevant facts and circumstances. A copy of the
environmental consultant's report will be promptly delivered to the Purchasers
and the Company upon completion.
(e) If at any time the Company or any Subsidiary, directly or indirectly
through any professional consultant or other representative, determines to
undertake an environmental audit, assessment or investigation, then the Company
shall promptly provide the Purchasers with written notice of the initiation of
the environmental audit, fully describing the purpose and intended scope of the
environmental audit. Upon receipt, the Company will promptly provide to the
Purchasers copies of all final written findings and conclusions of any such
environmental investigation. Preliminary written findings and conclusions shall
be provided if final reports have not been completed and delivered to the
Purchasers within 60 days following completion of the preliminary findings and
conclusions.
(f) The Company will promptly comply with any governmental requirements
requiring the removal, treatment or disposal of any Hazardous Materials or
Hazardous Materials Contamination and provide evidence satisfactory to the
Purchasers of such compliance, except where such compliance is the subject of a
Permitted Contest."
8.16. Maintain Consolidated Adjusted Net Worth. Maintain as of the end of
each fiscal quarter a Consolidated Adjusted Net Worth of not less than the
following amounts during the periods specified below:
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from the Closing Date through December 30, 1999................................................$17,000,000
from December 31, 1999 through December 30, 2000...............................................$17,000,000
from December 31, 2000 through December 30, 2001...............................................$17,850,000
from December 31, 2001 through December 30, 2002...............................................$19,550,000
from December 31, 2002 through December 30, 2003...............................................$22,100,000
from December 31, 2003 and thereafter..........................................................$25,075,000
8.17. Maintain Total Debt to EBITDA Ratio. Maintain as of the end of each fiscal
quarter a Total Debt to EBITDA Ratio of not more than the following amounts
during the periods specified below:
from the Closing Date through December 30, 1999.................................................4.6 to 1.0
from December 31, 1999 through December 30, 2000................................................4.6 to 1.0
from December 31, 2000 through December 30, 2001...............................................4.31 to 1.0
from December 31, 2001 through December 30, 2002...............................................4.03 to 1.0
from December 31, 2002 through December 30, 2003...............................................4.03 to 1.0
from December 31, 2003 and thereafter..........................................................4.03 to 1.0
8.18. Maintain Fixed Charge Coverage Ratio. Maintain as of the end of each
fiscal quarter of Company a Fixed Charge Coverage Ratio of not less than the
following amounts during the periods specified below:
from the Closing Date through December 30, 1999..................................................89 to 1.0
from December 31, 1999 through December 30, 2000.................................................89 to 1.0
from December 31, 2000 through December 30, 2001.................................................89 to 1.0
from December 31, 2001 through December 30, 2002.................................................89 to 1.0
from December 31, 2002 through December 30, 2003.................................................94 to 1.0
from December 31, 2003 and thereafter............................................................98 to 1.0
8.19. Maintain Senior Debt to EBITDA Ratio. Maintain as of the end of each
fiscal quarter a Senior Debt to EBITDA Ratio of not more than the following
during the periods specified below:
from the Closing Date through December 30, 1999................................................3.74 to 1.0
from December 31, 1999 through December 30, 2000...............................................3.74 to 1.0
from December 31, 2000 through December 30, 2001...............................................3.45 to 1.0
from December 31, 2001 through December 30, 2002...............................................3.16 to 1.0
from December 31, 2002 through December 30, 2003...............................................3.16 to 1.0
from December 31, 2003 and thereafter..........................................................3.16 to 1.0
8.20. Acquisition and Senior Loans. No later than 10 days after the date hereof,
(i) the closing of the Acquisition and the financing contemplated by the Credit
Agreement shall occur and (ii) the Company shall deliver to the Purchasers true
and complete copies of all Acquisition Documents (other than the Stock Purchase
Agreement) and Senior Loan Documents, together with a true and complete copy of
each document that was delivered at such closings; provided, however that such
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documents shall contain no material change from the drafts delivered to the
Purchasers without the consent of the Purchasers, which consent shall not be
unreasonably withheld.
8.21 TAXES. The Company shall pay and discharge, and cause each of its
Subsidiaries to pay and discharge, all taxes and other governmental charges,
before the same shall become overdue, unless and to the extent only that such
payment is the subject of a Permitted Contest.
8.22 ERISA NOTICES. The Company shall promptly notify the Purchasers after the
occurrence thereof in writing of any of the following events:
(a) the termination of a Pension Plan pursuant to Subtitle C of Title IV of
ERISA or otherwise;
(b) the appointment of a trustee by a United States District Court to
administer a Pension Plan;
(c) the commencement by the Pension Benefit Guaranty Corporation, or any
successor thereto of any proceeding to terminate a Pension Plan;
(d) the failure of a Pension Plan to satisfy the minimum funding
requirements for any plan year as established in Section 412 of the
Internal Revenue Code of 1954, as amended or any similar provision
under the Internal Revenue Code of 1986, as amended;
(e) the withdrawal of Company or any Subsidiary from a Pension Plan; or
(f) a reportable event, within the meaning of Title IV of ERISA.
ARTICLE 9
Negative Covenants
Until the payment by the Company of all principal of and
interest on the Notes and all other amounts due at the time of payment of such
principal and interest to the Purchasers under this Agreement or the Notes,
including, without limitation, all fees, expenses and amounts due at such time
in respect of indemnity obligations under Article 7, and for so long as any of
the Warrants remain outstanding, the Company hereby covenants and agrees with
the Purchasers as follows:
9.01. Capital Stock. The Company shall not purchase, acquire, issue or redeem
any of its capital stock or make any material change in its capital structure,
except for redemptions of stock if at the time of such redemption or after
giving effect thereto no Potential Default or Event of Default shall exist and
be continuing. Other than the Preferred Stock currently issued and outstanding,
the Company shall not issue any capital stock that under its articles of
incorporation is entitled to a preference over the Common Stock as to payment of
dividends or distributions.
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9.02. Consolidations, Mergers and Sales of Assets. Except as permitted under
Section 9.05, the Company shall not, and shall not permit any Subsidiary to,
enter into any merger or consolidation or sell, lease, transfer, or dispose of
all, substantially all, or any material part of its assets, except in the
ordinary course of business and except mergers of which the Company is the
surviving entity.
9.03. Guarantees. The Company shall not, and shall not permit any Subsidiary to,
guarantee, endorse, or otherwise become secondarily liable for or upon the
obligations of others, except (a) by endorsement for deposit in the ordinary
course of business, (b) guarantees to the Lenders or the Purchasers, (c)
unsecured Guarantees by the Company of the obligations of its Subsidiaries to
the extent the underlying obligations are permitted under this Agreement, and
(d) the corporate guaranty of the Company relative to the obligations of its
wholly owned Subsidiary, Inmet, under the Bank of ▇▇▇ Arbor credit facility (as
described in SCHEDULE 9.04) provided that in no event shall such obligations
under the Bank of ▇▇▇ Arbor credit facility exceed $2,830,000.
9.04. Debt. The Company shall not, and shall not permit any Subsidiary to,
become or remain obligated for any indebtedness for borrowed money, or for any
indebtedness incurred in connection with the acquisition of any property, real
or personal, tangible or intangible, except:
(a) indebtedness to the Purchasers;
(b) indebtedness to the Lenders under the Credit Agreement in the aggregate
principal amount not to exceed the sum of (i) the product of (A) $25,000,000 of
term Debt minus the sum of all scheduled principal payments (scheduled as of the
date the Credit Agreement is entered into by the parties thereto) multiplied by
(B) 1.30, plus (ii) the product of (A) $12,000,000 of revolving Debt multiplied
by (B) 1.30;
(c) current unsecured trade payables and accrued liabilities arising in the
ordinary course of the Company's or any Subsidiary's business, deferred income
tax and purchase accounting reserves;
(d) purchase money indebtedness for the acquisition of fixed assets in an
amount not to exceed $500,000 in the aggregate during any fiscal year of the
Company (determined on a combined basis for the Company and its Subsidiaries).
(e) existing indebtedness listed in attached Schedule 9.04.
(f) unsecured indebtedness of the Company to its wholly owned Material
Subsidiaries or a wholly owned Material Subsidiary to another wholly owned
Material Subsidiary or a wholly owned Material Subsidiary to the Company.
(g) other unsecured indebtedness not exceeding $100,000 in the aggregate at
any time outstanding.
(h) indebtedness under any Interest Rate Protection Agreements.
(i) unsecured indebtedness of Densitron Microwave Limited or DML Microwave
Limited under
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an overdraft line of credit in an amount not exceeding 500,000 Pounds Sterling
in the aggregate at any time outstanding.
(j) unsecured indebtedness of DML Microwave Limited to MCE Europe, Inc. in
an amount not exceeding 3,000,000 Pounds Sterling incurred to consummate the
Acquisition and until June 30, 2000 unsecured indebtedness of Densitron
Microwave Limited to MCE Europe, Inc. in an amount not to exceed 2,000,000
Pounds Sterling incurred for working capital purposes.
9.05. Purchase of Assets. The Company shall not, and shall not permit any
Subsidiary to, purchase or otherwise acquire or become obligated for the
purchase of all or substantially all of the assets or business interests of any
person, firm or corporation or any shares of stock of any corporation,
trusteeship or association or in any other manner effectuate or attempt to
effectuate an expansion of present business by acquisition, other than Permitted
Acquisitions.
9.06. Investments. The Company shall not, and shall not permit any Subsidiary
to, make or allow to remain outstanding any investment (whether such investment
shall be of the character of investment in shares of stock, evidences of
indebtedness or other securities or otherwise) in, or any loans or advances or
extensions of credit to, any person, firm, corporation or other entity or
association, except:
(a) the Company's investment in its wholly owned Material Subsidiaries;
(b) loans and advances permitted under Section 9.04(f) and 9.04(j) hereof;
(c) investments (other than loans or advances) by a wholly owned Material
Subsidiary in another wholly owned Material Subsidiary or a wholly
owned Material Subsidiary in the Company;
(d) investments of surplus cash in cash equivalents;
(e) loans and advances to management employees made to enable them to
purchase an equity interest in the Company not to exceed $150,000 in
aggregate amount at any time outstanding;
(f) sales on open account or in the ordinary course of business;
(g) other loans, advances and investments not exceeding $500,000 in the
aggregate at any time outstanding;
(h) deposits made in the ordinary course of business in order to obtain
goods and services; and
(i) investments which constitute or are part of a Permitted Acquisition,
including the
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equity investment by MCE Europe, Inc. in DML Microwave Limited in an amount not
exceeding 2,000,000 Pounds Sterling incurred in connection with the Acquisition.
9.07. Negative Pledge. The Company shall not, and shall not permit any
Subsidiary to, affirmatively pledge or mortgage any of their assets, whether now
owned or hereafter acquired, or create, suffer or permit to exist any Lien
thereon, except:
(a) for the indebtedness for borrowed money permitted by Section 9.04(b);
(b) the Permitted Liens;
(c) the Liens described in SCHEDULE 5.06 attached hereto; and
(d) Liens upon fixed assets acquired by Company or a Subsidiary after the
date of this Agreement (including by virtue of a Capital Lease) provided that
(i) any such Lien is created solely for the purpose of securing indebtedness
representing, or incurred to finance, the cost of the item of property subject
thereto; (ii) the principal amount of the indebtedness secured by such Lien is
initially at least 70% and does not exceed 100% of the fair value of the
property at the time it was acquired, (iii) the Lien does not cover any other
property other than such item of property, and (iv) the incurrence of the
indebtedness secured by such Lien is permitted by Section 9.04(d) hereof.
9.08. Security Interest. The Company shall not, and shall not permit any
Subsidiary to, sell, assign, transfer or confer a security interest in any
account, contract, note, trade acceptance or other receivable, except to the
Lenders as permitted in Section 9.07(a).
9.09. Business Purposes. The Company shall not, and shall not permit any
Subsidiary to, materially alter the character of its businesses from that
conducted as of the date of this Agreement.
9.10. Extensions of Credit. The Company shall not, and shall not permit any
Subsidiary to, make loans, advances of credit or extensions of credit to any of
its officers, directors or shareholders or any member of their immediate
families or entity controlled by any of the foregoing or to any other person,
except for sales on open account or in the ordinary course of business and
except for loans and advances permitted pursuant to the provisions of Section
9.06.
9.11. Distributions. The Company shall not, and shall not permit any Subsidiary
to, declare or pay any Restricted Payments (whether by reduction of capital or
otherwise) with respect to any shares of its stock, except for (a) dividends by
Subsidiaries to the Company, (b) dividends paid during any fiscal year of the
Company to the extent not exceeding five percent (5%) of Consolidated Net Income
for such fiscal year if at the time such dividends are declared and paid and
after giving effect thereto, no Event of Default or Potential Default shall
exist and be continuing, and (c) dividends or redemptions with respect to the
Preferred Stock, and purchases or redemptions of the Warrants.
9.12. ERISA. The Company shall not, and shall not permit any Subsidiary to,
enter into,
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maintain, or make contributions to, directly or indirectly, any defined benefit
pension plan that is subject to ERISA except for the KDI/Triangle Corporation
Defined Benefit Plan (the "KDI Plan"). The Company shall not, and shall not
permit any of its Subsidiaries to:
(a) engage in any transaction in connection with which the Company or any
of its Subsidiaries could reasonably be expected to be subject to any material
liability arising from either a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Code;
(b) terminate any Plan in a manner, or take any other action, which could
result in any material liability of any member of the ERISA Group to the PBGC;
(c) fail to make full payment when due of all amounts which, under the
provisions of any Plan, it is required to pay as contributions thereto, or
permit to exist any accumulated funding deficiency, whether or not waived, with
respect to any Plan;
(d) except for the KDI Plan, which had an unfunded past service liability
of $538,475 as of January 1, 1998, permit the present value of all benefit
liabilities under all Plans to exceed the fair market value of the assets of
such Plans; or
(e) fail to make any material payments to any Multiemployer Plan that it
may be required to make under any agreement relating to such Multiemployer Plan
or any law pertaining thereto.
In addition, no member of the ERISA Group shall (i) fail to pay when
due any amount that it shall have become liable to pay under Title IV of ERISA,
(ii) cause or permit to exist any event by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated, or (iii) cause or permit there to occur a complete or partial
withdrawal from, or a default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to one or more Multiemployer Plans which could cause one or
more members of the ERISA Group to incur a current payment obligation.
9.13. Transactions with Affiliates. The Company shall not, and shall not permit
any Subsidiary to, enter into any transaction or series of transactions with any
Affiliate other than on terms and conditions as favorable to the Company or
Subsidiary, as the case may be, as would be obtainable in a comparable
arm's-length transaction with a person other than an Affiliate, except
transactions between the Company and any wholly owned Subsidiary.
9.14. Fiscal Year. The Company shall not change, and shall not permit any of its
Subsidiaries to change, its fiscal year from a fiscal year ending December 31.
9.15. Amendments or Waivers. Without the prior written consent of the
Purchasers, the Company will not, and will not permit any Subsidiary to, agree
to (a) any amendment to or waiver of or in respect of any of the Operative
Documents, excluding the Credit Agreement, or (b) any amendment to or waiver of
or in respect of the certificate of incorporation of the Company.
Notwithstanding the foregoing, the Company shall not, and shall not permit any
Subsidiary to, enter
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into any modification or amendment to the Credit Agreement or Senior Security
Documents to which it is a party (or permit the amendment or modification
thereof) that (i) makes less restrictive the advance rates and formulae
applicable to the Debt thereunder, (ii) relates to the payment of dividends or
other distributions with respect to capital stock, or (iii) adds any new
covenant, prepayment event or event of default prohibiting or limiting, as such,
changes in ownership of capital stock of the Company, the effect of which will
directly prohibit the exercise of the Warrants in whole or in part.
9.16. No Inconsistent Agreements; Amendments. Except with respect to Article 11
of this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries to, enter into any loan or other agreement, or enter into any
amendment or other modification to any currently existing agreement, which by
its terms prevents (a) the Company from paying the principal of or premium, if
any, or interest on the Notes at the times or in the amounts as provided
therein; (b) the Company from paying dividends on the Preferred Stock or
redeeming the Preferred Stock at the times or in the amounts as provided
therein; or (c) the Company or any Subsidiaries from otherwise observing or
performing any of its obligations under the Transaction Documents to which it is
a party.
9.17. CAPITAL EXPENDITURES. Make any Capital Expenditure during any single
fiscal year the aggregate amount of all Capital Expenditures made by Company and
its Subsidiaries during such period would exceed $2,500,000 provided, that
Company and its Subsidiaries may make additional Capital Expenditures in any
annual period commencing January 1 in each case in an amount equal to the excess
of the maximum amount of Capital Expenditures specified above for the
immediately previous annual period over the amount of Capital Expenditures
actually made in such period; and provided, further, in calculating the
limitation for purposes of this Section 9.17, the Inmet Cap Ex shall be
excluded.
9.18. PREPAYMENT OF DEBTS. The Company shall not, and shall not permit any
Subsidiary to, prepay, purchase, redeem or defease any Debt for money borrowed
or any Capital Leases excluding, subject to the terms hereof, any indebtedness
or liabilities of the Company to the Purchasers arising under this Agreement,
the 1996 Agreement or the Credit Agreement.
ARTICLE 10
Defaults
10.01. Events of Default. If any one or more of the following events (each an
"Event of Default") shall occur and be continuing for any reason whatsoever
(whether voluntary or involuntary, by operation of law or otherwise):
(a) the Company shall fail to pay when due any principal of any Note, or
shall fail to pay within two Business Days of the due date thereof any interest
or premium on any Note, or any fees or any other amount payable hereunder;
(b) the Company shall fail to pay when due any principal of any Senior
Note, or shall fail
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to pay when due any interest or premium on any Senior Note, or any fees or any
other amount payable thereunder;
(c) the Company shall fail to observe or perform any covenant in Sections
8.13, 8.16 through 8.20, inclusive, or in Article 9, or shall fail to observe or
perform for 10 days any of the covenants or agreements of the Company set forth
in Section 8.01(a), (b), 8.03, 8.04, 8.05 or 8.08.
(d) the Company shall fail to observe or perform any covenant or agreement
contained in this Agreement or any other Transaction Document to which it is a
party (other than those covered by clause (a), (b) or (c) above) for 30 days
after the earlier of the date written notice of such failure has been given to
the Company by any Purchaser and the date the Company first has knowledge of
such failure;
(e) any Subsidiary shall fail to observe or perform any covenant or
agreement contained in any Operative Agreement to which it is a party for 30
days after the earlier of the date written notice of such failure has been given
to any Subsidiary by any Purchaser and the date the Company first has knowledge
of such failure;
(f) any representation, warranty, certification or statement made by the
Company or any Subsidiary in any Operative Document or in any certificate,
financial statement or other material document delivered pursuant to the
Operative Documents shall prove to have been incorrect in any respect (or in any
material respect if such representation, warranty, certification, or statement
is not by its terms already qualified as to materiality) when made (or deemed
made);
(g) the Company or any of its Subsidiaries shall fail to make any payment
or payments in respect of any Debt (other than the Notes and Senior Notes)
arising in one or more related or unrelated transactions, the amount of such
payment or payments shall be in an aggregate amount exceeding $100,000 and such
failure shall continue beyond any period of grace, if any, specified therein;
(h) any event or condition shall occur which (i) results in the
acceleration of the maturity of (A) Senior Notes, or (B) any Debt (other than
the Notes and the Senior Notes) of the Company or any of its Subsidiaries
arising in one or more related or unrelated transactions, in an aggregate
principal amount exceeding $100,000, or (ii) enables (or, with the giving of
notice or lapse of time or both, would enable) the holder of such Debt (other
than the Senior Notes) or any Person or Persons acting on behalf of such holder
or holders to accelerate the maturity thereof, or (iii) results in a violation
of, or a default under, any provision of the articles of incorporation of the
Company;
(i) (i) the Company or any of its Subsidiaries shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general
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assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or (ii) the Company or any of its Subsidiaries shall
take any corporate action to authorize any of the foregoing;
(j) an involuntary case or other proceeding shall be commenced against the
Company or any of its Subsidiaries seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Company or any of its Subsidiaries under the
federal bankruptcy laws as now or hereafter in effect;
(k) one or more judgments or orders for the payment of money aggregating in
excess of $100,000 shall be rendered against the Company or any of its
Subsidiaries and such judgments or orders shall continue unsatisfied and
unstayed for a period of 30 consecutive days; provided that any amounts that an
insurer has acknowledged an obligation to pay shall not be included in such
aggregate amount; or notice of intent to terminate a Material Plan shall be
filed under Title IV of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate, to impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer any Material Plan;
(l) any person or group of persons (within the meaning of Rule 13d-3
promulgated by the Commission under the Exchange Act), other than the Investors
and Investor Affiliates, shall have acquired beneficial ownership (within the
meaning of such Rule 13d-3) of 45% or more of the Common Stock; or the Investors
and Investor Affiliates shall cease to be the beneficial owner of at least 45%
of the Common Stock (each, a "Change in Control");
(m) the auditor's report or reports on the audited statements delivered
pursuant to Section 8.01 shall include any material qualification (including
with respect to the scope of audit) or exception and shall not have been
replaced within 30 days after the delivery thereof by an auditor's report that
does not include any material qualification (including with respect to the scope
of audit) or exception;
(n) [INTENTIONALLY OMITTED];
(o) the Company shall be prohibited or otherwise materially restrained from
conducting the business theretofore conducted by it by virtue of any
determination, ruling, decision, decree or order of any court or regulatory
authority of competent jurisdiction and such determination, ruling, decision,
decree or order remains unstayed and in effect for any period of 10 days beyond
any period for which any business interruption insurance policy of the Company
shall provide full coverage to the Company of any losses and lost profits; or
(p) any of the Operative Documents shall for any reason fail to
constitute the valid and binding agreement of any party thereto, or any such
party shall so assert in writing; provided that in
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the case of any Operative Document which is not a Transaction Document, such
failure could reasonably be expected to have an adverse effect on the
Purchasers;
then, and in every such event and at any time thereafter during the continuance
of such event, the Purchasers by notice to the Company shall declare the Notes
(together with accrued interest thereon) to be, and the Notes shall thereupon
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Company;
provided that in the case of any of the Events of Default specified in clause
(i) or (j) above with respect to the Company, without any notice to the Company
or any other act by the Purchasers, all of the Notes (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company. The exercise by the Purchasers of one or more of its remedies upon
the occurrence of an Event of Default shall in no way preclude the Purchasers
from exercising other remedies also available to it in law or in equity.
ARTICLE 11
Subordination
The payment of the principal of and premium, if any, and
interest on the Subordinated Indebtedness (as defined below) shall be
subordinate and junior in right of payment to all Senior Indebtedness (as
defined below) to the extent and in the manner provided in this Article 11.
11.01. Certain Definitions. As used in this Article 11, the following terms
shall have the following meanings:
"Junior Securities" means any debt or equity securities
distributed to the holders of the Notes, but only if they are subordinated to at
least the same extent as the Notes to Senior Indebtedness and any securities
issued in exchange for Senior Indebtedness, and any such subordination shall
include provisions relating to amortization and prepayment or, if applicable,
redemption or repurchase to the effect that all payments of principal on the
Senior Indebtedness or any securities issued in exchange for the Senior
Indebtedness are to be made in full prior to any payment of principal under or
redemption or repurchase of such securities distributed to the holders of the
Notes.
"Post Petition Interest" means interest that accrues after the
commencement of a case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Company or any of its Subsidiaries or
Affiliates, whether or not allowed or allowable as a claim in any such
proceeding.
"Senior Default" means a Senior Payment Default or a Senior
Event of Default.
"Senior Event of Default" means any default, other than a
Senior Payment Default, that occurs and is continuing with respect to Senior
Indebtedness that permits the holders of such
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Senior Indebtedness to accelerate the maturity of such Senior Indebtedness.
"Senior Indebtedness" means (i) the principal of and interest
(including Post-Petition Interest) on the Senior Loans, (ii) any and all other
costs, fees, expenses and other amounts payable by the Company under the Credit
Agreement or any of the Senior Security Documents, and (iii) any other
obligations or liabilities of the Company to the Lenders; provided that in no
event shall the aggregate principal amount of loans or other obligations
constituting Senior Indebtedness exceed the amount permitted by Section 9.04(b).
"Senior Payment Default" means any default in the payment of
any Senior Indebtedness that occurs and is continuing beyond any applicable
period of grace.
"Subordinated Indebtedness" means (i) the principal of and
interest (including Post- Petition Interest) on the Notes, (ii) all payments for
the redemption of any Warrant pursuant to Article V of such Warrant or of any
Preferred Stock, and (iii) any other monetary obligations of the Company arising
out of or in connection with this Agreement or the Notes.
11.02. General. Subject to Section 11.03, the Company may make and the holders
of the Notes may receive payment on the Subordinated Indebtedness, including,
without limitation:
(a) payments of interest on account of the Notes on the regularly
scheduled payment dates thereof in accordance with the terms of the Notes; and
(b) payment of the principal of the Notes on the regularly
scheduled payment dates thereof, all in accordance with the terms of the Notes.
11.03. Limitation on Payment and Remedies.
(a) If there shall be a Senior Payment Default, the Company shall
not make any payment (in cash, property, securities or by setoff or otherwise)
of or on account of the principal of or interest on the Notes or as a sinking
fund for the Notes or on account of any other Subordinated Indebtedness or in
respect of any redemption, retirement, purchase or other acquisition of the
Notes until (i) such Senior Payment Default shall have been remedied or waived
or shall have ceased to exist or (ii) the Senior Indebtedness in respect of
which such Senior Payment Default shall have occurred shall have been paid or
provided for in full.
(b) If there shall be a Senior Event of Default and the Lenders
shall have delivered a Blockage Notice (as defined below) to the Company and the
holders of the Notes, the Company shall not make any direct or indirect payment
(in cash, property, securities or by setoff or otherwise) of or on account of
the principal of or interest on the Notes or as a sinking fund for the Notes or
on account of any other Subordinated Indebtedness or in respect of any
redemption, retirement, purchase or other acquisition of the Notes prior to the
earlier to occur of (i) the date all such Senior Events of Default that gave
rise to the Blockage Notice shall have been remedied or waived or shall have
ceased to exist or (ii) the 180th day after the Company's receipt of such
Blockage Notice or such shorter
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period as determined in accordance with paragraph (c) below.
(c) For the purposes of this Article 11, (i) a "BLOCKAGE NOTICE"
is a notice of a Senior Event of Default that in fact has occurred and is
continuing, given to the Company and the holders of the Notes by the Lenders;
provided, however, that (x) no such notice shall be effective as a Blockage
Notice if an effective Blockage Notice shall have been previously given within
the most recent period of 360 consecutive days, and (y) no such notice shall be
effective as a Blockage Notice if such notice relates to a Senior Event of
Default which existed or is continuing on the date a Blockage Notice was
previously delivered within the most recent period of 360 consecutive days (it
being understood and agreed that a Senior Default resulting from a breach of a
covenant in one time period or at one determination date and a Senior Default
resulting from a breach of the same covenant in the next succeeding time period
or at the next succeeding determination date shall be deemed to be the same
Senior Default); and (ii) a "BLOCKAGE PERIOD" is the period during which the
Company is restricted from making payments of or on account of the Subordinated
Indebtedness pursuant to Section 11.03(a) or Section 11.03(b). Notwithstanding
any provision in this Agreement to the contrary, in no event shall the Company
be restricted from making payments of or on account of the Subordinated
Indebtedness pursuant to Section 11.03(b) by reason of giving one or more
Blockage Notices for a period which exceeds, in the aggregate, 180 days in any
360-consecutive-day period. Upon the expiration or termination of any Blockage
Period, the holders of the Notes shall be entitled to be paid all sums due and
owing on the Subordinated Indebtedness.
(d) As long as any Senior Indebtedness remains outstanding, upon
the occurrence of an Event of Default under this Agreement, the holders of the
Subordinated Indebtedness shall not declare or join in any declaration of the
Notes to be due and payable by reason of such Event of Default or otherwise take
any action against the Company prior to the expiration of 10 days (a "REMEDY
STANDSTILL PERIOD") after the written notice of intention to accelerate on
account of the occurrence of such Event of Default (a "REMEDY NOTICE") shall
have been given by the holders of the Subordinated Indebtedness to the Company
and the Lenders or the holders of the Senior Indebtedness unless the holders of
any Senior Indebtedness shall have caused such Senior Indebtedness to become due
prior to its stated maturity or any Event of Default pursuant to Section
10.01(i) or Section 10.01(j) of this Agreement shall have occurred; provided,
however, that such Remedy Standstill Period shall be extended until the earliest
of (x) the date such Event of Default shall have been remedied or waived or
shall have ceased to exist or the date on which the holders of the Senior
Indebtedness have caused such Senior Indebtedness to become due prior to its
stated maturity, (y) the date that such Remedy Standstill Period shall cease to
be effective in accordance with Section 11.03(e), and (z) 120 days from the date
such Remedy Notice was given (if the Remedy Notice was given in respect of an
Event of Default under Section 10.01(a) or Section 10.01(b)) or 180 days from
the date such Remedy Notice was given (if the Remedy Notice was given in respect
of an Event of Default other than under Section 10.01(a) or Section 10.01(b))
if, at the time the Remedy Standstill Period would otherwise expire, (1) there
exists any Senior Payment Default and (2) there exists any Senior Event of
Default and an effective Blockage Notice is given in accordance with, and
subject to the limitations of, this Section 11.03. Upon the expiration or
termination of any Remedy Standstill Period, the holders of the Notes shall be
entitled to exercise any of their rights with respect to the Notes other than
any right to accelerate the maturity date of the Notes based upon the
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occurrence of any Event of Default which has been cured or otherwise remedied
during the Remedy Standstill Period.
(e) Notwithstanding any provision in this Agreement to the
contrary (excluding the subordination provisions of Section 11.03(a)), any
Blockage Period or Remedy Standstill Period shall be inapplicable or cease to be
effective if an Event of Default pursuant to Section 10.01(i) or Section
10.01(j) shall have occurred. In addition (subject to the subordination
provisions of Section 11.03(a)), any Blockage Period or Remedy Standstill Period
shall cease to be effective if at any time during such period: (i) all or
substantially all of the assets of the Company are sold or otherwise disposed of
outside of the ordinary course of business, or (ii) payment or any distribution
of any character, whether in cash, securities or other property of the Company
shall be made to or received by any creditor on any indebtedness for borrowed
money which is on a parity with or subordinate in right of payment to the Notes.
(f) Section 11.03(d) shall not apply to any action taken by any
holder of the Notes in filing lawsuits to prevent the running of any applicable
statute of limitations or other similar restriction on claims, but in each case
only to the extent reasonably necessary to prevent such running.
11.04. Subordination upon Certain Events. Upon the occurrence of any Event of
Default under Section 10.01(i) or Section 10.01(j) or, without duplication, upon
a receivership, insolvency, liquidation or dissolution of the Company or in
connection with an assignment for the benefit of its creditors or marshaling of
its assets or liabilities:
(a) Upon any payment or distribution of assets of the Company to
creditors of the Company, holders of Senior Indebtedness shall be entitled to
receive payment of the Senior Indebtedness in full before the holders of the
Notes shall be entitled to receive any payment in respect of the Subordinated
Indebtedness, except that the holders of the Notes may receive Junior
Securities.
(b) Until all Senior Indebtedness is paid in full, any
distribution to which the holders of the Notes would be entitled but for this
Article 11 shall be made to holders of Senior Indebtedness, as their interests
may appear, except that the holders of the Notes may receive Junior Securities.
(c) For purposes of this Article 11, a distribution or payment may
consist of cash, securities or other property, whether by setoff or otherwise.
(d) Notwithstanding the foregoing provisions of this Section
11.04, if payment or delivery by the Company of Junior Securities to the holders
of the Subordinated Indebtedness is authorized by an order or decree giving
effect, and stating in such order or decree that effect is given, to the
subordination of the Subordinated Indebtedness to the Senior Indebtedness, and
made by a court of competent jurisdiction in a proceeding under any applicable
bankruptcy or reorganization law, payment or delivery by the Company of such
Junior Securities shall be made to the holders of the Subordinated Indebtedness
in accordance with such order or decree.
11.05. Payments and Distributions Received. If the holders of the Subordinated
Indebtedness shall
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have received any payment from or distribution of assets of the Company of any
kind or character in respect of the Subordinated Indebtedness in contravention
of the terms of this Article 11 before all Senior Indebtedness is paid in full,
then and in such event such payment or distribution shall be received and held
in trust for and shall be paid over or delivered to the Lenders, as the holder
of the Senior Indebtedness (or its authorized agent) to the extent necessary to
pay all such Senior Indebtedness in full.
11.06. Subrogation. After all amounts payable under or in respect of Senior
Indebtedness are paid in full, the holders of the Subordinated Indebtedness
shall be subrogated to the rights of holders of Senior Indebtedness to receive
payments or distributions applicable to Senior Indebtedness to the extent that
distributions otherwise payable to the holders of the Subordinated Indebtedness
have been applied to the payment of Senior Indebtedness. A distribution made
under this Section 11.06 to a holder of Senior Indebtedness which otherwise
would have been made to the holders of the Subordinated Indebtedness is not, as
between the Company and the holders of the Subordinated Indebtedness, a payment
by the Company on Senior Indebtedness.
11.07. Relative Rights. This Article defines the relative rights of the holders
of the Subordinated Indebtedness and the holders of Senior Indebtedness. Nothing
in this Article 11 shall: (i) impair, as between the Company and the holders of
the Subordinated Indebtedness, the obligation of the Company, which is absolute
and unconditional, to pay principal of and premium, if any, and interest
(including default interest) on the Notes in accordance with their terms; or
(ii) affect the relative rights of the holders of the Subordinated Indebtedness
and creditors of the Company other than holders of Senior Indebtedness.
11.08. Subordination May Not Be Impaired by the Company. No right of any
holder of any Senior Indebtedness to enforce the subordination of the
Subordinated Indebtedness shall be impaired by any act or any failure to act by
the Company or by the failure of the Company to comply with this Agreement.
11.09. Payments. A payment with respect to principal of or interest on the
Subordinated Indebtedness shall include, without limitation, payment of
principal of and interest on the Notes and any payment on account of mandatory
prepayment or optional prepayment provisions.
11.10. Subordination Not to Prevent Events of Default. The failure to make a
payment on account of principal of or interest on or other amounts constituting
Subordinated Indebtedness by reason of any provision of this Article 11 shall
not be construed as preventing the occurrence of an Event of Default under
Article 10.
11.11. Subordination Not Impaired; Benefit of Subordination. Each holder of
Subordinated Indebtedness agrees and consents that, without notice to or assent
by such holder, and without affecting the liabilities and obligations of the
Company and any holder of Subordinated Indebtedness and the rights and benefits
of the holders of the Senior Indebtedness set forth in this Article 11:
(a) The holders of Senior Indebtedness, and any representative or
representatives acting
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on behalf thereof, may exercise or refrain from exercising any right, remedy or
power granted by or in connection with any agreements relating to the Senior
Indebtedness; and
(b) Any balance or balances of funds with any holder of Senior
Indebtedness at any time outstanding to the credit of the Company or any
collateral under the Senior Loan Documents may from time to time, in whole or in
part, be surrendered or released;
all as the holders of the Senior Indebtedness, and any representative or
representatives acting on behalf thereof, may deem advisable, and all without
impairing, abridging, diminishing, releasing or affecting the subordination of
the Subordinated Indebtedness to the Senior Indebtedness provided for herein.
11.12. Miscellaneous.
(a) To the extent permitted by applicable law, the holders of the
Subordinated Indebtedness and the Company hereby waive notice of acceptance
hereof by the holders of the Senior Indebtedness.
(b) The Company and the holders of the Subordinated Indebtedness
hereby expressly agree that the holders of the Senior Indebtedness may enforce
any and all rights derived herein by suit, either in equity or law, for specific
performance of any agreement contained in this Article 11 or for judgment at law
and any other relief whatsoever appropriate to such action or procedure.
ARTICLE 12
Prepayment
The Company shall prepay outstanding principal (together with
accrued interest) on the Notes in accordance with the "Mandatory Prepayment"
provisions set forth in the Notes. The Company may prepay outstanding principal
of (together with accrued interest on) the Notes only if the Notes are prepaid
on a pro rata basis and in accordance with the "Optional Prepayment" provisions
set forth in the Notes.
ARTICLE 13
Miscellaneous
13.01. Survival of Agreements, Representations and Warranties. All of the
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement, any investigation by or on behalf of
the Purchasers, acceptance of the Securities and payment therefor, exercise of
the Warrants or termination of this Agreement.
13.02. Notices. All notices, demands and other communications provided for or
permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail,
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return receipt requested, telecopier, courier service or personal delivery:
(a) if to the Purchasers:
National City Capital Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Managing Director
Rocky Mountain Mezzanine Fund II, L.P.
c/o Rocky Mountain Capital Partners LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Partner
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
3200 National City Center
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) if to the Company:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
MCE Companies, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇▇▇ ▇. ▇▇▇▇▇▇▇
MCE Companies, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; when delivered
by courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, certified mail, return
receipt requested if mailed first class; and when receipt is acknowledged, if
telecopied.
13.03. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns and permitted transferees
of the parties hereto.
13.04. Assignments and Participations.
(a) The Company may not assign any of its rights or obligations
under this Agreement without the prior written consent of the Purchasers.
(b) Subject to applicable securities laws and the applicable
provisions of the Warrants and the Stockholder Agreement, the Purchasers may, at
any time and from time to time assign or sell or otherwise transfer any of their
interests in any of the Transaction Documents (i) to an Affiliate thereof, (ii)
to any bank, insurance company, investment company, savings and loan
association, mezzanine investment fund or other financial institution or any
affiliate thereof or to any other Person (excluding a competitor of the Company
or its Subsidiaries), with the prior written consent of the Company, which
consent will not be unreasonably withheld.
13.05. Amendment and Waiver.
(a) No failure or delay on the part of the Company or the
Purchasers in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchasers at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company from the terms of any provision of
this Agreement, shall be effective (i) only if it is made or given in writing
and signed by the Company and the Purchasers, and (ii) only in the specific
instance and for the specific purpose for which made or given.
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Except where notice is specifically required by this Agreement, no notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
13.06. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
13.07. Headings; Section References. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. Unless otherwise specified, all references to Sections and
Articles are references to Sections and Articles of this Agreement, and all
references to Exhibits and Schedules are to Exhibits and Schedules to this
Agreement.
13.08. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without reference to principles
of conflicts of law.
13.09. Jurisdiction. Each party to this Agreement hereby irrevocably agrees that
any legal action or proceeding arising out of or relating to this Agreement or
any agreements or transactions contemplated hereby may be brought in the courts
of the State of Ohio located in the City of Cleveland or of the United States
District Court for the Northern District of Ohio and hereby expressly submits to
the personal jurisdiction and venue of such courts for the purposes thereof and
expressly waives any claim of improper venue and any claim that such courts are
an inconvenient forum. Each party hereby irrevocably consents to the service of
process of any of the aforementioned courts in any such suit, action or
proceeding by the mailing (via first class mail) of copies thereof by registered
or certified mail, return receipt requested, postage prepaid, to the address set
forth in Section 13.02, such service to become effective 10 days after such
mailing.
13.10. Severability. If any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
13.11. Rules of Construction. Unless the context otherwise requires, "or" is
not exclusive, and references to sections or subsections refer to sections or
subsections of this Agreement.
13.12. Entire Agreement. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, supersedes all prior
agreements and understandings between the parties with respect to
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such subject matter.
13.13. Certain Expenses. The Company will pay all reasonable
expenses of the Purchasers (including reasonable fees, charges and disbursements
of counsel) in connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Transaction Documents and the
consummation of the Closing and each purchase of Securities and any amendment,
supplement, modification or waiver of or to any provision of this Agreement, the
Notes or any other Transaction Document, or any consent to any departure by the
Company from the terms of any provision of this Agreement, the Notes or any
other Transaction Document.
13.14. Further Assurances. Each of the parties shall execute
such documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations, or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
13.15. Waiver of Jury Trial. THE COMPANY AND THE PURCHASERS HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW WAIVES ANY
RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL DAMAGES IN
CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
13.16. Required Purchasers. Whenever any action is to be taken or consent given,
such action or consent shall be effective if approved in writing and signed by
the Holders of at least 66 2/3% in principal amount of the Notes then
outstanding or, if no Notes are then outstanding, the Holders of at least 66
2/3% of the Warrants then outstanding; provided, however, that no modification
or waiver of any provision of this Agreement shall, unless in writing and signed
by the Holders of all Notes then outstanding, do any of the following: (a)
reduce the principal of, or interest on, the Notes, (b) postpone any date fixed
for any payment of principal of, or interest on, the Notes, or (c) change the
unpaid principal amount of the Notes or the principal percentage of Holders
required to take any action hereunder.
13.17. Confidentiality. Each Purchaser agrees to keep confidential any
information relating to the Company or any of its Subsidiaries received by it
pursuant to or in connection with this Agreement which is (a) trade information
which the Purchasers reasonably expect that the Company would want to keep
confidential, (b) technical information with respect to the equipment or
operations of the Company, (c) financial or environmental information, and (d)
any written information that is clearly and conspicuously identified in writing
by the Company as confidential; provided, however, that this Section 13.17 shall
not be construed to prevent any Purchaser from disclosing such information (i)
to any other Purchaser or any Purchaser's legal counsel, auditors, and
accountants, or any Affiliate that shall agree to be bound by this obligation of
confidentiality, (ii) upon the order of any court or
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60
administrative agency, (iii) upon the request or demand or any regulatory agency
or authority (whether or not such request or demand has the force of law), (iv)
that has been publicly disclosed, other than from a breach of this provision by
the Purchaser, (v) that has been obtained from any Person that is neither a
party to this Agreement nor an Affiliate of any such party, (vi) in connection
with the exercise of any right or remedy hereunder or under any other
Transaction Documents, or (vii) to any purchaser of all or any part of the Notes
or Warrants owned by that Purchaser that agrees to be bound by the obligation of
confidentiality in this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective officers hereunto
duly authorized as of the date first above written.
MCE COMPANIES, INC.
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Number of
Warrant
Shares
--------
7,142.72 NATIONAL CITY CAPITAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
Payment Account Designation
---------------------------
National City Bank, Cleveland, Ohio
ABA No. ▇▇▇-▇▇▇-▇▇▇
Account Name: National City Capital Corporation
Account No.: ▇▇▇▇▇▇▇
1,260.48 GREAT LAKES CAPITAL
INVESTMENTS I, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
Payment Account Designation
National City Bank, Cleveland, Ohio
ABA No. ▇▇▇-▇▇▇-▇▇▇
Account Name: Great Lakes Capital Investments I,
LLC
Account No.: 394991598
62
4,726.80 ROCKY MOUNTAIN MEZZANINE
FUND II, L.P.
By: Rocky Mountain Capital Partners
LLP, its General Partner
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: General Partner
Payment Account Designation
---------------------------
US Bank
ABA No. ▇▇▇-▇▇▇-▇▇▇
Account Name: Rocky Mountain Mezzanine
Fund II, L.P.
Account No.: 103655151910
63
EXECUTION COPY
FIRST AMENDMENT
TO
SENIOR SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT
This FIRST AMENDMENT TO SENIOR SUBORDINATED NOTE AND WARRANT PURCHASE
AGREEMENT (the "Amendment"), made as of July 21, 2000, is among MCE COMPANIES,
INC., a Michigan corporation (the "Company"), GREAT LAKES CAPITAL INVESTMENTS I,
LLC, a Delaware limited liability company ("GLCI"), NATIONAL CITY CAPITAL
CORPORATION, a Delaware corporation ("NCCC"), and ROCKY MOUNTAIN MEZZANINE FUND
II, L.P., a Colorado limited partnership ("RMMF") (GLCI, NCCC and RMMF each a
"Purchaser" and collectively the "Purchasers").
Recitals
A. The Company and the Purchasers entered into a Senior
Subordinated Note and Warrant Purchase Agreement, dated as of July 28, 1999 (the
"Purchase Agreement"); and
B. The parties desire to amend the Purchase Agreement as set forth
herein;
Agreements
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Effect of Amendment; Definitions. The Purchase Agreement shall be
and hereby is amended as provided in Section 2 hereof. Except as expressly
amended in Section 2 hereof, the Purchase Agreement shall continue in full force
and effect in accordance with its respective provisions on the date hereof. As
used in the Purchase Agreement, the terms "this Agreement", "herein",
"hereinafter", "hereto", "hereof", and words of similar import shall, unless the
context otherwise requires, mean the Purchase Agreement as amended and modified
by this Amendment. Capitalized terms that are not otherwise defined herein, have
the meanings ascribed to such terms in the Purchase Agreement.
2. Amendments.
(a) Section 1.01 is hereby amended to include the
following definition in alphabetical order:
"MCE Europe" means MCE Europe, Inc., a Michigan
corporation and a wholly-owned subsidiary of the Company. As of the
date of this
64
Agreement, MCE Europe is the sole shareholder of MCE Microwave Limited
UK which, in turn, is the sole shareholder of DML Microwave Limited;
see REVISED SCHEDULE 5.09 attached hereto.
(b) Section 1.01 of the Purchase Agreement is hereby amended,
effective as of September 30, 1999, by deleting in its entirety the definition
of "EBITDA Adjustment" contained therein, and substituting in lieu thereof the
following:
"EBITDA Adjustment" shall mean (i) if the date of
determination is September 30, 1999, that portion of actual
Consolidated EBITDA attributable to MCE Europe divided by 2 then
multiplied by 10; (ii) if the date of determination is December 31,
1999, that portion of actual Consolidated EBITDA attributable to MCE
Europe divided by 5 then multiplied by 7; (iii) if the date of
determination is March 31, 2000, that portion of actual Consolidated
EBITDA attributable to MCE Europe divided by 8 then multiplied by 4;
(iv) if the date of determination is June 30, 2000, that portion of
actual Consolidated EBITDA attributable to MCE Europe divided by 11
then multiplied by 1; and (v) if the date of determination is after
June 30, 2000, $0.
(c) Section 1.01 of the Purchase Agreement is hereby amended,
effective as of December 31, 1999, by adding the following new definition:
"Breakeven Adjustment" shall mean (i) if the date of
determination is December 31, 1999, $1,000,000, (ii) if the date of
determination is March 31, 2000, $1,000,000, (iii) if the date of
determination is June 30, 2000, $1,000,000, (iv) if the date of
determination is September 30, 2000, $500,000, and (v) if the date of
determination is after September 30, 2000, $0.
(d) Section 1.01 of the Purchase Agreement is hereby amended,
effective as of December 31, 1999, by deleting in its entirety the definition of
"Consolidated EBITDA" contained therein, and substituting in lieu thereof the
following:
"Consolidated EBITDA" shall mean for any period of
determination, Consolidated Net Income for such period, less the
aggregate amounts included in determining Consolidated Net Income for
extraordinary gains during such period, plus the aggregate amounts
deducted in determining Consolidated Net Income in respect of (a)
income taxes for such period, (b) interest expense for such period, (c)
depreciation and amortization expense and other non-cash charges for
such period, and (d) extraordinary losses for such period, in each case
determined on a Consolidated basis in accordance with GAAP, plus the
EBITDA Adjustment, plus the Breakeven Adjustment.
3. Representations and Warranties of the Company.
(a) The Company hereby represents and warrants that all
representations and
65
warranties set forth in the Financing Documents, as the same may be amended
hereby, to which it is a party are true and correct in all material respects,
and that this Amendment has been executed and delivered by its duly authorized
officer and constitutes a legal, valid and binding obligation of it, enforceable
against it in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and general principles of equity.
(b) Without limiting the generality of the foregoing, and
notwithstanding anything herein to the contrary, the parties hereto expressly
acknowledge and agree that, effective as of September 30, 1999, the references
in Section 5.09 of the Purchase Agreement (relative to Subsidiaries; Other
Equity Investments) to Schedule 5.09 is replaced by REVISED SCHEDULE 5.09
attached to this Amendment.
(c) The Company hereby represents and warrants that the
execution, delivery and performance by it of this Amendment and its performance
of the Financing Documents, as the same may be amended hereby, to which it is a
party (i) have been duly authorized by all necessary corporate action, (ii) do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of the articles of incorporation or bylaws of the Company, or
of any judgment, injunction, order or decree or of any material agreement or
other material instrument binding upon the Company, and (iii) do not result in
the creation or imposition of any Lien (other than the Permitted Liens) on any
asset of the Company.
4. Representations and Warranties of the Purchasers. Each of the
Purchasers hereby severally, and not jointly, represents and warrants with
respect to itself that this Amendment has been executed and delivered by its
duly authorized officer and constitutes a legal, valid and binding obligation of
it, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and general principles of equity.
5. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be treated as an original but all of which,
collectively, shall constitute a single instrument.
6. Miscellaneous.
(a) This Amendment shall be governed by and construed in
accordance with the laws of the State of Ohio, without reference to principles
of conflict of laws.
(b) This Amendment shall become effective upon the execution
and delivery hereof by GLCI, NCCC, RMMF and the Company.
(c) Except as expressly set forth in this Amendment, (i)
the execution, delivery and performance by each of the Purchasers of this
Amendment shall not constitute or be deemed to be or construed as a waiver of
any right, power or remedy, or a waiver of any provision of the Purchase
Agreement or any other Financing Document, or a waiver of any
66
Default or any Event of Default, and (ii) nothing herein shall be deemed to
entitle the Company to a future consent to, or a future waiver, amendment,
modification or other change of, any of the terms, conditions, obligations,
covenants or agreements contained in the Purchase Agreement or any other
Financing Document in similar or different circumstances. This Amendment is
subject to the provisions of Section 13.05 of the Purchase Agreement.
(d) Pursuant to Section 13.13 of the Purchase Agreement, the
Company agrees to pay on demand all reasonable expenses of the Purchasers
(including reasonable fees, charges and disbursements of counsel) in connection
with the preparation, negotiation, execution and delivery of this Amendment.
[SIGNATURES ON NEXT PAGE]
67
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the day and year first above written.
MCE COMPANIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
GREAT LAKES CAPITAL INVESTMENTS I,
LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Its: Member
-----------------------------------
NATIONAL CITY CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Its: Managing Director
-----------------------------------
ROCKY MOUNTAIN MEZZANINE FUND II,
L.P.
By: Rocky Mountain Capital Partners LLP
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Its: General Partner
-----------------------------------
68
REVISED SCHEDULE 5.09
to
FIRST AMENDMENT
TO
SENIOR SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT
SUBSIDIARIES
DML MICROWAVE LIMITED, a private limited company registered in
England and Wales (company no. 01064744) and a wholly-owned
subsidiary of MCE UK (f/k/a Densitron Microwave Limited)
INMET CORPORATION, a Michigan corporation ("Inmet")
KDI/TRIANGLE CORPORATION, a Michigan corporation ("KDI")
MCE EUROPE, INC., a Michigan corporation ("MCE Europe")
MCE MANUFACTURING CORPORATION, a Michigan corporation
MCE MICROWAVE LIMITED, a private limited company registered in
England and Wales (company no. 3719966) and a wholly-owned
subsidiary of MCE Europe ("MCE UK") (f/k/a DML Microwave
Limited)
MCE WORLDWIDE CORPORATION, a Barbados corporation (company no. 14658)
METELICS CORPORATION, a California corporation ("Metelics")
SOLENT MICROWAVE LIMITED a private limited company registered in
England and Wales (company no. 01854836) and a wholly-
owned Subsidiary of DML Microwave Limited
WEINSCHEL CORPORATION, a Michigan corporation ("Weinschel")