MATEC CORPORATION
BERGEN CABLE TECHNOLOGIES, INC.
MATEC APPLIED SCIENCES, INC.
MATEC INSTRUMENTS, INC.
▇▇▇▇▇▇-▇▇▇▇▇▇ CORPORATION
Secured Note and Warrant Purchase Agreement
Dated as of April 12, 1995
MATEC CORPORATION
BERGEN CABLE TECHNOLOGIES, INC.
MATEC APPLIED SCIENCES, INC.
MATEC INSTRUMENTS, INC.
▇▇▇▇▇▇-▇▇▇▇▇▇ CORPORATION
Secured Note and Warrant Purchase Agreement
-------------------------------------------
Dated as of April 12, 1995
INDEX
ARTICLE 1 ............................................................ 1
PURCHASE, SALE AND TERMS OF NOTES AND WARRANTS ....................... 1
1.01. The Notes ................................................... 1
1.02. The Warrants ................................................ 2
1.03. Purchase and Sale of Notes and Warrants ..................... 2
(a) The Closing ............................................ 2
(b) Allocation of Purchase Price ............................2
(c) Use of Proceeds .........................................2
1.04. Payments and Endorsements.................................... 3
1.05. Redemptions ................................................. 3
(a) Required Redemption .................................... 3
(b) Optional Redemptions With Premium ...................... 3
(c) Notice of Redemptions; Pro rata Redemptions............. 3
1.06. Payment on Non-Business ..................................... 3
1.07. Registration, etc ........................................... 3
1.08. Transfer and Exchange of Notes .............................. 4
1.09. Replacement of Notes ........................................ 4
1.10. Representations by the Purchaser ............................ 5
1.11. Disclosure of Information by the Purchaser .................. 5
ARTICLE II............................................................ 5
CONDITIONS TO PURCHASER'S OBLIGATION ................................. 5
2.01. Representations and Warranties .............................. 6
2.02. Documentation at Closing .................................... 6
ARTICLE III........................................................... 7
REPRESENTATIONS AND WARRANTIES........................................ 7
3.01. Organization and Standing ................................... 7
3.02. Corporate Action ............................................ 7
3.03. Governmental Approvals ...................................... 8
3.04. Litigation .................................................. 8
3.05. Compliance with Other Instruments ........................... 8
3.06. Federal Reserve Regulations ................................. 8
3.07. Title to Assets, Patents .................................... 9
3.08. Financial Information ....................................... 9
3.09. Taxes....................................................... 10
3.10. ERISA....................................................... 10
3.11. Transactions with Affiliates ............................... 10
3.12. Assumptions or Guaranties of Indebtedness of Other Persons . 10
3.13. Investments in Other Persons ............................... 10
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3.14. Equal Employment Opportunity ............................... 10
3.15. Status of Notes and Warrants as Qualified Investments ...... 11
3.16. Securities Act ............................................. 11
3.17. Disclosure ................................................. 12
3.18. No Brokers or Finders ...................................... 12
3.19. Other Agreements of Officers ............................... 12
3.20. Capitalization; Status of Capital Stock .................... 12
3.21. Labor Relations ............................................ 13
3.22. Insurance .................................................. 13
3.23. Books and Records .......................................... 13
3.24. Foreign Corrupt Practices Act .............................. 13
ARTICLE IV........................................................... 14
COVENANTS OF THE COMPANIES .......................................... 14
4.01. Affirmative Covenants Other Than Reporting Requirements .... 14
(a) Punctual Payment ...................................... 14
(b) Payment of Taxes and Trade Debt ....................... 14
(c) Maintenance of Insurance .............................. 14
(d) Preservation of Corporate Existence ................... 14
(e) Compliance with Laws .................................. 15
(f) Visitation Rights ..................................... 15
(g) Keeping of Records and Books of Account ............... 15
(h) Maintenance of Properties, etc ........................ 15
(i) Compliance with ERISA ................................. 15
(j) Maintenance of Debt to Equity Ratio ................... 16
(k) Maintenance of Interest Coverage ...................... 16
(l) Foreign Corrupt Practices Act ......................... 16
(m) Equal Employment Opportunity .......................... 16
(n) Status of Notes and Warrants as Qualified Investments . 16
(o) Attendance at Board Meetings .......................... 16
(p) Compensation .......................................... 17
(q) Compliance with Security Agreements ................... 17
4.02. Negative Covenants ......................................... 17
(a) Liens ................................................. 17
(b) Indebtedness .......................................... 18
(c) Lease Obligations ..................................... 18
(d) Assumptions or Guaranties of Indebtedness of
Other Persons ......................................... 19
(e) Mergers, Sale of Assets, etc .......................... 19
(f) Investments in Other Persons .......................... 19
(g) Distributions ......................................... 20
(h) Dealings with Affiliates .............................. 21
(i) Maintenance of Ownership of Subsidiaries .............. 21
(j) Change in Nature of Business .......................... 21
4.03. Reporting Requirements .................................... 21
4.04. Termination of Certain Covenants .......................... 23
ARTICLE V............................................................ 23
REGISTRATION RIGHTS ................................................. 23
5.01. "Piggy Back" Registration ................................. 23
5.02. Registration on Form S-3 .................................. 23
5.03. Effectiveness ............................................. 24
5.04. Indemnification of Holder of Registrable Shares ........... 24
(ii)
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5.05. Indemnification of Matec .................................. 25
5.06. Exchange Act Registration ................................. 26
5.07. Damages ................................................... 26
5.08. Further Obligations ....................................... 26
5.09. Holdback Agreement ........................................ 27
5.10. Participation in Registrations ............................ 28
5.11. Expenses .................................................. 28
ARTICLE VI........................................................... 28
EVENTS OF DEFAULT ................................................... 28
6.01. Events of Default ......................................... 28
6.02. Annulment of Defaults ..................................... 30
ARTICLE VII.......................................................... 30
DEFINITIONS AND ACCOUNTING TERMS .................................... 30
7.01. Certain Defined Terms ..................................... 30
7.02. Accounting Terms .......................................... 33
ARTICLE VIII......................................................... 34
MISCELLANEOUS........................................................ 34
8.01. No Waiver; Cumulative Remedies ............................ 34
8.02. Amendments, Waivers and Consents .......................... 34
8.03. Addresses for Notices, etc ................................ 34
8.04. Costs, Expenses and Taxes ................................. 35
8.05. Binding Effect; Assignment ................................ 35
8.06. Survival of Representations and Warranties ................ 36
8.07. Prior Agreements .......................................... 36
8.08. Severability .............................................. 36
8.09. Governing Law ............................................. 36
8.10. Headings .................................................. 36
8.11. Sealed Instrument ......................................... 36
8.12. Counterparts .............................................. 36
8.13. Further Assurances ........................................ 36
EXHIBITS
--------
1.01 Form of Secured Notes
1.02 Form of Common Stock Purchase Warrants
2.02(a) Form of Security Agreement
2.02(c) Matters to be Covered by Opinion Letter
3.01 Schedule of Subsidiaries
3.04 Schedule of Litigation
3.05 Schedule of Indebtedness
3.07 Schedule of Mortgages, Pledges, etc.
3.07(a) Schedule of Patent Obligations
3.09 Schedule of Taxes
3.12 Schedule of Assumptions or Guaranties
3.14 Schedule of Employment Practices
3.15 Certificate re "Qualified Investments"
(iii)
MATEC CORPORATION BERGEN CABLE TECHNOLOGIES, INC.
MATEC APPLIED SCIENCES, INC. ▇▇▇▇▇ Street
MATEC INSTRUMENTS, INC. ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇▇ CORPORATION
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
As of April 12, 1995
Massachusetts Capital Resource Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Secured Notes due 2000 and Common Stock
Purchase Warrants
Gentlemen:
MATEC Corporation, a Delaware corporation ("Matec"), and each of
its Subsidiaries, Bergen Cable Technologies, Inc., a New Jersey
corporation, Matec Applied Sciences, Inc., a Delaware corporation, Matec
Instruments, Inc., a Delaware corporation and ▇▇▇▇▇▇-▇▇▇▇▇▇ Corporation,
a Massachusetts corporation (Matec and such Subsidiaries being herein
collectively referred to as the Companies and individually as a Company)
hereby, jointly and severally, agree with Massachusetts Capital Resource
Company (the "Purchaser") as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF NOTES AND WARRANTS
1.01. THE NOTES. The Companies have authorized the issuance and
sale to the Purchaser of the Companies Secured Notes, due June 30, 2000,
in the original principal amount of $2,000,000. The Secured Notes shall
bear interest, as provided for therein, at the rate of ten percent (10%)
per annum; PROVIDED, HOWEVER, that if the Companies, or any of them,
shall at any time, or from time to time, incur any Indebtedness for
money borrowed, which Indebtedness or any portion thereof is secured by
any assets of any of the Companies in which the holder of any Note shall
have a security interest and which security is senior to, or on a pari
passu basis with, that of such holder, then in such event, from and
after the date such Indebtedness is incurred, the interest rate on such
Note shall automatically be increased to eleven percent (11%) per annum
if such Indebtedness is $2,000,000 or less and twelve percent (12%) per
annum if such Indebtedness is more than $2,000,000; and FURTHER,
PROVIDED, that the interest rate on the Notes shall be fourteen percent
(14%) per annum (as far as the same may be legally enforceable) on all
overdue principal (including any overdue required redemption), premium
and interest. The Secured Notes shall be substantially in the form set
forth in EXHIBIT 1.01 hereto and are herein referred to individually as
a "Note" and collectively as the "Notes", which terms shall also include
any notes delivered in exchange or replacement therefor.
1.02. THE WARRANTS. Matec has also authorized the issuance and
sale to the Purchaser of Matec's Common Stock Purchase Warrants for the
purchase (subject to adjustment as provided therein) of 85,000 shares of
Matec's Common Stock. The Common Stock Purchase Warrants shall be
substantially in the form set forth in EXHIBIT 1.02 hereto and are
herein referred to individually as a "Warrant" and collectively as the
"Warrants", which terms shall also include any warrants delivered in
exchange or replacement therefor.
1.03. PURCHASE AND SALE OF NOTES AND WARRANTS.
(a) THE CLOSING. The Companies agree to issue and sell to
the Purchaser, and, subject to and in reliance upon the representations,
warranties, terms and conditions of this Agreement, the Purchaser agrees
to purchase, the Notes and the Warrants for an aggregate purchase price
of $2,000,000. Such purchase and sale shall take place at a closing
(the "Closing") to be held at the office of Messrs. ▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, Exchange Place, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, on
April 12, 1995 at 2:00 P.M., or on such other date and at such time as
may be mutually agreed upon. At the Closing the Companies will
initially issue one Note, payable to the order of the Purchaser, in the
principal amount of $2,000,000 and Matec will issue one Warrant,
registered in the name of the Purchaser, to purchase (subject to
adjustment as provided therein) 85,000 shares of Matec's Common Stock,
against delivery to Matec, on behalf of itself and the other Companies,
of a check or a receipt of a wire transfer, in the amount of $2,000,000,
in payment of the full purchase price for the Notes and Warrants.
(b) ALLOCATION OF PURCHASE PRICE. The Companies and the
Purchaser, having adverse interests and as a result of arm's length
bargaining, agree that (i) neither the Purchaser nor any of its partners
has rendered or has agreed to render any services to the Companies in
connection with this Agreement or the issuance of the Notes and
Warrants; (ii) the Warrants are not being issued as compensation; and
(iii) for the purpose, and within the meaning, of Section 1273(c)(2) of
the Internal Revenue Code of 1986, as amended, the issue price of the
Notes is $1,977,000. The Companies and the Purchaser acknowledge that
this allocation is based on the relative fair market values of the Notes
and Warrants. The Companies and the Purchaser recognize that this
Agreement determines the original issue discount to be taken into
account by the Companies and the Purchaser for federal income tax
purposes on the Notes and they agree to adhere to this Agreement for
such purposes.
(c) USE OF PROCEEDS. The Companies agree to use the full
proceeds from the sale of the Notes and Warrants solely for working
capital, the purchase of machinery and equipment and for general
corporate purposes and agrees that full proceeds from the sale of the
Notes and Warrants will be utilized for purposes which increase or
maintain equal opportunity employment in the Commonwealth of
Massachusetts.
1.04. PAYMENTS AND ENDORSEMENTS. Payments of principal, interest
and premium, if any, on the Notes, shall be made directly by check duly
mailed or delivered to the Purchaser at its address referred to in
Section 8.03 hereof, without any presentment or notation of payment,
except that prior to any transfer of any Note, the holder of record
shall endorse on such Note a record of the date to which interest has
been paid and all payments made on account of principal of such Note.
1.05. REDEMPTIONS.
(a) REQUIRED REDEMPTION. On June 30, 2000 or accelerated
maturity of the Notes, the Companies, jointly and severally, will pay
the principal amount of the Notes then outstanding together with all
accrued and unpaid interest then due thereon. No optional redemption of
less than all of the Notes shall affect the obligation of the Companies
to make the redemption required by this subsection.
(b) OPTIONAL REDEMPTIONS WITH PREMIUM. The Companies may at
any time on or after July 1, 1995, (no optional redemption being
permitted prior to said date) redeem the Notes in whole or in part (in
integral multiples of $10,000) together with interest due on the amount
so redeemed through the date of redemption, and a premium equal to the
percentage of the principal amount of the Notes redeemed under this
subsection applicable to the twelve month period in which such
redemption is made, as follows:
12-month period
ending Premium
--------------- -------
June 30, 1996 10.0%
June 30, 1997 7.5%
June 30, 1998 5.0%
June 30, 1999 2.5%
June 30, 2000 0.0%
(c) NOTICE OF REDEMPTIONS; PRO RATA REDEMPTIONS. Notice of
any optional redemptions pursuant to subsection 1.05(b) shall be given
to all registered holders of the Notes at least ten (10) business days
prior to the date of such redemption. Each redemption of Notes pursuant
to subsections 1.05(a) or (b) shall be made so that the Notes then held
by each holder shall be redeemed in a principal amount which shall bear
the same ratio to the total principal amount of Notes being redeemed as
the principal amount of Notes then held by such holder bears to the
aggregate principal amount of the Notes then outstanding.
1.06. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made shall be due on a Saturday, Sunday or a public holiday under the
laws of the Commonwealth of Massachusetts, such payment may be made on
the next succeeding business day, and such extension of time shall in
such case be included in the computation of payment of interest due.
1.07. REGISTRATION, ETC. Matec, on behalf of itself and the other
Companies, shall maintain at its principal office a register of the
Notes and shall record therein the names and addresses of the registered
holders of the Notes, the address to which notices are to be sent and
the address to which payments are to be made as designated by the
registered holder if other than the address of the holder, and the
particulars of all transfers, exchanges and replacements of Notes. No
transfer of a Note shall be valid unless made on such register for the
registered holder or his executors or administrators or his or their
duly appointed attorney, upon surrender therefor for exchange as
hereinafter provided, accompanied by an instrument in writing, in form
and execution reasonably satisfactory to Matec. Each Note issued
hereunder, whether originally or upon transfer, exchange or replacement
of a Note or Notes, shall be registered on the date of execution thereof
by the Companies and shall be dated the date to which interest has been
paid on such Notes or Note. The registered holder of a Note shall be
that Person in whose name the Note has been so registered by Matec. A
registered holder shall be deemed the owner of a Note for all purposes
of this Agreement and, subject to the provisions hereof, shall be
entitled to the principal, premium, if any, and interest evidenced by
such Note free from all equities or rights of setoff or counterclaim
between the Companies, or any of them, and the transferor of such
registered holder or any previous registered holder of such Note.
1.08. TRANSFER AND EXCHANGE OF NOTES. The registered holder of
any Note or Notes may, prior to maturity or prepayment thereof,
surrender such Note or Notes at the principal office of Matec for
transfer or exchange. Within a reasonable time after notice to Matec
from a registered holder of its intention to make such exchange and
without expense (other than transfer taxes, if any) to such registered
holder (and provided, in the case of a transfer, that the proposed
transferee shall have provided to Matec a written representation
substantially to the effect set forth in Section 1.10), the Companies
shall issue in exchange therefor another Note or Note, in such
denominations as requested by the registered holder, for the same
aggregate principal amount as the unpaid principal amount of the Note or
Notes so surrendered, and having the same maturity and rate of interest,
containing the same provisions and subject to the same terms and
conditions as the Note or Notes so surrendered. Each new Note shall be
made payable to such Person or Persons, or registered assigns, as the
registered holder of such surrendered Note or Notes may designate, and
such transfer or exchange shall be made in such a manner that no gain or
loss of principal or interest shall result therefrom.
1.09. REPLACEMENT OF NOTES. Upon receipt of evidence satisfactory
to Matec of the loss, theft, destruction or mutilation of any Note and,
if requested in the case of any such loss, theft or destruction, upon
delivery of an indemnity bond or other agreement or security reasonably
satisfactory to Matec, or, in the case of any such mutilation, upon
surrender and cancellation of such Note, the Companies will issue a new
Note, of like tenor and amount and dated the date to which interest has
been paid, in lieu of such lost, stolen, destroyed or mutilated Note;
PROVIDED, HOWEVER, if any Note of which Massachusetts Capital Resource
Company, its nominee, or any of its partners is the registered holder is
lost, stolen or destroyed, the affidavit of the President, Treasurer or
any Assistant Treasurer of the registered holder setting forth the
circumstances with respect to such loss, theft or destruction shall be
accepted as satisfactory evidence thereof, and no indemnification bond
or other security shall be required as a condition to the execution and
delivery by the Companies of a new Note in replacement of such lost,
stolen or destroyed Note other than the registered holder's written
agreement to indemnify the Companies.
1.10. REPRESENTATIONS BY THE PURCHASER. The Purchaser represents
that it is its present intention to acquire the Notes and Warrants for
its own account and that the Notes and Warrants are being and will be
acquired for the purpose of investment and not with a view to
distribution or resale thereof; subject, nevertheless, to the condition
that the disposition of the property of the Purchaser shall at all times
be within its control. The acquisition by the Purchaser of the Notes
and Warrants shall constitute a confirmation of this representation.
1.11. DISCLOSURE OF INFORMATION BY THE PURCHASER. Each of the
Companies understands that the Purchaser is a special purpose limited
partnership organized under Chapter 109 of the General Laws of the
Commonwealth of Massachusetts and Chapter 816 of the Acts and Resolves
of 1977 of the Commonwealth of Massachusetts (the "Capital Resource
Company Act"), and as such, in accordance with such provisions, the
Purchaser, in order to obtain certain benefits for itself and its
partners, is required to file certain reports and otherwise disclose
information relating to the business, financial affairs, and future
prospects of the Companies and their affiliates (as defined in the
aforesaid legislation) with the Clerk of the Senate and the Clerk of the
House of Representatives of the General Court of the Commonwealth of
Massachusetts, the Secretary of Manpower Affairs, the Commissioner of
Insurance and the Department of Revenue of the Commonwealth of
Massachusetts, and that such reports and other information may
constitute "public records" within the purview of Section 7 of Chapter 4
of the General Laws of the Commonwealth of Massachusetts. In addition,
information relating to the business, financial affairs and future
prospects of each of the Companies and its affiliates must be disclosed
to others in order to obtain independent confirmation that financing on
substantially similar terms to financing provided pursuant to this
Agreement was not elsewhere available to the Companies. The Companies
hereby authorize the Purchaser to disclose all such information relating
to the business, financial affairs and future prospects of the Companies
and their affiliates as has been or may in the future be presented to
the Purchaser to all such persons as the Purchaser in good ▇▇▇▇▇ ▇▇▇▇▇
necessary or appropriate in order to fulfill its obligations under the
Capital Resource Company Act.
ARTICLE II
CONDITIONS TO PURCHASER'S OBLIGATION
The obligation of the Purchaser to purchase and pay for the Notes
and Warrants at the Closing is subject to the following conditions:
2.01. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Companies set forth in Article III
hereof shall be true on the date of the Closing.
2.02. DOCUMENTATION AT CLOSING. The Purchaser shall have received
prior to or at the Closing all of the following, each in form and
substance satisfactory to the Purchaser and its special counsel:
(a) A Security Agreement, in the form attached as EXHIBIT
2.02(a), (collectively, the Security Agreements), and all related
financing statements and other similar instruments and documents, shall
have been executed and delivered to the Purchaser by a duly authorized
officer of each Company.
(b) A certified copy of all charter documents of each
Company; a certified copy of the resolutions of the Board of Directors
and, to the extent required, the stockholders of each Company evidencing
approval of this Agreement, the Notes, the Warrants, the Security
Agreements, and other matters contemplated hereby; a certified copy of
the By-laws of each Company; and certified copies of all documents
evidencing other necessary corporate or other action and governmental
approvals, if any, with respect to this Agreement, the Notes, the
Warrants and the Security Agreements.
(c) A favorable opinion of Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, counsel for the Companies, as to matters set forth in EXHIBIT
2.02(c), and as to such other matters as the Purchaser, or its special
counsel, may reasonably request.
(d) A certificate of the Secretary or an Assistant Secretary
of each Company which shall certify the names of the officers of such
Company, authorized to sign this Agreement, the Notes, the Warrants, the
Security Agreements and the other documents or certificates to be
delivered pursuant to this Agreement or the Security Agreements by such
Company, or any of its officers, together with the true signatures of
such officers. The Purchaser may conclusively rely on such certificates
until it shall receive a further certificate of the Secretary or an
Assistant Secretary of such Company canceling or amending the prior
certificate and submitting the signatures of the officers named in such
further certificate.
(e) A certificate from a duly authorized officer of each
Company stating that the representations and warranties of all of the
Companies contained in Article III hereof and otherwise made by the
Companies in writing in connection with the transactions contemplated
hereby are true and correct and that no condition or event has occurred
or is continuing or will result from execution and delivery of this
Agreement, the Notes, the Warrants or the Security Agreements which
constitute an Event of Default or would constitute an Event of Default
but for the requirement that notice be given or time elapse or both.
(f) A certificate, in the form attached as EXHIBIT 3.15
hereto, shall have been executed and delivered by a duly authorized
officer of each Company.
(g) Payment for the costs, expenses, taxes and filing fees
identified in Section 8.04 as to which the Purchaser gives Matec notice
prior to the Closing.
(h) Matec's Form 10-K for the fiscal year ended December 31,
1994, as filed with the Commission pursuant to the Exchange Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Company represents and warrants as to itself and Matec
represents and warrants as to itself and as to each of the other
Companies as follows:
3.01. ORGANIZATION AND STANDING. Each Company is a duly organized
and validly existing corporation in good standing under the laws of the
jurisdiction in which it was organized and has all requisite corporate
power and authority for the ownership and operation of its properties
and for the carrying on of its business as now conducted and as now
proposed to be conducted. Each Company is duly licensed or qualified
and in good standing as a foreign corporation authorized to do business
in all jurisdictions wherein the character of the property owned or
leased, or the nature of the activities conducted, by it makes such
licensing or qualification necessary, and where a failure to so qualify
would have a material adverse effect on the business or assets of such
Company. All of the outstanding capital stock of each of the Companies
has been duly authorized and validly issued, is fully paid and
nonassessable, and is, except for Matec, owned beneficially and of
record by Matec, free and clear of any lien, right, encumbrance or
restriction of any nature, including, without limitation, any lien,
right, encumbrance or restriction on transfer, other than those imposed
by relevant state and federal securities laws. None of the Companies
have any Subsidiaries except that: (i) each of the Companies, other than
Matec, are Subsidiaries of Matec and (ii) except as is set forth on
EXHIBIT 3.01.
3.02. CORPORATE ACTION. Each Company has all necessary corporate
power and has taken all corporate action required to make all the
provisions of this Agreement, the Notes, the Warrants, the Security
Agreements and any other agreements and instruments executed in
connection herewith and therewith the valid and enforceable obligations
they purport to be. Sufficient shares of authorized but unissued Common
Stock of Matec have been reserved by appropriate corporate action in
connection with the prospective exercise of the Warrants. Neither the
issuance of the Notes or Warrants, nor the issuance of shares of Common
Stock upon the exercise of the Warrants, is subject to preemptive or
other similar statutory or contractual rights and will not conflict with
any provisions of any agreement or instrument to which any Company is a
party or by which it is bound.
3.03. GOVERNMENTAL APPROVALS. No authorization, consent,
approval, license, exemption of or filing or registration with any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for, or in
connection with, the offer, issuance, sale, execution or delivery by any
Company of, or for the performance by it of its obligations under, this
Agreement, the Notes, the Warrants or the Security Agreements, except as
may result from the circumstances of any proposed transfer of the Notes
or Warrants or exercise of the Warrants in order to insure compliance
with applicable federal and state securities laws.
3.04. LITIGATION. Except as is set forth in EXHIBIT 3.04, there
is no litigation or governmental proceeding or investigation pending or,
to the best of the knowledge of any Company, threatened against any
Company affecting any of its properties or assets, or, to the best of
the knowledge of any Company, against any officer, key employee or
principal stockholder of any Company where such litigation, proceeding
or investigation, either individually or in the aggregate, would have a
material adverse effect on any Company or which might call into question
the validity of this Agreement, the Notes, the Warrants, the Security
Agreements or any action taken or to be taken pursuant hereto or
thereto, nor, to the best of the knowledge of any Company, has there
occurred any event or does there exist any condition on the basis of
which any litigation, proceeding or investigation might properly be
instituted. None of the Companies, nor, to the best of the knowledge of
any Company, any officer or key employee or principal stockholder of any
Company is in default with respect to any order, writ, injunction,
decree, ruling or decision of any court, commission, board or other
government agency affecting any Company.
3.05. COMPLIANCE WITH OTHER INSTRUMENTS. Each Company is in
compliance in all respects with the terms and provisions of this
Agreement and of its charter and by-laws and in all material respects
with the terms and provisions of the mortgages, indentures, leases,
agreements and other instruments and of all judgments, decrees,
governmental orders, statutes, rules and regulations by which it is
bound or to which its properties or assets are subject. It is the
reasonable opinion of each Company that there is no term or provision in
any of the foregoing documents and instruments which materially
adversely affects the business, assets or financial condition of any
Company. Neither the execution and delivery of this Agreement, the
Notes, the Warrants or the Security Agreements, nor the consummation of
any transactions contemplated hereby or thereby has constituted or
resulted in or will constitute or result in a default or violation of
any term or provision in any of the foregoing documents or instruments.
A schedule of Indebtedness for money borrowed of the Companies
(including lease obligations required to be capitalized in accordance
with applicable Statements of Financial Accounting Standards) is
attached as EXHIBIT 3.05.
3.06. FEDERAL RESERVE REGULATIONS. No Company is engaged in the
business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System), and no part of the
proceeds of the Notes or Warrants will be used to purchase or carry any
margin security or to extend credit to others for the purpose of
purchasing or carrying any margin security or in any other manner which
would involve a violation of any of the regulations of the Board of
Governors of the Federal Reserve System.
3.07. TITLE TO ASSETS, PATENTS. Except as is set forth in EXHIBIT
3.07, each Company has good and clear record and marketable title in fee
to such of its fixed assets as are real property, and good and
merchantable title to all of its other assets, now carried on its books
including those reflected in the most recent consolidated balance sheet
of the Companies which forms a part of EXHIBIT 3.08 attached hereto, or
acquired since the date of such balance sheet (except personal property
disposed of since said date in the ordinary course of business and
except for defects in title to real property which do not materially
detract from its value or impair its use) free of any mortgages,
pledges, charges, liens, security interests or other encumbrances. Each
Company enjoys peaceful and undisturbed possession under all leases
under which it is operating, and all said leases are valid and
subsisting and in full force and effect. Except as is set forth in
EXHIBIT 3.04, each Company owns or has a valid right to use the patents,
patent rights, licenses, permits, trade secrets, trademarks, trademark
rights, trade names or trade name rights or franchises, copyrights,
inventions and intellectual property rights being used to conduct its
business as now operated and as now proposed to be operated; and the
conduct of its business as now operated and as now proposed to be
operated does not and will not conflict with valid patents, patent
rights, licenses, permits, trade secrets, trademarks, trademark rights,
trade names or trade name rights or franchises, copyrights, inventions
and intellectual property rights of others. Except as is set forth in
EXHIBIT 3.07(a), no Company has any obligation to compensate any Person
for the use of any such patents or such rights nor has any Company
granted to any Person any license or other rights to use in any manner
any of such patents or such rights of any Company.
3.08. FINANCIAL INFORMATION. The consolidated financial
statements of Matec which are included in Matec's Form 10-K present
fairly the consolidated financial position of Matec as at the dates
thereof and the results of operations for the periods covered thereby
and have been prepared in accordance with generally accepted accounting
principles consistently applied. Such financial statements are for the
two years ended December 31, 1993 and December 31, 1994, certified by
Deloitte & Touche. As of the date of such financial statements, no
Company has any liability contingent or otherwise not disclosed in the
aforesaid financial statements or in the notes thereto that could,
together with all such other liabilities, materially affect the
financial condition of any Company, nor does any Company have any
reasonable grounds to know of any such liability. Since the date of
said certified financial statements, (i) there has been no adverse
change in the business, assets or condition, financial or otherwise,
operations or prospects, of any Company; (ii) neither the business,
condition, operations nor prospects of any Company nor any of their
properties or assets has been adversely affected as a result of any
legislative or regulatory change, any revocation or change in any
franchise, license or right to do business, or any other event or
occurrence, whether or not insured against; and (iii), except for
intercompany transactions between the Companies, no Company has entered
into any material transaction or made any distribution on its capital
stock.
3.09. TAXES. Since January 1, 1990, each Company has accurately
prepared and timely filed (except where the failure to file on a timely
basis did not have a material adverse effect on such Company) all
federal, state and other tax returns required by law to be filed by it,
and all taxes shown to be due and all additional assessments have been
paid or provision made therefor. No Company knows of no additional
assessments or adjustments pending or threatened against any Company for
any period, nor of any basis for any such assessment or adjustment,
except as set forth on EXHIBIT 3.09.
3.10. ERISA. No employee benefit plan established or maintained,
or to which contributions have been made, by any Company, which is
subject to part 3 of Subtitle B of Title I of The Employee Retirement
Income Security Act of 1974, as amended ("ERISA") had an accumulated
funding deficiency (as such term is defined in Section 302 of ERISA) as
of the last day of the most recent fiscal year of such plan ended prior
to the date hereof, and no material liability to the Pension Benefit
Guaranty Corporation has been incurred with respect to any such plan by
any Company.
3.11. TRANSACTIONS WITH AFFILIATES. Except as is set forth in the
Proxy Statement, there are no loans, leases, royalty agreements or other
continuing transactions between Matec and any Person owning five percent
(5%) or more of any class of capital stock of Matec or other entity
controlled by such stockholder or a member of such stockholder's family.
3.12. ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF OTHER PERSONS.
Except as is set forth in EXHIBIT 3.12 and as permitted pursuant to
subsection 4.02(d), no Company has assumed, guaranteed, endorsed or
otherwise become directly or contingently liable on (including, without
limitation, liability by way of agreement, contingent or otherwise, to
purchase, to provide funds for payment, to supply funds to or otherwise
invest in the debtor or otherwise to assure the creditor against loss)
any Indebtedness of any other Person.
3.13. INVESTMENTS IN OTHER PERSONS. Except as described in the
Form 10-K and except for intercompany transactions permitted by this
Agreement, no Company has made any loan or advance to any Person which
is outstanding on the date of this Agreement, nor is any Company
obligated or committed to make any such loan or advance, nor does any
Company own any capital stock or assets comprising the business of,
obligations of, or any interest in, any Person.
3.14. EQUAL EMPLOYMENT OPPORTUNITY. Each Company has reviewed its
employment practices and policies and, to the best of its knowledge, it
is in full compliance with (a) all applicable laws of the United States,
of the Commonwealth of Massachusetts and of each other applicable
jurisdiction, relating to equal employment opportunity (including,
without limitation, Title VII of the Civil Rights Act of 1964, as
amended (42 U.S.C. Section 2000e-17), the Age Discrimination in
Employment Act of 1967, as amended (29 U.S.C. Sub Section 621-634), the
Equal Pay Act of 1963 (29 U.S.C. Section 206(d)), and any rules,
regulations and administrative orders and Executive Orders relating
thereto; Mass. Gen. Laws. c. 151B, Mass. Gen. Laws c. 149 Section 24A et
seq. and Section 105A et seq., and any rules or regulations relating
thereto; and (b) the applicable terms, relating to equal employment
opportunity, of any contract, agreement or grant such Company has with,
from, or relating (by way of subcontract or otherwise) to any other
contract, agreement or grant of, any federal or state governmental unit
("Government Contract"), including, without limitation, any terms
required pursuant to Federal Executive Order No. 11246 and Massachusetts
Executive Order No. 74 (both as amended). To the best of each Company's
knowledge, it has kept all records required to be kept, and has filed
all reports, affirmative action plans and forms (including, without
limitation and where applicable, Form EEO-1) required to be filed
pursuant to any such applicable law or the terms of any such Government
Contract. No Company has been subject to any adverse final
determination or order, with respect to any charge of employment
discrimination made against it, by the United States Equal Employment
Opportunity Commission, the Massachusetts Commission Against
Discrimination or any other governmental unit (including, without
limitation, any such governmental unit with which it has a Government
Contract), and no Company is presently, to the best of such Company's
knowledge, subject to any formal proceedings before, or investigations
by, such commissions or governmental units, except as is set forth in
EXHIBIT 3.14.
3.15. STATUS OF NOTES AND WARRANTS AS QUALIFIED INVESTMENTS. Each
Company has duly authorized the execution and delivery to the Purchaser
of the certificate attached as EXHIBIT 3.15 hereto, setting forth such
statements, information and related data as are necessary to permit the
Purchaser to determine and demonstrate that the Notes and Warrants
issued pursuant to this Agreement will constitute "qualified
investments" within the meaning of that term as set forth in the Capital
Resource Company Act and that the full proceeds of the Notes and
Warrants will be used for purposes which will materially increase or
maintain equal opportunity employment in the Commonwealth of
Massachusetts. All such statements, information and related data
presented in such certificate as are not based on estimates and
projections of future events are true and correct as of the date of such
certificate and all such statements, information and related data based
upon estimates or projections of future events have been carefully
considered and prepared on behalf of each Company.
3.16. SECURITIES ACT. None of the Companies nor anyone acting on
their behalf has offered any of the Notes, Warrants or similar
securities, or solicited any offers to purchase or made any attempt by
preliminary conversation or negotiations to dispose of the Notes,
Warrants or similar securities, to any Person other than the Purchaser
or the institutions described in EXHIBIT 3.15. None of the Companies
nor anyone acting on their behalf has offered or will offer to sell the
Notes, Warrants or similar securities to, or solicit offers with respect
thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any Person, so as to bring the
issuance and sale of the Notes and Warrants under the registration
provisions of the Securities Act.
3.17. DISCLOSURE. Neither this Agreement, the Form 10-K, the
Proxy Statement, the Certificate set forth as EXHIBIT 3.15 hereof, nor
any other agreement, document, certificate or written statement
furnished to the Purchaser or its special counsel by or on behalf of any
Company in connection with the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact within the special knowledge
of any Company or any executive officers of any Company which has not
been disclosed herein or in writing by them to the Purchaser and which
materially adversely affects, or in the future in their opinion may,
insofar as they can now foresee, materially adversely affect the
business, properties, assets or condition, financial or otherwise, of
any Company. Without limiting the foregoing, no Company has any
knowledge or belief that there exists, or there is pending or planned,
any patent, invention, device or application or any statute, rule, law,
regulation, standard or code which would materially adversely affect the
condition, financial or otherwise, or the operations of any Company.
3.18. NO BROKERS OR FINDERS. No Person has or will have, as a
result of the transactions contemplated by this Agreement, any right,
interest or valid claim against or upon any Company for any commission,
fee or other compensation as a finder or broker because of any act or
omission by any Company or any agent of any Company.
3.19. OTHER AGREEMENTS OF OFFICERS. To the best of the knowledge
of each Company, no officer or key employee of such Company is a party
to or bound by any agreement, contract or commitment, or subject to any
restrictions, particularly but without limitation in connection with any
previous employment of any such person, which materially and adversely
affects, or in the future may (as far as such Company can reasonably
foresee) materially and adversely affect, the business or operations of
such Company or the right of any such person to participate in the
affairs of such Company. To the best of the knowledge of each Company,
no officer or key employee has any present intention of terminating his
employment with such Company and such Company has no present intention
of terminating any such employment agreement.
3.20. CAPITALIZATION; STATUS OF CAPITAL STOCK. Matec has a total
authorized capitalization consisting of: (i) 10,000,000 shares of Common
Stock, of which 2,764,550 (excluding 1,029,145 Treasury Shares) shares
are issued and outstanding, and (ii) 1,000,000 shares of Preferred
Stock, $1.00 par value per share, no shares of which are issued or
outstanding. All the outstanding shares of capital stock of Matec have
been duly authorized, are validly issued and are fully paid and
nonassessable. The shares of Common Stock issuable upon exercise of the
Warrants, when so issued, will be duly authorized, validly issued and
fully paid and nonassessable. Except as is set forth in the Form 10-K
(including the stock options described in note 9 of the notes to the
consolidated financial statements of Matec included in the Form 10-K)
and except for the Warrants, there are no options, warrants or rights to
purchase shares of capital stock or other securities of Matec
authorized, issued or outstanding, nor is Matec obligated in any other
manner to issue shares of its capital stock or other securities. There
are no restrictions on the transfer of shares of capital stock of Matec
other than those imposed by relevant state and federal securities laws.
No holder of any security of Matec is entitled to preemptive or similar
statutory or contractual rights, either arising pursuant to any
agreement or instrument to which Matec is a party, or which are
otherwise binding upon Matec. Neither the issuance of the Notes or the
Warrants nor the shares of Common Stock issued upon exercise of the
Warrants will result in an adjustment under the antidilution or exercise
rights of any holders of any outstanding shares of capital stock,
options, warrants or other rights to acquire any securities of Matec.
The offer and sale of all shares of capital stock and other securities
of Matec issued before the Closing complied with or were exempt from all
federal and state securities laws.
3.21. LABOR RELATIONS. To the best of the knowledge of each
Company, since January 1, 1990 no labor union or any representative
thereof has made any attempt to organize or represent employees of such
Company. There are no unfair labor practice charges, pending trials
with respect to unfair labor practice charges, pending material
grievance proceedings or adverse decisions of a Trial Examiner of the
National Labor Relations Board against any Company. Furthermore, to the
best of the knowledge of each Company, relations with employees of such
Company are good and there is no reason to believe that any labor
difficulties will arise in the foreseeable future.
3.22. INSURANCE. Each Company carries insurance covering its
properties and business adequate and customary for the type and scope of
the properties and business, but in any event in amounts sufficient to
prevent it from becoming a co-insurer.
3.23. BOOKS AND RECORDS. The books of account, ledgers, order
books, records and documents of each Company accurately and completely
reflect all material information relating to the business of each
Company, the nature, acquisition, maintenance, location and collection
of the assets of each Company, and the nature of all transactions giving
rise to the obligations or accounts receivable of each Company.
3.24. FOREIGN CORRUPT PRACTICES ACT. Each Company has reviewed
its practices and policies and to the best of its knowledge and belief
it is not engaged, nor has any officer, director, employee or agent of
such Company engaged, in any act or practice which would constitute a
violation of the Foreign Corrupt Practices Act of 1977, or any rules or
regulations promulgated thereunder.
ARTICLE IV
COVENANTS OF THE COMPANIES
4.01. AFFIRMATIVE COVENANTS OTHER THAN REPORTING REQUIREMENTS. Without
limiting any other covenants and provisions hereof, as long as any of
the Notes or Warrants are outstanding, each Company covenants and agrees
that it will perform and observe the following covenants and provisions
as are applicable to it, and Matec covenants and agrees that it will
perform and observe the following covenants and provisions and will
cause each other Company and each Subsidiary to perform and observe such
of the following covenants and provisions as are applicable to such
other Company and such Subsidiary:
(a) PUNCTUAL PAYMENT. Pay the principal of, premium, if any,
and interest on each of the Notes at the times and place and in the
manner provided in the Notes and herein.
(b) PAYMENT OF TAXES AND TRADE DEBT. Pay and discharge all
taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or business, or upon any properties belonging
to it, prior to the date on which penalties attach thereto, and all
lawful claims which, if unpaid, might become a lien or charge upon any
properties of any Company or any Subsidiary, provided that no Company
nor any Subsidiary shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by
appropriate proceedings if such Company or such Subsidiary concerned
shall have set aside on its books adequate reserves with respect
thereto. Pay, when due, or in conformity with customary trade terms,
all lease obligations, all trade debt, and all other Indebtedness
incident to the operations of any Company or any Subsidiaries, except
such as are being contested in good faith and by appropriate proceedings
if such Company or such Subsidiary concerned shall have set aside on its
books adequate reserves with respect thereto.
(c) MAINTENANCE OF INSURANCE. Maintain insurance with
responsible and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in the same
general areas in which such Company or such Subsidiary operates, but in
any event in amounts sufficient to prevent such Company or such
Subsidiary from becoming a co-insurer.
(d) PRESERVATION OF CORPORATE EXISTENCE. Preserve and
maintain its corporate existence, rights, franchises and privileges in
the jurisdiction of its incorporation, and qualify and remain qualified
as a foreign corporation in each jurisdiction in which such
qualification is necessary or desirable in view of its business and
operations or the ownership of its properties; PROVIDED, HOWEVER, that
nothing herein contained shall prevent any merger, consolidation or
transfer of assets permitted by subsection 4.02(e). Preserve and
maintain all licenses and other rights to use patents, processes,
licenses, trademarks, trade names, inventions, intellectual property
rights or copyrights owned or possessed by it and necessary to the
conduct of its business; PROVIDED, HOWEVER, that nothing herein
contained shall prevent the Board of Directors of any Company or
Subsidiary from disposing of or abandoning any such license, right to
use, patent, trademark or other proprietary right as the Board of
Directors of such Company or Subsidiary shall, in good faith, deem to be
in the best interest of such Company or Subsidiary.
(e) COMPLIANCE WITH LAWS. Comply with all applicable laws,
rules, regulations and orders of any governmental authority,
noncompliance with which could materially adversely affect its business
or condition, financial or other.
(f) VISITATION RIGHTS. At any reasonable time and from time
to time, permit the Purchaser or any agents or representatives thereof,
to examine and make copies of and extracts from the records and books of
account of, and visit and inspect the properties of, any Company and any
Subsidiary, and to discuss the affairs, finances and accounts of any
Company and any Subsidiary with any of their officers or directors and
independent accountants.
(g) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep adequate
records and books of account, in which complete entries will be made in
accordance with generally accepted accounting principles consistently
applied (except to the extent that any change in accounting principles
has been concurred in by the certified public accountants of Matec),
reflecting all financial transactions of each Company and each
Subsidiary, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts
and other purposes in connection with its business shall be made.
(h) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve
all of its properties, necessary or useful in the proper conduct of its
business, in good repair, working order and condition, ordinary wear and
tear excepted; PROVIDED, HOWEVER, that nothing herein contained shall
require Matec, any Company or any Subsidiary to maintain and preserve or
keep in good repair, working order or condition, any property which is
obsolete or surplus or unfit for use or which may not be used
advantageously in the conduct of the business of Matec, such Company or
such Subsidiary.
(i) COMPLIANCE WITH ERISA. Comply with all minimum funding
requirements applicable to any pension or other employee benefit or
employee contribution plans which are subject to ERISA or to the
Internal Revenue Code of 1986, as amended (the "Code"), and comply in
all other material respects with the provisions of ERISA and the Code,
and the rules and regulations thereunder, which are applicable to any
such plan; provided, however, that nothing herein shall in any be deemed
to prohibit or limit Matec's rights as contained in the applicable plans
to amend the provisions of such plans or to terminate such plans or
trusts, subject to the terms of the plans or trusts, ERISA and the
Code. No Company or Subsidiary will permit any event or condition to
exist which could permit any such plan to be terminated under
circumstances which would cause the lien provided for in Section 4068 of
ERISA to attach to the assets of any Company or any Subsidiary.
(j) MAINTENANCE OF DEBT TO EQUITY RATIO. Matec shall
maintain a ratio of Consolidated Indebtedness to Consolidated Net Worth
of not more than 1 to 1, such ratio to be measured at the end of each
fiscal quarter of Matec.
(k) MAINTENANCE OF INTEREST COVERAGE. Matec shall maintain a
ratio of Consolidated Net Earnings Available for Interest Charges to
Interest Charges of not less than 1 to 1 through December 31, 1995, and
not less than 2 to 1 thereafter, such ratio to be measured at the end of
each fiscal quarter of Matec, commencing on and with the fiscal quarter
ending June 30, 1995, as an average of the four (4) most recent fiscal
quarters of Matec.
(l) FOREIGN CORRUPT PRACTICES ACT. Comply and cause each of
its officers, directors, employees and agents to comply, at all times
with the prohibitions on certain acts and practices set forth in the
Foreign Corrupt Practices Act of 1977, and any rules or regulations
promulgated thereunder.
(m) EQUAL EMPLOYMENT OPPORTUNITY. Comply with all applicable
laws of the United States, the Commonwealth of Massachusetts, and of
each other applicable jurisdiction relating to equal employment
opportunity, any rules, regulations, administrative orders and Executive
Orders relating thereto and the applicable terms, relating to equal
employment opportunity, of any Government Contract; and keep, and cause
each Subsidiary to file, all reports, affirmative action plans and forms
required to be filed, pursuant to any such applicable law or the terms
of any such Government Contract; PROVIDED, HOWEVER, no Company or
Subsidiary shall be considered to have failed to comply with the
foregoing during any period that any matter relating to such Company's
or such Subsidiary's employment practices is being contested by such
Company or such Subsidiary in appropriate proceedings, or thereafter, if
such Company or such Subsidiary complies with any final determination
issued in such proceedings.
(n) STATUS OF NOTES AND WARRANTS AS QUALIFIED INVESTMENTS
In the event that any of the statements, information and related data
provided by or on behalf of any Company or any Subsidiary and relied
upon by the Purchaser in determining that the Notes and Warrants
constitute "qualified investments" within the meaning of that term in
the Capital Resource Company Act shall be put in issue in any formal or
informal proceedings initiated or conducted by or on behalf of the
Commonwealth of Massachusetts, each Company shall, upon reasonable
notice and at its expense, provide, and, cause each Subsidiary to
provide, such additional information, witnesses and related data as may
be reasonably necessary or appropriate to support the representations
and warranties set forth in Article III.
(o) ATTENDANCE AT BOARD MEETINGS. Each Company shall permit
the Purchaser or its designee to have one observer attend each meeting
of its Board of Directors and each meeting of any committee thereof.
Each Company shall send to the Purchaser and such designee the notice of
the time and place of such meeting in the same manner and at the same
time as it shall send such notice to its directors or committee members,
as the case may be. Each Company shall also provide to the Purchaser
copies of all notices, reports, minutes and consents at the time and in
the manner as they are provided to the Board of Directors or
committee.
(p) COMPENSATION. Each Company shall pay to its management
or management of any Subsidiary compensation at a rate of compensation
which is not in excess of that commonly paid to management in companies
of similar size, of similar maturity and in similar businesses and all
management compensation and all policies relating thereto shall be
approved in advance by a majority of the members of that Company's Board
of Directors or by a majority of the members of Matec's Compensation
Committee.
(q) COMPLIANCE WITH SECURITY AGREEMENTS. Comply at all times
with all of the terms and conditions of the Security Agreements.
4.02. NEGATIVE COVENANTS. Without limiting any other covenants
and provisions hereof, as long as any of the Notes or Warrants are
outstanding, each Company covenants and agrees that it will comply with
and observe the following covenants and provisions as are applicable to
it, and Matec covenants and agrees that it will comply with and observe
the following covenants and provisions and will cause each other Company
and each Subsidiary to comply with and observe such of the following
covenants and provisions as are applicable to such other Company or such
Subsidiary, and will not:
(a) LIENS. Create, incur, assume or suffer to exist, or
permit any other Company or any Subsidiary to create, incur, assume or
suffer to exist, any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance (including the lien or retained
security title of a conditional vendor) of any nature, upon or with
respect to any of its properties, now owned or hereinafter acquired, or
assign or otherwise convey any right to receive income, except that the
foregoing restrictions shall not apply to mortgages, deeds of trust,
pledges, liens, security interests or other charges or encumbrances:
(i) for taxes, assessments or governmental charges or
levies on property of any Company or any Subsidiary if the same shall
not at the time be delinquent or thereafter can be paid without penalty,
or are being contested in good faith and by appropriate proceedings;
(ii) imposed by law, such as carriers', warehousemen's
and mechanics' liens and other similar liens arising in the ordinary
course of business;
(iii) arising out of pledges or deposits under
workmen's compensation laws, unemployment insurance, old age pensions,
or other social security or retirement benefits, or similar
legislation;
(iv) securing the performance of bids, tenders,
contracts (other than for the repayment of borrowed money), statutory
obligations and surety bonds;
(v) in the nature of zoning restrictions, easements
and rights or restrictions of record on the use of real property which
do not materially detract from its value or impair its use;
(vi) arising by operation of law in favor of the owner
or sublessor of leased premises and confined to the property rented;
(vii) arising from any litigation or proceeding which
is being contested in good faith by appropriate proceedings, PROVIDED,
HOWEVER, that no execution or levy has been made;
(viii) described in EXHIBIT 3.07 which secure the
Indebtedness set forth in EXHIBIT 3.05 or Indebtedness permitted under
subsection 4.02(b)(ii), provided that no such lien is extended to cover
other or different property of any Company or any Subsidiary; and
(ix) arising out of a purchase money mortgage or security interest
on personal property to secure the purchase price of such property (or
to secure Indebtedness incurred solely for the purpose of financing the
acquisition of any such property) incurred by any Company or any
Subsidiary, provided that such purchase money mortgage or security
interest does not extend to any other or different property of such
Company or such Subsidiary.
(b) INDEBTEDNESS. Create, incur, assume or suffer to exist,
or permit any other Company or any Subsidiary to create, incur, assume
or suffer to exist, any liability with respect to Indebtedness except
for:
(i) the Notes;
(ii) Indebtedness for money borrowed, provided that
such Indebtedness for money borrowed: (A) does not exceed $5,000,000 in
principal amount at any one time outstanding and (B) does not result in
the Companies failure to comply with all of the provisions of Article IV
hereof;
(iii) Current Liabilities, other than for borrowed
money, which are incurred in the ordinary course of business; and
(iv) Indebtedness with respect to lease obligations,
provided that such lease obligations do not violate subsection 4.02(c).
(c) LEASE OBLIGATIONS. Create, incur, assume or suffer to
exist, or permit any other Company or any Subsidiary to create, incur,
assume or suffer to exist, any obligations as lessee for the rental or
hire of real or personal property in connection with any sale and
leaseback transaction; or become obligated to pay any rent for real
property or personal property under any lease with an original term,
including any lessor options to renew or extend, of more than three
years if the aggregate of consolidated fixed annual rent which would be
payable in any fiscal year by the Companies and their Subsidiaries under
all such leases would exceed $250,000.
(d) ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF OTHER
PERSONS. Assume, guarantee, endorse or otherwise become directly or
contingently liable on, or permit any other Company or any Subsidiary to
assume, guarantee, endorse or otherwise become directly or contingently
liable on (including, without limitation, liability by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to
supply funds to or otherwise invest in the debtor or otherwise to assure
the creditor against loss) any Indebtedness of any other Person, except
for: (i) guaranties by endorsement of negotiable instruments for deposit
or collection in the ordinary course of business, (ii) guaranties by a
Subsidiary of Indebtedness of Matec or any other Company, (iii)
guaranties by Matec of any Indebtedness of any Company, and (iv)
guaranties of any Industrial Revenue Bonds, the proceeds of which are
used solely for the benefit of Matec or any Company.
(e) MERGERS, SALE OF ASSETS, ETC. Merge or consolidate with,
or sell, assign, lease or otherwise dispose of or voluntarily part with
the control of (whether in one transaction or in a series of
transactions) a material portion of its assets (whether now owned or
hereinafter acquired) or sell, assign or otherwise dispose of (whether
in one transaction or in a series of transactions) any of its accounts
receivable (whether now in existence or hereinafter created) at a
discount or with recourse, to, any Person, or permit any other Company
or any Subsidiary to do any of the foregoing, except for sales or other
dispositions of assets in the ordinary course of business and except
that (1) any Company, other than Matec, or any Subsidiary may merge into
or consolidate with or transfer assets to any Company, (2) Matec may
merge any Person into it or otherwise acquire such Person as long as
Matec is the surviving entity, such merger or acquisition does not
result in the violation of any of the provisions of this Agreement and
no such violation exists at the time of such merger or acquisition, and,
provided that such merger or acquisition does not result in the issuance
(in one or more transactions) of shares of the voting stock of Matec
representing in the aggregate more than twenty percent (20%) of the
total outstanding voting stock of Matec, on a fully diluted basis,
immediately following the issuance thereof and (3) the Companies may
sell fixed assets up to five percent (5%) (based upon their then net
book value) of their consolidated net fixed assets in any period of
twelve (12) consecutive months.
(f) INVESTMENTS IN OTHER PERSONS. Make or permit any other
Company or any Subsidiary to make, any loan or advance to any person, or
purchase, otherwise acquire, or permit any other Company or any
Subsidiary to purchase or otherwise acquire, the capital stock, assets
comprising the business of, obligations of, or any interest in, any
Person, except:
(i) investments by a Company or a Subsidiary in
evidences of indebtedness issued or fully guaranteed by the United
States of America and having a maturity of not more than one year from
the date of acquisition;
(ii) investments by a Company or a Subsidiary in
certificates of deposit, notes, acceptances and repurchase agreements
having a maturity of not more than one year from the date of acquisition
issued by: (A) a bank organized in the United States having capital,
surplus and undivided profits of at least $100,000,000 and whose parent
holding company has long-term debt rated Aa1 or higher, and whose
commercial paper (if rated) is rated Prime 1, by ▇▇▇▇▇'▇ Investors
Service, Inc. or (B) Framingham Savings Bank or Unibank For Savings;
(iii) investments by a Company or a Subsidiary in the
highest-rated commercial paper having a maturity of not more than one
year from the date of acquisition;
(iv) loans or advances from a Subsidiary to any
Company;
(v) investments, loans or advances in or from one
Company to any other Company;
(vi) investments in Framingham Savings Bank as
reflected in the Form 10-K; and
(vii) other loans, advances and investments; provided
that the aggregate amount of all such other loans advances and
investments made on or after January 1, 1995 does not exceed, at any one
time outstanding, two percent (2%) of the Consolidated Net Worth of the
Companies as of the end of their then most recent fiscal quarter.
(g) DISTRIBUTIONS. Declare or pay any dividends, purchase,
redeem, retire, or otherwise acquire for value any of its capital stock
(or rights, options or warrants to purchase such shares) now or
hereafter outstanding, return any capital to its stockholders as such,
or make any distribution of assets to its stockholders as such, or
permit any other Company or any Subsidiary to do any of the foregoing
(such transactions being hereinafter referred to as "Distributions"),
except that the Subsidiaries may declare and make payment of cash and
stock dividends, return capital and make distributions of assets to any
Company; PROVIDED, HOWEVER, that nothing herein contained shall prevent
Matec from:
(i) effecting a stock split or declaring or paying
any dividend consisting of shares of any class of capital stock to the
holders of shares of such class of capital stock, or
(ii) redeeming any stock of a deceased stockholder out
of insurance held by Matec on that stockholder's life, or
(iii) making cash distributions to its stockholders,
provided such cash distributions in the any fiscal year do not exceed
thirty percent (30%) of the Companies Consolidated Net Income for their
immediately prior fiscal year, or
(iv) repurchases by Matec from its stockholders of not
more than an aggregate of $50,000 of its Common Stock in any fiscal
year, provided that the repurchase price per share for each share of
Common Stock so repurchased is not greater than the market price per
share of Common Stock on the date of such repurchase,
if in the case of any such transaction there does not exist at the time
of such Distribution an Event of Default or an event which, but for the
requirement that notice be given or time elapse or both, would
constitute an Event of Default and provided that such Distribution can
be made in compliance with the other terms of this Agreement.
(h) DEALINGS WITH AFFILIATES. Enter or permit any other
Company or any Subsidiary to enter into any transaction with any holder
of 5% or more of any class of capital stock of Matec, or any member of
their families or any corporation or other entity in which any one or
more of such stockholders or members of their immediate families
directly or indirectly holds five percent (5%) or more of any class of
capital stock except in the ordinary course of business and on terms not
less favorable to such Company or such Subsidiary than it would obtain
in a transaction between unrelated parties.
(i) MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES. Sell or
otherwise dispose of any shares of capital stock of any Subsidiary,
except to a Company or another Subsidiary, or permit any Company (other
than Matec) or any Subsidiary to issue, sell or otherwise dispose of any
shares of its capital stock, except to a Company, PROVIDED, HOWEVER,
that nothing herein contained shall prevent: (i) any merger,
consolidation or transfer of assets permitted by subsection 4.02(e) or
(ii) the exercise of certain options, outstanding on the date hereof, to
acquire shares of Matec Applied Sciences, Inc.
(j) CHANGE IN NATURE OF BUSINESS. Make, or permit any other
Company or any Subsidiary to make, any material change in the nature of
its business as carried on at the date hereof.
4.03. REPORTING REQUIREMENTS. Matec will furnish to each
registered holder of any Note or any Warrant:
(a) as soon as possible and in any event within five (5)
business days after the occurrence of each Event of Default or each
event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default, the statement of the chief financial
officer of Matec setting forth details of such Event of Default or event
and the action proposed to be taken with respect thereto;
(b) as soon as available and in any event within forty-five
(45) days after the end of each of the first three quarters of each
fiscal year of Matec, consolidated and consolidating balance sheets of
the Companies and their Subsidiaries as of the end of such quarter and
consolidated and consolidating statements of income and retained
earnings and of changes in financial position of the Companies and their
Subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, setting forth in each case
in comparative form the corresponding figures for the corresponding
period of the preceding fiscal year, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the chief financial
officer of Matec as having been prepared in accordance with generally
accepted accounting principles consistently applied (except to the
extent that there has been a change in such accounting principles and to
the extent that Matec's independent public accountant have concurred in
such change);
(c) as soon as available and in any event within ninety (90)
days after the end of each fiscal year of Matec, a copy of the annual
audit report for such year for the Companies and their Subsidiaries,
including therein consolidated and consolidating balance sheets of the
Companies and their Subsidiaries as of the end of such fiscal year and
consolidated and consolidating (which consolidating statements need not
be audited) statements of income and retained earnings and of changes in
financial position of the Companies and their Subsidiaries for such
fiscal year, setting forth in each case, as to the consolidated
statements, in comparative form the corresponding figures for the
preceding fiscal year, all duly certified by independent public
accountants of recognized standing acceptable to the Purchaser;
(d) at the time of delivery of each quarterly and annual
statement, a certificate, executed by the chief financial officer of
Matec in the case of quarterly statements and Matec's independent public
accountants in the case of annual statements, stating that such officer
or accountants, as the case may be, has caused this Agreement, the
Notes, the Warrants and the Security Agreements to be reviewed and has
no knowledge of any default by any Company or any Subsidiary in the
performance or observance of any of the provisions of this Agreement,
the Notes, the Warrants or the Security Agreements or, if such officer
or accountant has such knowledge, specifying such default and the nature
thereof. Each such certificate shall set forth computations in
reasonable detail demonstrating compliance with the provisions of
subsections 4.01(j) and (k) and subsections 4.02(b) and (c);
(e) promptly upon receipt thereof, any written report
submitted to any Company or any Subsidiary by independent public
accountants in connection with an annual or interim audit of the books
of such Company and such Subsidiary made by such accountants;
(f) prior to the start of each fiscal year, consolidated
capital and operating expense budgets, cash flow projections and income
and loss projections for the Companies and their Subsidiaries in respect
of such fiscal year, all itemized in reasonable detail and prepared on a
quarterly basis and approved prior to the start of each such fiscal year
by the Board of Directors of Matec, and, promptly after preparation, any
revisions to any of the foregoing;
(g) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting any Company or any Subsidiary of the type
described in Section 3.04; and
(h) promptly after sending, making available, or filing the
same, such reports and financial statements as any Company or any
Subsidiary shall send or make available to the stockholders of any
Company or the Commission and such other information respecting the
business, properties or the condition or operations, financial or
otherwise, of any Company or any Subsidiaries as the Purchaser may from
time to time reasonably request.
4.04. TERMINATION OF CERTAIN COVENANTS. Except for the convenants
set forth in subsections 4.01(f), (m), (n) and (o), all other covenants
set forth in Sections 4.01 and 4.02 shall terminate and be of no further
force or effect when the Notes have been redeemed in their entirety.
ARTICLE V
REGISTRATION RIGHTS
5.01. "PIGGY BACK" REGISTRATION. If at any time Matec shall
determine to register under the Securities Act (including pursuant to a
demand of any stockholder of Matec exercising registration rights) any
of its Common Stock of the type which has been or may be issued upon the
exercise of the Warrants, other than on Forms S-4 or S-8 or its then
equivalent, it shall send to each holder of Registrable Shares,
including each holder who has the right to acquire Registrable Shares,
written notice of such determination and, if within thirty (30) days
after receipt of such notice, such holder shall so request in writing,
Matec shall use its best efforts to include in such registration
statement all or any part of the Registrable Shares such holder requests
to be registered, except that if, in connection with any offering
involving an underwriting of Common Stock to be sold by Matec, the
managing underwriter shall impose a limitation on the number of shares
of such Common Stock which may be included in any such registration
statement because, in its judgment, such limitation is necessary to
effect an orderly public distribution, and such limitation is imposed
pro rata among the holders of such Common Stock having an incidental
("piggy back") right to include such Common Stock in the registration
statement according to the amount of such Common Stock which each holder
had requested to be included pursuant to such right, then Matec shall be
obligated to include in such registration statement only such limited
portion of the Registrable Shares with respect to which such holder has
requested inclusion hereunder.
5.02. REGISTRATION ON FORM S-3. In addition to the rights
provided the holder of Registrable Shares in Section 5.01 above, if the
registration of Registrable Shares under the Securities Act can be
effected on Form S-3 (or any similar form promulgated by the
Commission), Matec will promptly so notify each holder of Registrable
Shares, including each holder who has a right to acquire Registrable
Shares, and then will at any time, and from time to time, thereafter, as
expeditiously as possible, use its best efforts to effect qualification
and registration under the Securities Act on said Form S-3 of all or
such portion of the Registrable Shares as the holder or holders shall
specify; provided that the reasonably anticipated aggregate price to the
public of the Registrable Shares to be so registered is at least
$250,000.
5.03. EFFECTIVENESS. Matec will use its best efforts to maintain
the effectiveness for up to nine (9) months of any registration
statement pursuant to which any of the Registrable Shares are being
offered, and from time to time will amend or supplement such
registration statement and the prospectus contained therein as and to
the extent necessary to comply with the Securities Act and any
applicable state securities statute or regulation. Matec will also
provide each holder of Registrable Shares with as many copies of the
prospectus contained in any such registration statement as it may
reasonably request.
5.04. INDEMNIFICATION OF HOLDER OF REGISTRABLE SHARES. In the
event that Matec registers any of the Registrable Shares under the
Securities Act, Matec will indemnify and hold harmless each holder and
each underwriter of the Registrable Shares so registered (including any
broker or dealer through whom such shares may be sold) and each person,
if any, who controls such holder or any such underwriter within the
meaning of Section 15 of the Securities Act from and against any and all
losses, claims, damages, expenses or liabilities, joint or several, to
which they or any of them become subject under the Securities Act or
under any other statute or at common law or otherwise, and, except as
hereinafter provided, will reimburse each such holder, each such
underwriter and each such controlling person, if any, for any legal or
other expenses reasonably incurred by them or any of them in connection
with investigating or defending any actions whether or not resulting in
any liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the registration statement, in any preliminary or amended preliminary
prospectus or in the prospectus (or the registration statement or
prospectus as from time to time amended or supplemented by Matec) or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading or any violation by
Matec of any rule or regulation promulgated under the Securities Act
applicable to Matec and relating to action or inaction required of Matec
in connection with such registration, unless such untrue statement or
omission was made in such registration statement, preliminary or
amended, preliminary prospectus or prospectus in reliance upon and in
conformity with information furnished in writing to Matec in connection
therewith by such holder of Registrable Shares, any such underwriter or
any such controlling person expressly for use therein. Promptly after
receipt by any holder of Registrable Shares, any underwriter or any
controlling person, of notice of the commencement of any action in
respect of which indemnity may be sought against Matec, such holder of
Registrable Shares, or such underwriter or such controlling person, as
the case may be, will notify Matec in writing of the commencement
thereof, and, subject to the provisions hereinafter stated, Matec shall
assume the defense of such action (including the employment of counsel,
who shall be counsel reasonably satisfactory to such holder of
Registrable Shares, such underwriter or such controlling person, as the
case may be), and the payment of expenses insofar as such action shall
relate to any alleged liability in respect of which indemnity may be
sought against Matec. Such holder of Registrable Shares, any such
underwriter or any such controlling person shall have the right to
employ separate counsel in any such action and to participate in the
defense thereof but the fees and expenses of such counsel shall not be
at the expense of Matec unless the employment of such counsel has been
specifically authorized by Matec. Matec shall not be liable to
indemnify any person for any settlement of any such action effected
without Matec's consent. Matec shall not, except with the approval of
each party being indemnified under this Section 5.04, consent to entry
of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to
the parties being so indemnified of a release from all liability in
respect to such claim or litigation.
5.05. INDEMNIFICATION OF MATEC. In the event that Matec registers
any of the Registrable Shares under the Securities Act, each holder of
the Registrable Shares so registered will indemnify and hold harmless
Matec, each of its directors, each of its officers who have signed the
registration statement, each underwriter of the Registrable Shares so
registered (including any broker or dealer through whom such of the
shares may be sold) and each person, if any, who controls Matec or any
such underwriter within the meaning of Section 15 of the Securities Act
from and against any and all losses, claims, damages, expenses or
liabilities, joint or several, to which they or any of them may become
subject under the Securities Act or under any other statute or at common
law or otherwise, and, except as hereinafter provided, will reimburse
Matec and each such director, officer, underwriter or controlling person
for any legal or other expenses reasonably incurred by them or any of
them in connection with investigating or defending any actions whether
or not resulting in any liability, insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in the registration statement, in any preliminary or amended
preliminary prospectus or in the prospectus (or the registration
statement or prospectus as from time to time amended or supplemented) or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as
any such statement or omission was made in reliance upon and in
conformity with information furnished in writing to Matec in connection
therewith by such holder of Registrable Shares expressly for use
therein; PROVIDED, HOWEVER, that such holder's obligations hereunder
shall be limited to an amount equal to the proceeds to such holder of
the Registrable Shares sold in such registration. Promptly after
receipt of notice of the commencement of any action in respect of which
indemnity may be sought against such holder of Registrable Shares, Matec
will notify such holder of Registrable Shares in writing of the
commencement thereof, and such holder of Registrable Shares shall,
subject to the provisions hereinafter stated, assume the defense of such
action (including the employment of counsel, who shall be counsel
reasonably satisfactory to Matec) and the payment of expenses insofar as
such action shall relate to the alleged liability in respect of which
indemnity may be sought against such holder of Registrable Shares.
Matec and each such director, officer, underwriter or controlling person
shall have the right to employ separate counsel in any such action and
to participate in the defense thereof but the fees and expenses of such
counsel shall not be at the expense of such holder of Registrable Shares
unless employment of such counsel has been specifically authorized by
such holder of Registrable Shares. Such holder of Registrable Shares
shall not be liable to indemnify any person for any settlement of any
such action effected without such holder's consent.
5.06. EXCHANGE ACT REGISTRATION. If Matec has listed, or shall at
any time list, any of its Common Stock of the type which may be issued
upon the exercise of the Warrants on any national securities exchange,
Matec will, at its expense, simultaneously list on such exchange and
maintain such listing of, all of the Common Stock from time to time
issuable upon exercise of the Warrants. If Matec becomes subject to the
reporting requirements of either Section 13 or Section 15(d) of the
Exchange Act, Matec will use its best efforts to timely file with the
Commission such information as the Commission may require under either
of said Sections; and in such event, Matec shall use its best efforts to
take all action as may be required as a condition to the availability of
Rule 144 under the Securities Act (or any successor exemptive rule
hereinafter in effect) with respect to such Common Stock. Matec shall
furnish to any holder of Registrable Shares forthwith upon request (i) a
written statement by Matec as to its compliance with the reporting
requirements of Rule 144, (ii) a copy of the most recent annual or
quarterly report of Matec as filed with the Commission, and (iii) such
other reports and documents as a holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a
holder to sell any such Registrable Shares without registration.
5.07. DAMAGES. Matec recognizes and agrees that the holder of
Registrable Shares will not have an adequate remedy if Matec fails to
comply with this Article V and that damages will not be readily
ascertainable, and Matec expressly agrees that, in the event of such
failure, it shall not oppose an application by the holder of Registrable
Shares or any other person entitled to the benefits of this Article V
requiring specific performance of any and all provisions hereof or
enjoining Matec from continuing to commit any such breach of this
Article V.
5.08. FURTHER OBLIGATIONS. Whenever under the preceding Sections
of this Article V, Matec is required hereunder to register Registrable
Shares, it agrees that it shall also do the following:
(a) Furnish to each selling holder such copies of each
preliminary and final prospectus and such other documents as said holder
may reasonably request to facilitate the public offering of its
Registrable Shares;
(b) Use its best efforts to register or qualify the
Registrable Shares covered by said registration statement under the
applicable securities or "blue sky" laws of such jurisdictions as any
selling holder may reasonably request; PROVIDED, HOWEVER, that Matec
shall not be obligated to qualify to do business in any jurisdiction
where it is not then so qualified or to take any action which would
subject it to the service or process in suits other than those arising
out of the offer or sale of the securities covered by the registration
statement in any jurisdiction where it is not then so subject;
(c) Furnish to each selling holder a signed counterpart of
(i) an opinion of counsel for Matec, dated the
effective date of the registration statements, and
(ii) "comfort" letters signed by Matec's independent
public accountants who have examined and reported on Matec's financial
statements included in the registration statement, to the extent
permitted by the standards of the American Institute of Certified Public
Accountants,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and (in the case of the
accountants' "comfort" letters) with respect to events subsequent to the
date of the financial statements, as are customarily covered in opinions
of issuer's counsel and in accountants' "comfort" letters delivered to
the underwriters in underwritten public offerings of securities, to the
extent that Matec is required to deliver or cause the delivery of such
opinion or "comfort" letters to the underwriters in an underwritten
public offering of securities;
(d) Permit each selling holder or his counsel or other
representatives to inspect and copy such corporate documents and records
as may reasonably be requested by them;
(e) Furnish to each selling holder a copy of all documents
filed and all correspondence from or to the Commission in connection
with any such offering; and
(f) Use its best efforts to insure the obtaining of all
necessary approvals from the National Association of Securities Dealers,
Inc.
5.09. HOLDBACK AGREEMENT. In the case of any underwritten
registration which includes Common Stock to be sold by Matec, each
holder of Registrable Shares agrees, if requested by the managing
underwriter or underwriters, not to effect any public sale or
distribution, including any sale pursuant to Rule 144 under the
Securities Act, of any Registrable Shares during the one hundred twenty
(120) day period commencing on the date such request is made; PROVIDED,
HOWEVER, that all persons entitled to registration rights with respect
to shares of Common Stock who are not parties to this Agreement, all
other persons selling shares of Common Stock in such offering and all