EXHIBIT 10.8
US$190,000,000
or [pound sterling]112,000,000
CREDIT AGREEMENT
dated as of
March 23, 1998
between
GERBER SCIENTIFIC, INC.
and
WACHOVIA BANK, N.A.
TABLE OF CONTENTS
CREDIT AGREEMENT
ARTICLE I
DEFINITIONS................................1
SECTION 1.01. Definitions.....................................................1
SECTION 1.02. Accounting Terms and Determinations............................15
SECTION 1.03. References.....................................................16
SECTION 1.04. Use of Defined Terms...........................................16
SECTION 1.05. Terminology....................................................16
ARTICLE II
THE CREDIT................................16
SECTION 2.01. Commitment to Lend.............................................16
SECTION 2.02. Method of Borrowing Loans......................................17
SECTION 2.03. The Note.......................................................18
SECTION 2.04. Maturity of Loans..............................................19
SECTION 2.05. Interest Rates.................................................19
SECTION 2.06. Optional Termination or Reduction of
Commitments....................................................21
SECTION 2.07. Voluntary Prepayments..........................................21
SECTION 2.08. Mandatory Prepayments..........................................22
SECTION 2.09. General Provisions as to Payments..............................22
SECTION 2.10. Computation of Interest and Fees...............................24
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND BORROWINGS.......................24
SECTION 3.01. Conditions to Effectiveness....................................24
SECTION 3.02. Conditions to Offer Funding Borrowing..........................26
SECTION 3.03. Conditions to All Borrowings other than Offer
Funding Borrowings.............................................27
(i)
ARTICLE IV
REPRESENTATIONS AND WARRANTIES...............................27
SECTION 4.01. Corporate Existence and Power..................................27
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention..................................................27
SECTION 4.03. Binding Effect.................................................28
SECTION 4.04. Financial Information..........................................28
SECTION 4.05. No Litigation..................................................28
SECTION 4.06. Compliance with ERISA..........................................29
SECTION 4.07. Compliance with Laws; Payment of Taxes.........................29
SECTION 4.08. Subsidiaries...................................................29
SECTION 4.09. Investment Company Act.........................................30
SECTION 4.10. Public Utility Holding Company Act.............................30
SECTION 4.11. Ownership of Property; Liens...................................30
SECTION 4.12. No Default.....................................................30
SECTION 4.13. Full Disclosure................................................30
SECTION 4.14. Environmental Matters..........................................31
SECTION 4.15. Capital Stock..................................................31
SECTION 4.16. Margin Stock...................................................31
SECTION 4.17. Insolvency.....................................................32
SECTION 4.18. Insurance......................................................32
ARTICLE V
COVENANTS................................33
SECTION 5.01. Information....................................................33
SECTION 5.02. Inspection of Property, Books and Records......................34
SECTION 5.03. Maintenance of Existence.......................................35
SECTION 5.04. Dissolution....................................................35
SECTION 5.05. Consolidations, Mergers and Sales of Assets....................35
(ii)
SECTION 5.06. Use of Proceeds................................................35
SECTION 5.07. Compliance with Laws; Payment of Taxes.........................36
SECTION 5.08. Insurance......................................................36
SECTION 5.09. Change in Fiscal Year..........................................37
SECTION 5.10. Maintenance of Property........................................37
SECTION 5.11. Environmental Notices..........................................37
SECTION 5.12. Environmental Matters..........................................37
SECTION 5.13. Environmental Release..........................................37
SECTION 5.14. Transactions with Affiliates...................................37
SECTION 5.15. Restricted Payments............................................37
SECTION 5.16. Loans or Advances..............................................37
SECTION 5.17. Investments....................................................38
SECTION 5.18. Liens..........................................................39
SECTION 5.19. Restrictions on Ability of Subsidiaries to Pay
Dividends......................................................40
SECTION 5.20. Minimum Consolidated Worth.....................................40
SECTION 5.21. Ratio of Consolidated Total Funded Debt to
Consolidated EBITDA............................................40
SECTION 5.22. Consolidated Fixed Charges Coverage Ratio......................40
SECTION 5.23. Debt...........................................................40
SECTION 5.24. Contingent Liabilities.........................................41
SECTION 5.25. Certain Covenants Pertaining to the Offer......................41
SECTION 5.26. Certain Covenants Pertaining to the Target and
its Shares.....................................................43
ARTICLE VI
DEFAULTS.................................43
SECTION 6.01. Events of Default..............................................43
ARTICLE VII
CHANGE IN CIRCUMSTANCES; COMPENSATION..................46
(iii)
SECTION 7.01. Basis for Determining Interest Rate Inadequate or
Unfair.........................................................47
SECTION 7.02. Illegality.....................................................47
SECTION 7.03. Increased Cost and Reduced Return..............................48
SECTION 7.04. Base Rate Loans Substituted for Affected Fixed
Rate Loans.....................................................49
SECTION 7.05. Compensation...................................................50
SECTION 7.06. Failure to Pay in Foreign Currency.............................50
SECTION 7.07. Judgment Currency..............................................51
ARTICLE VIII
MISCELLANEOUS...............................51
SECTION 8.01. Notices........................................................51
SECTION 8.02. No Waivers.....................................................51
SECTION 8.03. Expenses; Documentary Taxes....................................52
SECTION 8.04. Indemnification................................................52
SECTION 8.05. Setoff.........................................................52
SECTION 8.06. Amendments and Waivers.........................................53
SECTION 8.07. Successors and Assigns.........................................53
SECTION 8.08. Confidentiality................................................54
SECTION 8.09. Representation by the Bank.....................................54
SECTION 8.10. Georgia Law....................................................55
SECTION 8.11. Severability...................................................55
SECTION 8.12. Interest.......................................................55
SECTION 8.13. Interpretation.................................................56
SECTION 8.14. Waiver of Jury Trial; Consent to Jurisdiction..................56
SECTION 8.15. Counterparts...................................................56
SECTION 8.16. Source of Funds -- ERISA.......................................56
(iv)
EXHIBIT A Form of Note
EXHIBIT B Form of Opinion of Counsel for the Borrower and
the Guarantors
EXHIBIT C Form of Opinion of Special Counsel for the Bank
EXHIBIT D Form of Notice of Borrowing
EXHIBIT E Form of Compliance Certificate
EXHIBIT F Form of Closing Certificate
EXHIBIT G Form of Officer's Certificate
EXHIBIT H Form of Subsidiary Guaranty
EXHIBIT I Form of Contribution Agreement
EXHIBIT J Form of Pledge Agreement
Schedule 4.08 Subsidiaries
Schedule 4.14 Environmental Matters
Schedule 5.16 Existing Loans and Advances
Schedule 5.17 Existing Investments
(v)
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of March 23, 1998, between GERBER SCIENTIFIC,
INC., a Connecticut corporation, and WACHOVIA BANK, N.A..
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this Section 1.01 shall,
for all purposes of this Agreement and any amendment hereto (except as herein
otherwise expressly provided or unless the context otherwise requires), have the
meanings set forth herein:
"Additional Amounts" has the meaning set forth in Section 2.09(d).
"Adjusted IBOR Rate" has the meaning set forth in Section 2.05(d).
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.05(c).
"Affiliate" of any relevant Person means (i) any Person that directly, or
indirectly through one or more intermediaries, controls the relevant Person (a
"Controlling Person"), (ii) any Person (other than the relevant Person or a
Subsidiary of the relevant Person) which is controlled by or is under common
control with a Controlling Person, or (iii) any Person (other than a Subsidiary
of the relevant Person) of which the relevant Person owns, directly or
indirectly, 20% or more of the common stock or equivalent equity interests. As
used herein, the term "control" means 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.
"Agreement" means this Credit Agreement, together with all amendments and
supplements hereto.
"Applicable Margin" has the meaning set forth in Section 2.05(a).
"Authority" has the meaning set forth in Section 7.02.
"Bank" means Wachovia, N.A., and its successors and assigns.
1
"Base Rate" means for any Base Rate Loan for any day, the rate per annum
equal to the higher as of such day of (i) the Prime Rate, or (ii) one-half of
one percent above the Federal Funds Rate. For purposes of determining the Base
Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall be
effective on the date of each such change.
"Base Rate Loan" means a Loan made in Dollars which bears or is to bear
interest at a rate based upon the Base Rate, and is to be made as a Base Rate
Loan pursuant to the applicable Notice of Borrowing, Section 2.02(f), or Article
VIII, as applicable.
"Borrower" means Gerber Scientific, Inc., a Connecticut corporation, and its
successors and its permitted assigns.
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrower. A Borrowing is a "Base Rate Borrowing" if such Loans are Base Rate
Loans or a "[pound sterling]Dollar Borrowing" if such Loans are Euro-Dollar
Loans. A Borrowing is a "Foreign Currency Borrowing" if such Loans are Foreign
Currency Loans.
"Capital Stock" means any nonredeemable capital stock of the Borrower or any
Consolidated Subsidiary (to the extent issued to a Person other than the
Borrower or a Subsidiary), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. ss. 9601 et. seq. and its implementing regulations and
amendments.
"CERCLIS" means the Comprehensive Environmental Response, Compensation, and
Liability Information System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section 7.02.
"Closing Certificate" has the meaning set forth in Section 3.01(e).
"Clean-up Period" means the period commencing on the Closing Date and ending
on the date that is 90 days after the date of the initial Borrowing hereunder.
"Closing Date" means March 23, 1998.
"Code" means the Internal Revenue Code of 1986, as amended, or any successor
Federal tax code.
"Commitment" means $190,000,000 or, with respect to Offer Funding Borrowings
during the Offer Period, [pound sterling]112,000,000,
2
as such amount may be reduced from time to time pursuant to Section 2.06.
"Compliance Certificate" has the meaning set forth in Section 5.01(c).
"Consolidated Capital Expenditures" at any date, on a consolidated basis in
accordance with GAAP for the Borrower and its Consolidated Subsidiaries,
calculated at the end of each Fiscal Quarter for the Fiscal Quarter most
recently ended and the immediately preceding 3 Fiscal Quarters (and with respect
to any Consolidated Subsidiary acquired during such 4 Fiscal Quarter period,
such Consolidated Subsidiary shall be included on a pro forma, historical basis
as if it had been a Consolidated Subsidiary during such entire 4 Fiscal Quarter
period), the sum of all capital expenditures paid in cash during such 4 Fiscal
Quarter period by the Borrower and its Consolidated Subsidiaries.
"Consolidated Dividends" means at any date, on a consolidated basis in
accordance with GAAP for the Borrower and its Consolidated Subsidiaries,
calculated at the end of each Fiscal Quarter for the Fiscal Quarter most
recently ended and the immediately preceding 3 Fiscal Quarters the sum of all
dividends and other distributions paid during such period in respect of any
Capital Stock and Redeemable Preferred Stock (other than dividends paid or
payable in the form of additional Capital Stock).
"Consolidated EBITDA" means at any date the sum of the following, on a
consolidated basis in accordance with GAAP for the Borrower and its Consolidated
Subsidiaries, calculated at the end of each Fiscal Quarter for the Fiscal
Quarter most recently ended and the immediately preceding 3 Fiscal Quarters (and
with respect to any Consolidated Subsidiary acquired during such 4 Fiscal
Quarter period, such Consolidated Subsidiary shall be included on a pro forma,
historical basis as if it had been a Consolidated Subsidiary during such entire
4 Fiscal Quarter period): (i) Consolidated Net Income (but without deduction for
any loss incurred in connection with the sale of the interests in Gerber Systems
Corporation); plus (ii) Consolidated Interest Expense; plus (iii) Consolidated
Taxes; plus (iv) depreciation expense; plus (v) amortization expense; plus (vi)
other non-cash charges.
"Consolidated Fixed Charges Coverage Ratio" means, at any date, for the
Fiscal Quarter most recently ended and the immediately preceding 3 Fiscal
Quarters, the ratio of: (i) the sum of (x) Consolidated EBITDA, less (y)
Consolidated Capital Expenditures; to (ii) the sum of (x) Consolidated Interest
Expense, plus (y) Consolidated Dividends, plus (z) Consolidated Taxes.
"Consolidated Interest Expense" means at any date, on a consolidated basis
in accordance with GAAP for the Borrower
3
and its Consolidated Subsidiaries, calculated at the end of each Fiscal Quarter
for the Fiscal Quarter most recently ended and the immediately preceding 3
Fiscal Quarters (and with respect to any Consolidated Subsidiary acquired during
such 4 Fiscal Quarter period, such Consolidated Subsidiary shall be included on
a pro forma, historical basis as if it had been a Consolidated Subsidiary during
such entire 4 Fiscal Quarter period), interest, whether expensed or capitalized,
in respect of Debt of the Borrower or any of its Consolidated Subsidiaries
outstanding during such 4 Fiscal Quarter period.
"Consolidated Net Income" means, for any period, the Net Income of the
Borrower and its Consolidated Subsidiaries determined on a consolidated basis,
but excluding (i) extraordinary items and (ii) any equity interests of the
Borrower or any Subsidiary in the unremitted earnings of any Person that is not
a Subsidiary.
"Consolidated Net Worth" means, at any time, the shareholders' equity of the
Borrower and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding (ii) any Redeemable
Preferred Stock of the Borrower or any of its Consolidated Subsidiaries and (ii)
any write-off of the Borrower's interest in Gerber Systems Corporation.
"Consolidated Subsidiary" means at any date any Subsidiary or other entity
the accounts of which, in accordance with GAAP, would be consolidated with those
of the Borrower in its consolidated financial statements as of such date.
"Consolidated Taxes" means at any date, on a consolidated basis in
accordance with GAAP for the Borrower and its Consolidated Subsidiaries,
calculated on a consolidated basis at the end of each Fiscal Quarter for the
Fiscal Quarter most recently ended and the immediately preceding 3 Fiscal
Quarters (and with respect to any Consolidated Subsidiary acquired during such 4
Fiscal Quarter period, such Consolidated Subsidiary shall be included on a pro
forma, historical basis as if it had been a Consolidated Subsidiary during such
entire 4 Fiscal Quarter period), all income tax expense of the Borrower or any
of its Consolidated Subsidiaries during such 4 Fiscal Quarter period.
"Consolidated Total Funded Debt" means, without duplication,
all of the following types of Debt of the Borrower and its Consolidated
Subsidiaries: (i) obligations for borrowed money or evidenced by bonds,
debentures, notes or other similar instruments, (ii) obligations as lessee under
capital leases, (iii) obligations to reimburse any bank or other Person in
respect of amounts paid under a letter of credit (other than a trade letter of
credit) or similar instrument, (iv) all Redeemable Preferred Stock of such
Person (in the event such Person is a corporation), and (v) Debt of the types
referred to
4
in clauses (i) through (iv), inclusive, of this definition of Persons other than
the Borrower or any Guarantor which are Guaranteed by the Borrower or any
Consolidated Subsidiary.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital leases,
(v) all obligations of such Person to reimburse any bank or other Person in
respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations of such Person to reimburse any bank or other Person in
respect of amounts paid or to be paid or to be paid under a letter of credit
(other than a trade letter of credit) or similar instrument, (viii) all Debt of
others secured by a Lien on any asset of such Person, whether or not such Debt
is assumed by such Person, (ix) all obligations of such Person with respect to
any Hedging Agreement (valued as the termination value thereof computed in
accordance with a method approved by the International Swap Dealers Association
and agreed to by such Person in the applicable hedging agreement, if any), and
(x) all Debt of others Guaranteed by such Person.
"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.
"Default Rate" means, with respect to any Loan, on any day, the sum of 4%
plus the then highest interest rate (including the Applicable Margin) which may
be applicable to any Loans hereunder (irrespective of whether any such type of
Loans are actually outstanding hereunder).
"Dollar Equivalent" means the Dollar equivalent of the amount of a Foreign
Currency Loan, determined by the Bank on the basis of the Exchange Rate.
"Dollars" or "$" means dollars in lawful currency of the United States of
America.
5
"Domestic Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in Georgia or New York are authorized by law to close.
"Domestic Subsidiary" means any Subsidiary which is incorporated, organized
or created under the laws of the United States of America or any state,
territory or possession thereof or the District of Columbia.
"Dow Xxxxx Markets, Inc." means, when used in connection with any designated
page and the London Interbank Offered Rate or IBOR, the display page so
designated on the Dow Xxxxx Markets, Inc. Service (or such other page as may
replace that page on that service for the purpose of displaying rates comparable
to the London Interbank Offered Rate or IBOR).
"Environmental Authority" means any foreign, federal, state, local or
regional government of competent jurisdiction or authority under any
Environmental Requirement.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites, if any, for
conducting the business of the Borrower or any Subsidiary required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or orders
arising from any Environmental Requirements, whether or not entered upon
consent, or final and binding written agreements with an Environmental Authority
arising from or pursuant to any Environmental Requirement, whether or not
incorporated in a judgment, decree or order.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from any Environmental Requirements.
"Environmental Notices" means written notice from any Environmental
Authority or by any other person or entity, of possible or alleged noncompliance
with or liability under any Environmental Requirement, including without
limitation any complaints, citations, demands or requests from any Environmental
Authority or from any other person or entity for correction of any violation of
any Environmental Requirement or any investigations concerning any violation of
any Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative proceedings
arising from any Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA or under any
Environmental Requirement.
6
"Environmental Requirements" means any applicable legal requirement relating
to health, safety or the environment that governs or regulates the Borrower, any
Subsidiary or the Properties, including but not limited to any such requirement
under CERCLA or similar state legislation and all federal, state and local laws,
ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Euro-Dollar Loan" means a Loan made in Dollars which bears or is to bear
interest at a rate based upon the Adjusted London Interbank Offered Rate, and to
be made as a Euro-Dollar Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.05(d).
"Event of Default" has the meaning set forth in Section 6.01.
"Exchange Rate" means, on any day, (a) with respect to the Foreign Currency,
the rate at which such Foreign Currency may be exchanged into Dollars, as set
forth at approximately 11:00 a.m., London time, on such day on the Reuters World
Currency Page for such currency. In the event that such rate does not appear on
any Reuters World Currency Page, the Exchange Rate shall be determined by
reference to the applicable Bloomberg System page or, in the event that such
rate does not appear on such page, such other publicly available service for
displaying exchange rates as may be agreed upon by the Bank and the Borrower,
or, in the absence of such agreement, such Exchange Rate shall instead be the
arithmetic average of the spot rates of exchange of the Bank in the market where
its foreign currency exchange operations in respect of the Foreign Currency are
then being conducted, at or about 11:00 a.m., London time, on such date for the
purchase of Dollars, with such Foreign Currency for delivery 2 Fixed Rate
Business Days later; provided, that if at the time of any such determination,
for any reason, no such spot rate is being quoted, the Bank may use any
reasonable method it deems appropriate to determine such rate, and such
determination shall be conclusive absent manifest error.
"Federal Funds Rate" means, for any day, the rate per annum (rounded upward,
if necessary, to the next higher 1/100th of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as
7
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Domestic Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to the Bank on such day on such
transactions, as determined by the Bank.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Fixed Rate Borrowing" means a Euro-Dollar Borrowing or a Foreign Currency
Borrowing, or any or all of them, as the context shall require.
"Fixed Rate Business Day" means (i) with respect to Euro-Dollar Loans, any
Domestic Business Day on which dealings in Dollar deposits are carried out in
the London interbank market, and (ii) with respect to Foreign Currency Loans,
any Domestic Business Day, excluding one on which trading is not carried on by
and between banks in deposits of the Foreign Currency in the London interbank
market.
"Fixed Rate Loans" means Euro-Dollar Loans or Foreign Currency Loans, as the
context shall require.
"Foreign Currency" means British pounds sterling.
"GAAP" means generally accepted accounting principles applied on a basis
consistent with those which, in accordance with Section 1.02, are to be used in
making the calculations for purposes of determining compliance with the terms of
this Agreement.
"GECC Credit Receivables Arrangement" means the arrangements and transaction
pertaining to lease financing for purchasers of equipment manufactured by the
Borrower and certain of its Subsidiaries described in the Vendor Program
Agreement between the Borrower and General Electric Capital Corporation dated
August 17, 1992, as amended or supplemented from time to time, which arrangement
includes, as of the Closing Date, an $85,000,000 upper limit on amount of
contingent liability permitted thereunder.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or material performance
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 secure, purchase or pay (or
8
advance or supply funds for the purchase or 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 provide
collateral security, 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 (x) endorsements for
collection or deposit in the ordinary course of business or (y) any obligation
under or arising out of the GECC Credit Receivables Arrangement. The term
"Guarantee" used as a verb has a corresponding meaning.
"Guarantor" means Gerber Technology, Inc., Gerber Scientific Products, Inc.,
and Gerber Optical, Inc., each a Connecticut corporation.
"Hazardous Materials" includes, without limitation, (a) solid or hazardous
waste, as defined in the Resource Conservation and Recovery Act of 1980, 42
U.S.C. ss. 6901 et seq. and its implementing regulations and amendments, or in
any comparable state or local law or regulation, (b) "hazardous substance",
"pollutant", or "contaminant" as defined in CERCLA, or in any comparable state
or local law or regulation, (c) gasoline, or any other petroleum product or
by-product, including, crude oil or any fraction thereof, (d) toxic substances,
as defined in the Toxic Substances Control Act of 1976, or in any comparable
state or local law or regulation and (e) insecticides, fungicides, or
rodenticides, as defined in the Federal Insecticide, Fungicide, and Rodenticide
Act of 1975, or in any comparable state or local law or regulation, as each such
Act, statute or regulation may be amended from time to time.
"Hedging Agreement" means any interest rate protection agreement, foreign
currency exchange agreement or other hedging arrangement.
"IBOR" has the meaning set forth in Section 2.05(d).
"Interest Period" means, (1) with respect to each Fixed Rate Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the first month thereafter; provided that:
(a) any Interest Period (subject to paragraph (c) below) which would
otherwise end on a day which is not a Fixed Rate Business Day shall be
extended to the next succeeding Fixed Rate Business Day unless such Fixed
Rate Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Fixed Rate Business Day;
9
(b) any Interest Period which begins on the last Fixed Rate
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month) shall, subject to paragraph (c) below, end on the last Fixed
Rate Business Day of the appropriate subsequent calendar month; and
(c) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
(2) With respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; provided that:
(a) any Interest Period which would otherwise end on a day which is not a
Domestic Business Day shall be extended to the next succeeding Domestic Business
Day; and
(b) no Interest Period which begins before the Termination Date and would
otherwise end after the Termination Date may be selected.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person, capital
contribution to such Person, loan or advance to such Person, making of a time
deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
"Lending Office" means, as to the Bank, its office located at its address
set forth on the signature pages hereof (or identified on the signature pages
hereof as its Lending Office) or such other office as the Bank may hereafter
designate as its Lending Office by notice to the Borrower. The Bank may
designate a Lending Office for Base Rate Loans and Euro-Dollar Loans and a
different Lending Office for Foreign Currency Loans, and the term "Lending
Office" shall in such case mean either such Lending Office, as the context shall
require.
"Lien" means, with respect to any asset, any mortgage, deed to secure debt,
deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement,
10
capital lease or other title retention agreement relating to such asset.
"Loan" means a Base Rate Loan, a Euro-Dollar Loan or a Foreign Currency
Loan, or any or all of them, as the context shall require.
"Loan Documents" means this Agreement, the Note, the Pledge Agreement, the
Subsidiary Guaranty, and any other document evidencing or securing the Loans, as
such documents and instruments may be amended or supplemented from time to time.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(c).
"Mandate" means the mandate and fee letter dated March 10, 1998 between the
Borrower and the Bank.
"Margin Stock" means "margin stock" as defined in Regulations G, T, U or X.
"Material Adverse Effect" means, with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business or properties of the Borrower and its
Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of the
Bank under the Loan Documents, or the ability of the Borrower or any Guarantor
to perform its obligations under the Loan Documents to which it is a party, as
applicable, or (c) the legality, validity or enforceability of any Loan
Document.
"Material Foreign Subsidiary" means: (i) the Target; and (ii) any other
Subsidiary which is not a Domestic Subsidiary, is directly owned by the Borrower
or a Domestic Subsidiary, and either (x) has assets which constitute more than
5% of the consolidated total assets of the Borrower and its Consolidated
Subsidiaries at the end of the most recent Fiscal Quarter, or (y) contributed
more than 5% of Consolidated Net Income for the 4 most recent Fiscal Quarters
then ended (or, with respect to any Subsidiary which is not a Domestic
Subsidiary and which existed during the entire 4 Fiscal Quarter period but was
acquired by the Borrower during such period, which would have contributed more
than 5% of Consolidated Net Income for such period had it been a Subsidiary for
the entire period, as determined on a pro forma basis in accordance with GAAP);
provided, that in calculating consolidated total assets and Consolidated Net
Income for purposes of the foregoing, the
11
assets, liabilities and Net Income of Gerber Systems Corporation shall be
disregarded.
"Moody's" means Xxxxx'x Investor Service, Inc.
"Multiemployer Plan" shall have the meaning set forth in Section 4001(a)(3)
of ERISA.
"Net Income" means, as applied to any Person for any period, the aggregate
amount of net income of such Person, after taxes, for such period, as determined
in accordance with GAAP.
"Non-US Lender" has the meaning set forth in Section 2.09(e).
"Note" means the promissory note in form and substance as set forth on
Exhibit A, evidencing the obligation of the Borrower to repay the Loans,
together with all amendments, consolidations, modifications, renewals and
supplements thereto.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Other Taxes" has the meaning set forth in Section 8.03.
"Offer" means the offer by J. Xxxxx Xxxxxxxx & Co., Limited on behalf of the
Borrower to acquire all the outstanding Shares, substantially on the terms and
conditions referred to in the Press Release, as such offer may be amended,
revised, supplemented or otherwise modified from time to time.
"Offer Document" means the Offer Document distributed to the holders of
Shares to which the Offer is made in the agreed form consistent with Section
5.25(a), setting out the terms of Offer.
"Offer Funding Borrowing" has the meaning set forth in Section 5.06.
"Offer Termination Date" means the earliest date (as notified by the
Borrower to the Bank) on which all of the following have occurred: (a) all
payments in respect of acceptances of the cash alternative in the Offer have
been made in full, (b) no further such acceptances are possible; and (c) all
procedures pursuant to Section 428 et seq. of the U.K. Companies Xxx 0000 that
are capable of being implemented have been completed and all payments pursuant
thereto to or for the benefit of shareholders of the Target have been made in
full.
"Officer's Certificate" has the meaning set forth in Section 3.01(g).
12
"Participant" has the meaning set forth in Section 8.07(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code and is either (i) maintained by a member of the Controlled Group
for employees of any member of the Controlled Group or (ii) maintained pursuant
to a collective bargaining agreement or any other arrangement under which more
than one employer makes contributions and to which a member of the Controlled
Group is then making or accruing an obligation to make contributions or has
within the preceding 5 plan years made contributions.
"Pledge Agreement" means the Pledge Agreement, substantially in the form of
Exhibit J, to be executed and delivered by the Borrower agreeing to pledge to
the Bank pursuant thereto, at the times specified in Section 5.26(a), the
capital common stock of the Target and all Material Foreign Subsidiaries, if
any.
"Press Release" means the agreed form of press release issued in the United
Kingdom on or about the Closing Date by which the Offer is announced.
"Prime Rate" refers to that interest rate so denominated and set by Wachovia
from time to time as an interest rate basis for borrowings. The Prime Rate is
but one of several interest rate bases used by Wachovia. Wachovia lends at
interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or otherwise used or
occupied by the Borrower or any Subsidiary, wherever located.
"Redeemable Preferred Stock" of any Person means any preferred stock issued
by such Person which is at any time prior to the Termination Date either (i)
mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Reuters Screen" shall mean, when used in connection with any designated
page and IBOR, the display page so designated on the Reuter Monitor Money Rates
Service (or such
13
other page as may replace that page on that service for the purpose of
displaying rates comparable to IBOR).
"Regulation G" means Regulation G of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Restricted Payment" means (i) any dividend or other distribution on any
shares of the Borrower's Capital Stock (except dividends payable solely in
shares of its Capital Stock) or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Borrower's
Capital Stock (except shares acquired upon the conversion thereof into other
shares of its Capital Stock) or (b) any option, warrant or other right to
acquire shares of the Borrower's Capital Stock.
"S&P" means Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx, Inc.
"Shares" shall mean (i) the ordinary shares of the Target (par value 10
xxxxx per share) and (ii) the "A" shares of the Target (par value 10 xxxxx per
share).
"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 Borrower.
"Subsidiary Guaranty" means the Subsidiary Guaranty, substantially in the
form of Exhibit H, to be executed and delivered by each of the existing Domestic
Subsidiaries.
"Target" means Spandex PLC, which on the date hereof is a public limited
company incorporated under the laws of England and Wales.
"Taxes" has the meaning set forth in Section 2.09(c).
14
"Termination Date" means March 23,1999.
"Third Parties" means all lessees, sublessees, licensees and other users of
the Properties, excluding those users of the Properties in the ordinary course
of the Borrower's business and on a temporary basis.
"Transferee" means any bank or financial institution to which the Bank has
sold either (i) all or a proportionate part of its rights and obligations under
this Agreement, the Note and the other Loan Documents or (ii) a participation
interest in the Loans, the Note and the Commitment.
"Unfunded Vested Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the present value of all vested nonforfeitable
benefits under such Plan exceeds (ii) the fair market value of all Plan assets
allocable to such benefits, 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 Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"Unused Commitment" means at any date, an amount equal to the Commitment
less the aggregate outstanding principal amount of the Loans.
"Wachovia" means Wachovia Bank, N.A., a national banking association, and
its successors.
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of capital
stock or other ownership interests of which (except directors' qualifying
shares) are at the time directly or indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all terms of an accounting character 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 GAAP, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants or otherwise
required by a change in GAAP) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered
to the Bank unless with respect to any such change concurred in by the
Borrower's independent public accountants or required by GAAP, in determining
compliance with any of the provisions of this Agreement or any of the other Loan
Documents: (i) the Borrower shall have objected to determining such compliance
on such basis at the time of delivery of such financial statements, or (ii) the
Bank shall so object in writing within 30 days after the delivery of such
financial statements, in either of which events such calculations shall be made
on a basis consistent with those
15
used in the preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in respect of
the first financial statements delivered under Section 5.01, shall mean the
financial statements referred to in Section 4.04).
SECTION 1.03. References. Unless otherwise indicated, references in this
Agreement to "Articles", "Exhibits", "Schedules", "Sections" and other
Subdivisions are references to articles, exhibits, schedules, sections and other
subdivisions hereof.
SECTION 1.04. Use of Defined Terms. All terms defined in this Agreement
shall have the same defined meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall require
otherwise.
SECTION 1.05. Terminology. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the plural shall
include the singular. Titles of Articles and Sections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement.
ARTICLE II
THE CREDIT
SECTION 2.01. Commitment to Lend. The Bank agrees, on the terms and
conditions set forth herein, to make Loans (which may be, at the option of the
Borrower and subject to the terms and conditions hereof, Base Rate Loans,
Euro-Dollar Loans or Foreign Currency Loans) to the Borrower from time to time
before the Termination Date; provided that, immediately after each such Loan is
made, the sum of the aggregate outstanding principal amount of Base Rate Loans
and Euro-Dollar Loans and the Dollar Equivalent of Foreign Currency Loans shall
not exceed the amount of the Commitment.
The Dollar Equivalent of each Foreign Currency Loan on the date each Foreign
Currency Loan is disbursed pursuant hereto shall be deemed to be the amount of
such Foreign Currency Loan outstanding for the purpose of calculating the
aggregate outstanding principal amount of the Foreign Currency Loans for
purposes of the proviso contained in the first paragraph of Section 2.01;
provided, however, that if at the time of receipt of any Notice of Borrowing,
the aggregate outstanding principal amount of all Base Rate Loans and Euro-
Dollar Loans and the Dollar Equivalent of the aggregate principal amount of the
Foreign Currency Loans is equal to or greater than 90% of the Commitment, then
the Dollar Equivalent of each Foreign Currency Loan shall be calculated as of
such date, rather than as of the date such Foreign Currency Loans
16
were disbursed, and in the event that, as a result of such calculation, the
aggregate outstanding principal amount of all Base Rate Loans and Euro-Dollar
Loans and the Dollar Equivalent of the aggregate principal amount of the Foreign
Currency Loans is equal to or exceeds 105% of the amount of the Commitment, then
(i) the Foreign Currency Loans shall be subject to mandatory repayment pursuant
to the provisions of Section 2.09(b), and until such prepayment is made, no
additional Borrowings shall be permitted.
Each Fixed Rate Borrowing under this Section shall be in an aggregate
principal amount of $10,000,000 (or the Dollar Equivalent thereof in the Foreign
Currency) or any larger integral multiple of $2,500,000 (or the Dollar
Equivalent thereof in the Foreign Currency); each Base Rate Borrowing under this
Section shall be in an aggregate principal amount of $5,000,000 or any larger
integral multiple of $2,500,000 (except that any such Base Rate Borrowing may be
in the amount of the Unused Commitment). Within the foregoing limits, the
Borrower may borrow under this Section, repay or, to the extent permitted by
Section 2.07, prepay Loans and reborrow under this Section at any time before
the Termination Date.
Notwithstanding the foregoing, if there shall occur on or prior to the date
of any Foreign Currency Loan any change in national or international financial,
political or economic conditions or currency exchange rates or exchange controls
which would in the opinion of the Bank make it impracticable to make such
Foreign Currency Loan, then the Bank shall forthwith give notice thereof to the
Borrower, and such Foreign Currency Loan shall be made on such date as Base Rate
Loans, unless the Borrower notifies the Bank at least two Domestic Business Days
before such date that it elects not to borrow on such date.
SECTION 2.02. Method of Borrowing Loans. (a) The Borrower shall give the
Bank notice (a "Notice of Borrowing"), which shall be substantially in the form
of Exhibit D, prior to 11:00 A.M. (Atlanta, Georgia time) on the Domestic
Business Day of each Base Rate Borrowing and at least 3 Fixed Rate Business Days
before each Fixed Rate Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing or a Fixed Rate Business Day in
the case of a Fixed Rate Borrowing,
(ii) the amount of such Borrowing, and
(iii) whether the Loan comprising such Borrowing is to be a
Base Rate Loan, a Euro-Dollar Loan or a Foreign Currency Loan.
The first Offer Funding Borrowing shall include an amount sufficient to pay to
the Bank the fees payable to it at the time of such funding pursuant to the
Mandate, and the Bank
17
shall pay itself such amount from such Borrowing and fund the remainder of such
Borrowing to the Borrower;
(b) In the event that a Notice of Borrowing fails to specify whether the
Loan comprising such Borrowing is to be a Base Rate Loan, a Euro-Dollar Loan or
a Foreign Currency Loan, such Loan shall be made as a Base Rate Loan. If the
Borrower is otherwise entitled under this Agreement to repay any Loans maturing
at the end of an Interest Period applicable thereto with the proceeds of a new
Borrowing, and the Borrower fails to repay such Loans using its own moneys and
fails to give a Notice of Borrowing in connection with such new Borrowing, a new
Borrowing shall be deemed to be made on the date such Loans mature in an amount
equal to the principal amount of the Loans so maturing, and the Loan comprising
such new Borrowing shall be a Base Rate Loan. If the Bank makes a new Loan
hereunder on a day on which the Borrower is to repay all or any part of an
outstanding Loan, the Bank shall apply the proceeds of its new Loan to make such
repayment as a refunding loan and only an amount equal to the difference (if
any) between the amount being borrowed and the amount of such refunding loan
shall be made available by the Bank to the Borrower, or remitted by the Borrower
to the Bank, as the case may be; provided, however, that if the Loan which is to
be repaid is a Foreign Currency Loan, the foregoing provisions shall apply only
if the new Loan is to be made as a Foreign Currency Loan.
(c) Notwithstanding anything to the contrary contained herein, there shall
not be more than 6 Fixed Rate Borrowings outstanding at any given time (or such
higher number of Fixed Rate Borrowings to which the Bank may consent in order to
facilitate Offer Funding Borrowings, which consent shall not be unreasonably
withheld).
SECTION 2.03. The Note. (a) The Loans of the Bank shall be evidenced by a
single Note payable to the order of the Bank for the account of its Lending
Office in an amount equal to the original principal amount of the Bank's
Commitment.
(b) The Bank shall record, and prior to any transfer of its Note shall
endorse on the schedules forming a part thereof appropriate notations to
evidence, the date, amount and maturity of, and effective interest rate for,
each Loan made by it, whether such Loan is a Base Rate Loan, a Euro-Dollar Loan
or a Foreign Currency Loan, and the date and amount of each payment of principal
made by the Borrower with respect thereto, and such schedules of the Bank's Note
shall constitute rebuttable presumptive evidence of the respective principal
amounts owing and unpaid on the Bank's Note; provided that the failure of the
Bank to make, or any error in making, any such recordation or endorsement shall
not affect the obligation of the Borrower hereunder or under the Note or the
ability of the Bank to assign its Note. The Bank is hereby irrevocably
authorized by the Borrower so to endorse its Note and to attach
18
to and make a part of the Note a continuation of any such schedule as and when
required.
SECTION 2.04. Maturity of Loans. (a) Each Loan included in any Borrowing
shall mature, and the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Borrowing.
(b) Notwithstanding the foregoing, the outstanding principal amount of the
Loans, if any, together with all accrued but unpaid interest thereon, if any,
shall be due and payable on the Termination Date.
SECTION 2.05. Interest Rates. (a) "Applicable Margin" means: (i) for any
Base Rate Loan, 0.0%; and (ii) for any Fixed Rate Loan, (x) 1.00% for the period
commencing on the Closing Date to and including May 31, 1998, (y) 1.50% for the
period commencing on June 1, 1998 to and including June 30, 1998, and (z) 2.00%
thereafter.
(b) Each Base Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it becomes
due, at a rate per annum equal to the Base Rate for such day. Such interest
shall be payable for each Interest Period on the last day thereof. Any overdue
principal of and, to the extent permitted by applicable law, overdue interest on
any Base Rate Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the Default Rate.
(c) Each Fixed Rate Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per annum
equal to the sum of the Applicable Margin plus the applicable Adjusted London
Interbank Offered Rate for such Interest Period. Such interest shall be payable
for each Interest Period on the last day thereof. Any overdue principal of and,
to the extent permitted by law, overdue interest on any Fixed Rate Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upwards,
if necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable
London Interbank Offered Rate for such Interest Period by (ii) 1.00 minus the
Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Euro-Dollar Loan means
for the Interest Period of such Euro-Dollar Loan, the rate per annum determined
on the basis of the offered rate for deposits in Dollars of amounts equal or
comparable to the principal amount of such Euro-Dollar Loan offered for a term
equal to such Interest Period, which rates appear on the Dow Xxxxx Markets, Inc.
Page 3750 effective as of
19
11:00 A.M., London time, 2 Fixed Rate Business Days prior to the first day of
such Interest Period, provided that if no such offered rates appear on such
page, the "London Interbank Offered Rate" for such Interest Period will be the
arithmetic average (rounded upward, if necessary, to the next higher 1/100th of
1%) of rates quoted by the principal London offices of not less than 2 leading
money center banks in New York City, selected by the Bank, at approximately
11:00 A.M., London time, 2 Fixed Rate Business Days prior to the first day of
such Interest Period, for deposits in Dollars offered by leading European banks
for a period comparable to such Interest Period in an amount comparable to the
principal amount of such Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
the Bank to United States residents). The Adjusted London Interbank Offered Rate
shall be adjusted automatically on and as of the effective date of any change in
the Euro-Dollar Reserve Percentage.
(d) Each Foreign Currency Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the Applicable Margin plus the applicable Adjusted
IBOR Rate for such Interest Period. Such interest shall be payable for each
Interest Period on the last day thereof. Any overdue principal of and, to the
extent permitted by law, overdue interest on any Foreign Currency Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the Default Rate.
"Adjusted IBOR Rate" means, with respect to each Interest Period for a
Foreign Currency Loan, the sum of (i) the rate obtained by dividing (A) IBOR for
such Interest Period by (B) a percentage equal to 1 minus the then stated
maximum rate (stated as a decimal) of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) applicable to any member bank of the Federal Reserve System as defined
in Regulation D (or against any successor category of liabilities as defined in
Regulation D), plus (ii) a percentage sufficient to compensate the Banks for the
cost of complying with any reserves, liquidity and/or special deposit
requirements of the Bank of England directly or indirectly affecting the
maintenance or funding of such Foreign Currency Loan.
20
"IBOR" means, for any Interest Period, with respect to Foreign Currency
Loans, the offered rate for deposits in the applicable Foreign Currency, for a
period comparable to the Interest Period and in an amount comparable to the
amount of such Foreign Currency Loan appearing on Dow Xxxxx Markets, Inc. Page
3750, or, if Dow Xxxxx Markets, Inc. is unavailable the Reuters Screen Page
FRBD, FRBE, FRBF or FRBG, as applicable, or, if it is unavailable on either Dow
Xxxxx Markets, Inc. or the Reuters Screen, then such rate shall be determined by
the Bank from any other interest rate reporting service of recognized standing
designated in writing by the Bank to the Borrower as of 11:00 A.M. (London,
England time) on the day that is two Fixed Rate Business Days prior to the first
day of the Interest Period.
(e) The Bank shall determine each interest rate applicable to the Loans
hereunder. The Bank shall give prompt notice to the Borrower by telecopier of
each rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(f) After the occurrence and during the continuance of an Event of Default,
the principal amount of the Loans (and, to the extent permitted by applicable
law, all accrued interest thereon) may, at the election of the Bank, bear
interest at the Default Rate.
SECTION 2.06. Optional Termination or Reduction of Commitments. The Borrower
may, upon at least 3 Domestic Business Days' notice to the Bank, terminate at
any time, or proportionately reduce the Unused Commitment from time to time by
an aggregate amount of at least $5,000,000 and any larger incremental multiple
of $2,500,000.
SECTION 2.07. Voluntary Prepayments. (a) The Borrower may, upon at least 1
Domestic Business Days' notice to the Bank, prepay any Base Rate Borrowing in
whole at any time, or from time to time in part in amounts aggregating at least
$5,000,000 and any incremental multiple of $2,500,000 by paying the principal
amount to be prepaid together with accrued interest thereon to the date of
prepayment.
(b) The Borrower may, upon at least 3 Fixed Rate Business Days' notice to
the Bank, prepay any Fixed Rate Borrowing in whole at any time, or from time to
time in part in amounts aggregating at least $10,000,000 (or the Dollar
Equivalent thereof in the Foreign Currency) and any incremental multiple of
$2,500,000 (or the Dollar Equivalent thereof in the Foreign Currency) by paying
the principal amount to be prepaid together with accrued interest thereon to the
date of prepayment, plus any amount required to be paid pursuant to Section
7.05(a); provided, that to the extent of any such prepayment made from the
proceeds of the sale of Gerber Systems Corporation, no amount shall be required
to be paid pursuant to Section 7.05(a).
21
SECTION 2.08. Mandatory Prepayments. (a) On each date on which the
Commitment is reduced pursuant to Section 2.06, the Borrower shall repay or
prepay such principal amount of the outstanding Loans, if any (together with
interest accrued thereon and any amount due under Section 7.05(a)), as may be
necessary so that after such payment the aggregate unpaid principal amount of
the Loans (including the Dollar Equivalent of any Foreign Currency Loans) does
not exceed the amount of the Commitment as then reduced.
(b) If the Bank determines at any time (either on its own initiative or
otherwise) that the aggregate principal amount of the Foreign Currency Loans
outstanding (after converting each Foreign Currency Loan to its Dollar
Equivalent on the date of calculation) at any time is equal to or exceeds 105%
of the amount of the Commitment less the outstanding aggregate amount of all
Base Rate Loans and Euro-Dollar Loans, then upon 3 Fixed Rate Business Days'
written notice from the Bank, the Borrower shall prepay an aggregate principal
amount of Fixed Rate Loans as is necessary to eliminate the excess. Nothing in
the foregoing shall require the Bank to make any such calculation.
SECTION 2.09. General Provisions as to Payments. (a) The Borrower shall make
each payment of principal of, and interest on, the Loans, not later than 11:00
A.M. (Atlanta, Georgia time) on the date when due, in Federal or other funds
(subject to paragraph (c) below with respect to Foreign Currency Loans)
immediately available at the place where payment is due, to the Bank at its
address set forth on the signature pages hereof.
(b) Whenever any payment of principal of, or interest on, the Base Rate
Loans shall be due on a day which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next succeeding Domestic Business Day.
Whenever any payment of principal of or interest on, the Fixed Rate Loans shall
be due on a day which is not a Fixed Rate Business Day, the date for payment
thereof shall be extended to the next succeeding Fixed Rate Business Day unless
such Fixed Rate Business Day falls in another calendar month, in which case the
date for payment thereof shall be the next preceding Fixed Rate Business Day.
(c) All payments of principal and interest with respect to Foreign Currency
Loans shall be made in the Foreign Currency.
(d) All payments of principal, interest and fees and all other amounts to be
made by the Borrower pursuant to this Agreement with respect to any Loan or fee
relating thereto shall be paid without deduction for, and free from, any tax,
imposts, levies, duties, deductions, or withholdings of any nature now or at
anytime hereafter imposed by any governmental authority or by any taxing
authority thereof or therein
22
excluding (i) taxes imposed on or measured by its net income, franchise taxes
and branch profits taxes imposed on it, by the jurisdiction under the laws of
which the Bank is organized or any political subdivision thereof and, in the
case of the Bank, taxes imposed on the Bank (or Transferee) as a result of any
present or former connection between the Bank (or Transferee) and the
jurisdiction of the governmental authority or taxing authority imposing such tax
or any political subdivision thereof or therein (other than solely as a result
of entering into this Agreement, performing any obligations hereunder, receiving
any payments hereunder or enforcing any rights hereunder) and (ii) any taxes
that are attributable to the failure of any Non-U.S. Lender) to comply with this
Section 2.09(d) (all such non-excluded taxes, imposts, levies, duties,
deductions or withholdings of any nature being "Taxes"). In the event that the
Borrower is required by applicable law to make any such withholding or deduction
of Taxes with respect to any Loan or fee or other amount, the Borrower shall pay
such deduction or withholding to the applicable taxing authority, shall promptly
furnish to the Bank (or Transferee) in respect of which such deduction or
withholding is made all receipts and other documents evidencing such payment and
shall pay to the Bank (or Transferee) additional amounts ("Additional Amounts")
as may be necessary in order that the amount received by the Bank (or
Transferee) after the required withholding or other payment shall equal the
amount the Bank (or Transferee) would have received had no such withholding or
other payment been made.
In the event the Bank (or Transferee) receives a refund of any (i) Taxes
paid by the Borrower, or as to which tax the Borrower has paid Additional
Amounts, pursuant to this Section 2.09(d) or Other Taxes, it will pay to the
Borrower the amount of such refund promptly upon receipt thereof; provided that
if at any time thereafter it is required to return such refund, the Borrower
shall promptly repay to it the amount of such refund.
(e) If the Bank (or Transferee) is not a United States person as defined in
Section 7701(a) (30) of the Code (a "Non-U.S. Lender"), and the Bank (or
Transferee) is entitled to an exemption from, or reduction of, withholding tax
under the law of the jurisdiction in which the Borrower is located, or any
treaty to which such jurisdiction is a party, with respect to payments under
this Agreement, the Bank (or Transferee) shall deliver to the Borrower, at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
The Borrower shall not be required to pay any Additional Amounts in respect
of any withholding tax pursuant to Section 2.09(d) to the extent that the
obligation to withhold amounts with respect to such withholding tax (i) was in
effect and
23
would apply to amounts payable to the Non-U.S. Lender (A) on the date the
Non-U.S. Lender became a party to this Agreement, or, (B) if the Bank (or
Transferee) changes its applicable lending office by designating a different
lending office, on the date the Bank (or Transferee) designates such different
lending office or (ii) the obligation to pay such Additional Amounts would not
have arisen but for a failure by the Non-U.S. Lender to comply with the
provisions of this Section 2.09(e).
(f) If the Bank (or any Transferee) claims Additional Amounts pursuant to
Section 2.09(d), it shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document reasonably
requested by the Borrower or to change the jurisdiction of its applicable
lending office if the making of such filing or change would avoid the need for,
or reduce the amount of, such Additional Amounts that may thereafter accrue and
would not, in the sole determination of the Bank (or Transferee) be otherwise
disadvantageous to the Bank (or Transferee).
(g) Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower and the Bank contained
in Section 2.09(c) through (f), inclusive, shall be applicable with respect to
any Transferee, and any calculations required by such provisions (i) shall be
made based upon the circumstances of such Transferee, and (ii) constitute a
continuing agreement and shall survive the termination of this Agreement and the
payment in full or cancellation of the Note.
SECTION 2.10. Computation of Interest and Fees. Interest on Base Rate Loans
shall be computed on the basis of (i) a year of 365 or 366 days, as the case may
be, if calculated based on the Prime Rate, and (ii) 360 days, if calculated
based on the Federal Funds Rate, and in each case paid for the actual number of
days elapsed (including the first day but excluding the last day). Interest on
Fixed Rate Loans shall be computed on the basis of (x) a year of 360 days, with
respect to Euro-Dollar Loans, and (y) a year of 365 or 366 days, as the case may
be, with respect to Foreign Currency Loans, and in each case paid for the actual
number of days elapsed, calculated as to each Interest Period from and including
the first day thereof to but excluding the last day thereof.
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND BORROWINGS
SECTION 3.01. Conditions to Effectiveness. The effectiveness of this
Agreement and the Commitment and other obligations of the Bank hereunder are
subject to the receipt by the Bank of the following:
24
(a) a duly executed counterpart of this Agreement signed by
the Borrower;
(b) a duly executed Note for the account of the Bank complying with
the provisions of Section 2.03;
(c) a duly executed counterpart of the Pledge Agreement signed
by the Borrower;
(d) an opinion letter (together with any opinions of local
counsel relied on therein) of each of (i) Xxxxxxx X. Xxxxxx, Xx., Esq.,
General Counsel of the Borrower, and (ii) Cravath, Swaine & Xxxxx,
counsel for the Borrower and the Guarantors, dated as of the Closing
Date, substantially in the form of Exhibit B and covering such
additional matters relating to the transactions contemplated hereby as
the Bank may reasonably request;
(e) an opinion of Xxxxx, Day, Xxxxxx & Xxxxx, special counsel
for the Bank, dated as of the Closing Date, substantially in the form
of Exhibit C and covering such additional matters relating to the
transactions contemplated hereby as the Bank may reasonably request;
(f) a certificate (the "Closing Certificate") substantially in
the form of Exhibit F), dated as of the Closing Date, signed by a
principal financial officer of the Borrower, to the effect that (i) no
Default is in existence on the Closing Date and (ii) the representations
and warranties of the Borrower contained in Article IV are true in all
material respects on and as of the Closing Date, except to the extent
any such representation or warranty relates to an earlier date;
(g) all documents which the Bank may reasonably request
relating to the existence of the Borrower or any Guarantor, the
corporate authority for and the validity of this Agreement, the Note,
the Pledge Agreement, the Subsidiary Guaranty and the Contribution
Agreement, and any other matters relevant hereto, all in form and
substance satisfactory to the Bank, including, without limitation,
certificates from the Borrower and each Guarantor substantially in the
form of Exhibit G (the "Officer's Certificate"), signed by the
Secretary or an Assistant Secretary of the Borrower or the relevant
Guarantor, certifying as to the names, true signatures and incumbency
of the officer or officers of the Borrower or the Guarantor, as the
case may be, authorized to execute and deliver the Loan Documents on
behalf of such entity, and certified copies for each such entity of the
following items: (i) the Certificate of Incorporation, (ii) the Bylaws,
(iii) a certificate of the Secretary of State of the state of
incorporation of such entity as to the good standing of the entity in
such jurisdiction, and (iv) the action taken by the Board of Directors
of such entity
25
authorizing the entity's execution, delivery and performance of the Loan
Documents to which such entity is a party;
(h) the fees payable on the Closing Date pursuant to the Mandate;
(i) the Subsidiary Guaranty, duly executed by each Guarantor; and
(j) the Contribution Agreement, duly executed by each Guarantor and
the Borrower.
SECTION 3.02. Conditions to Offer Funding Borrowings. The obligation of the
Bank to make any Loan which constitutes an Offer Funding Borrowing is subject to
the satisfaction of the following conditions:
(a) receipt by the Bank of a Notice of Borrowing;
(b) the fact that, immediately after such Borrowing, the condition set
forth in the proviso contained in the first paragraph of Section 2.01 shall
have been satisfied;
(c) the fact that, immediately before and after such Borrowing (but
not including the Target or its subsidiaries as Subsidiaries for purposes
hereof), no Default shall have occurred and be continuing under Section
6.01(b), but only insofar as it arises out of a breach of Sections 5.04 or
5.06, in each case solely as they relate to the Borrower;
(d) the fact that the representations and warranties set forth in
Sections 4.01, 4.02 (but only insofar as it relates to clauses (i) through
(iv), inclusive, thereof), 4.03 and 4.17, as they relate to the Borrower,
shall be true and correct in all material respects on the date of any such
Borrowing with the same effect as though made on such date;
(e) the Borrower not having lowered the percentage acceptance level
required for satisfaction of either of conditions (a) or (b) of the Offer
(as the same are set forth in Appendix I to the Press Release) below 75%
without the prior written consent of the Bank; and
(f) the fact that the Borrower shall have declared the Offer
unconditional in all respects.
Each Offer Funding Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of such Borrowing as to
the truth and accuracy of the facts specified in clauses (c) through (f),
inclusive, of this Section 3.02.
26
SECTION 3.03. Conditions to All Borrowings other than Offer Funding
Borrowings. The obligation of the Bank to make a Loan on the occasion of each
Borrowing that is not an Offer Funding Borrowing is subject to the satisfaction
of the following conditions:
(a) receipt by the Bank of a Notice of Borrowing;
(b) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the Borrower
contained in Article IV of this Agreement shall be true on and as of the
date of such Borrowing, except to the extent any such representation or
warranty relates to an earlier date; and
(d) the fact that, immediately after such Borrowing, the conditions
set forth in the proviso contained in the first paragraph of Section 2.01
shall have been satisfied.
Each Borrowing hereunder which is not an Offer Funding Borrowing shall be
deemed to be a representation and warranty by the Borrower on the date of such
Borrowing as to the truth and accuracy of the facts specified in paragraphs (b),
(c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. Each of the Borrower and each
of the Guarantors is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its respective incorporation, is
duly qualified to transact business in every jurisdiction where, by the nature
of its business, such qualification is necessary, and has all corporate powers
and all governmental licenses, authorizations, consents and approvals required
to carry on its businesses as now conducted, except where the failure to so
qualify does not have and could not reasonably be expected to cause a Material
Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Borrower of this Agreement, the
Note, the Pledge Agreement and the other Loan Documents, and the execution,
delivery and performance by each Guarantor of the Subsidiary Guaranty (i) are
within the Borrower's or Guarantor's respective corporate powers, (ii) have been
duly authorized by all necessary corporate action, (iii) require no
27
action by or in respect of or filing with, any governmental body, agency or
official (except such actions as are required in the United Kingdom with respect
to the Offer, all of which are being taken), (iv) do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the certificate of incorporation or by-laws of the Borrower or any Guarantor or
any injunction, order or decree binding upon the Borrower or any of its
Subsidiaries, (v) do not contravene, or constitute a default under, any material
agreement, judgment or other material instrument binding upon the Borrower or
any of its Subsidiaries, and (vi) do not result in the creation or imposition of
any Lien on any asset of the Borrower or any of its Subsidiaries, except in
favor of the Bank pursuant to the Pledge Agreement.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and binding
agreement of the Borrower enforceable in accordance with its terms, and the
Note, the Pledge Agreement and the other Loan Documents to which it is a party,
when executed and delivered in accordance with this Agreement, will constitute
valid and binding obligations of the Borrower enforceable in accordance with
their respective terms, and the Subsidiary Guaranty when executed and delivered
in accordance with this Agreement, will constitute a valid and binding agreement
of each Guarantor enforceable in accordance with its terms, provided that in
each case the enforceability hereof and thereof is subject in each case to
general principles of equity and to bankruptcy, insolvency and similar laws
affecting the enforcement of creditors' rights generally.
SECTION 4.04. Financial Information. (a) The consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as of April 30, 1997 and the
related consolidated statements of earnings, shareholders' equity and cash flows
for the Fiscal Year then ended, reported on by KPMG Peat Marwick LLP, copies of
which have been delivered to the Bank, and the unaudited consolidated financial
statements of the Borrower for the interim period ended January 31, 1998 copies
of which have been delivered to the Bank, fairly present, in conformity with
GAAP, the consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such dates and their consolidated results of operations and
cash flows for such periods stated (subject to the absence of footnotes and to
normal year-end adjustments in the case of such unaudited statements).
(b) Since April 30, 1997, except as disclosed to the Bank, there has been no
event, act, condition or occurrence having a Material Adverse Effect.
SECTION 4.05. No Litigation. There is no action, suit or proceeding pending,
or to the knowledge of the Borrower threatened, against or affecting the
Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official (i) which could reasonably be expected
28
to have a Material Adverse Effect or (ii) which in any manner draws into
question the validity of or could impair the ability of the Borrower to perform
its obligations under, this Agreement, the Note, the Pledge Agreement, the
Subsidiary Guaranty or any of the other Loan Documents.
SECTION 4.06. Compliance with ERISA. (a) The Borrower and each member of the
Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the presently applicable provisions of ERISA and
the Code, and have not incurred any liability to the PBGC or a Plan under Title
IV of ERISA (other than the payment of premiums), except for any instances of
non-compliance or any liability, neither of which has and could not reasonably
be expected to cause a Material Adverse Effect or an Event of Default.
(b) Except as disclosed to the Bank, neither the Borrower nor any member of
the Controlled Group is or has within the last 4 years been obligated to
contribute to any Multiemployer Plan.
SECTION 4.07. Compliance with Laws; Payment of Taxes. The Borrower and its
Subsidiaries are in compliance with all applicable laws, regulations and similar
requirements of governmental authorities, except where such compliance is being
contested in good faith through appropriate proceedings and except where the
failure to so comply does not have and could not reasonably be expected to cause
a Material Adverse Effect. There have been filed on behalf of the Borrower and
its Subsidiaries all Federal, state and local income, excise, property and other
tax returns which are required to be filed by them and all taxes due pursuant to
such returns or pursuant to any assessment received by or on behalf of the
Borrower or any Subsidiary have been paid, except where the failure to so file
and pay does not have and could not reasonably be expected to cause a Material
Adverse Effect or an Event of Default. The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate. United
States income tax returns of the Borrower and its Subsidiaries have been
examined and closed through the Fiscal Year ended April 30, 1994.
SECTION 4.08. Subsidiaries. Each of the Borrower's Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such qualification is
necessary, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except where the failure to so qualify or have any such licenses,
authorizations, consents and approvals does not have
29
and could not reasonably be expected to cause a Material Adverse Effect. The
Borrower has no Subsidiaries on the date hereof, except for those Subsidiaries
listed on Schedule 4.08, which accurately sets forth each such Subsidiary's
complete name and jurisdiction of incorporation. As of the Closing Date, there
are no existing Foreign Subsidiaries which are Material Foreign Subsidiaries.
SECTION 4.09. Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 4.10. Public Utility Holding Company Act. Neither the Borrower nor
any of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property; Liens. Each of the Borrower and its
Consolidated Subsidiaries has title to its properties sufficient for the conduct
of its business, and none of such property is subject to any Lien except as
permitted in Section 5.18.
SECTION 4.12. No Default. Neither the Borrower nor any of its Consolidated
Subsidiaries is in default under or with respect to any agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound which could reasonably be expected to have or cause a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.
SECTION 4.13. Full Disclosure. All information heretofore furnished by the
Borrower to the Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all such information hereafter furnished
by the Borrower to the Bank will be, true, accurate and complete in every
material respect or based on reasonable estimates on the date as of which such
information is stated or certified. The Borrower has disclosed to the Bank any
and all facts known to it which could reasonably be expected to have or cause a
Material Adverse Effect. So far as the Borrower is aware, the contents of the
Press Release and the Offer Document does not contain any untrue statement by
the Borrower or omit to make any statement the omission of which makes the
statements therein misleading and all expressions of expectation, intention,
belief and opinion contained therein were honestly made on reasonable grounds
after due and careful consideration by the Borrower. To the best of its
knowledge (based on the due diligence which the Borrower has been permitted to
perform), the Borrower has disclosed to the Bank all material facts concerning
the Target and its Subsidiaries
30
which could give rise to an Event of Default which would be subject to the
Clean-up Period.
SECTION 4.14. Environmental Matters. Except as identified in Schedule 4.14
and for any of the following which would not have and could not reasonably be
expected to cause a Material Adverse Effect: (a) Neither the Borrower nor any
Subsidiary is subject to any Environmental Liability, and neither the Borrower
nor any Subsidiary has been designated as a potentially responsible party under
CERCLA or any comparable state statute. None of the Properties has been
identified on any current or proposed (i) National Priorities List under 40
C.F.R. ss. 300, (ii) CERCLIS list or (iii) any comparable list arising from a
state statute comparable to CERCLA.
(b) No Hazardous Materials have been or are being used, produced,
manufactured, processed, treated, recycled, generated, stored, disposed of,
managed or otherwise handled at, or shipped or transported to or from the
Properties or are otherwise present at, on, in or under the Properties, or, to
the best of the knowledge of the Borrower, at or from any adjacent site or
facility, except for Hazardous Materials used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed of, managed, or
otherwise handled in the ordinary course of business in compliance with all
applicable Environmental Requirements.
(c) The Borrower, and each of its Subsidiaries and Affiliates, has procured
all Environmental Authorizations necessary for the conduct of its business, and
is in compliance with all Environmental Requirements in connection with the
operation of the Properties and the Borrower's, and each of its Subsidiary's and
Affiliate's, respective businesses.
SECTION 4.15. Capital Stock. All Capital Stock, debentures, bonds, notes and
all other securities of the Borrower and its Subsidiaries presently issued and
outstanding are validly and properly issued in accordance with all applicable
laws, including, but not limited to, the "Blue Sky" laws of all applicable
states and the federal securities laws. The issued shares of Capital Stock of
the Borrower's Wholly Owned Subsidiaries are owned by the Borrower free and
clear of any Lien or adverse claim, except as permitted by Section 5.18. At
least a majority of the issued shares of capital stock of each of the Borrower's
other Subsidiaries (other than Wholly Owned Subsidiaries) is owned by the
Borrower free and clear of any Lien or adverse claim, except as permitted by
Section 5.18.
SECTION 4.16. Margin Stock. Neither the Borrower nor any of its Subsidiaries
is engaged principally, or as one of its important activities, in the business
of purchasing or carrying any Margin Stock, and no part of the proceeds of any
Loan will be used to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock, or be used
for any purpose which
31
violates, or which is inconsistent with, the provisions of Regulation G, T, U or
X.
SECTION 4.17. Insolvency. After giving effect to the execution and delivery
of the Loan Documents and the making of the Loans under this Agreement: (i) the
Borrower will not (x) be "insolvent," within the meaning of such term as defined
in ss. 101 of the "Bankruptcy Code", or Section 2 of either the "UFTA" or the
"UFCA", or as defined or used in any "Other Applicable Law" (as those terms are
defined below), or (y) be unable to pay its debts generally as such debts become
due within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the
UFTA or Section 6 of the UFCA, or (z) have an unreasonably small capital to
engage in any business or transaction, whether current or contemplated, within
the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA or
Section 5 of the UFCA; and (ii) the obligations of the Borrower under the Loan
Documents and with respect to the Loans will not be rendered avoidable under any
Other Applicable Law. For purposes of this Section 4.17, "Bankruptcy Code" means
Title 11 of the United States Code, "UFTA" means the Uniform Fraudulent Transfer
Act, "UFCA" means the Uniform Fraudulent Conveyance Act, and "Other Applicable
Law" means any other applicable law pertaining to fraudulent transfers or acts
voidable by creditors, in each case as such law may be amended from time to
time.
SECTION 4.18. Insurance. The Borrower and each of its Subsidiaries has
(either in the name of the Borrower or in such Subsidiary's own name), with
financially sound and reputable insurance companies, insurance in at least such
amounts and against at least such risks (including on all its property, and
public liability and worker's compensation) as are usually insured against in
the same general area by companies of established repute engaged in the same or
similar business.
SECTION 4.19. Millennium Compliance. All computer systems used by the
Borrower and its Subsidiaries which are necessary in the conduct of their
business will be capable of the following, before, during and/or after January
2000:
(a) handling date information involving all and any dates before, during
and/or after January 1, 2000, including accepting input, providing output and
performing date calculations in whole or in part;
(b) operating, accurately without interruption on and in respect of any and
all dates before, during and/or after January 1, 2000 and without any change in
performance;
(c) responding to and processing two digit year input without creating any
ambiguity as to the century; and
32
(d) storing and providing date input information with out creating any
ambiguity as to the century.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as the Bank has any Commitment hereunder
or any amount payable hereunder or under the Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to the Bank:
(a) as soon as available and in any event within 90 days after the end
of each Fiscal Year, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of earnings, shareholders' equity and cash flows for
such Fiscal Year, setting forth in each case in comparative form the figures
for the previous fiscal year, all certified by KPMG Peat Marwick LLP or
other independent public accountants of nationally recognized standing, with
such certification to be free of material exceptions and qualifications not
acceptable to the Bank in its reasonable judgment;
(b) as soon as available and in any event within 45 days after the end
of each of the first 3 Fiscal Quarters of each Fiscal Year, a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the
end of such Fiscal Quarter and the related statement of earnings for such
Fiscal Quarter, and statement of cash flows for the portion of the Fiscal
Year ended at the end of such Fiscal Quarter, setting forth in each case in
comparative form the figures for the corresponding Fiscal Quarter or Fiscal
Year to date, as applicable, and the corresponding portion of the previous
Fiscal Year, all certified (subject to normal year-end adjustments and the
absence of footnotes) as to fairness of presentation, conformity to GAAP and
consistency by the chief financial officer or the chief accounting officer
of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a certificate,
substantially in the form of Exhibit E (a "Compliance Certificate"), of the
chief financial officer or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Sections
5.16 through 5.18, inclusive, and 5.20 through 5.23, inclusive, on the date
of such financial statements and (ii) stating whether any Default exists on
the date of such certificate
33
and, if any Default then exists, setting forth the details thereof and
the action which the Borrower is taking or proposes to take with
respect thereto;
(d) simultaneously with the delivery of each set of annual financial
statements referred to in paragraph (a) above, a statement of the firm of
independent public accountants which reported on such statements to the
effect that nothing has come to their attention during the course of their
examination to cause them to believe that any Default existed on the date of
such financial statements (which statement may be limited to the extent
required by accounting rules or guidelines);
(e) within 5 Domestic Business Days after the Borrower becomes aware
of the occurrence of any Default, a certificate of the chief financial
officer or the chief accounting officer of the Borrower setting forth the
details thereof and the action which the Borrower is taking or proposes to
take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and annual, quarterly or monthly reports
which the Borrower shall have filed with the Securities and Exchange
Commission;
(h) if and when any member of the Controlled Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA, a copy of
such notice; or (iii) receives notice from the PBGC under Title IV of ERISA
of an intent to terminate or appoint a trustee to administer any Plan, a
copy of such notice; and
(i) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Bank may reasonably request.
SECTION 5.02. Inspection of Property, Books and Records. The Borrower will
(i) keep, and cause each Subsidiary
34
to keep, proper books of record and account in which full, true and correct
entries sufficient to permit the preparation of financial statements in
conformity with GAAP shall be made of all dealings and transactions in relation
to its business and activities; and (ii) permit, and cause each Subsidiary to
permit, upon reasonable prior notice, representatives of the Bank at the Bank's
expense prior to the occurrence of a Default and at the Borrower's expense after
the occurrence of a Default to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants. The
Borrower agrees to cooperate and assist in such visits and inspections, in each
case at such reasonable times and as often as may reasonably be desired.
SECTION 5.03. Maintenance of Existence. The Borrower shall, and shall cause
each Subsidiary to, maintain its corporate existence and carry on its business
in substantially the same manner and in substantially the same fields (and
fields related thereto) as such business is now carried on and maintained;
provided, that the foregoing shall not prohibit any dissolution, liquidation,
consolidation or merger permitted under Sections 5.04 or 5.05.
SECTION 5.04. Dissolution. Neither the Borrower nor any of its Subsidiaries
shall suffer or permit dissolution or liquidation either in whole or in part,
except (i) if the Borrower's Board of Directors or an Executive Committee
thereof determines in good faith that such liquidation or dissolution is in the
best interests of the Borrower and is not disadvantageous to the Bank or (ii)
through corporate reorganization to the extent permitted by Section 5.05.
SECTION 5.05. Consolidations, Mergers and Sales of Assets. The Borrower will
not, nor will it permit any Subsidiary to, consolidate or merge with or into, or
sell, lease or otherwise transfer all or any substantial part of its assets to,
any other Person, provided that (a) the Borrower may merge with another Person
if (i) such Person was organized under the laws of the United States of America
or one of its states, (ii) the Borrower is the corporation surviving such merger
and (iii) immediately after giving effect to such merger, no Default shall have
occurred and be continuing, (b) Subsidiaries of the Borrower may merge with the
Borrower and with one another, and (c) the foregoing limitation on the sale,
lease or other transfer of assets shall not prohibit the sale or other
disposition of the stock or assets of Gerber Systems Corporation.
SECTION 5.06. Use of Proceeds. The proceeds of the Loans may be used (i) for
the purchase of the Shares of the Target pursuant to the Offer (any Loan the
proceeds of which will be used, directly or indirectly, for such purpose being
an
35
"Offer Funding Borrowing"), (ii) for the purchase or cancellation of existing
stock options of the Target (including the cash cancellation of options), (iii)
for the refinancing of any "Loan Notes" issued pursuant to the Offer, (iv) for
transaction costs incurred in connection with the Offer (including, without
limitation, the fees and expenses of any professional advisors and any stamp,
duty or other tax charge), (v) to satisfy all Debt of the Target and (vi) to pay
the fees payable to the Bank at the times and in the amounts set forth in the
Mandate. No portion of the proceeds of the Loans will be used by the Borrower or
any Subsidiary (x) in connection with, whether directly or indirectly, any
tender offer for, or other acquisition of, stock of any corporation with a view
towards obtaining control of such other corporation, unless such tender offer or
other acquisition is to be made on a negotiated basis with the approval of the
Board of Directors of the Person to be acquired, and the provisions of Section
5.17 would not be violated, (y) directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any Margin Stock,
or (z) for any purpose in violation of any applicable law or regulation.
SECTION 5.07. Compliance with Laws; Payment of Taxes. The Borrower will, and
will cause each of its Subsidiaries and each member of the Controlled Group to,
comply with applicable laws (including but not limited to ERISA), regulations
and similar requirements of governmental authorities (including but not limited
to PBGC), except where the necessity of such compliance is being contested in
good faith through appropriate proceedings diligently pursued and except where
the failure to so comply does not have and could not reasonably be expected to
cause a Material Adverse Effect or an Event of Default. The Borrower will, and
will cause each of its Subsidiaries to, pay promptly when due all taxes,
assessments, governmental charges, claims for labor, supplies, rent and other
obligations which, if unpaid, might become a lien against the property of the
Borrower or any Subsidiary, except liabilities being contested in good faith and
against which the Borrower will set up reserves in accordance with GAAP and
except where the failure to so pay does not have and could not reasonably be
expected to cause a Material Adverse Effect or an Event of Default.
SECTION 5.08. Insurance. The Borrower will maintain, and will cause each of
its Subsidiaries to maintain (either in the name of the Borrower or in such
Subsidiary's own name), with financially sound and reputable insurance
companies, insurance on all its property of material value or material to the
conduct of its business in at least such amounts and against at least such risks
(including public liability and worker's compensation) as are customarily
insured against by companies of established repute engaged in the same or
similar business operating in the same or similar locations.
36
SECTION 5.09. Change in Fiscal Year. The Borrower will not change its Fiscal
Year without the consent of the Bank, which consent will not be unreasonably
withheld.
SECTION 5.10. Maintenance of Property. The Borrower shall, and shall cause
each Subsidiary to, maintain all of its material properties and assets in good
condition, repair and working order, ordinary wear and tear excepted.
SECTION 5.11. Environmental Notices. The Borrower shall furnish to the Bank
timely written notice of all material Environmental Liabilities, material
pending, threatened or anticipated Environmental Proceedings, Environmental
Notices, Environmental Judgments and Orders, and material Environmental Releases
at, on, in, under or in any way affecting the Properties or any adjacent
property, and all facts, events, or conditions that could lead to any of the
foregoing.
SECTION 5.12. Environmental Matters. Except in the ordinary course of
business in compliance in all material respects with all applicable
Environmental Requirements, the Borrower and its Subsidiaries will not, and will
not permit any Third Party to, use, produce, manufacture, process, treat,
recycle, generate, store, dispose of, manage at, or otherwise handle, or ship or
transport to or from the Properties any Hazardous Materials.
SECTION 5.13. Environmental Release. The Borrower agrees that upon the
occurrence of an Environmental Release at or on any of the Properties it will
act timely to investigate the extent of, and to take appropriate remedial action
to eliminate, such Environmental Release, except where the Borrower is
contesting its obligation to do so before the appropriate Environmental
Authority and is maintaining adequate and appropriate reserves under GAAP.
SECTION 5.14. Transactions with Affiliates. Neither the Borrower nor any of
its Subsidiaries shall enter into, or be a party to, any transaction involving
$100,000 or more with any Affiliate of the Borrower or such Subsidiary (which
Affiliate is not the Borrower or a Wholly Owned Subsidiary), except as permitted
by law and in the ordinary course of business and pursuant to reasonable terms
which are fully disclosed to the Bank, and are no less favorable to the Borrower
or such Subsidiary than would be obtained in a comparable arm's length
transaction with a Person which is not an Affiliate.
SECTION 5.15. Restricted Payments. The Borrower will not declare or make any
Restricted Payment during any Fiscal Year unless, after giving effect thereto,
no Default shall be in existence or be created thereby.
SECTION 5.16. Loans or Advances. Neither the Borrower nor any of its
Subsidiaries shall make loans or
37
advances to any Person except as permitted by Section 5.17 and except: (i) loans
or advances to employees (other than travel advances) not exceeding $1,000,000
in the aggregate principal amount outstanding at any time, in each case made in
the ordinary course of business and consistent with practices existing on
January 30, 1998; and (ii) deposits required by government agencies or public
utilities; (iii) loans or advances from the Borrower to any Guarantor or to the
Target or from any Guarantor to any other Guarantor or to the Target; (iv) loans
or advances to any Subsidiary that is not a Guarantor or from any such
Subsidiary to the Borrower or to another such Subsidiary in existence on the
Closing Date (or, as to subsidiaries of the Target, loans and advances in
existence on the Offer Termination Date), which loans and advances in existence
as of the Closing Date are described on Schedule 5.16; and (v) loans or advances
made after the Closing Date (or, as to subsidiaries of the Target, made after
the Offer Termination Date) to any Subsidiary that is not a Guarantor or from
any such Subsidiary to the Borrower or to another such Subsidiary, not exceeding
$5,000,000 in the aggregate outstanding; provided that after giving effect to
the making of any loans, advances or deposits permitted by this Section, no
Default shall be in existence or be created thereby.
SECTION 5.17. Investments. Neither the Borrower nor any of its Subsidiaries
shall make Investments in any Person except as permitted by Section 5.16 and
except pursuant to the Offer, except Investments in (i) direct obligations of,
or obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America or the United Kingdom, in each case
maturing within one year, (ii) certificates of deposit, banker's acceptances and
time deposits maturing within 6 months from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any commercial bank organized under the laws of the United States
of America or any State thereof or under the laws of any jurisdiction in which
the Borrower or any of its Subsidiaries is doing business, provided that such
bank or its rated Affiliate is rated A1 or the equivalent by S&P or A+ or the
equivalent thereof by Xxxxx'x, (iii) commercial paper maturing within 9 months
from the date of acquisition thereof and, at such date of acquisition, rated A1
or the equivalent thereof by S&P or P1 or the equivalent thereof by Xxxxx'x,
(iv) tender bonds the payment of the principal of and interest on which is fully
supported by a letter of credit issued by a United States bank whose long-term
certificates of deposit are rated at least AA or the equivalent thereof by S&P
and Aa or the equivalent thereof by Xxxxx'x, (v) fully collateralized repurchase
agreements with a term of not more than 30 days for securities described in
clause (i) above and entered into with a financial institution satisfying the
criteria described in clause (ii) above, (vi) Investments existing on the date
hereof and set forth on Schedule 5.17, to the extent such Investments would
38
not be permitted under any other clause of this Section, (vii) Investments
received in connection with the bankruptcy or reorganization of, or settlement
of delinquent accounts and disputes with, customers and suppliers, in each case
in the ordinary course of business, (viii) Hedging Agreements entered into to
mitigate interest rate, exchange rate, commodity price or other risks incurred
by the Borrower and the Subsidiaries in the ordinary course of business and not
for speculative purposes, (ix) Investments in Guarantors and/or (x) other
Investments which, together with Debt permitted by clause (vi) of Section 5.23,
do not at any time exceed $12,500,000; provided, however, that immediately after
giving effect to the making of any Investment, no Default shall have occurred
and be continuing.
SECTION 5.18. Liens. Except for Liens in favor of the Bank created under the
Loan Documents, neither the Borrower nor any Consolidated Subsidiary will
create, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount
not exceeding $7,195,000;
(b) Liens securing Debt owing by any Subsidiary to the Borrower
permitted by Section 5.16;
(c) any Lien incurred in connection with the GECC Receivables
Arrangement;
(d) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
paragraphs of this Section, provided that (i) such Debt is not secured by
any additional assets, and (ii) the amount of such Debt secured by any such
Lien is not increased;
(e) Liens incidental to the conduct of its business or the ownership
of its assets which (i) do not secure Debt and (ii) do not in the aggregate
materially detract from the value of its assets or materially impair the use
thereof in the operation of its business;
(g) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.07;
(h) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (j) of Section 6.01;
(i) any Lien existing on any fixed or capital asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any
39
Person that becomes a Subsidiary after the date hereof prior to the
time such Person becomes a Subsidiary; provided that (i) such Lien is not
created in contemplation of or in connection with such acquisition or such
Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not
apply to any other property or assets of the Borrower or any Subsidiary and
(iii) such Lien shall secure only those obligations that it secures on the
date of such acquisition or the date such Person becomes a Subsidiary, as
the case may be;
(j) Liens on fixed or capital assets acquired, constructed or improved
by the Borrower or any Subsidiary; provided that (i) such security interests
and the Debt secured thereby are incurred prior to or within 3 months after
such acquisition or the completion of such construction or improvement, (ii)
the Debt secured thereby does not exceed 70% of the cost of acquiring,
constructing or improving such fixed or capital assets and (iii) such
security interests shall not apply to any other property or assets of the
Borrower or any subsidiary; and
(k) Other Liens securing Debt not in excess of an aggregate amount of
$500,000.
SECTION 5.19. Restrictions on Ability of Subsidiaries to Pay Dividends. The
Borrower shall not permit any Subsidiary to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary to (i) pay any dividends or
make any other distributions on its Capital Stock or any other interest or (ii)
make or repay any loans or advances to the Borrower or the parent of such
Subsidiary.
SECTION 5.20. Minimum Consolidated Worth. Consolidated Net Worth will at no
time be less than $240,000,000.
SECTION 5.21. Ratio of Consolidated Total Funded Debt to Consolidated
EBITDA. The ratio of Consolidated Total Funded Debt to Consolidated EBITDA will
not at any time exceed 3.5 to 1.0.
SECTION 5.22. Consolidated Fixed Charges Coverage Ratio. At the end of each
Fiscal Quarter, the Consolidated Fixed Charges Coverage Ratio shall not have
been less than 1.25 to 1.0.
SECTION 5.23. Debt. Neither the Borrower nor any Consolidated Subsidiary
will create, assume or suffer to exist any Debt, except (i) Debt in existence on
the date hereof (or incurred pursuant to a revolving credit commitment in
existence on the date hereof) in the aggregate amount of approximately
$47,500,000 and extensions, renewals and replacements of any such Debt that do
not increase the outstanding principal amount
40
thereof or result in an earlier maturity date or decreased weighted average life
thereof; (ii) Debt evidenced by "Loan Notes" issued pursuant to the Offer; (iii)
Debt of Guarantors and Subsidiaries to the Borrower permitted by Section 5.16;
(iv) Debt to the Bank created under the Loan Documents, (v) contingent
obligations permitted by Section 5.24, and (vi) other Debt which, together with
Investments permitted by clause (x) of Section 5.17, do not at any time exceed
$12,500,000.
SECTION 5.24. Contingent Liabilities. Neither the Borrower nor any
Subsidiary shall Guarantee, endorse or otherwise be or become contingently
liable, directly or indirectly, in connection with the obligations, stock or
dividends of any Person except that the Borrower or any Subsidiary may:
(a) endorse negotiable instruments for collection in the ordinary
course of business;
(b) incur contingent obligations in favor of the Bank; and
(c) remain contingently liable in an amount not in excess of
$85,000,000 with respect to the sale of receivables in connection with
the GECC Receivables Arrangement.
41
SECTION 5.25. Certain Covenants Pertaining to the Offer. (a) The Borrower
will only issue the Press Release in a form that is, in all material respects,
the form that has been approved by the Bank. The Borrower will comply with all
applicable laws and regulations of all regulatory bodies and authorities
relating to the Offer.
(b) The Borrower will keep the Bank informed as to the progress of the Offer
and will provide the Bank with any information as the Bank may reasonably
request.
(c) The Borrower will make full disclosure to the Bank in writing as soon as
practicable of all information which comes to the attention of the Borrower
which is material to the decision whether to waive any condition of the Offer or
which suggests that any condition to the Offer will or may not be satisfied, or
will or may required to be waived.
42
SECTION 5.26. Certain Covenants Pertaining to the Target and its Shares. (a)
The Borrower shall, within 5 Business Days after the Offer Termination Date (or
such later date on which they are available to the Borrower), deliver to the
Bank the stock transfer forms and share certificates relating to the Shares
which are in certificated form.
(b) On the Offer Termination Date, the Borrower shall furnish to the Bank a
certificate listing all outstanding Debt of the Target, and all such Debt shall
be repaid in full within 10 Domestic Business Days after the Offer Termination
Date.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any Loan
or shall fail to pay any interest on any Loan within 5 Domestic Business
Days after such interest shall become due, or shall fail to pay any fee or
other amount payable hereunder within 5 Domestic Business Days after such
fee or other amount becomes due; or
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.01(e), 5.02(ii), 5.03 through 5.06, inclusive,
Sections 5.15 or 5.16, or Sections 5.19 through 5.25, inclusive; or
(c) the Borrower or any Guarantor shall fail to observe or perform any
covenant or agreement contained or incorporated by reference in this
Agreement (other than those covered by paragraph (a) or (b) above) or in the
Pledge Agreement, the Subsidiary Guaranty or any other Loan Document and
such failure shall not have been cured within 30 days after the earlier to
occur of (i) written notice thereof has been given to the Borrower or the
Guarantor by the Bank or (ii) the Borrower or any Guarantor otherwise
becomes aware of any such failure; or
(d) any representation, warranty, certification or statement made by
the Borrower or any Guarantor in Article IV of this Agreement or in the
Pledge Agreement or in any certificate, financial statement or other
document delivered pursuant to this Agreement shall prove to have been
incorrect or misleading in any material respect when made (or deemed made);
or
43
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of Debt in the aggregate amount of $5,000,000 or more outstanding
(other than the Note) when due or within any applicable grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt in the aggregate amount of $5,000,000
or more outstanding of the Borrower or any Subsidiary (including, without
limitation, any required mandatory prepayment or "put" of such Debt to the
Borrower or any Subsidiary) or enables (or, with the giving of notice or
lapse of time or both, would enable) the holders of such Debt or commitment
or any Person acting on such holders' behalf to accelerate the maturity
thereof or terminate any such commitment (including, without limitation, any
required mandatory prepayment or "put" of such Debt to the Borrower or any
Subsidiary); or
(g) the Borrower or any Subsidiary 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 assignment for the benefit of creditors, or shall fail generally, or
shall admit in writing its inability, to pay its debts as they become due,
or shall take any corporate action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced against
the Borrower or any Subsidiary 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 Borrower or any Subsidiary
under the federal bankruptcy laws as now or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall fail to
pay when due any amount equal to or in excess of $5,000,000 which it shall
have become liable to pay to the PBGC or to a Plan under Title IV of ERISA;
or notice of intent to terminate a Plan or Plans shall be filed under Title
IV of ERISA by the Borrower, any member of the Controlled Group, any plan
administrator or any
44
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be
appointed to administer any such Plan or Plans or a proceeding shall be
instituted by a fiduciary of any such Plan or Plans to enforce Section
515 or 4219(c)(5) of ERISA and such proceeding shall not have been
dismissed within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated; or the
Borrower or any other member of the Controlled Group shall incur any
withdrawal liability with respect to, a Multiemployer Plan, in each of
the foregoing cases if the amount of unfunded liability with respect of
any such terminated plan is equal to or in excess of $5,000,000; or
(j) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $5,000,000 shall be rendered against the
Borrower or any Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against the Borrower or any
Subsidiary under Section 6323 of the Code or a lien of the PBGC shall be
filed against the Borrower or any Subsidiary under Section 4068 of ERISA and
in either case such lien is for an amount equal to or in excess of
$5,000,000 and shall remain undischarged for a period of 25 days after the
date of filing; or
(l) (i) any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange \Commission under the Securities Exchange Act of
1934) of 30% or more of the outstanding shares of the voting stock of the
Borrower; or (ii) as of any date a majority of the Board of Directors of the
Borrower consists of individuals who were not either (A) directors of the
Borrower as of the corresponding date of the previous year, (B) selected or
nominated to become directors by the Board of Directors of the Borrower of
which a majority consisted of individuals described in clause (A), or (C)
selected or nominated to become directors by the Board of Directors of the
Borrower of which a majority consisted of individuals described in clause
(A) and individuals described in clause (B).
then, and in every such event the Bank may terminate its Commitment and declare
the Note (together with accrued interest thereon), and all other amounts payable
hereunder and under the other Loan Documents, to be, and the Note (together with
accrued interest thereon), and all other amounts payable hereunder and under the
other Loan Documents shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
45
hereby waived by the Borrower together with interest at the Default Rate
accruing on the principal amount thereof from and after the date of such Event
of Default; provided that: (A) if any Event of Default specified in paragraph
(g) or (h) above occurs with respect to the Borrower, without any notice to the
Borrower or any other act by the Bank, the Commitment shall thereupon terminate
and the Note (together with accrued interest thereon) and all other amounts
payable hereunder and under the other Loan Documents shall automatically and
without notice become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower together with interest thereon at the Default Rate accruing on the
principal amount thereof from and after the date of such Event of Default; and
(B) during the period commencing with the Closing Date and ending on the Offer
Termination Date, the Bank shall not be entitled to terminate the Commitment,
rescind this Agreement or prevent any Offer Funding Borrowing nor to declare the
Loans due and payable in whole or in part or exercise any other right or remedy
under any Loan Document or exercise any set off or similar right arising on the
basis of misrepresentation or Default or otherwise if to do so would prevent the
funding of the Offer in accordance with Section 3.02(a) unless (i) an Event of
Default described in paragraph (b) above, but only insofar as it arises out of a
breach of Sections 5.04 or 5.06, in each case solely as they relate to the
Borrower, or of Section 5.25, shall have occurred and be continuing or (ii) any
of the representations and warranties set forth in Sections 4.01, 4.02 (but only
insofar as it relates to clauses (i) through (iv), inclusive, thereof), 4.03 and
4.17, as they relate to the Borrower, shall not be true and correct in all
material respects on the date of any Offer Funding Borrowing.
Notwithstanding anything to the contrary in the preceding paragraph, during
the Clean-up Period, the Bank may not declare that an Event of Default has
occurred, or terminate the Commitment or declare the Loans to be due any payable
as a result solely of one or more Defaults insofar as such Default or Defaults
relate to or involve the Target (excluding the Target's Debt, which shall be
paid in accordance with Section 5.26(b)); provided that the event or
circumstance giving rise to such Default, or the result of such Default, is
capable of being cured or remedied during the Clean-up Period; and provided
further, that the Bank shall be entitled to exercise any and all rights and
remedies granted to it hereunder and under the Loan Documents or at law or in
equity with respect to an occurrence or continuation of any such Default or
Event of Default after the expiration of the Clean-up Period.
ARTICLE VII
CHANGE IN CIRCUMSTANCES; COMPENSATION
46
SECTION 7.01. Basis for Determining Interest Rate Inadequate or Unfair.
Except with respect to any Offer Funding Borrowing during the Offer Period, if
on or prior to the first day of any Interest Period:
(a) the Bank determines that deposits in Dollars (in the applicable
amounts) are not being offered in the relevant market for such Interest
Period, or
(b) the Bank determines that the London Interbank Offered Rate or IBOR
as determined by the Bank will not adequately and fairly reflect the cost to
the Bank of funding the relevant type of Fixed Rate Loans for such Interest
Period,
the Bank shall forthwith give notice thereof to the Borrower, whereupon until
the Bank notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligations of the Bank to make such type of
Fixed Rate Loans specified in such notice shall be suspended. Unless the
Borrower notifies the Bank at least 2 Domestic Business Days before the date of
any Borrowing of such type of Fixed Rate Loans for which a Notice of Borrowing
has previously been given that it elects not to borrow on such date, such
Borrowing shall instead be made as a Base Rate Borrowing.
SECTION 7.02. Illegality. Except with respect to any Offer Funding Borrowing
during the Offer Period, if, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein or any existing or
future law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof (any such
agency being referred to as an "Authority" and any such event being referred to
as a "Change of Law"), or compliance by the Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority shall make it unlawful or impossible for the Bank (or its Lending
Office) to make, maintain or fund its Euro-Dollar Loans or Foreign Currency
Loans and the Bank shall so notify the Borrower, until the Bank notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
the obligation of the Bank to make Euro-Dollar Loans or Foreign Currency Loans,
as the case may be, shall be suspended. Before giving any notice to the Borrower
pursuant to this Section, the Bank shall designate a different Lending Office if
such designation will avoid the need for giving such notice and will not, in the
judgment of the Bank, be otherwise disadvantageous to the Bank. If the Bank
shall determine that it may not lawfully continue to maintain and fund any of
its outstanding Euro-Dollar Loans or Foreign Currency Loans, as the case may be,
to maturity and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each Euro-Dollar Loan or
Foreign Currency Loans of the Bank, as the case may be,
47
together with accrued interest thereon and any amount due the Bank pursuant to
Section 7.05(a). Concurrently with prepaying each such Euro-Dollar Loan or
Foreign Currency Loan, as the case may be, the Borrower shall borrow a Base Rate
Loan in an equal principal amount from the Bank, and the Bank shall make such a
Base Rate Loan.
SECTION 7.03. Increased Cost and Reduced Return. (a) If after the date
hereof, a Change of Law or compliance by the Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority:
(i) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
but excluding (A) with respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve Percentage), and (B) with
respect to any Foreign Currency Loan any such requirement included in the
applicable Adjusted IBOR Rate) against assets of, deposits with or for the
account of, or credit extended by, the Bank (or its Lending Office); or
(ii) shall impose on the Bank (or its Lending Office) or on the London
interbank market any other condition affecting its Fixed Rate Loans, its
Note or its obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to the Bank (or
its Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce
the amount of any sum received or receivable by the Bank (or its Lending Office)
under this Agreement or under its Note with respect thereto, by an amount deemed
by the Bank to be material, then, within 15 days after demand by the Bank, the
Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank for such increased cost or reduction.
(b) If the Bank shall have determined that after the date hereof the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof, or compliance by the Bank (or its Lending Office) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any Authority, has or would have the effect of reducing the rate of return on
the Bank's capital as a consequence of its obligations hereunder to a level
below that which the Bank could have achieved but for such adoption, change or
compliance (taking into consideration the Bank's policies with respect to
capital adequacy) by an amount deemed by the Bank to be material, then from time
to time, within 15 days after demand by the Bank, the Borrower shall pay to the
Bank such additional amount or amounts as will compensate the Bank for such
reduction.
48
(c) The Bank will promptly notify the Borrower of any event of which it has
knowledge, occurring after the date hereof, which will entitle the Bank to
compensation pursuant to this Section and will designate a different Lending
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank. A certificate of the Bank claiming compensation
under this Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods.
(d) Failure or delay on the part of the Bank to demand compensation pursuant
to this Section shall not constitute waiver of the Bank's right to demand such
compensation; provided that the Borrower shall not be required to compensate the
Bank pursuant to this Section for any increased costs or reductions incurred
more that 120 days prior to the date that the Bank notifies the Borrower of the
Change of Law giving rise to such increased costs or reductions and of the
Bank's intention to claim compensation therefor; provided, further, that if the
Change of Law giving rise to such increased costs or reductions is retroactive,
then the 120-day period referred to above shall be extended to include the
period of retroactive effect thereof.
(e) The provisions of this Section 7.03 shall be applicable with respect to
any Transferee, and any calculations required by such provisions shall be made
based upon the circumstances of such Transferee.
SECTION 7.04. Base Rate Loans Substituted for Affected Fixed Rate Loans.
Except with respect to any Offer Funding Borrowing during the Offer Period, if
(i) the obligation of the Bank to make or maintain Fixed Rate Loans has been
suspended pursuant to Section 7.02 or (ii) the Bank has demanded compensation
under Section 7.03, and the Borrower shall, by at least 5 Fixed Rate Business
Days' prior notice to the Bank, have elected that the provisions of this Section
shall apply to the Bank, then, unless and until the Bank notifies the Borrower
that the circumstances giving rise to such suspension or demand for compensation
no longer apply:
(a) all Loans which would otherwise be made by the Bank as Euro-Dollar Loans
or Foreign Currency Loans, as the case may be, shall be made instead either (A)
as Base Rate Loans, (B) if such suspension or demand for compensation relates to
Euro-Dollar Loans, but not Foreign Currency Loans, as Foreign Currency Loans, or
(C) if such demand for compensation relates to Foreign Currency Loans, but not
Euro-Dollar Loans, as Euro-Dollar Loans, as the Borrower may elect in the
notice to the Bank referred to hereinabove, and
49
(b) after each of its Euro-Dollar Loans or Foreign Currency Loans, as the
case may be, has been repaid, all payments of principal which would otherwise be
applied to repay such Fixed Rate Loans shall be applied to repay its Base Rate
Loans instead.
SECTION 7.05. Compensation. Upon the request of the Bank, delivered to the
Borrower, the Borrower shall pay to the Bank such amount or amounts as shall
compensate the Bank for any loss, cost or expense incurred by the Bank as a
result of:
(a) any payment or prepayment (pursuant to Section 2.07, 2,08, 6.01, 7.02 or
otherwise) of a Fixed Rate Loan on a date other than the last day of an Interest
Period for such Loan; or
(b) any failure by the Borrower to prepay a Fixed Rate Loan on the date for
such prepayment specified in the relevant notice of prepayment hereunder; or
(c) any failure by the Borrower to borrow a Fixed Rate Loan on the date for
the Fixed Rate Borrowing specified in the applicable Notice of Borrowing
delivered pursuant to Section 2.02; or
(d) any failure by the Borrower to pay a Foreign Currency Loan in the
applicable Foreign Currency;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (x) the amount of interest which would have accrued on the amount so
paid or prepaid or not prepaid or borrowed for the period from the date of such
payment, prepayment or failure to prepay or borrow to the last day of the then
current Interest Period for such Fixed Rate Loan (or, in the case of a failure
to prepay or borrow, the Interest Period for such Fixed Rate Loan which would
have commenced on the date of such failure to prepay or borrow) at the
applicable rate of interest for such Fixed Rate Loan provided for herein over
(y) the amount of interest (as reasonably determined by the Bank) the Bank would
have paid on deposits in Dollars of comparable amounts having terms comparable
to such period placed with it by leading banks in the London interbank market.
SECTION 7.06. Failure to Pay in Foreign Currency. If the Borrower is unable
for any reason to effect payment of a Foreign Currency Loan in the Foreign
Currency as required by this Agreement or if the Borrower shall default in the
payment of a Foreign Currency Loan, the Bank may, require such payment to be
made in Dollars in the Dollar Equivalent amount of such payment. In any case in
which the Borrower shall make such payment in Dollars, the Borrower agrees to
hold the Bank harmless from any loss incurred by the Bank arising from any
change in the value of Dollars in relation to the Foreign
50
Currency between the date such payment became due and the date of payment
thereof.
SECTION 7.07. Judgment Currency. If for the purpose of obtaining judgment in
any court or enforcing any such judgment it is necessary to convert any amount
due in the Foreign Currency into any other currency, the rate of exchange used
shall be the Bank's spot rate of exchange for the purchase of the Foreign
Currency with such other currency at the close of business on the Fixed Rate
Business Day preceding the date on which judgment is given or any order for
payment is made. The obligation of the Borrower in respect of any amount due
from it hereunder shall, notwithstanding any judgment or order for a liquidated
sum or sums in respect of amounts due hereunder or under any judgment or order
in any other currency or otherwise be discharged only to the extent that on the
Fixed Rate Business Day following receipt by the Bank of any payment in a
currency other than the Foreign Currency the Bank is able (in accordance with
normal banking procedures) to purchase the Foreign Currency with such other
currency. If the amount of the Foreign Currency that the Bank is able to
purchase with such other currency is less than the amount due in the Foreign
Currency, notwithstanding any judgment or order, the Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the Bank
for the shortfall.
ARTICLE VIII
MISCELLANEOUS
-------------
SECTION 8.01. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopier or similar writing)
and shall be given to such party at its address or telecopier number set forth
on the signature pages hereof or such other address or telecopier number as such
party may hereafter specify for the purpose by notice to each other party. Each
such notice, request or other communication shall be effective (i) if given by
telecopier, when such telecopy is transmitted to the telecopier number specified
in this Section and the confirmation is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Bank under Article II or Article VIII shall not be effective until
received.
SECTION 8.02. No Waivers. No failure or delay by the Bank in exercising any
right, power or privilege hereunder or under the Note or other Loan Document
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and
51
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 8.03. Expenses; Documentary Taxes. The Borrower shall pay (i) all
out-of-pocket expenses of the Bank, including fees and disbursements of special
counsel for the Bank, in connection with the preparation of this Agreement and
the other Loan Documents, any waiver or consent hereunder or thereunder or any
amendment hereof or thereof or any Default or alleged Default hereunder or
thereunder and (ii) if a Default occurs, all out-of-pocket expenses incurred by
the Bank, including fees and disbursements of counsel, in connection with such
Default and collection and other enforcement proceedings resulting therefrom,
including out-of-pocket expenses incurred in enforcing this Agreement and the
other Loan Documents. The Borrower shall indemnify the Bank against any transfer
taxes, documentary taxes, assessments or charges made by any Authority by reason
of the execution and delivery of this Agreement or the other Loan Documents
("Other Taxes").
SECTION 8.04. Indemnification. The Borrower shall indemnify the Bank and
each Affiliate thereof and their respective directors, officers, employees and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims or damages to which any of them may become subject, insofar
as such losses, liabilities, claims or damages arise out of or result from any
actual or proposed use by the Borrower of the proceeds of any extension of
credit by the Bank hereunder or breach by the Borrower of this Agreement or any
other Loan Document or from any investigation, litigation (including, without
limitation, any actions taken by the Bank to enforce this Agreement or any of
the other Loan Documents) or other proceeding (including, without limitation,
any threatened investigation or proceeding) relating to the foregoing, and the
Borrower shall reimburse the Bank, and each Affiliate thereof and their
respective directors, officers, employees and agents, upon demand for any
expenses (including, without limitation, legal fees) incurred in connection with
any such investigation or proceeding; but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence or wilful misconduct of the Person to be indemnified.
SECTION 8.05. Setoff. The Borrower hereby grants to the Bank a lien for all
indebtedness and obligations owing to it from the Borrower upon all deposits or
deposit accounts, of any kind, or any interest in any deposits or deposit
accounts thereof, now or hereafter pledged, mortgaged, transferred or assigned
to the Bank or otherwise in the possession or control of the Bank for any
purpose for the account or benefit of the Borrower and including any balance of
any deposit account or of any credit of the Borrower with the Bank, whether now
existing or hereafter established hereby authorizing the Bank at any time or
times with or without prior notice to apply such balances or any part thereof to
such of the indebtedness and
52
obligations owing by the Borrower to the Bank then past due and in such amounts
as it may elect, and whether or not the collateral, if any, or the
responsibility of other Persons primarily, secondarily or otherwise liable may
be deemed adequate. For the purposes of this paragraph, all remittances and
property shall be deemed to be in the possession of the Bank as soon as the same
may be put in transit to it by mail or carrier or by other bailee.
SECTION 8.06. Amendments and Waivers. Any provision of this Agreement, the
Note or any other Loan Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower (or the
Guarantors, as to the Subsidiary Guaranty) and the Bank.
SECTION 8.07. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement.
(b) The Bank may at any time sell to one or more Persons (each a
"Participant") participating interests in any Loan owing to the Bank, any Note
held by the Bank, any Commitment hereunder or any other interest of the Bank
hereunder. In the event of any such sale by the Bank of a participating interest
to a Participant, the Bank's obligations under this Agreement shall remain
unchanged, the Bank shall remain solely responsible for the performance thereof,
the Bank shall remain the holder of any such Note for all purposes under this
Agreement, and the Borrower shall continue to deal solely and directly with the
Bank in connection with the Bank's rights and obligations under this Agreement.
The Borrower agrees that each Participant shall be entitled to the benefits of
Article VIII with respect to its participation in Loans outstanding from time to
time.
(c) Subject to the provisions of Section 8.08, the Borrower authorizes the
Bank to disclose to any Transferee and any prospective Transferee any and all
financial information in the Bank's possession concerning the Borrower which has
been delivered to the Bank by the Borrower pursuant to this Agreement or which
has been delivered to the Bank by the Borrower in connection with the Bank's
credit evaluation prior to entering into this Agreement.
(d) No Transferee shall be entitled to receive any greater payment under
Section 7.03 than the transferor Bank would have been entitled to receive with
respect to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions of Section 7.02
or 7.03 requiring the Bank to designate a different Lending Office under certain
circumstances or at a time when
53
the circumstances giving rise to such greater payment did not exist.
(e) Anything in this Section 8.07 to the contrary notwithstanding, the Bank
may assign and pledge all or any portion of the Loans and/or obligations owing
to it to any Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal Reserve Bank,
provided that any payment in respect of such assigned Loans and/or obligations
made by the Borrower to the assigning and/or pledging Bank in accordance with
the terms of this Agreement shall satisfy the Borrower's obligations hereunder
in respect of such assigned Loans and/or obligations to the extent of such
payment. No such assignment shall release the assigning and/or pledging Bank
from its obligations hereunder.
SECTION 8.08. Confidentiality. The Bank agrees to exercise commercially
reasonable efforts to keep any information delivered or made available by the
Borrower to it which pertains to the financial condition, operations, business
or properties of the Borrower and its Subsidiaries, or which constitutes other
information which is clearly indicated to be confidential information,
confidential from anyone other than persons employed or retained by the Bank who
are or are expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided that nothing herein shall prevent the Bank
from disclosing such information (i) upon the order of any court or
administrative agency, (ii) upon the request or demand of any regulatory agency
or authority having jurisdiction over the Bank, (iii) which has been publicly
disclosed, (iv) to the extent reasonably required in connection with any
litigation to which the Bank or its Affiliates may be a party, (v) to the extent
reasonably required in connection with the exercise of any remedy hereunder,
(vi) to the Bank's legal counsel and independent auditors and (vii) to any
actual or proposed Participant or other Transferee of all or part of its rights
hereunder which has agreed in writing to be bound by the provisions of this
Section 8.08; provided that should disclosure of any such confidential
information be required by virtue of clause (i) of the immediately preceding
sentence, to the extent permitted by law, the Bank shall promptly notify the
Borrower of same so as to allow the Borrower to seek a protective order or to
take any other appropriate action; provided, further, that, the Bank shall not
be required to delay compliance with any directive to disclose any such
information so as to allow the Borrower to effect any such action.
SECTION 8.09. Representation by the Bank. The Bank hereby represents that it
is a commercial lender or financial institution which makes loans in the
ordinary course of its business and that it will make its Loans hereunder for
its own account in the ordinary course of such business; provided that,
54
subject to Section 8.07, the disposition of the Note held by the Bank shall at
all times be within its exclusive control.
SECTION 8.10. Georgia Law. This Agreement and each Note shall be construed
in accordance with and governed by the laws of the State of Georgia.
SECTION 8.11. Severability. In case any one or more of the provisions
contained in this Agreement, the Note or any of the other Loan Documents should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby and shall be enforced to the
greatest extent permitted by law.
SECTION 8.12. Interest. In no event shall the amount of interest, and all
charges, amounts or fees contracted for, charged or collected pursuant to this
Agreement, the Note or the other Loan Documents and deemed to be interest under
applicable law (collectively, "Interest") exceed the highest rate of interest
allowed by applicable law (the "Maximum Rate"), and in the event any such
payment is inadvertently received by the Bank, then the excess sum (the
"Excess") shall be credited as a payment of principal, unless the Borrower shall
notify the Bank in writing that it elects to have the Excess returned forthwith.
It is the express intent hereof that the Borrower not pay and the Bank not
receive, directly or indirectly in any manner whatsoever, interest in excess of
that which may legally be paid by the Borrower under applicable law. The right
to accelerate maturity of any of the Loans does not include the right to
accelerate any interest that has not otherwise accrued on the date of such
acceleration, and the Bank does not intend to collect any unearned interest in
the event of any such acceleration. All monies paid to the Bank hereunder or
under the Note or the other Loan Documents, whether at maturity or by
prepayment, shall be subject to rebate of unearned interest as and to the extent
required by applicable law. By the execution of this Agreement, the Borrower
covenants, to the fullest extent permitted by law, that (i) the credit or return
of any Excess shall constitute the acceptance by the Borrower of such Excess,
and (ii) the Borrower shall not seek or pursue any other remedy, legal or
equitable , against the Bank, based in whole or in part upon contracting for
charging or receiving any Interest in excess of the Maximum Rate. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by the Bank, all interest at any time contracted for,
charged or received from the Borrower in connection with this Agreement, the
Note or any of the other Loan Documents shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread in equal parts
throughout the full term of the Commitments. The Borrower and the Bank shall, to
the maximum extent permitted under applicable law, (i) characterize any
non-principal payment as an expense, fee or premium rather than as Interest and
(ii) exclude voluntary prepayments and the
55
effects thereof. The provisions of this Section shall be deemed to be
incorporated into the Note and each of the other Loan Documents (whether or not
any provision of this Section is referred to therein). All such Loan Documents
and communications relating to any Interest owed by the Borrower and all figures
set forth therein shall, for the sole purpose of computing the extent of
obligations hereunder and under the Note and the other Loan Documents be
automatically recomputed by the Borrower, and by any court considering the same,
to give effect to the adjustments or credits required by this Section.
SECTION 8.13. Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
SECTION 8.14. Waiver of Jury Trial; Consent to Jurisdiction. The Borrower
(a) and the Bank irrevocably waives, to the fullest extent permitted by law, any
and all right to trial by jury in any legal proceeding arising out of this
Agreement, any of the other Loan Documents, or any of the transactions
contemplated hereby or thereby, (b) submits to the nonexclusive personal
jurisdiction in the State of Georgia, the courts thereof and the United States
District Courts sitting therein, for the enforcement of this Agreement, the Note
and the other Loan Documents, (c) waives any and all personal rights under the
law of any jurisdiction to object on any basis (including, without limitation,
inconvenience of forum) to jurisdiction or venue within the State of Georgia for
the purpose of litigation to enforce this Agreement, the Note or the other Loan
Documents, and (d) agrees that service of process may be made upon it in the
manner prescribed in Section 8.01 for the giving of notice to the Borrower.
Nothing herein contained, however, shall prevent the Bank from bringing any
action or exercising any rights against any security and against the Borrower
personally, and against any assets of the Borrower, within any other state or
jurisdiction.
SECTION 8.15. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 8.16. Source of Funds -- ERISA. The Bank hereby represents to the
Borrower that no part of the funds to be used by the Bank to fund the Loans
hereunder from time to time constitutes (i) assets allocated to any separate
account maintained by the Bank in which any employee benefit plan (or its
related trust) has any interest nor (ii) any other assets of any employee
benefit plan. As used in this Section, the terms "employee benefit plan" and
"separate account" shall have the respective meanings assigned to such terms in
Section 3 of ERISA.
56
[Signatures are contained on the following pages.]
57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, under seal, by their respective authorized officers as of the day and
year first above written.
GERBER SCIENTIFIC, INC. (SEAL)
By:______________________________________
Xxxx X. Xxxxxxx
Senior Vice President and
Chief Financial Officer
Gerber Scientific, Inc.
00 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Financial
Officer
Telecopier number: 000-000-0000
Confirmation number: 000-000-0000
COMMITMENT WACHOVIA BANK, N.A.,
(SEAL)
$190,000,000 or
[pound sterling]112,000,000(1) By:______________________________________
Xxxxxxx X. Xxxxxxxxxx
Vice President
Lending Office
--------------
Wachovia Bank, N.A.
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: U.S. Corporate
Telecopier number: 000-000-0000
Confirmation number: 000-000-0000
________________
(1) For Offer Funding Borrowings during the Offer Period
58
EXHIBIT A
---------
NOTE
Atlanta, Georgia
March 23, 1998
For value received, GERBER SCIENTIFIC, INC., a Connecticut corporation (the
"Borrower"), promises to pay to the order of WACHOVIA, N.A., a national banking
association (the "Bank"), for the account of its Lending Office, the principal
sum of ONE HUNDRED NINETY MILLION AND NO/100 DOLLARS ($190,000,000.00) (or the
Dollar Equivalent thereof with respect to amounts payable in the Foreign
Currency), or such greater or lesser amount as shall equal the unpaid principal
amount of each Loan made by the Bank to the Borrower pursuant to the Credit
Agreement referred to below, on the dates and in the amounts provided in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of this Note on the dates and at the rate or rates provided for in the
Credit Agreement. Interest on any overdue principal of and, to the extent
permitted by law, overdue interest on the principal amount hereof shall bear
interest at the Default Rate, as provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful money of the United
States in Federal or other immediately available funds (except for Foreign
Currency Loans shall be paid in the Foreign Currency) at the office of Wachovia
Bank, N.A., 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000-0000, or such
other address as may be specified from time to time pursuant to the Credit
Agreement.
All Loans made by the Bank, the respective maturities thereof, the
interest rates from time to time applicable thereto, the type of Loan (Base Rate
Loan, Euro-Dollar Loan or Foreign Currency Loan) and all repayments of the
principal thereof shall be recorded by the Bank and, prior to any transfer
hereof, endorsed by the Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof; provided that
the failure of the Bank to make any such recordation or endorsement shall not
affect the obligations of the Borrower hereunder or under the Credit Agreement.
This Note is the Note referred to in the Credit Agreement dated as of March
23, 1998 between the Borrower and the Bank (as the same may be amended and
modified from time to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the optional and mandatory prepayment and
the repayment hereof and the acceleration of the maturity hereof, as well as the
obligation of the Borrower to
59
pay all costs of collection, including reasonable attorneys fees, in the event
this Note is collected by law or through an attorney at law.
The Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment and any other notice required by law relative
hereto, except to the extent as otherwise may be expressly provided for in the
Credit Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed, under seal, by its duly authorized officer as of the day and year
first above written.
GERBER SCIENTIFIC, INC.
(SEAL)
By:______________________________________
Xxxx X. Xxxxxxx
Senior Vice President and
Chief Financial Officer
60
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
-------------------------------------------------------------------------------------------------------------
Base Rate,
Euro-Dollar or Amount of
Foreign Amount of Principal Maturity Notation
Date Currency Loan of Loan Repaid Date Made By
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
61
EXHIBIT B
---------
OPINION OF
COUNSEL FOR THE BORROWER
------------------------
March 23, 1998
Wachovia Bank, N.A.,
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attn: U.S. Corporate
Dear Sirs:
We have acted as counsel for Gerber Scientific, Inc, a Connecticut
corporation (the "Borrower"), and for Gerber Technology, Inc., Gerber Scientific
Products, Inc, and Gerber Optical, Inc. (each a "Guarantor" and collectively the
"Guarantors") in connection with the Credit Agreement (the "Credit Agreement")
dated as of March 23, 1998 among the Borrower and Wachovia Bank, N.A.. Terms
defined in the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion. We have assumed for purposes of our opinions set forth below that the
execution and delivery of the Credit Agreement by the Bank has been duly
authorized by the Bank.
Upon the basis of the foregoing, we are of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing and in
good standing under the laws of Connecticut and has all corporate powers
required to carry on its business as now conducted.
2. The execution, delivery and performance by the Borrower of the Credit
Agreement, the Note and the Pledge Agreement (i) are within the Borrower's
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) require no action by or in respect of, or filing with, any
governmental body, agency or official, except such as have been obtained or made
and are in full force and effect, (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or of any agreement,
judgment, injunction, order, decree or other instrument which
62
to our knowledge is binding upon the Borrower and (v) to our knowledge, except
as provided in the Credit Agreement and the Pledge Agreement, do not result in
the creation or imposition of any Lien on any asset of the Borrower or any of
its Subsidiaries.
3. Each of the Credit Agreement and the Pledge Agreement constitutes a valid
and binding agreement of the Borrower, enforceable against the Borrower in
accordance with its terms, and the Note constitutes a valid and binding
obligation of the Borrower, enforceable in accordance with their respective
terms, except as such enforceability may be limited by: (i) bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally and (ii) general principles of equity, regardless
of whether considered in a proceeding in equity or at law.
4. Each Guarantor is a corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all corporate powers required to carry on its business as now conducted.
5. The execution, delivery and performance by each Guarantor of the
Subsidiary Guaranty (i) are within such Guarantor's corporate powers, (ii) have
been duly authorized by all necessary corporate action, (iii) require no action
by or in respect of, or filing with, any governmental body, agency or official,
except such as have been obtained or made and are in full force and effect, (iv)
do not contravene, or constitute a default under, any provision of applicable
law or regulation or of the certificate of incorporation or by-laws of such
Guarantor or of any agreement, judgment, injunction, order, decree or other
instrument which to our knowledge is binding upon such Guarantor and (v) to our
knowledge, except as provided in the Credit Agreement, do not result in the
creation or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.
6. The Subsidiary Guaranty constitutes a valid and binding agreement of each
of the Guarantors, enforceable against the Borrower in accordance with its
terms, except as such enforceability may be limited by: (i) bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally and (ii) general principles of equity, regardless
of whether considered in a proceeding in equity or at law.
7. To our knowledge, there is no action, suit or proceeding pending, or
threatened, against or affecting the Borrower 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 materially
adversely affect the business,
63
consolidated financial position or consolidated results of operations of the
Borrower and its Consolidated Subsidiaries, considered as a whole, or which in
any manner questions the validity or enforceability of the Credit Agreement or
any Note.
8. Each of the Borrower's Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
9. Neither the Borrower nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
10. Neither the Borrower nor any of its Subsidiaries is a "holding company"
as defined in the Public Utility Holding Company Act of 1935, as amended.
11. The choice of Georgia law to govern the Credit Agreement, the Note, the
Subsidiary Guaranty and the other Loan Documents in which such choice is
stipulated is a valid and effective choice of law under the laws of the State of
New York, and adherence to existing judicial precedents generally would require
a court sitting in the State of New York to abide by such choice of law, unless
a fundamental policy of the State of New York would be violated. We are not
aware of any provision of the Credit Agreement, the Note, the Subsidiary
Guaranty or the other Loan Documents that would violate a fundamental policy of
the State of New York.
[I am a member] [We are members] of the bar of the State of [__________]
[New York] and the foregoing opinion is limited to the laws of the State of
[__________] {New York] and the Federal laws of the United States of America.
[I] [We] note that the Credit Agreement is governed by the laws of the State of
Georgia and, for purposes of the opinions expressed in paragraphs 2 and 5 above,
[I] [we] have assumed that the laws of the State of Georgia do not differ from
the laws of the State of [_________] [New York] in any manner that would render
such opinion incorrect.
This opinion is delivered to you in connection with the transaction
referenced above and may only be relied upon by you, any Assignee, Participant
or other Transferee under the Credit Agreement, and Xxxxx, Day, Xxxxxx & Xxxxx
without our prior written consent.
Very truly yours,
64
EXHIBIT C
---------
OPINION OF
XXXXX, DAY, XXXXXX & XXXXX, SPECIAL COUNSEL
FOR THE BANK
------------
March 23, 1998
Wachovia Bank, N.A.,
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attn: U.S. Corporate
Dear Sirs:
We have participated in the preparation of the Credit Agreement (the "Credit
Agreement") dated as of March 23, 1998, among Gerber Scientific, Inc., a
Connecticut corporation (the "Borrower") and Wachovia Bank, N.A.,(the "Bank"),
and have acted as special counsel for the Bank for the purpose of rendering this
opinion pursuant to Section 3.01(e) of the Credit Agreement. Terms defined in
the Credit Agreement are used herein as therein defined.
This opinion letter is limited by, and is in accordance with, the January 1,
1992 edition of the Interpretive Standards applicable to Legal Opinions to Third
Parties in Corporate Transactions adopted by the Legal Opinion Committee of the
Corporate and Banking Law Section of the State Bar of Georgia which Interpretive
Standards are incorporated herein by this reference.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, and assuming the due authorization,
execution and delivery of the Credit Agreement and the Note by or on behalf of
the Borrower, we are of the opinion that the Credit Agreement constitutes a
valid and binding agreement of the Borrower and the Note constitutes valid and
binding obligations of the Borrower, in each case enforceable in accordance with
its terms except as: (i) the enforceability thereof may be affected by
bankruptcy, insolvency, reorganization, fraudulent conveyance, voidable
preference, moratorium or similar laws applicable to creditors' rights or the
collection of debtors' obligations generally; (ii) rights of acceleration and
the availability of equitable remedies may be limited by equitable principles of
general applicability; and (iii) the enforceability of certain of the
65
remedial, waiver and other provisions of the Credit Agreement and the Note may
be further limited by the laws of the State of Georgia; provided that such
additional laws do not, in our opinion, substantially interfere with the
practical realization of the benefits expressed in the Credit Agreement and the
Note, except for the economic consequences of any procedural delay which may
result from such laws.
In giving the foregoing opinion, we express no opinion as to the effect (if
any) of any law of any jurisdiction except the State of Georgia. We express no
opinion as to the effect of the compliance or noncompliance of the Bank with any
state or federal laws or regulations applicable to the Bank by reason of the
legal or regulatory status or the nature of the business of the Bank.
This opinion is delivered to you in connection with the transaction
referenced above and may only be relied upon by you and any Assignee,
Participant or other Transferee under the Credit Agreement without our prior
written consent.
Very truly yours,
66
EXHIBIT D
---------
NOTICE OF BORROWING
-------------------
____________________, 199__
Wachovia Bank, N.A.
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: U.S. Corporate
Re: Credit Agreement (as amended and modified from time
to time, the "Credit Agreement") dated as of March
23, 1998 by and between Gerber Scientific, Inc. and
Wachovia Bank, N.A..
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall have
the meanings attributable thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to Section 2.02 of the
Credit Agreement.
The Borrower hereby requests a [Euro-Dollar Borrowing][Base Rate Borrowing]
[Foreign Currency] in the aggregate principal amount of $_____________ to be
made on ____________________, 199__, and for interest to accrue thereon at the
rate established by the Credit Agreement for [Fixed Rate Loans][Base Rate
Loans].
The Borrower has caused this Notice of Borrowing to be executed and
delivered by its duly authorized officer this ____ day of _______________,
199__.
Gerber Scientific, Inc.
By:______________________________________
Title:
67
EXHIBIT E
---------
COMPLIANCE CERTIFICATE
----------------------
Reference is made to the Credit Agreement dated as of March 23, 1998 (as
modified and supplemented and in effect from time to time, the "Credit
Agreement") between Gerber Scientific, Inc., as Borrower, and Wachovia Bank,
N.A., as Bank. Capitalized terms used herein shall have the meanings ascribed
thereto in the Credit Agreement.
Pursuant to Section 5.01(c) of the Credit Agreement, ________________, the
duly authorized ____________________ of Gerber Scientific, Inc., hereby
certifies to the Bank that the information contained in the Compliance Check
List attached hereto is true, accurate and complete as of ________________,
_____, and that no Default is in existence on and as of the date hereof.
GERBER SCIENTIFIC, INC.
By:______________________________________
Title:
68
GERBER SCIENTIFIC, INC.
COMPLIANCE CHECK LIST
_______________, ______
1. Loans and Advances (Section 5.16)
Neither the Borrower nor any of its Subsidiaries shall make loans or
advances to any Person except as permitted by Section 5.17 and except: (i)
loans or advances to employees (other than travel advances) not exceeding
$1,000,000 in the aggregate principal amount outstanding at any time, in
each case made in the ordinary course of business and consistent with
practices existing on January 30, 1998; and (ii) deposits required by
government agencies or public utilities; (iii) loans or advances from the
Borrower to any Guarantor or to the Target or from any Guarantor to any
other Guarantor or to the Target; (iv) loans or advances to any Subsidiary
that is not a Guarantor or from any such Subsidiary to the Borrower or to
another such Subsidiary in existence on the Closing Date (or, as to
subsidiaries of the Target, loans and advances in existence on the Offer
Termination Date), which loans and advances in existence as of the Closing
Date are described on Schedule 5.16; and (v) loans or advances made after
the Closing Date (or, as to subsidiaries of the Target, made after the Offer
Termination Date) to any Subsidiary that is not a Guarantor or from any such
Subsidiary to the Borrower or to another such Subsidiary, not exceeding
$5,000,000 in the aggregate outstanding; provided that after giving effect
to the making of any loans, advances or deposits permitted by this Section,
no Default shall be in existence or be created thereby.
(a) To Employees $_______________
Limitation $1,000,000
(b) Loans and advances made after the Closing
Date to any Subsidiary that is not
a Guarantor or from any such Subsidiary to
the Borrower or to another such Subsidiary $_______________
Limitation $5,000,000
69
2. Investments (Section 5.17)
Neither the Borrower nor any of its Subsidiaries shall make Investments in
any Person except as permitted by Section 5.16 and except pursuant to the
Offer, except Investments in (i) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the
United States of America or the United Kingdom, in each case maturing within
one year, (ii) certificates of deposit, banker's acceptances and time
deposits maturing within 6 months from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any commercial bank organized under the laws of the
United States of America or any State thereof or under the laws of any
jurisdiction in which the Borrower or any of its Subsidiaries is doing
business, provided that such bank or its rated Affiliate is rated A1 or the
equivalent by S&P or A+ or the equivalent thereof by Xxxxx'x, (iii)
commercial paper maturing within 9 months from the date of acquisition
thereof and, at such date of acquisition, rated A1 or the equivalent thereof
by S&P or P1 or the equivalent thereof by Xxxxx'x, (iv) tender bonds the
payment of the principal of and interest on which is fully supported by a
letter of credit issued by a United States bank whose long-term certificates
of deposit are rated at least AA or the equivalent thereof by S&P and Aa or
the equivalent thereof by Xxxxx'x, (v) fully collateralized repurchase
agreements with a term of not more than 30 days for securities described in
clause (i) above and entered into with a financial institution satisfying
the criteria described in clause (ii) above, (vi) Investments existing on
the date hereof and set forth on Schedule 5.17, to the extent such
Investments would not be permitted under any other clause of this Section,
(vii) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business,
(viii) Hedging Agreements entered into to mitigate interest rate, exchange
rate, commodity price or other risks incurred by the Borrower and the
Subsidiaries in the ordinary course of business and not for speculative
purposes, (ix) Investments in Guarantors and/or (x) other Investments which,
together with Debt permitted by clause (vi) of Section 5.23, do not at any
time exceed $12,500,000; provided, however, that immediately after giving
effect to the making of any Investment, no Default shall have occurred and
be continuing.
(a) Loans and advances not permitted by
clauses (i) through (ix), inclusive $_______________
Limitation See [paragraph] 7(c) below
70
3. Liens (Section 5.18)
None of the Borrowers' nor any Consolidated Subsidiary's property is subject to
any Lien securing Debt, except for:
Description of Lien and Property Amount of Debt
subject to same Secured
--------------- -------
a.___________________________ $_____________
b.___________________________ $_____________
c.___________________________ $_____________
d.___________________________ $_____________
e.___________________________ $_____________
f.___________________________ $_____________
Total $
=============
$_____________
4. Minimum Consolidated Net Worth (Section 5.20)
Consolidated Net Worth will at no time be less than $240,000,000.
(a) Shareholders' equity $_____________
(b) Redeemable Preferred Stock $_____________
(c) write-off of the Borrower's
interest in Gerber Systems
Corporation $_____________
(d) Consolidated Net Worth
sum of (a), less (b), plus (c) $_____________
5. Ratio of Consolidated Total Funded Debt to Consolidated EBITDA
(Section 5.21)
The ratio of Consolidated Total Funded Debt to Consolidated EBITDA will
not at any time exceed 3.5 to 1.0.
(a) Consolidated Total Funded Debt
Schedule 1 $_____________
(b) Consolidated EBITDA-Schedule 2 $_____________
(c) Actual ratio of (a) to (b) ___ to 1.0
Maximum ratio 3.5 to 1.0
71
6. Consolidated Fixed Charges Coverage Ratio (Section 5.22)
At the end of each Fiscal Quarter, the Consolidated Fixed Charges
Coverage Ratio shall not have been less than 1.25 to 1.0.
(a) Consolidated EBITDA - Schedule 2 $_____________
(b) Consolidated Capital Expenditures
Schedule 3 $_____________
(c) sum of (a) less (b) $_____________
(d) Consolidated Interest Expense
Schedule 2 $_____________
(e) Consolidated Dividends
Schedule 4 $_____________
(f) Consolidated Taxes - Schedule 2 $_____________
(g) sum of (d), plus (e), plus (e) $_____________
(h) Actual ratio of (c) to (h) ____ to 1.0
Minimum ratio 1.25 to 1.0
7. Debt (Section 5.23)
Neither the Borrower nor any Consolidated Subsidiary will create,
assume or suffer to exist any Debt, except (i) Debt in existence on the
date hereof (or incurred pursuant to a revolving credit commitment in
existence on the date hereof) in the aggregate amount of approximately
$47,500,000 and extensions, renewals and replacements of any such Debt
that do not increase the outstanding principal amount thereof or result
in an earlier maturity date or decreased weighted average life thereof;
(ii) Debt evidenced by "Loan Notes" issued pursuant to the Offer; (iii)
Debt of Guarantors and Subsidiaries to the Borrower permitted by
Section 5.16; (iv) Debt to the Bank created under the Loan Documents,
(v) contingent obligations permitted by Section 5.24, and (vi) other
Debt which, together with Investments permitted by clause (x) of
Section 5.17, do not at any time exceed $12,500,000.
(a) Debt not permitted by
clauses (i) through (v), inclusive $_____________
(b) Amount of loans and advances in [paragraph] 2(b)
above $_____________
(c) Sum of (a) and (b) $_____________
Limitation $12,500,000
72
Schedule 1
----------
CONSOLIDATED TOTAL FUNDED DEBT
------------------------------
(a) obligations for borrowed money
or evidenced by bonds, debentures,
notes or other similar instruments $_____________
(b) obligations as lessee under
capital leases $_____________
(c) obligations to reimburse any bank
or other Person in respect of amounts
paid under a letter of credit or
similar instrument $_____________
(d) Redeemable Preferred Stock $_____________
(e) obligations of Persons other than
the Borrower or any Guarantor which
are Guaranteed by the Borrower
or any Consolidated Subsidiary $_____________
CONSOLIDATED TOTAL FUNDED DEBT
sum of (a) through (e) $_____________
73
Schedule 2
----------
CONSOLIDATED EBITDA(2)
----------------------
(a) Consolidated Net Income(3) for:
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
Total $_____________
(b) Consolidated Interest Expense for:
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
Total $_____________
(c) Consolidated Taxes for:
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
Total $_____________
(d) Depreciation expense for:
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
Total $_____________
_______________
(2) With respect to any Consolidated Subsidiary acquired during the 4 Fiscal
Quarter period set forth below, such Consolidated Subsidiary shall be included
on a pro forma, historical basis as if it had been a Consolidated Subsidiary
during such entire 4 Fiscal Quarter period.
(3) Without deduction for any non-cash loss incurred in connection with the
sale of the interests in Gerber Systems Corporation.
74
(e) Amortization expense for:
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
Total $_____________
(f) Other non-cash charges for:
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
Total $_____________
TOTAL CONSOLIDATED EBITDA
(sum of (a) through (f)) $_____________
75
Schedule 3
----------
CONSOLIDATED CAPITAL EXPENDITURES
---------------------------------
Consolidated Capital Expenditures for(4):
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
Total $_____________
________________
(4) With respect to any Consolidated Subsidiary acquired during the 4 Fiscal
Quarter period set forth below, such Consolidated Subsidiary shall be included
on a pro forma, historical basis as if it had been a Consolidated Subsidiary
during such entire 4 Fiscal Quarter period.
76
Schedule 4
----------
CONSOLIDATED DIVIDENDS
----------------------
Consolidated Dividends for:
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
___ quarter ____ $_____________
Total $_____________
77
EXHIBIT F
---------
GERBER SCIENTIFIC, INC.
CLOSING CERTIFICATE
-------------------
Reference is made to the Credit Agreement (the "Credit Agreement") dated as
of March 23, 1998, among Gerber Scientific, Inc. and Wachovia Bank, N.A..
Capitalized terms used herein have the meanings ascribed thereto in the Credit
Agreement.
Pursuant to Section 3.01(f) of the Credit Agreement, Xxxx X. Xxxxxxx, the
duly authorized Senior Vice President and Chief Financial Officer of Gerber
Scientific, Inc. hereby certifies to Wachovia Bank, N.A. that (i) no Default has
occurred and is continuing as of the date hereof, and (ii) the representations
and warranties contained in Article IV of the Credit Agreement are true on and
as of the date hereof, except to the extent any such representation or warranty
relates to an earlier date.
Certified as of this March 23, 1998.
By:______________________________________
Xxxx X. Xxxxxxx
Senior Vice President and
Chief Financial Officer
78
EXHIBIT G
---------
GERBER SCIENTIFIC, INC.
SECRETARY'S CERTIFICATE
-----------------------
The undersigned, Xxxxxxx X. Xxxxxx, Xx., Secretary of Gerber Scientific, Inc., a
Connecticut corporation (the "Borrower"), hereby certifies that he has been duly
elected, qualified and is acting in such capacity and that, as such, he is
familiar with the facts herein certified and is duly authorized to certify the
same, and hereby further certifies, in connection with the Credit Agreement
dated as of March 23, 1998 between the Borrower and Wachovia Bank, N.A., that:
1. Attached hereto as Exhibit A is a complete and correct copy of the
Certificate of Incorporation of the Borrower as in full force and effect on the
date hereof as certified by the Secretary of State of the State of Connecticut,
the Borrower's state of incorporation.
2. Attached hereto as Exhibit B is a complete and correct copy of the Bylaws
of the Borrower as in full force and effect on the date hereof.
3. Attached hereto as Exhibit C is a complete and correct copy of the
resolutions duly adopted by the Board of Directors of the Borrower on March 19,
1998, approving, and authorizing the execution and delivery of, the Credit
Agreement, the Note, the Pledge Agreement, the Contribution Agreement and the
other Loan Documents (as such terms are defined in the Credit Agreement) to
which the Borrower is a party. Such resolutions have not been repealed or
amended and are in full force and effect, and no other resolutions or consents
have been adopted by the Board of Directors of the Borrower in connection
therewith.
4. Xxxx X. Xxxxxxx, who is Senior Vice President and Chief Financial Officer
of the Borrower signed the Credit Agreement, the Note, the Pledge Agreement, the
Contribution Agreement and the other Loan Documents to which the Borrower is a
party, was duly elected, qualified and acting as such at the time he signed the
Credit Agreement, the Note, the Pledge Agreement, the Contribution Agreement and
other Loan Documents to which the Borrower is a party, and his signature
appearing on the Credit Agreement, the Note, the Pledge Agreement, the
Contribution Agreement and the other Loan Documents to which the Borrower is a
party is his genuine signature.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the 23rd day
of March, 1998.
_________________________________________
Xxxxxxx X. Xxxxxx, Xx.
Secretary
EXHIBIT H
---------
FORM OF SUBSIDIARY GUARANTY
---------------------------
THIS GUARANTY (this "Guaranty") is made as of March 23, 1998, by Gerber
Technology, Inc., Gerber Scientific Products, Inc., and Gerber Optical, Inc.,
each a Connecticut corporation (each a "Guarantor", and collectively, the
"Guarantors", in favor of Wachovia Bank, N.A.;
W I T N E S S E T H
WHEREAS, GERBER SCIENTIFIC, INC., a corporation organized and existing under
the laws of the State of Connecticut (the "Borrower")and WACHOVIA BANK, N.A.(the
"Lender") have entered into that certain Credit Agreement, dated as of even date
herewith (the "Credit Agreement"); and
WHEREAS, it is required by Section 4.1(i) of the Credit Agreement, that the
Guarantors execute and deliver this Guaranty whereby the Guarantors shall
guarantee the payment when due of all principal, interest and other amounts that
shall be at any time payable by the Borrower under the Credit Agreement, the
Note, the Pledge Agreement and the other Loan Documents; and
WHEREAS, in consideration of the financial and other support
that the Borrower has provided, and such financial and other support as the
Borrower may in the future provide, to Guarantors, whether directly or
indirectly, and in order to induce the Lender to enter into the Credit
Agreement, the Guarantors are willing to guarantee the obligations of the
Borrower under the Credit Agreement, the Note, the Pledge Agreement and the
other Loan Documents;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.
SECTION 2. Representations and Warranties. Each Guarantor incorporates
herein by reference as fully as if set forth herein all of the representations
and warranties pertaining to a Subsidiary contained in Article 4 of the Credit
Agreement (which representations and warranties shall be deemed to have been
renewed by the Guarantors upon each Borrowing under the Credit Agreement).
80
SECTION 3. Covenants. Each Guarantor incorporates herein by reference as
fully as if set forth herein all of the covenants pertaining to a Subsidiary
contained in Article 5 of the Credit Agreement.
SECTION 4. The Guaranty. The Guarantors hereby unconditionally and jointly
and severally guarantee the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and interest on
the Note issued by the Borrower pursuant to the Credit Agreement, including
without limitation all compensation and indemnification amounts and fees payable
pursuant to the Credit Agreement and the Pledge Agreement, and the full and
punctual payment of all other amounts payable by the Borrower under the Credit
Agreement, and all costs of collection, including reasonable attorneys fees (all
of the foregoing obligations being referred to collectively as the "Guaranteed
Obligations"). Upon failure by the Borrower to pay punctually any such amount,
each of the Guarantors agrees that it shall forthwith on demand pay the amount
not so paid at the place and in the manner specified in the Credit Agreement,
the Note, the Pledge Agreement or the relevant Loan Document, as the case may
be, and pay all costs of collection, including reasonable attorney's fees.
SECTION 5. Guaranty Unconditional. The obligations of each
Guarantor hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of the Borrower under the Credit Agreement, the
Note, the Pledge Agreement or any other Loan Document, by operation of law
or otherwise or any obligation of any other Guarantors of any of the
Guaranteed Obligations;
(ii) any modification or amendment of or supplement to the Credit
Agreement, the Note, the Pledge Agreement or any other Loan Document;
(iii) any release, nonperfection or invalidity of any direct or indirect
security for any obligation of the Borrower under the Credit Agreement, the
Note, the Pledge Agreement any Loan Document, or any obligations of any
other Guarantor or any other guarantor of any of the Guaranteed Obligations;
(iv) any change in the corporate existence, structure or ownership of
the Borrower or any other Guarantor or any other guarantor of any of the
Guaranteed Obligations, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting the Borrower, or any other Guarantor or
any other guarantor of the Guaranteed
81
Obligations, or its assets or any resulting release or discharge of any
obligation of the Borrower, or any other Guarantor or any other guarantor of
any of the Guaranteed Obligations;
(v) the existence of any claim, setoff or other rights which any
Guarantor may have at any time against the Borrower, any other Guarantors or
any other guarantor of any of the Guaranteed Obligations, the Lender or any
other Person, whether in connection herewith or any unrelated transactions,
provided that nothing herein shall prevent the assertion of any such claim
by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Borrower, or any other Guarantor or any other guarantor of any of the
Guaranteed Obligations, for any reason related to the Credit Agreement, any
other Loan Document, or any other guaranty, or any provision of applicable
law or regulation purporting to prohibit the payment by the Borrower, or any
other Guarantor or any other guarantor of the Guaranteed Obligations, of the
principal of or interest on the Note or any other amount payable by the
Borrower under the Credit Agreement, the Note, the Pledge Agreement or any
other Loan Document; or
(vii) any other act or omission to act or delay of any kind by the
Borrower, any other Guarantor or any other guarantor of the Guaranteed
Obligations, the Lender or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph, constitute
a legal or equitable discharge of the Guarantors's obligations hereunder,
including without limitation, any failure, omission, delay or inability on
the part of the Lender to enforce, assert or exercise any right, power or
remedy conferred on the Lender under the Credit Agreement or any other Loan
Documents (other than the indefeasible payment in full of all of the
Guaranteed Obligations).
SECTION 6. Discharge Only Upon Payment In Full; Reinstatement In
Certain Circumstances. The Guarantors' obligations hereunder shall remain in
full force and effect until all Guaranteed Obligations shall have been paid in
full and the Commitments under the Credit Agreement shall have terminated or
expired. If at any time any payment of the principal of or interest on the Note
or any other amount payable by the Borrower under the Credit Agreement, the
Note, the Pledge Agreement or any other Loan Document is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of the Borrower or otherwise, the Guarantors' obligations hereunder with respect
to such payment shall be reinstated as though such payment had been due but not
made at such time.
SECTION 7. Waiver of Notice by the Guarantors. The Guarantors irrevocably
waive acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any
82
notice not provided for herein, as well as any requirement that at any time any
action be taken by any Person against the Borrower, any other Guarantors or any
guarantor of the Guaranteed Obligations, or any other Person.
SECTION 8. Stay of Acceleration. If acceleration of the time for payment of
any amount payable by the Borrower under the Credit Agreement, the Note, the
Pledge Agreement or any other Loan Document is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower, all such amounts otherwise subject
to acceleration under the terms of the Credit Agreement, the Note, the Pledge
Agreement or any other Loan Document shall nonetheless be payable by the
Guarantors hereunder forthwith on demand by the Lender.
SECTION 9. Notices. All notices, requests and other communications to any
party hereunder shall be given or made by telecopier or other writing and
telecopied or mailed or delivered to the intended recipient at its address or
telecopier number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for such purpose by
notice to the Lender in accordance with the provisions of Section 10.1 of the
Credit Agreement. Except as otherwise provided in this Guaranty, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a mailed notice, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, in each case given or addressed as aforesaid.
SECTION 10. No Waivers. No failure or delay by the Lender in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided in this Guaranty, the Credit Agreement, the Note, the Pledge
Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 11. Successors and Assigns. This Guaranty is for the benefit of the
Lender and its successors and assigns and in the event of an assignment of any
amounts payable under the Credit Agreement, the Note, the Pledge Agreement or
the other Loan Documents, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Guaranty may not be assigned by the Guarantors without the prior written consent
of the Lender, and shall be binding upon each Guarantor and its successors and
permitted assigns.
SECTION 12. Changes in Writing. Neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by the Guarantors and the Lender.
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SECTION 13. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF GEORGIA. EACH OF THE GUARANTORS AND THE LENDER HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF GEORGIA AND OF ANY GEORGIA STATE COURT SITTING IN ATLANTA,
GEORGIA AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTORS
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
GUARANTORS AND THE LENDER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14. Taxes, etc. All payments required to be made by the Guarantors
hereunder shall be made without setoff or counterclaim and free and clear of and
without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, duties or other charges of whatsoever nature imposed by
any government or any political or taxing authority as required pursuant to
Section 2.09 of the Credit Agreement.
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed, under seal, by its authorized officer as of the date first above
written.
GERBER TECHNOLOGY,
GERBER SCIENTIFIC PRODCTS, INC.,
GERBER OPTICAL, INC.,
each a Connecticut
corporation (SEAL)
By:______________________________________
Xxxx X. Xxxxxxx
Treasurer
c/o Gerber Scientific, Inc.
00 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Financial
Officer
Telecopier number: 000-000-0000
Confirmation number: 000-000-0000
84
EXHIBIT I
---------
FORM OF CONTRIBUTION AGREEMENT
------------------------------
THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of March
23, 1998 by and between GERBER SCIENTIFIC, INC. a Connecticut corporation (the
"Principal"), GERBER TECHNOLOGY, INC., GERBER SCIENTIFIC PRODUCTS, INC., and
GERBER OPTICAL, INC., each a Connecticut corporation(collectively, the
"Subsidiary Guarantors"). The Principal and each of the Subsidiary Guarantors
are sometimes hereinafter referred to individually as a "Contributing Party" and
collectively as the "Contributing Parties").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as of even date
herewith between the Principal and WACHOVIA, N.A. (the "Bank")(such agreement,
as the same may from time to time be amended, modified, restated or extended,
being hereinafter referred to as the "Credit Agreement"; capitalized terms used
herein shall have the meanings ascribed thereto in the Credit Agreement), the
Bank has agreed to extend financial accommodations to the Principal;
WHEREAS, as a condition, among others, to the willingness of the Bank to
enter into the Credit Agreement, it has required that each Subsidiary Guarantor
execute and deliver that certain Subsidiary Guaranty, dated as of even date
herewith (such agreement, as the same may from time to time be amended,
modified, restated or extended, being hereinafter referred to collectively as
the "Guaranty"), pursuant to which, among other things, the Subsidiary
Guarantors have each agreed to guarantee the "Guaranteed Obligations" (as
defined in the Guaranty); and
WHEREAS, each Subsidiary Guarantor is a direct or indirect subsidiary of the
Principal and is engaged in businesses related to those of the Principal and
each other Subsidiary Guarantors, and each of the Subsidiary Guarantors will
derive direct or indirect economic benefit from the effectiveness and existence
of the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce each Subsidiary Guarantor to enter into the
Guaranty, it is agreed as follows:
To the extent that any Subsidiary Guarantor shall, under its Guaranty, make
a payment (a "Subsidiary Guarantors Payment") of a portion of the Guaranteed
Obligations, then, without limiting its rights of subrogation against the
principal, such Subsidiary Guarantor shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Contributing
Parties in an amount, for each such Contributing Party, equal to a fraction of
such Subsidiary Guarantors Payment, the numerator of which fraction is such
Contributing Party's Allocable Amount and the denominator of which is the sum of
the Allocable Amounts of all of the Contributing Parties.
85
As of any date of determination, the "Allocable Amount" of each Contributing
Party shall be equal to the maximum amount of liability which could be asserted
against such Contributing Party hereunder with respect to the applicable
Subsidiary Guarantors Payment without (i) rendering such Contributing Party
"insolvent" within the meaning of Section 101(31) of the Federal Bankruptcy Code
(the "Bankruptcy Code") or Section 2 of either the Uniform Fraudulent Transfer
Act (the "UFTA") or the Uniform Fraudulent Conveyance Act (the "UFCA"), (ii)
leaving such Contributing Party with unreasonably small capital, within the
meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA or
Section 5 of the UFCA, or (iii) leaving such Contributing Party unable to pay
its debts as they become due within the meaning of Section 548 of the Bankruptcy
Code or Section 4 of the UFTA or Section 6 of the UFCA.
This Agreement is intended only to define the relative rights of the
Contributing Parties, and nothing set forth in this Agreement is intended to or
shall impair the obligations of the Subsidiary Guarantors to pay any amounts, as
and when the same shall become due and payable in accordance with the terms of
the Guaranty.
The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets in favor of each Subsidiary
Guarantor to which such contribution and indemnification is owing.
This Agreement shall become effective upon its execution by each of the
Contributing Parties and shall continue in full force and effect and may not be
terminated or otherwise revoked by any Contributing Party until all of the
Guaranteed Obligations shall have been indefeasibly paid in full (in lawful
money of the United States of America) and discharged and the Credit Agreement
and financing arrangements evidenced and governed by the Credit Agreement shall
have been terminated. Each Contributing Party agrees that if, notwithstanding
the foregoing, such Contributing Party shall have any right under applicable law
to terminate or revoke this Agreement, and such Contributing Party shall attempt
to exercise such right, then such termination or revocation shall not be
effective until a written notice of such revocation or termination, specifically
referring hereto and signed by such Contributing Party, is actually received by
each of the other Contributing Parties and by the Bank at its notice address set
forth in the Credit Agreement. Such notice shall not affect the right or power
of any Contributing Party to enforce rights arising prior to receipt of such
written notice by each of the other Contributing Parties and the Bank. If the
Bank grants additional loans to the Principal or takes other action giving rise
to additional Guaranteed Obligations after any Contributing Party has exercised
any right to terminate or revoke this Agreement but before the Bank receives
such written notice, the rights of each other Contributing Party to contribution
and indemnification hereunder in connection with any Subsidiary Guarantors
Payments made with respect to such loans or Guaranteed Obligations shall be the
same as if such termination or revocation had not occurred.
86
IN WITNESS WHEREOF, each Contributing Party has executed and delivered this
Agreement, under seal, as of the date first above written.
GERBER SCIENTIFIC, INC.(SEAL)
By:______________________________________
Xxxx X. Xxxxxxx
Senior Vice President
GERBER TECHNOLOGY,
GERBER SCIENTIFIC PRODCTS, INC.,
GERBER OPTICAL, INC.,
each a Connecticut
corporation (SEAL)
By:______________________________________
Treasurer
87
EXHIBIT J
---------
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT dated as of March 23, 1998 by and between GERBER
SCIENTIFIC, INC., a Connecticut corporation (the "Pledgor") and WACHOVIA BANK,
N.A., a national banking association (the "Pledgee").
WHEREAS, the Pledgee and the Pledgor have entered into a certain Credit
Agreement dated as of the date hereof (as amended, supplemented, restated or
otherwise modified from time to time in accordance with its terms, the "Credit
Agreement"), pursuant to which the Pledgee has agreed, subject to the terms
thereof, to make available to the Pledgor certain financial accommodations; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the extension of such financial accommodations under the Credit
Agreement that the Pledgor execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein contained
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. The Pledge. Effective upon the acquisition of any of the
Securities (such acquisition as to any Securities being the "Effective Date"
with respect to such Securities and the Pledged Collateral relating thereto),
the Pledgor hereby pledges, hypothecates, assigns, transfers, sets over and
delivers unto the Pledgee, and grants to the Pledgee a security interest in, all
of the Pledgor's right, title and interest in, to and under the following
(collectively, the "Pledged Collateral"): (a) all of the shares of common stock,
equity interest and other securities, including the Shares described in the
Credit Agreement (collectively, "Securities") of the Target (the "Issuer");
provided, however, that the Securities pledged pursuant hereto shall not include
(i) Securities owned by the Borrower in excess of Securities evidencing 65% of
the voting power of each class of capital stock owned by the Pledgor or (ii) to
the extent that applicable law requires that a Subsidiary of the Pledgor issue
directors' qualifying shares, such qualifying shares; (b) subject to the
provisions of Section 5(b) hereof, any additional Securities of any of the
Issuer as may from time to time be issued to the Pledgor or otherwise acquired
by the Pledgor; (c) any additional Securities of the Issuer as may hereafter at
any time be delivered to the Pledgee by or on behalf of the Pledgor; (d) any
cash or additional Securities or other property at any time and from time to
time receivable or otherwise distributable in respect of, in exchange for, or in
substitution of, any of the property referred to in any of the immediately
preceding clauses (a) through (c); and
88
(e) any and all products and proceeds of any of the foregoing, together with and
all other rights, titles, interests, powers, privileges and preferences
pertaining to said property.
SECTION 2. Obligations Secured. This Agreement is made, and the security
interest created hereby is granted to the Pledgee, to secure the prompt
performance and payment in full of the following (collectively, the "Secured
Obligations"): (a) all principal and interest on the Note issued by the Pledgor
pursuant to the Credit Agreement; (b) all other obligations of the Pledgor under
the Credit Agreement, this Agreement and the other Loan Documents, including
without limitation all compensation and indemnification amounts and fees payable
pursuant to the Credit Agreement, this Agreement and the other Loan Documents;
(c) any reasonable costs or expenses incurred by the Pledgee or Pledgee's
counsel in connection with the realization of the security for which this
Agreement provides, including, without limitation, any reasonable costs or
expenses of any proceedings to which this Agreement may give rise and (d) all
other indebtedness, liabilities, obligations, covenants and duties of the
Pledgor owing to the Pledgee of every kind, nature and description, whether
direct or indirect, absolute or contingent, due or not due, contractual or
tortious, liquidated or unliquidated, and whether or not evidenced by any note.
SECTION 3. Representations and Warranties. The Pledgor hereby represents and
warrants to the Pledgee as follows, in each case as of the relevant Effective
Date for the Securities and to the best of its knowledge:
(a) Validly Issued, etc. All of the Securities of the Issuer have been
validly issued and are fully paid and nonassessable.
(b) Title and Liens. The Pledgor is, and will at all times continue to be,
the legal and beneficial owner of the Pledged Collateral and none of the
Pledged Collateral is subject to any Lien, except for the Lien granted
hereby).
(c) Name; Chief Executive Office; Taxpayer ID Number. The correct corporate
name of the Pledgor is set forth in the first paragraph of this Agreement.
The chief executive office and principal place of business of the Pledgor
and the location of the Pledgor's books and records relating to the Pledged
Collateral are located at 00 Xxxxxx Xxxx Xxxx, Xxxxx Xxxxxxx, Xxxxxxxx
Xxxxxx, Xxxxxxxxxxx. The Pledgor has no offices or places of business other
than as set forth in the immediate preceding sentence of this section 3(c).
The Social Security number, or the Internal Revenue Service taxpayer
identification number, as applicable, of the Pledgor is 00-0000000.
89
(d) Authority, etc. The Pledgor (i) has the power and authority to pledge
the Collateral in the manner hereby done or contemplated and (ii) will
defend its title or interest thereto or therein against any and all Liens
(other than the Lien created by this Agreement), however arising, of all
persons.
(e) No Approval. No consent or approval of any Governmental Authority
or any securities exchange was or is necessary to the validity of the
pledge effected hereby.
(f) Outstanding Shares. The Securities pledged by the Pledgor hereunder
constitute 65% of the issued and outstanding Shares owned by the Pledgor.
SECTION 4. Covenants. The Pledgor hereby unconditionally covenants and
agrees as follows:
(a) No Liens; No Sale of Pledged Collateral. The Pledgor will not create,
assume, incur or permit or suffer to exist or to be created, assumed or
incurred, any Lien on any of the Pledged Collateral (or any interest
therein), and will not, without the prior written consent of the Pledgee
(which consent shall not be unreasonably withheld), sell, lease, assign,
transfer or otherwise dispose of all or any portion of the Pledged
Collateral (or any interest therein).
(b) Change of Locations, Name, Etc. Without giving the Pledgee sixty-day's
prior written notice, the Pledgor will not (i) change the Pledgor's chief
executive office, principal place of business, or the location of its books
and records relating to the Pledged Collateral or (ii) change its name,
identity or structure.
SECTION 5. Additional Shares.
a) From and after the Effective Date for any Securities and during the
period this Agreement is in effect, without the consent of the Bank (which
consent shall not be unreasonably withheld), the Pledgor shall not permit
the Issuer to issue any additional shares of capital stock or other equity
securities or interests. Further, without the consent of the Bank (which
consent shall not be unreasonably withheld), the Pledgor shall not permit
the Issuer to amend or modify its articles or certificate of incorporation
in a manner which would affect the voting, liquidation, preference or other
rights of a holder of the shares of stock pledged hereunder.
(b) The Pledgor agrees that, from and after the Effective Date as to any
Securities and until this Agreement has terminated in accordance with its
terms, any additional Securities of the Issuer at any time issued to the
Pledgor or otherwise acquired by the Pledgor shall be promptly (subject
90
to the provisions of Section 5.26(b) of the Credit Agreement, where
applicable) delivered or otherwise transferred to the Pledgee as additional
Pledged Collateral and shall be subject to the Lien of, and the terms and
conditions of, this Agreement; provided that if compliance with this Section
5(b) would result in more than 65% of the voting power of any class of such
capital stock of the Issuer being included in the Pledged Collateral, the
Pledgor shall pledge only such portion of such capital stock as shall result
in 65% of the voting power of such class of capital stock owned by the
Pledgor being included in the Pledged Collateral.
SECTION 6. Registration in Nominee Name, Denominations. From and after
the Effective Date as to any Securities, the Pledgee shall have the right (in
its sole and absolute discretion) to hold the Pledged Collateral in its own name
as pledgee, the name of its nominee (as Pledgee or as sub-agent) or the name of
the applicable Pledgor, endorsed or assigned in blank or in favor of the
Pledgee. The Pledgor will promptly give to the Pledgee copies of any notices or
other communications received by it with respect to Pledged Collateral
registered in the name of the Pledgor. The Pledgee shall at all times have the
right to exchange the certificates representing Pledged Collateral for
certificates of smaller or larger numbers of shares for any purpose consistent
with this Agreement.
SECTION 7. Voting Rights; Dividends, etc. So long as no Event of Default
shall have occurred and be continuing, from and after the Effective Date with
respect to any Securities:
(a) the Pledgor shall be entitled to exercise any and all voting and/or
consensual rights and powers accruing to an owner of the Pledged Collateral
or any part thereof for any purpose not inconsistent with the terms and
conditions of this Agreement or any agreement giving rise to or otherwise
relating to any of the Secured Obligations; provided, however, that the
Pledgor shall not exercise, or refrain from exercising, any such right or
power if any such action would have a materially adverse effect on the value
of such Pledged Collateral in the judgment of the Pledgee;
(b) the Pledgor shall be entitled to retain and use any and all cash
dividends, interest and principal paid on the Pledged Collateral, but any
and all stock and/or liquidating dividends, other distributions in property,
return of capital or other distributions made on or in respect of Pledged
Collateral, whether resulting from a subdivision, combination or
reclassification of outstanding Securities of the Issuer which are pledged
hereunder or received in exchange for Pledged Collateral or any part thereof
or as a result of any merger, consolidation, acquisition or other exchange
of assets or on the liquidation, whether voluntary or
91
involuntary, of the Issuer, or otherwise, shall be and become part of the
Pledged Collateral pledged hereunder and, if received by the Pledgor, shall
forthwith be delivered to the Pledgee to be held as collateral subject to
the terms and conditions of this Agreement.
The Pledgee agrees to execute and deliver to the Pledgor, or cause to be
executed and delivered to the Pledgor, as appropriate, at the sole cost and
expense of the Pledgor, all such proxies, powers of attorney, dividend
orders and other instruments as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to exercise the voting and/or consensual
rights and powers which Pledgor is entitled to exercise pursuant to clause
(a) above and/or to receive the dividends which Pledgor is authorized to
retain pursuant to clause (b) above.
(c) Upon the occurrence and during the continuance of an Event of Default,
all rights of the Pledgor to exercise the voting and/or consensual rights
and powers which Pledgor is entitled to exercise pursuant to subsection (a)
above and/or to receive the dividends, interest and principal that the
Pledgor is authorized to receive and retain pursuant to subsection (b) above
shall cease, and all such rights thereupon shall become immediately vested
in the Pledgee, which shall have, to the extent permitted by law, the sole
and exclusive right and authority to exercise such voting and/or consensual
rights and powers which the Pledgor shall otherwise be entitled to exercise
pursuant to subsection (a) above and/or to receive and retain the dividends
which the Pledgor shall otherwise be authorized to retain pursuant to
subsection (b) above. Any and all money and other property paid over to or
received by the Pledgee pursuant to the provisions of this subsection (b)
shall be retained by the Pledgee as additional collateral hereunder and
shall be applied in accordance with the provisions of Section 10. If the
Pledgor shall receive any dividends or other property which it is not
entitled to receive under this Section, the Pledgor shall hold the same in
trust for the Pledgee, without commingling the same with other funds or
property of or held by the Pledgor, and shall promptly deliver the same to
the Pledgee upon receipt by the Pledgor in the identical form received,
together with any necessary endorsements.
SECTION 8. Event of Default Defined. For purposes of this Agreement,
"Event of Default" shall mean:
(a) Pledgor shall fail to observe or perform any covenant or agreement
contained in Sections 4(a), 5, or 7(b) hereof;
(b) Pledge shall fail to observe or perform any covenant or agreement
contained in this Agreement (other
92
than those covered by the immediately preceding clause (a)) for a period
of thirty days after written notice thereof has been given to Pledgor by
Pledgee; and
(c) an Event of Default under and as defined in the Credit Agreement
shall occur and be continuing.
SECTION 9. Remedies upon Default. (a) In addition to any right or remedy
that the Pledgee may have under the Credit Agreement, the other Loan Documents
or otherwise under Applicable Law, if an Event of Default shall have occurred
and be continuing, the Pledgee may exercise any and all the rights and remedies
of a secured party under the Uniform Commercial Code as in effect in any
applicable jurisdiction (the "Code") and may otherwise sell, assign, transfer,
endorse and deliver the whole or, from time to time, any part of the Pledged
Collateral at a public or private sale or on any securities exchange, for cash,
upon credit or for other property, for immediate or future delivery, and for
such price or prices and on such terms as the Pledgee in its discretion shall
deem appropriate. The Pledgee shall be authorized at any sale (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to Persons
who will represent and agree that they are purchasing the Pledged Collateral for
their own account in compliance with the Securities Act and upon consummation of
any such sale the Pledgee shall have the right to assign, transfer, endorse and
deliver to the purchaser or purchasers thereof the Pledged Collateral so sold.
Each purchaser at any sale of Pledged Collateral shall take and hold the
property sold absolutely free from any claim or right on the part of the
Pledgor, and the Pledgor hereby waives (to the fullest extent permitted by
Applicable Law) all rights of redemption, stay and/or appraisal which the
Pledgor now has or may at any time in the future have under any Applicable Law
now existing or hereafter enacted. The Pledgor agrees that, to the extent notice
of sale shall be required by Applicable Law, at least ten days' prior written
notice to the Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification,
but notice given in any other reasonable manner or at any other reasonable time
shall constitute reasonable notification. Such notice, in case of public sale,
shall state the time and place for such sale, and, in the case of sale on a
securities exchange, shall state the exchange on which such sale is to be made
and the day on which the Pledged Collateral, or portion thereof, will first be
offered for sale at such exchange. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Pledgee may fix and shall state in the notice or publication (if any) of such
sale. At any such sale, the Pledged Collateral, or portion thereof to be sold,
may be sold in one lot as an entirety or in separate parcels, as the Pledgee may
determine in its sole and absolute discretion. The Pledgee shall not be
obligated to make any sale of the Pledged Collateral if it shall determine not
to do so regardless of the fact that notice of sale of the Pledged Collateral
may have been given. The Pledgee
93
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case the sale of all or any
part of the Pledged Collateral is made on credit or for future delivery, the
Pledged Collateral so sold may be retained by the Pledgee until the sale price
is paid by the purchaser or purchasers thereof, but the Pledgee shall not incur
any liability to the Pledgor in case any such purchaser or purchasers shall fail
to take up and pay for the Pledged Collateral so sold and, in case of any such
failure, such Pledged Collateral may be sold again upon like notice. At any
public sale made pursuant to this Agreement, the Pledgee, to the extent
permitted by Applicable Law, may bid for or purchase, free from any right of
redemption, stay and/or appraisal on the part of the Pledgor (all said rights
being also hereby waived and released to the extent permitted by Applicable
Law), any part of or all the Pledged Collateral offered for sale and may make
payment on account thereof by using any claim then due and payable to the
Pledgee from the Pledgor as a credit against the purchase price, and the Pledgee
may, upon compliance with the terms of sale and to the extent permitted by
Applicable Law, hold, retain and dispose of such property without further
accountability to the Pledgor therefor. For purposes hereof, a written agreement
to purchase all or any part of the Pledged Collateral shall be treated as a sale
thereof; the Pledgee shall be free to carry out such sale pursuant to such
agreement and the Pledgor shall not be entitled to the return of any Pledged
Collateral subject thereto, notwithstanding the fact that after the Pledgee
shall have entered into such an agreement all Events of Default may have been
remedied or the Secured Obligations may have been paid in full as herein
provided. The Pledgor hereby waives any right to require any marshaling of
assets and any similar right.
(b) In addition to exercising the power of sale herein conferred upon
it, the Pledgee shall also have the option to proceed by suit or suits at law or
in equity to foreclose this Agreement and sell the Pledged Collateral or any
portion thereof pursuant to judgment or decree of a court or courts having
competent jurisdiction.
(c) In addition to the foregoing, the Pledgee shall have all other rights,
powers and remedies which are available to it under the laws of the United
Kingdom;
(d) The rights and remedies of the Pledgee under this Agreement are
cumulative and not exclusive of any rights or remedies which it would otherwise
have.
SECTION 10. Application of Proceeds of Sale and Cash. The proceeds of any
sale of the whole or any part of the Pledged Collateral, together with any other
moneys held by the Pledgee
94
under the provisions of this Agreement, shall be applied by the Pledgee in the
following order:
First: to the payment of all costs and expenses incurred in connection with
such sale or other realization, including reasonable attorneys' fees incurred if
the Pledgee endeavored to collect the Secured Obligations by or through an
attorney at law;
Second: to the payment of the interest due upon any of the Secured
Obligations, in any order which the Pledgee may elect;
Third: to the payment of the principal due upon any of the Secured
Obligations in any order which the Pledgee may elect; and
Fourth: the balance (if any) of such proceeds shall be paid to the Pledgor
or to whomsoever may be legally entitled thereto.
The Pledgor shall remain liable and will pay, on demand, any deficiency
remaining in respect of the Secured Obligations.
SECTION 11. Pledgee Appointed Attorney-in-Fact. From and after the
occurrence and during the existence of an Event of Default, the Pledgor hereby
constitutes and appoints the Pledgee as the attorney-in-fact of the Pledgor with
full power of substitution either in the Pledgee's name or in the name of the
Pledgor to do any of the following with respect to any Securities and the
related Pledged Collateral as to which the Effective Date has occurred: (a) to
perform any obligation of the Pledgor hereunder in the Pledgor's name or
otherwise; (b) to ask for, demand, xxx for, collect, receive, receipt and give
acquittance for any and all moneys due or to become due under and by virtue of
any Pledged Collateral; (c) to prepare, execute, file, record or deliver
notices, assignments, financing statements, continuation statements,
applications for registration or like papers to perfect, preserve or release the
Pledgee's security interest in the Pledged Collateral or any of the documents,
instruments, certificates and agreements described in Section 13(b); (d) to
verify facts concerning the Pledged Collateral in its own name or a fictitious
name; (e) to endorse checks, drafts, orders and other instruments for the
payment of money payable to the Pledgor, representing any interest or dividend
or other distribution payable in respect of the Pledged Collateral or any part
thereof or on account thereof and to give full discharge for the same; (f) to
exercise all rights, powers and remedies which the Pledgor would have, but for
this Agreement, under the Pledged Collateral; and (g) to carry out the
provisions of this Agreement and to take any action and execute any instrument
which the Pledgee may deem necessary or advisable to accomplish the purposes
hereof, and to do all acts and things and execute all documents in the name of
the Pledgor or otherwise, deemed by the Pledgee as necessary, proper and
convenient in connection with the preservation, perfection or enforcement of its
rights hereunder. Nothing herein contained
95
shall be construed as requiring or obligating the Pledgee to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received
by it, or to present or file any claim or notice, or to take any action with
respect to the Pledged Collateral or any part thereof or the moneys due or to
become due in respect thereof or any property covered thereby, and no action
taken by the Pledgee or omitted to be taken with respect to the Pledged
Collateral or any part thereof shall give rise to any defense, counterclaim or
offset in favor of the Pledgor or to any claim or action against the Pledgee.
The power or attorney granted herein is irrevocable and coupled with an
interest.
SECTION 12. Reimbursement of Pledgee. The Pledgor agrees to pay upon demand
to the Pledgee the amount of any and all reasonable expenses, including the
reasonable fees disbursements and other charges of its counsel and of any
experts or agents, that the Pledgee may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or any
sale of, collection from, or other realization upon, any of the Pledged
Collateral, (iii) the exercise or enforcement of any of the rights of the
Pledgee hereunder, or (iv) the failure by the Pledgor to perform or observe any
of the provisions hereof. Any such amounts payable as provided hereunder shall
be additional obligations secured hereby and by the other Security Documents.
SECTION 13. Further Assurances. The Pledgor shall, at its sole cost and
expense, take all action that may be necessary or desirable in the Pledgee's
sole discretion, so as at all times to maintain the validity, perfection,
enforceability and priority of the Pledgee's security interest in the Pledged
Collateral, or to enable the Pledgee to exercise or enforce its rights
hereunder, including without limitation (a) delivering to the Pledgee, endorsed
or accompanied by such instruments of assignment as the Pledgee may specify, any
and all chattel paper, instruments, letters of credit and all other advices of
guaranty and documents evidencing or forming a part of the Pledged Collateral
and (b) executing and delivering financing statements, pledges, designations,
notices and assignments, in each case in form and substance satisfactory to the
Pledgee, relating to the creation, validity, perfection, priority or
continuation of the security interest granted hereunder; provided, that the
foregoing shall be subject to the provisions of Section 5.26(b) of the Credit
Agreement, to the extent applicable. Subject to the foregoing, the Pledgor
agrees to take, and authorizes the Pledgee to take on the Pledgor's behalf, any
or all of the following actions with respect to any Pledged Collateral as the
Pledgee shall deem necessary to perfect the security interest and pledge created
hereby or to enable the Pledgee to enforce its rights and remedies hereunder:
(i) to register in the name of the Pledgee any Pledged Collateral in
certificated or uncertificated form; (ii) to endorse in the name of the Pledgee
any Pledged Collateral issued in certificated form; and (iii) by book entry or
otherwise, identify as belonging to the Pledgee a quantity of securities that
constitutes all or part of
96
the Pledged Collateral registered in the name of the Pledgee. Notwithstanding
the foregoing the Pledgor agrees that Pledged Collateral which is not in
certificated form or is otherwise in book-entry form shall be held for the
account of the Pledgee. The Pledgor hereby authorizes the Pledgee to execute and
file in all necessary and appropriate jurisdictions (as determined by the
Pledgee) one or more financing or continuation statements (or any other document
or instrument referred to in the immediately preceding clause (b)) in the name
of the Pledgor and to sign the Pledgor's name thereto. The Pledgor authorizes
the Pledgee to file any such financing statement, document or instrument without
the signature of the Pledgor to the extent permitted by applicable law. To the
extent permitted by Applicable Law, a carbon, photographic, xerographic or other
reproduction of this Agreement or any financing statement is sufficient as a
financing statement. Any property comprising part of the Pledged Collateral
required to be delivered to the Pledgee pursuant to this Pledge Agreement shall
be accompanied by proper instruments of assignment duly executed by the Pledgor
and by such other instruments or documents as the Pledgee may reasonably
request.
SECTION 14. Securities Act. In view of the position of the Pledgor in
relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar Applicable Law hereafter enacted analogous
in purpose or effect (such Act and any such similar Applicable Law as from time
to time in effect being called the "Federal Securities Laws") with respect to
any disposition of the Pledged Collateral permitted hereunder. The Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Pledgee if the Pledgee were to attempt to
dispose of all or any part of the Pledged Collateral in accordance with the
terms hereof, and might also limit the extent to which or the manner in which
any subsequent transferee of any Pledged Collateral could dispose of the same.
Similarly, there may be other legal restrictions or limitations affecting the
Pledgee in any attempt to dispose of all or part of the Pledged Collateral in
accordance with the terms hereof under applicable Blue Sky or other state
securities laws or similar Applicable Law analogous in purpose or effect. The
Pledgor recognizes that in light of the foregoing restrictions and limitations
the Pledgee may, with respect to any sale of the Pledged Collateral, limit the
purchasers to those who will agree, among other things, to acquire such Pledged
Collateral for their own account, for investment, and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees that in
light of the foregoing restrictions and limitations, the Pledgee, in its sole
and absolute discretion, may, in accordance with Applicable Law, (a) proceed to
make such a sale whether or not a registration statement for the purpose of
registering such Pledged Collateral or part thereof shall have been filed under
the Federal Securities Laws and (b) approach and negotiate with a single
potential purchaser to effect such sale.
97
The Pledgor acknowledges and agrees that any such sale might result in prices
and other terms less favorable to the seller than if such sale were a public
sale without such restrictions. In the event of any such sale, the Pledgee shall
incur no responsibility or liability for selling all or any part of the Pledged
Collateral in accordance with the terms hereof at a price that the Pledgee, in
its sole and absolute discretion, may in good xxxxx xxxx reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might have been realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The provisions of
this Section will apply notwithstanding the existence of public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Pledgee sells.
SECTION 15. Indemnification. The Pledgor agrees to indemnify and hold the
Pledgee and any corporation controlling, controlled by, or under common control
with, the Pledgee and any officer, attorney, director, shareholder, agent or
employee of the Pledgee or any such corporation (each an "Indemnified Person"),
harmless from and against any claim, loss, damage, action, cause of action,
liability, cost and expense or suit of any kind or nature whatsoever
(collectively, "Losses"), brought against or incurred by an Indemnified Person,
in any manner arising out of or, directly or indirectly, related to or connected
with this Agreement, including without limitation, the exercise by the Pledgee
of any of its rights and remedies under this Agreement or any other action taken
by the Pledgee pursuant to the terms of this Agreement; provided, however, the
Pledgor shall not be liable to an Indemnified Person for any Losses to the
extent that such Losses result from the gross negligence or willful misconduct
of such Indemnified Person. The Pledgor's obligations under this section shall
survive the termination of this Agreement and the payment in full of the Secured
Obligations.
SECTION 16. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Pledged Collateral and shall remain in full
force and effect until it terminates in accordance with its terms. The Pledgor
and the Pledgee hereby agree that the security interest created by this
Agreement in the Pledged Collateral shall not terminate and shall continue and
remain in full force and effect notwithstanding the transfer to the Pledgor or
any person designated by it of all or any portion of the Pledged Collateral.
SECTION 17. Security Interest Absolute. All rights of the Pledgee hereunder,
the grant of a security interest in the Collateral and all obligations of the
Pledgor hereunder, shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement or any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of the payment of, or
98
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Credit Agreement, any other
Loan Document, or any other agreement or instrument relating to any of the
foregoing, (c) any exchange, release or nonperfection of any other collateral,
or any release or amendment or waiver of or consent to or departure from any
guaranty, for all or any of the Obligations or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Pledgor in respect of the Obligations or in respect of this Agreement (other
than the indefeasible payment in full of all the Obligations).
SECTION 18. No Waiver. Neither the failure on the part of the Pledgee to
exercise, nor the delay on its part in exercising any right, power or remedy
hereunder, nor any course of dealing between the Pledgee and the Pledgor shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power, or remedy hereunder preclude any other or the further
exercise thereof or the exercise of any other right, power or remedy.
SECTION 19. Notices. Notices, requests and other communications required or
permitted hereunder shall be given in accordance with the applicable terms of
the Credit Agreement.
SECTION 20. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION 21. Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Pledgor herefrom shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 22. Binding Agreement; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Pledgor shall not be permitted to assign
this Agreement or any interest herein or in the Pledged Collateral, or any part
thereof, or any cash or property held by the Pledgee as collateral under this
Agreement.
SECTION 23. Termination. Upon indefeasible payment in full of all of the
Secured Obligations, this Agreement shall terminate. Upon termination of this
Agreement in accordance with its terms the Pledgee agrees to take such actions
as the Pledgor may reasonably request, and at the sole cost and expense of the
Pledgor, (a) to return the Pledged Collateral to the Pledgor, and (b) to
evidence the termination of this Agreement, including, without limitation, the
filing of any releases or any termination statements under the Uniform
Commercial Code.
99
SECTION 24. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provisions shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
SECTION 25. Headings. Section headings used herein are for convenience only
and are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
SECTION 26. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
constitute but one agreement.
SECTION 27. Definitions. Terms not otherwise defined herein are used herein
with the respective meanings given to them in the Credit Agreement.
[Signatures on Next Page]
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IN WITNESS WHEREOF, the Pledgor has executed and delivered this Pledge
Agreement under seal as of this the date first written above.
GERBER SCIENTIFIC, INC.
By:______________________________________
Xxxx X. Xxxxxxx
Senior Vice President and
Chief Financial Officer
Agreed to, accepted and acknowledged
as of the date first written above.
WACHOVIA BANK, N.A.
By:__________________________________
Xxxxxxx X. Xxxxxxxxxx
Vice President
101
Schedule 4.08
-------------
Subsidiaries
------------
Jurisdiction of
Name Incorporation
---- ---------------
Gerber Systems Corporation Connecticut
Gerber Systems GmbH Germany
Gerber Systems Srl Italy
Gerber Systems NV Belgium
Gerber Systems Corporation Limited United Kingdom
Gerber Systems Corporation Hong Kong Limited Hong Kong
Gerber Garment Technology, Inc. Connecticut
GGT Canada Ltd. Canada
GGT International (Australia) Pty. Ltd. Australia
GGT International (NZ) Pty. Ltd. New Zealand
GGT International (Far East) Ltd. Hong Kong
GGT International de Mexico, S.A. de C.V. Mexico
Gerber Garment Technology GmbH Germany
Gerber Garment Technology Srl Italy
Gerber Garment Technology SA/NV Belgium
Gerber Garment Technology SARL France
Gerber Garment Technology AB Sweden
Gerber Garment Technology Ltd. United Kingdom
GGT-Xxxxxxx A/S Denmark
Gerber Garment Technology Systems
Computorizados Lda Portugal
M.D. "Europe" Ltd. United Kingdom
C.I.M. Microdynamics Limited United Kingdom
Microdynamics AB Sweden
Gerber Scientific Products, Inc. Connecticut
Gerber Scientific Products GmbH Germany
Gerber Optical, Inc. Connecticut
Gerber Venture Capital Corporation Delaware
Gerber Foreign Sales Corporation, Inc. Barbados
Xxxxxx Optical Industries, Inc. Delaware
Xxxxxx Optical Industries (Aust.) Pty. Limited Australia
Xxxxxx Optical Industries (Singapore) Pte. Ltd. Singapore
Xxxxxx Optical Industries (U.K.) Limited United Kingdom
Stereo Optical Company, Inc. Illinois
Xxxxxx Optical International, Inc. Delaware
COI (Delaware), Inc. Delaware
Xxxxxx Optical Industries of Canada, Ltd. Canada
102
Schedule 4.14
-------------
Environmental Matters
---------------------
1. There is soil and groundwater contamination at the Xxxxxx Optical
Industries, Inc. ("Xxxxxx") property in Muskogee, Oklahoma. The Company plans to
undertake certain related investigation and remediation activities that may lead
to state oversight or enforcement.
2. The Xxxxxx property in Muskogee, Oklahoma has been operating without
permits for certain air emissions sources. Xxxxxx filed an application to obtain
the required permits in January 1998 with the Oklamona Department of
Environmental Quality ("ODEQ"), and is awaiting the ODEQ's response.
3. Pursuant to an order of the Connecticut Department of Environmental
Protection, the Company is conducting quarterly groundwater monitoring relating
to the removal of septic systems and surrounding soils at its property at 00
Xxxxxx Xxxx, Xxxx in South Windsor, Connecticut. Residual groundwater
contamination remains and residual soil contamination may remain at this
property.
4. There may be soil and groundwater contamination relating to disposal
activities conducted by the Connecticut Department of Transportation that is
assocuated with certain property that the Company purchased from the State of
Connecticut. The Company is investigating whether the Connecticut Department of
Transportation's subsequent removal and cleanup activities satisfy state
requirements.
103
Schedule 5.16
-------------
Existing Loans and Advances(5)
------------------------------
Gerber Scientific, Inc.
GGT Belgium $ 3,229,398
GGT Germany 316,835
GGT France 45,855
GGT Scandinavia 487,097
GGT Italy 402,845
GGT United Kingdom 1,082,000
GGT Portugal 20,972
GGT Xxxxxxx (Denmark) 2,333,787
GGT Canada 341,805
GGT Hong Kong 2,135,694
GGT USA 3,042,071
Gerber Optical 67,146
-----------
$13,505,505
===========
Spandex PLC
Xxxxxxx $ 1,786,068
Ultramark 660,284
Spandex USA 1,244,635
Xxxxxx Signs 868,273
ND Graphics 2,467,811
Spandex Hungary 74,282
Syndicut 113,899
-----------
$ 7,215,252
===========
_______________
(5) All loans and advances to subsidiaries of Gerber Scientific are as of
January 31, 1998, and all loans and advances to subsidiaries of Spandex are as
of December 31, 1997, as these balances were deemed to be reflective of normal
intercompany lending activity.
104
Schedule 5.17
-------------
Existing Investments
--------------------
INVESTMENTS AS OF MARCH 23, 1998:
Investment Principal Date Maturing
Bank Type Amount Invested Rate Term Amount
---- ---- ------ -------- ---- ---- ------
Fleet Bank Eurodollar $ 6,000,000 03/23/98 5.125% 1 day $6,000,854.17
Wachovia Bank Eurodollar $7,014,653.22 03/23/98 5.350% 7 days $7,021,950.41
105
