-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LijlWnTPP3m3MAfrh+lDYHAaYZZR32o6PIFHKKnHxMWgU+iFtaL1V21TRMBm4Iv1 vE77oJQpRnuFPAVu9l88ZA== 0000927016-96-000144.txt : 19960426 0000927016-96-000144.hdr.sgml : 19960426 ACCESSION NUMBER: 0000927016-96-000144 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19960425 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SURVIVAL TECHNOLOGY INC CENTRAL INDEX KEY: 0000095676 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 520898764 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-35771 FILM NUMBER: 96550709 BUSINESS ADDRESS: STREET 1: 2275 RESEARCH BLVD STREET 2: STE 100 CITY: ROCKVILLE STATE: MD ZIP: 20850 BUSINESS PHONE: 3019261800 MAIL ADDRESS: STREET 1: 2275 RESEARCH BLVD SUITE 100 CITY: ROCKVILLE STATE: MD ZIP: 20850 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BRUNSWICK BIOMEDICAL CORP CENTRAL INDEX KEY: 0000906831 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 043091513 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 6 THACTHER LANE CITY: WAREHAM STATE: MA ZIP: 02571 BUSINESS PHONE: 5082911830 MAIL ADDRESS: STREET 1: 6 THACHER LANE CITY: WAREHAM STATE: MA ZIP: 02571 SC 13D 1 SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 Survival Technology, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $0.10 par value - -------------------------------------------------------------------------------- (Title of Class of Securities) 869028100 ------------------------------------------ James H. Miller (CUSIP Number) Copies to: Stanley Keller, Esq. President Palmer & Dodge Brunswick Biomedical Corporation One Beacon Street 6 Thacher Lane, Wareham, MA 02571 (508) 460-9690 Boston, MA 02108 (617) 573-0100 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 15, 1996 ------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_]. Check the following box if a fee is being paid with the statement [X]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1: and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing of this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ----------------------- ---------------------- CUSIP NO. 869028100 SCHEDULE 13D PAGE 2 OF _ PAGES --------- - - ----------------------- ---------------------- - ------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON BRUNSWICK BIOMEDICAL CORPORATION, A MASSACHUSETTS CORPORATION, 04-3091513 - ------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] 2 - ------------------------------------------------------------------------------- SEC USE ONLY 3 - ------------------------------------------------------------------------------- SOURCE OF FUNDS* 4 BK, AF, WC, OO - ------------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 NOT APPLICABLE - ------------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 MASSACHUSETTS - ------------------------------------------------------------------------------- SOLE VOTING POWER 7 1,888,126 NUMBER OF SHARES ------------------------------------------------------------ SHARED VOTING POWER BENEFICIALLY 8 0 OWNED BY ------------------------------------------------------------ EACH SOLE DISPOSITIVE POWER 9 1,888,126 REPORTING PERSON ------------------------------------------------------------ SHARED DISPOSITIVE POWER WITH 10 0 - ------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,888,126 - ------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [_] NOT APPLICABLE - ------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 61.1% - ------------------------------------------------------------------------------- TYPE OF REPORTING PERSON* 14 CO - ------------------------------------------------------------------------------- *SEE INSTRUCTION BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D ITEM 1. SECURITY AND ISSUER. This statement relates to the Common Stock, $0.10 par value (the "Common Stock"), of Survival Technology, Inc., a Delaware corporation (the "Issuer"). The principal executive offices of the Issuer are located at 2275 Research Boulevard, Rockville, Maryland 20850. ITEM 2. IDENTITY AND BACKGROUND. This statement is being filed by Brunswick Biomedical Corporation ("Brunswick"), a Massachusetts corporation. Brunswick's principal business address and principal office are located at 6 Thacher Lane, Wareham, Massachusetts 02571. Brunswick's business is the development, manufacture and sale of medical devices. James H. Miller, the President and Chief Executive Officer of Brunswick, is also the President and Chief Executive Officer of the Issuer, which also engages in the medical devices business. See Item 1 above. During the last five years, neither Brunswick nor any of Brunswick's other directors or executive officers has been (i) convicted in a criminal proceeding (excluding traffic violations or misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violation of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Set forth as Exhibit 1 to this Schedule 13D and incorporated herein by reference is the following information with respect to each director and executive officer of Brunswick: (i) name, (ii) business address, (iii) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted, and (iv) citizenship. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. As further described in Item 4, on April 15, 1996, Brunswick purchased 1,888,126 shares of the Issuer's Common Stock (the "Shares") from Robert Herzstein, Personal Representative of the Estate of Dr. Stanley J. Sarnoff (the "Seller"), at a purchase price of $11.00 per share or an aggregate purchase price of $20,769,386. The purchase price was paid in the form of (i) $16,069,386 in cash from Brunswick's working capital and (ii) the delivery of a Subordinated Promissory Note of Brunswick in the principal amount of $4,700,000 (as more fully described below), together with warrants to purchase 50,000 shares of common stock of Brunswick, exercisable at a price of $27.55 per share, subject to adjustment. Copies of the Stock Purchase Agreement with the Seller, and of the Warrant, are included in Exhibit 4 attached hereto. The cash portion of the purchase price was derived from (i) a portion of the proceeds of a senior bridge loan in the amount of $11,000,000 from Internationale Nederlanden (U.S.) Capital Corporation (the "Senior Lender"); (ii) the proceeds of a subordinated loan in the amount of $1,000,000 from EM Industries, Inc., an investor in Brunswick and a customer and licensee of the Issuer, and (iii) the balance from the $5,749,960 of proceeds received upon the sale of 208,710 shares of Brunswick's Series F 10% Convertible Preferred Stock at a price of $27.55 per share. The $11,000,000 bridge loan, the terms of which are governed by a credit agreement between Brunswick and the Senior Lender, as agent for itself and for lenders who may subsequently become parties to the credit agreement (the "Credit Agreement"), provides for interest at a variable rate. The bridge loan matures on October 15, 1996, unless extended until January 15, 1997. Of the loan proceeds, $1,000,000 is held in a collateral account. Upon the consummation of the merger described in Item 4 and satisfaction of certain conditions, the Senior Lender or Lenders have agreed to convert the bridge loan into a $10,000,000 term loan and to make available a $5,000,000 revolving credit loan, each of which shall be obligations of the merged entity, shall bear interest at a variable rate and shall mature on the fifth anniversary of the merger consummation date. Quarterly principal payments of the term loan will be required in scheduled amounts ranging from $500,000 to $750,000. In addition, mandatory prepayments of 75% of excess cash flow will be required on an annual basis. The bridge loan is secured by substantially all the assets of Brunswick, including a pledge of the Shares pursuant to a stock pledge agreement (the "Senior Stock Pledge Agreement"). The term loan and revolving credit loans will be secured by substantially all of the assets of the merged entity. Copies of the Credit Agreement, the Bridge Note and the Senior Stock Pledge Agreement are included in Exhibit 3 hereto. In connection with the bridge loan, Brunswick has issued two series of warrants to the Senior Lender to purchase shares of its Class A Common Stock, one of which is exercisable for 33,370 shares at an initial price of $.01 per share and the other of which is exercisable for 36,298 shares at an initial price of $27.55 per share, both subject to adjustment (the "Warrants"). The Class A Common Stock is a non-voting class of common stock, which otherwise entitles its holders to the same rights and privileges as the holders of Brunswick's Common Stock and which, subject to certain restrictions, is convertible into shares of Brunswick Common Stock on a one for one basis. Under the terms of the Warrants, upon consummation of the merger of Brunswick with or into the Issuer, the warrants will be exchanged for warrants exercisable for a class of non-voting common stock of the Issuer, which will otherwise entitle its holders to the same rights and privileges as the holders of the Issuer's Common Stock, and which, subject to certain restrictions, will be convertible into shares of the Issuer's Common Stock on a one for one basis. The holders of the Warrants are entitled to certain registration rights for the shares issued upon conversion of the Warrants, as set forth in a Registration Rights Agreement between Brunswick and the Senior Lender. Copies of the Warrants and related Warrant Purchase Agreement, and of the Registration Rights Agreement are included in Exhibit 3 hereto. The $1,000,000 subordinated loan from EM Industries, Inc. matures on the earlier of December 31, 2001 or the fifth anniversary of any merger of Brunswick as a result of which Brunswick shareholders receive capital stock or securities convertible into capital stock registered under the Securities Exchange Act of 1934. The loan is unsecured, and interest accrues on such loan at the rate of 12% per annum through the second anniversary of the closing date and 13% per annum thereafter. Through April 30, 1998, accrued interest is to be added to principal and accrues interest. Thereafter, accrued interest is payable monthly in arrears. Principal on the loan is payable in seven consecutive quarterly installments of $125,000 beginning on April 30, 1999 and one final payment of the balance on the maturity date. This loan is subordinated to the loan payable to the Senior Lender and the Subordinated Promissory Note payable to the Seller. Copies of the Note Purchase Agreement and Subordinated Promissory Note payable to EM Industries, Inc. are included in Exhibit 5 hereto. The Subordinated Promissory Note payable to the Seller in the amount of $4,700,000 matures on the same day and bears interest at the same rate as the note payable to EM Industries, Inc. Through April 30, 1998, accrued interest is to be added to principal and accrues interest. Thereafter, accrued interest is payable quarterly in arrears. All principal is payable in one payment on the maturity date. This loan is subordinated to the loan payable to the Senior Lender and is secured by a pledge of the Shares pursuant to a stock pledge agreement, junior in priority to the Senior Stock Pledge Agreement in favor of the Senior Lender (the "Subordinated Stock Pledge Agreement"). Copies of the Subordinated Promissory Note payable to the Seller and of the Subordinated Stock Pledge Agreement are included in Exhibit 4 hereto. ITEM 4. PURPOSE OF TRANSACTION. The Shares represent approximately 61.1% of the Issurer's outstanding shares of Common Stock, and were purchased by Brunswick for the purpose of acquiring control of the Issuer in order to effect a consolidation of the operations of Brunswick and the Issuer. In this connection, Brunswick is planning to relocate its operations to the Issuer's principal offices in Rockville, Maryland in space subleased from the Issuer. Brunswick intends to propose a merger of Brunswick with or into the Issuer pursuant to which the stockholders of Brunswick will receive shares of Common Stock of the Issuer in exchange for their Brunswick shares based on an exchange ratio to be determined on the basis of the relative values of the shares of Brunswick and the Issuer. In connection with the foregoing and in order to obtain the approval of the Issuer's Board of Directors of Brunswick's acquisition of the Shares from the Seller so that the provisions of Section 203 of the Delaware General Corporation Law relating to business combinations will not apply to Brunswick (which approval was obtained on March 15, 1996), Brunswick made certain undertakings (the "Undertaking") to the Issuer's Board, including the following: (i) Until the earlier of the merger or the expiration of three years, Brunswick will use its best efforts to cause the Issuer to have at least two qualified independent directors (a director shall not be considered independent if he or she (i) is or any time within ten years prior to the date of determination was a director, officer or employee of, or a consultant, attorney or advisor to, the Issuer (other than persons who served as independent directors of the Issuer prior to the acquisition) or Brunswick or (ii) has a direct or indirect material ownership interest in, or is an officer, director or employee of an organization with a direct or indirect material ownership interest in, Brunswick); (ii) During that period, Brunswick and its stockholders will not enter into agreement, arrangement or transaction with the Issuer (other than proportionately as a stockholder) unless it is approved by a Special Committee of the Issuer's Board of Directors consisting solely of at least two independent directors; (iii) For a period of three years, Brunswick and its affiliates will not acquire shares of Common Stock of the Issuer at a price less than the $11.00 price per share paid to the Seller except to the extent otherwise approved by a Special Committee; and (iv) For a period of three years, Brunswick will not engage in certain business combination transactions with the Issuer, including a merger, unless the transaction is approved by a Special Committee based on an investment banker fairness opinion. Brunswick has asked Messrs. James H. Miller and Bruce M. Dresner, who are current directors of the Issuer, to continue as directors. The remaining directors, who will replace the other three directors of the Issurer, each of whom has resigned, are Messrs. Robert G. Foster, Andrew Grinstead and David L. Lougee. Messrs. Dresner and Grinstead would be independent directors of the Issuer for purposes of the foregoing Undertaking. A copy of the Undertaking is included in Exhibit 2 hereto. Except as stated above, Brunswick has no plans (i) to change the management of the Issuer, (ii) to sell or transfer any material amount of assets of the Issuer or any of its subsidiaries, although it reserves the right to do so in connection with an ongoing evaluation of the properties and operations of the post-merger consolidated operations, (iii) to make any material change in the present capitalization or dividend policy of the Issuer, (iv) to make any other material change in the Issuer's business or corporate structure, (v) to change the Issuer's charter or bylaws or to take other actions which may impede the acquisition of control of the Issuer by any person, (vi) to cause the Issuer's Common Stock to cease to be authorized to be listed on the Nasdaq National Market System or to become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, or (vii) to take any action similar to any of the foregoing. ITEM 5 INTEREST IN SECURITIES OF THE ISSUER (a) As a result of the transaction described in Items 3 and 4, Brunswick beneficially owns 1,888,126 shares of the Issuer's Common Stock, representing approximately 61.1% of the outstanding shares of Common Stock of the Issuer, based on the number of shares outstanding (3,088,163) as of April 15, 1996. Mr. Miller owns, or has the right to acquire within 60 days, 76,035 shares of the Issuer's Common Stock, representing approximately 2.5% of the outstanding shares of Common Stock of the Issuer, and consisting of 16,035 shares issued to him as compensation and options to acquire 75,000 more shares, or which 60,000 are currently exercisable. (b) Brunswick has the sole power to vote the shares of Common Stock of the Issuer owned by it and, subject to the terms of the stock pledge agreements to the Senior Lender and the Seller, to dispose of such shares. No officers or directors of Brunswick own any shares of Common Stock of the Issuer, except Mr. Miller, who has the sole power to vote the shares of Common Stock of the Issuer beneficially owned by him and to dispose of such shares. (c) Brunswick has not acquired or disposed of any shares of Common Stock of the Issuer during the past 60 days, except for the purchase of the Shares from the Seller described in Item 3 above. No officers or directors of Brunswick have acquired or disposed of any shares of Common Stock of the Issuer during the past 60 days. (d) The Shares purchased from the Seller have been pledged to secure the senior loan obtained to finance the purchase price and to secure the Subordinated Promissory Note delivered to the Seller. Upon the occurrence of an "event of default" under such indebtedness, the Senior Lender or the Seller may have the power to direct the receipt of dividends upon, or the proceeds from the sale of, the Shares pursuant to the terms of their respective stock pledge agreements. ITEM 6. CONTRACTS, AGREEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Brunswick has registration rights with respect to the Shares to a Registration Rights Agreement dated September 14, 1990 between the Issuer and the Seller, which has been assigned to Brunswick in connection with its purchase of the Shares, and which has been collaterally assigned by Brunswick to the Senior Lender in connection with the bridge loan. Brunswick's loan arrangements to finance the purchase of the Shares are described in Item 3 above. The Shares are pledged as security for the senior loan to the Senior Lender and as security for the Subordinated Promissory Note to the Seller of the Shares. Certain fees are payable to Vector Securities International, Inc. for services to Brunswick as financial advisor in connection with the acquisition of the Shares. In connection with an investment in Brunswick to finance the purchase of the Shares from the Seller, Brunswick has agreed with EM Industries, Inc., a customer and licensee of the Issuer, to use its best efforts to cause the Issuer to extend the license to EM Industries, Inc. relating to the EpiPen product through the year 2010 so long as annual minimums are met and to grant the licensee certain purchase rights if the Issuer determines to terminate production of the product or to sell its rights. The licensee, in turn, has agreed to enter into such extension pending approval by the Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1: Directors and Executive Officers of Brunswick. Exhibit 2: Brunswick's Undertakings to the Issuer's Board of Directors Exhibit 3: Senior Loan Documentation: (a) Credit Agreement (b) Bridge Note (c) Senior Stock Pledge Agreement (d) Warrant Purchase Agreement, together with form of Series A Warrant and Series B Warrant (e) Registration Rights Agreement Exhibit 4: Seller Stock Purchase Documentation: (a) Stock Purchase Agreement (b) Warrant (c) Subordinated Promissory Note (d) Subordinated Stock Pledge Agreement Exhibit 5: EM Industries, Inc. Subordinated Loan Documentation: (a) Note Purchase Agreement (b) Subordinated Promissory Note SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 25, 1996 BRUNSWICK BIOMEDICAL CORPORATION - ----------------- By: /s/James H. Miller ---------------------- Name: James H. Miller Title: President EXHIBIT INDEX Page ---- Exhibit 1: Directors and Executive Officers of Brunswick. Exhibit 2: Brunswick's Undertakings to the Issuer's Board of Directors Exhibit 3: Senior Loan Documentation: (a) Credit Agreement (b) Bridge Note (c) Senior Stock Pledge Agreement (d) Warrant Purchase Agreement, together with form of Series A Warrant and Series B Warrant (e) Registration Rights Agreement Exhibit 4: Seller Stock Purchase Documentation: (a) Stock Purchase Agreement (b) Warrant (c) Subordinated Promissory Note (d) Subordinated Stock Pledge Agreement Exhibit 5: EM Industries, Inc. Subordinated Loan Documentation: (a) Note Purchase Agreement (b) Subordinated Promissory Note
EX-1 2 DIRECTORS AND EXECUTIVE OFFICERS EXHIBIT 1 Officers and Directors of Brunswick - ----------------------------------- Set forth below is the name, present principal occupation or employment and the name, principal business and address of any corporation or other orgainization in which such employment is conducted of each director and executive officer of Brunswick. Each executive officer and director is a citizen of the United States of America. Directors --------- James H. Miller President and Chief Executive Officer Brunswick Biomedical Corporation 6 Thacher Lane Wareham, MA 02571 and President & Chief Executive Officer Survival Technology, Inc. 2275 Research Boulevard Rockville, MD 20850 Both companies are in the medical devices business. Robert G. Foster Chairman, President and Chief Executive Officer Commonwealth BioVentures Inc. Four Milk Street Portland, ME 04101 Venture capital firm James G. Nichols Senior Vice President, General Manager Brunswick Biomedical Technologies, Inc. 6 Thacher Lane Wareham, MA 02571 Medical devices business. Executive Officers ------------------ James H. Miller President and Chief Executive Officer (See above) EX-2 3 BRUNSWICK'S UNDERTAKINGS TO THE ISSUER'S B.O.D. EXHIBIT 2 BRUNSWICK BIOMEDICAL CORPORATION March 15, 1996 Board of Directors Survival Technology, Inc. 2275 Research Boulevard Suite 100 Rockville, Maryland 20850 Dear Sirs: Brunswick Biomedical Corporation ("Brunswick") has informed you that it is proposing to acquire shares of Common Stock of Survival Technology, Inc. ("STI") from the Estate of Dr. Stanley J. Sarnoff (the "Estate") which would result in Brunswick becoming an "interested stockholder" within the meaning of Section 203 of the Delaware General Corporation Law (the "DGCL"). It is a condition of such acquisition that the Board of Directors of STI (the "Board") approve Brunswick's acquisition of the STI shares from the Estate so that the provisions of Section 203 will not apply to Brunswick. Brunswick believes that it is in the best interests of STI and its stockholders for Brunswick to acquire the shares from the Estate and, in order to assist the Board to approve such acquisition, hereby makes the following representations, warranties, undertakings and agreements: 1. The information previously furnished to the Board and to STI's representatives regarding (i) the business and financial condition of Brunswick, (ii) the identity and background of its stockholders and proposed investors to fund the acquisition of the Estate's STI shares and (iii) Brunswick's present plans regarding the conduct of the business of STI and Brunswick following such acquisition, including without limitation the information furnished to the Board at its January 11, 1996 meeting, is true and complete in all material respects and, except to the extent disclosed in writing to the Board at least 48 hours prior to such acquisition, will be true and complete in all material respects at the time of such acquisition. In the event of a material change in such information, the Board may revoke its approval contemplated hereunder prior to such acquisition. 2. During the Undertaking Period (as defined below), Brunswick will use its best efforts to cause the Board of Directors of STI to include at least two qualified independent directors. A director shall not be considered independent if he or she (i) is or at any time within ten years prior to the date of determination was a director, officer or employee of, or a consultant, attorney or advisor to, STI (other than persons who served as independent directors of STI prior to the acquisition) or Brunswick or (ii) has a direct or indirect material ownership interest in, or is an officer, director or employee of an organization with a direct or indirect material ownership interest in, Brunswick. The persons proposed to be elected as independent directors of STI have previously been disclosed by Brunswick to the Board, and Brunswick will use its best efforts during the Undertaking Period to cause such persons to be elected and continued in office and, if necessary, to cause suitable replacements to be elected. 3. During the Undertaking Period, Brunswick will use its best efforts to not permit STI to terminate the employment of Jeffrey W. Church without Cause (as such term is defined in the employment agreement between Mr. Church and STI dated as of January 28, 1994) or to provide Mr. Church with Good Reason (as such term is so defined). 4. During the Undertaking Period, neither Brunswick nor any of its stockholders will, directly or indirectly, enter into any agreement, arrangement or transaction with STI (other than proportionately as a stockholder of STI) except (i) on terms no less favorable to STI than would be available from a third party on an arm's-length basis, as may be approved by a Special Committee or (ii) if the agreement, arrangement or transaction is approved by a Special Committee as being in the best interests of STI and its stockholders other than Brunswick. 5. During the Undertaking Period or a period of 36 months from the date Brunswick becomes an interested stockholder, whichever ends later, Brunswick will not offer to acquire or acquire, and will use its best efforts to cause STI and any other affiliate or shareholder of Brunswick and any person acting in concert with Brunswick to refrain from offering to acquire or acquiring, any shares of Common Stock of STI outstanding at the date Brunswick becomes an interested stockholder at a price less than the price paid to the Estate, except to the extent that (i) Brunswick can demonstrate to the satisfaction of a Special Committee that a lower price is justified by events or circumstances occurring subsequent to its acquisition from the Estate, (ii) such acquisition is pursuant to an agreement existing at the time of Brunswick's acquisition from the Estate and disclosed to the Board prior to execution hereof or (iii) the transaction otherwise is approved by a Special Committee as in the best interests of STI and its shareholders other than Brunswick. 6. For a period of three years from the date it becomes an interested stockholder, Brunswick will not engage in, and will use its best efforts to cause STI not to engage in, (i) any merger or consolidation of STI or any majority-owned subsidiary of STI with or into Brunswick or any affiliate or shareholder of Brunswick or person acting in concert with Brunswick, (ii) any sale, lease or exchange of all or substantially all the assets of Brunswick or STI to the other or any affiliate or shareholder of, or person acting in concert with, the other or (iii) any other transaction in which the shares of capital stock of Brunswick are exchanged for or converted into shares of capital stock or the right to acquire shares of capital stock of STI or the shares of capital stock of STI are exchanged for or converted into shares of capital stock or the right to acquire shares of capital stock of Brunswick or any affiliate or shareholder of Brunswick or person acting in concert with Brunswick, unless in each case any such transaction is approved by a Special Committee with the advice and after receipt of an affirmative opinion of an independent, generally recognized investment banking or similar firm experienced in providing such advice and rendering "fairness opinions." - 2 - 7. The following terms used herein have the meanings specified: (a) "Special Committee" means a committee of the Board of Directors of STI consisting solely of independent directors, not less than two in number, except to the extent a lesser number is available to serve, which shall act by majority action of its members and shall be authorized to retain, if it chooses, independent counsel and independent financial advisors. (b) "Undertaking Period" means the period from the date Brunswick becomes an interested stockholder of STI and ending on the earlier of (i) the date Brunswick and STI cease to be separate entities or one becomes a wholly- owned subsidiary of the other in a transaction effected in compliance with this Agreement, or (ii) the date which is three years after the date Brunswick becomes an interested stockholder of STI. (c) "Interested stockholder" means an interested stockholder of STI within the meaning of Section 203 of the DGCL as in effect at the time Brunswick becomes an interested stockholder. 8. Brunswick acknowledges and agrees for the benefit of the directors and officers of STI (i) that all rights to indemnification and all limitations on liability existing in favor of the directors, officers and employees of STI and its subsidiaries as provided in their respective Certificates of Incorporation, By-Laws or similar governing documents as in effect as of the date of this Agreement with respect to matters occurring prior to the time of Brunswick's acquisition of the Estate's shares are contractual in nature and that it will use its best efforts to cause STI and such subsidiaries to continue such rights to indemnification and limitations on liability in full force and effect and to be honored by such entities or their respective successors as if they were the indemnifying party thereunder, without any amendment thereto, for a period of not less than six years from such time; provided, however, that all rights to -------- ------- indemnification in respect of any claim asserted or made within such period shall continue until the final disposition of such claim; and (ii) that STI currently carries directors' and officers' liability insurance and that, in order not to detract from the coverage currently maintained on behalf of STI's directors and officers, STI may, and Brunswick will use its best efforts to cause STI to, provide for a period of no less than six years after the time of such acquisition directors' and officers' liability insurance substantially equivalent to that in effect on the date hereof for STI's directors and officers covering causes of action that arise out of acts or omissions occurring on or before the date Brunswick becomes an interested stockholder of STI; provided, -------- however, that STI may elect instead to purchase "tail coverage" or a "discovery - ------- period" as a substitute for some or all of such insurance. Upon acquiring the shares of STI Common Stock from the Estate, Brunswick will reimburse STI for the cost of purchasing such "tail coverage" or "discovery period" as such cost is payable. STI shall use its best efforts to finance such cost consistent with its past practice. In the event Brunswick, STI or any of their respective successors and assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of Brunswick or STI, as the case may be, assume the obligations set forth in this section. - 3 - 9. Brunswick agrees for the benefit of the current directors of STI that any director of STI who is not expected to be a continuing director of STI after Brunswick's acquisition of the shares of STI Common Stock from the Estate shall be given the opportunity to resign at the closing of such acquisition, and such resignation will not be considered removal as a director and will result in the stock options granted to such director under STI's 1986 Stock Option Plan remaining outstanding until their otherwise scheduled expiration. 10. Except as otherwise provided, this Agreement is for the benefit of the Board, STI and its stockholders and shall become binding on Brunswick and its successors upon the Board approving, for purposes of Section 203 of the DGCL, Brunswick's acquisition of the shares of STI Common Stock from the Estate and Brunswick's becoming an interested stockholder of STI, and thereafter this Agreement shall not be amended without the approval of a Special Committee after a finding that the amendment does not adversely affect the rights of any person for whose benefit this Agreement is entered into and is not contrary to the best interests of STI and its stockholders other than Brunswick. 11. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to agreements made and entirely to be performed within such jurisdiction, except to the extent federal law may be applicable. Very truly yours, BRUNSWICK BIOMEDICAL CORPORATION By:/s/ James H. Miller ------------------------------ Title: President - 4 - EX-3.A 4 CREDIT AGREEMENT Exhibit 3(a) ============ ================================================================================ CREDIT AGREEMENT Dated as of April 15, 1996 among BRUNSWICK BIOMEDICAL CORPORATION as Borrower, VARIOUS LENDERS and INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, as Agent for the Lenders ================================================================================
Page ARTICLE 1 DEFINITIONS..................................... 2 SECTION 1.1 Defined Terms................................... 2 SECTION 1.2 Use of Defined Terms............................ 28 SECTION 1.3 Cross-References................................ 28 SECTION 1.4 Accounting and Financial Determinations......... 28 ARTICLE 2 COMMITMENTS..................................... 29 SECTION 2.1 Bridge Loan..................................... 29 SECTION 2.2 Term Loan and Revolving Loan Commitment......... 29 SECTION 2.2.1 Term Loan....................................... 29 SECTION 2.2.2 Revolving Loan Commitment....................... 29 SECTION 2.2.3 Limitations on Revolving Credit Commitment...... 29 SECTION 2.3 Establishment of Reserves....................... 30 SECTION 2.4 Commitment Fee.................................. 30 SECTION 2.5 Increased Costs; Capital Adequacy............... 30 ARTICLE 3 LOANS AND NOTES................................. 32 SECTION 3.1 Borrowing Procedure............................. 32 SECTION 3.2 Notes........................................... 32 SECTION 3.3 Principal Payments.............................. 33 SECTION 3.3.1 Repayments and Prepayments...................... 33 SECTION 3.3.2 Application..................................... 36 SECTION 3.3.3 Revolving Loans on Borrower's Behalf............ 36 SECTION 3.4 Interest........................................ 36 SECTION 3.4.1 Bridge Loan Rate................................ 36 SECTION 3.4.2 Term Loan Rate.................................. 37 SECTION 3.4.3 Revolving Loan Rate............................. 37 SECTION 3.4.4 Continuation and Conversion Elections........... 37 SECTION 3.4.5 Post-Default Rates.............................. 38 SECTION 3.4.6 Payment Dates................................... 38 SECTION 3.4.7 Rate Determinations............................. 39 SECTION 3.4.8 Limitation on Types of Loans.................... 39 SECTION 3.4.9 Illegality...................................... 39 SECTION 3.4.10 Treatment of Affected Loans..................... 40 SECTION 3.4.11 Compensation.................................... 40 SECTION 3.5 Taxes........................................... 41 SECTION 3.6 Payments, Interest Rate Computations, Other Computations, etc............................... 42
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Page SECTION 3.7 Proration of Payments........................... 43 SECTION 3.8 Setoff.......................................... 43 SECTION 3.9 Use of Proceeds................................. 43 ARTICLE 4 CONDITIONS TO LOANS............................. 45 SECTION 4.1 Bridge Loan..................................... 45 SECTION 4.1.1 Resolutions, etc................................ 45 SECTION 4.1.2 Bridge Notes.................................... 46 SECTION 4.1.3 Subsidiary Guaranty............................. 46 SECTION 4.1.4 No Contest, etc................................. 46 SECTION 4.1.5 Certificate as to Completed Conditions, Warranties, No Default, etc..................... 46 SECTION 4.1.6 Opinion of Counsel.............................. 47 SECTION 4.1.7 Closing Fees, Expenses, etc..................... 47 SECTION 4.1.8 Security Documents and Perfection............... 47 SECTION 4.1.9 Employment Agreements; Compensation............. 48 SECTION 4.1.10 Pension and Welfare Liabilities................. 48 SECTION 4.1.11 Insurance....................................... 48 SECTION 4.1.12 Key Man Insurance............................... 49 SECTION 4.1.13 Financial Information, etc...................... 49 SECTION 4.1.14 Solvency, etc................................... 49 SECTION 4.1.15 Acquisition..................................... 49 SECTION 4.2.2 Term Notes and Revolving Notes.................. 52 SECTION 4.2.3 STI Subsidiary Guaranty......................... 52 SECTION 4.2.5 No Contest, etc................................. 52 SECTION 4.2.6 Certificate as to Completed Conditions, Warranties, No Default, etc..................... 52 SECTION 4.2.7 Opinions of Counsel............................. 53 SECTION 4.2.8 Assumption Agreement............................ 53 SECTION 4.2.9 Security Documents and Perfection............... 53 SECTION 4.2.10 Financial Information, etc...................... 55 SECTION 4.2.11 Solvency, etc................................... 55 SECTION 4.2.12 Merger of Brunswick into STI.................... 56 SECTION 4.2.13 Maturity of Bridge Loan......................... 57 SECTION 4.2.14 Reaffirmation of Representations and Warranties. 57 SECTION 4.2.15 No Dividends; etc............................... 57 SECTION 4.3 All Loans....................................... 57 SECTION 4.3.1 Compliance with Warranties, No Default, etc..... 58 SECTION 4.3.2 Borrowing Request, etc.......................... 58 SECTION 4.3.3 Satisfactory Legal Form......................... 59 SECTION 4.3.4 Margin Regulations.............................. 59
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Page SECTION 4.3.5 Adverse Change.................................. 59 SECTION 4.3.6 Change in Law................................... 59 ARTICLE 5 WARRANTIES, ETC................................. 59 SECTION 5.1 Organization, Power, Authority, etc............. 59 SECTION 5.2 Due Authorization............................... 60 SECTION 5.3 Validity, etc................................... 60 SECTION 5.4 Financial Information; Solvency................. 60 SECTION 5.5 Material Adverse Change......................... 62 SECTION 5.6 Absence of Default.............................. 62 SECTION 5.7 Litigation, Legislation, etc.................... 62 SECTION 5.8 Regulations G, T, U and X....................... 62 SECTION 5.9 Government Regulation........................... 62 SECTION 5.10 Taxes........................................... 63 SECTION 5.11 Pension and Welfare Plans....................... 63 SECTION 5.12 Labor Controversies............................. 65 SECTION 5.13 Ownership of Properties; Collateral............. 65 SECTION 5.14 Intellectual Property........................... 66 SECTION 5.15 Accuracy of Information......................... 66 SECTION 5.16 Insurance....................................... 66 SECTION 5.17 Certain Indebtedness............................ 66 SECTION 5.18 Environmental Matters........................... 67 SECTION 5.19 No Burdensome Agreements........................ 67 SECTION 5.20 Consents........................................ 67 SECTION 5.21 Contracts....................................... 67 SECTION 5.22 Employment Agreements........................... 67 SECTION 5.23 Condition of Property........................... 67 SECTION 5.24 Subsidiaries.................................... 68 SECTION 5.25 Acquisition Agreement........................... 68 SECTION 5.26 Trade Relations................................. 68 ARTICLE 6 COVENANTS....................................... 68 SECTION 6.1 Affirmative Covenants........................... 68 SECTION 6.1.1 Financial Information, etc...................... 69 SECTION 6.1.2 Maintenance of Corporate Existence, etc......... 71 SECTION 6.1.3 Foreign Qualification........................... 71 SECTION 6.1.4 Payment of Taxes, etc........................... 71 SECTION 6.1.5 Insurance....................................... 71 SECTION 6.1.6 Notice of Default, Litigation, etc.............. 72 SECTION 6.1.7 Books and Records............................... 74
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Page SECTION 6.1.8 Maintenance of Properties, Etc.................. 74 SECTION 6.1.9 Maintenance of Licenses and Permits............. 74 SECTION 6.1.10 Employee Plans.................................. 74 SECTION 6.1.11 Environmental Management........................ 75 SECTION 6.1.12 Compliance with Laws............................ 75 SECTION 6.1.13 Interest Rate Protection........................ 75 SECTION 6.1.14 Real Estate..................................... 75 SECTION 6.1.15 Merger of Brunswick into STI.................... 75 SECTION 6.1.16 Cash Reserve Account............................ 76 SECTION 6.1.17. Private Placements.............................. 76 SECTION 6.2 Negative Covenants.............................. 76 SECTION 6.2.1 Business Activities............................. 76 SECTION 6.2.2 Indebtedness.................................... 77 SECTION 6.2.3 Liens........................................... 78 SECTION 6.2.4 Financial Condition............................. 80 SECTION 6.2.5 Capital Expenditures............................ 83 SECTION 6.2.6 Lease Obligations............................... 84 SECTION 6.2.8 Restricted Payments, etc........................ 85 SECTION 6.2.9 Take or Pay Contracts; Sale/Leasebacks.......... 86 SECTION 6.2.10 Consolidation, Merger, Subsidiaries, etc........ 86 SECTION 6.2.11 Asset Dispositions, etc......................... 87 SECTION 6.2.12 Modification of Organic Documents, etc.......... 87 SECTION 6.2.13 Transactions with Affiliates.................... 87 SECTION 6.2.14 Inconsistent Agreements......................... 87 SECTION 6.2.15 Change in Accounting Method..................... 88 SECTION 6.2.16 Change in Fiscal Year End....................... 88 SECTION 6.2.17 Compliance with ERISA........................... 88 SECTION 6.2.18 Limitation on Restrictions on Subsidiary Dividends....................................... 88 SECTION 6.2.19. Modification of Certain Documents............... 88 SECTION 6.2.20. Prohibition on Voluntary Prepayments on Subordinated Indebtedness....................... 89 SECTION 6.2.21. Prohibition on Actions Triggering Redemption of Series D Stock............................... 89 ARTICLE 7 EVENTS OF DEFAULT............................... 89 SECTION 7.1 Events of Default............................... 89 SECTION 7.1.1 Non-Payment of Obligations...................... 89 SECTION 7.1.2 Non-Performance of Certain Covenants............ 90 SECTION 7.1.3 Defaults Under Other Loan Documents; Non-Performance of Other Obligations............ 90 SECTION 7.1.4 Bankruptcy, Insolvency, etc..................... 90
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Page SECTION 7.1.5 Breach of Warranty.............................. 91 SECTION 7.1.6 Default on Other Indebtedness, etc.............. 91 SECTION 7.1.7 Failure of Valid, Perfected Security Interest... 91 SECTION 7.1.8 Employee Plans.................................. 92 SECTION 7.1.9 Judgments....................................... 92 SECTION 7.1.10 Cessation of Business; Dissolution.............. 93 SECTION 7.1.11 Subordinated Debt Documents..................... 93 SECTION 7.2 Action if Bankruptcy............................ 93 SECTION 7.3 Action if Other Event of Default................ 93 ARTICLE 8 THE AGENT...................................... 93 SECTION 8.2 Funding Reliance, etc........................... 94 SECTION 8.3 Exculpation..................................... 95 SECTION 8.4 Successor....................................... 95 SECTION 8.5 Loans by the Agent.............................. 96 SECTION 8.6 Credit Decisions................................ 96 SECTION 8.7 Copies, etc..................................... 96 ARTICLE 9 MISCELLANEOUS................................... 96 SECTION 9.1 Waivers, Amendments, etc........................ 96 SECTION 9.2 Notices......................................... 98 SECTION 9.3 Costs and Expenses.............................. 99 SECTION 9.4 Indemnification................................. 100 SECTION 9.5 Survival........................................ 101 SECTION 9.6 Severability.................................... 102 SECTION 9.7 Headings........................................ 102 SECTION 9.8 Counterparts, Effectiveness, etc................ 102 SECTION 9.9 Governing Law; Entire Agreement................. 102 SECTION 9.10 Successors and Assigns.......................... 103 SECTION 9.11 Sale and Transfers, Participations, etc......... 103 SECTION 9.12 Other Transactions.............................. 106 SECTION 9.13 Confidentiality................................. 106 SECTION 9.14 Change in Accounting Principles................. 107 SECTION 9.15 Waiver of Jury Trial, Etc....................... 107 SECTION 9.16 Limitation of Liability......................... 107 SECTION 9.17 Usury Savings Clause............................ 108 SECTION 9.18 Effectiveness of Execution and Delivery by STI.. 109
v SCHEDULES AND EXHIBITS - ----------------------
Page Schedule 1 - Disclosure Schedule Exhibit A - Assumption Agreement Exhibit B - Borrowing Request Exhibit C-1 - Bridge Note Exhibit C-2 - Revolving Note Exhibit C-3 - Term Note Exhibit D - Compliance Certificate Exhibit E - Continuation/Conversion Notice Exhibit F - Acknowledgment of Interest Rate Contract Counterparty Exhibit G - Transfer Supplement Exhibit H - Opinion of Counsel to STI (to be delivered on the Merger Consummation Date)
vi CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of April 15, 1996, among BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation ("Brunswick"), various --------- lenders as are, or may become, parties hereto (individually a "Lender" and, ------ collectively, the "Lenders"), and INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL ------- CORPORATION, a Delaware corporation, as Agent for the Lenders. W I T N E S E T H: ----------------- RECITALS. - -------- A. Pursuant to a Stock Purchase Agreement, dated as of March 18, 1996, between Brunswick and the Estate of Dr. Stanley J. Sarnoff, Brunswick has agreed to acquire 1,888,126 shares of Common Stock, $.10 par value, of Survival Technology, Inc., a Delaware corporation ("STI"); --- B. After giving effect to such acquisition, Brunswick will seek to merge with and into STI (the "Merger"), with STI being the surviving corporation ------ and assuming all obligations of Brunswick hereunder; C. Brunswick desires to obtain from the Lenders (a) a Bridge Loan in an aggregate principal amount of Eleven Million Dollars ($11,000,000) having an initial maturity on October 15, 1996, unless extended for an additional ninety- day period as permitted herein, $10,000,000 of which will be converted, upon consummation of the Merger, into a Term Loan in the principal amount of Ten Million Dollars ($10,000,000) having a final maturity on the fifth anniversary of the Merger; and (b) a Revolving Loan Commitment in an aggregate amount of up to Five Million Dollars ($5,000,000), pursuant to which Revolving Loans will be made to the Borrower from time to time from the date of the Merger to but excluding the Revolving Loan Commitment Termination Date; D. The Lenders are willing, on the terms and conditions set forth herein (a) to make such Bridge Loan on the date hereof and (b) upon consummation of the Merger to convert up to $10,000,000 of the outstanding principal balance of the Bridge Loan into the Term Loan and to extend the Revolving Loan Commitment; and 1 E. The Bridge Loan, the Term Loan and the Revolving Loans will be used in the manner described in Section 3.9 below; ----------- NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.1 Defined Terms. The following terms (whether or not ------------- underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Acquisition" means the acquisition by Brunswick from the Estate of ----------- 1,888,126 shares of Common Stock, $.10 par value, of STI in exchange for the payment of the Purchase Price pursuant to the terms and conditions of the Acquisition Agreement. "Acquisition Agreement" means that certain Stock Purchase Agreement, --------------------- dated as of March 18, 1996, between Brunswick and the Estate, as amended, modified or supplemented to the date hereof. "Affiliate" of any Person means any other Person which, directly or --------- indirectly, controls or is controlled by or under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (a) to vote 5% or more of the securities having ordinary voting power for the election of directors of such Person, or (b) to direct or cause the direction of the management or policies of such Person whether by contract or otherwise; provided that (i) no Lender shall be deemed to constitute an Affiliate of the - -------- ---- Borrower, and (ii) no member of the Hewson family or their transferees who owns, directly or indirectly, together with all other members of the Hewson family or such transferees, 10% or less of the securities having ordinary voting power for the election of directors of Technology shall be deemed to constitute an Affiliate of the Borrower or of Technology. "Agent" means ING as agent for the Lenders pursuant hereto, or such ----- other Person as shall have subsequently been appointed as the successor agent pursuant to Section 8.4. ----------- 2 "Agreement" means, on any date, this Credit Agreement as originally in --------- effect on the Closing Date and as thereafter from time to time amended, supplemented, amended and restated, extended or otherwise modified and in effect. "Applicable Lending Office" means, with respect to any Lender, the ------------------------- branch or office of such Lender at which Loans of a certain type are maintained. "Assumption Agreement" means the Assumption Agreement and Supplement -------------------- to Pledge and Security Agreement, dated as of the Merger Consummation Date, to be executed and delivered by STI in favor of the Agent and the Lenders in the form of Exhibit A. --------- "Authorized Officer" means, relative to any Loan Party those officers ------------------ of such Loan Party whose signatures, incumbency and authority shall have been certified to the Agent and the Lenders pursuant to Section 4.1.1 or Section ------------- ------- 4.2.1. - ----- "Base Rate Loans" means Loans, or portions thereof, interest rates on --------------- which are determined on the basis of the ING Alternate Base Rate. "Borrower" means, except as otherwise specified in Article 5, (a) at -------- --------- all times prior to the Merger Consummation Date, Brunswick, and (b) at all times on and after the Merger Consummation Date, STI. "Borrowing" means the Loans or portions thereof of the same type and, --------- in the case of Eurodollar Loans, having the same Interest Period, in each case made, converted or continued by the Lenders on the same Business Day pursuant to the same Borrowing Request or Continuation/Conversion Notice in accordance with Sections 3.1 or 3.4.4, respectively. ------------ ----- "Borrowing Request" means a loan request and certificate duly executed ----------------- by an Authorized Officer of the Borrower in the form of Exhibit B. --------- "Bridge Loan" means, collectively, the loan or loans, in an aggregate ----------- principal amount of $11,000,000, made by the Lenders on the Closing Date to the Borrower pursuant to Section 2.1. ----------- "Bridge Loan Applicable Margin" shall mean (a) 2.50% during the period ----------------------------- commencing on the Closing Date and ending on the 180th-day following the Closing Date and (b) 4.00% thereafter. 3 "Bridge Loan Commitment" means the collective commitments of the ---------------------- Lenders to make the Bridge Loan pursuant to Section 2.1 if the conditions set ----------- forth in Section 4.1 and Section 4.3 ----------- ----------- are met. "Bridge Note" means a promissory note of the Borrower dated the date ----------- hereof and substantially in the form of Exhibit C-1, and shall also refer to all ----------- other promissory notes accepted from time to time in substitution or renewal thereof. "Bridge Percentage" of any Lender means at any time, in respect of the ----------------- Bridge Loan, the percentage set forth opposite such Lender's signature hereto under the caption "Percentage" as the same may be adjusted pursuant to Section ------- 9.11. - ---- "Brunswick" means Brunswick Biomedical Corporation, a Massachusetts --------- corporation. "Brunswick Patent Assignment" means the Collateral Assignment and --------------------------- Security Agreement (Patents), dated as of the Closing Date, made by Brunswick in favor of the Agent, for its benefit and the ratable benefit of the Lenders, as originally in effect on the Closing Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect. "Brunswick Pledge Agreement" means the Stock and Notes Pledge -------------------------- Agreement, dated as of the Closing Date, made by Brunswick in favor of the Agent, for itself and the ratable benefit of the Lenders, as originally in effect on the Closing Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect, pursuant to which Brunswick shall pledge to the Agent all of the issued and outstanding Stock of its direct Subsidiaries held by Brunswick (including, without limitation, the STI Shares) and all promissory notes and other instruments and securities held by Brunswick, as security for the Obligations. "Brunswick Security Agreement" means the Security Agreement, dated as ---------------------------- of the Closing Date, made by Brunswick and each of its Subsidiaries located in the United States (other than STI and its Subsidiaries and other than the Inactive Subsidiaries) in favor of the Agent, for its benefit and the ratable benefit of the Lenders, as originally in effect on the Closing Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect. "Brunswick Subsidiary Guaranty" means the Subsidiary Guaranty, dated ----------------------------- as of the Closing Date, made by each Subsidiary (other than STI and its Subsidiaries and other than the 4 Inactive Subsidiaries) of Brunswick located in the United States in favor of the Agent and the Lenders, as originally in effect on the Closing Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect. "Brunswick Trademark Assignment" means the Collateral Assignment and ------------------------------ Security Agreement (Trademarks), dated as of the Closing Date, made by Brunswick in favor of the Agent, for its benefit and the ratable benefit of the Lenders, as originally in effect on the Closing Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect. "Business Day" means: ------------ (a) any day which is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in New York, New York; and (b) relative to the making, continuing, prepaying or repaying of any Eurodollar Loans, any day on which dealings in Dollars are carried on in the London interbank market. "Capitalized Lease Liabilities" means all monetary obligations of the ----------------------------- Borrower and its Subsidiaries under any leasing or similar arrangement which, in accordance with GAAP, are or would be classified as capitalized leases. "Cash Equivalent Investment" means, at any time: -------------------------- (a) any direct obligation issued or guaranteed by the United States of America or any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, or issued by any state or political subdivision or public instrumentality thereof, (i) which has a remaining maturity at the time of purchase of not more than one (1) year or which is subject to a repurchase agreement with any Lender or any Eligible Lending Institution exercisable within one (1) year from the time of purchase so long as such direct obligation remains in the possession of the Borrower or in the possession of any Lender and (ii) which, in the case of obligations of any state or political subdivision or public instrumentality thereof, is rated AA or better by Moody's Investors Service, Inc.; (b) certificates of deposit, time deposits, demand deposits and bankers' acceptances, having a remaining maturity at the time of purchase of not more than one (1) year, issued by any Lender or by any Eligible Lending Institution; 5 (c) corporate obligations rated Prime-1 by Moody's Investors Service, Inc. or A-1 by Standard & Poor's Corporation, having a remaining maturity at the time of purchase of not more than one (1) year; and (d) shares of funds registered under the Investment Company Act of 1940, as amended, having assets of at least $100,000,000 which invest only in obligations described above and which shares are rated by Moody's Investors Service, Inc. or Standard & Poor's Corporation in one of the two highest rating categories assigned by such agencies for obligations of such nature. "Cash Flow" means, for any period, an amount equal to (without --------- duplication) the consolidated Net Income of the Borrower and its Subsidiaries, plus depreciation, amortization of intangible assets and other non-cash charges - ---- of the Borrower and its Subsidiaries, minus non-cash credits and revenues, plus ----- ---- decreases in the Borrower's and its Subsidiaries' working capital (excluding changes in cash, Cash Equivalent Investments and current maturities of Indebtedness), minus increases in the Borrower's and its Subsidiaries' working ----- capital (excluding changes in cash, Cash Equivalent Investments and current maturities of Indebtedness). "Cash Reserve Account" means an interest-bearing cash reserve account -------------------- established by the Borrower at SunTrust Bank, Atlanta in favor of the Agent, subject to the terms of the Cash Reserve Account Agreement, in which account the Borrower shall deposit or cause to be deposited on the Closing Date, out of the proceeds of the Bridge Loan, $1,000,000 and from which account the Agent shall be irrevocably authorized by the Borrower to withdraw funds sufficient to pay from time to time accrued and unpaid interest on the Bridge Loan which has become due and payable. "Cash Reserve Account Agreement" means the Collateral Account ------------------------------ Agreement, dated as of the Closing Date, between Brunswick, the Agent and SunTrust Bank, Atlanta, pursuant to which Brunswick shall grant to the Agent a security interest in the Cash Reserve Account. "Change in Control" means (a) at any time prior to the Merger ----------------- Consummation Date, (i) the sale, transfer or other disposition by EM Industries, Inc. or Mylan Laboratories, Inc. of any shares of Stock held by such Persons as of the Closing Date other than to an Affiliate of such Person, or (ii) the failure of James H. Miller (or a Person of comparable qualifications and experience) to serve as chief executive officer of the Borrower, and (b) from and after the Merger Consummation Date, (i) the acquisition by any Person or group of Persons (other than an employee benefit plan solely for employees of STI and its Subsidiaries) of beneficial ownership of more than 20% of the outstanding Stock of the Borrower (within the meaning of 6 Section 13(d) or 14(d) of the Securities and Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder) other than as a result of the Merger, (ii) during any period of 12 consecutive months (whether commencing before or after the Merger Consummation Date), the failure of individuals who on the first day of such period were directors of the Borrower (together with any replacement or additional directors who were nominated or elected by a majority of directors then in office) to constitute a majority of the Board of Directors of the Borrower, or (iii) the failure of James H. Miller (or a Person of comparable qualifications and experience) to serve as chief executive officer of the Borrower. "Charges" means all federal, state, county, city, municipal, local, ------- foreign or other governmental (including, without limitation, PBGC) (a) taxes at the time due and payable and (b) levies, assessments, charges, liens, claims or encumbrances upon or relating to (i) the Collateral, (ii) the Obligations, (iii) the Borrower's and its Subsidiaries' employees, payroll, income or gross receipts, (iv) the Borrower's and its Subsidiaries' ownership or use of their assets, or (v) any other aspect of the Borrower's and its Subsidiaries' business. "Closing Date" means April 15, 1996, the date of the funding of the ------------ Bridge Loan. "Closing Date Pro Forma Balance Sheet" means the pro forma balance ------------------------------------ --- ----- sheet of Brunswick as of January 31, 1996 prepared by Brunswick based on the financial statements described in clauses (a)(i) and (ii) of Section 5.4 and ----------- assuming that the transactions contemplated by this Agreement to occur on the Closing Date, including the Acquisition and the Bridge Loan, occurred on January 31, 1996. "Collateral" means all property and interests in property and proceeds ---------- thereof now owned or hereafter acquired by the Borrower or any Subsidiary in or upon which a Lien is granted to the Agent, for its benefit and the ratable benefit of the Lenders, under any of the Loan Documents. "Commitment" means, collectively, the Lenders' Bridge Loan ---------- Commitments, Revolving Loan Commitments and Term Loan Commitments. "Commitment Letter" means the Commitment Letter dated March 18, 1996 ----------------- between Brunswick and ING. "Commonly Controlled Entity" means, with respect to any Person, an -------------------------- entity or trade or business, whether or not incorporated, which is from time to time a member of a controlled group or a group under common control with such Person within the meaning of Sections 414(b), 414(c), 414(m) or 414(o) of the IRC or Section 4001(a)(14) of ERISA. Unless 7 otherwise indicated in this Agreement, Commonly Controlled Entity shall refer to a Commonly Controlled Entity with respect to the Borrower. "Compliance Certificate" means a certificate duly executed by the ---------------------- chief executive, accounting or financial Authorized Officer of the Borrower in the form of Exhibit D, together with such changes as the Required Lenders may --------- from time to time reasonably request through the Agent for purposes of monitoring the Borrower's compliance herewith. "Consolidated Capital Expenditures" means, for any period, without --------------------------------- duplication, the sum of (a) the gross dollar amount of additions during such period to property, plant, equipment and other fixed assets of the Borrower and its Subsidiaries, including those additions made in the ordinary course of business, but excluding routine maintenance and repairs, plus (b) the aggregate ---- amount of Capitalized Lease Liabilities incurred during such period by the Borrower and its Subsidiaries. "Continuation/Conversion Notice" means a notice of continuation or ------------------------------ conversion and certificate duly executed by the chief executive, accounting or financial Authorized Officer of the Borrower in the form of Exhibit E attached --------- hereto. "Contractual Obligation" means, relative to any Person, any provision ---------------------- of any security issued by such Person or of any Instrument or undertaking to which such Person is a party or by which it or any of its property is bound. "Default" means any Event of Default or any condition or event which, ------- after notice or lapse of time or both, would constitute an Event of Default. "Disclosure Schedule" means the Disclosure Schedule attached hereto as ------------------- Schedule 1, as it may be amended, supplemented or otherwise modified from time - ---------- to time by the Borrower with the consent of the Required Lenders as provided in Section 4.3.2. - ------------- "Dollar" and the sign "$" mean lawful money of the United States. ------ - "EBITDA" means, for any period, an amount equal to Net Income plus (to ------ ---- the extent deducted in determining Net Income) interest expense, provisions for income taxes, depreciation and amortization of intangible assets, in each case for the Borrower and its Subsidiaries on a consolidated basis. "Eligible Lending Institution" means a financial institution having a ---------------------------- branch or office in the United States and having capital and surplus and undivided profits aggregating at 8 least $100,000,000 and rated Prime-1 or better by Moody's Investors Service, Inc. or A-1 or better by Standard & Poor's Corporation. "Environment" means soil, surface waters, ground waters, land, ----------- streams, sediments, surface or subsurface strata and ambient air. "Environmental Laws" means all federal, state, local and foreign laws ------------------ or regulations, codes, common law, consent agreements, orders, decrees, judgments or injunctions issued, promulgated, approved or entered thereunder relating to pollution or protection of the Environment, natural resource or occupational health and safety. "Environmental Liabilities and Costs" means all liabilities, ----------------------------------- obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, expert and consulting fees and costs of investigation and feasibility studies), fines, penalties, settlement costs, sanctions and interest incurred as a result of any claim or demand, by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, any Environmental Law, permit, order, variance or agreement with a Governmental Authority or other Person, arising from or related to the administration of any Environmental Law or arising from environmental, health or safety conditions or a release or threatened release resulting from the past, present or future operations of the Borrower or its Subsidiaries or affecting any of their properties, or any release or threatened release for which the Borrower or any of its Subsidiaries is otherwise responsible under any Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended, and any successor statute of similar import, together with the regulation thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections. "ERISA Insolvency" or "ERISA Insolvent" means, at any particular time, ---------------- --------------- a Multiemployer Pension Plan is insolvent within the meaning of Section 4245 of ERISA. "Estate" means the Estate of Dr. Stanley J. Sarnoff. ------ "Estate Registration Rights Agreement" means the Registration Rights ------------------------------------ Agreement, dated September 14, 1990, between STI and the Estate, pursuant to which the Estate was granted the right, upon the terms and subject to the conditions set forth therein, to require STI to register the STI Shares under the Securities Act of 1933, as amended, which right will be acquired by 9 Brunswick pursuant to the Acquisition Agreement and collaterally assigned to the Agent, for its benefit and the ratable benefit of the Lenders, pursuant to Section 4.1.8(g). - ---------------- "Estate Stock Pledge Agreement" means the Stock Pledge Agreement, ----------------------------- dated as of the Closing Date, between the Estate and Brunswick regarding the STI Shares. "Estate Subordinated Note" means the Subordinated Promissory Note, ------------------------ dated the Closing Date, made by Brunswick payable to the Estate in the principal amount of $4,700,000, and delivered by Brunswick to the Estate in partial payment of the Purchase Price. "Eurodollar Base Rate" means, with respect to any Borrowing of -------------------- Eurodollar Loans for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) which appears on Telerate Page 3750 for Dollar deposits comparable to the amount of such Borrowing in the London interbank market as of 11:00 a.m. London time (or as soon thereafter as practicable) on the date two (2) Business Days prior to the first day of such Interest Period having a term comparable to such Interest Period. If such Telerate Page is unavailable, the "Eurodollar Base Rate" shall mean with respect -------------------- to any Borrowing of Eurodollar Loans for any Interest Period therefor, the arithmetic average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the rates per annum which appear on the Reuters Screen LIBO Page, or if such Reuters Screen LIBO Page is unavailable, the "Eurodollar Base Rate" shall mean -------------------- with respect to any Borrowing of Eurodollar Loans for any Interest Period therefor, the arithmetic average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the rates per annum for Dollar deposits comparable to the amount of such Borrowing offered to each of the Reference Lenders in the London interbank market as of 11:00 a.m. London time (or as soon thereafter as practicable) on the date two (2) Business Days prior to the first day of such Interest Period of Dollar deposits having a term comparable to such Interest Period. "Eurodollar Loans" means Loans or portions thereof interest rates on ---------------- which are determined on the basis of the Eurodollar Rate. "Eurodollar Rate" means, with respect to any Borrowing of Eurodollar --------------- Loans for any Interest Period therefor, the rate per annum (rounded upward, if necessary, to the nearest 1/16 of 1%) determined by the Agent to be equal to (i) the Eurodollar Base Rate for such Borrowing for such Interest Period divided by ---------- (ii) one (1) minus the Reserve Requirement. The Eurodollar Rate for any Interest Period will be determined initially by the Agent on the basis of the Reserve Requirement in effect on the date two (2) Business Days prior to the commencement of such Interest Period and, from time to time thereafter during such Interest Period, such Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Requirement during such Interest Period. 10 "Event of Default" means any of the events set forth in Section 7.1. ---------------- ----------- "Excess Cash Flow" means, for any Fiscal Year, the excess of : (a) ---------------- Cash Flow for such Fiscal Year minus (b) the sum of (i) the lesser of the amount ----- ------ of Consolidated Capital Expenditures permitted during such Fiscal Year pursuant to Section 6.2.5 and actual Consolidated Capital Expenditures during such Fiscal ------------- Year, plus (ii) scheduled repayments of the Term Loan under clause (c) of ---- Section 3.3.1 during such Fiscal Year and scheduled repayments of other - ------------- Indebtedness permitted under Section 6.2.2 during such Fiscal Year. ------------- "Extension Criteria" means (1) all filings and registrations required ------------------ to be made with the Securities and Exchange Commission in connection with the Merger shall have been submitted and no stop order or other action which would unreasonably delay or prevent the effectiveness of any such filing or registration shall exist, (2) all procedural matters related to the Merger shall have been completed by the respective Boards of Directions of Brunswick and STI, including, without limitation, approving and authorizing the Merger, and (3) the Agent, based upon the advice of its counsel, shall have determined to its satisfaction that there are no material impediments to the orderly consummation of the Merger. "Facility Fee Letter" means the letter agreement, dated as of the ------------------- Closing Date, between ING and the Borrower. "Fair Saleable Value Balance Sheet" means, with respect to Brunswick --------------------------------- or STI, as the case may be, a hypothetical balance sheet of such Person, prepared by such Person based on the Closing Date Pro Forma Balance Sheet or the --- ----- Merger Pro Forma Balance Sheet, as applicable, setting forth (a) the assets of --- ----- such Person (restated at the fair saleable value thereof based upon such evidence of the fair saleable value thereof as such Person shall reasonably deem pertinent), (b) the liabilities of such Person (including all liabilities and obligations of such Person, fixed or contingent, direct or indirect, disputed or undisputed, and whether or not required to be reflected on a balance sheet prepared in accordance with GAAP), and (c) the excess of such assets over such liabilities. The amount of attributed contingent liabilities shall be discounted to reflect the likelihood that such liabilities shall become payable. "Federal Funds Rate" means, for any period, a fluctuating interest ------------------ rate per annum equal for each day during such period to: (a) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York; or 11 (b) if such rate is not so published for any day which is a Business Day, the arithmetic average of the quotations for such transactions received by the Agent, in its sole discretion, either from (i) three federal funds brokers of recognized standing selected by the Agent in its sole discretion or (ii) the Reference Lenders. "Financing Statements" means the financing statements under the -------------------- Uniform Commercial Codes of the applicable jurisdictions, filed with respect to the Security Documents pursuant to clause (c) of Section 4.1.8 or clause (c) or ------------- (d) of Section 4.2.9. ------------- "Fiscal Quarter" means any quarter of a Fiscal Year. -------------- "Fiscal Year" means, subject to Sections 6.2.16 and 9.14 (b), (a) at ----------- --------------- --------- any time prior to the Merger Consummation Date, the accounting period of Brunswick commencing on the Closing Date and ending on June 30, 1996 or, if Brunswick shall have changed its Fiscal Year end to July 31 as permitted under Section 6.2.16, July 31, 1996, and each twelve-month accounting period ending - -------------- June 30 or July 31, as the case may be, thereafter and (b) from and after the Merger Consummation Date, the accounting period of STI commencing on the Merger Consummation Date and ending on the first July 31 to occur thereafter, and each twelve-month accounting period ending on July 31 thereafter. References to a Fiscal Year with a number corresponding to any calendar year (e.g., the "1996 ---- Fiscal Year") refer to the Fiscal Year ending on a date in such calendar year. "Foreign Lender" means any Lender organized under the laws of a -------------- jurisdiction outside the United States. "F.R.S. Board" means the Board of Governors of the Federal Reserve ------------ System (or any successor). "GAAP" means generally accepted accounting principles in effect from ---- time to time in the United States. "Governmental Authority" means any nation or government, any state or ---------------------- other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "herein", "hereof", "hereto", "hereunder" and similar terms contained ------ ------ ------ --------- in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular Section, clause or provision of this Agreement or such other Loan Document. 12 "Inactive Subsidiaries" means, collectively, Brunswick Biomedical --------------------- Investment Corporation, a Massachusetts corporation, and Pharmapak, Inc., a Delaware corporation. "including" means including without limiting the generality of any --------- description preceding such term. "Indebtedness" of any Person means, without duplication: ------------ (a) all obligations of such Person for borrowed money (including all notes payable and drafts accepted representing extensions of credit) and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments on which interest charges are customarily paid; (b) all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and banker's acceptances issued for the account of such Person; (c) all Capitalized Lease Liabilities of such Person (to the extent required by GAAP to be included on the balance sheet of such Person); (d) whether or not so included as liabilities in accordance with GAAP (i) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable for other than borrowed money arising in the ordinary course of business) and indebtedness secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse, and (ii) all obligations of such Person in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise assure a creditor against loss in respect of, Indebtedness of another Person; (e) all net obligations of such Person under Interest Rate Contracts; and (f) all obligations of such Person to redeem, purchase or otherwise retire or extinguish any of its Stock at a fixed or determinable date (whether by operation of a sinking fund or otherwise), at another's option or upon the occurrence of a condition not solely within the control of such Person (e.g., ---- redemption from future earnings). "Indemnified Liabilities" has the meaning set forth in Section 9.4. ----------------------- ----------- 13 "ING" means Internationale Nederlanden (U.S.) Capital Corporation. --- "ING Alternate Base Rate" means a fluctuating rate of interest per ----------------------- annum equal to the higher of: (a) the arithmetic average of rates of interest announced by each of the Reference Lenders from time to time at such Reference Lender's principal New York City office as its prime (or base) rate for U.S. domestic commercial loans; and (b) the Federal Funds Rate from time to time in effect plus 1/2 of 1% (0.50%). Changes in the rate of interest on the Base Rate Loans shall take effect on the date of each change in the ING Alternate Base Rate. The Agent shall give notice promptly to the Borrower and the Lenders of changes in the ING Alternate Base Rate. "Instrument" means any contract, agreement, letter of credit, ---------- indenture, mortgage, deed, certificate of title, document or writing (whether by formal agreement, letter or otherwise) under which any obligation is evidenced, assumed or undertaken, any Lien (or right or interest therein) is granted or perfected, or any property (or right or interest therein) is conveyed. "Intellectual Property" means, collectively, (a) patents, patent --------------------- rights and patent applications, copyrights and copyright applications, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, applications for registration of trademarks, trade names and service marks, fictitious names registrations and trademark, trade name and servicemark registrations, including the names "Brunswick Biomedical Corporation", "Survival Technology, Inc." and all derivations thereof, and (b) patent licenses, trademark licenses, copyright licenses and other licenses to use any of the items described in clause (a), or any other items necessary to conduct or operate the business of the Borrower and its Subsidiaries. "Interest Coverage Ratio" means, for any period, the ratio of (a) ----------------------- EBITDA for such period to (b) Interest Expense during such period. "Interest Expense" means, for any period, the sum of (a) the ---------------- Borrower's consolidated interest expense accrued during such period in respect of all Indebtedness of the Borrower and its Subsidiaries, minus (b) the ----- Borrower's consolidated interest expense accrued during such period in respect of the Estate Subordinated Note and the Junior Subordinated Note to the extent that, in accordance with the terms of the Estate Subordinated Note and the Junior 14 Subordinated Note, such interest expense is added to the respective principal amounts thereof and is not paid by the Borrower in cash. "Interest Period" means, relative to any Eurodollar Loans comprising --------------- part of the same Borrowing, the period beginning on (and including) the date on which such Eurodollar Loans are made or continued as, or converted into, Eurodollar Loans pursuant to Section 3.1 or Section 3.4.4 and ending on (but ----------- ------------- excluding) the date which numerically corresponds to such date one, two, three or six months thereafter (or, if such month has no numerically corresponding date, on the last Business Day of such month), in either case as the Borrower may select in its relevant notice pursuant to Section 3.1 or Section 3.4.4; ----------- ------------- provided, however, that: - -------- ------- (a) the Borrower shall not be permitted to select Interest Periods to be in effect at any one time which have expiration dates occurring on more than three (3) dates with respect to the Term Loan and two (2) dates with respect to the Revolving Loans; (b) if such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next following Business Day (unless such next following Business Day is the first Business Day of a calendar month, in which case such Interest Period shall end on the Business Day next preceding such numerically corresponding date); (c) in the case of Interest Periods for Revolving Loans, no such Interest Period may end later than the Stated Maturity Date for Revolving Loans; and (d) in the case of Interest Periods for the Term Loan, no such Interest Period may end later than (i) the Stated Maturity Date of the Term Loan, or (ii) the date of any principal repayment with respect to the Term Loan as set forth in clause (c) of Section 3.3.1, if on such date the Borrower ------------- otherwise would be required to repay any portion of any Borrowing prior to the end of the Interest Period relative to such Borrowing. "Interest Rate Contract" means any interest rate cap agreement, ---------------------- interest rate collar agreement, interest rate swap agreement or other agreement or arrangement designed to protect against fluctuations in interest rates. "Interest Rate Contract Counterparty" means any counterparty to an ----------------------------------- Interest Rate Contract which the Borrower is required to enter into pursuant to Section 6.1.13. - -------------- "Internal Revenue Service" means the Internal Revenue Service of the ------------------------ United States of America. 15 "Investment" means, relative to any Person: ---------- (a) any loan or advance made by such Person to any other Person (excluding commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business); (b) any ownership or similar interest held by such Person in any other Person; and (c) the purchase of any debt or equity securities or instruments issued by any other Person (including, without limitation, Stock, notes, debentures, drafts and acceptances, trust certificates, partnership interests or units or membership interests in limited liability companies). The amount of any Investment of the nature referred to in clause (a) or (b) shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property. "IRC" means the Internal Revenue Code of 1986, as amended, and any --- successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of the IRC also refer to any successor sections. "Junior Subordinated Note" means the Subordinated Promissory Note, ------------------------ dated the Closing Date, made by Brunswick payable to EM Industries, Inc. in the principal amount of $1,000,000. "Lender" means any of the various lenders as are, or may become, ------ parties to this Agreement. "Lender Parties" means, collectively, the Agent and each Lender, and -------------- each of their respective successors and assigns, and each of the respective officers, directors, employees, attorneys and agents of the Agent and each Lender and of each of their respective successors and assigns, indemnified by the Borrower as provided in Section 9.4. ----------- "Lien" means any mortgage, pledge, hypothecation, assignment, charge, ---- deposit arrangement, encumbrance, lien (statutory or other), adverse claim or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including 16 any conditional sale or other title retention agreement, any financing lease involving substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC or comparable law of any jurisdiction). "Loan" means, as the context may require, the Bridge Loan, the Term ---- Loan or the Revolving Loans. "Loan Documents" means, collectively, this Agreement, the Notes, each -------------- Security Document, the Brunswick Subsidiary Guaranty, each Borrowing Request, any Interest Rate Contract entered into by the Borrower with a Lender that has executed and delivered to the Agent an acknowledgment in the form of Exhibit F, --------- each other Instrument executed and delivered by the Borrower or any of its Subsidiaries as of the date hereof or at any time thereafter and, from and after the Merger Consummation Date, the STI Subsidiary Guaranty, in connection with the transactions contemplated by this Agreement, in each case, as amended, modified or supplemented from time to time. "Loan Party" means any of the Borrower, its Subsidiaries and ---------- Affiliates which is a party to any of the Loan Documents. "Loss" means any loss, damage, destruction, theft, or seizure of, or ---- any other casualty with respect to, or any condemnation of, any property or asset of any Person in an amount in excess of $100,000 individually or $250,000 in the aggregate for any Fiscal Year; and the "amount" of any Loss means (i) if ------ such asset or property is repaired or replaced, the greater of (A) the cost to repair or replace the property or asset that was the subject of such Loss and (B) the amount of insurance proceeds or condemnation awards payable as a result of such Loss, and (ii) if such asset or property is not repaired or replaced, the amount of insurance proceeds or condemnation awards payable as a result of such loss. "Material Adverse Change" means a material adverse change in (a) the ----------------------- condition (financial or otherwise), operations, performance, business, properties or prospects of the Borrower and its Subsidiaries taken as a whole; or (b) the rights and remedies of the Lenders or the Agent under the Loan Documents; or (c) the ability of the Borrower to repay the Obligations or of the Borrower or any Subsidiary to perform their respective obligations under the Loan Documents; or (d) the legality, validity or enforceability of any Loan Document; or (e) the Liens granted the Agent pursuant to the Security Documents. "Maturity" means relative to any Loan or portion thereof, the earlier -------- of such Loan's Stated Maturity Date or such other date when such Loan or portion thereof shall be or 17 become due and payable in accordance with the terms of this Agreement, whether by required repayment, prepayment, declaration or otherwise. "Merger" means the merger of Brunswick with and into STI with STI ------ being the surviving corporation. "Merger Consummation Date" means the date on which the Merger has been ------------------------ consummated and all conditions set forth in Section 4.2 and Section 4.3 have ----------- ----------- been satisfied or waived in writing by the Lenders and the Agent. "Merger Pro Forma Balance Sheet" means the pro forma balance sheet of ------------------------------ --- ----- the Borrower as of the Merger Consummation Date, prepared by the Borrower based upon the financial statements described in clause (a) of Section 5.4, and after ----------- giving effect to the transactions contemplated by this Agreement to occur on the Merger Consummation Date, including the consummation of the Merger, the conversion of $10,000,000 of the Bridge Loan into the Term Loan and the making of the Revolving Loans to be made on the Merger Consummation Date. "Monthly Payment Date" means the last day of each calendar month or, -------------------- if such day is not a Business Day, the immediately preceding Business Day. "Mortgage" means any mortgage, deed of trust, deed to secure debt, -------- leasehold mortgage, leasehold deed of trust or leasehold deed to secure debt covering real property, as such instruments are originally executed or supplemented, amended, renewed, extended or otherwise modified from time to time. "Multiemployer Pension Plan" means a Multiemployer Plan which is -------------------------- subject to Subtitle E of Title IV of ERISA. "Multiemployer Plan" means a Plan which is a "multiemployer plan" ------------------ within the meaning of Section 3(37) of ERISA. "Net Disposition Proceeds" means, with respect to any disposition of ------------------------ the assets of the Borrower or any Subsidiary (including the disposition by Brunswick of any Stock of STI other than as a result of the Merger), the excess of: (a) the gross cash proceeds received by the Borrower or any Subsidiary from such disposition (including any cash proceeds subsequently received in respect of notes and other non-cash proceeds received by the Borrower or any of its Subsidiaries from such disposition), minus (b) the sum of (i) all reasonable ----- out-of-pocket fees 18 and expenses incurred in connection therewith, plus (ii) all taxes paid or ---- payable in connection with such sale. "Net Income" means, as to any Person, for any period, the net income ---------- (or loss) of such Person for such period, determined in accordance with GAAP, but excluding extraordinary gains or losses for such period. "Net Securities Proceeds" means, with respect to the issuance or sale ----------------------- by the Borrower or any Subsidiary of any equity or debt securities (not including upon the exercise of existing stock options or employee stock options, the issuance of equity securities pursuant to any dividend reinvestment plan or the incurrence of Indebtedness to finance Consolidated Capital Expenditures to the extent permitted under Section 6.2.2), the excess of: (a) the gross cash ------------- proceeds received by the Borrower or any Subsidiary from such issuance and sale; minus (b) all reasonable out-of-pocket fees and expenses incurred in connection - ----- with such issuance and sale; minus (c) the amount of such proceeds required to ----- be applied to the prepayment of the Estate Subordinated Note pursuant to Section 4 of the Estate Subordinated Note as in effect on the Closing Date. "Note" means, as the context may require, any Bridge Note, Term Note ---- or Revolving Note. "Notes" means, collectively, the Bridge Notes, the Term Notes and the ----- Revolving Notes. "Obligations" means all payment and performance obligations of the ----------- Loan Parties (monetary or otherwise) arising under or in connection with this Agreement, the Notes and the other Loan Documents. "Organic Document" means, relative to any Person, its articles or ---------------- certificate of incorporation or organization or certificate of limited partnership, its bylaws, partnership or operating agreement or other organizational documents, and all stockholders agreements, voting trusts and similar arrangements applicable to any of its Stock or partnership interests or other ownership interests. "Participant" means the banks or other entities that purchase ----------- participating interests in any Loan, Note, Revolving Loan Commitment or other interest hereunder, as provided in clause (a) of Section 9.11. ------------ 19 "PBGC" means the Pension Benefit Guaranty Corporation and any entity ---- succeeding to any or all of its functions under ERISA. "Pension Plan" means any Plan which is subject to the provisions of ------------ Title IV of ERISA, or to the provisions of Section 302 of ERISA or Section 412 of the IRC. "Percentage" means, as the context requires, either (a) the Bridge ---------- Percentage, (b) the Revolving Percentage, (c) the Term Percentage or (d) all of the above. "Person" means any natural person, corporation, partnership, limited ------ liability company, firm, association, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity. "Plan" shall mean, at a particular time, any employee benefit plan ---- (within the meaning of Section 3(3) of ERISA), which is covered by ERISA and in respect of which the Borrower, a Subsidiary or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Plan Reorganization" means with respect to any Multiemployer Pension ------------------- Plan, the condition that such plan is in reorganization within the meaning of such term as used in Section 4241 of ERISA. "Plan Reportable Event" means (i) a reportable event described in --------------------- Section 4043 of ERISA and regulations thereunder (other than any reportable event described in Section 4043(b)(2) or (7)), (ii) a withdrawal by a "substantial employer" (within the meaning of Section 4001(a)(2) of ERISA) from a Single Employer Plan to which more than one employer contributes, as referred to in Section 4063(b) of ERISA, or (iii) a cessation of operations at a facility causing more than twenty percent (20%) of participants under a Single Employer Plan to be separated from employment, as referred to in Section 4062(e) of ERISA. "Pledge Agreement" means any of the Brunswick Pledge Agreement or the ---------------- STI Pledge Agreement. "Post-Default Rate" means (a) in the case of each Loan, the sum of the ----------------- rate per annum otherwise applicable to such Loan from time to time plus two ---- percent (2%) per annum and (b) in the case of all other Obligations, the sum of the highest rate per annum then applicable to any Loan (other than by application of the Post-Default Rate) plus two percent (2%) per annum. ---- 20 "Pro Forma Balance Sheets" means the Closing Date Pro Forma Balance ------------------------ --- ----- Sheet, the Trial Merger Pro Forma Balance Sheet, and the Merger Pro Forma --- ----- --- ----- Balance Sheet. "Projections" means the projected balance sheets and statements of ----------- operations and changes in cash flows of the Borrower (after giving effect to the Merger) for the Fiscal Years 1997 - 1999 inclusive, prepared by the Borrower on an annual basis for the 1997 - 1999 Fiscal Years, together with supporting details and a statement of underlying assumptions, which have been delivered to the Lenders prior to the Closing Date. "Purchase Money Indebtedness" means Indebtedness incurred to finance --------------------------- part or all of (but not more than) the purchase price of equipment in which neither the Borrower nor any of its Subsidiaries had an interest at any time prior to such purchase. "Purchase Price" means "Purchase Price" as that term is defined in the -------------- Acquisition Agreement. "Purchasing Lender" means any Person purchasing all or any part of the ----------------- rights and obligations under this Agreement and the Notes of any Lender pursuant to a Transfer Supplement in accordance with Section 9.11. ------------ "Quarterly Payment Date" means the last day of each March, June, ---------------------- September and December or, if such day is not a Business Day, the immediately preceding Business Day. "Reference Lenders" means, collectively, The Chase Manhattan Bank, ----------------- N.A., Citibank, N.A. and Morgan Guaranty Trust Company of New York. "Register" means the register for the recordation of the names and -------- addresses of the Lenders and the Revolving Loan Commitment of, and the principal amounts of the Loans owing to, each Lender from time to time, as provided in clause (c) of Section 9.11. ------------ "Regulatory Approval" means each and every approval, consent, filing ------------------- and registration by or with any federal, state or other regulatory authority (domestic or foreign) necessary to authorize or permit the execution, delivery or performance of this Agreement, the Notes or any other Loan Document, for the granting of any security contemplated hereby or thereby, for the validity or enforceability hereof or thereof, or for the consummation of the transaction contemplated by the Loan Documents, including, without limitation, the Acquisition and the Merger. 21 "Regulatory Change" means, as to any or all of the Lenders or the ----------------- Agent, the adoption of or any change in (including, without limitation, any change in the interpretation of) any: (a) United States federal or state law or foreign law applicable to the Agent or such Lender; or (b) regulation, interpretation, directive, guideline or request (whether or not having the force of law) applicable to the Agent or such Lender of any court or Governmental Authority charged with the interpretation or administration of any law referred to in clause (a) or of any central bank or fiscal, monetary or other authority having jurisdiction over the Agent or such Lender. "Required Lenders" means, as the context may require at any time, ---------------- Lenders having, in the aggregate, 66-2/3% or more of (a) the Bridge Loans at any time prior to the Merger Consummation Date, and (b) the Revolving Loan Commitment, the Revolving Loans and the Term Loan on and after the Merger Consummation Date. "Requirements of Law" means, as to any Person, the Organic Documents ------------------- of such Person, and all federal, state and local laws, rules, regulations, orders, decrees or other determinations of an arbitrator, court or other Governmental Authority, including, without limitation, all disclosure and other requirements of ERISA, the requirements of Environmental Laws and Environmental Permits, the requirements of OSHA, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Reserve Requirement" means, relative to any Interest Period for any ------------------- Eurodollar Loans, from time to time during such Interest Period, the reserve percentage (expressed as a decimal) equal to the maximum aggregate reserve requirements (including all basic, emergency, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements) specified under regulations issued from time to time by the F.R.S. Board and then applicable to assets or liabilities consisting of or including "Eurodollar Liabilities", as currently defined under Regulation D of the F.R.S. Board, having a term approximately equal or comparable to such Interest Period. "Responsible Officer" means the chief executive officer, the chief ------------------- operating officer and the chief financial officer of the Borrower. 22 "Revolving Loan" means, relative to any Lender, any loan made by such -------------- Lender to the Borrower pursuant to Section 2.2.2. ------------- "Revolving Loan Availability" means, on any date, the excess of (a) --------------------------- the Revolving Loan Commitment Amount minus (b) the then aggregate principal ----- amount of all outstanding Revolving Loans. "Revolving Loan Commitment" means the collective commitments of the ------------------------- Lenders to make Revolving Loans pursuant to Section 2.2.2 if the conditions set ------------- forth in Section 4.2 and Section 4.3 are met. ----------- ----------- "Revolving Loan Commitment Amount" means $5,000,000. -------------------------------- "Revolving Loan Commitment Termination Date" means the earliest of: ------------------------------------------ (a) the Stated Maturity Date for Revolving Loans; (b) immediately and without further action upon the occurrence of any Event of Default described in Section 7.1.4; ------------- (c) immediately when any other Event of Default shall have occurred and be continuing and either: (i) the Revolving Loans shall be declared to be due and payable pursuant to Section 7.3; or ----------- (ii) in the absence of such declaration, the Agent, acting at the direction of the Required Lenders, shall give notice to the Borrower that the Revolving Loan Commitment has been terminated; and (d) immediately upon the occurrence of a Change in Control. "Revolving Note" means a promissory note of the Borrower dated the -------------- date hereof and substantially in the form of Exhibit C-2, and shall also refer ----------- to all other promissory notes accepted from time to time in substitution therefor or renewal thereof. "Revolving Percentage" of any Lender means, at any time, in respect of -------------------- the Revolving Loan Commitment and the Revolving Loans, the percentage set forth opposite such 23 Lender's signature hereto under the caption "Percentage," as the same may be adjusted pursuant to Section 9.11. ------------ "Secretary" means, with respect to any Person, the secretary, --------- assistant secretary, clerk, assistant clerk or comparable officer of such Person. "Security Documents" means, collectively, the Brunswick Pledge ------------------ Agreement, the Brunswick Security Agreement, the Brunswick Patent Agreement, the Brunswick Trademark Assignment, the Technology Patent Assignment, the Technology Trademark Assignment, the Cash Reserve Account Agreement, the assignment of the Interest Rate Contracts described in Section 6.1.13, the collateral assignment -------------- of the Estate Registration Rights Agreement described in clause (g) of Section ------- 4.1.8, the collateral assignment of rights under Acquisition Agreement and all - ----- other documents described in clause (f) of Section 4.1.8, each other Instrument ------------- at any time delivered in connection with this Agreement to secure the Obligations and, from and after the Merger Consummation Date, the Assumption Agreement, the STI Security Agreement, STI Patent Assignment, STI Trademark Assignment, the STI Pledge Agreement, the Mortgages described in clause (h) of Section 4.2.9, the Share Charge and the assignment of "key-man" life insurance - ------------- described in clause (i) of Section 4.2.9. ------------- "Senior Debt Leverage Ratio" means, for any period, the ratio of (a) -------------------------- the aggregate outstanding principal amount of the Loans as of the last day of such period to (b) EBITDA for such period. "Senior Debt Service" means, for any period, the sum of (a) Interest ------------------- Expense with respect to the Loans during such period, plus (b) principal repayments, if any, of the Loans during such period required to be made pursuant to clause (c) of Section 3.3.1. ------------- "Senior Debt Service Ratio" means, for any period, the ratio of (a) ------------------------- EBITDA for such period to (b) Senior Debt Service for such period. "Share Charge" means the Share Charge, dated the Merger Consummation ------------ Date, made by STI in favor of the Agent, for its benefit and the ratable benefit of the Lenders, in respect of all of the outstanding shares of STI International Limited held by STI, in form and substance satisfactory to the Agent. "Single Employer Plan" means any Plan which is covered by Title IV of -------------------- ERISA, other than a Multiemployer Plan. 24 "Solvent" means, with respect to any Person on a particular date, that ------- on such date (i) the fair value of the assets of such Person (both at fair valuation and at present fair saleable value) is, on the date of determination, greater than the total amount of liabilities of such Person (including all liabilities and obligations of such Person, fixed or contingent, direct or indirect, disputed or undisputed, and whether or not required to be reflected on a balance sheet prepared in accordance with GAAP), (ii) such Person is able to pay all liabilities of such Person as they mature, and (iii) such Person does not have unreasonably small capital with which to carry on its business. The amount attributed to contingent liabilities shall be discounted to reflect the likelihood that such liabilities shall become payable. "Stated Maturity Date" means, (a) with respect to the Bridge Loan, -------------------- October 15, 1996, unless the Borrower requests a ninety-day extension in writing and the Extension Criteria have been met, in which case the Stated Maturity Date shall be January 15, 1997, and (b) with respect to the Term Loan and the Revolving Loans, the fifth anniversary of the Merger Consummation Date. "STI" means Survival Technology, Inc., a Delaware corporation. --- "STI Patent Assignment" means, collectively, each Collateral --------------------- Assignment and Security Agreement (Patents), dated as of the Merger Consummation Date, in substantially the form of the Brunswick Patent Assignment, made by STI or one of its Subsidiaries in favor of the Agent, for its benefit and the ratable benefit of the Lenders, as originally in effect on the Merger Consummation Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect. "STI Pledge Agreement" means the Stock and Notes Pledge Agreement, -------------------- dated as of the Merger Consummation Date, in substantially the form of the Brunswick Pledge Agreement, made by STI in favor of the Agent, for itself and the ratable benefit of the Lenders, as originally in effect on the Merger Consummation Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect, pursuant to which STI shall pledge to the Agent all of the issued and outstanding stock of its Subsidiaries located in the United States and all promissory notes and other instruments and securities held by STI, as security for the Obligations. "STI Security Agreement" means the Security Agreement, dated as of the ---------------------- Merger Consummation Date, in substantially the form of the Brunswick Security Agreement, made by STI and each of its Subsidiaries located in the United States (other than the Inactive Subsidiaries) in favor of the Agent, for its benefit and the ratable benefit of the Lenders, as originally in effect 25 on the Merger Consummation Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect. "STI Subsidiary Guaranty" means the Subsidiary Guaranty, dated as of ----------------------- the Merger Consummation Date, in substantially the form of the Brunswick Subsidiary Guaranty, made by each Subsidiary (other than the Inactive Subsidiaries) of STI located in the United States in favor of the Agent and the Lenders, as originally in effect on the Merger Consummation Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect. "STI Shares" means the 1,888,126 shares of Common Stock, $.10 par ---------- value, of STI purchased by Brunswick pursuant to the Acquisition Agreement. "STI Trademark Assignment" means, collectively, each Collateral ------------------------ Assignment and Security Agreement (Trademarks), dated as of the Merger Consummation Date, in substantially the form of the Brunswick Trademark Assignment, made by STI or one of its Subsidiaries in favor of the Agent, for its benefit and the ratable benefit of the Lenders, as originally in effect on the Merger Consummation Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect. "Stock" means all shares of capital stock of or in a corporation, ----- whether voting or non-voting, and including, without limitation, common stock and preferred stock. "Subsidiary" of any corporation means any other corporation greater ---------- than 50% of the outstanding shares of Stock of which having ordinary voting power for the election of directors is owned directly or indirectly by such corporation, and, except as otherwise indicated herein, references to Subsidiaries shall refer to Subsidiaries of the Borrower. Unless otherwise indicated, references to Subsidiaries of Brunswick on the Closing Date and as of any time thereafter, but prior to the Merger Consummation Date, shall include STI and its Subsidiaries. "Subsidiary Note" means a promissory note made by a Subsidiary payable --------------- to the Borrower and meeting the requirements of Section 6.2.7(e). ---------------- "Taxes" means all taxes, levies, imposts, deductions, charges or ----- withholdings, and all liabilities with respect thereto, excluding, in the case --------- of each Lender and the Agent, taxes imposed on or measured by its net income and franchise taxes imposed on it. "Technology" means Brunswick Biomedical Technologies, Inc., a ---------- Massachusetts corporation and a Subsidiary of the Borrower. 26 "Technology Patent Assignment" means the Collateral Assignment and ---------------------------- Security Agreement (Patents), dated as of the Closing Date, made by Technology in favor of the Agent, for its benefit and the ratable benefit of the Lenders, as originally in effect on the Closing Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect. "Technology Trademark Assignment" means the Collateral Assignment and ------------------------------- Security Agreement (Trademarks), dated as of the Closing Date, made by Technology in favor of the Agent, for its benefit and the ratable benefit of the Lenders, as originally in effect on the Closing Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified and in effect. "Term Loan" means, collectively, the loans, in an aggregate principal --------- amount equal to $10,000,000, to be converted from $10,000,000 of the outstanding principal balance of the Bridge Loan on the Merger Consummation Date pursuant to Section 2.2.1. - ------------- "Term Loan Commitment" means the collective commitments of the Lenders -------------------- to extend the Term Loan pursuant to Section 2.2.1 by converting $10,000,000 of ------------- the outstanding principal balance of the Bridge Loan into the Term Loan on the Merger Consummation Date if the conditions set forth in Section 4.2 and Section ----------- ------- 4.3 are met. - --- "Term Note" means a promissory note of the Borrower dated the date --------- hereof and substantially in the form of Exhibit C-3, and shall also refer to all ----------- other promissory notes accepted from time to time in substitution therefor or renewal thereof. "Term Percentage" of any Lender means, at any time, in respect of the --------------- Term Loan, the percentage set forth opposite such Lender's signature hereto under the caption "Percentage," as the same may be adjusted pursuant to Section ------- 9.11. - ---- "Total Debt Leverage Ratio" means, for any period, the ratio of (a) ------------------------- the aggregate outstanding principal amount of all Indebtedness of the Borrower and its Subsidiaries as of the last day of such period to (b) EBITDA for such period. "Transfer Supplement" means a Transfer Supplement, substantially in ------------------- the form of Exhibit G, executed pursuant to Section 9.11. --------- ------------ "Trial Merger Pro Forma Balance Sheet" means the pro forma balance ------------------------------------ --- ----- sheet of the Borrower, assuming the Merger will occur on August 1, 1996, prepared by Brunswick based 27 on the financial statements described in clauses a(i)-(iv) of Section 5.4 and ----------- the Projections and after giving effect to the transactions contemplated to occur on the Closing Date. "type" means, relative to any Borrowing or Loan, the portion thereof ---- being maintained as a Base Rate Loan or a Eurodollar Rate Loan. "UCC" means the Uniform Commercial Code of any applicable --- jurisdiction, as in effect from time to time. "United States" or "U.S." means the United States of America, its 50 ------------- ---- States and the District of Columbia. "Written" or "in writing" means any form of written communication or a ------- ---------- communication by means of telephonic facsimile device. SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the -------------------- context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in the Disclosure Schedule and each Note, Borrowing Request, Compliance Certificate, Continuation/Conversion Notice, notice and other communication delivered from time to time in connection with this Agreement or any other Loan Document. SECTION 1.3 Cross-References. Unless otherwise specified, ---------------- references in this Agreement and in each other Loan Document to any Article or Section are references to such Article or Section of this Agreement or such other Loan Document, as the case may be, and unless otherwise specified, references in any Article, Section, or definition to any clause are references to such clause of such Section, Article or definition. SECTION 1.4 Accounting and Financial Determinations. Unless --------------------------------------- otherwise specified, all accounting terms used herein or in any other Loan Document shall be interpreted, all accounting determinations and computations hereunder or thereunder shall be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared in accordance with GAAP. 28 ARTICLE 2 COMMITMENTS SECTION 2.1 Bridge Loan. Subject to the terms and conditions of this ----------- Agreement, each Lender severally and for itself alone agrees to make a single Loan to the Borrower on the Closing Date equal to its Bridge Percentage of $11,000,000. SECTION 2.2 Term Loan and Revolving Loan Commitment. Subject to the --------------------------------------- terms and conditions of this Agreement, each Lender severally and for itself alone agrees to make its Term Percentage of the Term Loan described in Section ------- 2.2.1 and to provide its Revolving Percentage of the Revolving Loan Commitment - ----- described in Section 2.2.2. ------------- SECTION 2.2.1 Term Loan. On the Merger Consummation Date, each --------- Lender will convert a portion of the Bridge Loan equal to its Term Percentage of $10,000,000, which portion shall thereafter constitute such Lender's portion of the Term Loan. SECTION 2.2.2 Revolving Loan Commitment. Each Lender will, from time ------------------------- to time on any Business Day occurring during the period commencing on the Merger Consummation Date and continuing to (but not including) the Revolving Loan Commitment Termination Date, make Revolving Loans to the Borrower equal to its Revolving Percentage of the aggregate amount of any Borrowing of Revolving Loans requested by the Borrower to be made on such Business Day in accordance with Section 3.1. - ----------- SECTION 2.2.3 Limitations on Revolving Credit Commitment. No Lender ------------------------------------------ shall be required to make any Revolving Loan, if after giving effect thereto: (a) the then aggregate outstanding principal amount of all Revolving Loans would exceed the Revolving Loan Commitment Amount less the amount of reserves established by the Agent pursuant to Section 2.3; or ----------- (b) the then aggregate outstanding principal amount of such Lender's Revolving Loans would exceed its Revolving Percentage of an amount equal to the Revolving Loan Commitment Amount less the amount of reserves established by the Agent pursuant to Section 2.3. ----------- Subject to the terms hereof, the Borrower may from time to time borrow, prepay and reborrow Revolving Loans, in all cases pursuant to the Revolving Loan Commitment. 29 SECTION 2.3 Establishment of Reserves. The Agent shall have the ------------------------- right to establish, in such amounts, and with respect to such matters, as the Agent, based on the Agent's customary credit considerations, shall deem necessary or appropriate, reserves with respect to (i) Charges and Liens; (ii) Environmental Liabilities and Costs, (iii) sums as to which the Agent and the Lenders are permitted to make Revolving Loans on the Borrower's behalf under Section 3.3.3 of this Agreement; and (iv) by thirty (30) days prior written - ------------- notice by the Agent to the Borrower, such other matters, events, conditions or contingencies as to which the Agent, based on the Agent's customary credit considerations, reasonably determines reserves should be established from time to time hereunder. SECTION 2.4 Commitment Fee. The Borrower agrees to pay to the Agent, -------------- for the account of each Lender, a nonrefundable fee for the period from the Closing Date to and including the Revolving Loan Commitment Termination Date, equal to such Lender's Revolving Percentage of one-half of one percent (0.50%) per annum of the difference between (A) the Revolving Loan Commitment Amount and (B) the average daily aggregate outstanding principal amount of all Revolving Loans. The fee described in this Section 2.4 shall be calculated on a daily ----------- basis and shall be payable by the Borrower in arrears on each Monthly Payment Date and on the Revolving Loan Commitment Termination Date. SECTION 2.5 Increased Costs; Capital Adequacy. (a) The Borrower --------------------------------- shall pay to each Lender from time to time on demand such amounts as such Lender may determine to be reasonably necessary to compensate it or its holding company for any costs which such Lender determines are attributable to its making or maintaining Loans, or maintaining Commitments hereunder or its obligation to make any such Loans hereunder, or any reduction in any amount receivable by such Lender hereunder in respect of any such Loans, Commitments or obligation, in each case resulting from any Regulatory Change which: (i) changes the basis of taxation of any amounts payable to such Lender under this Agreement in respect of any of such Loans or Commitments (other than taxes imposed on or measured by the overall net income of such Lender or of its Applicable Lending Office); or (ii) imposes or modifies any reserve, special deposit, deposit insurance or assessment, minimum capital, capital ratio or similar requirements relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, such Lender or any holding company of such bank (including, without limitation, a request or requirement which affects the manner in which any Lender or the holding company of any thereof allocates capital resources to commitments, including the Commitments and obligations of such Lender hereunder). Each Lender will notify the Borrower of any event occurring after the date of this Agreement which will entitle such Lender to compensation pursuant to this clause (a) as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. 30 (b) Without limiting the effect of the foregoing provisions of this Section 2.5 (but without duplication), the Borrower shall pay to each Lender - ----------- from time to time upon demand by such Lender such amounts as the Lender may determine to be reasonably necessary to compensate such Lender for any costs which it determines are attributable to the maintenance by it or its holding company, pursuant to any law or regulation of any jurisdiction or any interpretation, directive or request (whether or not having the force of law) of any court or governmental or monetary authority, whether in effect on the date of this Agreement or thereafter, of capital in respect of its Loans its obligation to make the Loans hereunder (such compensation to include, without limitation, an amount equal to any reduction in return on assets or equity of such Lender or its holding company to a level below that which it could have achieved but for such law, regulation, interpretation, directive or request). The Lender will notify the Borrower with a copy to the Agent) if it is entitled to compensation pursuant to this clause (b) as promptly as practicable after it determines to request such compensation. (c) Each notice delivered by any Lender pursuant to this Section 2.5 ----------- shall contain a statement of such Lender as to any such additional amount or amounts (including calculations thereof in reasonable detail) which shall, in the absence of manifest error, be conclusive of the matters stated therein and be binding upon the Borrower. In determining such amount, any Lender may use any method of averaging and attribution that it in good faith shall deem applicable. (d) Upon the receipt by the Borrower from any Lender of a claim for compensation pursuant to this Section 2.5, the Borrower may obtain a replacement ----------- bank, financial institution or other lender satisfactory to the Borrower and the Agent to acquire and assume all or part of such affected Lender's Loans and Commitments and such affected Lender shall transfer all or such part of its Loans and Commitments upon receipt of the purchase price therefor (which shall equal the outstanding principal amount of its Loans plus all accrued and unpaid interest and fees to the date of purchase, plus all other amounts owing by the Borrower) to such affected Lender under this Agreement. Any such replacement bank, financial institution or other lender shall be subject to the prior written consent of the Agent, which consent shall not be unreasonably withheld. 31 ARTICLE 3 LOANS AND NOTES SECTION 3.1 Borrowing Procedure. By delivery of a Borrowing Request ------------------- to the Agent on or before 11:00 a.m., New York City time, on any day, the Borrower may request that the Bridge Loan be made on such day. By delivering a Borrowing Request to the Agent at the Agent's Atlanta Office on or before 11:00 a.m., New York City time, on a Business Day, the Borrower may (a) request, on not less than one (1) Business Day's advance notice in the case of Base Rate Loans and not less than three (3) Business Days' advance notice in the case of Eurodollar Loans, that the Term Loan be made on the Merger Consummation Date; and (b) from time to time request, on not less than one (1) nor more than three (3) Business Days' notice, in the case of Base Rate Loans, and not less than three (3) nor more than five (5) Business Days' notice in the case of Eurodollar Loans, that a Borrowing of Revolving Loans be made on the Business Day specified in such Borrowing Request. Borrowings of Base Rate Loans shall be in a minimum aggregate amount equal to $250,000 and in integral multiples of $50,000 or, if less, the amount of the Revolving Loan Availability immediately prior to such Borrowing. Borrowings of Eurodollar Loans shall be in a minimum aggregate amount of $500,000 and in integral multiples of $100,000. The Term Loan shall be made on the Merger Consummation Date, and each Revolving Loan shall be made on the Business Day specified in the Borrowing Request therefor, which Business Day shall be on or after the Merger Consummation Date. On such Business Day, each Lender shall, on or before 2:00 p.m., New York City time, deposit same day funds with the Agent in an amount equal to such Lender's Percentage of the requested Borrowing, such deposit to be made to such account as the Agent shall specify from time to time by notice to the Lenders. The proceeds of all Borrowings shall be made available to the Borrower by wire transfer of such proceeds to such transferees, or to such accounts of the Borrower, as the Borrower shall have specified in the Borrowing Request therefor; provided, -------- however, that in each case the Agent shall be required to make available to the - ------- Borrower the proceeds of any Borrowing only to the extent received by it in same day funds from the Lenders. No Lender's obligation to make any Loan shall be affected by any other Lender's failure to make any Loan. SECTION 3.2 Notes. All Loans made by each Lender shall be evidenced: ----- (a) in the case of such Lender's portion of the Bridge Loan, by a Bridge Note payable to the order of such Lender in a principal amount equal to such Lender's Bridge Percentage of the Bridge Loan; 32 (b) in the case of such Lender's portion of the Term Loan, by a Term Note payable to the order of such Lender in a principal amount equal to such Lender's Term Percentage of the Term Loan; and (c) in the case of such Lender's Revolving Loans, by a Revolving Note payable to the order of such Lender in a principal amount equal to such Lender's Revolving Percentage of the Revolving Loan Commitment Amount. The Borrower hereby irrevocably authorizes each Lender to make (or cause to be made) appropriate notations on a grid schedule attached to such Lender's Revolving Note (or on a continuation of any such grid attached to any Revolving Note and made a part thereof), which notations shall evidence, inter alia, the ---------- date and outstanding principal amount of the Revolving Loans evidenced thereby. The notations on any such grid (and on any such continuation) indicating the outstanding principal amount of such Lender's Revolving Loans shall be presumptive evidence of the principal amount thereof owing and unpaid, but the failure to record any such amount on any such grid (or on any such continuation) shall not limit or otherwise affect the obligations of the Borrower hereunder or under such Note to make payments of principal of or interest on such Loans when due. SECTION 3.3 Principal Payments. Repayments and prepayments of ------------------ principal of the Loans shall be made in accordance with this Section 3.3. ----------- SECTION 3.3.1 Repayments and Prepayments. The Borrower will make -------------------------- payment in full of all unpaid principal of each Loan at its Stated Maturity Date (or such earlier date as such Loan may become or be declared due and payable pursuant to Article 7). Prior thereto, the Borrower: --------- (a) may, from time to time on any Business Day, make a voluntary prepayment, in whole or in part, of the outstanding principal amount of any Loans; provided, however, that (i) as to partial prepayments of the Bridge Loan -------- ------- or the Term Loan, all such voluntary prepayments shall require at least three (3) Business Days prior notice to the Agent, (ii) as to the Bridge Loan, the Term Loan and the Revolving Loans, all such voluntary prepayments shall be in a minimum amount of $50,000 (subject to the Borrower's right to prepay in full the entire unpaid principal amount of the Bridge Loan, the Term Loan or the Revolving Loans, as the case may be), and (iii) as to the voluntary prepayment in full of the Bridge Loan and the Term Loan and the termination of the Revolving Loan Commitment, such prepayment shall require at least five (5) Business Days prior written notice to the Agent; 33 (b) shall, on any Business Day on which the aggregate outstanding principal amount of all Revolving Loans exceeds the Revolving Loan Commitment Amount, make a mandatory prepayment of the outstanding principal amount of Revolving Loans in an amount equal to such excess amount; (c) shall, on each Quarterly Payment Date, commencing on the third (3rd) Quarterly Payment Date occurring after the Merger Consummation Date, make a scheduled payment of a portion of the outstanding principal amount of the Term Loan in an amount equal to the lesser of (i) the outstanding principal balance ------ of the Term Loan, and (ii) the amount shown below opposite each such Quarterly Payment Date:
Quarterly Quarterly Payment Dates Occur- Principal ring During the Period from: Payment - ------------------------------ -------- Merger Consummation Date through but excluding the first anniversary of the Merger Consummation Date $250,000 First anniversary of the Merger Consummation Date through but excluding the second anniversary of the Merger Consummation Date $500,000 Second anniversary of the Merger Consummation Date through but excluding the third anniversary of the Merger Consummation Date $500,000 Third anniversary of the Merger Consummation Date through but excluding the fourth anniversary of the Merger Consummation Date $625,000 Fourth anniversary of the Merger Consummation Date through and including the Stated Maturity Date for the Term Loan $750,000
(d) shall, concurrently with the receipt by the Borrower or any Subsidiary of any Net Disposition Proceeds (other than from dispositions of assets permitted under clause (a) of Section 6.2.11) which in the aggregate -------------- equal or exceed $250,000 in any Fiscal Year, if received prior to the Merger Consummation Date, make a mandatory prepayment of the Bridge 34 Loan, and if received after the Merger Consummation Date, make a mandatory prepayment of the Term Loan, in each case in an aggregate amount equal to such Net Disposition Proceeds; provided that this clause (d) of Section 3.3.1 shall -------- ------------- not in any event be deemed a consent to any disposition by the Borrower or any Subsidiary which is otherwise prohibited by the terms of this Agreement or of any of the other Loan Documents; (e) shall, concurrently with the receipt by the Borrower or any Subsidiary of any Net Securities Proceeds, if received prior to the Merger Consummation Date make a mandatory prepayment of the Bridge Loan, and if received after the Merger Consummation Date make a mandatory prepayment of the Term Loan, in each case in an aggregate amount equal to such Net Securities Proceeds; provided that this clause (e) of Section 3.3.1 shall not in any event -------- ------------- be deemed a consent to any issuance of Stock or the incurrence of Indebtedness by the Borrower or any Subsidiary which is otherwise prohibited by the terms of this Agreement or of any of the other Loan Documents; (f) shall, concurrently with the delivery of the financial information required under clause (a)(i) of Section 6.1.1 (but in no event later than the ------------- date such information is required to be delivered), make a mandatory prepayment of a portion of the outstanding principal amount of the Term Loan in an amount equal to 75% of Excess Cash Flow for the Fiscal Year with respect to which such financial information was delivered or is required to be delivered; (g) shall, within 180 days after receipt by the Borrower or any Subsidiary or the Agent of any condemnation awards with respect to any Loss, make a mandatory prepayment of the Loans in an amount by which such condemnation awards exceed the actual cost incurred to replace or restore the property or asset which was the subject of such Loss as nearly as practicable to conditions prior to such Loss; (h) shall, within 180 days after receipt by the Borrower or any Subsidiary or the Agent of any insurance proceeds with respect to any Loss resulting from a casualty, make a mandatory prepayment of the Loans in an amount by which such insurance proceeds exceed the actual cost incurred by the Borrower or such Subsidiary to repair or replace the property or asset which was the subject of the Loss or deemed Loss giving rise to such insurance proceeds; (i) shall, within 180 days after receipt by the Borrower or any Subsidiary or the Agent of any insurance proceeds with respect to any Loss resulting from a liability, make a mandatory prepayment of the Loans in an amount by which such insurance proceeds exceed the amount of the liability to be satisfied with such proceeds (to the extent such liability is so satisfied); 35 (j) shall, concurrently with the receipt by the Borrower of any proceeds of the life insurance policies described in clause (c) of Section ------- 6.1.5, make a mandatory prepayment of the Loans in an amount equal to the amount - ----- of such insurance proceeds; (k) shall, concurrently with the receipt by the Borrower of any amount payable by the Estate to the Borrower pursuant to or as a result of the breach by the Estate of the Acquisition Agreement, make a mandatory prepayment in an aggregate amount equal to the amount so received; (l) shall, on the earlier of the Merger Consummation Date or the Stated Maturity Date for the Bridge Loan, repay the Bridge Loan in an amount equal to the cash balance on deposit in the Cash Reserve Account on such date (and the Borrower hereby irrevocably authorizes and directs the Agent to apply such cash balance for such purpose); and (m) shall prepay the entire outstanding principal amount of the Loans together with accrued and unpaid interest and all of the outstanding Obligations hereunder upon the occurrence of a Change in Control. SECTION 3.3.2 Application. Each prepayment or repayment of principal ----------- required under clauses (d) through (k) of Section 3.3.1 prior to the Merger ------------- Consummation Date shall be applied to the Bridge Loan and, subsequent to the Merger Consummation Date, shall be applied in inverse order to the scheduled installments due on the Term Loan under clause (c) of Section 3.3.1. ------------- SECTION 3.3.3 Revolving Loans on Borrower's Behalf. The Lenders are ------------------------------------ authorized to, and at their option may, make Revolving Loans on behalf of the Borrower for payment of all fees, expenses, charges, costs, principal and interest owed by the Borrower to the Lenders or the Agent under this Agreement and the other Loan Documents. Such Revolving Loans shall be made when and as the Borrower fails promptly to pay same, and all such Revolving Loans shall constitute Revolving Loans made to the Borrower and shall be secured by all of the Collateral. SECTION 3.4 Interest. Interest on the outstanding principal amount -------- of the Loans and other outstanding Obligations shall accrue and be payable in accordance with this Section 3.4. ----------- SECTION 3.4.1 Bridge Loan Rate. Subject to Section 3.4.5, the Bridge ---------------- ------------- Loan shall accrue interest at a rate per annum equal to the ING Alternate Base Rate (as in effect from time to time) plus the Bridge Loan Applicable Margin. ---- 36 SECTION 3.4.2 Term Loan Rate. Subject to Section 3.4.5, the Term -------------- ------------- Loan or any portion thereof shall accrue interest at the following rates per annum, at the election of the Borrower, pursuant to an appropriately delivered Borrowing Request or Continuation/Conversion Notice: (a) during such periods as the Term Loan or portion thereof is a Base Rate Loan, the ING Alternate Base Rate (as in effect from time to time) plus ---- 1.50%, and (b) during such periods as the Term Loan or portion thereof is a Eurodollar Loan, for each Interest Period relating thereto, the Eurodollar Rate for and Interest Period plus 3.50%. ---- SECTION 3.4.3 Revolving Loan Rate. Subject to Section 3.4.5, ------------------- ------------- Borrowings of Revolving Loans shall accrue interest at the following rates per annum, at the election of the Borrower pursuant to an appropriately delivered Borrowing Request or Continuation/Conversion Notice: (a) during such periods as such Borrowing consists of Base Rate Loans, the ING Alternate Base Rate (as in effect from time to time) plus 1.25%, and ---- (b) during such periods as such Borrowing consists of Eurodollar Loans, for each Interest Period relating thereto, the Eurodollar Rate for such Interest Period plus 3.25%. ---- SECTION 3.4.4 Continuation and Conversion Elections. By delivering a ------------------------------------- Continuation/Conversion Notice to the Agent on or before 11:00 a.m., New York City time, on a Business Day, the Borrower may from time to time irrevocably elect, on not less than three (3) nor more than five (5) Business Days' notice, that all or any portion in an aggregate minimum amount of $500,000 and an integral multiple of $100,000 of Revolving Loans or the Term Loan be, in the case of Base Rate Loans, converted to Eurodollar Loans or, in the case of Eurodollar Loans, continued as Eurodollar Loans; provided, however, that: -------- ------- (a) each such continuation or conversion shall be pro rata among the --- ---- applicable outstanding Term Percentages of the Term Loan or Revolving Percentages of Revolving Loans, as the case may be, of all Lenders; and (b) no portion of the outstanding principal amount of any Loan may be continued as, or converted into, a Eurodollar Loan when any Default has occurred and is continuing. 37 The Agent shall give prompt telephonic notice to each Lender of the interest rate determined pursuant to this Section 3.4.4 with respect to such Loans. ------------- Absent delivery of a Continuation/Conversion Notice with respect to any Eurodollar Loan at least three (3) Business Days before the last day of the then current Interest Period with respect thereto, such Eurodollar Loan shall, on such last day, automatically convert to a Base Rate Loan. SECTION 3.4.5 Post-Default Rates. From and after the occurrence of ------------------ an Event of Default and during the continuance thereof, the Borrower shall pay interest (after as well as before judgment) on the outstanding principal amount of all Loans and other Obligations at a rate per annum equal to the Post-Default Rate applicable to such Loans and Obligations. SECTION 3.4.6 Payment Dates. Accrued interest on any Loans shall be ------------- payable, without duplication: (a) on the Stated Maturity Date applicable to such Loans; (b) with respect to any portion of any Loan prepaid or repaid pursuant to Section 3.3.1, on the date such prepayment or repayment is due as provided in ------------- Section 3.3.1 and, in the case of a voluntary prepayment, on the date set forth - ------------- in any notice required for such prepayment; (c) with respect to Base Rate Loans, on each Monthly Payment Date, commencing with the first such day following the Closing Date; (d) with respect to Eurodollar Loans, on the last day of each applicable Interest Period (and if such Interest Period shall exceed three months, also on the numerically corresponding day of the third calendar month after the commencement of such Interest Period); (e) with respect to any Base Rate Loans converted into Eurodollar Loans on a day which is not a Monthly Payment Date, on the date of such conversion; and (f) on the date of acceleration of such Loans pursuant to Section 7.2 ----------- or Section 7.3. ----------- Interest accruing at the Post-Default Rate and, to the extent permitted by applicable law, interest on overdue amounts (including overdue interest), shall be payable upon demand. The Borrower hereby irrevocably authorizes and directs the Agent to withdraw from the Cash Reserve Account on each day that accrued interest on the Bridge Loan shall be due and payable in accordance with this Section 3.4.6, an amount equal to the amount of accrued interest so due and - ------------- payable 38 and to apply such amount withdrawn from the Cash Reserve Account to the payment of such interest. SECTION 3.4.7 Rate Determinations. All determinations by the Agent ------------------- of the rate of interest applicable to any Loan shall be conclusive in the absence of manifest error. SECTION 3.4.8 Limitation on Types of Loans. Anything herein to the ---------------------------- contrary notwithstanding, if on or prior to the determination of any Eurodollar Rate for any Interest Period: (a) the Agent determines in good faith, which determination shall be conclusive, that quotations of interest rates for the relevant deposits referred to in the definition of "Eurodollar Rate" are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for Eurodollar Loans as provided herein; or (b) the Required Lenders determine in good faith, which determination shall be conclusive, and notify the Agent that the relevant rates of interest referred to in the definition of "Eurodollar Rate" upon the basis of which the rate of interest for Eurodollar Loans for such Interest Period is to be determined are not likely to cover adequately the cost to such Lenders of making or maintaining Eurodollar Loans for such Interest Period; then the Agent shall give the Borrower and each Lender prompt notice thereof, and so long as such condition remains in effect, the Lenders shall be under no obligation to make additional Eurodollar Loans, to continue Eurodollar Loans or to convert Base Rate Loans into Eurodollar Loans, and the Borrower shall, on the last day(s) of the then current Interest Period(s) for the outstanding Eurodollar Loans, either prepay such Loans or such Loans shall be converted into Base Rate Loans in accordance with Section 3.4.10 hereof. -------------- SECTION 3.4.9 Illegality. Notwithstanding any other provision of ---------- this Agreement, in the event that it becomes unlawful for any Lender or its Applicable Lending Office to honor its obligation to make or maintain Eurodollar Loans hereunder, then such Lender shall promptly notify the Borrower thereof (with a copy to the Agent) and such Lender's obligation to make or continue, or to convert Base Rate Loans into, Eurodollar Loans shall be suspended until such time as such Lender may again make and maintain Eurodollar Loans (in which case the provisions of Section 3.4.10 hereof shall be applicable). If requested by -------------- the Borrower, any such Lender shall use reasonable efforts to designate another Applicable Lending Office, provided that such designation would not, in the discretion of such Lender exercised in 39 good faith, be materially disadvantageous to such Lender or in any manner contrary to such Lender's policy. SECTION 3.4.10 Treatment of Affected Loans. If the obligation of any --------------------------- Lender to make Eurodollar Loans or continue, or to convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant to Sections 3.4.8 or 3.4.9 hereof, -------------- ----- such Lender's Eurodollar Loans shall be automatically converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for Eurodollar Loans (or, in the case of a conversion required by Sections 3.4.8 or 3.4.9 -------------- ----- hereof, on such earlier date as such Lender may specify to the Borrower with a copy to the Agent) and, unless and until such Lender gives notice as provided below that the circumstances specified in Sections 3.4.8 or 3.4.9 hereof which -------------- ----- gave rise to such conversion no longer exist: (a) to the extent that such Lender's Eurodollar Loans have been so converted, all payments and prepayments of principal which would otherwise be applied to such Lender's Eurodollar Loans shall be applied instead to its Base Rate Loans; and (b) all Loans which would otherwise be made or continued by such Lender as Eurodollar Loans shall be made or continued instead as Base Rate Loans and all Base Rate Loans of such Lender which would otherwise be converted into Eurodollar Loans shall remain as Base Rate Loans. Promptly after the circumstances specified in Sections 3.4.8 or 3.4.9 which gave -------------- ----- rise to the conversion of such Lender's Eurodollar Loans pursuant to this Section 3.4.10 no longer exist, such Lender shall give the Agent and the - -------------- Borrower notice thereof, and the Borrower may thereafter request conversion of such Loans to Eurodollar Loans, subject to the subsequent application of Section ------- 3.4.8 or 3.4.9. - ----- ----- SECTION 3.4.11 Compensation. The Borrower shall pay to the Agent for ------------ the account of each Lender, upon the request of such Lender through the Agent, such amount or amounts as shall be sufficient (in the reasonable opinion of such Lender) to compensate it for any loss, cost or expense which such Lender determines is attributable to: (a) any payment, prepayment or conversion of a Eurodollar Loan made by such Lender for any reason (including, without limitation, the acceleration of the Loans pursuant to Article 7 hereof) on a date other than the last day of the --------- Interest Period for such Loan; or (b) any failure by the Borrower for any reason (including, without limitation, the failure of any of the conditions precedent specified in Article ------- 4 hereof to be satisfied) to - - 40 borrow a Eurodollar Loan from such Lender on the date for such borrowing specified in the Borrowing Request given pursuant to Section 3.1 hereof. ----------- SECTION 3.5 Taxes. (a) Any and all payments by the Borrower ----- hereunder or under the Notes or any other Loan Document shall be made, in accordance with this Section 3.5, free and clear of and without deduction for ----------- any and all present or future Taxes. If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.5), such Lender or ----------- the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law; (b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or intangibles taxes or any other excise or property taxes, transfer taxes, charges or similar levies which arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, or otherwise with respect to this Agreement, the Notes, or any other Loan Document; (c) The Borrower will indemnify each Lender and the Agent for the full amount of the taxes, charges and levies described in clauses (a) and (b) of this Section 3.5 (including, without limitation, any such taxes, charges and levies - ----------- imposed by any jurisdiction on amounts payable under this Section 3.5) paid by ----------- such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such taxes, charges and levies were correctly or legally asserted. Payment under this clause (c) shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor; (d) Within 30 days after the date of any payment of Taxes, the Borrower will furnish to the Agent, at its address referred to in Section 9.2, ----------- the original or a certified copy of any receipt received by the Borrower evidencing payment thereof; (e) On or prior to the Closing Date and on or prior to the first Business Day of each calendar year thereafter, each Foreign Lender shall provide the Agent and the Borrower with two properly executed original Forms 4224 and 1001 (or any successor form) prescribed by the Internal Revenue Service or other documents satisfactory to the Borrower and the Agent, and properly executed Internal Revenue Service Forms W-8 or W-9, as the case may be, 41 certifying (i) as to such Foreign Lenders's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to such Foreign Lender hereunder and under the Notes or (ii) that all payments to be made to such Foreign Lender hereunder and under the Notes are subject to such taxes at a rate reduced to zero by an applicable tax treaty. Each Foreign Lender agrees to provide the Agent and the Borrower with new forms prescribed by the Internal Revenue Service upon the expiration or obsolescence of any previously delivered form, or after the occurrence of any event requiring a change in the most recent forms delivered by it to the Agent and the Borrower; (f) In the event that the Agent or any Lender receives a refund or credit that, in the good faith determination of the Agent or such Lender, is attributable to any taxes paid on its behalf by the Borrower in accordance with this Section 3.5, the Agent or such Lenders, as the case may be, shall pay an ----------- amount equal to such refund or credit to the Borrower; and (g) Without prejudice to the survival of any other agreement hereunder, the agreements and obligations contained in this Section 3.5 shall ----------- survive the payment in full of principal and interest hereunder and under the Notes. SECTION 3.6 Payments, Interest Rate Computations, Other ------------------------------------------- Computations, etc. All payments by the Borrower pursuant to this Agreement, the - ----------------- Notes or any other Loan Document, (a) in respect of principal or interest on the Bridge Notes, shall be made by the Borrower to the Agent for the account of the Lenders, pro rata according to their respective unpaid principal amounts of the -------- Bridge Notes, (b) in respect of principal or interest on the Term Notes, shall be made by the Borrower to the Agent for the account of the Lenders, pro rata -------- according to their respective unpaid principal amounts of the Term Notes and, (c) in respect of principal or interest on the Revolving Notes, shall be made by the Borrower to the Agent for the account of the Lenders, pro rata according to --- ---- their respective unpaid principal amounts of the Revolving Notes. The payment of the commitment fee referred to in Section 2.4 shall be made by the Borrower ----------- to the Agent for the account of the Lenders entitled thereto pro rata according -------- to their respective Revolving Percentages. All other amounts payable to the Agent or any Lender under this Agreement or any other Loan Document (except under the Facility Fee Letter) shall be paid to the Agent for the account of the Person entitled thereto. All such payments required to be made to the Agent shall be made, without setoff, deduction or counterclaim, not later than 2:00 p.m., New York City time, on the date due, in immediately available funds, to such account as the Agent shall specify from time to time by notice to the Borrower. Funds received after that time shall be deemed to have been received by the Agent on the next following Business Day. The Agent shall promptly remit in the type of funds received to each Lender notified to the Agent its share, if any, of such payments received by the Agent for the account of such Lender or holder. All interest and fees shall be computed on the 42 basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days (365 days in the case of interest computed on the basis of the ING Alternate Base Rate). Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall be made on the immediately preceding Business Day. SECTION 3.7 Proration of Payments. If any Lender shall obtain any --------------------- payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of principal of or interest on any Loan or other Obligations in excess of such Lender's or holder's pro rata share of payments -------- then or therewith obtained thereon by all Lenders, such Lender which has received in excess of its pro rata share shall purchase from the other Lenders --- ---- such participations in such Notes or other Obligations held by them as shall be necessary to cause such purchaser to share the excess payment or other recovery ratably with each of them; provided, however, that if all or any portion of the -------- ------- excess payment or other recovery is thereafter recovered from such purchasing holder, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 3.7 may, to the fullest extent permitted by law, exercise all its rights - ----------- of payment (including pursuant to Section 3.8) with respect to such ----------- participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section 3.7 applies, such Lender shall, to the ----------- extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders under this Section 3.7 to share ----------- in the benefits of any recovery on such secured claim. SECTION 3.8 Setoff. In addition to and not in limitation of any ------ rights of any Lender under applicable law, each Lender shall, upon the occurrence and during the continuance of any Event of Default, have the right to appropriate and apply to the payment of the Obligations owing to it (whether or not then due), and (as security for such Obligations) the Borrower hereby grants to each Lender, a continuing security interest in, any and all balances, credits, deposits, accounts or moneys of the Borrower then or thereafter maintained with such Lender; provided, however, that any such appropriation and -------- ------- application shall be subject to the provisions of Section 3.7. ----------- SECTION 3.9 Use of Proceeds. --------------- (a) The Borrower shall use the proceeds of the Bridge Loan on the Closing Date (i) to pay a portion of the Purchase Price, and (ii) to pay costs and expenses arising in connection with the transactions contemplated hereby which are set forth in Item 1 (Transaction ------ 43 Costs) of the Disclosure Schedule, all as more specifically described in Item 2 ------ (Sources and Uses) of the Disclosure Schedule. (b) By conversion of $10,000,000 of the outstanding principal balance of the Bridge Loan into the Term Loan, the Term Loan shall constitute an extension and renewal of such portion of the Bridge Loan, and the Term Loan shall not constitute or otherwise be deemed a repayment, refinancing or novation of any portion of the Bridge Loan. (c) The Borrower shall use the proceeds of (i) the Revolving Loans made on the Merger Consummation Date to refinance the remaining principal balance of the Bridge Loan after conversion of $10,000,000 thereof into the Term Loan, and to refinance in full the outstanding Indebtedness of STI described in Item 3 (Indebtedness of STI to be Refinanced) of the Disclosure Schedule and - ------ (ii) the Revolving Loans made after the Merger Consummation Date for the on- going working capital needs of the Borrower. (d) No part of the proceeds of any Loans shall be used for any purpose which violates Regulations G, T, U or X of the F.R.S. Board. SECTION 3.10. Replacement of Lender Under Certain Circumstances. If ------------------------------------------------- (x) the obligation of any Lender to make Eurodollar Loans or to continue, or to convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant to Sections 3.4.8 or 3.4.9 or (y) the Borrower shall be required by law to deduct - -------------- ----- any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender in respect of which the Borrower is required to increase amounts payable to such Lender under subsection (a) of Section 3.5, in either such case ----------- the Borrower may obtain a replacement bank, financial institution or other lender to acquire and assume all or part of such affected Lender's Loans and Revolving Loan Commitment and such affected Lender shall transfer all or such part of its Loans and Revolving Loan Commitment upon receipt of the purchase price therefor (which shall equal the outstanding principal amount of its Loans plus all accrued and unpaid interest and fees to the date of purchase, plus all other amounts owing by the Borrower to such affected Lender under this Agreement. Any such replacement bank, financial institution or other lender shall be subject to the prior written consent of the Agent, which consent shall not be unreasonably withheld. 44 ARTICLE 4 CONDITIONS TO LOANS SECTION 4.1 Bridge Loan. The obligations of the Lenders to fund the ----------- Bridge Loan on the Closing Date shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 4.1. ----------- SECTION 4.1.1 Resolutions, etc. The Agent shall have received: ---------------- (a) a certificate, dated the Closing Date, of the Secretary of each Loan Party as of the Closing Date as to: (i) resolutions of its Board of Directors, then in full force and effect authorizing the execution, delivery and performance of the Loan Documents to which such Loan Party is a party and the related transactions contemplated thereby, and (ii) the incumbency and signatures of those of its officers authorized to act with respect to the Loan Documents to which it is party, upon which certificate each Lender may conclusively rely until it shall have received further certificates of the Secretary of such Loan Party canceling or amending such prior certificates; (b) copies of the Organic Documents of each Loan Party as of the Closing Date certified by, in the case of the charters, the appropriate Governmental Authority of the State of such Loan Party's incorporation and, in the case of its other Organic Documents, such Loan Party's Secretary, which documents shall be satisfactory to the Agent; (c) a so-called "good standing" certificate with respect to each Loan Party as of the Closing Date from the appropriate Governmental Authority of the State of its incorporation; (d) evidence of qualification of each Loan Party as of the Closing Date to do business in each other jurisdiction in which the failure to so qualify could result in a Material Adverse Change; and (e) such other documents (certified if requested) as the Agent or the Required Lenders may reasonably request, with respect to this Agreement, the Notes, any other Loan Document, the transactions contemplated hereby and thereby, or any Organic Document, Contractual Obligation or Regulatory Approval. 45 SECTION 4.1.2 Bridge Notes. The Agent shall have received for the ------------ account of each Lender, such Lender's Bridge Note, in each case duly executed and delivered pursuant to clause (a) of Section 3.2. ----------- SECTION 4.1.3 Subsidiary Guaranty. The Agent shall have received for ------------------- the account of each Lender the Brunswick Subsidiary Guaranty, duly executed and delivered by each Subsidiary of Brunswick located in the United States, other than STI and its Subsidiaries and other than the Inactive Subsidiaries. SECTION 4.1.4 No Contest, etc. No litigation, arbitration, ---------------- governmental investigation, injunction, proceeding or inquiry shall be pending or, to the knowledge of Brunswick, threatened which: (a) seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief from Brunswick, Technology or, to the knowledge of Brunswick, the Estate, as a result of, the transactions contemplated by or in connection with the Acquisition Agreement, this Agreement or any Loan Document; or (b) would, in the opinion of the Agent, be materially adverse to any of the parties hereto with respect to the transactions contemplated hereby; No litigation set forth in Item 4 (Litigation) of the Disclosure Schedule, in ------ the reasonable opinion of the Agent, could result in a Material Adverse Change or give rise to any liability on the part of the Agent or any Lender in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby. SECTION 4.1.5 Certificate as to Completed Conditions, Warranties, No ------------------------------------------------------ Default, etc. The Agent shall have received a certificate, dated the Closing - ------------- Date, of the chief executive officer of Brunswick, to the effect that: (a) all conditions precedent set forth in this Section 4.1 and in ----------- Section 4.3 have been satisfied; - ----------- (b) all representations and warranties set forth in Article 5 are true --------- and correct in all material respects; (c) all representations and warranties set forth in the Loan Documents are true and correct in all material respects; and 46 (d) no Default has occurred and is continuing. SECTION 4.1.6 Opinion of Counsel. The Agent shall have received ------------------ opinion letters, dated the Closing Date and addressed to the Agent and all Lenders, from Palmer & Dodge, counsel to Brunswick and its Subsidiaries, in form and substance satisfactory to the Agent, and covering such matters as the Agent may request, including the Acquisition. SECTION 4.1.7 Closing Fees, Expenses, etc. The Agent shall have ---------------------------- received the facility fee, which was due and payable pursuant to the terms of the Facility Fee Letter, and all costs and expenses which have been invoiced and are payable upon the initial Borrowing pursuant to Section 9.3. ----------- SECTION 4.1.8 Security Documents and Perfection. The Agent shall --------------------------------- have received: (a) The Brunswick Security Agreement, duly executed by an Authorized Officer of Brunswick and each Subsidiary of Brunswick located in the United States, other than STI and its Subsidiaries and other than the Inactive Subsidiaries; (b) The Brunswick Patent Assignment and the Brunswick Trademark Assignment duly executed by an Authorized Officer of Brunswick, and the Technology Patent Assignment and Technology Trademark Assignment duly executed by an Authorized Officer of Technology; (c) Evidence of all filings of the Financing Statements with respect to the Brunswick Security Agreement and other Security Documents executed on the Closing Date; searches or other evidence as to the absence of any perfected security interests or Liens (except those previously disclosed to and consented to by the Lenders); and evidence that all other actions (including all actions necessary such that the Brunswick Patent Assignment, the Brunswick Trademark Assignment, the Technology Patent Assignment and the Technology Trademark Assignment are acceptable for filing in the United States Patent and Trademark Office and the payment of all documentary, intangibles, filing and recording taxes and fees) with respect to the Liens created by the Security Documents executed on the Closing Date have been taken as are necessary or appropriate to perfect such Liens; (d) The Brunswick Pledge Agreement, duly executed by an Authorized Officer of Brunswick; 47 (e) All (i) stock certificates and undated stock powers duly executed in blank relating thereto with respect to the pledged securities under the Brunswick Pledge Agreement, which pledged securities shall consist of the STI Shares and all outstanding Stock held by Brunswick in its other Subsidiaries located in the United States (other than the Inactive Subsidiaries) and (ii) all promissory notes and other instruments owned by Borrower duly endorsed in blank pledged under the Brunswick Pledge Agreement; (f) A collateral assignment to the Agent, for its benefit and the ratable benefit of the Lenders, of Brunswick's rights under the Acquisition Agreement and all other documents executed or delivered by the Estate pursuant to the Acquisition Agreement, duly consented to by the Estate, which assignment shall be in form and substance satisfactory to the Agent; (g) A collateral assignment to the Agent, for its benefit and the ratable benefit of the Lenders, of Brunswick's rights under the Estate Registration Rights Agreement, which assignment and registration rights shall be in form and substance satisfactory to the Agent; (h) The Cash Reserve Account Agreement, duly executed by Brunswick, the Agent and SunTrust Bank, Atlanta. SECTION 4.1.9 Employment Agreements; Compensation. The Agent shall ----------------------------------- have received copies of all employment agreements to which Brunswick or any of its Subsidiaries is a party (including STI or any of its Subsidiaries), and the Agent shall be satisfied in all respects with the levels of compensation (including, without limitation, fees, wages, salaries, deferred payment arrangements, stock options, incentive plans and pension or employee benefit contributions) paid to key members of management. SECTION 4.1.10 Pension and Welfare Liabilities. The Agent shall have ------------------------------- received (i) the most recent actuarial valuation report for each Single Employer Plan, if any, and a copy of Schedule B to the Annual Report on Form 5500 of the Internal Revenue Service for each such Single Employer Plan most recently filed with the Internal Revenue Service, and (ii) a report prepared by Brunswick in form and substance satisfactory to the Agent detailing any liabilities of Brunswick and each of its Subsidiaries and of STI and each of its Subsidiaries, and of each Commonly Controlled Entity of Brunswick or STI for post-retirement benefits under Plans which are welfare benefit plans. SECTION 4.1.11 Insurance. The Agent shall have received evidence --------- satisfactory to it that the insurance maintained by Brunswick, STI and their respective Subsidiaries is issued by an insurance company with a Best's rating of "A" or better and a financial size category of not less than XII, is in amounts satisfactory to the Agent and, in the 48 case of insurance maintained by Brunswick and its Subsidiaries (other than STI and its Subsidiaries), under policies naming the Agent as loss payee (in the case of casualty insurance policies) and as additional insured (in the case of liability policies), and otherwise complying with the requirements of this Agreement and the Security Documents. SECTION 4.1.12 Key Man Insurance. Brunswick shall have purchased ----------------- "key-man" life insurance policies in the total amount of $500,000 on the life of James H. Miller. SECTION 4.1.13 Financial Information, etc. The Agent shall have -------------------------- received the historical financial statements referred to in Section 5.4, the ----------- Closing Date Pro Forma Balance Sheet, a Fair Saleable Value Balance Sheet for --------- Brunswick as of the Closing Date, the Trial Merger Pro Forma Balance Sheet and --- ----- the Projections. SECTION 4.1.14 Solvency, etc. The Fair Saleable Value Balance Sheet ------------- for Brunswick as of the Closing Date shall show that the assets of Brunswick are at least $6,540,888 greater than the liabilities of Brunswick (including all liabilities and obligations of Brunswick, fixed or contingent, direct or indirect, disputed or undisputed, and whether or not required to be reflected on a balance sheet prepared in accordance with GAAP, except to the extent noted thereon); and the Agent shall have received a certificate of the chief executive officer of Brunswick dated the Closing Date, stating that, after giving effect to the consummation of the transactions contemplated by this Agreement to occur on the Closing Date (including the Acquisition and the making of the Bridge Loan), each of Brunswick and Technology is Solvent. SECTION 4.1.15 Acquisition. The Acquisition Agreement shall remain in ----------- full force and effect and shall not have been amended, modified or supplemented without the Agent's approval, all conditions precedent to the consummation by Brunswick of the transactions contemplated by the Acquisition Agreement shall have been fully satisfied or waived with the consent of the Agent, Brunswick shall have delivered to the Agent evidence satisfactory to the Agent that the Acquisition shall be consummated simultaneously with the funding of the Bridge Loan substantially in accordance with the terms of the Acquisition Agreement, and Brunswick shall have delivered to the Agent each of the following: (a) resolutions of the boards of directors and, to the extent required, the stockholders of Brunswick, certified by the Secretary of Brunswick, to be duly adopted and in full force and effect on the Closing Date, authorizing the execution, delivery and performance of the Acquisition Agreement; 49 (b) certified copies of all documents evidencing any other necessary corporate action, consents and Regulatory Approvals with respect to the consummation of the transactions contemplated by the Acquisition Agreement; and (c) a certificate from the chief executive officer of Borrower to the effect that attached thereto are true and correct copies of the Acquisition Agreement and each of the material documents, instruments and agreements executed and delivered pursuant to the Acquisition Agreement and making such statements of fact concerning the Acquisition and the other transactions consummated pursuant to such agreements as the Agent shall reasonably request. SECTION 4.1.16 Cash Reserve Fund. Brunswick shall have established ----------------- the Cash Reserve Account for the benefit of the Agent and shall have irrevocably directed the Agent to deposit from the proceeds of the Bridge Loan the sum of $1,000,000 in the Cash Reserve Account. SECTION 4.1.17. Capital Contributions; Junior Subordinated Note. The ----------------------------------------------- Agent shall have received evidence that, since August 1, 1995, Brunswick has received not less than $7,000,000 in cash proceeds from the issuance of its Stock, and $1,000,000 in cash proceeds from the issuance of the Junior Subordinated Note. SECTION 4.1.18. Other Documents, Certificates, Etc. The Agent shall ----------------------------------- have received such other documents, certificates, opinions of counsel or other materials as it reasonably requests from any Loan Party. SECTION 4.2 Term Loan and Revolving Loans. The obligations of the ----------------------------- Lenders to fund the Term Loan and Revolving Loans on the Merger Consummation Date shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 4.2. ----------- SECTION 4.2.1 Resolutions, etc. The Agent shall have received: ---------------- (a) a certificate, dated the Merger Consummation Date, of the Secretary of STI as to: (i) resolutions of its Board of Directors, then in full force and effect authorizing (A) the Merger, (B) the execution, delivery and performance of the Assumption Agreement, the Term Notes, the Revolving Notes and all other Loan 50 Documents to which such Loan Party is a party and (C) the related transactions contemplated thereby, and (ii) the incumbency and signatures of those of its officers authorized to act with respect to the Assumption Agreement, the Term Notes, the Revolving Notes and all Loan Documents to which it is party, upon which certificate each Lender may conclusively rely until it shall have received further certificates of the Secretary of such Loan Party canceling or amending such prior certificates; (b) a certificate, dated as of the Merger Consummation Date, of the Secretary of each Subsidiary of STI executing a Loan Document as of the Merger Consummation Date as to: (i) resolutions of its Board of Directors, then in full force and effect, authorizing the execution, delivery and performance of each Loan Document to which such Subsidiary is a party and the transactions contemplated thereby, and (ii) the incumbency and signature of those of its officers authorized to act with respect to all Loan Documents to which it is a party, upon which certificate each Lender may conclusively rely until it shall have received further certificates of the Secretary of such Subsidiary canceling or amending such prior certificate; (c) copies of the Organic Documents of STI and each Subsidiary of STI executing a Loan Document as of the Merger Consummation Date certified by, in the case of charters, the appropriate Governmental Authority of the State of such Loan Party's incorporation and, in the case of its other Organic Documents, such Loan Party's Secretary, which documents shall be satisfactory to the Agent; (d) a so-called "good standing" certificate with respect to STI and each Subsidiary of STI executing a Loan Document as of the Merger Consummation Date from the appropriate Governmental Authority of the State of its incorporation; (e) evidence of qualification of STI and each Subsidiary of STI to do business in each other jurisdiction in which the failure to so qualify could result in a Material Adverse Change; and (f) such other documents (certified if requested) as the Agent may reasonably request, with respect to this Agreement, the Notes, any other Loan Document, the transactions 51 contemplated hereby and thereby, or any Organic Document, Contractual Obligation or Regulatory Approval. SECTION 4.2.2 Term Notes and Revolving Notes. The Agent shall have ------------------------------ received for the account of each Lender, such Lender's Term Note and Revolving Note, in each case, duly executed and delivered by STI pursuant to clauses (b) and (c) of Section 3.2. ----------- SECTION 4.2.3 STI Subsidiary Guaranty. The Agent shall have received ----------------------- for the account of each Lender the STI Subsidiary Guaranty, duly executed and delivered by each Subsidiary of STI located in the United States, other than the Inactive Subsidiaries. SECTION 4.2.4 Release of Liens on Assets. All Indebtedness of STI -------------------------- and its Subsidiaries described in Item 3 (Indebtedness of STI to be Refinanced) ------ of the Disclosure Schedule shall have been repaid in full and all holders of such Indebtedness shall have acknowledged such repayment, released STI and its Subsidiaries from any liability in respect of such Indebtedness, and released all Liens on the assets securing such Indebtedness pursuant to UCC-3 Termination Statements and other Instruments as shall be suitable or appropriate in connection therewith. SECTION 4.2.5 No Contest, etc. No litigation, arbitration, ---------------- governmental investigation, injunction, proceeding or inquiry shall be pending or, to the knowledge of Brunswick or STI, threatened which: (a) seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the Merger or the transactions contemplated by or in connection with this Agreement, the Assumption Agreement or any other Loan Document; or (b) would, in the reasonable opinion of the Agent be materially adverse to any of the parties hereto with respect to the transactions contemplated hereby; No litigation set forth in Item 4 (Litigation) of the Disclosure Schedule, in ------ the reasonable opinion of the Agent, could result in a Material Adverse Change or give rise to any liability on the part of the Agent or any Lender in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby. SECTION 4.2.6 Certificate as to Completed Conditions, Warranties, No ------------------------------------------------------ Default, etc. The Agent shall have received a certificate, dated the Merger - ------------- Consummation Date, of the chief executive officer of STI to the effect that; 52 (a) all conditions precedent set forth in this Section 4.2 and in ----------- Section 4.3 have been satisfied; - ----------- (b) all representations and warranties set forth in Article 5 are true --------- and correct in all material respects; (c) all representations and warranties set forth in the Loan Documents are true and correct in all material respects; and (d) no Default has occurred and is continuing. SECTION 4.2.7 Opinions of Counsel. The Agent shall have received ------------------- opinion letters, dated the Merger Consummation Date and addressed to the Agent and all Lenders, from (a) counsel to STI and its Subsidiaries, substantially in the form of Exhibit H; - --------- (b) counsel to STI in the States of Maryland and Missouri, in form and substance reasonably satisfactory to the Agent and covering such matters as the Agent may request; (c) counsel to STI and STI International, Limited in England, in form and substance reasonably satisfactory to the Agent and covering such matters relating to the Share Charge and STI International, Limited, as the Agent may request; and (d) if required by the Agent, counsel to STI and Brunswick Biomedical Limited in Ireland, in form and substance reasonably satisfactory to the Agent and covering such matters related to Brunswick Biomedical Limited and a share charge over Stock of Brunswick Biomedical Limited owned by STI or any of its Subsidiaries as the Agent may request. SECTION 4.2.8 Assumption Agreement. The Agent shall have received -------------------- the Assumption Agreement duly executed by an Authorized Officer of STI. SECTION 4.2.9 Security Documents and Perfection. The Agent shall --------------------------------- have received: (a) The STI Security Agreement, duly executed by an Authorized Officer of STI and each Subsidiary of STI located in the United States, other than the Inactive Subsidiaries; 53 (b) The STI Patent Assignment and the STI Trademark Assignment duly executed by an Authorized Officer of STI and each Subsidiary of STI located in the United States, other than the Inactive Subsidiaries; (c) Evidence of all filings of the Financing Statements with respect to the STI Security Agreement and the other Security Documents executed and delivered by STI and its Subsidiaries on the Merger Consummation Date; evidence that all other actions (including all actions necessary such that the STI Patent Assignment and the STI Trademark Assignment are acceptable for filing in the United States Patent and Trademark Office and the payment of all documentary, intangibles, filing and recording taxes and fees) with respect to the Liens created by the Security Documents executed by STI and its Subsidiaries on the Merger Consummation Date have been taken as are necessary or appropriate to effect such Liens; (d) UCC amendments to all Financing Statements naming Brunswick as debtor and filed pursuant to clause (c) of Section 4.1.8, amending such ------------- Financing Statements to reflect that the debtor with respect to such Financing Statements is STI as successor by merger to Brunswick, in each case duly executed by the Borrower; (e) searches or other evidence as to the absence of any perfected security interests or Liens (except those permitted under Section 6.2.3 and ------------- those to be released pursuant to Section 4.2.4.) against STI or any of its ------------- property; and evidence that all other actions with respect to the Liens created by the Security Documents have been taken as are necessary or appropriate to continue the perfection of Liens granted thereunder; and (f) The STI Pledge Agreement and the Share Charge, duly executed by an Authorized Officer of STI, and if requested by the Agent prior to the Merger Consummation Date, a share charge (or the equivalent thereof) pursuant to which sixty-six and two-thirds (66 2/3%) of the outstanding Stock of Brunswick Biomedical Limited shall be pledged to the Agent, duly executed by an Authorized Officer of STI and any Subsidiary of STI that owns such Stock; (g) all (i) stock certificates and undated stock powers duly executed in blank relating thereto with respect to the pledged securities under the STI Pledge Agreement, which pledged securities shall constitute (after giving effect to the Merger) all outstanding stock of all Subsidiaries of STI located in the United States (other than the Inactive Subsidiaries) and sixty-six and two- thirds percent (66-2/3%) of the outstanding stock of all Subsidiaries of STI located outside the United States; provided, however, STI and its Subsidiaries -------- ------- shall not have to pledge any shares of outstanding Stock of Brunswick Biomedical Limited unless requested by the Agent prior to the Merger Consummation Date; and (ii) all promissory notes and other instruments owned by STI duly endorsed in blank pledged under the STI Pledge Agreement. 54 (h) Mortgages covering the real property owned and leased by STI which is identified on Item 5 (Mortgaged Property) of the Disclosure Schedule, ------ together with such title insurance policies, title searches, abstracts of title or other title work as may be required by the Agent with regard to such real property, insuring the security title of the Agent in such real property and including such endorsements as the Agent shall require, as well as surveys, valuations of properties and assets, certificates of occupancy, deeds, leases, tenant subordination agreements, leasehold assignments and related consents of landlords, and such environmental reports, assessments and diligence as the Agent shall require; and (i) An assignment to the Agent, for its benefit and the ratable benefit of the Lenders, of the insurance policies described in Section 4.1.12 -------------- (with respect to which the insurer shall have executed and delivered to the Agent a written consent), which assignment shall be in form and substance satisfactory to the Agent. SECTION 4.2.10 Financial Information, etc. The Agent shall have --------------------------- received unaudited consolidated balance sheets of STI as of the last day of each Fiscal Quarter subsequent to the Fiscal Quarter ending January 31, 1996 and ending prior to the Merger Consummation Date and the related consolidated statements of income for each of such Fiscal Quarters, and, if available, the consolidated audited balance sheets of STI as of July 31, 1996, as well as the Merger Pro Forma Balance Sheet, a Fair Saleable Value Balance Sheet for STI as --- ----- of the Merger Consummation Date, and, to the extent required to reflect historical experience, revisions to the Projections delivered as of the Closing Date. SECTION 4.2.11 Solvency, etc. The Fair Saleable Value Balance Sheet ------------- for STI as of the Merger Consummation Date shall show that the assets of STI (after giving effect to the Merger) are at least $6,540,888 greater than the liabilities of STI (after giving effect to the Merger) (including all liabilities and obligations of STI, fixed or contingent, direct or indirect, disputed or undisputed, and whether or not required to be reflected on a balance sheet prepared in accordance with GAAP, except to the extent noted thereon); and the Agent shall have received a certificate of the chief executive officer of STI dated the Merger Consummation Date, stating that after giving effect to the consummation of the transactions contemplated by this Agreement to occur on the Merger Consummation Date (including the Merger, the making of the Revolving Loans to be made on the Merger Consummation Date and the conversion of $10,000,000 of the Bridge Loan into the Term Loan), STI and each of its Subsidiaries (other than the Inactive Subsidiaries) is Solvent. 55 SECTION 4.2.12 Merger of Brunswick into STI. The Agent shall have ---------------------------- received: (a) evidence that all filings and registrations required to be made with the Securities and Exchange Commission in connection with the consummation of the Merger shall have been submitted and, to the extent applicable, approved, and shall be effective; (b) copies of all agreements, instruments, and documents executed, delivered or furnished in connection with the Merger (the "Merger Documents"), ---------------- and evidence that the Merger Documents remain in full force and effect and have not have been amended, modified or supplemented and that all conditions precedent to the consummation of the Merger have been fully satisfied or waived; (c) each of the following, in form and substance satisfactory to the Agent: (i) resolutions of the boards of directors and, to the extent required, the stockholders of Brunswick and STI, certified by the Secretary of Brunswick and STI, respectively, to be duly adopted and in full force and effect on the Merger Consummation Date, authorizing and approving the Merger and the execution, delivery and performance of the Merger Documents; (ii) certified copies of all documents evidencing any other necessary corporate action, consents and Regulatory Approvals with respect to the consummation of the Merger; (iii) a certificate from the chief executive officer of Borrower (A) to the effect that attached thereto are true and correct copies of the Merger Documents and each of the material documents, instruments and agreements executed and delivered pursuant thereto, that the Merger has been consummated in accordance with all applicable law, rules and regulations, including all securities and antitrust laws and regulations, and that all Regulatory Approvals required in connection with the Merger have been obtained, and (B) making such other statements of fact concerning the Merger as the Agent shall reasonably request; (d) a certificate from the chief executive officer of Borrower certifying that no shareholder of STI has exercised or that no shareholder of STI is entitled to exercise any appraisal rights they may have in connection with the Merger, whether such rights arise as a matter of law or otherwise; and 56 (e) a certificate from the chief executive officer of Borrower certifying that shareholders of Brunswick holding no more than three percent (3%) of the outstanding capital stock of Brunswick have exercised any appraisal rights they may have in connection with the Merger, whether such rights arise as a matter of law or otherwise. SECTION 4.2.13 Maturity of Bridge Loan. The date of the conversion of ----------------------- $10,000,000 of the outstanding principal balance of the Bridge Loan and the funding of the Revolving Loans to be funded on the Merger Consummation Date shall be on or prior to the Stated Maturity Date of the Bridge Loan. SECTION 4.2.14 Reaffirmation of Representations and Warranties. The ----------------------------------------------- Borrower shall have reaffirmed as of the Merger Consummation Date, in form and substance satisfactory to the Agent, each of the representations and warranties made in Article 5 of this Agreement, except for any such representation or --------- warranty expressly made as of a particular date, which STI shall have reaffirmed as of such date. In addition, STI shall have represented and warranted to the Agent and the Lenders the following (which shall be deemed to supplement the representations and warranties in Article 5): (i) the Merger Pro Forma Balance --- ----- Sheet has been prepared in accordance with GAAP consistently applied (except to the extent based upon estimates) throughout the periods involved and presents fairly in all material respects the matters reflected therein, (ii) as of the Merger Consummation Date, neither STI nor its Subsidiaries has material contingent liabilities or material liabilities for taxes, long-term leases or unusual forward or long-term commitments which are not reflected in such Merger Pro Forma Balance Sheet, (iii) as of the Merger Consummation Date, after giving - --- ----- effect to the consummation of the transactions contemplated by this Agreement and the other Loan Documents to occur on the Merger Consummation Date (including the Merger, the conversion of $10,000,000 of the outstanding principal balance of the Bridge Loan into the Term Loan and the making of the Revolving Loans contemplated to be made on the Merger Consummation Date), STI is solvent, and (iv) each of the Security Documents executed on the Merger Consummation Date creates a fully perfected first lien on, and security interest in, all right, title and interest of the Loan Parties executing such Security Documents in all of the Collateral described therein, other than Liens permitted under Section ------- 6.2.3. - ----- SECTION 4.2.15 No Dividends; etc. Since the Closing Date, STI shall ------------------ not have declared or paid any dividends or other distributions on its Stock, and no material increase shall have occurred in the liabilities, liquidated or contingent, of STI and its Subsidiaries and no material decrease shall have occurred in the assets of STI and its Subsidiaries. SECTION 4.3 All Loans. Without duplication of any conditions --------- precedent required to be satisfied pursuant to Section 4.1 or Section 4.2, the ----------- ----------- obligations of the Lenders to 57 make any Loan, shall be subject to the satisfaction of each of the additional conditions precedent set forth in this Section 4.3. ----------- SECTION 4.3.1 Compliance with Warranties, No Default, etc. The -------------------------------------------- representations and warranties set forth in Article 5 (including from and after --------- the Merger Consummation Date, those representations and warranties set forth in Section 4.2.14) shall have been true and correct in all material respects as of - -------------- the date initially made. In addition, both before and after giving effect to the making of any such Loan and the application of the proceeds thereof, (a) such representations and warranties shall be true and correct in all material respects with the same effect as if then made (except to the extent expressly made as of a specified date, in which case such representations and warranties shall be true as of such specified date); (b) all representations and warranties set forth in the Security Documents shall be true and correct in all material respects with the same effect as if then made (except to the extent expressly made as of a specified date, in which case such representations and warranties shall be true as of such specified date); (c) no material adverse development shall have occurred in any litigation, arbitration or governmental investigation, proceeding or inquiry disclosed pursuant to Section 5.7 which renders such litigation, ----------- arbitration or governmental investigation or inquiry or proceeding, in the reasonable opinion of the Required Lenders, likely to be adversely determined and, if adversely determined, could result in a Material Adverse Change; and (d) no Default shall have occurred and be continuing. SECTION 4.3.2 Borrowing Request, etc. The Agent shall have received ----------------------- a duly completed Borrowing Request. The delivery of any such Borrowing Request, and the acceptance by the Borrower of the proceeds of any such Loan, shall constitute a representation and warranty by the Borrower that on the date of such request for a Loan, and before and after giving effect to the making of such Loan and the application of any proceeds of such Loan, all statements set forth in Section 4.3.1 are true and correct. In the event that, in connection ------------- with the delivery of any such Borrowing Request the Borrower is required to amend any Item of the Disclosure Schedule in order that the statement set forth in clause (a) or (b) of Section 4.3.1 shall be true and correct, the Borrower ------------- shall deliver to the Agent at least three (3) Business Days prior to the date of the Borrowing requested or to be requested, a request that such Item of the 58 Disclosure Schedule be amended, and the Agent shall promptly forward such request to the Lenders. To the extent that the Required Lenders agree to such requested amendment or otherwise make any Loans after receipt of such request, the representations and warranties proposed to be amended by such amendment to the Disclosure Schedule will be deemed amended for purposes of this Agreement. SECTION 4.3.3 Satisfactory Legal Form. All documents executed or ----------------------- submitted by or on behalf of the Borrower or any Subsidiary shall be reasonably satisfactory in form and substance to the Agent and its counsel, the Agent and its counsel shall have received all information, and such counterpart originals or such certified or other copies of such Instruments, as the Agent or its counsel may request. All legal matters incident to the transactions contemplated by this Agreement shall be satisfactory to counsel to the Agent. SECTION 4.3.4 Margin Regulations. The making of such Loan and the ------------------ use of the proceeds thereof shall not violate Regulations G, T, U and X of the F.R.S. Board. SECTION 4.3.5 Adverse Change. In the reasonable judgment of the -------------- Required Lenders, no Material Adverse Change shall have occurred since the Closing Date. SECTION 4.3.6 Change in Law. On the date of such Loan, no change ------------- shall have occurred in applicable law, or in applicable regulations thereunder or in interpretations thereof by any court or Governmental Authority which, in the opinion of any Lender, would make it illegal for such Lender to make the Loan required to be made on such date. ARTICLE 5 WARRANTIES, ETC. In order to induce the Lenders and the Agent to enter into this Agreement, to engage in the transactions contemplated herein and in the other Loan Documents and to make the Loans, the Borrower represents and warrants to the Agent and each Lender as set forth in this Article 5; provided, however, --------- -------- ------- that to the extent any representation or warranty made by Brunswick prior to the Merger Consummation Date relates to STI or any of its Subsidiaries, such representation or warranty is made to the best knowledge of Brunswick. SECTION 5.1 Organization, Power, Authority, etc. Each of the ------------------------------------ Borrower and its Subsidiaries (i) is a corporation validly organized and existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified to do business and is in 59 good standing as a foreign corporation in each jurisdiction where the failure to so qualify could result in a Material Adverse Change, and (iii) has full power and authority, and, except as set forth in Item 6 (Governmental Licenses) of the ------ Disclosure Schedule, holds all governmental licenses, permits, registrations and other Regulatory Approvals required under all Requirements of Law, to own and hold under lease its property and to conduct its business as conducted prior to the Closing Date and as contemplated to be conducted subsequent to the Closing Date and the Merger Consummation Date. Each Loan Party has full power and authority to enter into and perform its Obligations under this Agreement, the Notes and each other Loan Document executed or to be executed by it and to incur Indebtedness hereunder or under the Subsidiary Guaranty, as the case may be. SECTION 5.2 Due Authorization. The execution and delivery by each ----------------- Loan Party of each Loan Document executed or to be executed by it, and the incurrence and performance by such Loan Party of its respective Obligations have been duly authorized by all necessary corporate action, do not require any Regulatory Approval (except those Regulatory Approvals already obtained), do not and will not conflict with, result in any violation of, or constitute any default under, any provision of any Organic Document or Contractual Obligation of such Loan Party or any law or governmental regulation or court decree or order, and will not result in or require the creation or imposition of any Lien on such Loan Party's properties pursuant to the provisions of any Contractual Obligation of such Loan Party. SECTION 5.3 Validity, etc. Each of this Agreement, the Notes and -------------- the other Loan Documents constitutes the legal, valid and binding obligation of each Loan Party executing and delivering such Loan Document, enforceable in accordance with its terms subject to the effect of any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights generally, and the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law). SECTION 5.4 Financial Information; Solvency. ------------------------------- (a) Except as disclosed in Item 7 (Exceptions to GAAP) of the ------ Disclosure Schedule, all balance sheets, all statements of operations, stockholders' equity and cash flows, and all other financial information of Brunswick and STI which have been furnished by or on behalf of Brunswick or STI to the Agent and the Lenders for the purposes of or in connection with this Agreement or any transaction contemplated hereby, including: (i) the consolidated audited balance sheets of Brunswick as of June 30, 1994 and June 30, 1995, and the related consolidated statements of income and cash flows for 60 each of the two (2) fiscal years of Brunswick ending June 30, 1994 and June 30, 1995, together with the opinion thereon of Arthur Andersen LLP; (ii) the unaudited consolidated balance sheets of Brunswick as of September 30, 1995 and December 31, 1995, and the related consolidated statements of income for each of the fiscal quarters of Brunswick ending September 30, 1995 and December 31, 1995; (iii) the consolidated audited balance sheets of STI as of July 31, 1994 and July 31, 1995, and the related consolidated statements of income and cash flows for each of the two (2) fiscal years of STI ending July 31, 1994 and July 31, 1995, each as included in its annual report on Form 10-K filed with the Securities and Exchange Commission, together with the opinion thereon of Price Waterhouse LLP; (iv) the unaudited consolidated balance sheets of STI as of October 31, 1995 and January 31, 1996 and the related consolidated statements of income for each of the fiscal quarters of STI ending October 31, 1996 and January 31, 1996, each as included in its quarterly report on Form 10-Q filed with the Securities and Exchange Commission; (v) the Closing Date Pro Forma Balance Sheet; --------- (vi) the Trial Merger Pro Forma Balance Sheet; and --- ----- (vii) the Projections; have been prepared in accordance with GAAP consistently applied (except to the extent items in the Closing Date Pro Forma Balance Sheet, the Trial Merger Pro --------- --- Forma Balance Sheet, and the Projections are based upon estimates) throughout - ----- the periods involved and present fairly in all material respects the matters reflected therein subject, in the case of unaudited statements, to changes resulting from normal year-end audit adjustments and except as to the absence of footnotes. As of the Closing Date, neither Brunswick nor STI nor any of their respective Subsidiaries has material contingent liabilities or material liabilities for taxes, long-term leases or unusual forward or long-term commitments which are not reflected in the financial statements described in clauses (i), (ii), (iii), (iv), (v) and (vi). (b) After giving effect to the consummation of the transactions contemplated by this Agreement and the other Loan Documents to occur on the Closing Date (including the Acquisition and the Bridge Loan), Brunswick is Solvent. 61 SECTION 5.5 Material Adverse Change. (a) Since June 30, 1995, there ----------------------- has been no material adverse change in the condition (financial or otherwise), operations, performance, business, properties or prospects of the Brunswick and its Subsidiaries (other than STI and its Subsidiaries), taken as a whole, or in any industry in which the Borrower or any of its Subsidiaries (other than STI and its Subsidiaries) is engaged in any material respect. (b) Since July 31, 1995, there has been no material adverse change in the condition (financial or otherwise), operations, performance, business, properties or prospects of STI and its Subsidiaries, taken as a whole, or in any industry in which STI or any of its Subsidiaries is engaged in any material respect. SECTION 5.6 Absence of Default. Neither the Borrower nor any ------------------ Subsidiary is in default in the payment of (or in the performance of any obligation applicable to) any Indebtedness, or is in material default under any regulation of any Governmental Agency or court decree or order, or is in default under any Requirements of Law which default could result in a Material Adverse Change. SECTION 5.7 Litigation, Legislation, etc. Except as disclosed in ----------------------------- Item 4 (Litigation) of the Disclosure Schedule, there is no pending or, to the - ------ knowledge of the Borrower, threatened litigation, arbitration or governmental investigation, proceeding or inquiry which, if adversely determined, could result in a Material Adverse Change; and none of the proceedings set forth in such Item 4 seeks to amend, modify or enjoin the transactions contemplated ------ hereby or is likely to be adversely determined. There is no legislation, governmental regulation or judicial decision that could result in a Material Adverse Change. SECTION 5.8 Regulations G, T, U and X. Neither the Borrower nor ------------------------- any Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock (as defined in F.R.S. Board Regulation G or U) and, except for the STI Shares prior to the Merger Consummation Date, no assets of the Borrower or any Subsidiary consist of Margin Stock. The Loans hereunder will not be used for a purpose which violates, or would be inconsistent with, F.R.S. Board Regulation G, T, U or X. SECTION 5.9 Government Regulation. Neither the Borrower nor any --------------------- Subsidiary is an "investment company" within the meaning of the Investment Holding Company Act of 1940, as amended, or a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended, or subject to regulation under the Federal Power Act, the Interstate Commerce Act or any other 62 federal or state law limiting its ability to incur Indebtedness or to execute, deliver or perform the Loan Documents to which it is party. SECTION 5.10 Taxes. Each of the Borrower and its present or past ----- Subsidiaries has filed all tax returns and reports required by law to have been filed by it and has paid all taxes and Charges thereby shown to be owing, except any such taxes or Charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. SECTION 5.11 Pension and Welfare Plans. (a) Except as disclosed in ------------------------- Item 8 (Benefit Plans) of the Disclosure Schedule, neither the Borrower nor any - ------ Subsidiary or Commonly Controlled Entity has assumed any material liability under any employee benefit plan, fund, program, arrangement, agreement or commitment maintained by or on behalf of or contributed to by or on behalf of any entity or trade or business which, together with any of such corporations, is treated as a single employer under Sections 414(b), (c), (m) or (o) of the IRC. Neither the Borrower nor any Subsidiary or Commonly Controlled Entity shall be subject (directly or indirectly) to any material liability, tax or penalty whatsoever to any person whomsoever with respect to any employee benefit plan, fund, program, arrangement, agreement or commitment described in the immediately preceding sentence. (b) No Reportable Event which could result in a Material Adverse Change has occurred during the six-year period prior to the date on which this representation is made or deemed made with respect to any Single Employer Plan. The Borrower, each Commonly Controlled Entity, each Subsidiary, each Plan, and each trust maintained pursuant to any such Plan have complied in all material respects with the applicable provisions of ERISA, the IRC, and any other applicable laws. Except as disclosed in Item 8 (Benefit Plans) of the Disclosure ------ Schedule, the present value of all "benefit liabilities" (within the meaning of Section 4001(a)(16) of ERISA) under each Single Employer Plan maintained by the Borrower, any Subsidiary or any Commonly Controlled Entity (based on those assumptions that would be used in a termination of each such Plan) did not, as of the last annual valuation date for which an actuarial valuation report has been done, exceed the value of the assets of such Plan as of such date. Except as disclosed in such Item 8, neither the Borrower nor any Commonly Controlled ------ Entity or Subsidiary has incurred any liability to the PBGC or to any other Person under Section 4062, 4063 or Section 4064 of ERISA on account of the termination of, or its withdrawal from, a Single Employer Plan, and no Lien has been imposed on the assets of the Borrower or any Commonly Controlled Entity or Subsidiary under Section 4068 of ERISA. To the knowledge of the Borrower and any Commonly Controlled Entities and Subsidiaries, there does not exist any event or condition which would permit the institution of proceedings to terminate any Single Employer Plan pursuant to Section 4042 of ERISA. Except as disclosed in Item 8 of the ------ 63 Disclosure Schedule, no "accumulated funding deficiency" (as defined in Section 302 of ERISA or Section 412 of IRC), whether or not waived, exists with respect to any Pension Plan. The Borrower and each Commonly Controlled Entity and Subsidiary have timely made in full each quarterly installment payment to any Pension Plan required under Section 302(e) of ERISA or Section 412(m) of the IRC and have also made full and timely payment of any other costs or expenses related to such a Plan. The Borrower and all Commonly Controlled Entities and Subsidiaries have made full and timely payment of all contributions to Multiemployer Plans required under ERISA, the IRC or applicable collective bargaining agreements. Neither the Borrower nor any Commonly Controlled Entity or Subsidiary has had a complete or partial withdrawal from any Multiemployer Pension Plan and the liability to which the Borrower or any Commonly Controlled Entity or Subsidiary would become subject under ERISA if the Borrower or any such Commonly Controlled Entity or Subsidiary were to withdraw completely from all Multiemployer Pension Plans as of the valuation date most closely preceding the date hereof is not in excess of $200,000. No such Multiemployer Pension Plan has been terminated or is in Plan Reorganization or ERISA Insolvent, nor, to the knowledge of the Borrower and any Commonly Controlled Entities and Subsidiaries, is any such Multiemployer Pension Plan likely to be terminated or to become in Plan Reorganization or ERISA Insolvent. To the knowledge of the Borrower and any Commonly Controlled Entities and Subsidiaries, no "accumulated funding deficiency" (as defined in Section 302 of ERISA or Section 412 of the IRC), whether or not waived, exists with respect to any Multiemployer Plan. The present value (determined using assumptions which are reasonable in respect of the benefits provided and the employees participating) of the aggregate liability of the Borrower and each Subsidiary and Commonly Controlled Entity for post-retirement benefits to be provided to their current and former employees under Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) is not in excess of $200,000. No written notice of liability has been received with respect to the Borrower, any of its Subsidiaries, or any Plan for any "prohibited transaction" (within the meaning of Section 4975 of the IRC or Section 406 of ERISA), nor has any such prohibited transaction resulting in material liability to the Borrower or any of its Subsidiaries occurred. Neither the Borrower nor any Subsidiary or Commonly Controlled Entity will, as a result of consummating the transactions contemplated by this Agreement (pursuant to the provisions of the Agreement, by operation of law or otherwise) (i) have incurred or become liable for any tax assessed by the Internal Revenue Service for any alleged violations of Section 4975 of the IRC or any civil penalty imposed by the Department of Labor for any alleged violations of Section 406 of ERISA, (ii) have caused or permitted to occur any "prohibited transaction" within the meaning of such Section 4975 of the IRC or Section 406 of ERISA with respect to any Plan for which no exemption is available or (iii) have incurred any liability to the PBGC (other than ordinary and usual PBGC premium liability) or any liability for complete or partial withdrawal to any Multiemployer Plan. Neither the Holding Company, the Borrower nor any Subsidiary is subject (directly or indirectly) to, and no facts exist which could subject the 64 Holding Company, the Borrower or any Subsidiary (directly or indirectly) to, any other liability, penalty, tax or lien whatsoever, which could result in a Material Adverse Change and which is directly or indirectly related to any Plan, including, but not limited to, liability for any damages or penalties arising under Title I or Title IV of ERISA, liability for any tax or penalty resulting from a loss of deduction under Section 404 or 419 of the IRC, any tax or penalty under chapter 43 of the IRC, or any taxes or penalties under any other applicable law, but excluding any liability to make contributions or pay premiums to or under an ongoing Plan before the last due date on which such contributions or premiums could be paid or made without penalty or to pay benefits when due in accordance with Plan terms. SECTION 5.12 Labor Controversies. Except as disclosed in Item 9 ------------------- ------ (Labor Controversies) of the Disclosure Schedule, there are no labor controversies pending or, to the best knowledge of the Borrower, threatened, relating to the Borrower or any Subsidiary. There is (i) no unfair labor practice complaint pending against the Borrower, or any of its Subsidiaries or, to the best knowledge of the Borrower, threatened against any of them, before the National Labor Relations Board, and no arbitration proceeding arising out of or under any collective bargaining agreement or the Borrower's internal grievance procedures is so pending against the Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage is pending against the Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries and (iii) no union representation question existing with respect to the employees of the Borrower or any of its Subsidiaries. Each of the Borrower and its Subsidiaries is in compliance in all material respects with all collective bargaining agreements to which it is subject. SECTION 5.13 Ownership of Properties; Collateral. (a) Each of the ----------------------------------- Borrower and its Subsidiaries owns good title to all of its material personal properties and assets of any nature whatsoever, free and clear of all Liens except as permitted pursuant to Section 6.2.3. ------------- (b) The provisions of the Brunswick Security Agreement are effective to create in favor of the Agent for the benefit of the Agent and the Lenders, a legal, valid and enforceable security interest in all right, title and interest of the Loan Parties in the Collateral described therein, and, upon the filing of the Financing Statements and any required filing in the United States Patent and Trademark Office pursuant to Section 4.1.8, the Security Documents will ------------- create a fully perfected first Lien on, and the security interest in, all right, title and interest of the Loan Parties in all of the Collateral described therein, to the extent that a security interest therein can be perfected by such a filing, subject to no other Liens other than Liens permitted by Section 6.2.3. ------------- 65 SECTION 5.14 Intellectual Property. Each of the Borrower and its ---------------------- Subsidiaries owns or licenses all such Intellectual Property, and has obtained assignments of all licenses and other rights, as the Borrower considers necessary for or as are otherwise material to the conduct of the business of the Borrower and its Subsidiaries as now conducted without, individually or in the aggregate, any infringement upon rights of other Persons which could result in a Material Adverse Change. All Intellectual Property owned or licensed from third Persons described in this Section 5.14 is set forth in Item 10 (Intellectual ------------ ------- Property) of the Disclosure Schedule. SECTION 5.15 Accuracy of Information. All factual information ----------------------- heretofore or contemporaneously furnished by or on behalf of the Borrower in writing to the Agent or any Lender for purposes of or in connection with this Agreement or any transaction contemplated hereby is true and accurate in every material respect on the date as of which such information is dated or certified and as of the date of execution and delivery of this Agreement by the Agent or such Lender and such information is not incomplete by omitting to state any material fact necessary to make such information not misleading. Neither this Agreement nor any document or statement furnished to the Agent or any of the Lenders by or on behalf of the Borrower contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained herein or therein not materially misleading. The Agent and the Lenders recognize that the Projections are not to be viewed as facts and that actual results during the period or periods covered by the Projections may differ from the projected or forecasted results. SECTION 5.16 Insurance. All policies of insurance in effect of any --------- kind or nature owned by or issued to the Borrower and its Subsidiaries, including policies of life, fire, theft, product liability, public liability, property damage, other casualty, employee fidelity, workers' compensation, property and liability insurance, (a) are listed in Item 11 (Insurance) of the ------- Disclosure Schedule as of the Closing Date, (b) are, together with all policies of employee health and welfare and title insurance, in full force and effect, (c) comply in all respects with the applicable requirements set forth herein and in the Security Documents and (d) are of a nature and provide such coverage as is customarily carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower and its Subsidiaries operate. Neither the Borrower nor any of its Subsidiaries provides any of its insurance through self-insurance except as disclosed in Item 11 of ------- the Disclosure Schedule. SECTION 5.17 Certain Indebtedness. Item 12 (Existing Indebtedness) -------------------- ------- of the Disclosure Schedule sets forth all Indebtedness of Brunswick and its Subsidiaries as of the Closing Date, which (a) is for borrowed money, or (b) is not incurred in the ordinary course of the business of the Borrower or any Subsidiary in a manner and to the extent consistent with past 66 practice, or (c) is material to the financial condition, operations, businesses, properties or prospects of the Borrower or any Subsidiary. SECTION 5.18 Environmental Matters. Except as disclosed in Item 13 --------------------- ------- (Environmental Matters) of the Disclosure Schedule, the Borrower and each of its Subsidiaries are in compliance in all material respects with all applicable Environmental Laws, and to the best of the Borrower's knowledge, there are no conditions or circumstances associated with the currently or previously owned, operated, used or leased properties or current or past operations of the Borrower or any Subsidiary which may give rise to Environmental Liabilities and Costs which could result in a Material Adverse Change or which may give rise to any Environmental Lien. SECTION 5.19 No Burdensome Agreements. Neither the Borrower nor any ------------------------ Subsidiary is a party to or has assumed any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter or other corporate restriction that could result in a Material Adverse Change. SECTION 5.20 Consents. Except as disclosed in Item 14 (Consents) of -------- ------- the Disclosure Schedule, the Borrower and its Subsidiaries have all material permits and governmental consents and Regulatory Approvals necessary under Requirements of Law or, in the reasonable business judgment of the Borrower, deemed advisable under Requirements of Law, in connection with the transactions contemplated hereby (including the Acquisition, the Merger and the Loans) and the ongoing business and operations of the Borrower and its Subsidiaries. SECTION 5.21 Contracts. Set forth in Item 15 (Contracts) of the --------- ------- Disclosure Schedule is an accurate and complete list of all material Contractual Obligations of the Borrower and its Subsidiaries as of the Closing Date. Each such material Contractual Obligation is in full force and effect in accordance with the terms thereof. There are no material defaults by the Borrower or any Subsidiary or, to the Borrower's knowledge after due inquiry, any other default in existence under any such material Contractual Obligations, in each case that could result in a Material Adverse Change. SECTION 5.22 Employment Agreements. Set forth in Item 16 --------------------- ------- (Employment Contracts) of the Disclosure Schedule is a complete and accurate list of each employment agreement to which the Borrower or any Subsidiary is a party, or by which it is bound. SECTION 5.23 Condition of Property. All of the assets and --------------------- properties owned by, leased to or used by the Borrower and its Subsidiaries material to the conduct of their 67 business are in adequate operating condition and repair, ordinary wear and tear excepted, and are free and clear of known defects except for defects which do not substantially interfere with the use thereof in the conduct of normal operations. SECTION 5.24 Subsidiaries. Item 17 (Subsidiaries) of the Disclosure ------------ ------- Schedule sets forth all Subsidiaries of Brunswick. SECTION 5.25 Acquisition Agreement. The closing of the transactions --------------------- contemplated by the Acquisition Agreement shall occur on the Closing Date simultaneously with the making of the Bridge Loan, and the Borrower has not waived or in any way amended, without the prior written consent of the Agent, any condition to the obligations to consummate the Acquisition. A true and complete copy of the Acquisition Agreement (including all exhibits, schedules and amendments thereto) has been delivered to the Agent. The Borrower is not in default under the Acquisition Agreement or under any instrument or document to be delivered in connection therewith. The representations and warranties made in the Acquisition Agreement by the Borrower and, to the best knowledge of the Borrower, the Estate are true and correct in all material respects on and as of the Closing Date as though made on and as of such date. SECTION 5.26 Trade Relations. There exists no actual or, to the --------------- best of Borrower's knowledge, threatened termination, cancellation or limitation of, or any modification or change in, the business relationship of the Borrower with any customer or group of customers of the Borrower. ARTICLE 6 COVENANTS SECTION 6.1 Affirmative Covenants. The Borrower agrees with each --------------------- Lender that until all Obligations (other than Obligations that expressly survive the termination of this Agreement pursuant to Section 9.5) have been paid and ----------- performed in full and the Commitments have terminated, the Borrower will perform the Obligations set forth in this Section 6.1; provided, however, that to the ----------- -------- ------- extent that prior to the Merger Consummation Date any of the Obligations of Brunswick set forth in this Section 6.1 relate to STI and its Subsidiaries, ----------- Brunswick's obligation to cause STI or such Subsidiary to perform any act or to refrain from performing any act shall be subject to Brunswick's fiduciary duties to the other shareholders of STI. 68 SECTION 6.1.1 Financial Information, etc. The Borrower will furnish, --------------------------- or will cause to be furnished, to each Lender and to the Agent copies of its financial statements, reports and information: (a) (i) promptly when available and in any event within ninety (90) days after the close of each Fiscal Year, a consolidated and consolidating balance sheet at the close of such Fiscal Year, and related consolidated and consolidating statements of operations, retained earnings, and cash flows for such Fiscal Year, of the Borrower and its Subsidiaries (with comparable information at the close of and for the prior Fiscal Year), certified (in the case of consolidated statements) without qualification by Arthur Andersen L.L.P., Price Waterhouse LLP or other independent public accountants satisfactory to the Agent, together with a report containing management's discussion and analysis of the financial condition and results of operation of the Borrower and its Subsidiaries (the delivery by the Borrower to the Agent of the Borrower's annual report on Form 10-K filed under the Securities Exchange Act of 1934, as amended, shall satisfy the requirements of this clause (a)(i)); (ii) promptly when available and in any event within ninety (90) days after the close of each Fiscal Year, a letter report of such independent public accountants at the close of such Fiscal Year to the effect that it has reviewed the provisions of this Agreement and the most recent Compliance Certificate being furnished pursuant to clause (a)(iii) of this Section 6.1.1 and that, in ------------- the course of performing its duties it did not become aware of any Default or Event of Default or any miscalculation in such Compliance Certificate relating to the financial tests set forth in Section 6.2.4 or relating to the calculation ------------- of Excess Cash Flow, except as such may be disclosed in such statement; and (iii) promptly when available and in any event within ninety (90) days after the close of each Fiscal Year, a Compliance Certificate calculated as of the computation date at the close of such Fiscal Year; and (b) promptly when available and in any event within forty-five (45) days after the close of each Fiscal Quarter, consolidated and consolidating balance sheets at the close of such Fiscal Quarter, and consolidated and consolidating statements of operations, retained earnings, and cash flows for such Fiscal Quarter and for the period commencing at the close of the previous Fiscal Year and ending with the close of such Fiscal Quarter, of the Borrower and its Subsidiaries (with comparable information at the close of and for the corresponding Fiscal Quarter of the prior Fiscal Year and for the corresponding portion of such prior Fiscal Year), certified by the chief executive or financial officer of the Borrower, together with a brief report containing management's discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries (including a discussion and analysis of any 69 changes compared to prior results) (the delivery by the Borrower of its quarterly report with respect to any Fiscal Quarter on Form 10-Q filed under the Securities Exchange Act of 1934, as amended, shall satisfy the requirements of this clause (b) with respect to such Fiscal Quarter) (subject to normal recurring year end adjustments); (c) promptly when available and in any event within thirty (30) days after the close of each calendar month of each Fiscal Year (other than a calendar month that is the last month of a Fiscal Quarter), consolidated and consolidating balance sheets at the close of such month, and consolidated and consolidating statements of operations, retained earnings, and cash flows for such month and for the period commencing at the close of the previous Fiscal Year and ending with the close of such month, of the Borrower and its Subsidiaries (with comparable information at the close of and for the corresponding month of the prior Fiscal Year and for the corresponding portion of such prior Fiscal Year), certified by the chief executive or financial officer of the Borrower, together with a brief report containing management's discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries (including a discussion and analysis of any changes compared to prior results); (d) promptly upon preparation of any update to the business plan described in clause (g) of this Section 6.1.1 for the remaining term of ------------- Borrower's then current Fiscal Year as in the Borrower's reasonable judgment is required, a copy of such update; and (e) within forty-five (45) days after the close of each Fiscal Quarter, a Compliance Certificate calculated as of the close of such Fiscal Quarter; (f) promptly upon receipt thereof, copies of all detailed financial and management reports submitted to the Borrower by its independent public accountants in connection with each annual or interim audit made by such independent public accountants of the books of the Borrower or any Subsidiary; (g) within ten (10) days prior to the end of each Fiscal Year of the Borrower, (i) a business plan of the Borrower and its Subsidiaries, in form, scope and detail satisfactory to the Agent, and (ii) consolidated and consolidating operating budgets for the twelve (12) months following the end of such Fiscal Year, prepared on a monthly basis, and for each Fiscal Year thereafter through the 2001 Fiscal Year, prepared on an annual basis, which budgets shall include estimated capital expenditures and other costs to be incurred by the Borrower and its Subsidiaries, on a consolidated and consolidating basis, during the applicable Fiscal Year, in each case, with accompanying detail, together with a report containing management's discussion and analysis of the projected financial condition and results of operations of the Borrower and its Subsidiaries; 70 (h) promptly after approved by the Borrower's Board of Directors, any updates or revisions to any business plan described in clause (g) of this Section 6.1.1, in addition to those described in clause (d) of this Section - ------------- ------- 6.1.1; - ----- (i) promptly upon the sending or filing thereof, copies of all reports that the Borrower sends to its security holders generally, and copies of all reports and registration statements that the Borrower or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange; and (j) such other information with respect to the financial condition, business, property, assets, revenues and operations of the Borrower and any Subsidiary as the Agent or the Required Lenders may from time to time reasonably request. SECTION 6.1.2 Maintenance of Corporate Existence, etc. Except as --------------------------------------- permitted by Section 6.2.10, the Borrower will cause to be done at all times all -------------- things necessary to maintain and preserve the corporate existence of the Borrower and each Subsidiary (other than the Inactive Subsidiaries). SECTION 6.1.3 Foreign Qualification. The Borrower will, and will --------------------- cause each Subsidiary to, cause to be done at all times all things necessary to be duly qualified to do business and be in good standing as a foreign corporation in each jurisdiction where the failure to so qualify could result in a Material Adverse Change. SECTION 6.1.4 Payment of Taxes, etc. The Borrower will, and will --------------------- cause each Subsidiary to, pay and discharge, as the same become due and payable, (a) all Charges against it or on any of its property, as well as claims of any kind which, if unpaid, might become a Lien upon any one of its properties, and (b) all lawful claims for labor, materials, supplies, services or otherwise before any thereof become a default; provided, however, that the foregoing shall -------- ------- not require the Borrower or any Subsidiary to pay or discharge any such Charge or claim so long as it shall be diligently contesting the validity thereof in good faith by appropriate proceedings and shall have set aside on its books adequate reserves in accordance with GAAP. SECTION 6.1.5 Insurance. In addition to any insurance required to be --------- maintained pursuant to any other Loan Document, the Borrower will, and (with respect to the insurance described in clauses (a) and (b) below) will cause each Subsidiary to, maintain or cause to be maintained: 71 (a) insurance with respect to its properties and business against such casualties, contingencies and liabilities (including, without limitation, in the case of STI, business interruption insurance) and of such types and in such amounts as are customary in the industries in which the Borrower and Subsidiaries are engaged, and will furnish to the Agent annual certification from the respective insurers (or their authorized agents) of the extent of all insurance maintained by the Borrower and its Subsidiaries in accordance with this Section 6.1.5; and ------------- (b) the "key-man" life insurance policy referred to in Section 4.1.12, -------------- which policy shall at all times have a minimum face value of not less than $500,000 in the aggregate. Each such policy shall be issued by an insurance company with a Best's rating of "A" or better and a financial size category of not less than XII shall be in effect on the Closing Date. The premiums for each such policy shall be paid as such premiums shall come due. All policies of casualty insurance shall contain an endorsement, in the form submitted to the Borrower by the Agent, showing loss payable to the Agent, for its benefit and the ratable benefit of the Lenders, as their interests may appear. All policies of liability insurance, including, without limitation, all primary and umbrella liability policies, shall name the Agent, for its benefit and the ratable benefit of the Lenders, as additional insured. All such insurance policies shall provide, or shall be properly endorsed to provide, that the insurer shall give the Agent not less than 10 days prior written notice of any cancellation or non-renewal of any such policy. The Borrower shall retain all the incidents of ownership of the insurance maintained pursuant to this Section 6.1.5, but shall not borrow upon or otherwise impair ------------- its right to receive the proceeds of such insurance. So long as no Event of Default has occurred and is continuing, the Borrower and its Subsidiaries shall have the right to use the proceeds of casualty insurance to repair or replace damaged or destroyed property, shall have the right to use the proceeds of business interruption insurance for its ongoing business needs and shall have the right to use the proceeds of liability insurance to pay covered claims. SECTION 6.1.6 Notice of Default, Litigation, etc. Upon a Responsible ---------------------------------- Officer learning thereof, the Borrower will give prompt written notice (with a description in reasonable detail) to the Agent of: (a) the occurrence of any Default; (b) the occurrence of any litigation, arbitration or governmental investigation or proceeding not previously disclosed in writing by the Borrower to the Lenders which has been instituted or, to the knowledge of the Borrower, is threatened against, the Borrower or any 72 Subsidiary or to which any of its properties, assets or revenues is subject which, if adversely determined, could result in a Material Adverse Change; (c) any material development which shall occur in any litigation, arbitration or governmental investigation or proceeding previously disclosed by the Borrower to the Lenders pursuant to Section 5.7 which renders such ----------- litigation, arbitration or governmental investigation likely to be adversely determined and, if adversely determined, could result in a Material Adverse Change; (d) the occurrence of any other circumstance which could result in a Material Adverse Change; (e) the occurrence of any Loss; and (f) (i) the occurrence or expected occurrence of any Reportable Event with respect to any Single Employer Plan, or any withdrawal from, or the termination, Plan Reorganization or ERISA Insolvency of any Multiemployer Pension Plan, (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or Subsidiary or any Multiemployer Pension Plan with respect to the withdrawal from, or the termination, Plan Reorganization or ERISA Insolvency of, any Single Employer Plan or Multiemployer Pension Plan, or the receipt of notice by the Borrower or any Commonly Controlled Entity or Subsidiary that the institution of any such proceedings or the taking of any such action is under consideration or anticipated, (iii) the institution of any proceedings or other action by the Internal Revenue Service or the Department of Labor with respect to the minimum funding requirements of any Pension Plan, or the receipt of notice by the Borrower or any Commonly Controlled Entity or Subsidiary that the institution of any such proceedings or the taking of any such action is under consideration or anticipated, (iv) the occurrence or expected occurrence of any event which could result in the incurrence of unpredictable contingent event benefits under Section 302 of ERISA or Section 412 of the IRC with respect to any Pension Plan, (v) any event or condition which could increase the liability of the Borrower or any Commonly Controlled Entity or Subsidiary with respect to post-retirement welfare benefits under any Plan, or (vi) the occurrence of any other event or condition with respect to any Plan which could subject the Borrower or any Subsidiary (directly or indirectly) to any tax, penalty or liability under Title I or Title IV of ERISA, Section 404 or 419 and Chapter 43 of the IRC, or any other applicable laws, and in each case in clauses (i) through (vi) above, such event or condition, together with all other events or conditions, if any, could subject the Borrower or any Subsidiary (directly or indirectly) to any tax, fine, penalty, or other liabilities in amounts which in the aggregate could result in a Material Adverse Change. Upon the request of the Agent, the Borrower will deliver to each of the Lenders a true and 73 complete copy of each annual report (Form 5500) of each Plan (other than a Multi-Employer Plan) required to be filed with the Internal Revenue Service, promptly after the filing thereof; and (g) the condemnation or threat of condemnation with respect to any property used or necessary in the conduct of the businesses of the Borrower or any of its Subsidiaries. SECTION 6.1.7 Books and Records. The Borrower will, and will cause ----------------- each Subsidiary to, keep books and records reflecting all of its business affairs and transactions in accordance with GAAP and, subject to any government security limitations, permit the Agent and each Lender or any of their respective representatives upon one Business Day's notice, during normal business hours, to visit all of its offices, to discuss its financial matters with its officers and independent public accountants and to examine (and, at the expense of the Borrower, photocopy extracts from) any of its books or other corporate records. The Borrower shall pay any fees of its independent public accountants incurred in connection with the Agent's or any Lender's exercise of its rights pursuant to this Section 6.1.7; provided that unless an Event of ------------- Default shall have occurred and be continuing, the Borrower shall be required to pay any such fees only in respect of the Agent's exercise of its rights pursuant to this Section 6.1.7 for one occasion during each Fiscal Year. On or prior to ------------- the Closing Date (and upon consummation of the Merger) the Borrower will deliver a letter to its independent public accountants authorizing such public accountants to discuss the Borrower's financial matters with the Agent and each Lender or any of their respective representatives whether or not a representative of the Borrower is present; provided that the Borrower shall have been given prior notice and an opportunity to be present. SECTION 6.1.8 Maintenance of Properties, Etc. The Borrower will ------------------------------ maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties (real and personal and including all intangible assets), except obsolete properties, which are used or necessary in the conduct of its business in good working order and condition, ordinary wear and tear excepted. SECTION 6.1.9 Maintenance of Licenses and Permits. The Borrower will ----------------------------------- maintain and preserve, and will cause each of its Subsidiaries to maintain and preserve, all Intellectual Property, rights, permits, licenses, Regulatory Approvals and privileges issued under or arising under any Requirements of Law to the extent material to the conduct of the business of the Borrower or any of its Subsidiaries. 74 SECTION 6.1.10 Employee Plans. The Borrower will at all times comply -------------- in all material respects with the provisions of ERISA and the IRC which are applicable to any of the Plans, and cause each of its Subsidiaries so to do. SECTION 6.1.11 Environmental Management. The Borrower will adopt and ------------------------ maintain prudent solid and hazardous waste management and disposal practices, including at a minimum such practices as are required or dictated from time to time by current and future Environmental Laws and Environmental Permits. SECTION 6.1.12 Compliance with Laws. The Borrower will, and will -------------------- cause each Subsidiary to, comply with all applicable Requirements of Law; provided, however, that this Section 6.1.12 shall not apply to any circumstance - -------- ------- -------------- of noncompliance that together with all other noncompliance could not result in a Material Adverse Change. SECTION 6.1.13 Interest Rate Protection. Within 90 days after the ------------------------ Merger Consummation Date, the Borrower shall obtain and thereafter maintain in full force and effect, from ING or an Eligible Lending Institution, one or more Interest Rate Contracts, protecting the Borrower against increases in the Eurodollar Rate for an aggregate notional amount equal to 50% of the aggregate principal amount of the Term Loan for a term of five (5) years. ING shall make available to the Borrower various proposals for Interest Rate Contracts. Should the Borrower obtain any proposal for Interest Rate Contracts from a source other than ING, the Borrower agrees that ING shall have a right to provide such Interest Rate Contracts on the same terms as those set forth in such proposal. The Borrower will collaterally assign such Interest Rate Contracts to the Agent, for its benefit and the ratable benefit of the Lenders, pursuant to documentation acceptable to the Agent. SECTION 6.1.14 Real Estate. If the Borrower shall acquire a fee ----------- interest in real estate which the Agent reasonably designates as material to the Borrower or a leasehold interest in real estate with respect to which the Borrower shall have made substantial tenant improvements or improvements uniquely configured for the Borrower's business requirements, in either case, at any time prior to the date on which all Commitments have terminated and all Obligations under this Agreement have been paid in full, the Borrower will execute a Mortgage subject only to the Liens described in clauses (c) and (h) of Section 6.2.3, in form and substance satisfactory to the Agent, in favor of the - ------------- Agent, for its benefit and the ratable benefit of the Lenders, and shall use its reasonable efforts to deliver to the Agent such title insurance policies, surveys and landlords' estoppel agreements with respect thereto as the Agent shall reasonably request. 75 SECTION 6.1.15 Merger of Brunswick into STI. Brunswick shall use its ---------------------------- best efforts to merge with and into STI, with STI being the surviving corporation, to cause STI to take any action required to be taken in order that the conditions set forth in Sections 4.2 and 4.3 are satisfied on or prior to ------------ --- the Stated Maturity Date for the Bridge Loan, and to cause STI to refrain from taking any action if the result of such action would be to prevent any conditions set forth in Section 4.2 or 4.3 from being met on or prior to the ----------- --- Maturity Date for the Bridge Loan or at any time thereafter. SECTION 6.1.16 Cash Reserve Account. The Borrower agrees to establish -------------------- the Cash Reserve Account for the benefit of the Agent. The Borrower hereby irrevocably authorizes the Agent to withdraw funds from the Cash Reserve Account at any time that accrued and unpaid interest with respect to the Bridge Loan has become due and payable and to apply such funds to the payment of such interest. SECTION 6.1.17. Private Placements. The Borrower hereby grants to ------------------ ING a right of first refusal for a period of one year following the Closing Date to manage and serve as placement agent, on an exclusive basis, in assisting the Borrower in any private placement of debt securities. In the event that the Borrower desires to issue through a private placement debt securities to institutional investors, the Borrower shall, prior to entering into any agreement with any other party in connection with such issuance, give notice to ING of the terms of such issuance. ING shall have the right to manage and serve as placement agent, on an exclusive basis, in connection with such private placement of debt securities on terms that are at least as favorable to the Borrower as the terms of any proposal made by any other party. Once ING has exercised its rights to manage and serve as placement agent, the Borrower agrees that it shall use its best efforts to assist ING in its efforts to place such debt securities on the Borrower's behalf. SECTION 6.2 Negative Covenants. The Borrower agrees with each ------------------ Lender that until all Commitments have terminated and all Obligations (other than Obligations that expressly survive the termination of this Agreement pursuant to Section 9.5) have been paid and performed in full, the Borrower will ----------- perform the Obligations set forth in this Section 6.2. provided, however, that ------------ -------- ------- to the extent that prior to the Merger Consummation Date any of the Obligations of Brunswick set forth in this Section 6.1 relate to STI and its Subsidiaries, ----------- Brunswick's obligation to cause STI or such Subsidiary to perform any act or to refrain from performing any act shall be subject to Brunswick's fiduciary duties to the other shareholders of STI. SECTION 6.2.1 Business Activities. The Borrower will not, and will ------------------- not permit any Subsidiary to, engage in any business activity, except those in the fields in which the 76 Borrower and its Subsidiaries are engaged on the Closing Date and such activities as may be incidental or related thereto. SECTION 6.2.2 Indebtedness. The Borrower will not, and will not ------------ permit any Subsidiary to, create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness other than: (a) Indebtedness in respect of the Loans and other Obligations; (b) Indebtedness in respect of the Interest Rate Contracts required pursuant to Section 6.1.13 to the extent such do not constitute Obligations; -------------- (c) obligations that constitute Indebtedness solely by virtue of being secured by Liens permitted under Section 6.2.3; ------------- (d) Indebtedness in respect of liabilities resulting from (i) endorsements of negotiable instruments in the ordinary course of business; and (ii) surety bonds and other bonds issued for the Borrower's account in the ordinary course of business; (e) Indebtedness of Brunswick and its Subsidiaries existing on the Closing Date and set forth in Item 12 (Existing Indebtedness) of the Disclosure ------- Schedule, excluding, however, from and after the Merger Consummation Date (i) Indebtedness owed to Syntex Laboratories, Inc. unless prior to the Merger Consummation Date, Syntex Laboratories, Inc. expressly agrees, in form and substance satisfactory to the Agent, that (A) the Agent may be granted a lien on the property subject to a lien in favor of Syntex Laboratories, Inc. and (B) Syntex Laboratories, Inc. enters into an intercreditor agreement, in form and substance satisfactory to the Agent, pursuant to which Syntex Laboratories, Inc. will agree, among other things, to give the Agent notice of any default under such Indebtedness and, upon request by any Lender, to sell such Indebtedness to such Lender for the principal amount then outstanding, plus accrued and unpaid interest, but without premium or penalty, and (ii) such Indebtedness set forth in Item 3 (Indebtedness of STI to be Refinanced) of the Disclosure Schedule. (f) Indebtedness of any Subsidiary (other than an Inactive Subsidiary) owing to the Borrower, provided that such Indebtedness is evidenced by a demand promissory note that is pledged to the Agent, for its benefit and the benefit of the Lenders, as security for the Obligations pursuant to the Pledge Agreement; (g) Capitalized Lease Liabilities incurred after the Closing Date; provided that (i) the aggregate amount of such Capitalized Lease Liabilities - -------- incurred by the Borrower and its 77 Subsidiaries during any Fiscal Year which in accordance with GAAP is attributable to principal, together with the aggregate principal amount of all Purchase Money Indebtedness of the Borrower and its Subsidiaries incurred during such Fiscal Year, does not exceed $1,000,000, (ii) payments under each capitalized lease giving rise to such Capitalized Lease Liabilities shall be made in equal periodic installments, (iii) the original term of each capitalized lease giving rise to such Capitalized Lease Liabilities shall not be less than seventy-five percent (75%) of the useful life of the item of property for which such Capitalized Lease Liabilities are incurred and (iv) the Consolidated Capital Expenditures financed by such Capitalized Lease Liabilities are not prohibited under Section 6.2.5; ------------- (h) Purchase Money Indebtedness incurred after the Closing Date; provided that (i) the aggregate amount of such Indebtedness incurred by the - -------- Borrower and its Subsidiaries during any Fiscal Year, together with the aggregate amount of any Capitalized Lease Liabilities of the Borrower and its Subsidiaries incurred during such Fiscal Year that in accordance with GAAP is attributable to principal, does not exceed $1,000,000, (ii) such Indebtedness provides for the payment of principal in equal periodic installments, (iii) each issue of such Purchase Money Indebtedness shall have an original term that is not less than seventy-five (75%) of the useful life of the item of property for which such Purchase Money Indebtedness is incurred, and (iv) the Consolidated Capital Expenditures financed by such Purchase Money Indebtedness are not prohibited under Section 6.2.5; ------------- (i) Indebtedness evidenced by the Estate Subordinated Note; (j) Indebtedness evidenced by the Junior Subordinated Note; (k) extensions, refinancings, replacements and renewals of any of the foregoing Indebtedness described in clause (e) (other than Capitalized Lease Liabilities) and clause (i) of this Section 6.2.2; provided that the principal ------------- -------- amount thereof is not increased, such extension, refinancing, replacement or renewal does not impose more burdensome terms upon the Borrower or its Subsidiaries, as the case may be, than the Indebtedness being extended, refinanced, replaced or renewed and, in the case of any Indebtedness that constitutes an extension, refinancing, replacement or renewal of the Estate Subordinated Note, such Indebtedness does not have a stated final maturity that is earlier than the Stated Maturity Date for the Term Loan, such Indebtedness does not require any principal amortization and such Indebtedness otherwise is subordinated in right of payment to the prior payment of "Senior Debt" (as such term is defined in the Estate Subordinated Note as in effect on the Closing Date) to the same extent and in the same manner as the Estate Subordinated Note. 78 SECTION 6.2.3 Liens. The Borrower will not, and will not permit any ----- Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets, whether now owned or hereafter acquired, except: (a) Liens in favor of the Agent or the Lenders granted pursuant to any Loan Document; (b) Liens identified in Item 19 of the Disclosure Schedule, excluding, ------- however, from and after the Merger Consummation Date, (i) Liens in favor of First Pennsylvania Bank, which the Borrower agrees to have promptly terminated after the Closing Date, and (ii) Liens in favor of Merrill Lynch Business Financial Services, Inc.; (c) Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable with penalty or being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (d) Liens of carriers, warehousemen, mechanics, and materialmen incurred in the ordinary course of business for sums not overdue or being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the forfeiture or sale of the asset subject to such Lien) and for which adequate reserves shall have been set aside on its books; (e) Liens (other than Liens arising under ERISA or Section 412(n) of the Code) incurred in the ordinary course of business in connection with workmen's compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (f) judgment Liens with respect to judgments to the extent such judgments do not constitute an Event of Default described in Section 7.1.9; ------------- (g) Liens which arise by operation of law under Article 2 of the UCC in favor of unpaid sellers of goods, or liens in items or any accompanying documents or proceeds of either arising by operation of law under Article 4 of the UCC in favor of a collecting bank; (h) easements (including, without limitation, reciprocal easement agreements and utility agreements), rights-of-way, covenants, consents, reservations, encroachments, 79 variations and other restrictions, charges or encumbrances (whether or not recorded) affecting the use of property, which do not materially detract from the value of such property or impair the use thereof; (i) Liens upon any equipment acquired by the Borrower or any of its Subsidiaries after the Closing Date to secure Indebtedness permitted under clause (h) of Section 6.2.2 or arising by virtue of a capital lease permitted ------------- under clause (g) of Section 6.2.2; ------------- (j) Leases and subleases granted to others in the ordinary course of business not interfering in any material respect with any business of the Borrower or any of its Subsidiaries; (k) Liens which constitute rights of set-off of a customary nature or bankers' liens with respect to amounts on deposit, whether arising by operation of law or by contract, in connection with arrangements entered into with banks in the ordinary course of business; and (l) Liens consisting of precautionary UCC-1 filings in respect of operating leases to the extent permitted under Section 6.2.6; ------------- (m) the Lien on the STI Shares in favor of the Estate to the extent arising pursuant to the Estate Stock Pledge Agreement, and subordinated to the Lien of the Agent in the STI shares on the terms and conditions set forth therein; and (n) extensions, renewals or replacements of any Lien referred to in clause (b) of this Section 6.2.3, other than any Lien granted to Syntex ------------- Laboratories, Inc., provided that the principal amount of the obligation secured thereby is not increased and that any such extension, renewal or replacement is limited to the property originally encumbered thereby. SECTION 6.2.4 Financial Condition. From and after the Merger ------------------- Consummation Date, the Borrower hereby covenants and agrees as set forth below: (a) Senior Debt Leverage Ratio. The Borrower will not permit its -------------------------- Senior Debt Leverage Ratio with respect to the twelve-month period ending on the last day of any Fiscal Quarter to be greater than the ratio set forth opposite such Fiscal Quarter (for each Fiscal Quarter ending prior to the first anniversary of the Merger Consummation Date, such ratio to be calculated as provided in clause (g) of this Section 6.2.4): ------------- 80
Fiscal Quarter Ending: Ratio - --------------------------------- ------- October 31, 1996 3.2:1.0 January 31, 1997 2.8:1.0 April 30, 1997 2.5:1.0 July 31, 1997 2.1:1.0 October 31, 1997 1.8:1.0 January 31, 1998 1.5:1.0 April 30, 1998 1.3:1.0 July 31, 1998 1.1:1.0 October 31, 1998 1.0:1.0 January 31, 1999 0.9:1.0 April 30, 1999 0.8:1.0 July 31, 1999 and thereafter 0.7:1.0
(b) Total Debt Leverage Ratio. The Borrower will not permit its Total ------------------------- Debt Leverage Ratio with respect to the twelve-month period ending on the last day of any Fiscal Quarter to be greater than the ratio set forth opposite such Fiscal Quarter (for each Fiscal Quarter ending prior to the first anniversary of the Merger Consummation Date, to be calculated as provided in clause (g) of this Section 6.2.4): - -------------
Fiscal Quarter Ending: Ratio - --------------------------------- ------- October 31, 1996 5.0:1.0 January 31, 1997 4.5:1.0 April 30, 1997 3.6:1.0 July 31, 1997 3.0:1.0 October 31, 1997 2.7:1.0 January 31, 1998 2.3:1.0 April 30, 1998 2.0:1.0 July 31, 1998 1.7:1.0 October 31, 1998 1.6:1.0 January 31, 1999 1.4:1.0 April 30, 1999 1.3:1.0 July 31, 1999 and thereafter 1.2:1.0
(c) Senior Debt Service Ratio. The Borrower will not permit its ------------------------- Senior Debt Service Ratio with respect to the twelve-month period ending on the last day of any Fiscal Quarter to be less than the ratio set forth below opposite such Fiscal Quarter (for each Fiscal 81 Quarter ending prior to the first anniversary of the Merger Consummation Date, such ratio to be calculated as provided in clause (g) of this Section 6.2.4): -------------
Fiscal Quarter Ending: Ratio - --------------------------------- ------- October 31, 1996 3.5:1.0 January 31, 1997 3.8:1.0 April 30, 1997 3.9:1.0 July 31, 1997 4.0:1.0 October 31, 1997 3.4:1.0 January 31, 1998 3.1:1.0 April 30, 1998 3.2:1.0 July 31, 1998 3.5:1.0 October 31, 1998 3.7:1.0 January 31, 1999 4.1:1.0 April 30, 1999 4.4:1.0 July 31, 1999 and thereafter 4.8:1.0
(d) Interest Coverage Ratio. The Borrower will not permit its ----------------------- Interest Coverage Ratio with respect to the twelve-month period ending on the last day of any Fiscal Quarter to be less than the ratio set forth below opposite such Fiscal Quarter (for each Fiscal Quarter ending prior to the first anniversary of the Merger Consummation Date, such ratio to be calculated as provided in clause (g) of this Section 6.2.4): -------------
Fiscal Quarter Ending: Ratio - --------------------------------- ------- October 31, 1996 3.0:1.0 January 31, 1997 3.5:1.0 April 30, 1997 4.0:1.0 July 31, 1997 5.0:1.0 October 31, 1997 5.8:1.0 January 31, 1998 6.3:1.0 April 30, 1998 7.3:1.0 July 31, 1998 7.5:1.0 October 31, 1998 7.0:1.0 January 31, 1999 6.9:1.0 April 30, 1999 6.8:1.0 July 31, 1999 and thereafter 7.5:1.0
82 (e) Net Worth. The Borrower will not permit its net worth determined --------- in accordance with GAAP as of the last day of any Fiscal Quarter, commencing with the Fiscal Quarter ending on July 31, 1996 and continuing thereafter, to be less than (1) $19,500,000 plus (2) 75% of Net Income (but not loss) for each Fiscal Quarter ending after July 31, 1996 through and including the last day of the Fiscal Quarter in which this covenant is being tested; provided, however, -------- ------- that the amount set forth in clause (1) above shall be reduced by the amount, if any, by which any goodwill resulting from the Merger is allocated to research and development and is expensed by the Company on its income statement for the Fiscal Quarter during which the Merger occurs. (f) EBITDA. The Borrower will not permit EBITDA for the twelve-month ------ period ending on the last day of any Fiscal Quarter to be less than the amount set forth opposite such Fiscal Quarter (for each Fiscal Quarter ending prior to the first anniversary of the Merger Consummation Date, such amount to be calculated as provided in clause (g) of this Section 6.2.4): -------------
Fiscal Quarter Ending: Amount --------------------- ---------- October 31, 1996 $ 5,000,000 January 31, 1997 $ 5,500,000 April 30, 1997 $ 6,500,000 July 31, 1997 $ 8,000,000 October 31, 1997 $ 8,500,000 January 31, 1998 $ 9,000,000 April 30, 1998 $10,000,000 July 31, 1998 $11,500,000 October 31, 1998 $12,000,000 January 31, 1999 $13,000,000 April 30, 1999 $14,000,000 July 31, 1999 and thereafter $15,000,000
(g) Calculations for Stub Periods. Notwithstanding anything contained ----------------------------- herein to the contrary, calculation of all items relating to income or expense (including, without limitation, EBITDA and Interest Expense) for any period ending prior to the first anniversary of the Merger Consummation Date shall be made by annualizing all items relating to income or expense for the period consisting of the full Fiscal Quarter(s) elapsed from the Merger Consummation Date to the end of such period and by using the actual scheduled repayments of Indebtedness occurring during such period. 83 SECTION 6.2.5 Capital Expenditures. The Borrower will not, and will --------------------- not permit any Subsidiary to make or commit to make Consolidated Capital Expenditures, except that, during any Fiscal Year, the Borrower and its Subsidiaries may make Consolidated Capital Expenditures (including the amount of Capitalized Lease Liabilities incurred during such Fiscal Year that in accordance with GAAP is attributable to principal) which in the aggregate do not exceed the amount set forth below opposite such Fiscal Year (in the case of the 1996 Fiscal Year, for the period commencing on the Closing Date and ending on July 31, 1996):
Fiscal Year: Amount - -------------- ---------- 1996 $3,500,000 1997 $2,000,000 1998 $2,500,000 1999 $3,000,000 2000 $3,000,000 2001 $3,000,000
provided further, however, that expenditures from insurance proceeds received - -------- ------- ------- upon the occurrence of a Loss which are made to replace or repair damaged or destroyed assets will not be included in the foregoing calculation. SECTION 6.2.6 Lease Obligations. The Borrower will not, and will not ----------------- permit any Subsidiary to, create or suffer to exist any obligation for the payment of rent for any property under any operating lease or agreement to lease having a term of one year or more, except for (a) leases in existence on the Closing Date and described in Item 20 (Leases) of the Disclosure Schedule, and ------- (b) any lease of real property entered into by the Borrower or any Subsidiary after the Closing Date in the ordinary course of business; provided, however, -------- ------- that no such lease shall subject the Borrower or any Subsidiary to Environmental Liabilities and Costs and that the aggregate amount of payments due from the Borrower and its Subsidiaries for all leases referred to in this Section 6.2.6 ------------- during any Fiscal Year set forth below is less than the amount set forth below opposite such Fiscal Year (in the case of the 1996 Fiscal Year, for the period commencing on the Closing Date and ending on July 31, 1996): 84
Fiscal Year: Amount ------------ ---------- 1996 $1,000,000 1997 $1,000,000 1998 $1,250,000 1999 $1,250,000 2000 $1,250,000 2001 $1,250,000
SECTION 6.2.7 Investments. The Borrower will not, and will not ----------- permit any Subsidiary to, make, incur, assume or suffer to exist any Investment in any other Person except: (a) Cash Equivalent Investments; (b) deposits for utilities, security deposits under leases and similar prepaid expenses; (c) accounts receivable arising in the ordinary course of business; (d) Investments existing on the Closing Date and disclosed in Item 21 ------- (Existing Investments) of the Disclosure Schedule; (e) Investments in the form of Indebtedness made by the Borrower in its Subsidiaries (other than Inactive Subsidiaries) to the extent such Investments are evidenced by demand promissory notes in principal amounts equal to the amount of such Investments, payable to the Borrower and pledged by the Borrower in favor of the Agent pursuant to the Pledge Agreements; (f) Investments in the form of equity made by the Borrower in its Subsidiaries (other than Inactive Subsidiaries) to the extent permitted under subsection (b) of Section 6.2.10; -------------- (g) Investments (including debt obligations) received in connection with a bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business, provided that if such Investments are evidenced by promissory notes or other instruments, and such instruments are pledged to the Agent, for its benefit and the benefit of the Lenders; 85 (h) Investments arising under Interest Rate Contracts; and (i) Investments consisting of deposit accounts of the Borrower and its Subsidiaries maintained in the ordinary course of business. SECTION 6.2.8 Restricted Payments, etc. The Borrower will not ------------------------ declare, pay or make any dividend or distribution (in cash, property or obligations) on any shares of any class of Stock (now or hereafter outstanding) of the Borrower or on any warrants, options or other rights in respect of any class of Stock (now or hereafter outstanding) of the Borrower or apply, or permit any Subsidiary to apply, any of its funds, property or assets to the purchase, redemption, sinking fund or other retirement of any shares of any class of Stock (now or hereafter outstanding), of the Borrower or any Subsidiary, or make any deposit for any of the foregoing; provided, however, -------- ------- that (i) the Borrower may redeem Series D Preferred Stock from the State of Maryland in accordance with the terms of the Stock Purchase Agreement between Brunswick and the State of Maryland as in effect on the Closing Date and (ii) after the Merger Consummation Date, the Borrower may redeem restricted shares of Stock from any officer or employee who has purchased such restricted shares of Stock since the Merger Consummation Date, provided that the Borrower may not -------- redeem such restricted shares of Stock for more than the purchase price paid by such officer or employee for such restricted shares of Stock. SECTION 6.2.9 Take or Pay Contracts; Sale/Leasebacks. (a) The -------------------------------------- Borrower will not, and will not permit any Subsidiary to, enter into or be a party to any arrangement for the purchase of materials, supplies, other property or services if such arrangement by its express terms requires that payment be made by the Borrower or such Subsidiary regardless of whether or not such materials, supplies, other properties or services are delivered or furnished to it. (b) The Borrower will not enter into, or permit any Subsidiary to enter into, any arrangement with any Person providing for the leasing by the Borrower or one or more Subsidiaries of any property or assets, which property or assets has been or is to be sold or transferred by the Borrower or such Subsidiary to such Person except as permitted by Section 6.2.2(g). ---------------- SECTION 6.2.10 Consolidation, Merger, Subsidiaries, etc. (a) The ----------------------------------------- Borrower will not, and will not permit any Subsidiary to, liquidate or dissolve, consolidate with, or merge into or with, any Person, or purchase or otherwise acquire all or substantially all of the assets or any Person (or of any operating division or unit thereof), except that (i) any such Subsidiary may liquidate or dissolve voluntarily into, and may merge with and into, the Borrower or any wholly-owned Subsidiary other than an Inactive Subsidiary (so long as the Borrower or such wholly-owned Subsidiary is the surviving corporation), and (ii) Brunswick and STI may 86 consummate the Merger provided that they simultaneously comply with the conditions set forth in Section 4.2 and Section 4.3. ----------- ----------- (b) The Borrower will not, and will not permit any Subsidiary to, create any Subsidiary or transfer any assets to any Subsidiary; provided, -------- however, that the Borrower or any Subsidiary may create or transfer assets to - ------- any Subsidiary, provided that neither Brunswick nor any Subsidiary shall transfer more than 20% of its respective assets to Subsidiaries, in the aggregate and, to the extent any new Subsidiary is created, such Subsidiary executes and delivers to the Agent, for its benefit and the ratable benefit of the Lenders, (i) security agreements, collateral assignments, pledge agreements, UCC financing statements and other documents, all substantially in the form of the Security Documents executed and delivered as of the Closing Date, granting to the Agent, for its benefit and the ratable benefit of the Lenders, Liens on all of its assets subject only to Liens permitted under Section 6.2.3 and (ii) a ------------- guaranty in substantially the form of the Brunswick Subsidiary Guaranty executed and delivered as of the Closing Date. SECTION 6.2.11 Asset Dispositions, etc. The Borrower will not, and ------------------------ will not permit any Subsidiary to, sell, transfer, lease or otherwise dispose of, or grant options, warrants or other rights with respect to, any of its assets (including accounts receivable and capital stock of Subsidiaries) to any Person, unless (a) such disposition is made in the ordinary course of business and consists of inventories; or (b) such disposition constitutes a disposition of obsolete or retired assets no longer used in the business of the Borrower and its Subsidiaries. SECTION 6.2.12 Modification of Organic Documents, etc. The Borrower --------------------------------------- will not consent to any amendment, supplement or other modification of any of the terms or provisions contained in, or applicable to, the charter or the by- laws of the Borrower, except for any amendment, supplement or other modification which does not adversely affect the Borrower's ability to pay or perform the Obligations. SECTION 6.2.13 Transactions with Affiliates. The Borrower will not, ---------------------------- and will not permit any Subsidiary to, enter into, or cause, suffer or permit to exist: (a) any arrangement or contract with any of its Affiliates (other than its Subsidiaries) of a nature customarily entered into by Persons which are Affiliates of each other (including management or similar contracts or arrangements relating to the allocation of revenues, expenses or otherwise) requiring any payments to be made by the Borrower or any Subsidiaries to any such Affiliate, other than the transactions provided for in the Loan Documents; and 87 (b) any other transaction, arrangement or contract with any of its Affiliates which is on terms which are less favorable than are obtainable from any Person which is not one of its Affiliates. SECTION 6.2.14 Inconsistent Agreements. The Borrower will not, and ----------------------- will not permit any Subsidiary to, enter into any material agreement containing any provision which would be violated or breached in any material respect by any Loan or by the performance by the Borrower or any Subsidiary of its obligations hereunder or under any Loan Document. SECTION 6.2.15 Change in Accounting Method. The Borrower will not, --------------------------- and will not permit any Subsidiary to, make any change in accounting treatment and reporting practices except as required by GAAP. SECTION 6.2.16 Change in Fiscal Year End. The Borrower will not ------------------------- change its Fiscal Year end without the Required Lenders' prior written consent, which consent will not be unreasonably withheld but will not be given with respect to more than one such change during the term of this Agreement, except that Brunswick may change its Fiscal Year end to July 31 as a result of or in contemplation of the Merger. SECTION 6.2.17 Compliance with ERISA. The Borrower will not, and --------------------- will not permit any Subsidiary to take, or fail to take, any action with respect to a Plan, including establishing, amending, or terminating or withdrawing from any Plan, without first obtaining the Agent's written consent, where such action or failure to act could result in any liabilities under the IRC, ERISA, or any other applicable law which individually or in the aggregate could result in a Material Adverse Change. SECTION 6.2.18 Limitation on Restrictions on Subsidiary Dividends. -------------------------------------------------- The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Subsidiary to (a) pay dividends or make other distributions on its Stock or other interests or participations in profits owned by the Borrower or any Subsidiary of the Borrower or pay any Indebtedness owed to the Borrower or any Subsidiary of the Borrower, (b) make loans or advances to the Borrower or any Subsidiary of the Borrower or (c) transfer any of its property or assets to the Borrower or any Subsidiary of the Borrower, except for such encumbrances and restrictions existing under or by reason of this Agreement and the other Loan Documents. 88 SECTION 6.2.19. Modification of Certain Documents. The Borrower --------------------------------- shall not amend or modify, or consent to any amendment or modification of, any of the terms of the Estate Subordinated Note, the Junior Subordinated Note or the Estate Stock Pledge Agreement, the effect of which is to (i) increase the principal amount thereof, (ii) increase the interest rate applicable thereto, or cause any accrued interest thereon to be payable in cash at any time prior to the second anniversary of the Closing Date, (iii) alter or in any way modify the subordination provisions thereof (together with any definitions used therein), (iv) require any amortization of principal or any prepayment of interest, (v) impose on the Borrower or any of its Subsidiaries any additional or more burdensome obligations or covenants, (vi) impose on the Borrower any additional or more burdensome events of default or other events or conditions the effect of which would be to accelerate, or to permit the acceleration of, the stated maturity of the Estate Subordinated Note or the Junior Subordinated Note (or to permit any holder thereof to require the Borrower to redeem or repurchase the Estate Subordinated Note or the Junior Subordinated Note) or to allow the Estate (or any successor thereto) to exercise any remedies under the Estate Stock Pledge Agreement, (vii) modify the Estate Stock Pledge Agreement in any manner such that the Lien granted pursuant thereto is not released upon consummation of the Merger, or (viii) adversely affect any right or interest of the Agent or any Lender. SECTION 6.2.20. Prohibition on Voluntary Prepayments on Subordinated ---------------------------------------------------- Indebtedness. The Borrower will not, and will not permit any of its - ------------ Subsidiaries to, make any voluntary or optional payment or prepayment on, or redemption or acquisition for value of the Estate Subordinated Note, the Junior Subordinated Note or any Indebtedness incurred to refinance the Estate Subordinated Note (as permitted pursuant to clause (k) of Section 6.2.2); ------------- provided, however, that the Borrower may repay the Estate Subordinated Note to - -------- ------- the extent such payment is required pursuant to Section 4.1 of the Estate Subordinated Note as in effect on the Closing Date. SECTION 6.2.21. Prohibition on Actions Triggering Redemption of ----------------------------------------------- Series D Stock. The Borrower will not relocate its office located in the State - -------------- of Maryland on the Closing Date to any location outside the State of Maryland or take any other action that would permit the State of Maryland to require the redemption of the Series D Preferred Stock. 89 ARTICLE 7 EVENTS OF DEFAULT SECTION 7.1 Events of Default. The term "Event of Default" shall ----------------- ---------------- mean any of the events set forth in this Section 7.1. ----------- SECTION 7.1.1 Non-Payment of Obligations. The Borrower shall default: -------------------------- (a) in the payment or prepayment when due of any principal of any Loan; (b) in the payment when due of the interest payable in respect of any Loan, the commitment fee provided for in Section 2.4 hereof and such default ----------- shall continue unremedied for a period of five (5) days; or (c) in the payment when due of any Obligation (other than an Obligation referenced in clause (a) or (b) of this Section 7.1.1) and such ------------- default shall continue unremedied for a period of five (5) days after a notice thereof shall have been given to the Borrower by the Agent or any Lender or a Responsible Officer of the Borrower shall have actual knowledge thereof. SECTION 7.1.2 Non-Performance of Certain Covenants. The Borrower ------------------------------------ shall default in the due performance and observance of any of its obligations under Section 6.1 and such default shall continue unremedied for a period of ten ----------- (10) days after notice thereof shall have been given to the Borrower by the Agent (or if such default is not reasonably susceptible to cure within ten (10) days, such longer period as is reasonably needed to effect such cure, but in no event longer than thirty (30) days from the date notice is given, so long as the Borrower promptly commences and diligently pursues such cure), or shall default in the due performance or observation of any of its obligations under Section ------- 6.2. - --- SECTION 7.1.3 Defaults Under Other Loan Documents; Non-Performance of ------------------------------------------------------- Other Obligations. Any "Event of Default" shall occur under the other Loan - ----------------- Documents; or the Borrower or any Subsidiary shall default in the due performance and observance of any other obligation, covenant or agreement contained herein or in any other Loan Document and such default shall continue unremedied for a period of ten (10) days after notice thereof shall have been given to the Borrower by the Agent (or if such default is not reasonably susceptible to cure within ten (10) days, such longer period as is reasonably needed to effect such cure, but in no event longer than thirty (30) days from the date notice is given, so long as the Borrower promptly commences and diligently pursues such cure). 90 SECTION 7.1.4 Bankruptcy, Insolvency, etc. The Borrower or any ---------------------------- Subsidiary shall: (a) become insolvent or generally fail to pay, or admit in writing its inability to pay, debts as they become due; (b) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Borrower or any Subsidiary or any property of any thereof, or make a general assignment for the benefit of creditors; (c) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Borrower or any Subsidiary or for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged within sixty (60) days; (d) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Borrower or any Subsidiary, and, if such case or proceeding is not commenced by the Borrower or such Subsidiary, such case or proceeding shall be consented to or acquiesced in by Borrower or such Subsidiary or shall result in the entry of an order for relief or shall remain for sixty (60) days undismissed; or (e) take any corporate action authorizing, or in furtherance of, any of the foregoing. SECTION 7.1.5 Breach of Warranty. Any representation or warranty of ------------------ the Borrower hereunder or in any other Loan Document or in any other writing furnished by or on behalf of the Borrower to the Agent or any Lender for the purposes of or in connection with this Agreement or any such Loan Document is or shall be incorrect when made in any material respect. SECTION 7.1.6 Default on Other Indebtedness, etc. (a) Any ----------------------------------- Indebtedness of the Borrower or any Subsidiary in an aggregate principal amount exceeding $500,000 (i) shall be duly declared to be or shall become due and payable prior to the stated maturity thereof (other than as a result of any mandatory prepayments required under Section 3.3.1 of this Agreement, Section ------------- 4.1 of the Estate Subordinated Note or any provision of any instrument governing any such Indebtedness that provides for the mandatory prepayment thereof with insurance proceeds or the like as a result of any casualty loss relating to any property securing 91 such Indebtedness), or (ii) shall not be paid as and when the same becomes due and payable including any applicable grace period; or (b) there shall occur and be continuing any event under any Instrument relating to any Indebtedness of the Borrower or any Subsidiary in an aggregate principal amount exceeding $500,000, the effect of which is to cause such Indebtedness to become due prior to its stated maturity or to permit the holder or holders of such Indebtedness, or a trustee, agent or other representative on behalf of such holder or holders, to cause such Indebtedness to become due prior to its stated maturity or to require (or permit the holder or holders to require) the Borrower or any Subsidiary to redeem, repurchase or otherwise acquire or retire such Indebtedness for value. SECTION 7.1.7 Failure of Valid, Perfected Security Interest. The --------------------------------------------- security interest or Lien in the Collateral and all proceeds thereof, securing the Obligations shall cease to be valid or perfected at any time after the Closing Date (other than as a result of (i) the Agent's failure to make any required filing to the extent the necessity of such filing was disclosed to the Agent in an opinion of counsel to the Borrower or (ii) the release of possession of any pledged Instrument delivered to the Agent or its agent or representative pursuant to any of the Security Documents). SECTION 7.1.8 Employee Plans. Any of the following events shall -------------- occur with respect to any Plan: (i) any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA) not disclosed in Item 8 ------ (Benefit Plans) of the Disclosure Schedule, whether or not waived, shall exist with respect to any Single Employer Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) a notice of intent to terminate any Single Employer Plan for purposes of Title IV of ERISA is issued by the plan administrator thereof without the prior written consent of the Required Lenders, or the PBGC shall commence proceedings to terminate any Single Employer Plan, (v) the Borrower or any Commonly Controlled Entity or Subsidiary shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the ERISA Insolvency, Plan Reorganization or termination of, a Multiemployer Plan, (vi) the Borrower or any Commonly Controlled Entity or Subsidiary shall fail to make any quarterly installment payment to a Pension Plan required under Section 302(e) of ERISA or Section 412(m) of the Code, (vii) the Borrower or any Commonly Controlled Entity or Subsidiary shall fail to make any contribution to a Multiemployer Plan which is required under ERISA, the Code or applicable collective bargaining agreements, or (viii) any 92 other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (viii) above, such event or condition, together with all other such events or conditions, if any, could subject the Borrower or any Subsidiary (directly or indirectly) to any tax, penalty or other liabilities under Title I or Title IV of ERISA, Section 404 or 419 and Chapter 43 of the IRC or any other applicable law which in the aggregate could result in a Material Adverse Change. SECTION 7.1.9 Judgments. A final judgment which, with other such --------- outstanding final judgments against the Borrower and its Subsidiaries (in each case to the extent not covered by insurance), exceeds an aggregate of $500,000, shall be entered against the Borrower or any of its Subsidiaries and, within 30 days after entry thereof, such judgment shall not have been discharged or execution thereof stayed pending appeal, or, within 30 days after the expiration of any such stay, such judgment shall not have been discharged or stayed. SECTION 7.1.10 Cessation of Business; Dissolution. The entry of any ---------------------------------- order of a court enjoining, restraining or otherwise preventing the Borrower or any Subsidiary from conducting all or any material part of its business affairs; or the cessation of business or dissolution of the Borrower. SECTION 7.1.11 Subordinated Debt Documents. The Borrower shall fail ---------------------------- to perform, keep or observe any term or provision of, or a default or other event shall occur or exist under, the Estate Subordinated Note or the Junior Subordinated Note, or any other event shall have occurred or circumstance shall exist, in any such case, the effect of which is to accelerate, or to permit the holder thereof to accelerate, the maturity of the Estate Subordinated Note or the Junior Subordinated Note or to permit the holder thereof to require the Borrower to redeem the Estate Subordinated Note or the Junior Subordinated Note or any portion thereof. SECTION 7.2 Action if Bankruptcy. If any Event of Default described -------------------- in clause (d) of Section 7.1.4 shall occur, the outstanding principal amount of ------------- all outstanding Loans and all other Obligations shall automatically be and become immediately due and payable and all Commitments shall automatically be terminated, in either case without notice, demand or presentment. SECTION 7.3 Action if Other Event of Default. If any Event of -------------------------------- Default (other than any Event of Default described in clause (d) of Section ------- 7.1.4) shall occur for any reason, whether voluntary or involuntary, and be - ----- continuing, the Agent may, and upon the direction of the Required Lenders, shall upon notice or demand, declare all or any portion of the outstanding principal amount of the Loans to be due and payable and any or all other Obligations to be due and payable and all Commitments to be terminated, whereupon the full 93 unpaid amount of such Loans and any and all other Obligations which shall be so declared due and payable shall be and become immediately due and payable and any and all Commitments which shall be so declared terminated shall be and become immediately terminated, in each case without further notice, demand, or presentment, and to the extent any obligations are paid by the Borrower, they shall constitute a prepayment under this Agreement. ARTICLE 8 THE AGENT SECTION 8.1 Actions. Each Lender and the holder of each Note ------- authorize the Agent to act on behalf of such Lender or holder under this Agreement and any other Loan Document and, in the absence of other written instructions from the Required Lenders received from time to time by the Agent (with respect to which the Agent agrees that it will, subject to the last two sentences of this Section 8.1, comply, except as otherwise advised by counsel), ----------- to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto. Each Lender agrees (which agreement shall survive any termination of this Agreement) to indemnify the Agent, pro rata according to such Lender's Percentage, from and against any and -------- all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement, the Notes, or any other Loan Document, including the reimbursement of the Agent for all out-of-pocket expenses (including attorneys' fees) incurred by the Agent hereunder or in connection herewith or in enforcing the Obligations of the Borrower under this Agreement or any other Loan Document, in all cases as to which the Agent is not reimbursed by the Borrower; provided that no Lender shall be liable for the -------- payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements determined by a court of competent jurisdiction in a final proceeding to have resulted solely from the Agent's gross negligence or wilful misconduct. The Agent shall not be required to take any action hereunder or under any other Loan Document, or to prosecute or defend any suit in respect of this Agreement or any other Loan Document, unless it is indemnified to its satisfaction by the Lenders against loss, costs, liability and expense. If any indemnity in favor of the Agent shall become impaired, it may call for additional indemnity and cease to do the acts indemnified against until such additional indemnity is given. 94 SECTION 8.2 Funding Reliance, etc. Unless the Agent shall have been ---------------------- notified by telephone, confirmed in writing, by any Lender by 5:00 p.m., New York City time, on the day prior to a Borrowing that such Lender will not make available the amount which would constitute its Percentage of such Borrowing on the date specified therefor, the Agent may assume that such Lender has made such amount available to the Agent and, in reliance upon such assumption, make available to the Borrower a corresponding amount; provided, however, that the -------- ------- Agent shall have no obligation to do so. If such amount is made available by such Lender to the Agent on a date after the date of such Borrowing, such Lender shall pay to the Agent on demand interest on such amount at the Federal Funds Rate for the number of days from and including the date of such Borrowing to the date on which such amount becomes immediately available to the Agent, together with such other compensatory amounts as may be required to be paid by such Lender to the Agent pursuant to the Rules for Interbank Compensation of the Council on International Banking or the Clearinghouse Compensation Committee, as the case may be, as in effect from time to time. A statement of the Agent submitted to any Lender with respect to any amounts owing under this Section 8.2 ----------- shall be conclusive, in the absence of manifest error. If such amount is not in fact made available to the Agent by such Lender within three Business Days after the date of such Borrowing, the Agent shall be entitled to recover such amount, with interest thereon at the rate per annum then applicable to the Loans comprising such Borrowing, within five Business Days after demand, from the Borrower. Nothing herein shall be construed to release any Lender from its obligation to make Loans subject to the terms and conditions set forth in this Agreement. SECTION 8.3 Exculpation. Neither the Agent nor any of its directors, ----------- officers, employees or agents shall be liable to any Lender for any action taken or omitted to be taken by it under this Agreement, the Notes, or any Loan Document, or in connection herewith or therewith, except for its own wilful misconduct or gross negligence. The Agent shall not be responsible to any Lender for any recitals, statements, representations or warranties herein or in any certificate or other document delivered in connection herewith or for the authorization, execution, effectiveness, genuineness, validity, enforceability, perfection, collectibility, or sufficiency of any of the Loan Documents, the financial condition of the Borrower or any Subsidiary or the condition or value of any of the Collateral, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of any of the Loan Documents, the financial condition of the Borrower or any Subsidiary or the existence or possible existence of any Default. The Agent shall be entitled to rely upon advice of counsel concerning legal matters and upon any notice, consent, certificate, statement or writing which it believes to be genuine and to have been presented by a proper Person. 95 SECTION 8.4 Successor. The Agent may resign as such at any time upon --------- at least thirty (30) days' prior notice to the Borrower and all Lenders, such resignation not to be effective until a successor Agent is in place. If the Agent at any time shall resign, the Required Lenders may appoint another Lender as a successor Agent which shall thereupon become the Agent hereunder. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be one of the Lenders or a financial institution reasonably acceptable to the Borrower organized under the laws of the United States and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall be entitled to receive from the retiring Agent such documents of transfer and assignment as such successor Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges, and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. SECTION 8.5 Loans by the Agent. The Agent shall have the same rights ------------------ and powers with respect to (a) the Loans made by it or any of its Affiliates and (b) the Notes held by it or any of its Affiliates, as any Lender and may exercise the same as if it were not the Agent. SECTION 8.6 Credit Decisions. Each Lender acknowledges that it has, ---------------- independently of the Agent and each other Lender, and based on such financial information and such other documents, information and investigations as it has deemed appropriate, made its own credit decision to extend its Commitments, to make the Loans. Each Lender also acknowledges that it will, independently of the Agent and each other Lender, and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement or any other Loan Document. SECTION 8.7 Copies, etc. The Agent shall give prompt notice to each ------------ Lender of each notice or request required or permitted to be given to the Agent by the Borrower pursuant to the terms of this Agreement. The Agent will distribute to each Lender each Instrument received for its account and copies of all other communications received by the Agent from the Borrower for distribution to the Lenders by the Agent in accordance with the terms of this Agreement. Notwithstanding anything herein contained to the contrary, all notices to and communications with the Borrower under this Agreement and the other Loan Documents shall be effected by the Lenders through the Agent. 96 ARTICLE 9 MISCELLANEOUS SECTION 9.1 Waivers, Amendments, etc. (a) The provisions of this ------------------------- Agreement and of each Loan Document may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and, (x) in the case of an amendment or modification, is consented to by the Borrower and the Required Lenders and (y) in the case of a waiver of any obligation of the Borrower or compliance with any prohibition contained in this Agreement or any other Loan Document, is consented to by the Required Lenders; provided, however, -------- ------- that no such amendment, modification or waiver: (i) which would modify any requirement hereunder that any particular action be taken by all the Lenders or by the Required Lenders shall be effective unless consented to by each Lender; (ii) which would modify this Section 9.1, change the definition of ----------- "Required Lenders," increase the Revolving Loan Commitment Amount or change any Percentage for any Lender, reduce any fees payable to the Lenders described in Article 2 and Article 3, extend the Revolving Loan Commitment --------- --------- Termination Date or subject any Lender to any additional obligations shall be made without the consent of each Lender; (iii) which would extend the due date for, or reduce the amount of, any payment or prepayment of principal of or interest on any Loan (or reduce the principal amount of or rate of interest on any Loan) shall be made without the consent of the holder of the Note evidencing such Loan; or (iv) which would affect adversely the interests, rights, compensation or obligations of the Agent qua the Agent shall be made without consent of --- the Agent. (b) No failure or delay on the part of the Agent, any Lender or the holder of any Note in exercising any power or right under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Borrower in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or consent by the Agent, any Lender, or the holder of any Note under this Agreement or any other Loan Document shall, except as may be otherwise stated in such waiver or consent, be applicable to subsequent transactions. No waiver 97 or consent hereunder shall require any similar or dissimilar waiver or consent thereafter to be granted hereunder. (c) Neither any Lender nor the Agent shall be under any obligation to marshal any assets in favor of the Borrower or any other party or against or in payment of any or all of the Obligations. Recourse for security shall not be required at any time. To the extent that the Borrower makes a payment or payments to the Agent or the Lenders, or the Agent or the Lenders enforce their security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently for any reason invalidated, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. SECTION 9.2 Notices. All notices hereunder shall be in writing or ------- by telecopy and shall be sufficiently given to the Agent, the Lenders or the Borrower if addressed or delivered to them at the following addresses: If to the Agent: ING Capital 135 East 57th Street New York, New York 10022 Attention: Chief Credit Officer Telecopier No.: (212) 750-8935 with copies to: ING Capital Atlanta Office 200 Galleria Parkway Suite 950 Atlanta, Georgia 30339 Telecopier No.: (770) 951-1005 and a copy to: King & Spalding 191 Peachtree Street Atlanta, Georgia 30303-1763 Attention: Hector E. Llorens, Jr. Esq. Telecopier No.: (404) 572-5100 98 If to any other Lender: At its address set forth beneath its name on the signature pages hereof If to the Borrower Brunswick Biomedical Corporation/ prior to the Merger 6 Thacher Lane Consummation Date: Wareham, Massachusetts 02571 Attention: James H. Miller Telecopier No.: (508) 460-7702 with a copy to: Palmer & Dodge One Beacon Street Boston, Massachusetts 02108 Attention: Stanley Keller, Esq. Telecopier No: (617) 227-4420 If to the Borrower Survival Technology, Inc. on or after the Merger 2275 Research Boulevard, Suite 100 Consummation Date: Rockville, Maryland 20850 Attention: James H. Miller Telecopier No: (301) 926-6423 with a copy to: Palmer & Dodge One Beacon Street Boston, Massachusetts 02108 Attention: Stanley Keller, Esq. Telecopier No: (617) 227-4420 or at such other address as any party may designate to any other party by written notice. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when received, if deposited in the mail, postage prepaid; when transmission is verified, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. SECTION 9.3 Costs and Expenses. The Borrower agrees to pay all ------------------ reasonable out-of-pocket expenses of the Agent (including reasonable fees and expenses of counsel to the Agent, or of any consultants or other experts retained by the Agent) in connection with (i) the negotiation, preparation, execution, and delivery of this Agreement and each other Loan Document, including schedules and exhibits, and any amendments, waivers, consents, supplements, terminations, releases or other modifications to this Agreement or any other Loan 99 Document as may from time to time hereafter be required, whether or not the transactions contemplated hereby are consummated, and (ii) the consideration of legal questions relevant to this Agreement of any other Loan Document. The Borrower also agrees to pay and hold the Agent and the Lenders harmless from any stamp, documentary, intangibles, transfer or similar taxes or charges, and all recording or filing fees with respect to the Loan Documents or any payments to be made thereunder and any title insurance premiums, surveyors costs and valuation fees, and to reimburse the Agent and each Lender upon demand for all reasonable out-of-pocket expenses (including reasonable attorneys' fees and expenses) incurred by the Agent or such Lender in enforcing the Obligations of the Borrower or any Subsidiary under this Agreement or any other Loan Document or related Document or in connection with any restructuring or "work-out" of any Obligations, provided that the Lenders shall be entitled to reimbursement in respect of reasonably attorney's fees and expenses payable to a single law firm (in addition to any law firm representing the Agent) in connection with any such enforcement, restructuring or "work-out". SECTION 9.4 Indemnification. In consideration of the execution and --------------- delivery of this Agreement by the Agent and each Lender, the making of the Bridge Loan and the Term Loan and the extension of the Revolving Loan Commitment, the Borrower hereby indemnifies, exonerates and holds the Agent and each Lender, each of their respective successors and assigns, each of the respective officers, directors, employees, attorneys and agents of the Agent and each Lender and each of their respective successors and assigns (collectively, the "Lender Parties") free and harmless from and against any and all actions, -------------- causes of action, suits, losses, costs, liabilities (including, but not limited to, Environmental Liabilities and Costs), damages and expenses (irrespective of whether such Lender Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by the Lender Parties or any of them ----------------------- or asserted or awarded against the Lender Parties or any of them as a result of, or arising out of, or relating to (a) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Loan, including, without limitation, the Acquisition and the Merger; (b) the use of any of the proceeds of the Loans by the Borrower for any other purpose; (c) the making of any claim by any investment banking firm, broker or third party that it is entitled to compensation from the Agent or any Lender in connection with this 100 Agreement (other than investment banking firms and brokers retained by the Agent or any Lender); (d) the entering into and performance of this Agreement and any other Loan Document by any of the Lender Parties (other than the breach by such Lender Party of this Agreement); (e) the existence of any contaminant, in, under, on or otherwise affecting any property owned, used, operated, or leased by Borrower or any Subsidiary in the past, present, or future or any surrounding areas affected by such property, regardless of whether the existence of the contaminant is related to the past, present, or future operations of the Borrower and its Subsidiaries, or their predecessors in interest or any other Person; any Environmental Liabilities and Costs related to any property owned, used, operated, or leased by Borrower or any Subsidiary in the past, present, or future; any Environmental Liabilities and Costs related to the past, present, or future operations of the Borrower or any Subsidiaries; any alleged violations of any Environmental Law related to any property owned, used, operated, or leased by Borrower or any Subsidiary in the past, present, or future; any alleged violations of any Environmental Law related to the past, present, or future operations of the Borrower or any Subsidiaries; the performance of any remedial action that is related to any property owned, used, operated, or leased by Borrower or any Subsidiaries in the past, present, or future; the performance of any remedial action that is related to the past, present, or future operations of the Borrower or any Subsidiaries; and the imposition of any Lien on any property affected by this Agreement or any of the other Loan Documents arising from any Environmental Liabilities or Costs; (f) the breach in any material respect by Borrower of any representation or warranty set forth in this Agreement or any Loan Document; (g) the failure of Borrower to comply in any material respect with any term, condition, or covenant set forth in this Agreement or any Loan Document; or (h) any claim, litigation, investigation or proceeding relating to (i) any of the Loan Documents, (ii) any proposed acquisition by the Borrower of all or any portion of the stock or assets of any Person or (iii) any of the other matters referenced in clauses (a) - (g) above, whether or not the Agent or any Lender (or any of their respective officers, directors, employees or agents) is a party thereto; except for any such Indemnified Liabilities arising for the account of a - ---------- particular Lender Party by reason of the relevant Lender Party's material breach of any of its obligations under this Agreement or any other Loan Document or by reason of the relevant Lender Party's bad faith, 101 gross negligence or wilful misconduct, in each such case as determined by a final and nonappealable decision of a court of competent jurisdiction. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The foregoing indemnity shall become effective immediately upon the execution and delivery hereof and shall remain operative and in full force and effect notwithstanding the consummation of the transactions contemplated hereunder, the repayment of any of the Loans made hereunder, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of any Lender or the Agent. SECTION 9.5 Survival. The obligations of the Borrower under -------- Sections 2.5, 3.5, 9.3 and 9.4, and the obligations of the Lenders under Section - ------------ --- --- --- ------- 8.1, shall in each case survive any termination of this Agreement. The - --- representations and warranties made by the Borrower in this Agreement, the Notes and in each other Loan Document (including those not required to be made or repeated after the Merger Consummation Date) shall survive the execution and delivery of this Agreement, the Notes and each such other Loan Document. SECTION 9.6 Severability. Any provision of this Agreement, the ------------ Notes or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement, the Notes or such other Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 9.7 Headings. The various headings of this Agreement, the -------- Notes and of each other Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement, the Notes or such other Loan Document or any provisions hereof or thereof. SECTION 9.8 Counterparts, Effectiveness, etc. This Agreement may --------------------------------- be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when counterparts hereof executed on behalf of the Borrower and each Lender (or notice thereof satisfactory to the Agent) shall have been received by the Agent and notice thereof shall have been given by the Agent to the Borrower and each Lender. 102 SECTION 9.9 Governing Law; Entire Agreement. (a) THIS AGREEMENT AND ------------------------------- THE NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the Notes and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto including the Commitment Letter. (b) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR RELATED DOCUMENT, AND EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. THE BORROWER AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING BROUGHT BY IT AGAINST THE AGENT OR ANY LENDER. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. (c) The Borrower hereby irrevocably designates, appoints and empowers CT Corporation System, whose present address is 1633 Broadway, New York, New York 10019, as its authorized agent to receive, for and on its behalf and its property, service of process in the State of New York when and as such legal actions or proceedings may be brought in the courts of the State of New York or of the United States of America sitting in New York, and such service of process shall be deemed complete upon the date of delivery thereof to such agent whether or not such agent gives notice thereof to the Borrower, or upon the earliest of any other date permitted by applicable law. The Borrower shall furnish the consent of CT Corporation System so to act to the Agent on or prior to the Closing Date. It is understood that a copy of said process served on such agent will as soon as practicable be forwarded to the Borrower, at its address set forth below, but its failure to receive such copy shall not affect in any way the service of said process on said agent as the agent of the Borrower. The Borrower irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of the copies thereof by certified mail, return receipt requested, postage prepaid, to it at its address set forth herein, such service to become effective upon the earlier of (i) the date 10 calendar days after such mailing or (ii) any earlier date permitted by applicable law. The Borrower agrees that it will at all times continuously maintain an agent to receive service of process in the State of New York on behalf of itself and its properties and in the event that, for any reason, the agent named above or its successor shall no longer serve as 103 its agent to receive service of process in the State of New York on its behalf, it shall promptly appoint a successor so to serve and shall advise the Agent and the Lenders thereof (and shall furnish to the Agent the consent of any successor agent so to act). Nothing in this Section 9.9 shall affect the right of the ----------- Agent or any Lender to bring proceedings against the Borrower in the courts of any other jurisdiction or to serve process in any other manner permitted by applicable law. SECTION 9.10 Successors and Assigns. This Agreement shall be ---------------------- binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that the Borrower may not -------- ------- assign or transfer its rights or obligations hereunder without the prior written consent of all Lenders; and the rights of sale, assignment and transfer of the Lenders are subject to Section 9.11. ------------ SECTION 9.11 Sale and Transfers, Participations, etc. (a) Any --------------------------------------- Lender may at any time sell to one or more Participants participating interests in any Loan owing to such Lender, any Note held by such Lender, the Term Loan Commitment or the Revolving Loan Commitment of such Lender, or any other interest of such Lender under this Agreement. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under this Agreement shall remain unchanged and such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Note for all purposes under this Agreement and the other Loan Documents, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents. The Borrower agrees that if amounts outstanding under this Agreement and the Notes are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement and any Note to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement or any Note, provided that such right of setoff shall be subject to -------- the approval of the Required Lenders and to the obligations of such Participant to share with the Lenders, and the Lenders agree to share with such Participant, as provided in Section 3.8 as if the Participant were a Lender hereunder and the ----------- Borrower shall have been notified of the name, address, date and amount of such Participant's participating interest in the Loans and the Commitments. The Borrower also agrees that each Participant shall be entitled to the benefits of (i) Section 9.4 and (ii) Sections 2.5 and 3.6, with respect to its participation ----------- ------------ --- in the Commitments and the Loans outstanding from time to time; provided, that -------- no Participant shall be entitled to receive any greater amount pursuant to the Sections referred to in clause (ii) than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred. 104 (b) With the consent of the Agent and the consent of the Borrower (which consent shall not be unreasonably withheld or delayed), any Lender may at any time sell to any Purchasing Lender all or any part in a minimum amount of $2,500,000, of its rights and obligations under this Agreement and the Notes pursuant to a Transfer Supplement, executed by such Purchasing Lender, such transferor Lender, the Agent and the Borrower. Upon (i) such execution of such Transfer Supplement, and (ii) delivery of a fully executed copy thereof to the Borrower, such Purchasing Lender shall for all purpose be a Lender party to this Agreement and shall have all the rights and obligations of a Lender under this Agreement, to the same extent as if it were an original party hereto, with a Percentage of the Bridge Loan, the Revolving Loan Commitment Amount and the Term Loan set forth in such Transfer Supplement, and no further consent or action by the Borrower, the Lenders or the Agent shall be required. Such Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Notes. Upon the consummation of any transfer to a Purchasing Lender pursuant to this paragraph (b), the transferor Lender, the Agent and the Borrower shall make appropriate arrangements so that, if required, replacement Notes are issued to such transferor Lender and new Notes to the Purchasing Lender in the amount equal to their respective Commitments and outstanding Loans, as appropriately adjusted pursuant to such Transfer Supplement. (c) The Agent shall maintain at its address referred to herein a copy of each Transfer Supplement delivered to it and the Register for the recordation of the names and addresses of the Lenders and the Commitments of, and principal amount of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as the owner of the Loans recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of a Transfer Supplement executed by a transferor Lender, the Agent and a Purchasing Lender together with payment by such Purchasing Lender to the Agent, for the account of the Agent and not for the account of the Lenders, of a registration and processing fee of $2,500, and the Notes subject to such Transfer Supplement, the Agent shall (i) accept such Transfer Supplement, (ii) record the information therein in the Register and (iii) give prompt notice of such acceptance and recordation to the Lenders and the Borrower. (e) If, pursuant to this Section 9.11, any interest in this Agreement ------------ or any Note is transferred to any Participant or Purchasing Lender which is organized under the laws 105 of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Participant or Purchasing Lender, concurrently with the effectiveness of such transfer, (i) to represent to the transferor Lender (for the benefit of the transferor Lender, the Agent and the Borrower) that under applicable law and treaties no taxes will be required to be withheld by the Agent, the Borrower or the transferor Lender with respect to any payments to be made to such Participant or Purchasing Lender in respect of the Loans or Commitments, (ii) to furnish to the transferor Lender, the Agent and the Borrower two properly executed original Internal Revenue Service Forms 4224 or 1001 (or any successor forms) and properly executed Internal Revenue Service Forms W-8 and W-9, as the case may be, (wherein such Participant or Purchasing Lender claims entitlement to complete exemption from the United States federal withholding tax on all interest payments hereunder and all fees payable under Section 2.4) and (iii) to agree (for the benefit of the transferor Lender, the - ----------- Agent and the Borrower) to provide the transferor Lender, the Agent and the Borrower new Internal Revenue Service Forms 4224 or 1001 upon the expiration or obsolescence of any previously delivered form or after the occurrence of any event requiring a change in the most recent forms delivered by it to the Transferor Lender, the Agent and the Borrower, and comparable statements in accordance with applicable United States laws and regulations and amendments duly executed and completed by such Participant or Purchasing Lender, and to comply from time to time with all applicable United States laws and regulations with regard to such withholding tax exemption. (f) Notwithstanding anything to the contrary set forth in this Section ------- 9.11, (i) any Lender may sell to any of its Affiliates all or any part of its - ---- rights and obligations under this Agreement and the Notes (provided that no such Affiliate shall be entitled to receive any greater amount pursuant to Sections -------- 2.5 or 3.6 than that which the transferor Lender would have been entitled to - --- --- receive in respect of the amount so assigned by such transferor Lender to such Affiliate had no such transfer occurred) and, upon the occurrence and during the continuance of an Event of Default, any Lender may sell to any Purchasing Lender all or any part of its rights and obligations under this Agreement and the Notes, in either case notwithstanding that the Borrower has not consented or does not consent to such sale, provided such Lender has obtained the consent of the Agent and otherwise meets the requirements of this Section 9.11 and (ii) any ------------ Lender may create a security interest in all or any portion of its rights under this Agreement (including the Loans owing to it and the notes held by it) in favor of the Federal Reserve Bank in accordance with Regulation A of the F.R.S. Board. SECTION 9.12 Other Transactions. Nothing contained herein shall ------------------ preclude the Agent or any other Lender from engaging in any transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Affiliates in which the Borrower or such Affiliate is not restricted hereby from engaging with any other Person. 106 SECTION 9.13 Confidentiality. The Lenders and the Agent shall hold --------------- all non-public, proprietary or confidential information (which has been identified as such by the Borrower) obtained pursuant to the requirements of this Agreement in accordance with their customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices; however, the Lenders and the Agent may make disclosure of any such information to its examiners, Affiliates, outside auditors, counsel, consultants, appraisers and other professional advisors in connection with this Agreement or as required by any proposed syndicate member or any proposed transferee or participant in connection with the contemplated transfer of any Note or participation therein or as required or requested by any Governmental Authority or representative thereof or in connection with the enforcement hereof or of any Loan Document or related document or pursuant to legal process; provided, however, that any such proposed syndicate member or proposed - -------- ------- transferee or participant shall have agreed in writing for the Borrower's benefit to be bound by the terms of this Section 9.13. In no event shall any ------------ Lender or the Agent be obligated or required to return any materials furnished to it by the Borrower. SECTION 9.14 Change in Accounting Principles. If ------------------------------- (a) any changes in accounting principles from those used in the preparation of the financial statements referred to in clause (a)(i) of Section ------- 5.4 hereafter occur as a result of the promulgation of rules, regulations, - --- pronouncements or opinions by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) result in a change in the method of calculation of financial covenants, standards or terms found in this Agreement; or (b) there is any change in the Borrower's Fiscal Year with the Required Lenders' prior written consent pursuant to Section 6.2.16 hereof; -------------- the parties hereto agree to enter into negotiations in order to amend such financial covenants, standards or terms so as to equitably reflect such changes with the desired result that the evaluations of the Borrower's financial condition shall be the same after such changes as if such changes had not been made; provided, however, that, until the parties hereto have reached a -------- ------- definitive agreement on such amendments the Borrower shall not change its Fiscal Year (other than a change by Brunswick of its Fiscal Year end to July 31 as a result of or in contemplation of the Merger) and the Borrower's financial condition and operations shall continue to be evaluated on the same principles as those used in the preparation of the financial statements referred to in clause (a)(i) of Section 5.4. ----------- 107 SECTION 9.15 Waiver of Jury Trial, Etc. THE AGENT, THE LENDERS AND -------------------------- THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, SUCH LENDERS, OR THE BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND SUCH LENDERS ENTERING INTO THIS AGREEMENT. SECTION 9.16 Limitation of Liability. Neither the Agent, the ----------------------- Lenders nor any Affiliate thereof shall have any liability with respect to, and THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON, ANY CLAIM FOR ANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS AGREEMENT, THE LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED HEREIN, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH. SECTION 9.17 Usury Savings Clause. Notwithstanding anything to the -------------------- contrary in this Agreement or any other Loan Document, if at any time any rate of interest accruing on any Obligation, when aggregated with all amounts payable by the Borrower or any other Loan Party under any of the Loan Documents that are deemed or construed to be interest accrued or accruing on such Obligation under applicable law, exceeds the highest rate of interest permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable to such Lender with respect to such Obligation (each a "Maximum Lawful Rate"), then in such event and so long as the ------------------- Maximum Lawful Rate would be so exceeded, such rate of interest shall be reduced to the Maximum Lawful Rate; provided that if at any time thereafter such rate of -------- interest accruing on Obligations held by such Lender is less than the Maximum Lawful Rate, the Borrower shall continue to pay interest to such Lender at the Maximum Lawful Rate until such time as the total interest received by such Lender in respect of the Obligations held by it is equal to the total interest which such Lender would have received had interest on all Obligations held by such Lender (but for the operation of this Section 9.17) accrued at the rate ------------ otherwise applicable under this Agreement and the other Loan Documents. Thereafter, interest payable to such Lender in respect of the Obligations held by it shall accrue at the applicable rate set forth in this Agreement or other Loan Documents unless and until such rate again exceeds the Maximum Lawful Rate, in which event this Section 9.17 shall again apply. In no event, shall the ------------ total interest received by any Lender pursuant to the terms hereof exceed the amount which such Lender could lawfully have received had interest been calculated 108 for the full term of this Agreement at the Maximum Lawful Rate. In the event that the Maximum Lawful Rate is calculated pursuant to this Section 9.17, (a) if ------------ required by applicable law, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made, and (b) if permitted by applicable law, the Borrower and such Lender shall (i) characterize any non-principal payment as an expense, fee or premium rather than as interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the entire contemplated term of the Loans so that interest for the entire term of the Loans shall not exceed the Maximum Lawful Rate. In the event that a court of competent jurisdiction, notwithstanding the provisions of this Section 9.17 ------------ shall make a final determination that any Lender has received interest in excess of the Maximum Lawful Rate, such Lender shall, to the extent permitted by applicable law, promptly apply such excess, first to any interest due and outstanding under this Agreement and the other Loan Documents, second to any principal due and payable under this Agreement and the Notes, third to the remaining principal amount of the Notes and fourth to other unpaid Obligations held by such Lender, and thereafter shall refund any excess to the Borrower or as a court of competent jurisdiction may otherwise order. SECTION 9.18 Effectiveness of Execution and Delivery by STI. This ---------------------------------------------- Agreement and the other Loan Documents to which Borrower is a party shall be deemed executed and delivered by STI upon the consummation of the Merger, and the execution and delivery by STI of this Agreement shall not be a condition to the execution, delivery and effectiveness of this Agreement as among Brunswick, the Lenders and the Agent. 109 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal by their respective officers thereunto duly authorized as of the day and year first above written. BRUNSWICK BIOMEDICAL CORPORATION By:/s/ James H. Miller --------------------------------------- James H. Miller President Percentage - ---------- 100% - Bridge INTERNATIONALE NEDERLANDEN (U.S.) 100% - Revolving CAPITAL CORPORATION, as Agent and as 100% - Term Lender By:/s/ Darren Wells -------------------------------------------- Darren Wells Managing Director 110 EXHIBITS OMITTED AS NON-MATERIAL 111 EX-3.B 5 BRIDGE NOTE EXHIBIT 3(B) BRIDGE NOTE ----------- $11,000,000.00 April 15, 1996 FOR VALUE RECEIVED, the undersigned, BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation (the "Borrower"), promises to pay to the order of -------- INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, a Delaware corporation (the "Lender"), at the times provided in the Credit Agreement referenced ------ hereinafter, the principal sum of ELEVEN MILLION AND NO/100 DOLLARS ($11,000,000.00) or, if less, the outstanding principal amount of the Bridge Loan made by the Lender pursuant to that certain Credit Agreement, dated as of April 15, 1996 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"; capitalized terms used herein and not ---------------- defined herein shall have the meaning ascribed to them in the Credit Agreement), among the Borrower, Internationale Nederlanden (U.S.) Capital Corporation, as Agent, and the various lenders (including the Lender) as are, or may from time to time become, parties thereto. Notations indicating the Bridge Loan made by the Lender pursuant to the Credit Agreement and all payments on account of the principal thereof may be endorsed by the holder hereof on the grid Schedule attached to this Note, as provided in the Credit Agreement. The unpaid principal amount of this Note from time to time shall bear interest as provided in Section 3.4 of the Credit Agreement. All payments of principal of and interest on this Note shall be payable in lawful currency of the United States of America to the account designated by the Agent (and as to which the Agent has notified the Borrower) in immediately available funds in accordance with Section 3.6 of the Credit Agreement. This Note is a Bridge Note referenced in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a description of the security for this Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be or may automatically become immediately due and payable. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. The Borrower hereby waives all requirements as to diligence, presentment, demand of payment, protest and notice of any kind with respect to this Note. All amounts owing hereunder are payable by the Borrower without relief from any valuation or appraisal laws. Executed under seal as of the day and year first above written. BRUNSWICK BIOMEDICAL CORPORATION By: /s/ James H. Miller --------------------- James H. Miller President -2- Schedule of Bridge Loan and Repayments
Person Amount of Amount of Outstanding Making Date Bridge Loan Repayment Balance Notation - ---- ----------- --------- ----------- -------- 4/15/96 $11,000,000.00 $11,000,000.00
-3- EX-3.C 6 SENIOR STOCK PLEDGE AGREEMENT EXHIBIT 3(C) STOCK AND NOTES PLEDGE AGREEMENT -------------------------------- THIS STOCK AND NOTES PLEDGE AGREEMENT (this "Agreement"), dated as of --------- April 15, 1996, between BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation (the "Borrower"), and INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL -------- CORPORATION, a Delaware corporation ("ING"), as Agent (in such capacity, the --- "Agent") for itself and the other lenders (ING and such other lenders, - ------ collectively, the "Lenders") as are, or may from time to time become, parties to ------- the Credit Agreement (as defined below). W I T N E S S E T H: ------------------- RECITALS. A. Pursuant to a Stock Purchase Agreement, dated as of March 18, 1996, between the Borrower and the Estate of Dr. Stanley J. Sarnoff (the "Estate"), ------ the Borrower has agreed to acquire 1,888,126 shares (the "STI Shares") of Common ---------- Stock, $0.10 par value, of Survival Technology, Inc., a Delaware corporation ("STI"); --- B. The Borrower, the Lenders and the Agent have entered into a Credit Agreement, dated as of even date herewith (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), pursuant to which the ---------------- Lenders have agreed to make available Loans to the Borrower, as more specifically set forth in the Credit Agreement; C. The initial Loans are to be used by the Borrower to finance in part the purchase of the STI Shares; and D. The Borrower is the holder of shares of capital stock of its Subsidiaries and is the holder of certain other instruments and securities. NOW, THEREFORE, for good and valuable consideration the receipt of which is hereby acknowledged by it, and in order to induce the Lenders to make Loans to the Borrower pursuant to the Credit Agreement, the Borrower agrees with the Agent, for its benefit and the ratable benefit of the Lenders, as follows: ARTICLE 1 DEFINITIONS SECTION 1.1. Certain Terms. The following terms (whether or not ------------- underscored) when used in this Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): "Collateral" means, collectively, (a) the Pledged Shares; (b) the ---------- Pledged Notes; (c) all other Pledged Property, whether now or hereafter delivered to the Agent in connection with this Agreement; and (d) all proceeds of any of the foregoing. "Default" means any Event of Default or any condition or event which, ------- after notice or lapse of time or both, would constitute an Event of Default. "Distributions" mean all stock dividends, liquidating dividends, ------------- shares of stock resulting from stock splits, reclassifications, warrants, options, non-cash dividends and other distributions (whether similar or dissimilar to the foregoing) on or with respect to any Pledged Shares or other shares of capital stock constituting Collateral, but shall not mean Dividends. "Dividends" means cash dividends and cash distributions with respect --------- to any Pledged Shares made out of capital surplus. "Event of Default" means any event described in Section 5.1. ---------------- ----------- "Initial Pledged Shares" means the capital stock more particularly ---------------------- described in Attachment 1 hereto as of the Closing Date. ------------ "Initial Pledged Notes" means the promissory notes more particularly --------------------- described in Attachment 2 hereto as of the Closing Date. ------------ "Pledged Notes" means the Initial Pledged Notes and all other ------------- promissory notes now or hereafter delivered by the Borrower to the Agent as Pledged Property hereunder and more particularly described on Attachment 1 ------------ hereto, as amended and supplemented from time to time. "Pledged Property" means (a) all Pledged Shares and all Dividends, ---------------- Distributions, securities, cash, instruments, interest payments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares, and (b) the Pledged Notes and the instruments evidencing the Pledged Notes, and all interest, cash, instruments or other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Pledged Notes. "Pledged Shares" means the Initial Pledged Shares and all other -------------- capital stock now or hereafter delivered by the Borrower to the Agent as Pledged Property hereunder and more particularly described in Attachment 2 hereto, as ------------ amended and supplemented from time to time. "ratable" or "ratably" means, in the context of a distribution of ------- ------- Collateral or a distribution of proceeds of any of the Collateral, an allocation of such Collateral or proceeds among the Lenders pro rata in accordance with -------- their respective portion of the aggregate dollar amount of the Secured Obligations to which the distribution is being applied. -2- "Secured Obligations" means, collectively, the obligations of the ------------------- Borrower under the Credit Agreement and the other Loan Documents, including, without limitation, its "Obligations" (as that term is defined in the Credit Agreement). "STI Shares" is defined in Recital A. ---------- --------- "U.C.C." means the Uniform Commercial Code as in effect on the date ------ hereof in the State of New York; provided that if by reason of mandatory -------- provisions of law, the perfection or the effect of perfection or non-perfection of the Security Interests in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, "UCC" means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection. SECTION 1.2. Credit Agreement Definitions, Cross-References, etc. ---------------------------------------------------- Capitalized terms used herein (including the preamble and recitals hereof) shall have the meanings assigned to them in the Credit Agreement, unless the context otherwise requires or unless otherwise defined herein. References in this Agreement, the Credit Agreement or any other Loan Document to this "Agreement" or the "Pledge Agreement" shall mean this Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to this Agreement as the same may be in effect at the time such reference becomes operative. References in this Agreement to any Section, unless otherwise specified, are references to such Section of this Agreement, and references in such Section to any subsection or clause, unless otherwise specified, are references to such subsection or clause of such Section. SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or ------------------ the context otherwise requires, terms for which meanings are provided in the U.C.C. are used in this Agreement, including its preamble and recitals, with such meanings. ARTICLE 2 PLEDGE SECTION 2.1. Grant of Security Interest. The Borrower hereby -------------------------- pledges, assigns, charges, mortgages, delivers, sets over, conveys and transfers to the Agent, for its benefit and the ratable benefit of the Lenders, and hereby grants to the Agent, for its benefit and the ratable benefit of the Lenders, a continuing security interest in and to, all of the Collateral. SECTION 2.2. Security for Secured Obligations. This Agreement and -------------------------------- the Collateral secure the payment in full and performance of all Secured Obligations. SECTION 2.3. Delivery of Pledged Property; Registration of Pledge, ----------------------------------------------------- Transfer, etc. All certificates and instruments representing or evidencing any - ------------- Collateral, including all Pledged Shares and Pledged Notes, shall be delivered to and held by or on behalf -3- of the Agent pursuant to this Agreement, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary instruments of transfer or assignment, duly executed in blank and, if the Agent shall so request, with signatures guaranteed by a member of a registered national securities exchange or the National Association of Securities Dealers, Inc. or by a commercial bank or trust company having an office or correspondent in the United States. The Agent shall have the right, at any time without notice to the Borrower, to transfer to, or to register in the name of, the Agent or any of its nominees, any or all of the Pledged Shares and any or all of the Pledged Notes, subject only to the revocable rights of the Borrower specified in Section 4.6. In ----------- addition, the Agent shall have the right at any time to exchange certificates or instruments representing or evidencing any Pledged Shares or Pledged Notes for certificates or instruments of smaller or larger denominations. SECTION 2.4. Dividends on Pledged Shares. In the event that any --------------------------- Dividend is to be paid on any Pledged Share at a time when no Default or Event of Default has occurred and is continuing or would result therefrom and such Dividend is otherwise permitted by the Credit Agreement, such Dividend may be paid directly to the Borrower. SECTION 2.5. No Duty to Agent. The powers conferred on the Agent ---------------- hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Beyond reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it under this Agreement, the Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The Agent shall be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property, and the Agent shall not be liable or responsible for any loss or damage to any of the Collateral, or from any diminution in the value of any Collateral, by reason of the act or omission of any carrier, forwarding agency, or other agent selected by the Agent in good faith. SECTION 2.6. Continuing Security Interest; Transfer of Secured ------------------------------------------------- Obligation. This Agreement shall: - ---------- (a) create a continuing security interest in the Collateral; (b) remain in full force and effect until the earlier of (i) the payment in full and performance of all Secured Obligations or (ii) the consummation of the Merger; (c) be binding upon the Borrower, its administrators, successors and assigns, provided, however, that the Borrower may not assign any of its rights -------- -------- or obligations hereunder without the prior written consent of the Agent; and (d) inure to the benefit of the Agent and the Lenders and their respective successors, transferees and assigns. -4- Without limitation to the foregoing, any Lender may assign or otherwise transfer any Note, Loan or other Secured Obligation held by it to any other Person, in accordance with the terms of the Credit Agreement, and such other Person shall thereupon become vested with all the benefits in respect thereof granted herein or otherwise. ARTICLE 3 REPRESENTATIONS AND WARRANTIES SECTION 3.1. Warranties, Etc. The Borrower represents and warrants --------------- as follows: (a) The Borrower is and at all times will be the legal and beneficial owner of, and has and at all times will have good and marketable title to (and has and at all times will have full right and authority to pledge and assign), all Collateral, free and clear of all Liens or other charges or encumbrances, except the Lien granted pursuant to this Agreement in favor of the Agent and the Lien granted to the Estate in the Initial Pledged Shares to the extent such Lien is subordinated to the Lien in favor of the Agent in the Initial Pledged Shares. (b) The delivery of the Collateral to the Agent is effective to create a valid, perfected, first priority security interest in such Collateral and all proceeds thereof, securing the Secured Obligations, and no filing or other action is necessary to perfect or protect such security interest, except that the filing of a financing statement, the taking of possession or some other action may be required under Section 9-306 of the U.C.C. to perfect a security interest in certain proceeds of the Collateral that does not constitute Pledged Notes, Pledged Shares or other securities or instruments. (c) The Pledged Shares have been duly authorized and validly issued, and are fully paid, and nonassessable. (d) The Pledged Shares constitute that percentage of all of the issued and outstanding shares of Stock of the issuer set forth opposite such Pledged Shares on Attachment 2 hereto ------------ (e) The Pledged Notes evidence the amount of outstanding indebtedness for money borrowed of the respective obligors thereof indicated on Attachment 1 hereto - ------------ (f) No authorization, approval, or other action by, and no notice to or filing with, any Governmental Authority is or will be required either: (i) for the pledge by the Borrower of any Collateral pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by the Borrower, or (ii) for the exercise by the Agent of the voting or other rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement -5- (except, with respect to any Pledged Shares or Pledged Notes, as may be required in connection with a disposition of such Pledged Shares or Pledged Notes by laws affecting the offering and sale of securities generally). SECTION 3.2. Warranties upon Pledge of Additional Collateral. The ----------------------------------------------- Borrower shall be deemed to restate each representation and warranty set forth in Section 3.1 as at the date of each pledge hereunder by the Borrower to the ----------- Agent of any Collateral. ARTICLE 4 COVENANTS SECTION 4.1. Protect Collateral; Further Assurances, Etc. The ------------------------------------------- Borrower will not sell, assign, transfer, pledge or encumber in any other manner the Collateral (except in favor of the Agent hereunder or with respect to the Lien in favor of the Estate on the Initial Pledged Shares). The Borrower will warrant and defend the right, title and security interest herein granted to the Agent in and to the Collateral (and all right, title and interest represented by the Collateral) against the claims and demands of all Persons whomsoever. The Borrower agrees that at any time, and from time to time, at the expense of the Borrower, the Borrower will promptly execute and deliver all further Instruments, and take all further action, that may be necessary, or that the Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. SECTION 4.2. Issuance of Stock, Etc. The Borrower will not, ---------------------- subsequent to the date of this Agreement, without the prior written consent of the Required Lenders, cause or permit any Subsidiary to issue or grant any warrants, stock options of any nature or other instruments convertible into shares of any class of Stock or issue any additional shares of Stock or sell or transfer any treasury Stock; provided, however, that STI may issue additional -------- ------- shares of Stock in connection with the exercise of any stock options existing as of the date hereof which have been issued under STI employee stock option plans or upon the exercise of warrants for Stock existing on the Closing Date. SECTION 4.3. Taxes. The Borrower will pay all taxes, assessments ----- and charges levied, assessed or imposed upon the Collateral before the same become delinquent or become Liens upon any of the Collateral except where the same may be contested in good faith by appropriate proceedings and as to which adequate reserves have been provided. SECTION 4.4. Stock Powers, Etc. The Borrower agrees that all ----------------- Pledged Shares (and all other shares of Stock constituting Collateral) delivered by the Borrower pursuant to this Agreement will be accompanied by all necessary instruments of transfer or assignment, duly executed in blank and, if the Agent shall so request, with signatures guaranteed by a member of a national securities exchange or the National Association of Securities Dealers, Inc. or by a commercial bank or trust company having an office or correspondent in the United States. The Borrower will, from time to time upon the request of the Agent, promptly deliver -6- to the Agent such stock powers, instruments and similar documents, satisfactory in form and substance to the Agent, with respect to the Collateral as the Agent may reasonably request and will, from time to time upon the request of the Agent after the occurrence of any Event of Default, promptly transfer any Pledged Shares or other shares of Stock constituting Collateral into the name of the Agent or any nominee designated by the Agent. SECTION 4.5. Continuous Pledge. Subject to Section 2.4, the ----------------- ----------- Borrower will, at all times, keep pledged to the Agent pursuant hereto all Pledged Shares, all Dividends and Distributions with respect thereto, all Pledged Notes and all other Collateral. SECTION 4.6. Voting Rights; Dividends, Etc. The Borrower agrees to ----------------------------- deliver all Distributions at any time received by it to the Agent to be held as Collateral hereunder. The Borrower shall be entitled to (i) exercise, in its reasonable judgment, but in a manner not inconsistent with the terms of the Credit Agreement or any other Loan Document (including this Agreement), the voting powers and all other incidental rights of ownership with respect to any Pledged Shares (subject to the Borrower's obligation to deliver to the Agent such Pledged Shares, and (ii) receive all Dividends in accordance with Section ------- 2.4 to the extent such Dividends were permitted to be paid pursuant to the - --- Credit Agreement; provided, however, that -------- ------- (a) if any Event of Default shall have occurred and be continuing or if any Event of Default shall occur as a result thereof, promptly upon receipt thereof by the Borrower and without any request therefor by the Agent, the Borrower shall deliver (properly endorsed where required hereby or requested by the Agent) to the Agent all Dividends, all of which shall be held by the Agent as additional Collateral for use in accordance with Section 5.5; ----------- (b) if any Event of Default shall have occurred and be continuing, all rights of the Borrower to exercise or refrain from exercising voting or other consensual rights in respect of the Collateral shall cease and all such rights shall thereupon become vested in the Agent who shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights; and (c) if any Event of Default shall have occurred and be continuing, promptly upon request of the Agent, the Borrower shall deliver to the Agent such proxies and other documents as may be necessary to allow the Agent to exercise the voting and other consensual rights with respect to any Collateral. All Dividends, Distributions, cash payments and proceeds which the Borrower is then obligated to deliver to the Agent, shall, until delivery to the Agent, be held by the Borrower separate and apart from its other property in trust for the Agent. The Agent agrees that unless an Event of Default shall have occurred and be continuing, the Agent shall, upon the written request of the Borrower, promptly deliver such proxies and other documents, if any, as shall be reasonably requested by the Borrower which are necessary to allow the Borrower to exercise voting power with respect to any share of Stock (including Pledged Shares) constituting Collateral; provided, however, that no vote shall be cast, -------- ------- or consent, waiver or ratification given, or action taken by the Borrower that would impair in any material respect any Collateral or be inconsistent with -7- or violate any provision of the Credit Agreement or any other Loan Document (including this Agreement). SECTION 4.7. Additional Information. The Borrower will furnish to ---------------------- the Agent and the Lenders written notice of the occurrence of any event which would make any representation contained in Article 3 untrue at such time. --------- SECTION 4.8. Additional Pledged Collateral. In the event that the ----------------------------- Borrower is required, under the terms of the Credit Agreement, the terms of any other Loan Document or otherwise, to pledge any Collateral after the Closing Date, the Borrower shall pledge such Collateral, and be bound with respect to such Collateral by all of the terms and conditions hereof, by delivery to the Agent of such Collateral together with an executed counterpart of a Supplement to Pledge Agreement in the form of Exhibit A attached hereto. --------- ARTICLE 5 EVENTS OF DEFAULT; REMEDIES SECTION 5.1. Events of Default. Each of the following shall ----------------- constitute an "Event of Default" hereunder: (a) if there shall occur any Event of Default under the Credit Agreement; (b) if any of the Collateral shall be attached or levied upon or seized in any legal proceeding, or held by virtue of any Lien or distress, other than Liens permitted under Section 6.2.3 of the Credit Agreement; or (c) if any representation or warranty of the Borrower set forth herein or in the Credit Agreement shall be untrue in any material respect or if the Borrower shall default in the due performance and observance of any covenant contained herein and such default shall continue unremedied for a period of ten (10) days after notice thereof shall have been given to the Borrower by the Agent. SECTION 5.2. Actions upon Event of Default. In addition to its ----------------------------- rights and remedies provided hereunder, whenever an Event of Default shall have occurred and be continuing, the Agent shall have all rights and remedies of a secured party upon default under the U.C.C. or other applicable law. Any notification required by law of any intended disposition by the Agent of any of the Collateral shall be deemed reasonably and properly given if given at least ten (10) days before such disposition. Without limitation of the above, the Agent may or, upon direction of the Required Lenders, shall whenever an Event of Default shall have occurred and be continuing, without prior notice to the Borrower, take all or any of the following actions: (a) transfer all or any part of the Collateral into the name of the Agent or its nominee, without disclosing that such Collateral is subject to the Lien hereunder; -8- (b) notify the obligors on any of the Collateral to make payment to the Agent of any amount due or to become due thereunder; (c) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto; (d) endorse any checks, drafts or other writings in the Borrower's name to allow collection of the Collateral; (e) take control of any proceeds of the Collateral; and (f) execute (in the name, place and stead of the Borrower) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Collateral. SECTION 5.3. Attorney-in-Fact. The Borrower hereby irrevocably ---------------- appoints the Agent its true and lawful attorney, with full power of substitution, in the name of the Borrower, the Agent, the Lenders or otherwise, for the sole use and benefit of the Agent and the Lenders, but at the Borrower's expense, upon the occurrence and during the continuation of an Event of Default to take any action and to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement. SECTION 5.4. Private Sales. (a) The Borrower recognizes that the Agent ------------- may be unable, after the occurrence and during the continuance of any Event of Default, to effect a public sale of any or all the Pledged Shares by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities law or otherwise, and may be -------------- compelled to resort to one or more private sales thereof to a restricted group of purchasers that will be obligated to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. The Borrower acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Agent shall be under no obligation to delay sale of any of the Pledged Shares for the period of time necessary to permit any Subsidiary to register such securities for public sale under the Securities Act, or under applicable state securities law, even if such Subsidiary would agree to do so. (b) The Borrower further agrees to use its best efforts, after the occurrence and during the continuance of an Event of Default, to do or cause to be done all such acts as may be necessary to make such sale or sales of all or any portion of the Pledged Shares pursuant to this Section 5.4 valid and binding ----------- and in compliance with any and all other applicable Requirements of Law. -9- SECTION 5.5. Application of Proceeds. All cash proceeds received by ----------------------- the Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral may, in the discretion of the Agent, be held by the Agent as additional collateral security for, or then or at any time thereafter be applied (after payment of any amounts payable to the Agent pursuant to Section 9.3 of the Credit Agreement and Sec tion 5.6 of this Agreement) in whole or in part by the Agent against, all or any part of the Secured Obligations in the following order: (a) first, ratably, to the unpaid interest (including post-petition ----- interest) accrued and then due or owing on the Secured Obligations and to the aggregate amount of fees described in Section 2.4 of the Credit Agreement which ----------- have accrued and are unpaid; (b) second, ratably, among holders of the Notes, on account of all ------ principal of any Secured Obligations then due or owing; and (c) third, to any other Secured Obligations then due or owing. ----- After termination of the Commitments, any surplus of such cash or cash proceeds held by the Agent and remaining after payment in full of all the Secured Obligations shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive such surplus. SECTION 5.6. Indemnity and Expenses. The Borrower hereby ---------------------- indemnifies and holds harmless the Agent and the Lenders from and against any and all claims, losses and liabilities growing out of or resulting from this Agreement (including enforcement of this Agreement), except claims, losses, or liabilities resulting from the Agent's gross negligence or willful misconduct. Upon demand, the Borrower will pay, or cause to be paid, to the Agent the amount of any and all expenses, including the fees and disbursements of its counsel and of any experts and agents, which the Agent may incur in connection with: (a) the administration of this Agreement; (b) the custody, preservation, use, or operation of, or the sale of, collection from, or other realization upon, any of the Collateral; (c) the exercise or enforcement of any of the rights of the Agent hereunder and any action taken by the Agent under Section 6.4; and ----------- (d) the failure by the Borrower to perform or observe any of the provisions hereof. SECTION 5.7. Registration Rights. If the Agent shall determine to ------------------- exercise its right to sell any of the Pledged Shares pursuant to Section 5.2 ----------- or under applicable law, the Borrower agrees that, upon request of the Agent, as soon as practicable, the Borrower will, at its own expense: -10- (a) execute and deliver, and cause each issuer of the Pledged Shares that is a Subsidiary of the Borrower and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Agent, advisable to register such Pledged Shares under the provisions of the Securities Act, and to cause the registration statement relating thereto to become effective and remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectuses which, in the opinion of the Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto; (b) use its best efforts to qualify the Pledged Shares under the state securities or "Blue Sky" laws and to obtain all necessary governmental approval for the sale of the Pledged Shares, as requested by the Agent; (c) cause each issuer of the Pledged Shares that is a Subsidiary of the Borrower to make available to its security holders, as soon as practicable, an earnings statement which will satisfy the provisions of Section 14(a) of the Securities Act; and (d) do or cause to be done all such other acts and things as may be necessary to make such sale of the Pledged Shares or any part thereof valid and binding and in compliance with applicable law. The Borrower further acknowledges the impossibility of ascertaining the amount of damages which would be suffered by the Agent and the Lenders by reason of the failure of the Borrower to perform any of the covenants contained in this Section and, consequently, agrees that the remedy of specific performance may be granted to require the Borrower to comply with the covenants contained in this Section, at any time after the Agent shall demand compliance with this Section. ARTICLE 6 MISCELLANEOUS SECTION 6.1. Loan Document. This Agreement is a Loan Document ------------- executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article 9 thereof. SECTION 6.2. Amendments, Etc. No amendment or waiver of any --------------- provision of this Agreement nor consent to any departures by the Borrower herefrom shall in any event be effective unless the same shall be in writing, signed by the Agent (with the consent of the Required Lenders), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given. -11- SECTION 6.3. Obligations Not Affected. The obligations of the ------------------------ Borrower under this Agreement shall remain in full force and effect without regard to, and shall not be impaired or affected by: (a) any amendment or modification or addition or supplement to the Credit Agreement, any Note, any other Loan Document, any Instrument delivered in connection therewith or any assignment or transfer thereof; (b) any exercise, non-exercise or waiver by the Agent or any Lender of any right, remedy, power or privilege under or in respect of, or any release of any guaranty or collateral provided pursuant to, this Agreement, the Credit Agreement or any other Loan Document; (c) any waiver, consent, extension, indulgence or other action or inaction in respect of this Agreement, the Credit Agreement or any other Loan Document or any assignment or transfer of any thereof; or (d) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like, of the Borrower or any other Person, whether or not the Borrower shall have notice or knowledge of any of the foregoing. SECTION 6.4. Protection of Collateral. The Agent may from time to ------------------------ time, at its option, perform any act which the Borrower agrees hereunder to perform and which the Borrower shall fail to perform after being requested in writing to so perform (it being understood that no such request need be given after the occurrence and during the continuance of an Event of Default) and the Agent may from time to time take any other action which the Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein. SECTION 6.5. Addresses for Notices. All notices and other --------------------- communications provided for hereunder to any party hereto shall be given in the manner provided in Section 9.2 of the Credit Agreement. SECTION 6.6. Governing Law; Jurisdiction. (a) THIS AGREEMENT SHALL --------------------------- BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT PERFECTION (AND THE EFFECT OF PERFECTION AND NONPERFECTION) AND CERTAIN REMEDIES MAY BE GOVERNED BY THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK. (b) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (AND THE BORROWER AGREES THAT SUCH JURISDICTION WILL BE EXCLUSIVE WITH RESPECT TO CLAIMS BROUGHT BY THE BORROWER AGAINST THE AGENT OR ANY -12- LENDER), AND EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. (c) The Borrower hereby irrevocably designates, appoints and empowers CT Corporation System, whose present address is 1633 Broadway, New York, New York 10019, as its authorized agent to receive, for and on its behalf and on behalf of its property, service of process in the State of New York when and as such legal actions or proceedings may be brought in the courts of the State of New York or of the United States of America sitting in the Southern District of New York, and such service of process shall be deemed complete upon the date of delivery thereof to such agent whether or not such agent gives notice thereof to the Borrower, or upon the earliest of any other date permitted by applicable law. It is understood that a copy of said process served on such agent will as soon as practicable be forwarded to the Borrower, at the address set forth below, but the Borrower's failure to receive such copy shall not affect in any way the service of said process on said agent as the agent of the Borrower. The Borrower irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of the copies thereof by certified mail, return receipt requested, postage prepaid, to the Borrower at its address set forth below, such service to become effective upon the earlier of (i) the date 10 calendar days after such mailing or (ii) any earlier date permitted by applicable law. The Borrower agrees that it will at all times continuously maintain an agent to receive service of process in the State of New York on behalf of the Borrower and its properties and in the event that, for any reason, the agent named above or its successor shall no longer serve as its agent to receive service of process in the State of New York on its behalf, it shall promptly appoint a successor so to serve and shall advise the Agent and the Lenders thereof (and shall furnish to the Agent the consent of any successor agent so to act). Nothing in this Section 6.6 shall affect the right ----------- of the Agent or any Lender to bring proceedings against the Borrower in the courts of any other jurisdiction or to serve process in any other manner permitted by applicable law. SECTION 6.7. Waiver of Jury Trial, Etc. THE AGENT, THE LENDERS AND ------------------------- THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, SUCH LENDERS, OR THE BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND SUCH LENDERS ENTERING INTO THE CREDIT AGREEMENT. SECTION 6.8. Limitation of Liability. Neither the Agent, the ----------------------- Lenders nor any Affiliate thereof, shall have any liability with respect to, and THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON, ANY CLAIM FOR ANY -13- SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREIN OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH. SECTION 6.9. Counterparts, Effectiveness, etc. This Agreement may --------------------------------- be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when counterparts hereof executed on behalf of the Borrower and each Lender (or notice thereof satisfactory to the Agent) shall have been received by the Agent and notice thereof shall have been given by the Agent to the Borrower and each Lender. SECTION 6.10. Termination. Upon the earlier of (i) the payment in ----------- full and performance of all Secured Obligations or (ii) the consummation of the Merger, the security interest granted herein shall terminate and all rights to the Collateral shall revert to the Borrower. Upon any such termination the Agent will, at the Borrower's expense, deliver all certificates and instruments representing or evidencing all Pledged Shares and the Pledged Notes, together with all other Collateral held by the Agent under this Agreement, and execute and deliver to the Borrower, at the Borrower's expense, such documents as the Borrower shall reasonably request to evidence such termination. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal as of the date first above written. BRUNSWICK BIOMEDICAL CORPORATION By: /s/ James H. Miller ---------------------- James H. Miller President INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, as Agent By: /s/ Darren Wells ---------------------- Darren Wells Managing Director -14- ATTACHMENT 1 (to the Stock and Notes Pledge Agreement) PLEDGED NOTES -------------
Issuer/ Date of Face Outstanding Maker Instrument Amount Principal Amount ----- ---------- ------ ---------------- Brunswick 4/15/96 $600,000.00 $550,000.00 Biomedical Technologies, Inc.
-15- ATTACHMENT 2 (to the Stock and Notes Pledge Agreement) PLEDGED SHARES --------------
Class of Number of Certificate Percentage Issuer Capital Stock Shares Number(s) of Outstanding ------ ------------- ----------- ------------- -------------- Survival Technology, Common 1,888,126 Listed on 61.14% attached Exhibit A-1 Brunswick Common 90,000 1 90% Biomedical Technologies, Inc.
-16- EXHIBIT A --------- to Stock and Notes Pledge Agreement -------------------------------- SUPPLEMENT TO PLEDGE AGREEMENT ------------------------------ THIS SUPPLEMENT TO PLEDGE AGREEMENT (this "Supplement"), dated as of ---------- _____________ __, 19___, is executed by BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation (the "Borrower"), in favor of INTERNATIONALE -------- NEDERLANDEN (U.S.) CAPITAL CORPORATION, a Delaware corporation ("ING"), as Agent --- (in such capacity, the "Agent") for itself and the other lenders (ING and such ----- other lenders, collectively, the "Lenders") as are, or may from time to time ------- become, parties to the Credit Agreement (as defined below). Terms used herein but not defined herein shall have the meaning defined for those terms in the Pledge Agreement (as defined below). W I T N E S S E T H: ------------------- RECITALS. - -------- A. The Borrower, the Agent and the Lenders have entered into a certain Credit Agreement, dated as of April 15, 1996 (as amended, restated, supplemented, extended or otherwise modified from time to time, the "Credit ------ Agreement"); and - --------- B. Pursuant to that certain Stock and Notes Pledge Agreement, dated as of April 15, 1996 (as amended, restated, supplemented, extended or otherwise modified from time to time, the "Pledge Agreement"), the Borrower has granted to ---------------- the Agent, for its benefit and the benefit of the Lenders, a security interest in the Collateral; and C. Pursuant to Section 4.1 of the Credit Agreement and Section 4.8 of the Pledge Agreement, the Borrower is required to execute and deliver to the Agent this Supple ment, and the Borrower desires to execute and deliver this Supplement to satisfy such requirement and condition; NOW, THEREFORE, in consideration of the premises and in order to ensure the Borrower's compliance with the Credit Agreement, the Borrower hereby agrees as follows: SECTION 1. Additional Pledge. As security for the payment and ----------------- performance of the Secured Obligations, the Borrower hereby: (a) pledges, assigns, charges, mortgages, delivers, sets over, conveys and transfers to the Agent, for its benefit and the ratable benefit of the Lenders and grants to the Agent, for its ratable benefit and the benefit of the Lenders, a security interest in all of Borrower's right, title and interest in and to (i) the shares of capital stock more particularly described in Schedule I hereto and the certificates evidencing such shares (the "Additional - ---------- ---------- Pledged Shares") and all cash, instruments and other property from time to time - -------------- received, receivable or otherwise distributed in exchange for any and all of such Additional Pledged Shares; (ii) the notes and other instruments more particularly described in Schedule I hereto (the "Additional Pledged Notes") and all interest, cash, - ---------- ------------------------ instruments or other property from time to time received, receivable or otherwise distributed in exchange for any and all of such Additional Pledged Notes; (iii) all rights and interests of Borrower under any pledge or security agreements pledging to the Borrower or granting to the Borrower a security interest in any collateral security for the Additional Pledged Notes; and (iv) all other Collateral relating to the Additional Pledged Shares or the Additional Pledged Notes (the items described in clauses (i) through (iv) of this subsection (a), collectively, the "Additional Pledged Collateral"); and ----------------------------- (b) delivers to the Agent, for its benefit and the benefit of the Lenders and any other holder of any Obligations, all of Borrower's right, title and interest in and to the certificates and instruments evidencing the Additional Pledged Shares and the Additional Pledged Notes, accompanied by instruments of transfer or assignment, duly executed in blank. SECTION 2. Representations and Warranties. Borrower hereby (a) ------------------------------ represents and warrants that the Additional Pledged Notes evidence the amount of the outstanding indebtedness for money borrowed of the respective obligors thereof, and the Additional Pledged Notes evidence the amount of outstanding indebtedness for money borrowed of the obligors indicated on Schedule I hereto; ---------- (b) represents and warrants that the Borrower is the legal and beneficial owner of the Additional Pledged Shares and the Additional Pledged Notes, free and clear of any lien, security interest, option or other charge or encumbrance except for the security interest created by the Pledge Agreement as supplemented by this Supplement; and (c) restates each representation and warranty set forth in Section 3.1 of the Pledge Agreement, as supplemented by this Supplement, as of the date hereof with respect to the Additional Pledged Shares and the Additional Pledged Notes. SECTION 3. Additional Pledged Collateral. By execution and ----------------------------- delivery of this Supplement, the Additional Pledged Collateral shall become a part of the Collateral referred to in the Pledge Agreement and shall secure the Secured Obligations as if such Additional Pledged Collateral were Collateral on the Closing Date, and shall be subject to all of the terms and conditions governing Collateral under the Pledge Agreement. From and after the date hereof, Attachment 1 to the Pledge Agreement is hereby amended to add the Additional Pledged Notes and Attachment 2 to the Pledge Agreement is hereby amended to add the Additional Pledged Shares. SECTION 4. Binding Effect. This Supplement shall become effective -------------- when it shall have been executed by the Borrower and thereafter shall be binding upon the Borrower and shall inure to the benefit of the Agent and the Lenders. Upon the effectiveness of this Supplement, this Supplement shall be deemed to be a part of and shall be subject to all the terms and conditions of the Pledge Agreement. The Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders. SECTION 5. Governing Law; Terms. THIS SUPPLEMENT SHALL BE DEEMED -------------------- TO BE A CONTRACT MADE UNDER AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK. Unless otherwise defined herein or in the Pledge Agreement, terms defined in Article 9 of the U.C.C. are used herein as therein defined. SECTION 6. Execution in Counterparts. This Supplement may be ------------------------- executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. IN WITNESS WHEREOF, the Borrower has caused this Supplement to be duly executed and delivered under seal by its duly authorized officer as of the date first above written. BRUNSWICK BIOMEDICAL CORPORATION By:_________________________________ Name Title: Acknowledged and Agreed to: INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, as Agent By:______________________________ Name: Title: SCHEDULE I ---------- to Supplement to Pledge Agreement ------------------------------ Additional Pledged Notes: - ------------------------ Issuer/ Date of Face Outstanding Maturity Maker Instrument Amount Principal Amount Date - ------- ---------- ------ ---------------- -------- Additional Pledged Shares: - ------------------------- Class of Number of Certificate Percentage Issuer Capital Stock Shares Number(s) of Outstanding - ------ ------------- --------- ----------- -------------- EX-3.D 7 WARRENT PURCHASE AGREEMENT EXHIBIT 3(D) WARRANT PURCHASE AGREEMENT BETWEEN BRUNSWICK BIOMEDICAL CORPORATION AND INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION Dated as of April 15, 1996 TABLE OF CONTENTS -----------------
Page ---- RECITALS: 1 SECTION 1. Definitions 1 (a) Defined Terms 1 SECTION 2. Purchase and Sale of Warrants; Closing 11 SECTION 3. Investment Representations 11 SECTION 4. Conditions Precedent 12 SECTION 5. Warranties, etc. 13 (a) Credit Agreement Warranties 13 (b) Power, Authority, etc. 13 (c) Due Authorization 13 (d) Validity, etc. 13 (e) Capitalization and Ownership of the Company 13 (f) Authorization and Issuance of Warrants 14 (g) Securities Laws 14 (h) No Integration of Issue 14 SECTION 6. Covenants 15 (a) Financial and Business Information 15 (b) Public Company Information 16 (c) Maintenance of Corporate Existences, etc. 16 (d) Maintenance of Books and Records 16 (e) Inconsistent Agreements 16 (f) Organic Documents 16 (g) Transactions with Affiliates 17 (h) Issuance of Additional Rights, Options and Warrants 17 SECTION 7. Warrant Certificates 18 SECTION 8. Execution of Warrant Certificates 18 SECTION 9. Registration 18 SECTION 10. Registration of Transfers and Exchanges 18 SECTION 11. Exercise of Warrants; Conversion of Warrants 20
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Page ---- SECTION 12. Payment of Taxes 21 SECTION 13. Mutilated or Missing Warrant Certificates 21 SECTION 14. Reservation of Warrant Shares. 22 SECTION 15. Adjustment of Exercise Price and Number of Warrant Shares Issuable 22 (a) Adjustment for Change in Capital Stock of the Company 22 (b) Adjustment for Stock Issues 23 (c) Adjustment for Convertible Securities Issue 24 (d) Adjustment for Right, Option and Warrant Issues 25 (e) Consideration Received 26 (f) Special Adjustments 27 (g) When No Adjustment Required 28 (h) Determination of Fair Market Value per Share; Notice of Adjustment 28 (i) Reorganization of the Company 29 (j) The Merger.................................................... 29 (k) When Issuance or Payment May Be Deferred 30 (l) Adjustment in Number of Shares 31 SECTION 16. Fractional Interests 31 SECTION 17. Notice to Warrant Holders 31 SECTION 18. Cash Distributions and Dividends 33 SECTION 19. Put Rights; Tag-Along Rights and Registration Rights 33 (a) Put by Holders 33 (b) Closing 35 (c) Restrictions on Purchase 35 (d) Tag-Along Rights 36 (e) Limitation on Put Rights of Others 37 (f) Severability 37 SECTION 20. Notices 38 SECTION 21. Costs and Expenses 39 SECTION 22. Indemnification 39
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Page ---- SECTION 23. Successors 40 SECTION 24. Termination 41 SECTION 25. Governing Law 41 SECTION 26. Benefits of this Agreement 41 SECTION 27. Counterparts 41 SECTION 28. Amendments; Waiver 41 SECTION 29. Waiver of Jury Trial 41 SECTION 30. Jurisdiction 42 SECTION 31. Specific Performance 42 SECTION 32. Confidentiality 43 SECTION 33. Entire Agreement 43
Exhibit A Form of Series A Warrant Certificate Exhibit B Form of Series B Warrant Certificate Exhibit C Schedule of Exceptions Exhibit D Holders of the Company's Stock Exhibit E-1 Existing Warrants Exhibit E-2 Shares Reserved under Stock Option Plan Exhibit F Existing Registration Rights Exhibit GOpinion of Counsel to STI (to be delivered on the Merger Consummation Date) -iii- WARRANT PURCHASE AGREEMENT -------------------------- THIS WARRANT PURCHASE AGREEMENT (this "Agreement") is made and entered --------- into as of April 15, 1996 by and between BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation ("Brunswick"), and INTERNATIONALE NEDERLANDEN (U.S.) --------- CAPITAL CORPORATION, a Delaware corporation (the "Purchaser"). --------- W I T N E S S E T H: ------------------- RECITALS: - --------- A. Simultaneously herewith, the Purchaser is entering into a Credit Agreement, dated of even date herewith, by and among Brunswick, the Purchaser and various other lenders that may become parties thereto (the "Lenders") and ------- the Purchaser in its capacity as Agent for the Lenders (the "Agent"); ----- B. It is a condition precedent to the extensions of credit by the Purchaser to Brunswick contemplated by the Credit Agreement that Brunswick agree to issue to the Purchaser (1) Series A Warrants initially exercisable for 33,370 shares of Class A Common Stock, par value $0.01 per share, of the Company ("Class A Common Stock") for an exercise price of $0.01 per share and (2) Series -------------------- B Warrants initially exercisable for 36,298 shares of Class A Common Stock for an exercise price of $27.55 per share; C. Shares of Class A Common Stock are convertible, at the option of each of the holders thereof, into shares of voting common stock, par value $0.01 per share, of Brunswick (the "Voting Common Stock"); and ------------------- D. The Purchaser and Brunswick desire to set forth in this Agreement the terms and provisions of the Series A Warrants and the Series B Warrants (collectively, the "Warrants") and the conditions to the issuance and sale of -------- the Warrants to the Purchaser; NOW, THEREFORE, in consideration of the premises and the agreements herein set forth and to induce the Purchaser to proceed with the transactions contemplated by the Credit Agreement, the parties hereto, intending to be legally bound, hereby agree as follows: -1- SECTION 1. Definitions. ----------- (a) Defined Terms. Capitalized terms appearing herein and not ------------- otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement (irrespective of whether the Credit Agreement is in effect or has been terminated). The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Affiliate" of any Person means any other Person which, directly or --------- indirectly, controls or is controlled by or under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (a) to vote 5% or more of the securities having ordinary voting power for the election of directors of such Person, or (b) to direct or cause the direction of the management or policies of such Person whether by contract or otherwise; provided that no Lender shall be deemed to constitute an Affiliate of the - -------- ---- Company solely by virtue of holding Warrants or Warrant Shares. "Agent" is defined in Recital A. ----- --------- "Agreement" means this Warrant Purchase Agreement as in effect on the --------- date hereof and as hereafter amended, supplemented, restated or otherwise modified. "Authorized Officer" means, relative to the Company, those officers of ------------------ the Company whose signature, incumbency and authority shall have been certified to the Agent and the Lenders pursuant to Section 4.1.1 or Section 4.2.1 of the ------------- ------------- Credit Agreement. "Brunswick" is defined in the preamble to this Agreement. --------- "Business Day" means any day which is neither a Saturday or Sunday nor ------------ a legal holiday on which banks are authorized or required to be closed in New York, New York. "Capitalized Lease Liabilities" shall have the meaning set forth in ----------------------------- the Credit Agreement. "Cash Equivalent Investment" means, at any time: -------------------------- (a) any direct obligation issued or guaranteed by the United States of America or any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, or issued by any state or political subdivision or public -2- instrumentality thereof, (i) which has a remaining maturity at the time of purchase of not more than one (1) year or which is subject to a repurchase agreement with any Lender or any Eligible Lending Institution exercisable within one (1) year from the time of purchase so long as such direct obligation remains in the possession of the Borrower or in the possession of any Lender and (ii) which, in the case of obligations of any state or political subdivision or public instrumentality thereof, is rated AA or better by Moody's Investors Service, Inc.; (b) certificates of deposit, time deposits, demand deposits and bankers' acceptances, having a remaining maturity at the time of purchase of not more than one (1) year, issued by any Lender or by any Eligible Lending Institution; (c) corporate obligations rated Prime-1 by Moody's Investors Service, Inc. or A-1 by Standard & Poor's Corporation, having a remaining maturity at the time of purchase of not more than one (1) year; (d) shares of funds registered under the Investment Company Act of 1940, as amended, having assets of at least $100,000,000 which invest only in obligations described above and which shares are rated by Moody's Investors Service, Inc. or Standard & Poor's Corporation in one of the two highest rating categories assigned by such agencies for obligations of such nature. "Change of Control" means (a) at any time prior to the Merger ----------------- Consummation Date, (i) the sale, transfer or other disposition by EM Industries, Inc. or Mylan Laboratories, Inc. of any shares of Stock held by such Persons as of the Closing Date other than to an affiliate of such Person, or (ii) the failure of James H. Miller (or a Person of comparable qualifications and experience) to serve as chief executive officer of the Company, and (b) from and after the Merger Consummation Date, (i) the acquisition by any Person or group of Persons (other than an employee benefit plan solely for employees of STI and its subsidiaries) of beneficial ownership of more than 20% of the outstanding Stock of the Company (within the meaning of Section 13(d) or 14(d) of the Securities and Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder) other than as a result of the Merger; (ii) during any period of 12 consecutive months (whether commencing before or after the Closing Date), the failure of individuals who on the first day of such period were directors of the Company (together with any replacement or additional directors who are nominated or elected by a majority of directors then in office) to constitute a majority of the Board of Directors of the Company; or (iii) the failure of James H. Miller (or a Person of comparable qualifications and experience) to serve as chief executive officer of the Company. "Class A Common Stock" means (a) at any time prior to the Merger -------------------- Consummation Date, Class A Common Stock, par value $0.01 per share, of Brunswick, convertible into Voting Common Stock of Brunswick at the option of the Holder, and (b) at -3- any time on and after the Merger Consummation Date, non-voting Common Stock of STI, convertible into voting Common Stock of STI at the option of the Holder. "Closing" means the closing of the sale and purchase of the Warrants ------- as contemplated hereby. "Closing Date" means April 15, 1996, the date of the Closing. ------------ "Common Stock" means shares now or hereafter authorized of any class ------------ of common stock of the Company and any other capital stock of the Company, however designated, that has the right (subject to any prior rights of any class or series of preferred stock) to participate in any distribution of the assets upon voluntary or involuntary liquidation, dissolution or winding up of the Company or in the earnings of the Company without limit as to per share amount, and shall include, without limitation, the presently authorized 1,903,000 shares of Voting Common Stock and 72,000 shares of Class A Common Stock . "Common Stock" shall not include preferred or special stock. "Company" means (a) at all times prior to the Merger Consummation ------- Date, Brunswick, and (b) at all times on and after the Merger Consummation Date, STI. "Contract Value per Share" means the value determined in accordance ------------------------ with paragraphs (i), (ii) and, if the Company is not a Public Company, (iii) below, and shall equal the highest number yielded by such determination: (i) If the Common Stock is traded on a national securities exchange or quoted in a national inter-dealer quotation system, the Contract Value per Share determined pursuant to this paragraph (i) shall be an amount equal to the average of the Quoted Prices for Common Stock for the thirty (30) consecutive trading days commencing forty-five (45) trading days before the date of determination. (ii) The Contract Value per Share determined pursuant to this paragraph (ii) shall equal the quotient of (A) seven (7.0) times EBITDA for the twelve-month period ending on the last day of the fiscal month ending immediately prior to the date of determination (for any twelve-month period ending prior to the first anniversary of the Merger Consumation Date, determined on a pro forma basis as if the Merger had occurred on the first --- ----- day of such period), minus (1) the outstanding principal amount of Funded ----- Indebtedness as of the last day of the fiscal month ending immediately prior to the date of determination, plus (2) cash and Cash Equivalent ---- Investments on the balance sheet of the Company and its Subsidiaries as of the last day of the fiscal month ending immediately prior to the date of determination, all determined in accordance with GAAP, divided by (B) the ---------- number of Fully Diluted Shares as of the date of determination. -4- (iii) If the Company is not a Public Company, the Contract Value per Share determined pursuant to this paragraph (iii) shall be equal to the Fair Market Value per Share. "Conversion Factor" means the greater of (a) the actual number of ----------------- whole and fractional shares of Common Stock of STI issued to shareholders of Brunswick in respect of one share of Common Stock of Brunswick as a result of the Merger and (b) 2.5046. "Conversion Right" is defined in Section 11(b). ---------------- ------------- "Convertible Securities" is defined in Section 15. ---------------------- ---------- "Credit Agreement" means the Credit Agreement, dated of even date ---------------- herewith, by and among the Company, the Purchaser and various other Lenders that may become parties thereto and the Purchaser as Agent for the Lenders, as in effect on the date hereof and as hereafter amended, supplemented, restated or otherwise modified. "EBITDA" shall have the meaning specified for such term in the Credit ------ Agreement as in effect on the Closing Date. "Eligible Lending Institution" means a financial institution having a ---------------------------- branch or office in the United States and having capital and surplus and undivided profits aggregating at least $100,000,000 and whose long-term debt securities are rated Prime-1 or better by Moody's Investor Service, Inc. or A-1 or better by Standard & Poor's Corporation. "Exchange Act" means the Securities Exchange Act of 1934, as amended ------------ from time to time. "Excluded Shares" means (i) shares of Common Stock to be issued upon --------------- exercise or conversion of the Warrants, (ii) shares of Common Stock issued upon exercise or conversion of any Option Securities granted prior to the Closing Date and (iii) shares of Common Stock issued upon exercise or conversion of any Option Securities granted pursuant to a stock incentive plan approved in good faith by the Board of Directors of the Company after the Merger Consummation Date. "Exercise Price" means, with respect to the Series A Warrants, the -------------- Series A Exercise Price and, with respect to the Series B Warrants, the Series B Exercise Price. "Fair Market Value per Share" means the fair market value of a share --------------------------- of Common Stock of the Company, and shall be equal to the quotient of (A) the fair market value of the Company and its Subsidiaries taken as a whole on the date of determination, taking into account all the factors relevant thereto, including, without limitation, the highest of the prices -5- that could be obtained from an arms'-length sale without time constraints of (1) all or substantially all of the assets of the Company and the Subsidiaries subject to or after satisfaction of all liabilities of the Company and the Subsidiaries or (2) all of the Fully Diluted Shares, whether by stock sale, merger, consolidation or otherwise, divided by (B) the number of Fully Diluted ------- -- Shares on the date of determination. In no event shall the Fair Market Value per Share be reduced or discounted on the basis that any securities to be valued on the basis of such Fair Market Value per Share may represent the right to acquire a minority interest in the Company or may not be freely transferable under federal or state securities laws, or for any other reason. The Fair Market Value per Share shall be determined as provided in clause (a) or (b) below, as applicable. (a) In any circumstances in which the Fair Market Value per Share is required to be determined, not later than ten (10) days following the date as of which such determination is required to be made, the Board of Directors of the Company shall determine in good faith the Fair Market Value per Share, and the Company shall give to the Holders (or, if such determination affects less than all of the Holders, to the Holders so affected) prompt written notice of such determination. If within thirty (30) days after the date such notice is given, the Company and the Required Holders agree upon the Fair Value per Share, then the Fair Market Value per Share shall be as so agreed. If within such 30-day period, the Company and the Required Holders do not agree upon such Fair Market Value per Share, then the Fair Market Value per Share shall be determined as provided in clause (b) of this definition. (b) If the Required Holders and the Company do not agree upon such Fair Market Value per Share within the 30-day period specified in clause (a) of this definition, then the Required Holders and the Company shall appoint a recognized investment banking firm of national reputation, reasonably acceptable to the Required Holders and the Company. If the Company and the Required Holders cannot agree on the appointment of a mutually acceptable investment banking firm, or if the firm so appointed declines or fails to serve, then the Required Holders and the Company shall each choose one such investment banking firm and the respective firms so chosen shall appoint another recognized investment banking firm of national reputation. The investment banking firm so selected shall appraise the value of the Company (which shall be in the form of a written report signed by such investment banking firm), and such appraised value of the Company determined as herein provided shall be final and conclusive and binding on the Company and the Holders. If the appraised value of the Company as determined by such investment banking firm is equal to or less than that determined by the Board of Directors of the Company in accordance with clause (a) of this definition, then all fees and expenses of such investment banking firm shall be paid by the Required Holders requesting such appraisal. If the appraised value of the Company as determined by such investment banking firm is greater than that determined by the Board of Directors in accordance with clause (a) of this definition, then all fees and expenses of such investment banking firm shall be paid by the Company. -6- "Fiscal Quarter" means any quarter of a Fiscal Year. -------------- "Fiscal Year" means, (a) at any time prior to the Merger Consummation ----------- Date, the accounting period of Brunswick commencing on the Closing Date and ending June 30, 1996 or, if Brunswick shall have changed its Fiscal Year end to July 31 in contemplation of the Merger, July 31, 1996 and each twelve-month accounting period ending June 30 or July 31, as the case may be, thereafter, and (b) from and after the Merger Consummation Date, the accounting period of STI commencing on the Merger Consummation Date and ending on the first July 31 to occur thereafter, and each twelve-month accounting period ending on July 31 thereafter. References to a Fiscal Year with a number corresponding to any calendar year (e.g., the "1996 Fiscal Year") refer to the Fiscal Year ending on ---- a date in such calendar year. "Fully Diluted Shares" means, as of any date of determination, the -------------------- number of shares of Common Stock of the Company equal to the sum of (i) the number of shares of Common Stock outstanding on such date of determination, plus (ii) the number of Warrant Shares receivable upon conversion of all outstanding Warrants as of such date of determination pursuant to Section 11(b), plus (iii) ------------- the number of shares of Common Stock that would be issued in respect of all Option Securities of the Company outstanding and immediately exercisable as of such date of determination if such Option Securities were to be converted into shares of Common Stock in accordance with the following formula: X = Y (A - B) --------- A where: X = the number of shares to be issued to the holders of such Option Securities; Y = the number of shares for which such Option Securities are exercisable; A = the Fair Market Value per Share as of the date of determination; and B = the exercise price for such Option Securities; provided, however, that the term "Fully Diluted Shares" as used in the - -------- ------- definition of Fair Market Value per Share shall mean the number of issued and outstanding shares of Common Stock plus the number of Warrant Shares purchasable and receivable upon exercise of the rights represented by the Warrant Certificates pursuant to Section 11(a). ------------- -7- "Funded Indebtedness" means (i) the indebtedness under the Credit ------------------- Agreement, (ii) Capitalized Lease Liabilities, and (iii) all other indebtedness of the Company and its Subsidiaries which matures more than one year from the date of its creation or matures within one year from such date but is renewable or extendable, at the option of the Company or any of its Subsidiaries, to a date more than one year from such date or arises under an agreement which obligates the lender or lenders to extend credit during a period of more than one year from such date. "GAAP" means generally accepted accounting principles in effect from ---- time to time in the United States. "Governmental Authority" means any nation or government, any state or ---------------------- other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Holders" means, collectively, Purchaser and any subsequent registered ------- holders, from time to time, of Warrant Securities. "Indemnified Liabilities" is defined in Section 22. ----------------------- ---------- "Indemnified Parties" is defined in Section 22. ------------------- ---------- "Legally Available Funds" means, with respect to any purchase of ----------------------- Warrant Securities pursuant to Section 19(a), the amount of funds of the Company ------------- legally available therefor under the corporate laws under which the Company is organized and existing. "Lenders" is defined in Recital A. ------- --------- "Lien" means any mortgage, pledge, hypothecation, assignment, charge, ---- deposit arrangement, encumbrance, lien (statutory or other), adverse claim or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease involving substantially the same economic effect as any of the foregoing and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction). "Loans" shall have the meaning set forth in the Credit Agreement. ----- "Merger" means the merger of Brunswick with and into STI, with STI ------ being the surviving corporation. -8- "Merger Consummation Date" means the date on which the Merger has been ------------------------ consummated and all conditions set forth in Section 4.2 of the Credit Agreement have been satisfied or waived in writing by the Lenders and the Agent. "Minimum Price" is defined in Section 15. ------------- ---------- "Obligations" means all obligations of the Company with respect to the ----------- repayment or performance of any obligations (monetary or otherwise) of the Company arising under or in connection with the Credit Agreement, the "Notes" or the other "Loan Documents" (as such terms are defined in the Credit Agreement) and the Warrant Documents. "Option Securities" is defined in Section 15. ----------------- ---------- "Organic Document" means, relative to any Person, its articles or ---------------- certificate of incorporation or organization or certificate of limited partnership, its by-laws, partnership or operating agreement or other organizational documents, and all stockholders agreements, voting trusts and similar arrangements applicable to any of its Stock or partnership interests or other ownership interests, in each case, as amended. "Person" means any natural person, corporation, partnership, limited ------ liability company, firm, association, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity. "Preferred Stock" means shares now or hereafter authorized of any --------------- class of capital stock of the Company other than Common Stock, and shall include, without limitation, the presently authorized 1,400,000 shares of Preferred Stock, $0.01 par value, of which (i) 65,000 shares have been designated Series A Preferred Stock, 64,665 shares of which are outstanding, (ii) 30,000 shares have been designated Series B Preferred Stock, 28,144 shares of which are outstanding, (iii) 380,000 shares have been designated Series C Preferred Stock, 374,462 shares of which are outstanding, (iv) 50,000 shares have been designated Series D Preferred Stock, 45,695 shares of which are outstanding, (v) 30,000 shares have been designated Series E Preferred Stock, 25,816 shares of which are outstanding, (vi) 210,000 shares have been designated Series F Preferred Stock, 208,710 shares of which are outstanding, and (vii) 635,000 shares are undesignated and unissued. "Prospective Purchaser" shall have the meaning set forth in Section --------------------- ------- 19(d). - ----- "Public Company" means a company (i) which is subject to the reporting -------------- requirements of Section 15(d) of the Exchange Act, or (ii) any of whose securities are registered pursuant to Section 12(b) or 12(g) of the Exchange Act. "Put Closing Date" is defined in Section 19(b). ---------------- ------------- -9- "Put Event" means any of the following: (a) any representation or --------- warranty of the Company under any Warrant Document is or shall be incorrect when made in any material respect; (b) the Company shall default in the due performance and observance of any of its obligations under any Warrant Document and, in the case of any such default other than a default of the Company's obligations under Section 6(l), such default shall have continued for a period ------------ of thirty (30) days after written notice thereof has been given to the Company by the Required Holders; (c) an Event of Default shall have occurred under the Credit Agreement; (d) a merger or consolidation of the Company with or into any other Person (other than the Merger if consummated in accordance with the provisions of Section 15(j)) or any acquisition of the Company by means of a ------------- share exchange; and (e) a Change of Control. "Put Exercise Notice" is defined in Section 19(a). ------------------- ------------- "Put Purchase Price" is the amount payable to each Holder for such ------------------ Holder's Warrant Securities, as calculated in accordance with Section 19(a). ------------- "Put Notice" is the written notice to the Company specifying the ---------- number and type of Warrant Securities with respect to which the Put Right is being exercised. "Put Right" is the right of each Holder to require that the Company --------- purchase all or any portion of the Warrant Securities then owned by such Holder. "Quoted Price" of Common Stock for each day means the last reported ------------ sales price of Common Stock on such day as reported by NASDAQ or, if Common Stock is listed on a national securities exchange, the last reported sales price of Common Stock on such exchange (which shall be consolidated trading if applicable to such exchange) on such day, or if not so reported or listed, the average of the last reported bid and ask prices of Common Stock on such day, in each case as appropriately adjusted for any stock splits or reverse stock splits occurring after the Closing Date. "Registration Rights Agreement" means the Registration Rights ----------------------------- Agreement, dated of even date herewith, between the Company and the Purchaser, as in effect on the date hereof and as hereafter amended, supplemented, restated or otherwise modified. "Regulatory Approval" means each and every approval, consent, filing ------------------- and registration by or with any federal, state or other regulatory authority (domestic or foreign) necessary to authorize or permit the execution, delivery or performance of this Agreement or any other Warrant Document, for the validity or enforceability hereof or thereof or for the consummation of the transactions contemplated hereby or thereby. "Required Holders" means Holders holding at least 66-2/3% of the ---------------- Warrant Securities outstanding (treating all Warrants as fully exercised for the Warrant Shares to which -10- Holders would be entitled upon exercise of such Warrants) or, if any matter affects the interest of less than all of the Holders, then Holders holding at least 66-2/3% of the Warrant Securities so affected, as the context may require. "Restriction on Purchase" exists if, at the time of a Put Closing, (i) ----------------------- the purchase of such Warrant Securities would result in a default under or a breach of any Restrictive Provision (assuming that the covenants applicable to the Company at the end of the Fiscal Quarter in which such purchase is to occur were applicable on the date of such purchase), or (ii) the Company would not have sufficient Legally Available Funds to pay the Purchase Price for the Warrant Securities. "Restrictive Provision" means any of the financial covenants contained --------------------- in Section 6.2.4 or the negative covenants contained in Section 6.2.8 of the Credit Agreement, in each case as the same may be amended from time to time; provided, however, that to the extent noncompliance with any such covenant as a - -------- ------- result of the purchase by the Company of Warrant Securities is waived in accordance with Section 9.1 of the Credit Agreement, such covenant shall not constitute a Restrictive Provision. "SEC" means the Securities and Exchange Commission. --- "Securities Act" means the Securities Act of 1933, as amended from -------------- time to time. "Securities Legend" is defined in Section 10. ----------------- ---------- "Selling Holder" is defined in Section 19(c). -------------- ------------- "Selling Holder Notice" is defined in Section 19(d). --------------------- ------------- "Selling Holder Offer" is defined in Section 19(d). -------------------- ------------- "Series A Exercise Price" means (a) at any time prior to the Merger ----------------------- Consummation Date, $.0.01 per Warrant Share and (b) at any time on or after the Merger Consummation Date, an amount per share equal to $0.01 divided by the Conversion Factor, in each case as adjusted as herein provided. "Series A Warrant Certificates" means the certificates evidencing the ----------------------------- Series A Warrants in the form of Exhibit A. --------- "Series A Warrants" means the warrants referred to in clause (1) of ----------------- Recital B as evidenced by the Series A Warrant Certificates. -11- "Series B Exercise Price" means (a) at any time prior to the Merger ----------------------- Consummation Date, $27.55 per Warrant Share and (b) at any time on or after the Merger Consummation Date, an amount per Warrant Share equal to $27.55 divided by the Conversion Factor, in each case as adjusted as herein provided. "Series B Warrant Certificates" means the certificates evidencing the ----------------------------- Series B Warrants in the form of Exhibit B. --------- "Series B Warrants" means the warrants referred to in clause (2) of ----------------- Recital B as evidenced by the Series B Warrant Certificates. "Stock" means any capital stock of the Company. ----- "Subsidiary" of any corporation means any other corporation greater ---------- than 50% of the outstanding shares of Stock of which having ordinary voting power for the election of directors is owned directly or indirectly by such corporation, and, except as otherwise indicated herein, references to Subsidiaries shall refer to Subsidiaries of the Company. "Substitute Securities" is defined in Section 15. --------------------- ---------- "Transfer Agent" is defined in Section 14. -------------- ---------- "Voting Common Stock" means (a) at any time prior to the Merger ------------------- Consummation Date, voting Common Stock, par value $0.01 per share, of Brunswick, and (b) at any time on and after the Merger Consummation Date, voting Common Stock of STI. "Warrant Certificates" means, collectively, the Series A Warrant -------------------- Certificates and the Series B Warrant Certificates. "Warrant Documents" means, collectively, this Agreement, the Warrants, ----------------- the Registration Rights Agreement and any other document, instrument or agreement executed or delivered in connection with any of the foregoing to which the Company is a party, but excluding the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement). "Warrant Securities" means, collectively, the Warrants and Warrant ------------------ Shares. "Warrant Shares" means the securities which a Holder may acquire upon -------------- exercise or conversion of a Warrant, together with any other securities which such Holder may acquire on account of any such securities, including, without limitation, as the result of the shares of Class A Common Stock being converted into shares of Voting Common Stock and/or any dividend or other distribution on Common Stock, any split-up of such Common Stock, or -12- in accordance with a recapitalization, merger, consolidation, share exchange, reorganization or other transaction or series of related transactions in which shares of Common Stock are changed into or exchanged for securities of another corporation (including the Merger), or the exercise of any preemptive right (or the exercise or conversion of any security which such Holder may acquire in connection with the exercise of any preemptive right) with respect to any such Common Stock. "Warrants" means the Series A Warrants and Series B Warrants, together -------- with any warrants issued in substitution or replacement therefor. (b) Cross-References. Unless otherwise specified, references in this ---------------- Agreement to any Article or Section are references to such Article or Section of this Agreement, and unless otherwise specified, references in any Article, Section, or definition to any clause are references to such clause of such Section, Article or definition. SECTION 2. Purchase and Sale of Warrants; Closing. -------------------------------------- (a) Subject to the funding of the Bridge Loan under the Credit Agreement, Brunswick hereby agrees to sell to the Purchaser and, subject to the provisions of Section 4, the Purchaser hereby agrees to purchase from Brunswick, --------- for a purchase price of $1.00 and other good and valuable consideration, all of which shall be deemed to have been received by the Company upon the funding of the Bridge Loan under the Credit Agreement, (1) Series A Warrants to purchase 33,370 shares of Class A Common Stock of Brunswick for an initial exercise price of $0.01 per share and (2) Series B Warrants to purchase 36,298 shares of Class A Common Stock of Brunswick for an initial exercise price of $27.55 per share. (b) The sale and purchase of the Warrants shall take place at the Closing at the offices of King & Spalding, 191 Peachtree Street, Atlanta, Georgia 30303, at 10:00 a.m. on April 15, 1996, or such other place and time as may be agreed upon by the Purchaser and the Company. At the Closing, the Company will deliver to the Purchaser, upon payment therefor, (1) Series A Warrant Certificates in the form of Exhibit A evidencing the Series A Warrants to be --------- purchased by the Purchaser and (2) Series B Warrant Certificates in the form of Exhibit B evidencing the Series B Warrants to be purchased by the Purchaser, in - --------- each case in such denomination or denominations as the Purchaser may request and registered in its name or the name of its nominee and dated the Closing Date. SECTION 3. Investment Representations. Purchaser represents and -------------------------- warrants that it is purchasing the Warrants and any Warrant Shares issuable upon exercise or conversion of the Warrants for its own account, for investment purposes and not with a view to the distribution thereof; provided, however, -------- ------- that the foregoing representation shall not be construed as imposing any limitation on the Purchaser's right to transfer any of the Warrants or Warrant Shares that is not otherwise expressly set forth in the Warrant Documents or -13- required under applicable law. Each Holder agrees that it will not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of the Warrant Securities (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of the Warrant Securities), except in compliance with the Securities Act. Each Holder agrees that it will not transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of the Warrant Securities if any such disposition would cause the Company to be required to register any Warrant Securities pursuant to Section 12(g) of the Exchange Act. SECTION 4. Conditions Precedent. The obligation of the Purchaser to -------------------- purchase the Series A Warrants and the Series B Warrants on the Closing Date pursuant to Section 2 hereof shall be subject to the prior or concurrent --------- satisfaction of each of the conditions precedent set forth in this Section 4, --------- except as the Purchaser shall otherwise consent: (a) the accuracy of the representations set forth in this Agreement and in the other Warrant Documents in all material respects; (b) the compliance by the Company in all material respects with all covenants and agreements required to be performed by it on or prior to the Closing; (c) the satisfaction of all of the conditions precedent set forth in Sections 4.1 and 4.3 of the Credit Agreement; - -------------------- (d) Purchaser's receipt of Warrant Certificates registered in Purchaser's name (or in the name of a nominee of Purchaser) evidencing the Warrants; (e) Purchaser's receipt of the Registration Rights Agreement with respect to the Warrants, in form and substance reasonably satisfactory to Purchaser, duly executed and delivered by the Company and dated the Closing Date; (f) Purchaser's receipt of a copy of the Company's articles of organization including provisions reasonably satisfactory to the Purchaser relating to the Company's capital structure, certified as of a recent date by the Secretary of the Commonwealth of Massachusetts; (g) Purchaser's receipt of a certificate of the clerk or an assistant clerk of the Company, together with true and correct copies of the resolutions of the Board of Directors and, to the extent necessary, the stockholders of the Company authorizing or ratifying the execution, delivery and performance of this Agreement and the other Warrant Documents, authorizing the amendment to the Company's articles of organization so that it contains the provisions referred to in Section 4(g) and authorizing the creation and issuance of the Warrants and ------------ the Warrant Shares; and setting forth the names of the Authorized Officers of the -14- Company executing this Agreement and the other Warrant Documents, together with a sample of the true signature of each such Authorized Officer; (h) Purchaser's receipt of certified copies of all documents evidencing any other necessary corporate action, consents and governmental approvals or filings (if any) with respect to this Agreement and the other Warrant Documents; (i) Purchaser's receipt of an opinion, dated the Closing Date, from Palmer & Dodge, counsel to the Brunswick, in form and substance reasonably satisfactory to Purchaser and its counsel, and covering such matters as the Purchaser may reasonably request; (j) All proceedings taken in connection with the transactions contemplated by this Agreement and the other Warrant Documents shall be reasonably satisfactory in form and substance to Purchaser and its counsel, and Purchaser and its counsel shall have received copies (executed or certified as may be appropriate) of all documents, instruments and agreements which Purchaser or its counsel may reasonably request in connection with the consummation of such transactions. SECTION 5. Warranties, etc. In order to induce Purchaser to enter ---------------- into this Agreement, to engage in the transactions contemplated herein and in the other Warrant Documents and to purchase the Warrants hereunder, the Company represents and warrants unto Purchaser as set forth in this Section 5, except as --------- provided in the Schedule of Exceptions attached as Exhibit C, each and all of --------- which representations and warranties are made as of the Closing Date and shall survive the execution and delivery of this Agreement and the Closing hereunder: (a) Credit Agreement Warranties. Each of the representations and --------------------------- warranties of the Company set forth in the Credit Agreement is true and correct. (b) Power, Authority, etc. The Company has full power and authority ---------------------- to enter into and perform its obligations under this Agreement and each of the other Warrant Documents. (c) Due Authorization. The execution and delivery by the Company of ----------------- this Agreement and each of the other Warrant Documents, the performance by the Company of its obligations hereunder and thereunder and the issuance of the Warrants hereunder by the Company have been duly authorized by all necessary corporate action, do not require any Regulatory Approval (except those Regulatory Approvals already obtained), do not and will not conflict with, result in any violation of, or constitute any default under, any provision of any Organic Document of the Company or any Subsidiary, any agreement or instrument to which the Company or any of it's Subsidiaries is a party or by which it or any of its property is bound, or any law or governmental regulation or court decree or order and will not result -15- in or require the creation or imposition of any Lien on any of the Company's or any Subsidiary's properties pursuant to the provisions of any such agreement or instrument. No vote (including any vote under the rules of any securities exchange or trading system or market on which any of the Company's securities are listed or traded) on the part of the stockholders of the Company, other than those which have been obtained, is required to approve or authorize the amendment to the articles of organization provided for in Section 4(g), any of ------------ the transactions contemplated by this Agreement, any of the other Warrant Documents or any of the Loan Documents or the authorization of the issuance of Class A Common Stock or the Warrant Securities or any shares of capital stock to be issued pursuant to the Loan Documents. None of the transactions contemplated by this Agreement, any of the other Warrant Documents or any of the Loan Documents (including the issuance of Class A Common Stock, the Warrant Securities or any shares of capital stock to be issued pursuant to the Loan Documents) will give rise to any payment or the acceleration of any obligation (whether with or without the passage of time or upon the occurrence of any event) to any director, officer or employee of the Company or any Subsidiary. (d) Validity, etc. This Agreement and each of the other Warrant -------------- Documents constitutes the legal, valid and binding obligations of the Company enforceable in accordance with their respective terms, subject to (i) the effect of any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights generally; and (ii) the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law). (e) Capitalization and Ownership of the Company. The authorized ------------------------------------------- capital stock of the Company consists of (1) 1,903,000 shares of Voting Common Stock, 66,780 of which will be outstanding on the Closing Date; (2) 72,000 shares of Class A Common Stock, no shares of which will be outstanding on the Closing Date; and (3) 1,400,000 shares of Preferred Stock, $.01 par value, of which (i) 65,000 shares have been designated Series A Preferred Stock, 64,665 shares of which are outstanding, (ii) 30,000 shares have been designated Series B Preferred Stock, 28,144 shares of which are outstanding, (iii) 380,000 shares have been designated Series C Preferred Stock, 374,462 shares of which are outstanding, (iv) 50,000 shares have been designated Series D Preferred Stock, 45,695 shares of which are outstanding, (v) 30,000 shares have been designated Series E Preferred Stock, 25,816 shares of which are outstanding, (vi) 210,000 shares have been designated Series F Preferred Stock, 208,710 shares of which are outstanding, and (vii) 635,000 shares are undesignated and unissued. The record and, to the best knowledge of the Company, beneficial ownership of the outstanding capital stock of the Company as of the Closing Date is set forth in Exhibit D. All such outstanding shares are duly authorized, validly issued, - --------- fully paid and nonassessable, and are not, and will not have been, issued in violation of any preemptive rights. Except as set forth in Exhibit C, --------- Exhibits E-1 and E-2, and the Organic Documents, no issued, no authorized but - ------------ --- unissued and no treasury shares of capital stock of the Company are subject to any preemptive right, option, warrant, right of conversion or purchase or any similar right issued or granted by the Company or, to the best knowledge of the Company, by -16- any of its shareholders. Except as set forth in the Organic Documents of the Company or in Section 19, there are no agreements or understandings with respect ---------- to the voting, sale or transfer of any shares of capital stock of the Company to which the Company or, to the best knowledge of the Company, any of its Affiliates is a party. (f) Authorization and Issuance of Warrants. The issuance of the -------------------------------------- Warrants has been duly authorized and, upon delivery to Purchaser of the Warrant Certificates therefor in accordance with the terms hereof, the Warrants will have been validly issued and fully paid and nonassessable, free and clear of all Liens and the issuance thereof will not give rise to any preemptive rights. The issuance of the shares of Class A Common Stock subject to the Warrants has been duly authorized and, when issued upon exercise of the Warrants in accordance with the terms thereof, such shares will have been validly issued and will be fully paid and nonassessable. The issuance of the shares of Voting Common Stock issuable upon conversion of the Class A Common Stock has been duly authorized and, when issued upon conversion of the Class A Common Stock in accordance with the terms thereof, such shares will have been validly issued and will be fully paid and nonassessable and the issuance thereof will not give rise to any preemptive rights. 69,668 shares of Class A Common Stock have been duly reserved for issuance upon the exercise of the Warrants. Except as set forth in the Registration Rights Agreement and on Exhibit D, no Person has the right to --------- demand or any other right to cause the Company to file any registration statement under the Securities Act relating to any securities of the Company or any right to participate in the any such registration. (g) Securities Laws. In reliance on the investment representations --------------- contained in Section 3, the offer, issuance, sale and delivery of the Warrants --------- to the Purchaser as provided in this Agreement, the issuance and delivery of Class A Common Stock upon the exercise of the Warrants by the Purchaser, and the conversion of the Class A Common Stock into Voting Common Stock, are and will be exempt from the registration requirements of the Securities Act and all applicable state securities laws, as such laws are currently in effect. (h) No Integration of Issue. Neither the Company nor any Person ----------------------- authorized or employed by the Company as agent, broker or otherwise in connection with the offering of the Warrants has offered the Warrants for sale to, or solicited any offers to buy the Warrants from, or otherwise approached or negotiated or communicated in respect thereof with, anyone other than Purchaser. Neither the Company nor any Person acting on behalf of the Company will sell or offer any class of securities to, or solicit any offers to buy any class of securities from, or otherwise approach, negotiate or communicate in respect thereof with, any Person so as to require the registration of the Warrants under the Securities Act or any applicable state securities laws. -17- SECTION 6. Covenants. The Company agrees with each Holder, that --------- until the termination of this Agreement pursuant to Section 24 hereof, the ---------- Company will perform the obligations set forth in this Section 6: --------- (a) Financial and Business Information. For so long as the Company ---------------------------------- is not a Public Company, the Company will furnish, or will cause to be furnished, to each Holder copies of the following financial statements, reports and information: (i) promptly when available and in any event within ninety (90) days after the close of each Fiscal Year, a consolidated and consolidating balance sheet at the close of such Fiscal Year, and related consolidated and consolidating statements of operations, retained earnings, and cash flows for such Fiscal Year, of the Company and its Subsidiaries (with comparable information at the close of and for the prior Fiscal Year), certified (in the case of consolidated statements) without qualification by Price Waterhouse LLP or other independent public accountants reasonably satisfactory to the Required Holders, together with a report containing management's discussion and analysis of financial condition and results of operation of the Company and its Subsidiaries generally similar in scope to that which would be required in an annual report on Form 10-K filed under the Exchange Act for such Fiscal Year (delivery to the Holders of such annual report in respect of any Fiscal Year shall satisfy the requirements of this clause (a)(i) with respect to such Fiscal Year); (ii) promptly when available and in any event within forty-five (45) days after the close of each Fiscal Quarter, consolidated and consolidating balance sheets at the close of such Fiscal Quarter, and consolidated and consolidating statements of operations, retained earnings, and cash flows for such Fiscal Quarter and for the period commencing at the close of the previous Fiscal Year and ending with the close of such Fiscal Quarter, of the Company and its Subsidiaries (with comparable information at the close of and for the corresponding Fiscal Quarter of the prior Fiscal Year and for the corresponding portion of such prior Fiscal Year), certified by the chief financial or executive officer of the Company, together with a brief report containing management's discussion and analysis of the financial condition and results of operations of the Company and its Subsidiaries (including a discussion and analysis of any changes compared to prior results) generally similar in scope to that which would be required in a quarterly report on Form 10-Q filed under the Exchange Act (delivery to the Holders of such a quarterly report on Form 10-Q with respect to any Fiscal Quarter will satisfy the requirements of this clause (a)(ii) with respect to such Fiscal Quarter; (iii) promptly when available and in any event within thirty (30) days after the close of each calendar month of each Fiscal Year (other than a calendar month that is the last month of a Fiscal Quarter), consolidated and consolidating balance sheets at the close of such month, and consolidated and consolidating statements of operations, -18- retained earnings and cash flows for such month and for the period commencing at the close of the previous Fiscal Year and ending with the close of such month, of the Company and its Subsidiaries (with comparable information at the close of and for the corresponding month of the prior Fiscal Year and for the corresponding portion of such prior Fiscal Year), certified by the chief executive or financial officer of the Company, together with a brief report containing management's discussion and analysis of the financial condition and results of operations of the Company and its Subsidiaries (including a discussion and analysis of any changes compared to prior results); and (iv) promptly upon the sending or filing thereof, copies of all reports that the Company sends to its security holders generally, and copies of all reports and registration statements that the Company or any of its Subsidiaries files with the SEC or any national securities exchange. (b) Public Company Information. From and after such time as the -------------------------- Company shall become a Public Company; (i) Filings. The Company will file with the SEC on or before the ------- required date all regular or periodic reports required pursuant to the Exchange Act and deliver to each Holder, promptly upon its becoming available, one copy of each report, notice or proxy statement sent by the Company to its stockholders generally, and of each regular or periodic report filed pursuant to the Exchange Act and any registration statement, prospectus or written communication (other than transmittal letters) pursuant to the Securities Act filed by the Company with (i) the SEC or (ii) any national securities exchange; and (ii) Rule 144. The Company will use its best efforts to make publicly -------- available information concerning the Company sufficient to allow any Holder to dispose of all or a portion of the Warrant Securities pursuant to Rule 144 (or any successor provision) promulgated by the SEC under the Securities Act. (c) Maintenance of Corporate Existences, etc. Except as permitted ---------------------------------------- pursuant to Section 6.2.10 of the Credit Agreement, the Company will cause to be -------------- done at all times all things necessary to maintain and preserve the corporate existences of the Company and its Subsidiaries. (d) Maintenance of Books and Records. The Company will, and will -------------------------------- cause each Subsidiary to, keep books and records reflecting all of its business affairs and transactions in accordance with GAAP. (e) Inconsistent Agreements. The Company will not, and will not ----------------------- permit any Subsidiary to, enter into any agreement containing any provision which would be violated -19- or breached by the issuance of the Warrants or the Warrant Shares or by the performance by the Company or any Subsidiary of its obligations under this Agreement or under any other Warrant Documents. (f) Organic Documents. So long as any Warrant Securities are ----------------- outstanding, the Company's charter shall contain the provisions regarding the Class A Common Stock set forth in its Organic Documents as constituted on the date hereof, except that in connection with the Merger, non-substantive modifications may be made to such provisions to reflect the Merger. The Company shall not permit to occur any amendment, alteration or modification to its Organic Documents, as constituted on the date hereof, the effect of which, in Purchaser's or the Required Holders' judgment, would be to alter, impair or adversely affect either the rights and benefits of Purchaser or the Holders or the duties and obligations of the Company under this Agreement and the other Warrant Documents. (g) Transactions with Affiliates. The Company will not, and will not ---------------------------- permit any Subsidiary to, enter into, or cause, suffer or permit to exist: (i) any arrangement or contract with any of its Affiliates of a nature customarily entered into by Persons which are Affiliates of each other (including management or similar contracts or arrangements relating to the allocation of revenues, expenses or otherwise) requiring any payments to be made by the Company or any of its Subsidiaries to any Affiliate, other than (i) any arrangement solely among the Company and its wholly-owned Subsidiaries, and (ii) the Merger; and (ii) any other transaction, arrangement or contract with any of its Affiliates which is on terms which are less favorable than are obtainable in a transaction from any Person which is not one of its Affiliates. (h) Issuance of Additional Rights, Options and Warrants. At any time --------------------------------------------------- prior to the Merger Consummation Date, the Company will not issue any rights, options or warrants to subscribe for or purchase or otherwise acquire Common Stock or Convertible Securities, whether or not the right to exercise such rights, options or warrants or to convert or exchange such Convertible Securities is immediately exercisable or is conditioned upon the passage of time, an occurrence or non-occurrence of some other event, or both. (i) Antitakeover Statutes. The Company shall take all action --------------------- necessary to avoid the application of any "fair price," "moratorium," "control share acquisition," "business combination," "shareholder protection" or similar antitakeover statute to the transactions contemplated by this Agreement or any other Warrant Document (including the issuance of the Warrant Securities). -20- (j) Governmental Approvals. The Company will, and will cooperate ---------------------- with the Holders to, secure all necessary consents, approvals, authorizations and exemptions from all governmental authorities in connection with the exercise of the Warrants, the issuance of shares of Class A Common Stock upon exercise of the Warrants and the issuance of shares of Voting Common Stock upon the conversion of such shares of Class A Common Stock. (k) Issuances of Shares. The Company will not issue any shares of ------------------- Class A Common Stock other than pursuant to the exercise of the Warrants. (l) Registration Rights Priorities. On or prior to the Merger ------------------------------ Consummation Date, Brunswick shall cause the holders of its Preferred Stock and all other holders of securities of the Company that are officers and directors of the Company and have registration rights to agree, or otherwise become subject to contractual provisions to the effect, that (i) in the event of any registration of securities of the Company where the intended method of distribution of such securities is by means of an underwriting, (A) all Warrant Shares requested by the Holders to be included in such registration and underwriting pursuant to the rights of the Holders under the Registration Rights Agreement shall first be included before any shares of Preferred Stock (or other securities of the Company issued in connection with the issuance of such Preferred Stock) or other securities of the Company held by such officers and directors shall be included in such registration and underwriting, (B) such priority of registration rights shall be effective notwithstanding that any other holder of securities of the Company has not agreed that Warrant Shares may first be included in such registration and underwriting, and (C) in order to effect such registration and underwriting of Warrant Shares, such other holders of securities of the Company that have not so agreed that Warrant Shares shall first be included in such registration and underwriting may have a larger percentage of their shares included therein than otherwise would be included absent such registration and underwriting of Warrant Shares; and (ii) if requested by the Company and an underwriter of Common Stock (or other securities) of the Company, not to sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held by it during a period of not less than 90 days following the effective date of a registration statement of the Company filed under the Securities Act, provided that such agreement may apply only to the first such registration statement of the Company after the Merger Consummation Date that includes securities to be sold on its behalf to the public in an underwritten offering. The form of such agreements and provisions shall be reasonably satisfactory to the Required Holders and, in the case of clause (i) above, shall be solely for the benefit of the Holders of Warrant Securities and not for any other Person. -21- SECTION 7. Warrant Certificates. The Warrant Certificates to be -------------------- delivered pursuant to this Agreement shall be in registered form only as provided in Section 9 and, (a) in the case of the Series A Warrants, in the form --------- set forth as Exhibit A and, (b) in the case of the Series B Warrants, in the --------- form of Exhibit B. --------- SECTION 8. Execution of Warrant Certificates. Warrant Certificates --------------------------------- shall be signed on behalf of the Company by the duly authorized officers of the Company under its corporate seal. Each such signature upon the Warrant Certificates may be in the form of a facsimile signature of the duly authorized officers of the Company and may be printed or otherwise reproduced on the Warrant Certificates and for that purpose the Company may adopt and use the facsimile signature of any person who shall have been a duly authorized officer of the Company, notwithstanding the fact that at the time the Warrant Certificates shall be delivered or disposed of such person shall have ceased to hold such office. The seal of the Company may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant Certificates. In case any officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer before the Warrant Certificates so signed shall have been disposed of by the Company, such Warrant Certificates nevertheless may be delivered or disposed of as though such person had not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company to sign such Warrant Certificate although at the date of the execution of this Agreement such person was not such officer. SECTION 9. Registration. The Company shall number and register the ------------ Warrant Certificates in a register as they are issued. The Company may deem and treat the registered holder(s) of the Warrant Certificates as the absolute owner(s) thereof (notwithstanding any notation of ownership or other writing thereon made by anyone) for all purposes and shall not be affected by any notice to the contrary. SECTION 10. Registration of Transfers and Exchanges. (a) The --------------------------------------- Company shall from time to time register the transfer of any outstanding Warrant Certificates in a Warrant register to be maintained by the Company upon surrender of such Warrant Certificates accompanied by a written instrument or instruments of transfer in form reasonably satisfactory to the Company, duly executed by the registered Holder or Holders thereof or by the duly appointed legal representative thereof or by a duly authorized attorney; provided, -------- however, that prior to effecting such transfer, the transferee shall agree (in a - ------- form reasonably satisfactory to the Company) to be bound by the terms of this Agreement, including, without limitation, Section 19. Upon any such ---------- registration of transfer, a new Warrant Certificate shall be issued to the transferee(s) and the surrendered Warrant Certificate shall be canceled and disposed of by the Company. Until the Warrant Certificate is transferred on the Warrant register of the Company, the Company may treat the Holder as shown in the Warrant register as the absolute owner of the Warrant Certificate for all purposes, and notwithstanding any -22- notice to the contrary. The Company agrees that it will make the Warrant register available for inspection by the Holders during normal business hours at its office and that the Holders may rely on the Warrant register for purposes of complying with the preceding sentence. (b) The Warrants shall be transferable in whole or in part and, in the event that a Warrant Certificate is transferred in respect of fewer than all the Warrants evidenced by the Warrant Certificate, a new Warrant Certificate evidencing the remaining Warrant or Warrants will be issued and delivered pursuant to the provisions of this Section 10 and of Section 8. ---------- --------- (c) If any transfer of Warrants or Warrant Shares is not made pursuant to an effective registration statement under the Securities Act, the Holder will, if reasonably requested by the Company, deliver to the Company an opinion of counsel, which may be counsel to the Holder but which must be reasonably satisfactory to the Company, reasonably satisfactory in form, scope and substance to the Company, that such Warrants or Warrant Shares may be sold without registration under the Securities Act, as well as: (1) an investment covenant reasonably satisfactory to the Company signed by the proposed transferee (except that no such covenant will be required in connection with a transfer effected in accordance with Rule 144A under the Securities Act); (2) an agreement by such transferee to the impression of the restrictive legends set forth below on the Warrant Certificate or on the certificate evidencing such Warrant Shares. The Holders agree that each Warrant Certificate and each certificate representing Warrant Shares will bear the following legend (the "Securities ---------- Legend"): - ------ "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION, OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER) AS TO AN EXEMPTION, FROM THE REGISTRATION PROVISIONS OF SAID ACT OR LAWS." -23- Notwithstanding the foregoing provisions of this Section 10, the restrictions ---------- upon the transferability of the Warrant Securities and the Securities Legend requirement set forth above in this Section 10 shall terminate as to any of the ---------- Warrant Securities (i) when and so long as such Warrant Security shall have been effectively registered under the Securities Act and disposed of pursuant thereto or (ii) when the Company shall have received an opinion of counsel reasonably satisfactory to it that such Securities Legend is not required in order to ensure compliance with the Securities Act. Whenever the restrictions imposed by this Section 10 shall terminate as to any Warrant Security, as hereinabove ---------- provided, the Holder thereof shall be entitled to receive from the Company, at the expense of the Company, a new Warrant Certificate or certificate for Warrant Shares bearing the following legend in place of the Securities Legend set forth above: "THE RESTRICTIONS ON TRANSFERABILITY OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE TERMINATED ON ______________, 19__, AND ARE OF NO FURTHER FORCE AND EFFECT." The Holders further agree that each Warrant Certificate and each certificate representing Warrant Shares will bear the following legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A WARRANT PURCHASE AGREEMENT, DATED AS OF APRIL 15, 1996, BETWEEN BRUNSWICK BIOMEDICAL CORPORATION (THE "COMPANY") AND INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION (THE "PURCHASER"), AND A REGISTRATION RIGHTS AGREEMENT, DATED AS OF APRIL 15, 1996, AMONG THE COMPANY AND THE PURCHASER, COPIES OF EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH SECURITIES IN -24- VIOLATION OF SAID AGREEMENTS SHALL BE INVALID." Warrant Certificates may be exchanged at the option of the Holder(s) thereof when surrendered to the Company at its office for another Warrant Certificate or other Warrant Certificates of like tenor and representing in the aggregate a like number of Warrants, including, without limitation, upon an adjustment in the Exercise Price or in the number of Warrant Shares purchasable upon exercise of the Warrants. Warrant Certificates surrendered for exchange shall be canceled and disposed of by the Company. SECTION 11. Exercise of Warrants; Conversion of Warrants. (a) -------------------------------------------- Subject to the terms of this Agreement, each Holder shall have the right, which may be exercised at any time or from time to time prior to April 15, 2006, to receive from the Company the number of fully paid and nonassessable Warrant Shares which such Holder may at the time be entitled to receive on exercise of all or any part of the Warrants and payment of the appropriate Exercise Price then in effect for such Warrant Shares. A Warrant may be exercised upon surrender to the Company at its office designated for such purpose (the address of which is set forth in Section 20) of the certificate or certificates ---------- evidencing the Warrants to be exercised with the form of election to purchase attached thereto properly completed and signed, upon payment to the Company of the appropriate Exercise Price for the number of Warrant Shares in respect of which such Warrants are then exercised. Payment of the aggregate Exercise Price shall be made in cash or by check payable to the order of the Company. Upon such surrender of Warrant Certificates and payment of the appropriate Exercise Price, the Company shall issue and cause to be delivered with all reasonable dispatch (and in any event within ten (10) Business Days of such surrender and payment) to or upon the written order of the Holder, and in the name of the Holder or the Holder's nominee, a certificate or certificates for the number of full Warrant Shares issuable upon the exercise of such Warrants together with such other property (including cash) and securities as may then be deliverable upon such exercise, including cash for fractional Warrant Shares as provided in Section 16. Such certificate or certificates shall be deemed to have been issued - ---------- and the Person so named therein shall be deemed to have become a holder of record of such Warrant Shares as of the date of the surrender of such Warrant Certificates and payment of the Exercise Price. (b) Subject to the terms of this Agreement, each Holder shall have the right (the "Conversion Right"), which may be exercised at any time or from ---------------- time to time prior to April 15, 2006, to convert the Warrants, in whole or in part, into the number of fully paid and nonassessable Warrant Shares calculated pursuant to the following formula: X = Y (A-B) ------- A -25- where: X = the number of Warrant Shares to be issued to the Holders; Y = the number of Warrant Shares for which the Conversion Right is being exercised; A = the Fair Market Value per Share as of the date of exercise of such Conversion Right; and B = the Exercise Price with respect to such Warrants. A Warrant may be converted upon surrender to the Company at its office designated for such purpose (the address of which is set forth in Section 20) of ---------- the certificate or certificates evidencing the Warrants to be converted with the form of election to convert attached thereto properly completed and signed. Upon such surrender of Warrant Certificates, the Company shall issue and cause to be delivered with all reasonable dispatch (and in any event within ten (10) Business Days of such surrender) to or upon the written order of the Holder, and in the name of the Holder or the Holder's nominee, a certificate or certificates for the number of full Warrant Shares issuable upon the conversion of such Warrants together with such other property (including cash) and securities as may then be deliverable upon such conversion, including cash for fractional Warrant Shares as provided in Section 16. Such certificate or certificates shall ---------- be deemed to have been issued and the Person so named therein shall be deemed to have become a holder of record of such Warrant Shares as of the date of the surrender of such Warrant Certificates. (c) The Warrants shall be exercisable and convertible, at the election of the Holders thereof, either in full or from time to time in part, and in the event that a Warrant Certificate is exercised or converted in respect of fewer than all of the Warrant Shares issuable pursuant to such Warrant Certificate at any time prior to the date of expiration of the Warrants, a new Warrant Certificate evidencing the remaining Warrant or Warrants will be issued and delivered pursuant to the provisions of this Section 11 and of Section 8. ---------- --------- All Warrant Certificates surrendered upon exercise or conversion of Warrants shall be canceled and disposed of by the Company. The Company shall keep copies of this Agreement and any notices received hereunder available for inspection during normal business hours at its office. The Company will furnish, at its expense, copies of this Agreement and all such notices, upon request, to any Holder of any Warrant Certificates. SECTION 12. Payment of Taxes. The Company will pay all stamp and ---------------- transfer taxes in connection with the issuance, sale and delivery of the Warrants hereunder, as well as all such taxes attributable to the initial issuance of Warrant Shares upon the exercise of Warrants and payment of the appropriate Exercise Price or upon conversion of the Warrants. The Company will not, however, be required to pay any tax or other similar charges imposed in connection with any transfer of any Warrant Securities. Nothing herein -26- shall be construed as requiring the Company to pay any taxes imposed in respect of income realized by any Holder upon the purchase, transfer or exercise of Warrants. SECTION 13. Mutilated or Missing Warrant Certificates. Upon receipt ----------------------------------------- by the Company of evidence reasonably satisfactory to the Company (which shall include an affidavit of the Holder) that any Warrant Certificate shall have been mutilated, lost, stolen or destroyed and, in the case of loss, theft or destruction, a customary indemnity agreement from the Holder of such Warrant Certificate, the Company shall issue, in exchange and substitution for and upon cancellation of the mutilated Warrant Certificate, or in lieu of and substitution for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor and representing an equivalent number of Warrants. SECTION 14. Reservation of Warrant Shares. The Company will at all ----------------------------- times that any Warrant is exercisable reserve and keep available, free from preemptive or similar rights, out of the aggregate of its authorized but unissued capital stock or its authorized and issued capital stock held in its treasury, for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon exercise of Warrants, (i) the maximum number of shares of each class of capital stock constituting a part of the Warrant Shares which may then be deliverable upon the exercise of all outstanding Warrants and (ii) the maximum number of shares of each class of capital stock of the Company which may then be delivered upon the conversion of all issued Warrant Shares into Voting Common Stock of the Company. The Company shall cause all shares of Voting Common Stock into which shares of Class A Common Stock issuable upon exercise of the Warrants are convertible to be (x) listed (or to be listed subject to notice of issuance) on each securities exchange on which shares of Voting Common Stock are listed, or (y) admitted for trading in any inter-dealer quotation system on which shares of Voting Common Stock are traded. The Company or, if appointed, the transfer agent for shares of each class of capital stock of the Company (the "Transfer Agent") and every subsequent transfer agent for any shares of the -------------- Company's capital stock issuable upon the exercise of the Warrants will be irrevocably authorized and directed at all times to reserve such number of authorized shares as shall be required for such purpose. The Company will keep a copy of this Agreement on file with the Transfer Agent and with every subsequent transfer agent for any shares of the Company's capital stock issuable upon the exercise of the rights of purchase represented by the Warrants or of the rights of conversion of the Warrant Shares. The Company will furnish such Transfer Agent a copy of all notices of adjustments, and certificates related thereto, transmitted to each Holder pursuant to Section 17. Before taking any action ---------- which would cause an adjustment pursuant to Section 15 to the maximum number of ---------- Warrant Shares deliverable upon the exercise of all outstanding Warrants above the then authorized number of shares of Class A Common Stock, the Company shall cause to be authorized additional shares of Class A Common Stock such that such maximum number of shares of Class A Common Stock deliverable upon exercise of all outstanding Warrants does not exceed the number of shares of Class A Common Stock authorized pursuant to the Organic Documents of the Company. Before taking any action which would cause an adjustment pursuant to -27- Section 15 to reduce the Exercise Price below the then par value (if any) of the - ---------- Warrant Shares, the Company will take any corporate action which may, in the opinion of its counsel (which may be counsel employed by the Company), be necessary in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares at the Exercise Price as so adjusted. SECTION 15. Adjustment of Exercise Price and Number of Warrant Shares --------------------------------------------------------- Issuable. The Exercise Price and the number of Warrant Shares issuable upon the - -------- exercise of each Warrant are subject to adjustment from time to time upon the occurrence of any of the events enumerated in this Section 15. ---------- (a) Adjustment for Change in Capital Stock of the Company. If the ----------------------------------------------------- Company (i) pays a dividend or makes a distribution on any class of its Common Stock in shares of any class of its Stock, (ii) subdivides its outstanding shares of any class of Common Stock into a greater number of shares, (iii) combines its outstanding shares of any class of Common stock into a smaller number of shares, (iv) makes a distribution on any class of its Common Stock in shares of its Stock other than Common Stock, or (v) issues by reclassification of any class of its Common Stock any shares of its Stock, then the Exercise Price in effect immediately prior to such action shall be proportionately adjusted so that the Holder of any Warrant thereafter exercised may receive the aggregate number and kind of shares of capital stock of the Company which it would have owned immediately following such action if such Warrant had been exercised immediately prior to such action and the shares of Class A Common Stock issuable upon exercise of such Warrants had been converted into shares of Voting Common Stock. Such adjustment shall be made successively whenever any event listed above shall occur, and shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification. If after an adjustment a Holder of a Warrant upon exercise of such Warrant may receive shares of two or more classes of capital stock of the Company, the Board of Directors of the Company shall determine in the good faith exercise of its reasonable business judgment the allocation of the adjusted Exercise Price between the classes of capital stock. After such allocation, the exercise privilege and the Exercise Price of each class of capital stock shall thereafter be subject to adjustment on terms comparable to those in this Section 15. ---------- (b) Adjustment for Common Stock Issues. If the Company issues shares ---------------------------------- of Common Stock for a consideration per share less than the Fair Market Value per Share on the date the Company fixes the offering price of such additional shares, the Exercise Price shall be adjusted in accordance with the following formula: P - E' = E x (O + M) ----- A -28- where: E' = the adjusted Exercise Price; E = the then current Exercise Price; O = the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares; P = the aggregate consideration received for the issuance of such additional shares; and M = the Fair Market Value per Share on the date the Company fixes the offering price of such additional shares; and A = the number of shares of Common Stock outstanding immediately after the issuance of such additional shares. The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance. The provisions of this subsection (b) do not apply (i) to of the transactions described in subsection (a) of this Section 15 or (ii) any transaction for which an ---------- adjustment has been made pursuant to the provisions of subsections (c) or (d) of this Section 15, or (iii) the issuance of any Excluded Shares.. ---------- (c) Adjustment for Convertible Securities Issues. If the Company -------------------------------------------- issues any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable, with or without payment of additional consideration in cash or property, for shares of Stock, either immediately or upon the occurrence of a specified date or a specified event ("Convertible ----------- Securities"), other than shares of Class A Common Stock issued pursuant to the - ---------- Warrants and Convertible Securities for which an adjustment has been made pursuant to the provisions of subsection (d) of this Section 15, whether or not --------------- the right to convert or exchange thereunder is immediately exercisable or is conditioned upon the passage of time, the occurrence or non-occurrence of some other event, or both, for a consideration per share of Stock initially deliverable upon conversion or exchange of such Convertible Securities less than the Fair Market Value per Share on the date of issuance of such Convertible Securities, the Exercise Price shall be adjusted in accordance with this formula: P - E' = E x O + M ----- O + D where: E' = the adjusted Exercise Price; E = the then current Exercise Price; -29- O = the number of shares of Common Stock outstanding immediately prior to the issuance of such Convertible Securities; P = the aggregate consideration received for the issuance of such Convertible Securities; and M = the Fair Market Value per Share on the date of issuance of such Convertible Securities; and D = the maximum number of shares of Common Stock deliverable upon exercise, conversion or in exchange of such Convertible Securities at the Minimum Price. In this subsection (c), the term "Minimum Price" means the lowest price at which ------------- the Convertible Securities can be converted into or exchanged for Common Stock, regardless of whether that is the initial rate or is conditioned upon the passage of time, the occurrence or non-occurrence of some other event, or both. The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance. If all of the Stock deliverable upon conversion or exchange of such Convertible Securities has not been issued when such Convertible Securities are no longer outstanding, then the Exercise Price shall promptly be readjusted to the Exercise Price which would then be in effect had the adjustment upon the issuance of such Convertible Securities been made on the basis of the actual number of shares of Stock issued upon conversion or exchange of such Convertible Securities. (d) Adjustment for Right, Option and Warrant Issues. If the Company ----------------------------------------------- issues any rights, options or warrants to subscribe for or purchase or otherwise acquire Stock, whether or not the right to exercise such rights, options or warrants is immediately exercisable or is conditioned upon the passage of time, the occurrence or non-occurrence of some other event, or both (the "Option ------ Securities"), for a consideration per share of Stock initially deliverable upon - ---------- exercise of such Option Securities less than the Fair Market Value per Share on the date of issuance of such Option Securities, the Exercise Price shall be adjusted in accordance with this formula: P - E' = E x O + M ----- O + D where: E' = the adjusted Exercise Price; E = the then current Exercise Price; -30- O = the number of shares of Common Stock outstanding immediately prior to the issuance of such Option Securities; P = the aggregate consideration received for the issuance of such Option Securities; M = the Fair Market Value per Share on the date of issuance of such Option Securities; and D = the maximum number of shares of Common Stock deliverable upon exercise, conversion or in exchange of such Option Securities at the Minimum Price. As used in this subsection (d), the term "Minimum Price" means the lowest price ------------- at which the Option Securities may be exercised to purchase or otherwise acquire Common Stock, regardless of whether that is the initial price or is conditioned upon the passage of time, the occurrence or non-occurrence of some other event, or both. The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance. If all of the Common Stock deliverable upon exercise of such Option Securities has not been issued when such Option Securities are no longer outstanding, then the Exercise Price shall promptly be readjusted to the Exercise Price which would then be in effect had the adjustment upon the issuance of such Option Securities been made on the basis of the actual number of shares of Common Stock issued upon such exercise of such Option Securities. (e) Consideration Received. For purposes of any computation ---------------------- respecting consideration received pursuant to any subsection of this Section 15, ---------- the following shall apply: (i) in the case of the issuance of shares of Common Stock for cash, the consideration received shall be the amount of cash received by the Company therefor, without deduction therefrom of any reasonable expenses incurred by the Company in connection therewith or any reasonable underwriters' discounts, fees and commissions paid or allowed by the Company in connection therewith. (ii) in the case of the issuance of shares of Common Stock for a consideration consisting in whole or in part of other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined by the Board of Directors of the Company in the good faith exercise of its business judgment, without deduction therefrom of any reasonable expenses incurred by the Company in connection therewith. In any circumstances in which the fair market value of any such consideration is to be determined pursuant to this paragraph (ii), the Company shall give to the Holders (or, if such determination affects less than all of the Holders, to the Holders so affected) written notice of the proposed fair market value, as determined in good faith by the Board of Directors of the -31- Company. If, within thirty (30) days after the date such notice is given, the Company and such Holders agree upon the fair market value then the fair market value for purposes of this paragraph (ii) shall be as so agreed. If such Holders and the Company do not agree upon such fair market value within such 30-day period, then the Required Holders and the Company shall appoint a recognized investment banking firm of national reputation, reasonably acceptable to the Required Holders and the Company. If the Company and the Required Holders cannot agree on the appointment of a mutually acceptable investment banking firm, or if the firm so appointed declines or fails to serve, then the Required Holders and the Company shall each choose one such investment banking firm and the respective firms so chosen shall appoint another recognized investment banking firm of national reputation. The investment banking firm so selected shall appraise the fair market value for the purposes of this paragraph (ii), and such investment banking firm shall make such appraisal (which shall be in the form of a written report signed by such investment banking firm) and, for the purposes of determining the fair market value pursuant to this paragraph (ii), such appraised fair market value determined as herein provided shall be final and conclusive on the Company and the Holders. If the appraised value of the Company as determined by such investment banking firm is equal to or less than that determined by the Board of Directors of the Company in accordance with this paragraph (ii), then all fees and expenses of such investment banking firm shall be paid by the Required Holders requesting such appraisal. If the appraised value of the Company as determined by such investment banking firm is greater than that determined by the Board of Directors in accordance with this paragraph (ii), then all fees and expenses of such investment banking firm shall be paid by the Company. (iii) in the case of the issuance of Convertible Securities or securities issuable upon the exercise of Option Securities, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such Convertible Securities, plus the consideration, if any, received by the Company for the issuance of such Option Securities, plus the additional minimum consideration, if any, to be received by the Company upon the conversion, exchange or exercise thereof (the consideration in each case to be determined in the same manner as provided in clauses (i) and (ii) of this subsection (e)). (f) Special Adjustments. If the purchase price provided for in any ------------------- Option Securities, the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities or the rate at which any Convertible Securities are convertible into or exchangeable for Stock shall change, the Exercise Price or number of Warrant Shares purchasable upon the exercise of the Warrants in effect at the time of such event shall forthwith be readjusted. The Exercise Price or number of Warrant Shares purchasable upon the exercise of the Warrants shall be adjusted to those amounts which would have been in effect at such time had such Option Securities or Convertible Securities outstanding at such time initially been granted, issued or sold and the Exercise Price or number of Warrant Shares purchasable upon the exercise of the Warrants initially adjusted as provided in the applicable subsection of this Section 15, ---------- whichever was applicable, except that the minimum amount of -32- additional consideration payable and the total maximum number of shares issuable shall be determined after giving effect to such event (and any prior event or events). (g) When No Adjustment Required. No adjustment need be made for a --------------------------- change in the par value or absence of par value of any Common Stock. No adjustment in the Exercise Price need be made unless adjustment would require an increase or decrease of at least 1% of the Exercise Price. Any adjustments that are not made but deferred pursuant to this subsection shall be carried forward and taken into account in any subsequent adjustment. (h) Determination of Fair Market Value per Share; Notice of -------------------------------------------------------- Adjustment. Prior to issuing any shares of Common Stock, any Convertible - ---------- Securities or any Option Securities, the Company shall cause the Board of Directors of the Company to determine in good faith the Fair Market Value per Share, as of the date on which the Company fixes the offering price of such shares or as of the date of issuance of such Convertible Securities or Option Securities, as the case may be. Within five (5) days of such determination by the Board of Directors of the Company, but in no event later than thirty (30) days prior to issuance of such Common Stock, Convertible Securities or Option Securities, the Company shall give the Holders written notice of the proposed Fair Market Value per Share. If within such thirty (30) day period, the Company and such Holders agree upon the Fair Market Value per Share, then the Fair Market Value per Share shall be as so agreed. If, within such 30-day period, the Company and the Required Holders do not agree upon such Fair Market Value per Share, then the Fair Market Value per Share shall be determined as provided in clause (b) of the definition thereof. (j) Reorganization of the Company. In the event of any capital ----------------------------- reorganization, recapitalization or reclassification of the capital stock of the Company, or consolidation, merger or amalgamation of the Company with another entity, any acquisition of capital stock of the Company by means of a share exchange, or the sale, lease, transfer, conveyance or other disposition of all or substantially all of its assets to another entity, then, as a condition of such reorganization, recapitalization, reclassification, consolidation, merger, amalgamation, share exchange or sale, lease, transfer, conveyance or other disposition, lawful and adequate provision shall be made whereby the Holders of the Warrant Certificates shall thereafter have the right to purchase and receive, on the basis and upon the terms and conditions specified in this Agreement and in lieu of the Warrant Shares immediately theretofore purchasable and receivable upon the exercise of the rights represented by the Warrants, such shares of stock, securities, cash or property as may be issued or payable with respect to or in exchange for the number of Warrant Shares immediately theretofore purchasable and receivable upon the exercise of the rights represented by the Warrant Certificates had such reorganization, recapitalization, reclassification, consolidation, merger, amalgamation, share exchange or sale, lease, transfer, conveyance or other disposition not taken place. If such consolidation, merger, amalgamation, share exchange, sale, lease, transfer, conveyance or other disposition is with any Person or group of Persons (within the -33- meaning of Section 13(d) or 14(d) of the Exchange Act) who shall have made a purchase, tender or exchange offer which was accepted by the holders of not less than twenty percent (20%) of the outstanding shares of Common Stock of the Company, the Holders of the Warrants shall have been given a reasonable opportunity (and, in no event, less than 30 days) to elect to receive, either (x) the stock, securities, cash or property it would have received pursuant to the immediately preceding sentence or (y) the stock, securities, cash or property issued or paid (or to be issued or paid) to holders of the Common Stock in accordance with such offer. In any such case appropriate provision shall be made with respect to the rights and interests of the Holders of the Warrants to the end that the provisions of this Agreement (including, without limitation, provisions for adjustment of the Exercise Price and of the number and type of securities purchasable upon the exercise of the Warrants) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities, cash or property thereafter deliverable upon the exercise of the Warrants. The Company shall not effect any such consolidation, merger, amalgamation, share exchange or sale, lease, transfer, conveyance or other disposition unless prior to or simultaneously with the consummation thereof the successor entity (if other than the Company) resulting from such consolidation, merger or amalgamation, share exchange or the entity purchasing or otherwise acquiring such assets or shares (i) shall assume by a supplemental Warrant Agreement, satisfactory in form, scope and substance to the Required Holders (which shall be mailed or delivered to the registered Holders of the Warrants at the last address of such Holders appearing on the books of the Company) the obligation to deliver to such Holders such shares of stock, securities, cash or property as, in accordance with the foregoing provisions, such Holders may be entitled to purchase (the "Substitute Securities") and (ii) shall assume all of the --------------------- obligations of the Company set forth in this Agreement and the Registration Rights Agreement. Following such assumption such obligations shall apply to the Substitute Securities rather than to the Warrant Shares. If the issuer of securities deliverable upon exercise of Warrants under the supplemental Warrant Agreement is an Affiliate of the formed, surviving, transferee or lessee entity, such issuer shall join the supplemental Warrant Agreement. The foregoing provisions of this paragraph shall similarly apply to successive reorganizations, recapitalizations, reclassifications, consolidations, mergers, amalgamations, share exchanges, sales, leases, transfers, conveyances or other dispositions. The provisions of this subsection (i) of Section 15 shall not ---------- apply to the Merger to the extent the Merger complies with subsection (j) of Section 15. - ----------- (j) The Merger. Upon consummation of the Merger, (1) the Warrant ---------- Documents and all obligations of Brunswick under the Warrant Documents shall automatically become the legal, valid and binding obligations of STI, enforceable against STI in accordance with their terms, as if STI had been the signatory thereto, (2) each Series A Warrant shall be exercisable for a number of shares of Class A Common Stock of STI equal to (i) the number of shares of Class A Common Stock of Brunswick for which such Series A Warrant is exercisable as of the Merger Consummation Date, multiplied by (ii) the Conversion Factor, ------------- for an Exercise Price equal to $.10 per share multiplied by the Conversion Factor, and (3) -34- each Series B Warrant shall be exercisable for a number of shares Class A Common Stock of STI equal to (i) the number of shares of Class A Common Stock of Brunswick for which such Series B Warrant is exercisable as of the Merger Consummation Date, multiplied by (ii) the Conversion Factor, for an Exercise ------------- Price equal to the Exercise Price immediately prior to consummation of the Merger divided by the Conversion Factor. Brunswick acknowledges and agrees that ------- -- it is a condition to the Merger that STI execute and deliver to the Purchaser, prior to or concurrently with the consummation of the Merger, (1) an assumption agreement, in form and substance reasonably satisfactory to the Required Holders, pursuant to which STI shall expressly assume and reaffirm its obligations under the Warrant Documents, (2) substitute Series A Warrant Certificates and Series B Warrant Certificates evidencing warrants for the number of shares of Class A Common Stock of STI set forth in the preceding sentence and reflecting the Exercise Prices for the Series A Warrants and Series B Warrants effective upon and after the Merger Consummation Date, and (3) an opinion of counsel to STI in the form of Exhibit F. --------- (k) When Issuance or Payment May Be Deferred. In any case in which ---------------------------------------- this Section 15 shall require that an adjustment in the Exercise Price be made ---------- effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event (i) issuing to the Holder of any Warrant exercised after such record date the Warrant Shares issuable upon such exercise over and above the Warrant Shares issuable upon such exercise on the basis of the Exercise Price prior to such adjustment and (ii) paying to such Holder any amount in cash in lieu of a fractional share pursuant to Section 16; ---------- provided, however, that the Company shall deliver to such Holder a bill or other - -------- ------- appropriate instrument evidencing such Holder's right to receive such additional Warrant Shares and cash upon the occurrence of the event requiring such adjustment. (l) Adjustment in Number of Shares. Upon each adjustment of the ------------------------------ Exercise Price pursuant to this Section 15, each Warrant outstanding prior to ---------- the making of the adjustment in the Exercise Price shall thereafter evidence the right to receive upon payment of the adjusted Exercise Price that number of Warrant Shares (calculated to the nearest hundredth) obtained from the following formula: N'= N x E - E' where: N' = the adjusted number of Warrant Shares issuable upon exercise of a Warrant by payment of the adjusted Exercise Price ; N = the number or Warrant Shares previously issuable upon exercise of a Warrant by payment of the Exercise Price prior to adjustment; -35- E' = the adjusted Exercise Price; and E = the Exercise Price prior to adjustment. Anything in this subsection (l) or elsewhere in this Agreement to the contrary notwithstanding, if because of any limitations set forth in subsection (g) of this Section 15, no adjustment in the Exercise Price is made, the provisions of ---------- this subsection (l) shall nevertheless be given effect so as to increase or decrease the adjusted number of Warrant Shares as though E' in the above formula had actually been adjusted. SECTION 16. Fractional Interests. The Company shall not be required -------------------- to issue fractional Warrant Shares on the exercise of Warrants. If more than one Warrant shall be presented for exercise in full at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon exercise thereof shall be computed on the basis of the aggregate number of Warrant Shares purchasable on exercise of the Warrants so presented. If any fraction of the Warrant Shares would, except for the provisions of this Section 16, be issuable ---------- on the exercise of any Warrants (or specified portion thereof), the Company shall pay an amount in cash equal to the Fair Market Value per Share on the day immediately preceding the date the Warrant is presented for exercise, multiplied by such fraction. SECTION 17. Notice to Warrant Holders. Upon any adjustment of the ------------------------- Exercise Price or number or type of securities purchasable upon exercise of the Warrants pursuant to Section 15, and as otherwise required by Section 15, the ---------- ---------- Company shall promptly thereafter (i) upon the request of the Required Holders, cause to be filed with the Company a certificate of the chief financial officer of the Company setting forth the Exercise Price and the number and type of securities or other property constituting Warrant Shares after such adjustment and setting forth in reasonable detail the method of calculation and the facts upon which such calculations are based and, in the case of an adjustment pursuant to Section 15(i) or (j), setting forth the number and type of ------------- --- securities or other property constituting Warrant Shares (or portion thereof) issuable, after such adjustment in the Exercise Price or number of Warrant Shares purchasable upon exercise of the Warrants, upon exercise of a Warrant and payment of the adjusted Exercise Price, and (ii) cause to be given to each of the Holders of the Warrant Certificates written notice of such adjustments, together with a copy of such certificate. Where appropriate, such notice may be given in advance and included as a part of the notice required to be given under the other provisions of this Section 17. In the event: ---------- (a) the Company shall authorize the issuance to holders (although not necessarily to all such holders) of shares of Stock or rights, options or warrants to subscribe for or purchase or otherwise acquire shares of Stock or of any other securities or property (including securities of any other issuer) or of any other subscription rights, options or warrants; or -36- (b) the Company shall authorize the payment of any dividend or distribution to holders of shares of Stock of cash, Stock or other securities or property (including securities of any other issuer) of the Company; or (c) of any capital reorganization, reclassification or recapitalization of the capital stock of the Company, or any amalgamation, consolidation or merger to which the Company is a party, or any acquisition of capital stock of the Company through a share exchange, or of the sale, lease, conveyance, transfer or other disposition of the properties and assets of the Company substantially as an entirety, or a purchase, tender or exchange offer for shares of Common Stock or other securities constituting part of the Warrant Shares (whether by the Company or some other party); or (d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or (e) the Company proposes to take any action which would require an adjustment of the Exercise Price or number of Warrant Shares purchasable upon exercise of the Warrants pursuant to Section 15; ---------- then the Company shall cause to be given to each of the Holders, at least 20 days prior to the applicable record date hereinafter specified (or promptly in the case of events for which there is no record date), a written notice stating (as applicable) (i) the date as of which the holders of record of shares of Stock entitled to receive any such rights, options, warrants or dividends or distribution are to be determined, (ii) the date on which any such reclassification, recapitalization or reorganization, consolidation, merger, amalgamation, share exchange, sale, lease, conveyance, transfer, disposition, dissolution, liquidation or winding up is expected to become effective or be consummated, or (iii) the initial expiration date set forth in any purchase, tender or exchange offer for shares of Stock, and the date as of which it is expected that holders of record of shares of Stock or other securities constituting a part of the Warrant Shares (or securities into which the Warrant Shares may be converted) shall be entitled to exchange such shares or securities for securities or other property, if any, deliverable upon such reclassification, recapitalization, reorganization, consolidation, merger, amalgamation, share exchange, sale, lease, conveyance, transfer, disposition, dissolution, liquidation or winding up. The failure to give the notice required by this Section 17 or any defect therein shall not affect the legality or ---------- validity of any distribution, right, option, warrant, reorganization, recapitalization, reclassification, consolidation, merger, amalgamation, share exchange, sale, lease, conveyance, transfer, disposition, dissolution, liquidation or winding up, or the vote upon any action. Nothing contained in this Agreement or in any of the Warrant Certificates shall be construed as conferring upon the Holders the right to vote or to consent as stockholders in respect of the meetings of stockholders or the election of members of the Board of Directors of the Company or any other matter, or any rights whatsoever as stockholders of the Company. -37- SECTION 18. Cash Distributions and Dividends. If the Company pays a -------------------------------- dividend or makes a distribution to the holders of its Stock of any securities (other than Stock) or property (including cash and securities of other companies) of the Company, or any rights, options or warrants to purchase securities (other than Stock) or property (including securities of other companies) of the Company, then, simultaneously with the payment of such dividend or the making of such distribution, and as a condition precedent to its right to do so, it will pay or distribute to the Holders of Series A Warrant Certificates an amount of property (including without limitation cash) and/or securities (including without limitation securities of other companies) of the Company as would have been received by such Holders had they exercised all of the Series A Warrants represented by the Series A Warrant Certificates immediately prior to the record date (or other applicable date) used for determining stockholders of the Company entitled to receive such dividend or distribution. Anything in subsection (d) of Section 15 to the contrary ---------- notwithstanding, no adjustment to the Exercise Price shall be made for any distribution of Convertible Securities of the Company to the Holders pursuant to the provisions of this Section 18. ---------- SECTION 19. Put Rights; Tag-Along Rights and Registration Rights. ---------------------------------------------------- (a) Put by Holders. Unless the Required Holders have otherwise agreed in -------------- writing, at any time and from time to time on or after the occurrence of a Put Event, the Put Right shall be exercisable by each of the Holders. After receipt of a Put Notice from any Holder, the Company will promptly (and in any event within ten (10) days) give written notice (the "Put Exercise Notice") to each of ------------------- the other Holders of Warrant Securities that a Put Right has been exercised. Each Holder will have the right to participate in the Put Right and require the Company to repurchase all or any portion of such Holder's Warrant Securities by delivering written notice to the Company within ten (10) days following receipt of the Put Exercise Notice. All such notices delivered by such other Holders will be deemed to have been delivered as of the date of the initial Put Notice and taken together will be deemed to be one exercise of the Put Right. Upon the exercise by a Holder of the Put Right, the purchase price payable to such Holder (the "Put Purchase Price") by the Company for such Holder's Warrant Securities ------------------ shall be as follows: (i) in the case of Warrants, an amount determined by subtracting (A) the aggregate Exercise Price for Series B Warrants then in effect under the Warrant Agreement from (B) the product of (1) the Contract Value per Share, multiplied ---------- by (2) the number of shares of Voting Common Stock that may be acquired upon the - -- conversion by such Holder of the shares of Class A Common Stock that would be received upon exercise of such Holder's Warrants with respect to which the Put Right is being exercised; (ii) in the case of Class A Common Stock, an amount equal to the product of (A) the Contract Value per Share, multiplied by (B) the number of shares of ------------- Voting Common -38- Stock that may be acquired upon the conversion by such Holder of the shares of Class A Common Stock with respect to which the Put Right is being exercised; and (iii) in the case of Voting Common Stock, an amount equal to the product of (A) the Contract Value per Share, multiplied by (B) the number of shares of Voting Common Stock with respect to which the Put Right is being exercised. Promptly upon the receipt of a Put Notice pursuant to Section 19(a) the Company ------------- shall cause the Contract Value per Share to be determined, and shall give written notice of the determination thereof to each Holder, promptly upon the determination thereof and in any event within thirty (30) days following the Company's receipt of the Put Notice. The provisions of this Section 19(a) shall ------------- apply until the termination of this Agreement pursuant to Section 24 to any ---------- Person who acquires in any manner any Warrant Securities from any Holder. (b) Closing. Each closing of the purchase and sale of any Warrant ------- Securities pursuant to Section 19(a) shall take place on a date (a "Put Closing ------------- ----------- Date") which is the later of (i) thirty (30) days after the giving of the Put - ---- Notice, and (ii) ten (10) days after determination of the Contract Value per share, provided that if such day is not a Business Day such closing shall be on the next succeeding Business Day. Payment of the Put Purchase Price shall be due and payable in full on the Put Closing Date. The closing of such purchase and sale of Warrant Securities shall take place at 10:00 a.m. on the Put Closing Date at such location in Atlanta, Georgia, or New York, New York, as the Required Holders may reasonably determine and notify the Company or at such other location as may be agreed to by the Company and the Required Holders. The Put Purchase Price shall be paid in full at each such closing, by wire transfer of immediately available federal funds, and the Warrant Securities to be repurchased at such closing shall be duly endorsed for transfer. Such Warrant Securities shall be free and clear of all liens and encumbrances of any kind, nature and description, other than applicable restrictions under federal and state securities laws, and each Holder shall represent and warrant to the Company to such effect with respect to such Holder's Warrant Securities. The Company will pay all stamp and transfer taxes in connection with the repurchase of the Warrant Securities hereunder. (c) Restrictions on Purchase. The Company covenants and agrees that, other ------------------------ than the Restrictive Provisions, it shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of the Required Holders, enter into or agree to become subject to any term, condition, provision or agreement that would conflict with or restrict in any way the performance of the Company's obligations under this Agreement or that would by its terms restrict the availability of Legally Available Funds with which to perform such obligations. Anything in this Agreement to the contrary notwithstanding, the Company shall not be required to purchase Warrant Securities under Section 19(a) ------------- if at the time of closing of the purchase and sale of any Warrant Securities pursuant to Section 19(a) there exists any Restrictions on ------------- -39- Purchase. Upon receipt of a Put Notice, if the Company's obligations under Section 19(a) at the time of performance would be subject to Restrictions on - ------------- Purchase, then the Company (i) shall promptly use all reasonable efforts (excluding the payment of waiver, consent or similar transactional fees, but including reasonable documentation costs and other similar expenses) to cause the Required Lenders to waive compliance with any such Restrictive Provisions and/or to amend the Restrictive Provisions so as to permit the purchase of the Warrant Securities pursuant to this Agreement, (ii) shall not repay, redeem, purchase or otherwise retire any indebtedness for borrowed money of, or any debt securities issued by, the Company in an amount or for a price or other consideration in excess of the principal amount thereof, and (iii) shall not declare or pay any dividend or distribution on any shares of Stock (other than dividends that accrue and cumulate on Preferred Stock in accordance with the terms of such Preferred Stock as is in effect on the date such Put Notice is received by the Company). If, notwithstanding the Company's reasonable efforts required under this Section 19(c), the Company is unable to fulfill its ------------- obligations under Section 19(a) because of the existence of one or more ------------- Restrictions on Purchase, the Company shall give prompt written notice thereof to each Holder exercising Put Rights, specifying in reasonable detail the nature thereof and the extent, if any, to which the Company would be able to fulfill its obligation to pay the Purchase Price within the Restrictions on Purchase. If any Restrictions on Purchase exist on the proposed Put Closing Date, then at the sole and independent election of each such Holder, and pursuant to written notice given by any such Holder to the Company: (i) such Holder's Put Right shall remain exercised and the closing of the purchase and sale of Warrant Securities pursuant to such Holder's Put Right shall be deferred until not more than five Business Days after all such Restrictions on Purchase cease to exist; provided, however, that, as and to the extent that such Restrictions on Purchase - -------- ------- cease to exist, the Company shall promptly make partial payments of the Purchase Price to such Holder, in which case there shall be a series of such closings, each of which shall take place not more than five Business Days after such Restrictions on Purchase have ceased to exist to an extent that would permit such partial payments of the Purchase Price in increments of not less than $100,000 ("Partially Available Funds"); or (ii) the exercise of such Holder's ------------------------- Put Right shall be rescinded and such Holder shall reserve its right to exercise the Put Right at any subsequent time. In the event that any Holders make the election provided in clause (i) of the immediately preceding sentence, the Company shall purchase from such selling Holders that number of Warrant Securities as may be purchased at the Purchase Price using that portion of Partially Available Funds for such purchase as equals the product of (a) all Partially Available Funds, and (b) the ratio of (i) the Warrant Securities originally proposed to be sold by such Holders electing to sell and not electing to rescind pursuant to clause (ii) of the immediately preceding sentence, to (ii) the Warrant Securities originally proposed to be sold by all Holders (treating all Warrants as fully exercised for the Warrant Shares to which the Holders would be entitled upon exercise of such Warrants). Such purchase shall be made from each selling Holder pro rata based on the ratio of (i) the number of Warrant Securities originally proposed to be sold by such Holder to (ii) the Warrant Securities originally proposed to be sold by all Holders. None of the provisions of this Section 19(c) shall be construed to limit any other right or ------------- -40- remedy under applicable law which any Holder may have as a result of the failure by the Company to purchase Warrant Securities as herein provided. (d) Tag-Along Rights. Without limitation to the right of any Holder to ---------------- exercise its Put Right pursuant to Section 19(a), if at any time the Company ------------ shall determine to enter into any transaction or series of transactions that would result in a Change of Control (a "Change of Control Transaction") (any ----------------------------- third party proposing to enter into such transaction or transactions being hereinafter referred to in this Section 19(d) as a "Prospective Purchaser"), the ------------- --------------------- Company and any Prospective Purchaser shall first give written notice (the "Offer Notice") to all of the Holders, specifying the name and address of the ------------ Prospective Purchaser and the number of shares, if any, of Stock proposed to be issued, sold, transferred or otherwise disposed of and setting forth in reasonable detail the price, structure and other terms and conditions of the Change of Control Transaction. The Offer Notice shall represent the offer (the "Offer") from the Prospective Purchaser to each of the Holders of the right to ----- sell to the Prospective Purchaser as a condition to the consummation of the proposed transaction described in the Offer Notice, all Warrant Securities then owned by each Holder to the Prospective Purchaser and, at the option of the Holders, on the same terms and conditions (including price and form of consideration) as are being offered by the Prospective Purchaser to the Company or at the Fair Market Value per Share, determined as of the date of the Offer Notice, minus the Exercise Price (if any). Each Holder shall have thirty (30) days from the date of receipt of the Offer Notice to give written notice of its intention to accept or reject the Offer. Failure to respond within such thirty- day period shall be deemed notice of rejection. In the event that any Holder gives written notice to the Company and the Prospective Purchaser of its intention to accept such Offer, then such written notice, taken in conjunction with the Offer Notice, shall constitute a valid and legally binding agreement, and each of the Holders so giving such written notice shall be entitled to sell to the Prospective Purchaser, contemporaneously with the consummation of the Change of Control Transaction, all of the Warrant Securities at the price specified therefor by such Holder in accordance with this Section 19(d). In the ------------- event that all of the Holders reject or are deemed to have rejected the offer represented by the Offer Notice, the Company shall be free to proceed to consummate such Change of Control Transaction on the terms and conditions set forth in the Offer Notice, provided that such sale is not otherwise prohibited by any agreement between the Company and the Purchaser. In the event the Company fails to complete the proposed sale, transfer or other disposition within ninety (90) days after the Holder or Holders rejected or were deemed to have rejected the Offer, such transaction or transactions shall again be subject to the provisions of this Section 19(d). The provisions of this Section 19(d) shall ------------- ------------- apply until the termination of this Agreement pursuant to Section 24 to any ---------- Person who acquires in any manner any Warrant Securities from any Holder. (e) Limitation on Put Rights of Others. The Company covenants and agrees ---------------------------------- that, neither the Company nor any of its Subsidiaries shall, directly or indirectly, grant to any Person or agree to or otherwise become obligated in respect of any rights to require the -41- Company or any of its Subsidiaries to purchase securities of the Company upon the demand of any Person. The Company represents and warrants that neither it nor any of its Subsidiaries has previously entered into any agreement granting any such rights to any Person, except for such rights as are granted pursuant to the Preferred Stock Purchase Agreement between Brunswick and the State of Maryland relating to the Series D Preferred Stock of Brunswick. (f) Severability. If any provision of this Agreement shall be held or ------------ deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution, statute, rule or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision or provisions in question, invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute, rule or public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case. SECTION 20. Notices. All notices, consents, approvals, agreements ------- and other communications provided hereunder shall be in writing or by telecopy and shall be sufficiently given to the Purchaser, the Holders and the Company if addressed or delivered to them at the following addresses: If to the Purchaser: ING Capital 135 East 57th Street New York, New York 10022 Attention: Chief Credit Officer Telecopier No.: (212) 750-8935 with copies to: ING Capital Atlanta Office 200 Galleria Parkway Suite 950 Atlanta, Georgia 30339 Telecopier No.: (770) 951-1005 and a copy to: King & Spalding 191 Peachtree Street Atlanta, Georgia 30303-1763 Attention: Hector E. Llorens, Jr., Esq. -42- Telecopier No.: (404) 572-5100 If to any other At its last known address appearing Holder: on the books of the Company maintained for such purpose If to the Company Brunswick Biomedical Corporation prior to the Merger 6 Thatcher Lane Consummation Wareham, Massachusetts 01752 Date: Attention: James H. Miller Telecopier No.: (508) 460-7702 with a copy to: Palmer & Dodge One Beacon Street Boston, Massachusetts 02108 Attention: Stanley Keller, Esq. Telecopier No.: (617) 227-4420 If to the Company Survival Technology, Inc. on or after the 2275 Research Boulevard, Suite 100 Merger Consumma- Rockville, Maryland 20830 tion Date: Attention: James H. Miller Telecopier No.: (301) 926-6423 with a copy to: Palmer & Dodge One Beacon Street Boston, Massachusetts 02108 Attention: Stanley Keller, Esq. Telecopier No.: (617) 227-6420 or at such other address as any party may designate to any other party by written notice. All such notices and communications shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered, (ii) when received, if deposited in the mail, postage prepaid, (iii) when transmission is verified, if telecopied, and (iv) on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. SECTION 21. Costs and Expenses. The Company agrees to pay all ------------------ reasonable out-of-pocket expenses of the Purchaser (including reasonable fees and expenses of counsel retained by the Purchaser from time to time) in connection with (i) the negotiation, preparation, execution, and delivery of this Agreement and each other Warrant Document, whether or not the transactions contemplated hereby are consummated, and (ii) the consideration of legal questions relevant hereto and thereto. The Company also agrees to reimburse the Purchaser and each Holder upon demand for all reasonable out-of-pocket -43- expenses (including reasonable attorneys' fees and expenses) incurred by the Purchaser or such Holder in enforcing the obligations of the Company under this Agreement or any other Warrant Document or in connection with any amendment, waiver, consent, supplement or other modification to this Agreement or any Warrant Document. SECTION 22. Indemnification. (a) In consideration of the --------------- transactions contemplated by this Agreement and the other Warrant Documents, the Company hereby agrees to indemnify, exonerate and hold the Purchaser and each Holder, each of their respective successors and assigns, each of the respective officers, directors, employees, attorneys and agents of the Purchaser and each Holder and each of their respective successors and assigns (collectively, the "Indemnified Parties") free and harmless from and against any and all actions, ------------------- causes of action, suits, losses, costs, liabilities, damages and expenses (irrespective of whether such Indemnified Party is a party to the action for which indemnification hereunder is sought), including attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by the Indemnified ----------------------- Parties or any of them or asserted or awarded against the Indemnified Parties or any of them as a result of, or arising out of, or relating to: (i) any transaction contemplated by this Agreement or any other Warrant Document; (ii) the making of any claim by any investment banking firm, broker or third party that it is entitled to compensation from any Indemnified Party in connection with this Agreement; (iii) any claim, investigation, litigation, or proceeding made or commenced by a third party related to this Agreement or any other Warrant Documents, whether or not the Indemnified Party or any other Indemnified Party is party thereto; (iv) the breach by the Company of any representation or warranty set forth in this Agreement or in any other Warrant Document; or (v) the failure of the Company to comply with all terms, conditions, and covenants set forth in this Agreement or in any other Warrant Document; except for any such Indemnified Liabilities arising for the account of a - ------ --- particular Indemnified Party by reason of the relevant Indemnified Party's gross negligence or wilful misconduct as determined by a final and nonappealable decision of a court of competent jurisdiction. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The foregoing indemnity shall become effective immediately upon the execution and delivery hereof and shall remain operative and in full force and effect notwithstanding the consummation of -44- the transactions contemplated hereunder, the issuance or exercise of the Warrants hereunder, the termination of this Agreement pursuant to Section 24, ------- -- the invalidity or unenforceability of any term or provision of this Agreement or any other Warrant Document, or any investigation made by or on behalf of any Holder or the Purchaser. (b) Promptly after receipt by an Indemnified Party of notice of the commencement of any action (including any governmental investigation or inquiry), such Indemnified Party will, if such Indemnified Party intends to make a claim in respect thereof against the Company, give written notice to the Company of the commencement thereof, but the omission so to notify the Company shall not relieve the Company from any of its obligations hereunder. In case any such action is brought against any Indemnified Party and it notifies the Company of the commencement thereof, the Company shall be entitled to participate in and to the extent that it may wish, to assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party, and after notice from the Company to such Indemnified Party, the Company shall not be responsible for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof. The Company will not consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation. SECTION 23. Successors. All the covenants and provisions of this ---------- Agreement by or for the benefit of the Company or the Holders shall bind and inure to the benefit of their respective successors and assigns, including those by operation of law, merger, consolidation or as otherwise provided in subsection (i) or (j) of Section 15. ------- -- SECTION 24. Termination. Except as otherwise provided herein, this ----------- Agreement shall terminate when (a) all Warrants have expired unexercised in accordance with their terms or all Warrant Securities have been purchased pursuant to Section 19 hereof, and (b) all obligations of the Company and the ------- -- Borrower (or any successor to either of them) shall have been satisfied in full and all contingencies in respect thereof shall no longer exist, including, without limitation, the obligations set forth in subsection (i) or (j) of Section 15. - ------- -- SECTION 25. Governing Law. THIS AGREEMENT AND THE WARRANTS SHALL BE --------- --- GOVERNED BY THOSE PROVISIONS OF THE CORPORATE CODE OF THE JURISDICTION IN WHICH THE COMPANY IS INCORPORATED AND ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF THE JURISDICTION IN WHICH THE COMPANY IS INCORPORATED WHICH ARE NECESSARILY APPLICABLE TO SECURITIES ISSUED BY A CORPORATION INCORPORATED IN SUCH JURISDICTION AND OTHERWISE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE. -45- SECTION 26. Benefits of this Agreement. Nothing in this Agreement -------- -- ---- --------- shall be construed to give to any Person other than the Company and the Holders any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company and the Holders. SECTION 27. Counterparts. This Agreement may be executed in any ------------ number of counterparts and each such counterpart shall for all purposes be deemed to be an original, and all such counterparts shall together constitute one and the same instrument. SECTION 28. Amendments; Waiver. No provision of this Agreement may ---------- ------ be amended or waived except by an instrument in writing signed by the party sought to be bound; provided, however, that any amendment requested or waiver -------- ------ sought from the Holders of any provision of this Agreement which affects Holders generally may be given by the Required Holders and any waiver so given shall be binding on all Holders; provided further, that the provisions of Section 11 with -------- ------- ---------- respect to the type of securities for which the Warrants are exercisable may not be changed without the consent of each Holder affected thereby. No failure or delay by any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall a waiver of a particular right or remedy on one occasion be deemed a waiver of any other right or remedy or a waiver of the same right or remedy on any subsequent occasion. SECTION 29. Waiver of Jury Trial. THE PURCHASER, EACH HOLDER AND THE ------ -- ---- ----- COMPANY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ON THE WARRANTS OR ON ANY OF THE OTHER WARRANT DOCUMENTS, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, THE WARRANTS OR ANY OF THE OTHER WARRANT DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PURCHASER, ANY HOLDER OR THE COMPANY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER'S ENTERING INTO THIS AGREEMENT. SECTION 30. Jurisdiction. The Company hereby agrees that any legal ------------ action or proceeding against it with respect to this Agreement, the Warrants or any of the other Warrant Documents may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York as any Holder may elect, and, by execution and delivery hereof, it accepts and consents for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts and agrees that such jurisdiction shall be exclusive, unless waived by the Required Holders in writing, with respect to any action or proceeding brought by it against such Holders. The Company hereby irrevocably designates, appoints and empowers CT Corporation System whose present address is 1633 Broadway, New York, New York 10019, as its authorized agent to receive, for and -46- on its behalf and its property, service of process in the State of New York when and as legal actions or proceedings may be brought in the courts of the State of New York or of the United States of America sitting in New York, and such service of process shall be deemed complete upon the date of delivery thereof to such agent, or upon the earliest of any other date permitted by applicable law. It is understood that a copy of said process served on such agent will be forwarded to the Company as soon as practicable, at its address set forth herein, but its failure to receive such copy shall not affect in any way the service of said process on said agent as the agent of the Company. The Company irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of the copies thereof by certified mail, return receipt requested, postage prepaid, to it at its address set forth herein, such service to become effective upon the earlier of (I) the date 10 calendar days after such mailing and (ii) any earlier date permitted by applicable law. The Company agrees that it will at all times continuously maintain an agent to receive service of process in the State of New York on behalf of itself and its properties and in the event that, for any reason, the agent named above or its successor shall no longer serve as its agent to receive service of process in the State of New York on its behalf, it shall promptly appoint a successor so to serve and shall advise the Holders thereof. The Company agrees that Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York shall apply to this Agreement and each of the other Warrant Documents and waives any right to stay or to dismiss any action or proceeding brought before said courts on the basis of forum non conveniens. ----- --- ---------- Nothing herein shall affect the right of any Holder to bring proceedings against the Company in the courts of any other jurisdiction or to serve process in any other manner permitted by applicable law. SECTION 31. Specific Performance. The Company recognizes that the -------- ----------- rights of the Holders under this Agreement and the other Warrant Documents are unique and, accordingly, the Holders shall, in addition to such other remedies as may be available to any of them at law or in equity, have the right to enforce their rights hereunder and thereunder by actions for injunctive relief and specific performance to the extent permitted by law. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement or any of the other Warrant Documents and hereby agrees to waive in any action for specific performance the defense that a remedy at law would be adequate. This Agreement is not intended to limit or abridge any rights of the Holders which may exist apart from this Agreement. SECTION 32. Confidentiality. The Holders shall hold all non-public, --------------- proprietary or confidential information (which has been identified as such by the Company) obtained pursuant to the requirements of this Agreement in accordance with their customary procedures for handling confidential information of this nature; provided, however, that each Holder may make disclosure of any -------- ------- such information to its examiners, Affiliates, outside auditors, counsel, consultants, appraisers and other professional advisors in connection with this Agreement or as reasonably required by any proposed transferee in connection with the -47- contemplated transfer of any Warrant Securities (but only if the proposed transferee agrees to be bound by the terms of this Section 32) or as required or ------- -- requested by an Governmental Authority or representative thereof or in connection with the enforcement hereof or of any other Warrant Document or pursuant to legal process. In no event shall any Holder be obligated or required to return any materials furnished to it by the Company. SECTION 33. Entire Agreement. The parties hereto agree that this ------ --------- Agreement, the Registration Rights Agreement and the Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings between them as to such subject matter; and there are no restrictions, agreements, arrangements, oral or written, between any or all of the parties relating to the subject matter hereof which are not fully expressed or referred to herein or therein. -48- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written. BRUNSWICK BIOMEDICAL CORPORATION By: /s/ James H. Miller -- ----- -- ------ Name: Title: INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION By: /s/ Daren J. Wells -- ----- -- ----- Name: Daren J. Wells Title: Managing Director -49- EXHIBIT A ------- - FORM OF SERIES A WARRANT CERTIFICATE ---- -- ------ - ------- ----------- THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION, OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER) AS TO AN EXEMPTION, FROM THE REGISTRATION PROVISIONS OF SAID ACT OR LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A WARRANT PURCHASE AGREEMENT, DATED AS OF APRIL 15, 1996, BETWEEN BRUNSWICK BIOMEDICAL CORPORATION (THE "COMPANY") AND INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION ("ING") AND A REGISTRATION RIGHTS AGREEMENT, DATED AS OF APRIL 15, 1996, AMONG THE COMPANY AND THE PURCHASERS IDENTIFIED IN EXHIBIT A ATTACHED THERETO, COPIES OF EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE INVALID. Certificate No.__ _______ Warrants Warrant Certificate BRUNSWICK BIOMEDICAL CORPORATION This Warrant Certificate certifies that INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION ("ING"), or registered assigns, is the registered --- holder of the number of Warrants (the "Warrants") set forth above to purchase -------- shares of non-voting common stock, par value $0.01 per share (the "Class A ----- - Common Stock"), of BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation - ------ ----- (the "Company"). Each Warrant entitles the holder upon exercise to receive from ------- the Company one fully paid and nonassessable share of Class A Common Stock (a "Warrant Share") at the initial exercise price (the "Exercise Price") of $0.01, ------- ----- -------- ----- payable in lawful money of the United States of America, upon surrender of this Warrant Certificate and payment of the Exercise Price, if applicable, -50- at the office of the Company designated for such purpose, subject to the conditions set forth herein and in the Warrant Agreement referenced below. The Exercise Price and number and type of Warrant Shares issuable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events, as set forth in the Warrant Agreement. Each Warrant also entitles the holder to convert such Warrant into the number of Warrant Shares determined in accordance with Section 11(b) of the Warrant Agreement. ------- ----- The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Series A Warrants, and are issued or to be issued pursuant to a Warrant Purchase Agreement dated as of April 15, 1996 (the "Warrant ------- Agreement"), duly executed and delivered by the Company and ING, which Warrant - --------- Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, obligations and duties hereunder of the Company and the holders of the Warrants (the words "holders" or "holder" meaning the registered holders or registered holder). A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. The holder of Warrants evidenced by this Warrant Certificate may exercise such Warrants under and pursuant to the terms and conditions of the Warrant Agreement by surrendering this Warrant Certificate, with the form of election to purchase attached hereto (and by this reference made a part hereof) properly completed and executed, together with payment of the Exercise Price in cash at the office of the Company designated for such purpose. In the event that any exercise of Warrants evidenced hereby shall be for less than the total number of Warrants evidenced hereby, there shall be issued by the Company to the holder hereof or his or its registered assignee a new Warrant Certificate evidencing the number of Warrants not exercised. The Warrant Agreement provides that upon the occurrence of certain events the Exercise Price set forth on the face hereof may, subject to certain conditions, be adjusted. If the Exercise Price is adjusted, the Warrant Agreement provides that the number of shares of Warrant Shares issuable upon the exercise of each Warrant shall be adjusted. No fractional shares of Warrant Shares will be issued upon the exercise of any Warrant, but the Company will pay the cash value thereof determined as provided in the Warrant Agreement. The Holders of the Warrants are entitled to certain registration rights as set forth in a Registration Rights Agreement dated as of April 15, 1996, among the Company and the purchasers identified in Exhibit A attached thereto (the "Registration Rights Agreement"). By acceptance of this Warrant Certificate, the Holder hereof agrees that upon exercise of any or all of the Warrants evidenced hereby, such Holder will be bound by the Registration Rights Agreement. A copy of the Registration Rights Agreement may be obtained by the holder hereof upon written request to the Company. -51- Warrant Certificates, when surrendered at the office of the Company by the registered holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. The Company may deem and treat the registered holder(s) thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing made hereon) for the purpose of any exercise hereof, of any distribution to the holder(s) hereof and for all other purposes, and the Company shall not be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company (other than the right to receive dividends and distributions as set forth in Section 18 of the Warrant Agreement). ------- -- IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be signed by its duly authorized officer and has caused its corporate seal to be affixed hereunto or imprinted hereon. Dated: April __, 1996 BRUNSWICK BIOMEDICAL CORPORATION By: ____________________________________ Name: Title: -52- FORM OF ELECTION TO PURCHASE [To Be Executed Upon Exercise of Warrant] The undersigned holder hereby represents that he or it is the registered holder of this Warrant Certificate, and hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive ____________ shares of Class A Common Stock, par value $.01 per share (the "Class A Common Stock"), of BRUNSWICK BIOMEDICAL CORPORATION (the "Company") and herewith tenders payment for such shares to the order of the Company in the amount of $___________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares be registered in the name of the undersigned or his/its nominee hereinafter set forth, and further that such certificate be delivered to the undersigned at the address hereinafter set forth or to such other person or entity as is hereinafter set forth. If said number of shares is less than all of the shares of Class A Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares be registered in the name of the undersigned or his/its nominee hereinafter set forth, and further that such Warrant Certificate be delivered to the undersigned at the address hereinafter set forth or to such other person or entity as is hereinafter set forth. Certificate to be registered as follows: ----------- -- -- ---------- -- ------- Name: Internationale Nederlanden (U.S.) Capital Corporation Address: 135 East 57th Street New York, New York 10022 Attn: Chief Credit Officer Certificate to be delivered as follows: ----------- -- -- --------- -- ------- Name: Internationale Nederlanden (U.S.) Capital Corporation Address: 135 East 57th Street New York, New York 10022 Attn: Chief Credit Officer Date:____________________ _______________________________________ (Signature must conform in all respects to the name of the holder as specified on the fact of the Warrant Certificate, unless Form of Assignment has been executed) -53- FORM OF ELECTION TO CONVERT [To be Executed Upon Conversion of Warrant] The undersigned holder hereby represents that he or it is the registered holder of this Warrant Certificate, and hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to convert the Warrants evidenced by this Warrant Certificate into ____________ shares of Class A Common Stock, par value $.01 per share (the "Class A Common Stock"), of BRUNSWICK BIOMEDICAL CORPORATION (the "Company"). The undersigned requests that a certificate for such shares be registered in the name of the undersigned or his/its nominee hereinafter set forth, and further that such certificate be delivered to the undersigned at the address hereinafter set forth or to such other person or entity as is hereinafter set forth. If said number of shares is less than all of the shares of Class A Common Stock convertible hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares be registered in the name of the undersigned or his/its nominee hereinafter set forth, and further that such Warrant Certificate be delivered to the undersigned at the address hereinafter set forth or to such other person or entity as is hereinafter set forth. Certificate to be registered as follows: ----------- -- -- ---------- -- ------- Name: Internationale Nederlanden (U.S.) Capital Corporation Address: 135 East 57th Street New York, New York 10022 Attn: Chief Credit Officer Certificate to be delivered as follows: ----------- -- -- --------- -- ------- Name: Internationale Nederlanden (U.S.) Capital Corporation Address: 135 East 57th Street New York, New York 10022 Attn: Chief Credit Officer Date:____________________ _______________________________________ (Signature must conform in all respects to the name of the holder as specified on the fact of the Warrant Certificate, unless Form of Assignment has been executed) -54- FORM OF ASSIGNMENT [To be executed upon Transfer of Warrant] FOR VALUE RECEIVED, the undersigned registered holder of the enclosed Warrant Certificate hereby sells, assigns and transfers unto ________________________________________ the right represented by such Warrant Certificate to purchase _____________ shares of Class A Common Stock of BRUNSWICK BIOMEDICAL CORPORATION to which such Warrant Certificate relates, and appoints __________________ _______________________________ Attorney to make such transfer on the books of BRUNSWICK BIOMEDICAL CORPORATION maintained for such purpose, with full power of substitution in the premises. Date:___________________ _______________________________________ (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate) _______________________________________ (Street Address) _______________________________________ (City) (State) (Zip Code) -55- EXHIBIT B ------- - FORM OF SERIES B WARRANT CERTIFICATE ---- -- ------ - ------- ----------- THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION, OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER) AS TO AN EXEMPTION, FROM THE REGISTRATION PROVISIONS OF SAID ACT OR LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A WARRANT PURCHASE AGREEMENT, DATED AS OF APRIL 15, 1996, BETWEEN BRUNSWICK BIOMEDICAL CORPORATION (THE "COMPANY") AND INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION ("ING") AND A REGISTRATION RIGHTS AGREEMENT, DATED AS OF APRIL 15, 1996, AMONG THE COMPANY AND THE PURCHASERS IDENTIFIED IN EXHIBIT A ATTACHED THERETO, COPIES OF EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE INVALID. Certificate No.__ _______ Warrants Warrant Certificate BRUNSWICK BIOMEDICAL CORPORATION This Warrant Certificate certifies that INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION ("ING"), or registered assigns, is the registered --- holder of the number of Warrants (the "Warrants") set forth above to purchase -------- shares of Class A Common Stock, par value $0.01 per share (the "Class A Common -------------- Stock"), of BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation (the - ----- "Company"). Each Warrant entitles the holder upon exercise to receive from the ------- Company one fully paid and nonassessable share of Common Stock (a "Warrant ------- Share") at the initial exercise price (the "Exercise Price") of $27.55, payable - ----- -------------- in lawful money of the United States, upon surrender of this Warrant Certificate and payment of the Exercise Price, if applicable, at the office of the -56- Company designated for such purpose, subject to the conditions set forth herein and in the Warrant Agreement referenced below. The Exercise Price and number and type of Warrant Shares issuable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events, as set forth in the Warrant Agreement. Each Warrant also entitles the holder to convert such Warrant into the number of Warrant Shares determined in accordance with Section 11(b) of the ------------- Warrant Agreement. The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Series B Warrants, and are issued or to be issued pursuant to a Warrant Purchase Agreement dated as of April 15, 1996 (the "Warrant ------- Agreement"), duly executed and delivered by the Company and ING, which Warrant - --------- Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, obligations and duties hereunder of the Company and the holders of the Warrants (the words "holders" or "holder" meaning the registered holders or registered holder). A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. The holder of Warrants evidenced by this Warrant Certificate may exercise such Warrants under and pursuant to the terms and conditions of the Warrant Agreement by surrendering this Warrant Certificate, with the form of election to purchase attached hereto (and by this reference made a part hereof) properly completed and executed, together with payment of the Exercise Price in cash at the office of the Company designated for such purpose. In the event that any exercise of Warrants evidenced hereby shall be for less than the total number of Warrants evidenced hereby, there shall be issued by the Company to the holder hereof or his or its registered assignee a new Warrant Certificate evidencing the number of Warrants not exercised. The Warrant Agreement provides that upon the occurrence of certain events the Exercise Price set forth on the face hereof may, subject to certain conditions, be adjusted. If the Exercise Price is adjusted, the Warrant Agreement provides that the number of shares of Warrant Shares issuable upon the exercise of each Warrant shall be adjusted. No fractional shares of Warrant Shares will be issued upon the exercise of any Warrant, but the Company will pay the cash value thereof determined as provided in the Warrant Agreement. The Holders of the Warrants are entitled to certain registration rights as set forth in a Registration Rights Agreement dated as of April 15, 1996, among the Company and the purchasers identified in Exhibit A attached thereto (the "Registration Rights Agreement"). By acceptance of this Warrant ----------------------------- Certificate, the Holder hereof agrees that upon exercise of any or all of the Warrants evidenced hereby, such Holder will be bound by the Registration Rights Agreement. A copy of the Registration Rights Agreement may be obtained by the holder hereof upon written request to the Company. -57- Warrant Certificates, when surrendered at the office of the Company by the registered holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. The Company may deem and treat the registered holder(s) thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing made hereon) for the purpose of any exercise hereof, of any distribution to the holder(s) hereof and for all other purposes, and the Company shall not be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company (other than the right to receive dividends and distributions as set forth in Section 18 of the Warrant Agreement). ------- -- IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be signed by its duly authorized officer and has caused its corporate seal to be affixed hereunto or imprinted hereon. Dated: April __, 1996 BRUNSWICK BIOMEDICAL CORPORATION By: ____________________________ Name: Title: -58- FORM OF ELECTION TO PURCHASE [To Be Executed Upon Exercise of Warrant] The undersigned holder hereby represents that he or it is the registered holder of this Warrant Certificate, and hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive ____________ shares of Class A Common Stock, par value $.01 per share (the "Class A Common Stock"), of BRUNSWICK BIOMEDICAL CORPORATION (the "Company") and herewith tenders payment for such shares to the order of the Company in the amount of $___________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares be registered in the name of the undersigned or his/its nominee hereinafter set forth, and further that such certificate be delivered to the undersigned at the address hereinafter set forth or to such other person or entity as is hereinafter set forth. If said number of shares is less than all of the shares of Class A Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares be registered in the name of the undersigned or his/its nominee hereinafter set forth, and further that such Warrant Certificate be delivered to the undersigned at the address hereinafter set forth or to such other person or entity as is hereinafter set forth. Certificate to be registered as follows: --------------------------------------- Name: Internationale Nederlanden (U.S.) Capital Corporation Address: 135 East 57th Street New York, New York 10022 Attn: Chief Credit Officer Certificate to be delivered as follows: --------------------------------------- Name: Internationale Nederlanden (U.S.) Capital Corporation Address: 135 East 57th Street New York, New York 10022 Attn: Chief Credit Officer Date:____________________ _______________________________________ (Signature must conform in all respects to the name of the holder as specified on the fact of the Warrant Certificate, unless Form of Assignment has been executed) -59- FORM OF ELECTION TO CONVERT [To Be Executed Upon Conversion of Warrant] The undersigned holder hereby represents that he or it is the registered holder of this Warrant Certificate, and hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to convert the Warrants evidenced by this Warrant Certificate into____________ shares of Class A Common Stock, par value $.01 per share (the "Class A Common Stock"), of BRUNSWICK BIOMEDICAL CORPORATION (the "Company") and herewith tenders payment for such shares to the order of the Company in the amount of $___________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares be registered in the name of the undersigned or his/its nominee hereinafter set forth, and further that such certificate be delivered to the undersigned at the address hereinafter set forth or to such other person or entity as is hereinafter set forth. If said number of shares is less than all of the shares of Class A Common Stock convertible hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares be registered in the name of the undersigned or his/its nominee hereinafter set forth, and further that such Warrant Certificate be delivered to the undersigned at the address hereinafter set forth or to such other person or entity as is hereinafter set forth. Certificate to be registered as follows: --------------------------------------- Name: Internationale Nederlanden (U.S.) Capital Corporation Address: 135 East 57th Street New York, New York 10022 Attn: Chief Credit Officer Certificate to be delivered as follows: -------------------------------------- Name: Internationale Nederlanden (U.S.) Capital Corporation Address: 135 East 57th Street New York, New York 10022 Attn: Chief Credit Officer Date:____________________ _______________________________________ (Signature must conform in all respects to the name of the holder as specified on the fact of -60- the Warrant Certificate, unless Form of Assignment has been executed) -61- FORM OF ASSIGNMENT [To be executed upon Transfer of Warrant] FOR VALUE RECEIVED, the undersigned registered holder of the enclosed Warrant Certificate hereby sells, assigns and transfers unto ________________________________________ the right represented by such Warrant Certificate to purchase _____________ shares of Class A Common Stock of BRUNSWICK BIOMEDICAL CORPORATION to which such Warrant Certificate relates, and appoints __________________ _______________________________ Attorney to make such transfer on the books of BRUNSWICK BIOMEDICAL CORPORATION maintained for such purpose, with full power of substitution in the premises. Date:___________________ _______________________________________ (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate) _______________________________________ (Street Address) _______________________________________ (City) (State) (Zip Code) -62- EXHIBIT C ------- - SCHEDULE OF EXCEPTIONS ---------------------- -63- EXHIBIT D --------- HOLDERS OF THE COMPANY'S STOCK ------------------------------ -64- EXHIBIT E-1 ------- --- EXISTING WARRANTS ----------------- -65- EXHIBIT E-2 ------- --- SHARES RESERVED UNDER STOCK OPTION PLAN --------------------------------------- -66- EXHIBIT F ------- - EXISTING REGISTRATION RIGHTS ---------------------------- -67- EXHIBIT G --------- OPINION OF COUNSEL ------------------ -68- EX-3.E 8 REGISTRATION RIGHTS AGREEMENT EXHIBIT 3(E) REGISTRATION RIGHTS AGREEMENT BETWEEN BRUNSWICK BIOMEDICAL CORPORATION AND INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION DATED AS OF APRIL 15, 1996 TABLE OF CONTENTS -----------------
PAGE ---- RECITALS 1 Section 1. Definitions 1 (a) Defined Terms 1 (b) Cross-References 3 Section 2. Registration of Securities 3 (a) Registration by the Company 3 (b) Registration at Holder's Request 4 (c) Registration Generally 6 Section 3. Registration Expenses 11 Section 4. Conditions to Registration 12 Section 5. Indemnification 13 (a) Indemnification by the Company 13 (b) Indemnification by Holders of Warrant Securities 14 (c) Procedure 14 (d) Contribution 14 Section 6. Exchange Act Registration; Rule 144 Reporting 16 Section 7. Limitation on Registration Rights of Others 17 Section 8. Mergers, etc. 17 Section 9. Notices, etc. 18 Section 10. Entire Agreement 18 Section 11. Waivers and Further Agreements 18 Section 12. Amendments 18 Section 13. Assignment; Successors and Assigns 19 Section 14. Severability 19
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PAGE Section 15. Counterparts 19 Section 16. Section Headings 19 Section 17. Gender; Usage 20 Section 18. Governing Law 20 Section 19. Termination 20 Section 20. Expenses 20 Section 21. Specific Performance 20
-ii- REGISTRATION RIGHTS AGREEMENT ----------------------------- THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and --------- entered into as of April 15, 1996, by and between BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation ("Brunswick"), and INTERNATIONALE --------- NEDERLANDEN (U.S.) CAPITAL CORPORATION, a Delaware corporation (the "Purchaser"). --------- W I T N E S S E T H: ------------------- RECITALS: - --------- A. Simultaneously herewith, the Purchaser is entering into a Credit Agreement, dated of even date herewith, among Brunswick, the Purchaser and various other lenders that may become parties thereto (the "Lenders") and the ------- Purchaser in its capacity as Agent for the Lenders (the "Agent"); ----- B. It is a condition precedent to the extensions of credit by the Purchaser to Brunswick contemplated by the Credit Agreement that Brunswick agree to issue to the Purchaser (1) Series A Warrants initially exercisable for 33,370 shares of Class A Common Stock, par value $.01 per share, of the Company (the "Class A Common Stock") for an exercise price of $0.01 per share and (2) Series - --------------------- B Warrants initially exercisable for 36,298 shares of Class A Common Stock for an exercise price of $27.55 per share; and C. The Purchaser is unwilling to extend credit to Brunswick pursuant to the Credit Agreement or to purchase the Warrants pursuant to the Warrant Agreement unless it receives the assurances set forth in this Agreement; and D. Brunswick and the Purchaser desire to set forth certain understandings with respect to the Warrants; NOW, THEREFORE, in consideration of the premises and the agreements herein set forth and to induce the Purchaser to proceed with the transactions contemplated by the Warrant Agreement and the Credit Agreement, the parties hereto, intending to be legally bound, hereby agree as follows: -1- Section 1. Definitions ----------- (a) Defined Terms. The following terms (whether or not underscored) ------------- when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Agreement" means this Registration Rights Agreement as in effect on the --------- date hereof and as hereafter amended, supplemented, restated or otherwise modified. "Available Securities" is defined in Section 2(a). -------------------- ------------ "Brunswick" is defined in the Preamble. --------- "Business Day" is defined in the Warrant Agreement. ------------ "Class A Common Stock" is defined in Recital B. -------------------- --------- "Common Stock" is defined in the Warrant Agreement. ------------ "Company" means (a) at all times prior to the Merger Consummation Date, ------- Brunswick, and (b) at all times on and after the Merger Consummation Date, STI. "Credit Agreement" is defined in the Warrant Agreement. ---------------- "Estate Warrant" means the Warrant to Purchase Shares of Common Stock of -------------- Brunswick Biomedical Corporation issued by Brunswick to the Estate of Dr. Stanley Sarnoff in partial payment of the Purchase Price. "Exchange Act" is defined in the Warrant Agreement. ------------ "Holder" is defined in the Warrant Agreement; provided, however, that any ------ -------- ------- reference to a Holder of Warrant Shares shall include any Holder of Warrants exercisable for or convertible into such Warrant Shares. "Indemnified Person" is defined in Section 5(a). ------------------ ------------ "Indemnifying Person" is defined in Section 5(c). ------------------- ------------ "Initial Request" is defined in Section 2(b). --------------- ------------ -2- "Lenders" is defined in Recital A. ------- --------- "Merger" is defined in the Warrant Agreement. ------ "Merger Consummation Date" is defined in the Warrant Agreement. ------------------------ "NASD" means the National Association of Securities Dealers, Inc. ---- "Person" is defined in the Warrant Agreement. ------ "Prospectus" means each prospectus included as part of any Registration ---------- Statement, as amended or supplemented, including each preliminary prospectus and all material incorporated by reference in such prospectus. "Purchaser" is defined in the Preamble. --------- "Registration Expenses" is defined in Section 3(c). --------------------- ------------ "Registration Request" is defined in Section 2(a)(ii). -------------------- ---------------- "Registration Statement" means any registration statement of the Company ---------------------- which covers Warrant Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments, including post-effective amendments, and supplements to such registration statement and Prospectus and all exhibits and all material incorporated by reference in such registration statement. "Required Holders" is defined in the Warrant Agreement. ---------------- "Secondary Requests" is defined in Section 2(b). ------------------ ------------ "Securities Act" is defined in the Warrant Agreement. -------------- "SEC" is defined in the Warrant Agreement. --- "Specified Registrable Securities" is defined in Section 2(a)(ii). -------------------------------- ---------------- "STI" means Survival Technology, Inc., a Delaware corporation. --- "Stock" is defined in the Warrant Agreement. ----- "Warrant Agreement" means the Warrant Purchase Agreement, dated of even ----------------- date herewith, by and between the Purchaser and Brunswick, as in effect on the date hereof and as -3- hereafter amended, supplemented, restated or otherwise modified. "Warrant Securities" is defined in the Warrant Agreement. ------------------ "Warrant Shares" is defined in the Warrant Agreement. -------------- "Warrants" is defined in the Warrant Agreement. -------- (b) Cross-References. Unless otherwise specified, references in this ---------------- Agreement to any Article, Section, Recital or Preamble are references to such Article, Section, Recital or Preamble of this Agreement, and unless otherwise specified, references in any Article, Section, or definition to any clause are references to such clause of such Section, Article or definition. Section 2. Registration of Securities. -------------------------- (a) Registration by the Company. If at any time or from time to time --------------------------- the Company shall propose to file on its behalf or on behalf of any of its security holders a registration statement under the Securities Act on Form S-1, S-2 or S-3 (or on any other Form for the general registration of securities) with respect to any class of equity securities (or any class of securities convertible into or exchangeable or exercisable for such equity securities), other than a registration relating solely to a Rule 145 transaction, a registration of shares to be issued pursuant to an employee benefit plan or a registration on Form S-3 relating solely to a dividend reinvestment plan, the Company shall in each case: (i) promptly give written notice to each Holder at least thirty (30) days before the anticipated filing date, indicating the proposed offering price and describing the plan of distribution; (ii) include in such registration (and any related qualification under blue sky or other state securities laws or other compliance) for the sale by the Holders and, at the request of any Holder, in any underwriting involved therein, all the Warrant Shares specified by any Holder or Holders (the "Specified Registrable Securities") in a written request (the -------------------------------- "Registration Request") made within twenty (20) days after receipt of such --------------------- written notice from the Company, specifying the number or amount of Specified Registrable Securities; and (iii) use its best efforts to cause the managing underwriter(s) of such proposed underwritten offering to permit the Specified Registrable Securities to be included in the Registration Statement for such offering on the same terms and conditions as any similar securities of the Company included therein. -4- If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders. In such event, the right of any Holder to include Specified Registrable Securities in such registration pursuant to this Section 2(a) shall ------------ be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Specified Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. If the managing underwriter(s) of such offering advise(s) the Holders of Specified Registrable Securities in writing that marketing considerations require a limitation on the securities to be included in any Registration Statement filed under this Section 2(a) to a certain number of ------------ shares (the "Available Securities"), then (i) if such registration is the first -------------------- registered offering of the Company's securities to the public (including the first such registration of STI following the Merger Consummation Date), the Company shall in such case be obligated to such Holders only with respect to such number of Available Securities, and (ii) if such registration is other than such first registered offering, Specified Registrable Securities, together with securities of all other selling shareholders to be included in such registration, shall be not less than fifty percent (50%) of the securities included in such registration (based on aggregate market values); provided, -------- however, that in either case the number of Specified Registrable Securities - ------- shall not be reduced unless all other holders of securities of the Company (other than securities being registered pursuant to rights granted under the Estate Warrant) are first entirely excluded from such registration and underwriting. The limitation on the number of Specified Registrable Securities will be imposed pro rata (based upon the ratio of the number of shares of --- ---- Specified Registrable Securities which the managing underwriter(s) propose to include at the anticipated offering price to the number of Specified Registrable Securities owned by each Holder) among all Holders of Specified Registrable Securities. Notwithstanding any other provision of this Agreement to the contrary, neither the delivery of the notice by the Company nor of the Registration Request by any Holder shall in any way obligate the Company to file a Registration Statement and, notwithstanding such filing, the Company may, at any time prior to the effective date thereof, in its sole discretion, determine not to offer the securities to which the Registration Statement relates without liability to any of the Holders, other than to pay Registration Expenses in connection with such Registration Statement. No registration of Warrant Shares effected under this Section 2(a) shall relieve the Company of its obligation to ------------ effect registration of Warrant Shares upon the request of one or more Holders pursuant to Section 2(b). ------------ (b) Registration at Holder's Request. Upon the written request -------------------------------- (an "Initial Request") of one or more Holders of Warrant Securities --------------- constituting 40% or more of all outstanding Warrant Securities made at any time after the earlier of (i) ninety (90) days after the Merger Consummation Date, or (ii) January 15, 1998, requesting that the Company effect the registration under the Securities Act of all or part of the Warrant Shares held by or subject -5- to Warrants held by such Holders and specifying the intended method or methods of disposition of such Warrant Shares, the Company will give prompt (and in any case within ten (10) days) written notice of such requested registration to all Holders of Warrant Securities and thereupon will expeditiously prepare and file a Registration Statement with respect to, and use its best efforts to effect the registration under the Securities Act, of: (i) the Warrant Shares which the Company has been so requested to register by such Holders, for disposition in accordance with the intended method of disposition stated in such request, and (ii) all other Warrant Shares which the Company has been requested to register by the Holders of Warrant Securities by written request (a "Secondary Requests") delivered to the Company within twenty (20) days ------------------ after the giving of such notice by the Company; provided, however, that the Company may delay the filing of a Registration - -------- ------- Statement with respect to such Warrant Shares for a reasonable period (not in excess of ninety (90) days if in its reasonable judgment such filing would require the disclosure of material information that the Company has a bona fide business purpose for preserving as confidential or such filing in the reasonable judgment of the Company, would interfere with any pending financing, acquisition or corporate reorganization, and such information, financing, acquisition or corporate reorganization is not then otherwise required to be disclosed. In any case where the requesting Holders specify that the intended method of disposition is to be an underwritten offering, the underwriter(s) for such offering shall be selected, after consultation with the Company, by such Holders, and shall be reasonably acceptable to the Company, such acceptance not to be unreasonably withheld, delayed or conditioned. Each registration requested pursuant to this Section 2(b) shall be effected ------------ by the filing of a Registration Statement on Form S-1, S-2 or S-3 (or on any other Form for the general registration of securities) unless the use of a different form has been agreed upon in writing by the Company and the requesting Holders; provided, however, that if the intended method of disposition by the -------- ------- requesting Holders is to be an underwritten offering, the Company shall use such Form of Registration Statement as is reasonably acceptable to the underwriter(s). The Company need not cause a Registration Statement filed pursuant to the provisions of this Section 2(b) to become effective under the ------------ Securities Act on more than two (2) occasions; provided, however, that the -------- ------- Company shall not be deemed to have caused a Registration Statement to be filed and to become effective under the Securities Act under this Section 2(b) unless ------------ a Registration Statement covering all Warrant Shares requested by one or more Holders to be registered for sale in accordance with the method of disposition specified by the requesting Holders shall have become effective and, if such method of disposition is a -6- firm commitment underwritten public offering, all such Warrant Shares shall have been sold pursuant thereto. Whenever a registration requested by one or more Holders pursuant to this Section 2(b) is for an underwritten offering, only Warrant Shares which are to - ------------ be distributed by the underwriters designated by such Holders may be included in such registration, without the written consent of the Required Holders. Notwithstanding the foregoing, unless the underwriter(s) of an underwritten offering object(s), the Company may include securities for offering by the Company or any other security holders in such Registration Statement, it being understood that the Company's right and such other security holders' right to inclusion shall be subordinate to, and not pari passu with, the rights of the ---- ----- Holders under this Section 2(b), provided, however, that the right of the Estate ------------ -------- ------- of Dr. Stanley Sarnoff to include its securities in such offering shall be as set forth in Section 9(e) of the Estate Warrant as in effect on the Closing Date. From the date of receipt of a notice from requesting Holders pursuant to this Section 2(b) indicating that such Holders intend to sell securities in an ------------ underwritten offering until the completion of the period of distribution of the registration contemplated thereby (but in no event later than 60 days following effectiveness of such registration), except as provided in this paragraph, the Company will not effect any other registration of its Stock (whether for its account or that of any other security holder), other than a registration relating solely to a Rule 145 transaction, a registration of shares to be issued pursuant to an employee benefit plan or a registration on Form S-3 relating solely to a dividend reinvestment plan. The immediately preceding sentence shall apply solely to the first notice from requesting Holders pursuant to this Section 2(b) pursuant to which (i) a Registration Statement is filed and becomes - ------------ effective under the Securities Act, (ii) all Warrant Shares covered thereby are registered for sale in accordance with the method of dispositions specified therein and (iii) if such method of disposition is a firm commitment underwritten public offering, all such Warrant Shares are sold pursuant thereto. All Holders of Warrant Securities proposing to sell Warrant Shares in such underwritten offering shall share pro rata in the number of shares of Warrant --- ---- Shares to be included in such underwritten offering, such sharing to be based on the respective numbers of Warrant Securities owned by such Holders. (c) Registration Generally. If and when the Company shall be ---------------------- required by the provisions of this Section 2 to effect the registration of --------- Warrant Shares under the Securities Act, the Company will use its best efforts to effect such registration to permit the sale of such Warrant Shares in accordance with the intended method or methods of disposition thereof, and pursuant thereto it will, as expeditiously as possible: (i) before filing a Registration Statement or Prospectus or any amendments or supplements thereto, furnish to the Holders of the Warrant Shares covered by such Registration Statement and the underwriter(s), if any, copies of all such documents proposed to be filed, which documents will be made available, on a timely basis, for review by such Holders and underwriters; and, with respect to any Registration -7- Statement filed pursuant to the provisions of Section 2(b), the Company ------------ will not file any Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which the Required Holders of the Warrant Shares covered by such Registration Statement or the managing underwriter(s), if any, shall reasonably object; (ii) prepare and file with the SEC such amendments and post- effective amendments to any Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by any Holder of Warrant Shares covered by such Registration Statement or the managing underwriter(s), if any, or as may be required by the Securities Act, the Exchange Act or by the rules, regulations or instructions applicable to the registration Form utilized by the Company or as may otherwise be necessary to keep such Registration Statement effective for the applicable period; and cause the Prospectus as so supplemented to be filed pursuant to Rule 424 (or any successor rule) under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement or Prospectus; (iii) promptly notify the selling Holders of Warrant Shares and the managing underwriter(s), if any, and if requested by any such Person, confirm such advice in writing, (a) of the filing of the Prospectus, any Prospectus supplement and of the effectiveness of the Registration Statement and/or any post-effective amendment, (b) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (c) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (d) of the Company's becoming aware at any time that the representations and warranties of the Company contemplated by paragraph (xiv)(a) below have ceased to be true and correct, (e) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Warrant Shares for sale in any jurisdiction or the initiation or threat of any proceeding for such purpose, and -8- (f) of the existence of any fact which, to the knowledge of the Company, results in the Registration Statement, the Prospectus or any document incorporated therein by reference containing an untrue statement of material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement or any qualification referred to in paragraph (iii)(e) at the earliest possible moment; (v) if reasonably requested by the managing underwriter(s) or the Required Holders of Warrant Shares being sold in connection with an underwritten offering, promptly incorporate in a Prospectus supplement or post-effective amendment to the Registration Statement such information as the managing underwriter(s) or the Required Holders of the Warrant Shares being sold reasonably request to have included therein relating to the plan of distribution with respect to such Warrant Shares, including, without limitation, information with respect to the amount of Warrant Shares being sold to such underwriters, the purchase price being paid therefor by such underwriters and any other terms of the underwritten (or best-efforts underwritten) offering of the Warrant Shares to be sold in such offering; and make all required filings of such Prospectus supplement or post- effective amendment to the Registration Statement as soon as notified of the matters to be incorporated in such Prospectus supplement or post- effective amendment to the Registration Statement; (vi) at the request of any selling Holder of Warrant Shares, furnish to such selling Holder of Warrant Shares and each managing underwriter, if any, without charge, at least one signed copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (vii) deliver to each selling Holder of Warrant Shares and the managing underwriter(s), if any, without charge, as many copies of the Registration Statement, each Prospectus (including each preliminary prospectus) and any amendment or supplement thereto (in each case including all exhibits), as such Persons may reasonably request, together with all documents incorporated by reference in such Registration Statement or Prospectus, and such other documents as such selling Holder may reasonably request in order to facilitate the disposition of its Warrant Shares covered by such Registration Statement; the Company consents to the use of each Prospectus and any supplement thereto by each of the selling Holders of Warrant Shares and the managing underwriter(s), if any, in connection with the offering and sale of the Warrant Shares covered by each Prospectus or any supplement thereto; -9- (viii) prior to any public offering of Warrant Shares, use its best efforts to register or qualify or reasonably cooperate with the selling Holders of Warrant Shares, the managing underwriter(s), if any, and their respective counsel in connection with the registration or qualification of such Warrant Shares for offer and sale under the securities or blue sky laws of such jurisdictions as any selling Holder or managing underwriter(s) reasonably request(s) and do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Warrant Shares covered by the Registration Statement, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service or process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Act; (ix) cooperate with the selling Holders of Warrant Shares and the managing underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Warrant Shares to be sold and not bearing any legends restricting the transfer thereof; and enable such Warrant Shares to be in such denominations and registered in such names as the managing underwriters may request at least two Business Days prior to any sale of Warrant Securities to the underwriters; (x) use its best efforts to cause the Warrant Shares covered by the applicable Registration Statement to be registered with or approved by such United States, state and local governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Warrant Shares; (xi) if any fact contemplated by paragraph (iii)(f) above shall exist, promptly notify each Holder on whose behalf Warrant Shares have been registered and prepare and furnish to such Holders a supplement or post- effective amendment to the Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Warrant Shares, neither the Registration Statement nor the Prospectus will contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; (xii) if requested by the Required Holders of the Warrant Shares covered by the Registration Statement or by the managing underwriter(s), if any, use its best efforts to cause all Warrant Shares covered by the Registration Statement to be (A) listed on each securities exchange on which securities of the same class are then listed or (B) admitted for trading in any inter-dealer quotation system on which securities of the same class are then traded; -10- (xiii) not later than the effective date of the applicable Registration Statement, provide a CUSIP number for all Warrant Shares covered by the Registration Statement and provide the applicable transfer agent with printed certificates for such Warrant Shares which are in a form eligible for deposit with Depository Trust Company; (xiv) enter into agreements (including underwriting agreements) and take all other reasonable actions in order to expedite or facilitate the disposition of such Warrant Shares and in such connection, except as otherwise provided, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration: (a) make such representations and warranties to the Holders selling such Warrant Shares and, in connection with any underwritten offering, to the underwriters, in form, substance and scope as are customarily made by issuers to underwriters in similar underwritten offerings; (b) use its best efforts to obtain opinions of counsel to the Company and updates thereof addressed to each selling Holder and the underwriters, if any, covering the matters customarily covered in opinions requested in similar underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters, which counsel and opinions shall be reasonably satisfactory (in form, scope and substance) to the managing underwriters, if any, and the Required Holders of such Warrant Shares; (c) in connection with any underwritten offering, use its best efforts to obtain so-called "cold comfort" letters and updates thereof from the Company's independent certified public accountants addressed to the selling Holders of Warrant Shares and the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters to underwriters in connection with similar underwritten offerings; (d) if an underwriting agreement is entered into, cause the same to set forth in full the indemnification and contribution provisions and procedures of Section 5 (or such other substantially --------- similar provisions and procedures as the underwriters shall reasonably request) with respect to all parties to be indemnified pursuant to said Section 5; and --------- (e) deliver such documents and certificates as may reasonably be requested by the Required Holders of the Warrant Shares being sold, or the managing underwriter(s), if any, to evidence compliance with this paragraph (xiv) and with any customary conditions contained in the underwriting -11- agreement or other agreement entered into by the Company; the foregoing to be done upon each closing under any underwriting or similar agreement as and to the extent required thereunder and from time to time as may reasonably be requested by any selling Holder of Warrant Shares in connection with the disposition of Warrant Shares pursuant to such Registration Statement, all in a manner consistent with customary industry practice; (xv) upon execution and delivery of such confidentiality agreements as the Company may reasonably request, make available to the Holders of the Warrant Shares being sold, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney or accountant retained by such Holders or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with the registration for purposes of satisfying any diligence obligations such Persons may have, at such time or times as the Person requesting such information shall reasonably determine; (xvi) otherwise use its best efforts to comply with the Securities Act, the Exchange Act, all applicable rules and regulations of the SEC and all applicable state blue sky and other securities laws, rules and regulations, and make generally available to its security holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, as soon as practicable, but in no event later than ninety (90) days after the end of the 12 calendar month period commencing after the effective date of the Registration Statement; (xvii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter" that is required to be retained in accordance with the rules and regulations of the NASD); and (xviii) prior to the filing of any document which is being prepared for incorporation by reference into the Registration Statement or the Prospectus, upon receipt of such confidentiality agreements as the Company may reasonably request, provide copies of such document to counsel to the selling Holders of Warrant Shares, and to the managing underwriter(s), if any, and make the Company's representatives available for discussion of such document. Each Holder agrees, if requested by the Company and an underwriter of Warrant Shares (or other securities) of the Company, not to sell or otherwise transfer or dispose of any Warrant Shares (or other securities) of the Company held by it during the 180-day period following the -12- effective date of a registration statement of the Company filed under the Act, provided that (a) such agreement only applies to the first such registration statement of the Company including securities to be sold on its behalf to the public in an underwritten offering (which shall include the first such registration statement of STI following the Merger Consummation Date) and (b) all holders of Preferred Stock of Brunswick (or of shares of STI issued in exchange for such Preferred Stock pursuant to the Merger), and officers and directors of the Company enter into or are otherwise subject to similar agreements (except that if any such agreement provides for a shorter non-sale period, the non-sale period applicable to the Holders under this sentence shall be the shortest of such periods). Such agreement shall be in writing in a form satisfactory to the Company and such underwriter. The Company may impose stop-transfer instructions with respect to the shares (or securities) subject to the foregoing restriction until the end of the 90-day period. Section 3. Registration Expenses . --------------------- (a) All expenses incident to the Company's performance of or compliance with its obligations under this Agreement (excluding underwriting discounts, selling commissions and brokerage fees) will be paid by the Company, regardless of whether Warrant Shares are sold pursuant to any Registration Statement, including, without limitation: (i) all registration, filing and listing fees; (ii) fees and expenses of compliance with securities or blue sky laws to the extent the Company is obligated to act under Section 2(c)(viii) ------------------ (including, without limitation, the reasonable fees and disbursements of counsel for the underwriters, if any, or selling Holders in connection with blue sky and state securities qualifications of Warrant Shares and determination of their eligibility for investment under the laws of such jurisdictions as the managing underwriter(s), if any, or the Required Holders of the Warrant Shares covered by such Registration Statement may reasonably designate); (iii) printing (including, without limitation, expenses of printing or engraving certificates for the Warrant Shares in a form eligible for deposit with Depository Trust Company and of printing prospectuses), messenger, telephone and delivery expenses; (iv) fees and disbursements of counsel for the Company and, subject to Section 3(b), counsel for the selling Holders of the Warrant Shares; ------------ (v) fees and disbursements of all independent certified public accountants of the Company (including, without limitation, the expenses of any special audit and, in connection with any underwritten offering, "cold comfort" letters required by or -13- incident to such performance); (vi) Securities Act liability insurance if the Company so desires; (vii) fees and expenses of other Persons (including special experts) retained by the Company; and (viii) fees and expenses associated with any NASD filing required to be made in connection with the Registration Statement, including, if applicable, the fees and expenses of any "qualified independent underwriter" (and its counsel) that is required to be retained in accordance with the rules and regulations of the NASD. The Company will, in any event, pay its internal expenses, the expense of any annual audit, the fees and expenses incurred in connection with the listing of the securities to be registered on each securities exchange on which securities of the same class are then listed or the qualification for trading of the securities to be registered in each inter-dealer quotation system in which securities of the same class are then traded, and rating agency fees. (b) In connection with each Registration Statement required hereunder, the Company will reimburse the Holders of Warrant Shares being registered pursuant to such Registration Statement for the reasonable fees and disbursements of not more than one counsel chosen by the Required Holders of the Warrant Shares being sold; the expense of any additional counsel for the Holders shall be paid by the Holders. (c) The term "Registration Expenses" shall mean the expenses --------------------- payable by the Company pursuant to the provisions of this Section 3. --------- (d) Notwithstanding the foregoing, if a registration request under Section 2 is subsequently withdrawn at the request of the Holders of Warrant Shares requesting registration and if the requesting Holders elect not to have such registration counted as a registration requested under Section 2, the requesting Holders shall pay the expenses of such registration pro rata in accordance with the number of their Warrant Shares included in such registration. Section 4. Conditions to Registration. -------------------------- Each Holder's right to have Warrant Shares included in any Registration Statement filed by the Company in accordance with the provisions of Section 2 shall be subject to the following conditions: - --------- (a) The Holders on whose behalf such Warrant Shares are to be included shall be required to furnish the Company in a timely manner with all information required by -14- the applicable rules and regulations of the SEC concerning the proposed method of sale or other disposition of such securities, the identity of and compensation to be paid to any proposed underwriters to be employed in connection therewith, and such other information as may be reasonably required by the Company properly to prepare and file such Registration Statement in accordance with applicable provisions of the Securities Act; (b) If any such Holder desires to sell and distribute Warrant Shares over a period of time, or from time to time, at then prevailing market prices, then any such Holder shall execute and deliver to the Company such written undertakings as the Company and its counsel may reasonably require in order to assure full compliance with relevant provisions of the Securities Act and the Exchange Act; (c) In the case of any registration requested pursuant to the provisions of Section 2(a), the offering price for any Warrant Shares to be so ------------ registered shall be no less than for any shares of the same class then to be registered for sale for the account of the Company or other security holders and the offering price for shares of Class A Common Stock shall be no less than for Voting Common Stock, unless such Warrant Shares are to be offered from time to time based on the prevailing market price; (d) Upon receipt of any notice from the Company of the happening of any event of the kind described in paragraph (xi) of Section 2(c), such ------------ Holder will forthwith discontinue disposition of Warrant Shares until such Holder's receipt of the copies of the supplemented Prospectus contemplated by such paragraph, or until it is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the Prospectus, and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Warrant Shares current at the time of receipt of such notice; and (e) In the case of any underwritten offering on behalf of the Holders of Warrant Shares, such Holders will enter into such agreements (including underwriting agreements and lock-up agreements) as the managing underwriter(s) shall reasonably request and as are customary in similar circumstances. Section 5. Indemnification. --------------- (a) Indemnification by the Company. In the event of the ------------------------------ registration of any Warrant Shares under the Securities Act pursuant to the provisions hereof, the Company will indemnify and hold harmless each and every seller of Warrant Shares, its directors, officers, employees and agents, each underwriter, broker and dealer, if any, who participates in the offering or sale of such Shares, and each other Person, if any, who controls such seller or any such underwriter, broker or dealer within the meaning of either Section 15 of the Securities -15- Act or Section 20 of the Exchange Act (each such Person being hereinafter sometimes referred to as an "Indemnified Person" provided that for ------------------ clauses (b), (c) and (d) of this Section 5 "Indemnified Person" shall include the Company, its directors, officers, employees and agents, and each other Person, if any who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any losses, claims, damages, liabilities or expenses, joint or several, to which such indemnified Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained or incorporated by reference in any Registration Statement or Prospectus or any amendment or supplement thereto, or any document incorporated by reference therein, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each such Indemnified Person for any legal or other expenses reasonably incurred by such Indemnified Person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be -------- ------- liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made or incorporated by reference in the Registration Statement or Prospectus or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by such Indemnified Person stated to be specifically for use in preparation thereof. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Person and shall survive the transfer of such Warrant Shares by such seller. (b) Indemnification by Holders of Warrant Shares. In the -------------------------------------------- event of the registration of any Warrant Shares under the Securities Act pursuant to the provisions hereof, each Holder on whose behalf such Warrant Shares shall have been registered will indemnify and hold harmless each and every Indemnified Person, against any losses, claims, damages or liabilities, joint or several, to which such Indemnified Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained or incorporated by reference in any Registration Statement or Prospectus or any amendment or supplement thereto or any document incorporated by reference therein, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which untrue statement or alleged untrue statement or omission or alleged omission has been made or incorporated therein in reliance upon and in conformity with written information furnished to the Company by such Holder specifically stating that it is for use in preparation thereof, and will reimburse each such Indemnified Person for any legal and other expenses reasonably incurred by such Indemnified Person in connection with investigating or defending any such loss, claim, damage, liability or action; -16- provided, however, that the liability of each Holder hereunder shall be limited to the proceeds received by such Holder from the sale of Warrant Shares covered by such Registration Statement. (c) Procedure. Promptly after receipt by an Indemnified --------- Person of notice of the commencement of any action (including any governmental investigation or inquiry), such Indemnified Person will, if such Indemnified Person intends to make a claim in respect thereof against the party agreeing to indemnify such Indemnified Person pursuant to paragraphs (a) or (b) hereof (any such Party being hereinafter referred to as an "Indemnifying Person"), give ------------------- written notice to such Indemnifying Person of the commencement thereof, but the omission so to notify the Indemnifying Person shall not relieve the Indemnifying Person from any of its obligations pursuant to the provisions of this Section 5 --------- except to the extent that the Indemnifying Person is actually prejudiced by such failure to give notice. In case any such action is brought against any Indemnified Person and it notifies an Indemnifying Person of the commencement thereof, the Indemnifying Person shall be entitled to participate in, and to the extent that it may wish, jointly with any other Indemnifying Person similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Person, and after notice from the Indemnifying Person to such Indemnified Person, the Indemnifying Person shall not, except as hereinafter provided, be responsible for any legal or other expenses subsequently incurred by such Indemnified Person in connection with the defense thereof. No Indemnifying Person will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Person of a release from all liability in respect of such claim or litigation. Such Indemnified Person shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expense of such Indemnified Person unless (a) the Indemnifying Person has agreed to pay such fees and expenses or (b) the Indemnifying Person shall have failed to assume the defense of such action or proceeding or has failed to employ counsel reasonably satisfactory to such Indemnified Person in any such action or proceeding or (c) the named parties to any such action or proceeding (including any impleaded parties) include both such Indemnified Person and the Indemnifying Person and such Indemnified Person shall have been advised by counsel that representation of both parties by the same counsel would be inappropriate due to actual or potential material differing interests between them (in which case, if such Indemnified Person notifies the Indemnifying Person in writing that it elects to employ separate counsel at the expense of the Indemnifying Person, the Indemnifying Person shall not have the right to assume the defense of such action or proceeding on behalf of such Indemnified Person). The Indemnifying Person shall not be liable for any settlement of any such action or proceeding effected without its written consent, which consent shall not unreasonably be withheld, delayed or conditioned, but if settled with its written consent, or if there is a final judgment for the plaintiff in any such action or proceeding, the Company agrees to indemnify and hold harmless such Indemnified Persons from and against any loss or liability by reason of such settlement -17- or judgment. (d) Contribution. If the indemnification provided for in ------------ this Section 5 is unavailable to a party that would have been an Indemnified --------- Person under this Section 5 in respect of any losses, claims, damages, --------- liabilities or expenses (or actions in respect thereof) referred to herein, then each party that would have been an Indemnifying Person thereunder shall, in lieu of indemnifying such Indemnified Person, contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages, liabilities or expenses (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Person on the one hand and the Indemnified Person on the other in connection with the statement or omission which resulted in such losses, claims, damages, liabilities or expenses (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission of a material fact relates to information supplied by the Indemnifying Person or the Indemnified Person and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 5(c), any legal or other fees or expenses reasonably incurred by such - ------------ party in connection with the investigation or defense of any action or claim. The Company and each Holder of Warrant Shares agrees that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro --------- --- rata allocation or by any other method of allocation which does not take account - ---- of the equitable considerations referred to in this Section 5. Notwithstanding --------- the provisions of this Section 5(d), no Holder of Warrant Shares shall be ------------ required to contribute any amount in excess of the amount by which the total price at which the Warrant Shares sold by it exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Indemnification or, if appropriate, contribution, similar to that specified in the preceding provisions of this Section 5 (with appropriate --------- modifications) shall be given by the Company and each seller of Warrant Shares with respect to any required registration or other qualification of such Shares under any federal or state law or Regulation or governmental authority other than the Securities Act. In the event of any underwritten offering of Warrant Shares under the Securities Act pursuant to the provisions of Section 2, the Company and each --------- Holder on whose behalf such Warrant Shares shall have been registered agree to enter into an underwriting agreement, in standard form, with the underwriters, which underwriting agreement -18- may contain additional provisions with respect to indemnification and contribution in lieu thereof. Section 6. Exchange Act Registration; Rule 144 Reporting. --------------------------------------------- The Company covenants and agrees that until such time as the Holders no longer hold any Warrant Shares it will: (a) if required by law, maintain an effective registration statement (containing such information and documents as the SEC shall specify) with respect to the Common Stock of the Company under Section 12(g) of the Exchange Act; (b) use its best efforts to make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act (even if the Company subsequently ceases to be subject to such reporting requirements); (c) use its best efforts to file with the SEC in a timely manner all reports and documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and (d) furnish to any Holder promptly upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its Shares to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), (ii) a copy of the most recent annual or quarterly report of the Company (beginning after the Company becomes subject to such reporting requirements), and (iii) such other reports and documents of the Company and other information in the possession of or reasonably attainable by the Company as such Holder may reasonably request in availing itself of any Rule or Regulation of the SEC allowing such Holder to sell any such Shares without registration. The Company represents and warrants that such registration statement or any information, document or report filed with the SEC in connection therewith or any information so made public shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements contained therein not misleading. The Company agrees to indemnify and hold harmless (or to the extent the same is not enforceable, make contribution to) the Holders, their partners, officers, directors, employees and agents, each broker, dealer or underwriter (within the meaning of the Securities Act) acting for any Holder in connection with any offering or sale by such Holder of Warrant Shares or any Person controlling (within the meaning of either -19- Section 15 of the Securities Act or Section 20 of the Exchange Act) such Holder and any such broker, dealer or underwriter from and against any and all losses, claims, damages, liabilities or expenses (or actions in respect thereof) arising out of or resulting from any breach of the foregoing representation or warranty, all on terms and conditions comparable to those set forth in Section 5. --------- Section 7. Limitation on Registration Rights of Others . ------------------------------------------- The Company represents and warrants that, except as set forth on Exhibit E of the Warrant Agreement, it has not granted to any Person the right to request or require the Company to register any Shares issued by the Company. The Company covenants and agrees that, so long as any Holder holds any Warrant Shares in respect of which any registration rights provided for in Section 2 --------- remain in effect, the Company will not, directly or indirectly, grant to any Person or agree to or otherwise become obligated in respect of (a) any registration rights of securities of the Company upon the demand of any Person without the prior written consent of the Required Holders; or (b) rights of registration in the nature or substantially in the nature of those set forth in Section 2(a), unless in each such case such rights are expressly subject and - ------------ subordinated to the rights of registration of the Holders pursuant to Section ------- 2(a) and 2(b) hereof on terms reasonably satisfactory to the Required Holders, - ---- ---- which shall include, without limitation, priority of registration over any Person exercising any such demand (whether upon exercise of rights of registration of the Holders pursuant to Section 2(a) or Section 2(b)). ------------ ------------ Section 8. Mergers, etc.. ------------ In addition to any other restrictions on mergers, consolidations and reorganizations contained in the Warrant Agreement or in the articles of incorporation or organization, by-laws or agreements of the Company, the Company covenants and agrees that it shall not, directly or indirectly, enter into any merger, consolidation or reorganization in which the Company shall not be the surviving corporation and in which the Holders shall not have had the option to receive cash for all their Warrant Shares, unless the surviving corporation shall, prior to such merger, consolidation or reorganization, agree in a writing satisfactory in form, scope and substance to the Required Holders to assume the obligations of the Company under this Agreement, and for such purpose references hereunder to "Warrant Shares" shall be deemed to include the Shares which such Holders would be entitled to receive in exchange for Warrant Shares pursuant to any such merger, consolidation or reorganization. If, and as often as, there are any changes in the Warrant Shares by way of stock split, stock dividend, combination or classification, or through merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustments shall be made in the provisions hereof as may be required, so that the rights and privileges granted hereby shall continue with respect to the Warrant Shares as so changed. -20- Upon consummation of the Merger, this Agreement and all obligations of Brunswick hereunder shall become the legal, valid and binding obligations of STI, enforceable against STI in accordance with their terms, as if STI had been the signatory hereto. Section 9. Notices, etc. ------------ All notices, consents, approvals, agreements and other communications provided hereunder shall be in writing or by telex or telecopy and shall be sufficiently given to the Purchaser, the Holders and the Company if addressed or delivered to them in accordance with Section 20 of the Warrant Agreement: Section 10. Entire Agreement. ---------------- The parties hereto agree that this Agreement and the agreements specifically referred to in Section 33 of the Warrant Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings between them as to such subject matter; and there are no restrictions, agreements, arrangements, oral or written, between any or all of the parties relating to the subject matter hereof which are not fully expressed or referred to herein or therein. Section 11. Waivers and Further Agreements. ------------------------------ Any waiver of any terms or conditions of this Agreement shall not operate as a waiver of any other breach of such terms or conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof; provided, however, -------- ------- that no such written waiver unless it by its own terms explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provision being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision. Each of the parties hereto agrees to execute all such further instruments and documents and to take all such further action as the other parties may reasonably require in order to effectuate the terms and purposes of this Agreement. Section 12. Amendments. ---------- This Agreement may not be amended nor shall any waiver, change, modification, consent or discharge be effected except by an instrument in writing executed by or on behalf of the party or parties against whom enforcement of any amendment, waiver, change, modification, consent or discharge is sought; provided, however, that any amendment requested or waiver sought from -------- ------- the Holders of any provision of this Agreement which affects the Holders generally, and any action required to be taken by the Holders as a group pursuant -21- to this Agreement, shall be given or taken by the Required Holders, and any such waiver or action so given or taken shall be binding on all Holders. No failure or delay by any party in exercising any right or remedy hereunder shall operate as a waiver thereof, and a waiver of a particular right or remedy on one occasion shall not be deemed a waiver of any other right or remedy or a waiver of the same right or remedy on any subsequent occasion. Section 13. Assignment; Successors and Assigns. ---------------------------------- This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, legal representatives, successors and permitted assigns, including, without limitation, any Holders, from time to time of the Warrant Securities. Nothing herein shall be construed as requiring the Holders of Warrants to exercise their warrants for, or convert their Warrants into, Warrant Shares prior to exercising the rights conferred upon such Holders under this Agreement. Anything in this Agreement to the contrary notwithstanding, the term "Holders" as used in this Agreement shall be deemed to include the registered Holders from time to time of the Warrant Securities. Section 14. Severability. ------------ If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because any provision conflicts with any constitution, statute, Rule or public policy, or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question, invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute, Rule or public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case. Section 15. Counterparts. ------------ This Agreement may be executed in two or more counterparts (each of which need not be executed by each of the parties), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and in pleading or proving any provision of this Agreement, it shall not be necessary to produce more than one such counterpart. -22- Section 16. Section Headings. ---------------- The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. Section 17. Gender; Usage. ------------- Whenever used herein the singular number shall include the plural, the plural shall include the singular, and the use of any gender shall include all genders. The words "hereof," "herein" and "hereunder," and words of similar import, when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Section 18. Governing Law. ------------- THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF. Section 19. Termination. ----------- This Agreement shall terminate when all Warrants have expired unexercised in accordance with their terms or when all Warrant Shares have been purchased pursuant to Sections 19 of the Warrant Agreement. In addition, the rights of ------------ any Holder under Sections 2(a) and 2(b) of this Agreement shall terminate as to ------------- ---- any Warrant Shares when such Warrant Shares have been effectively registered under the Securities Act and sold pursuant to a Registration Statement covering such Warrant Shares. The indemnification and contribution provisions of Sections 5 and 6 shall survive any termination of this Agreement. - ---------- - Section 20. Expenses. -------- The Company shall be obligated to pay to the Holders, on demand, all reasonable costs and expenses (including, without limitation, court costs and attorneys' fees and expenses and interest to the extent permitted by applicable law on overdue amounts) paid or incurred in collecting any sums due from, or enforcing any other obligations of, the Company. Section 21. Specific Performance. -------------------- The Company recognizes that the rights of the Holders under this Agreement are unique and, accordingly, the Holders shall, in addition to such other remedies as may be available to any of them at law or in equity, have the right to enforce their rights hereunder by actions for injunctive relief and specific performance to the extent permitted by law. The Company -23- agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. This Agreement is not intended to limit or abridge any rights of the Holders which may exist apart from this Agreement. -24- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written. BRUNSWICK BIOMEDICAL CORPORATION By: /s/ James H. Miller ---------------------- James H. Miller President INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION By: /s/ Darren Wells ------------------- Darren Wells Managing Director -25- EX-4.A 9 STOCK PURCHASE AGREEMENT EXHIBIT 4(A) STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT (this "Agreement") dated as of March 18, 1996 is between BRUNSWICK BIOMEDICAL CORPORATION (the "Buyer"), a Massachusetts corporation, and the ESTATE OF DR. STANLEY J. SARNOFF, Robert Herzstein as Personal Representative (the "Seller" or the "Estate"). It relates to the purchase by the Buyer from the Seller of 1,888,126 shares (the "Shares") of Common Stock, $.10 par value (the "Common Stock"), of Survival Technology, Inc. ("STI"), a Delaware corporation, which Shares constitute approximately 60% of the issued and outstanding Common Stock. In consideration of the mutual representations, warranties and covenants herein contained, the parties agree as follows: ARTICLE 1 PURCHASE AND SALE OF SHARES 1.1 Shares Sold and Acquired. Subject to the terms and conditions set ------------------------ forth in this Agreement, on the Closing Date (as defined below), the Seller shall sell, transfer and deliver to the Buyer or its nominee, and the Buyer shall purchase, acquire and accept from the Seller the Shares. Each share certificate representing the Shares shall be duly endorsed by the holder thereof in blank for transfer or accompanied by a stock power duly executed by such holder assigning the Shares held by such holder in blank, in each case with a customary signature guaranty. 1.2 Assignment of Registration Agreement. On the Closing Date, in ------------------------------------ connection with the sale of the Shares, the Seller shall assign to the Buyer all of the Seller's rights and interest under the Registration Rights Agreement dated September 14, 1990 between STI and the Seller (the "Registration Agreement"). Such assignment shall be substantially in the form of Exhibit E --------- attached hereto. 1.3 Consideration. The Buyer shall deliver to the Seller on the Closing ------------- Date, as consideration for the sale, transfer and delivery to the Buyer of the Shares, an aggregate purchase price of $20,769,386.00 (the "Purchase Price"). The Purchase Price shall consist of $16,069,386 payable in cash by wire transfer of immediately available funds (the "Cash Payment"), a promissory note issued by the Buyer in the original principal amount of $4,700,000 in the form of Exhibit ------- A attached hereto (the "Note"), and warrants in the form of Exhibit B hereto - - --------- (the "Warrants") to purchase 50,000 shares of common stock of the Buyer at an exercise price of $27.55 a share, subject to adjustment as set forth in Exhibit B. 1.4 The Closing. The closing of the transactions contemplated by this ----------- Agreement (the "Closing") shall take place at the offices of STI or at such other place as the parties may agree on the business day (the"Closing Date") set by the Buyer upon at least five business days' written notice to the Seller following the date upon which all conditions set forth in Article 5 (other than those to be satisfied at Closing) have been satisfied or waived. ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER The Seller hereby represents and warrants to the Buyer as follows: 2.1 Authorized and Effective Agreement. The Seller is an estate governed ---------------------------------- by testamentary instruments and applicable provisions of Maryland law. This Agreement has been duly authorized, executed and delivered by the Seller, and the Seller has the right, power, authority and legal capacity to enter into and perform the obligations to be performed by it under this Agreement and to consummate the transactions contemplated of it hereby. This Agreement constitutes the valid and binding obligation of the Seller, enforceable in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to general equity principles. 2.2 Ownership of the Shares. The Seller is, and on and as of the Closing ----------------------- Date will be, the owner, beneficially and of record, of the Shares, which on the date hereof constitute not less than 60% of the issued and outstanding shares of Common Stock of STI. The Shares are, and on and as of the Closing Date will be, owned beneficially and of record by the Seller free and clear of any lien, claim or other encumbrance and of any restriction or limitation of any nature whatsoever (collectively, "Liens"). By delivery of the Shares at the Closing, in exchange for the consideration provided in Section 1.3, the Seller will convey to the Buyer good and marketable title to the Shares, free and clear of any Lien. The Seller has not granted any warrants, options or other rights, or entered into any agreement or other commitment, which obligate the Seller to sell, transfer or otherwise dispose of any of the Shares to anyone other than the Buyer or which affect the right of the Seller or its successor as holder of the Shares to vote or to dispose of the Shares. The Seller does not on the date of this Agreement, nor will the Seller on and as of the Closing Date, own or have any right, warrant, option or other agreement to acquire any shares of capital stock or other securities of STI from STI or any other person except for the Shares and an option to acquire 32,500 shares of Common Stock granted by STI dated September 14, 1990, as amended effective as of September 14, 1993, which option is not being transferred to the Buyer. 2.3 No Consent; Non-Contravention. No consent of any other party and no ----------------------------- consent, license, approval or authorization of, or exemption by, or registration or declaration or filing with, any governmental authority, is required in connection with the execution, delivery, validity or enforceability of this Agreement with respect to the Seller or the consummation by the Seller of the transactions contemplated hereby. The execution, delivery and performance by the Seller of this Agreement does not and will not (i) violate any provision of the certificate of incorporation or by-laws of STI, (ii) conflict with or result in a breach of, or constitute a default under any agreement, understanding or arrangement to which the Seller is a party or by which it is bound, or (iii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Seller. 2.4 Regarding STI. The Seller has no knowledge (i) of any facts or ------------- circumstances - 2 - that cause STI's Annual Report on Form 10-K for the year ended July 31, 1995 or any report filed by STI with the Securities and Exchange Commission (the "Commission") subsequent to such date, as of their respective dates and as finally amended, to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (ii) of any material adverse change in the financial condition or results of operations of STI since the end of the quarter to which its most recently filed Form 10-K or Form 10-Q, as applicable, relates or any change in its capitalization from that shown in such Form 10-K or Form 10-Q. 2.5 Litigation. Except as set forth on Schedule 2.5, to the best of ---------- Seller's knowledge, there is neither pending nor threatened any action, suit, proceeding or claim to which the Seller or STI is or may be named as a party which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated herein. 2.6 Registration Agreement. The Registration Agreement has been duly ---------------------- authorized, executed and delivered by the parties thereto and constitutes the valid and binding obligation of such paries, enforceable in accordance with its terms subject, as to enforceability, to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to general equity principles. The rights of the Seller under the Registration Agreement will, on the Closing Date, have been duly and effectively assigned by the Seller to the Buyer hereunder. 2.7 Investment Representations. (a) The Seller is acquiring the Note and -------------------------- the Warrants, and will acquire any shares of common stock of the Buyer issuable on exercise of the Warrants, for investment for its own account (subject to distributions to any beneficiaries of the Estate in accordance with the testamentary instruments governing the Estate or any orders of any court of competent jurisdiction or under applicable law), and not with a view to the resale or distribution of any part thereof, and has and will have no present intention of selling, granting any participation in, or otherwise distributing the same within the meaning of the Securities Act of 1933, as amended (the "Securities Act"). (b) The Seller (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Note, the Warrants and any shares issuable upon exercise of the Warrants. 2.8 Absence of Registration. The Seller understands and acknowledges that ----------------------- the issuance of the Note and the Warrants pursuant to this Agreement, and the issuance of shares upon exercise of the Warrants, will not be registered under the Securities Act or under any applicable blue sky or state securities law on the grounds that such transfer is exempt from registration and that the availability of such exemption is predicated in part upon the Seller's representations set forth in this Agreement. The Seller acknowledges and understands that the Note, the Warrants and any shares issuable on exercise of the Warrants acquired by the Seller must be held indefinitely unless such Note, Warrants or shares are subsequently registered under the Securities Act and applicable blue sky laws or an exemption from such registration is available. - 3 - 2.9 Brokers and Finders. Neither the Seller nor, to the Seller's ------------------- knowledge, STI has employed any broker, finder or financial advisor or incurred any liability for any fees or commissions of any broker, finder or financial advisor in connection with the transactions contemplated herein, except for STI's retention of Merrill Lynch, Pierce, Fenner & Smith, Incorporated and the Seller's retention of Josephthal, Lyon & Ross, Incorporated ("Josephthal") to perform certain financial advisory services as previously disclosed. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER The Buyer hereby represents and warrants to the Seller as follows, except as set forth on the "Disclosure Schedule" attached hereto (the section numbers of which are numbered and correspond only to the section numbers of this Agreement to which they refer): 3.1 Organization, Standing and Authority of Buyer. --------------------------------------------- (a) The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts, with full corporate power and authority to carry on its business as now conducted. Each Subsidiary (as defined in paragraph (f) below) is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with full power and authority to carry on its business as now conducted. (b) The Buyer has, and on the Closing Date will have, all requisite corporate power and authority to enter into and perform all of its obligations under this Agreement, the Note, the Warrants and the security agreements and related documents identified on Schedule II hereto to which it is a party (the ----------- "Other Agreements"). The execution and delivery of this Agreement, the Note, the Warrants and the Other Agreements and the consummation of the transactions contemplated hereby and thereby have been, or will be on the Closing Date, duly and validly authorized by all necessary corporate action in respect thereof on the part of the Buyer. (c) This Agreement constitutes, and upon execution and delivery thereof, the Note, the Warrants and the Other Agreements will constitute, the legal, valid and binding obligations of the Buyer, enforceable against it in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to general equity principles. The shares of common stock of the Buyer issuable upon exercise of the Warrants, when issued in accordance with the terms of the Warrants upon payment of the exercise price specified therein, will be duly authorized, validly issued and fully paid and nonassessable. No shareholder has any preemptive rights or rights of first refusal by reason of the issuance of the Warrants which rights have not or prior to the Closing Date will not have been waived. (d) The execution, delivery and performance of this Agreement, the Note, the Warrants and the Other Agreements by the Buyer do not and will not (i) conflict with or result in a breach of any provision of the articles of organization or by-laws of the Buyer, (ii) require any consent by any person under, constitute or result in a breach of any term, condition or - 4 - provision of, or constitute a default or give rise to any right of termination or acceleration under any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to which the Buyer or any of its Subsidiaries is a party or by which it is bound, (iii) violate any, law, order, writ, judgment, injunction, decree, statute, rule or regulation applicable to the Buyer or any of its Subsidiaries, or (iv) result in the creation or imposition of any Lien on any assets of the Buyer or any of its Subsidiaries. (e) The Buyer has furnished to the Seller a true, correct and complete copy of its articles of organization and by-laws, as amended to date. (f) The Disclosure Schedule sets forth all of the Subsidiaries of the Buyer and the jurisdiction in which each is organized. All issued and outstanding shares or other equity interest of each Subsidiary are owned directly by the Seller free and clear of any Lien, and there are no other shares of capital stock or other equity interest of any Subsidiary outstanding or any subscriptions, options, conversion or exchange rights, warrants, repurchase or redemption agreements, or other agreements, claims or commitments of any nature whatsoever obligating any Subsidiary to issue, transfer, deliver or sell, or cause to be issued, transferred, delivered, sold, repurchased or redeemed, additional shares of the capital stock or other securities or equity interests of any Subsidiary or obligating the Buyer or any Subsidiary to grant, extend or enter into any such agreement. As used in this Agreement, "Subsidiary" means any corporation or other legal entity of which the Buyer or any Subsidiary owns, directly or indirectly, 50% or more of the stock or other equity interest entitled to vote for the election of directors. 3.2 Government Approval. No authorization or consent, and no registration ------------------- or filing with any governmental or regulatory official, body or authority is required in connection with the execution, delivery and performance of this Agreement, the Note, the Warrants or the Other Agreements by the Buyer or the consummation of the transactions contemplated hereby, other than those which have been or on the Closing Date will have been obtained or made. 3.3 Capitalization. The authorized capital stock of the Buyer consists of -------------- 1,975,000 shares of common stock, $.01 par value ("Buyer's Common Stock"), and 1,400,000 of Preferred Stock, $.01 par value (the "Preferred Stock"), of which 65,000 shares are Series A Preferred Stock ("Series A Preferred"), 30,000 shares are Series B Preferred Stock ("Series B Preferred"), 380,000 shares are Series C Preferred Stock ("Series C Preferred"), 50,000 shares are Series D Preferred Stock ("Series D Preferred"), 30,000 shares are Series E Preferred Stock ("Series E Preferred"), and 210,000 shares are Series F Preferred Stock ("Series F Preferred"). There are presently 66,780 shares of Buyer's Common Stock, 64,665 shares of Series A Preferred, 29,144 shares of Series B Preferred, 374,462 shares of Series C Preferred, 45,695 shares of Series D Preferred and up to 25,816 shares of Series E Preferred issued and outstanding. Except for warrants issued to the holders of the Series C Preferred, Series D Preferred and Series E Preferred to purchase up to 98,524 shares of Buyer's Common Stock in the aggregate, warrants issued to certain other persons to purchase up to 2,400 shares of Buyer's Common Stock in the aggregate and 155,493 shares of Buyer's Common Stock reserved for issuance pursuant to its 1993 Stock Option Plan, there are no outstanding preemptive, conversion or other rights, options, warrants or agreements granted or issued by or binding upon the Buyer for the purchase or acquisition of any shares of its capital stock, except as contemplated by this Agreement, as set forth in the Disclosure Schedule and the conversion rights with respect to - 5 - preferred stock contemplated by the Buyer's articles of organization, as amended to date. 3.4 Financial Information. The audited financial statements of the Buyer --------------------- and its Subsidiaries as of June 30, 1995 and related notes (the "Buyer's Financial Statements"), including the balance sheet at June 30, 1995 (the "Buyer's Balance Sheet") and the income statement for the year ended June 30, 1995, and the unaudited financial statements of the Buyer and its Subsidiaries as of September 30, 1995 (the "Buyer's Interim Financials"), including the balance sheet at September 30, 1995 (the "Buyer's Interim Balance Sheet") and the income statement for the three months ended September 30, 1995, present fairly the financial position and results of operations of the Buyer and its Subsidiaries, on a consolidated basis, at the dates and for the periods to which they relate, have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods indicated and show all material liabilities, absolute or contingent, of the Buyer and its Subsidiaries required to be recorded thereon in accordance with generally accepted accounting principles as at the respective dates thereof. 3.5 Absence of Undisclosed Liabilities. As of June 30, 1995 and September ---------------------------------- 30, 1995, respectively, the Buyer and its Subsidiaries had no material liabilities (whether accrued, absolute, fixed, contingent or otherwise, including without limitation any tax liabilities due or to become due) which are not fully reflected or provided for on the Buyer's Balance Sheet and the Buyer's Interim Balance Sheet which are required to be reflected or provided for therein or described in the notes thereto, and since September 30, 1995 the Buyer and its Subsidiaries have not incurred any material liabilities other than liabilities incurred in the ordinary course of business. 3.6 Absence of Certain Changes. Since the date of the Buyer's Interim -------------------------- Balance Sheet, there has not been any event or condition of any character which has materially and adversely affected the business or prospects of the Buyer and its Subsidiaries, taken as a whole, including but not limited to: a. any material adverse change in the financial condition, results of operation, business, properties or prospects of the Buyer and its Subsidiaries, taken as a whole; b. any damage, destruction or loss of any of the properties or assets of the Buyer or any Subsidiary (whether or not covered by insurance) materially adversely affecting the business or prospects of the Buyer and its Subsidiaries, taken as a whole; c. any declaration, setting aside or payment or other distribution in respect of any of the Buyer's capital stock or any direct or indirect redemption, purchase or other acquisition of any such stock by the Buyer; d. any incurrence, assumption or guarantee by the Buyer or any of its Subsidiaries of any material indebtedness for borrowed money; e. any creation or assumption by the Buyer or any of its subsidiaries of any Lien on any material asset other than in the ordinary course of business consistent with past practices; - 6 - f. any making of any loan, advance or capital contribution to or investment in any person other than loans, advances or capital contributions to or investments in wholly-owned Subsidiaries of Buyer made in the ordinary course of business consistent with past practices; g. any transaction or commitment made, or any contract or agreement entered into, by the Buyer or any of its Subsidiaries relating to its assets or business (including the acquisition or disposition of any assets) or any relinquishment by the Buyer or any of its Subsidiaries of any contract or other right, in either case, material to the Buyer and its Subsidiaries, taken as a whole, other than transactions and commitments in the ordinary course of business consistent with past practices and those contemplated by this Agreement; h. any change in any method of accounting or accounting practice by the Buyer or any Subsidiaries; or i. any labor trouble, or any event or condition of any character, materially adversely affecting the business or prospects of the Buyer and its Subsidiaries, taken as a whole. 3.7 Taxes. The Buyer and its Subsidiaries filed or will file within the ----- time prescribed by law (including extensions of time approved by the appropriate taxing authority) all tax returns and reports required to be filed with the United States Internal Revenue Service and with the Commonwealth of Massachusetts and with all other jurisdictions where such filing is required by law. The Buyer and its Subsidiaries have paid, or adequate provision has been made in the Buyer's Balance Sheet and the Buyer's Interim Balance Sheet for the payment of, all taxes, interest, penalties, assessments or deficiencies shown to be due or claimed to be due on or in respect of such tax returns and reports. The Buyer knows of (a) no other tax returns or reports which are required to be filed which have not been so filed and (b) no unpaid assessment for additional taxes for any fiscal period or any basis therefor. The Buyer's Federal income tax returns have not, to the best of the Buyer's knowledge and belief, been audited by the United States Internal Revenue Service nor by any state taxing authority. 3.8 Litigation. There is neither pending nor, to the best of the Buyer's ---------- knowledge, threatened any action, suit, proceeding or claim, or any basis therefor or threat thereof, whether or not purportedly on behalf of the Buyer or any Subsidiary, to which the Buyer or any Subsidiary is or may be named as a party or its property or assets is or may be subject and in which an unfavorable outcome, ruling or finding in any such matter or for all such matters taken as a whole might have a material adverse effect on the condition, financial or otherwise, or operations of the Buyer and its Subsidiaries, taken as a whole, or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated herein. 3.9 ERISA. Neither the Buyer nor any Subsidiary maintains any pension, ----- defined benefit or defined contribution plans for its employees which are subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 3.10 Environmental Matters. Neither the Buyer nor any Subsidiary has ever --------------------- generated, transported, used, stored, treated, disposed of, or managed any Hazardous Waste (as defined - 7 - below). To the best of the Buyer's knowledge, (i) no Hazardous Material (as defined below) has ever been or is threatened to be spilled, released, or disposed of at any site presently or formerly owned, operated, leased, or used by the Buyer or any Subsidiary during the period such site is or was so owned, operated, leased or used by the Buyer or such Subsidiary; (ii) no Hazardous Material has ever been transported from any site presently or formerly owned, operated, leased, or used by the Buyer or any Subsidiary for treatment, storage, or disposal at any other place during the period such site is or was so owned, operated, leased or used by the Buyer or such Subsidiary; (iii) neither the Buyer nor any Subsidiary presently owns, operates, leases or uses, nor has it previously owned, operated, leased, or used any, site on which underground storage tanks are or were located; (iv) no lien has ever been imposed by any governmental agency on any property, facility, machinery, or equipment owned, operated, leased, or used by the Buyer or any Subsidiary in connection with the presence of any Hazardous Material; (v) neither the Buyer nor any Subsidiary has any liability under, nor has it ever violated any, Environmental Law (as defined below); (vi) the Buyer and each Subsidiary, all property owned, operated, leased, or used by them, and all facilities and operations thereon are presently in compliance with all applicable Environmental Laws; and (vii) neither the Buyer nor any Subsidiary has ever entered into or been subject to any judgment, consent decree, compliance order, or administrative order with respect to any environmental or health and safety matter or received any request for information, notice, demand letter, administrative inquiry, or formal or informal complaint or claim with respect to the enforcement of any Environmental Law. For purposes of this paragraph, the following definitions shall apply: "Hazardous Material" shall mean and include any hazardous waste, hazardous material, hazardous substance, toxic substance, pollutant, contaminant, or other substance which may pose a threat to the environment or to human health or safety, as defined or regulated under any Environmental Law. "Hazardous Waste" shall mean and include any hazardous waste as defined or regulated under any Environmental Law. "Environmental Law" shall mean any federal or Massachusetts environmental or health and safety-related law, regulation, rule, ordinance, or by-law, whether existing as of the date of this Agreement, previously enforced, or subsequently enacted. 3.11 Compliance; Permits. (a) Neither the Buyer nor any of its ------------------- Subsidiaries is in conflict with, or in default or violation of, (i) any law, rule, regulation, order, judgment or decree applicable to the Buyer or any of its Subsidiaries or by which its or any of their respective properties is bound or affected, or (ii) any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Buyer or any of its Subsidiaries is a party or by which the Buyer or any of its Subsidiaries or its or any of their respective properties is bound or affected, except for any conflicts, defaults or violations which could not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the condition, financial or otherwise, or operations of the Buyer and its Subsidiaries, taken as a whole. To the best knowledge of the Buyer, no investigation or review by any governmental or regulatory body or authority is pending or threatened against the Buyer or its Subsidiaries, nor has any governmental or regulatory body or authority indicated an intention to conduct the same, other than, in each such case, those the outcome of which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the condition, financial or otherwise, or operations of the Buyer and its Subsidiaries, taken as a whole. (b) The Buyer and its Subsidiaries hold all permits, licenses, variances, exemptions, - 8 - orders and approvals from governmental authorities which are material to operation of the business of the Buyer and its Subsidiaries taken as a whole. The Buyer and its Subsidiaries are in compliance with the terms of such Permits, except where the failure to so comply could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the condition, financial or otherwise, or operations of the Buyer and its Subsidiaries, taken as a whole. 3.12 Investment Representations. (a) The Buyer is acquiring the Shares for -------------------------- investment for its own account, and not with a view to the resale or distribution of any part thereof, and has no present intention of selling, granting any participation in, or otherwise distributing the same within the meaning of the Securities Act. (b) The Buyer (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Shares. 3.13 Absence of Registration. The Buyer understands and acknowledges that ----------------------- the transfer of the Shares pursuant to this Agreement will not be registered under the Securities Act or under any applicable blue sky or state securities law on the grounds that such transfer is exempt from registration and that the availability of such exemption is predicated in part upon the Buyer's representations set forth in this Agreement. The Buyer acknowledges and understands that the Shares acquired by the Buyer must be held indefinitely unless such Shares are subsequently registered under the Securities Act and applicable blue sky laws or an exemption from such registration is available. 3.14 Financing. The Buyer has, as of the date hereof, entered into a --------- financing commitment with a lender identified in the commitment for the amounts, and subject to the terms and conditions, set forth on the Disclosure Schedule (the "Financing Commitment"). The Buyer has furnished a true, correct and complete copy of the Financing Commitment to the Seller. Assuming consummation of the financing contemplated by the Financing Commitment, the Buyer has, or as of the Closing will have, and Buyer has no reason to believe that as of the Closing it will not have, sufficient cash, commitments, available lines of credit or other sources of immediately available funds to enable it to make the Cash Payment. 3.15 Brokers and Finders. The Buyer has not employed any broker, finder or ------------------- financial advisor or incurred any liability for any fees or commissions of any broker, finder or financial advisor in connection with the transactions contemplated herein, except for the retention of Vector Securities International, Inc. as financial advisor. - 9 - ARTICLE 4 COVENANTS OF SELLER AND BUYER 4.1 Covenants of Seller. The Seller covenants and agrees as follows: ------------------- 4.1.1 Completion of Transaction. It shall use all reasonable efforts ------------------------- to cause the transactions contemplated by this Agreement to be consummated and the conditions to such consummation set forth in Article 5 to be met, including without limiting the generality of the foregoing, to obtain all consents and authorizations of third parties and to make all filings with and give all notices to third parties which may be necessary or reasonably required in order to effect such transactions. It shall not take any action that will result in any assignment, transfer or disposition of, or creation of any Lien on, the Shares or that will restrict the Seller's ability to transfer the Shares to the Buyer as contemplated by this Agreement. 4.1.2 Access to Properties and Cooperation. The Seller shall use ------------------------------------ reasonable efforts to cause STI prior to the Closing Date to give to the Buyer, its agents, representatives and financing sources, full access, upon reasonable notice, during normal business hours to all of the properties, books, tax returns, contracts, commitments and records of STI, and to furnish to the Buyer, its agents, representatives and financing sources all such documents, certified if requested, and information with respect to its affairs as the Buyer, its agents, representatives and financing sources, may from time to time reasonably request. 4.2 Covenants of Buyer. The Buyer covenants and agrees as follows: ------------------ 4.2.1 Completion of Transaction. Prior to the Closing Date, it shall ------------------------- use all reasonable efforts to cause the transactions contemplated by this Agreement to be consummated by the Buyer and the conditions to such consummation set forth in Article 5 to be met, including, without limiting the generality of the foregoing, to make all filings with and give all notices to third parties which may be necessary or reasonably required in order to effect the transactions contemplated hereby and to seek to complete its financing in accordance with the Financing Commitment. The Buyer agrees to cooperate with the Seller and STI to the extent necessary to obtain any consents or to make any filing required in connection with the transactions contemplated by this Agreement. 4.2.2 Access to Properties and Cooperation. The Buyer shall prior to ------------------------------------ the Closing Date give to the Seller, its agents, representatives and financing sources, full access, upon reasonable notice, during normal business hours to all of the properties, books, tax returns, contracts, commitments and records of the Buyer and its Subsidiaries, and shall furnish to the Seller, its agents, representatives and financing sources all such documents, certified if requested, and information with respect to its affairs as the Seller, its agents, representatives and financing sources, may from time to time reasonably request. 4.2.3 Conduct of Business. Prior to the Closing Date, the Buyer ------------------- shall, and shall cause each Subsidiary to, (i) conduct its business in the usual, regular and ordinary course consistent with past practice, (ii) use reasonable best efforts to maintain and preserve intact its business organization, employees and advantageous business relationships and retain the services of its officers and key employees and (iii) take no action which would materially adversely affect or materially delay the ability of either the Seller or the Buyer to obtain any necessary approvals - 10 - required for the transactions contemplated hereby or to perform its covenants and agreements under this Agreement. Prior to the Closing Date, without limiting the generality of the foregoing, except as set forth in Section 4.2.3 of the Disclosure Schedule and, except as expressly contemplated or permitted by this Agreement, the Buyer shall not, and shall cause each Subsidiary not to, without the prior written consent of the Seller: (a) other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money (other than short-term indebtedness incurred to refinance short-term indebtedness and indebtedness of the Buyer to finance the purchase of the Shares), assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity, or make any loan or advance; (b) (i) adjust, split, combine or reclassify any capital stock without making appropriate provision for adjusting the number of shares of Buyer Common Stock issuable on exercise of the Warrants in order to avoid dilution; (ii) make, declare or pay any dividend or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock or any securities or obligations convertible into or exchangeable or exercisable for any shares of its capital stock or such securities; (iii) grant any person any right to acquire any shares of its capital stock; (iv) issue, deliver or sell, or agree to issue, deliver or sell, any additional shares of capital stock or any securities or obligations convertible into or exchangeable or exercisable for any shares of its capital stock or such securities, except (1) pursuant to the exercise of options or warrants to acquire shares of its capital stock outstanding as of the date of this Agreement or (2) on an arm's- length basis for not less than fair consideration; or (v) enter into any agreement, understanding or arrangement with respect to the sale or voting of its capital stock except as permitted by clause(2) of the preceding clause (iv). (c) sell, transfer, pledge, mortgage, encumber or otherwise dispose of any of its properties or assets to any individual, corporation or other entity, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, except (i) in the ordinary course of business consistent with past practice, (ii) pursuant to contracts or agreements in force at the date of this Agreement or (iii) to secure indebtedness incurred to finance the purchase of the Shares; (d) merge or consolidate with any other person or acquire a material amount of assets or capital stock of any other person; (e) except for transactions in the ordinary course of business consistent with past practice, enter into or terminate any material contact or agreement, or make any change in any of its material leases or contracts, other than renewals of contracts and leases without material adverse changes of terms; (f) make or propose any changes in its Articles of Organization or Bylaws - 11 - which would materially and adversely affect the rights or interests of the Seller or which would prevent the Buyer from fulfilling its obligations under this Agreement; or (g) agree to, or make any commitment to, take any of the actions prohibited by this Section 4.2.3. ARTICLE 5 CONDITIONS PRECEDENT 5.1 Conditions Precedent to the Obligations of Both Parties. The ------------------------------------------------------- respective obligations of the parties to consummate the transactions contemplated by this Agreement shall be subject to satisfaction or waiver of the following conditions at or prior to the Closing Date: (a) The parties hereto shall have received all regulatory approvals required or mutually deemed necessary in connection with the transactions contemplated by this Agreement and all notice periods and waiting periods required after the granting of any such approvals shall have passed. (b) Neither of the parties hereto shall be subject to any order, decree, direction, notice or injunction of a court, agency or other governmental entity of competent jurisdiction which enjoins or prohibits the consummation of the transactions contemplated by this Agreement or otherwise materially impairs the ability of either party to consummate the transactions contemplated hereby, and there shall not be any other event in any proceeding that renders it unlawful for either party, or deprives either party of its authority, to consummate the transactions contemplated hereby. (c) The Board of Directors of STI shall have approved the transaction contemplated by this Agreement such that the supermajority vote provisions and restrictions of Section 203 of the Delaware General Corporation Law will not apply to this Agreement and neither of the parties shall be an "interested stockholder" for purposes of that section, and such approval shall be in full force and effect on the Closing Date. 5.2 Conditions Precedent to the Obligations of Seller. The obligations of ------------------------------------------------- the Seller to consummate the transactions contemplated by this Agreement shall be subject to satisfaction or waiver of the following additional conditions at or prior to the Closing Date: (a) The representations and warranties of the Buyer set forth in Article 3 hereof shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (or on the date when made in the case of any representation and warranty which specifically relates to an earlier date), except (i) as otherwise contemplated by this Agreement or consented to in writing by the Seller and (ii) insofar as the failure of any representation and warranty to be true and correct does not have, and is not reasonably likely to have, a material adverse effect on the financial condition, results of operations, business, properties or prospects of the Buyer. (b) The Buyer shall have in all material respects (i) performed all obligations - 12 - and (ii) complied with all covenants required by this Agreement. (c) The Buyer shall have delivered to the Seller the Cash Payment, the Warrant and the Note provided for under Section 1.3 and Other Agreements identified on Schedule II hereto. ----------- (d) The Buyer shall have delivered to the Seller a certificate, dated the Closing Date and signed by its Chief Executive Officer or Chief Financial Officer, to the effect that the conditions set forth in this section have been satisfied. (e) The Seller shall have received the legal opinion of Palmer & Dodge, counsel to the Buyer, dated the Closing Date and substantially in the form attached hereto as Exhibit C. --------- (f) The opinion of Josephthal, dated the date hereof, received by the Seller to the effect that, as of the date hereof, the consideration to be received by the Seller hereunder for the Shares is fair to the Seller from a financial point of view, a true, correct and complete copy of which has been furnished to the Buyer, shall not have been withdrawn. 5.3 Conditions Precedent to the Obligations of Buyer. The obligations of ------------------------------------------------ the Buyer to consummate the transactions contemplated by this Agreement shall be subject to satisfaction or waiver of the following additional conditions at or prior to the Closing Date: (a) The representations and warranties of the Seller set forth in Article 2 hereof shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (or on the date when made in the case of any representation and warranty which specifically relates to an earlier date), except as otherwise contemplated by this Agreement or consented to in writing by the Buyer. (b) From the date of this Agreement to the Closing Date, (i) the business and affairs of STI shall have been conducted only in the ordinary course consistent with past practice and (ii) there shall not have been any material adverse change in the capitalization, financial condition, results of operation, business, properties or prospects of STI. (c) The Seller shall have in all material respects performed all obligations and complied with all covenants required by this Agreement. (d) The Seller shall have delivered to the Buyer a certificate, dated the Closing Date and signed by its Personal Representative, to the effect that the conditions set forth in paragraphs (a) and (c) of this section have been satisfied. (e) The Buyer shall have received the legal opinion of Bradshaw, Thomas & Yeatman LLP, special Maryland counsel to the Seller, dated the Closing Date and substantially in the form attached hereto as Exhibit D. --------- (f) The financing contemplated by the Financing Commitment shall have been completed except to the extent that a failure to complete such financing is due to the willful fault - 13 - of the Buyer. (g) The Shares shall constitute not less than 60% of the issued and outstanding shares of Common Stock, not less than 60% of the ordinary voting power of STI and not less than 55% of such issued and outstanding shares and all shares of Common Stock issuable upon exercise or conversion of then outstanding warrants, options, convertible securities or other rights to acquire shares of Common Stock, and ownership of the Shares will be transferred to the Buyer free and clear of any lien or adverse claim to title. ARTICLE 6 FURTHER ASSURANCES 6.1 Seller's Further Assurances. The Seller shall execute, acknowledge --------------------------- and deliver any further assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by the Buyer and will take any other action consistent with the terms of this Agreement that may be reasonably requested by the Buyer for the purpose of selling, transferring, assigning, granting, conveying, delivering or confirming to the Buyer as of the Closing Date any or all of the Shares. 6.2 Buyer's Further Assurances. The Buyer, at any time after the Closing -------------------------- Date, shall execute, acknowledge and deliver any further assurances, documents and instruments of transfer reasonably requested by the Seller and will take any other action consistent with the terms of this Agreement that may be reasonably requested by the Seller for the purpose of concluding the transactions contemplated by this Agreement. ARTICLE 7 TERMINATION, WAIVER AND AMENDMENT 7.1 Termination. This Agreement may be terminated: ----------- (a) At any time on or prior to the Closing Date, by the mutual consent in writing of the parties hereto. (b) At any time on or prior to the Closing Date, by the Buyer or the Seller, in writing, if the other party has, in any material respect, breached (i) any covenant or agreement contained herein or (ii) any representation or warranty contained herein, if the failure of any such representation or warranty to be true and correct as of the date of this Agreement has, or is reasonably likely to have, a material adverse effect upon the nonbreaching party or a material adverse effect on the ability to consummate the transactions contemplated herein, and in either case if such breach has not been cured by the earlier of 30 days after the date on which written notice of such breach is given to the party committing such breach or the Closing Date. (c) By either party hereto in writing, if the Closing Date has not occurred by the close of business on the 30th day after the date of this Agreement; provided that either party may extend the termination date by up to fifteen days, upon written notice to the other party at least five business days prior to such termination date, if such additional time is required to complete the Buyer's financing and, in the case of the Buyer, it has used its best efforts to complete its financing in accordance with the Financing Commitment by such termination date. - 14 - 7.2 Effect of Termination. In the event this Agreement is terminated --------------------- pursuant to Section 7.1 hereof, this Agreement shall become void and have no effect, except that (i) the provisions relating to termination fees set forth in Section 7.3 and expenses set forth in Section 8.1 hereof shall survive any such termination and (ii) a termination pursuant to Section 7.1(b) shall not relieve the breaching party from liability for an uncured willful or fraudulent breach of such covenant or agreement giving rise to such termination. 7.3 Termination Fee. If the Seller has terminated this Agreement or --------------- declined to consummate the transactions contemplated by this Agreement because the condition set forth in Section 5.2 (f) has not been met for reasons beyond the control of the Buyer (the "Termination Event"), the Seller shall make a cash payment to the Buyer in the amount of $110,000 to reimburse the Buyer for a portion of the costs and expenses related to entering into this Agreement and seeking to consummate such transactions. Any payment required by this section will be payable by the Seller to the Buyer (by wire transfer of immediately available funds to an account designed by the Buyer) within five business days after demand by the Buyer. 7.4 Effect of Representations and Warranties. (a) All representations and ---------------------------------------- warranties contained in this Agreement (other than Section 2.4 and any other representation and warranty contained in Article 2 to the extent it relates to the condition or affairs of STI, which representations and warranties shall not survive the Closing) shall survive the Closing and shall be unaffected by any investigation made by either party, provided that the representations and warranties set forth in Sections 2.5 through 2.10 shall terminate one year after the Closing Date and the remaining representations and warranties shall expire upon expiration of the applicable statute of limitations. (b) No representation or warranty of the Seller shall be deemed breached on account of any matter which is known to James H. Miller, who is the Chief Executive Officer of both the Buyer and STI, or, to the extent it relates to STI, should have been known to James H. Miller in his capacity as Chief Executive Officer of STI. 7.5 Waiver. The Buyer and the Seller, respectively, by written instrument ------ signed by an authorized officer or representative of such party, may at any time extend the time for the performance of any of the obligations or other acts of the Seller or the Buyer, and may waive (i) any inaccuracies of the other party in the representations or warranties contained in this Agreement, or any document delivered pursuant hereto, (ii) compliance with any of the covenants, undertakings or agreements of such party, or satisfaction of any of the conditions precedent to its obligations, contained herein, or (iii) the performance by such party of any of its obligations set out herein. 7.6 Amendment or Supplement. This Agreement may not be amended or ----------------------- supplemented except by a written instrument signed by the parties hereto. - 15 - ARTICLE 8 MISCELLANEOUS 8.1 Expenses. Each party hereto shall bear and pay all costs and expenses -------- incurred by it in connection with the transactions contemplated in this Agreement, including fees and expenses of its own financial consultants, accountants and counsel. 8.2 Entire Agreement. This Agreement contains the entire agreement ---------------- between the parties with respect to the transactions contemplated hereunder and supersedes all prior arrangements or understandings, written or oral, with respect thereto. The parties hereto in executing and delivering, and in carrying out the provisions of, this Agreement are relying solely on the representations, warranties and covenants contained in this Agreement or in any writing delivered pursuant to provisions of this Agreement or at the Closing, and not upon any representation, warranty, covenant, or information, written or oral, made by any person other than as specifically set forth herein. The inclusion of any matter in information previously disclosed by STI or the Seller shall not be deemed an admission or otherwise to imply that any such matter is material for purposes of this Agreement. 8.3 Benefit of Agreement; No Assignment. The terms and conditions of this ----------------------------------- Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors. Except as specifically set forth herein, no party hereto may assign any of its rights or obligations under this Agreement to any other person, except that the Buyer may collaterally assign its rights under this Agreement to the lender under the Financing Commitment in a form reasonably satisfactory to the Seller. Nothing in this Agreement, expressed or implied, is intended to confer upon any party, other than the parties hereto, and their respective successors, any rights, remedies, obligations or liabilities. 8.4 Remedies. The parties agree that in the event of any breach of the -------- provisions of this Agreement, the Buyer's remedies at law will be inadequate, and that the Buyer shall be entitled, in addition to all other rights and remedies it may have at law, to specific performance, injunctive and other equitable relief. The Buyer shall be entitled to indemnification from the Seller for any such breach, including without limitation reasonable attorneys' fees and costs of suit. 8.5 Notices. All notices or other communications which are required or ------- permitted hereunder shall be in writing and sufficient if delivered personally or sent by facsimile transmission or overnight express or by registered or certified mail, postage prepaid, addressed as follows: If to the Estate of Dr. Stanley J. Sarnoff: Robert Herzstein, Personal Representative Shearman & Sterling 801 Pennsylvania Avenue, N.W. Washington, D.C. 20004 Facsimile No.: (202) 508-8100 - 16 - With a required copy to: Wachtell, Lipton, Rosen & Katz 51 W. 52nd St. New York, NY 10019 Attention: Gavin Solotar, Esq. Facsimile No.: (212) 403-2000 If to the Buyer: Brunswick Biomedical Corporation 6 Thacher Lane Wareham, MA 02571 Attention: Chief Executive Officer Facsimile No.: (508) 460-7702 With a required copy to: Palmer & Dodge One Beacon Street Boston, MA 02108 Attention: Stanley Keller, Esq. Facsimile No.: (617) 227-4420 8.6 Capacity of Estate. The Personal Representative of the Estate of Dr. ------------------ Stanley J. Sarnoff is executing this Agreement in his representative capacity only and shall not have any personal liability hereunder or in connection herewith, whether asserted upon a direct claim or in any other manner. 8.7 Captions. The captions contained in this Agreement are for reference -------- purposes only and are not part of this Agreement. 8.8 Counterparts. This Agreement may be executed in any number of ------------ counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. 8.9 Governing Law. This Agreement shall be governed by and construed in ------------- accordance with the laws of the State of Delaware applicable to agreements made and entirely to be performed within such jurisdiction, except to the extent federal law may be applicable. - 17 - IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Agreement to be executed in counterparts under seal by their duly authorized officers or representatives, all as of the day and year first above written. ESTATE OF DR. STANLEY J. SARNOFF By: /s/ Robert Herzstein ------------------------------------------ Personal Representative and not individually BRUNSWICK BIOMEDICAL CORPORATION By: /s/ James H. Miller ---------------------- Title: President - 18 - LIST OF EXHIBITS Exhibit A Form of Note, including form of Stock Pledge Agreement Exhibit B Form of Warrant Exhibit C Form of Buyer's Counsel Opinion Exhibit D Form of Seller's Counsel Opinion(s) Exhibit E Form of Assignment of Rights under Registration Rights Agreement - 19 - SCHEDULE II OTHER AGREEMENTS Stock Pledge Agreement dated as of April 15, 1996 by and between Brunswick Biomedical Corporation and Robert Herzstein, as Personal Representative of the Estate of Dr. Stanley J. Sarnoff. - 20 - SCHEDULE 2.5 ------------ On February 12, 1993, the Stanley J. Sarnoff Endowment for Cardiovascular Science, Inc. filed a petition (which petition is attached hereto as Exhibit A) in the Orphans' Court for Montgomery County, Maryland (Admin. No. 1992-1458) to compel immediate distribution to the Endowment of the assets of the Estate, to remove Mr. Herzstein as Personal representative of the Estate, to vacate prior orders granting attorneys' fees and commissions in connection with the Estate, and for other relief. On March 1, 1993, Mr. Herzstein as Personal Representative, filed a complaint, and an amended complaint on March 19, 1993 (which amended complaint is attached hereto as Exhibit B), for Declaratory Relief in the Circuit Court for Montgomery County, Maryland (Civ. No. 103086) against the Endowment, seeking, among other things, a declaration that, pursuant to the interrorem or ---------- forfeiture clause of the Sarnoff Will, the Endowment forfeited any entitlement to receive assets of the Estate and that all provisions of the Sarnoff Will in favor of the Endowment are null and void. The Complaint further alleged, among other things, that the Endowment forfeited any entitlement to its bequest under the common law and the Maryland Estate and Trusts Code, including the doctrine of cy pres. -- ---- Following a March 3, 1993 hearing, the Orphans' Court, among other things, declined to order the requested immediate distribution of all assets of the Estate to the Endowment, but ruled that the Personal Representative should distribute a lesser sum to the Endowment (which order is attached hereto as Exhibit C). By agreement dated September 28, 1993 executed by counsel for the Personal Representative and counsel for the Endowment, it was agreed that in order to explore the possibility of resolving the differences between the parties and to facilitate mutual efforts to maximize the value of the Estate's assets the above-referenced litigation between the parties in both the Orphans' Court and the Circuit Court would be dismissed without prejudice in accordance with certain stipulations agreed to by the parties (which stipulations are attached hereto as Exhibit D). The parties also agreed to toll the statute of limitations, which agreements have since been extended. The Endowment has addressed the potential sale of stock to Buyer in a number of letters. Copies of letters dated February 9, 1996 and February 28, 1996 and certain subsequent correspondence on that subject have been provided to Buyer. In the February 28, 1996 letter, the Endowment purported to give thirty (30) days written notice of an intention to file a lawsuit against the Personal Representative. - 21 - DISCLOSURE SCHEDULE To Stock Purchase Agreement 1. With respect to the representations and warranties set forth in Section 3.1(f), the Buyer has the following Subsidiaries: Brunswick Biomedical Technologies, Inc., a Massachusetts corporation Brunswick Biomedical Limited, a British limited liability company 2. With respect to the representations and warranties set forth in Sections 3.3 and 3.6 and elsewhere in Article 3, the Buyer discloses that, in addition to the documents contemplated by this Agreement, the following agreements are being negotiated and, in some instances, binding commitment letters or documents with respect to the disclosed transaction have been executed: a. Series F Preferred Stock Purchase Agreement between the Buyer and the Purchasers of Series F Preferred Stock, with respect to the purchase at $27.55 per share of up to 210,000 shares of Series F Preferred Stock, par value $0.01 per share. b. Senior Loan Agreement with Internationale Nederlanden (U.S.) Capital Corporation ("ING"), providing for a $11,000,000 credit facility secured by substantially all the assets of the Buyer, including the Estate Shares, and for the issuance of warrants to purchase up to 65,167 shares of Common Stock of the Buyer. c. Note Purchase Agreement between the Buyer and EM Industries, Inc., providing for a junior subordinated loan in the amount of $1,000,000. d. Undertaking by the Buyer to EM Industries, Inc. to use its best efforts to cause STI to enter into an extension of the EpiPen License Agreement. e. Undertaking by the Buyer to the Board of Directors of STI regarding the future conduct of the operations and affairs of STI. f. Stock Repurchase Agreement by and between the Company and the State of Maryland Department of Business and Economic Development ("DBED"), pursuant to which the Company agrees to repurchase the Series D Preferred Stock and Warrants from DBED if the Company fails to relocate its principal office to Maryland within six months or removes its principal office from Maryland within 5 years after locating there. 3. With respect to the representations and warranties set forth in Section 3.14, the Buyer discloses that it has entered into a financing commitment with ING with respect to the financing described in paragraph 2a. above for the amounts and subject to the terms and conditions of the Commitment Letter dated March 18, 1996 from ING previously delivered to the Seller. 4. With respect to the covenants set forth in Section 4.2.3, the Buyer discloses that, in addition to the indebtedness to be incurred as described in this Agreement, the Buyer has incurred or expects to incur the indebtedness described in paragraphs 2b. and 2c. above. - 22 - EXHIBIT A, PART I [See Exhibit 4(c) to this Schedule 13D] - 23 - EXHIBIT A, PART II [See Exhibit 4(d) to this Schedule 13D] - 24 - EXHIBIT B [See Exhibit 4(b) to this Schedule 13D] - 25 - EXHIBIT C [Form of opinion letter omitted] - 26 - EXHIBIT D [Form of opinion letter omitted] - 27 - EXHIBIT E ASSIGNMENT OF RIGHTS UNDER REGISTRATION RIGHTS AGREEMENT WHEREAS, a Registration Rights Agreement dated September 14, 1990, a copy of which is attached hereto as Exhibit "A", (the "Registration Rights Agreement") was entered into between Survival Technology, Inc., a Delaware Corporation (the "Company"), and Robert E. Herzstein, as Personal Representative of the Estate of Stanley J. Sarnoff (the "Estate"); and WHEREAS, the Estate has entered into a Stock Purchase Agreement with Brunswick Biomedical Corporation ("Brunswick") to sell shares of the Company held by the Estate to Brunswick and the Estate has agreed therein to assign to Brunswick all of the Estate's rights and interest under the Registration Rights Agreement. NOW, THEREFORE, in consideration of the foregoing and of the purchase price under the Stock Purchase Agreement, the Estate does hereby assign, transfer and convey to Brunswick Biomedical Corporation all of the Estate's right and interest in, to and under the Registration Rights Agreement. Dated: ______________________________________ Robert E. Herzstein, as Personal Representative of the Estate of Stanley J. Sarnoff The undersigned, BRUNSWICK BIOMEDICAL CORPORATION, does hereby acknowledge receipt of this assignment. BRUNSWICK BIOMEDICAL CORPORATION Dated: By:__________________________________ - 28 - EX-4.B 10 WARRENT EXHIBIT 4(B) THE WARRANTS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR THE SECURITIES LAWS OF ANY STATE AND NEITHER THE WARRANTS NOR ANY INTEREST THEREIN MAY BE SOLD OR IN ANY OTHER WAY TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. WARRANT TO PURCHASE SHARES OF COMMON STOCK OF BRUNSWICK BIOMEDICAL CORPORATION Warrant No. C-29 50,000 Shares This certifies that, for value received, Robert Herzstein, as Personal Representative of the Estate of Dr. Stanley J. Sarnoff (the "Holder") is ------ entitled to subscribe for and purchase up to 50,000 shares (subject to adjustment from time to time pursuant to the provisions of Section 5 hereof) of fully paid and nonassessable Common Stock of BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation (the "Company"), at the Warrant Price (as defined in ------- Section 2 hereof and subject to adjustment from time to time pursuant to the provisions of Section 5 hereof), subject to the provisions and upon the terms and conditions hereinafter set forth. As used herein, the term "Common Stock" shall mean the Company's presently ------------ authorized Common Stock, $.01 par value per share, and any other capital stock into or for which such Common Stock may hereafter be converted or exchanged or that may be issued in respect of, in exchange for, or in substitution of, such shares by reason of any stock splits, stock dividends, distributions, mergers, consolidations or other events. This Warrant (the "Warrant") is issued pursuant to that certain Stock Purchase Agreement dated March 18, 1996 (the "Purchase Agreement"). 1. Term of Warrant. The purchase right represented by this Warrant is --------------- exercisable, in whole or in part, at any time during the period beginning on April 15, 1996 (the "Initial Exercise Date") and ending on April 15, 2001. --------------------- 2. Warrant Price. The exercise price of this Warrant is $27.55 per share ------------- of Common Stock, subject to adjustment from time to time pursuant to the provisions of Section 5 hereof (the "Warrant Price"). ------------- 3. Method of Exercise; Conversion. ------------------------------ (a) Exercise. Subject to Section 1 hereof and Section 3(b) hereof, the -------- purchase right represented by this Warrant may be exercised at the option of the holder hereof, in whole or in part, at any time and from time to time, by the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit 1 duly executed) at the principal office of the Company at 6 Thacher - --------- Lane, Wareham, Massachusetts 02571 (or such other address of which the Company may notify the holder hereof in writing), and by either (or any combination of) (i) the payment to the Company, by check or wire transfer, of an amount equal to the Warrant Price per share multiplied by the number of shares then being purchased or (ii) the reduction of the outstanding principal amount of any indebtedness of the Company to the holder hereof in an amount equal to the Warrant Price per share multiplied by the number of shares then being purchased (the promissory note or other evidence of indebtedness held by the holder to be presented to the Company for notation of the reduction on the face thereof). The Company agrees that the shares so purchased shall be deemed to be issued to the holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid or, at the election of the Holder, may be made contingent upon the closing of the sale of the Company's Common Stock to the public in the initial public offering pursuant to a registration statement under the Act. In the event of any exercise of this Warrant, certificates for the shares of stock so purchased shall be delivered to the holder hereof within 5 days thereafter and, unless this Warrant has been fully exercised or expired, a new Warrant (containing the same terms and conditions set forth herein) representing the portion of the shares, if any, with respect to which this Warrant shall not then have been exercised, less the number of shares as to which the Conversion Right (as defined below) has been previously exercised, shall also be issued to the holder hereof within such 5 day period. (b) Conversion. The Holder may convert this Warrant (the "Conversion ---------- Right"), in whole or in part, into the number of shares (less the number of shares which have been previously exercised or as to which the Conversion Right has been previously exercised) calculated pursuant to the following formula at any time until such Warrant terminates, by surrendering this Warrant with written notice to the Company specifying the number of shares subject to this Warrant which the Holder desires to convert: - 2 - X = Y (A - B) --------- A where: X = the number of shares to be issued to the Holder; Y = the number of shares subject to this Warrant for which the Conversion Right is being exercised; A = the fair market value of one share of Common Stock; B = the Warrant Price As used herein, the "fair market value" of a share of Common Stock shall mean with respect to each share of Common Stock the last reported sales price per share of the Company's Common Stock on the principal national securities exchanges on which the Common Stock is then listed or admitted to trading or, if not then listed or admitted to trading on any such exchange, on the NASDAQ National Market System, or if not then listed or traded on any such exchange or system, the average of the last reported bid and offer price per share on NASDAQ, in each case averaged over the 10 trading days consisting of the day as of which the current fair market value of Common Stock is being determined and the nine consecutive business days prior to such day. If at any time such quotations are not available, the current fair market value of a share of Common Stock shall be the highest price per share which the Company could obtain from a willing buyer for shares of Common Stock sold by the Company, from authorized but unissued shares, as determined in good faith by the Board of Directors of the Company which determination shall be described in a resolution of the Board of Directors of the Company and delivered to the Holder, unless (i) the holder shall exercise its Conversion Right to purchase such shares between the time of the execution of any agreement providing for the merger, acquisition or other consolidation pursuant to which the Company is not the surviving party and the effective date of such transaction, in which case the current fair market value of a share of Common Stock shall be deemed to be the value (determined as aforesaid) of all consideration to be received by the holders of the Company's Common Stock for each share of Common Stock pursuant to the Company's transaction, as measured as of the date of exercise (provided, however, that in the case of a merger of the Company with or into Survival Technology, Inc. ("STI"), the value for purposes of this Section 3(b) shall not be less than the Warrant Price); or (ii) the Holder shall exercise its Conversion Right to purchase such shares between the time of the announcement of the initial underwritten public offering of the Company's Common Stock pursuant to a registration statement filed under the Act and the closing of sale pursuant to that offering or such exercise shall be contingent on such closing, in which case, the fair market value of a share of Common Stock shall be the price per share at which all registered shares are sold to the public in such offering. - 3 - The Company agrees that the shares issuable upon conversion of this Warrant shall be deemed for all purposes to be issued to the Holder converting this Warrant as of the close of business on the date on which the Warrant is surrendered for conversion or, at the election of the Holder, may be made contingent upon the closing of the consummation of the sale of the Company's Common Stock to the public in a public offering pursuant to a registration statement under the Act. Certificates for the shares so issued upon conversion of this Warrant shall be delivered to the Holder within a reasonable time, not exceeding 5 days, after the issuance of such shares. All certificates representing such shares may bear legends respecting restrictions under securities laws which normally appear on the Company's certi ficates for shares issued in private placements. In the event the Holder shall convert this Warrant in part only, the Company shall deliver to the Holder within a reasonable time, not exceeding 5 days, after the conversion of the Warrant, a new Warrant (dated the date hereof and containing the same terms and conditions set forth herein) in the form of this Warrant to purchase a number of shares equal to the number of shares which may be purchased under this Warrant minus the number of shares as to which the Conversion Right has been previously exercised or the number of shares which have been previously exercised. 4. Stock Fully Paid; Reservation of Shares. All Common Stock which --------------------------------------- may be issued upon the exercise or conversion of this Warrant will, upon issuance, be validly issued, fully paid and nonassessable, and free and clear from all taxes, security interests, encumbrances, liens, charges and preemptive rights. During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issuance upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights in full represented by this Warrant. The Company shall not by any action including, without limitation, amending its articles of organization or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (c) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. The Company will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of any shares of Common Stock upon conversion or exercise of this Warrant. - 4 - 5. Adjustments. The Warrant Price and the number of share of Common ----------- Stock issuable hereunder shall be subject to adjustment from time to time as follows: (a) Reclassification, Consolidation or Merger. In case of any ----------------------------------------- reclassification or change of outstanding securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of any consolidation or merger of the Company with or into another corporation, other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant, or in case of any sale of all or substantially all of the assets of the Company, the Company, or such successor or purchasing corporation, as the case may be, shall execute a new Warrant, providing that the holder of this Warrant shall have the right to exercise such new Warrant and procure upon such exercise, in lieu of each share of Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change, consolidation, or merger by a holder of one share of Common Stock; provided, however, that if the Company shall merge with or into STI in which the holders of Common Stock receive common stock of STI, the number of shares of common stock which the Holder shall have the right to purchase in lieu of each share of Common Stock theretofore issuable upon exercise of this Warrant shall not be less than 2.5 shares of common stock of STI (subject to appropriate adjustment on account of the events set forth in Sections 5(a), (b) and (c) prior to such merger). Such new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 5 and shall otherwise be subject to the same provisions and upon the same terms and conditions set forth herein. No consolidation or merger of the Company with or into another corporation referred to in the first sentence of this paragraph (a) shall be consummated unless the successor or purchasing corporation referred to above shall have agreed to issue a new Warrant as provided in this Section 5. The provisions of this subsection (a) shall similarly apply to successive reclassification, changes, consolidations, mergers and transfers. (b) Subdivision or Combination of Shares. If the Company at any time ------------------------------------ while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the Warrant Price shall be proportionately decreased in the case of a subdivision or increased in the case of a combination. (c) Stock Dividends. If the Company at any time while this Warrant --------------- is outstanding and unexpired shall pay a dividend with respect to Common Stock payable in, or make any other distribution with respect to, Common Stock (except any distribution specifically provided for in the foregoing subparagraphs (a) or (b)) then the Warrant Price shall be decreased, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (a) the numerator of which shall be the total number of shares of Common Stock outstanding - 5 - immediately prior to such dividend or distribution and (b) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution. (d) Rights; Options; Warrants. In case the Company shall issue ------------------------- rights, options, warrants or convertible or exchangeable securities ("Convertible Securities") to all holders of its Common Stock entitling them to subscribe for or purchase Common Stock at a price per share that is lower (at the record date for such issuance) than the fair market value per share of such Common Stock, (i) the number of shares of Common Stock thereafter issuable upon the exercise of this Warrant shall be determined by adding the number of shares of Common Stock theretofore issuable upon exercise of this Warrant to the product of (x) the Cheap Stock Issued (as defined below), multiplied by (y) the Ownership Ratio (as defined below), and (ii) the Warrant Price shall be adjusted by multiplying such Warrant Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of shares purchasable upon the exercise of each Warrant immediately prior to the adjustment set forth in clause (i), and of which the denominator shall be the number of Warrant Shares so purchasable immediately thereafter, provided, however, that the Exercise Price shall not be reduced below par. Such adjustments shall be made whenever such rights, options, warrants or convertible or exchangeable securities are issued, and shall become effective retroactively immediately after the record date for the determination of stockholders entitled to receive such rights, options, warrants or convertible or exchangeable securities. For purposes of this Section 5 (d), the "Cheap Stock Issued" shall be the ------------------ number of additional shares of any Common Stock offered by the Company for subscription or purchase as described above minus the number of shares of Common Stock that the aggregate offering price of the total number of shares of Common Stock so offered would purchase at the then fair market value per share of Common Stock. The "Ownership Ratio" shall be a fraction, the numerator of which --------------- shall be the number of shares of Common Stock theretofore issuable upon exercise of this Warrant, and the denominator of which shall be the number of shares of Common Stock then outstanding on the date of issuance of (and entitled to receive) such rights, options, warrants or convertible or exchangeable securities. (e) Distributions of Debt, Assets or Securities. In case the Company ------------------------------------------- shall fix a record date for the making of a distribution to all holders of shares of its Common Stock of evidences of indebtedness of the Company, assets (other than cash dividends payable out of earnings and profits arising after the date hereof) or securities (excluding those referred to in paragraphs (a) - (d) of this Section 5) (any such evidences of indebtedness, assets or securities, the "assets or securities"), then in each case the Holder, upon the exercise of -------------------- this Warrant, shall be entitled to receive in addition to the shares then issuable under this Warrant, (i) the assets or securities to which such Holder would have been entitled as a holder of Common Stock if such Holder had exercised this Warrant immediately prior to the record date for such distribution and (ii) any income earned on the assets or securities distributed from the distribution date to the date of exercise or conversion, as the case may be, less the Warrant Price then in effect. At the time of any such distribution, the Company - 6 - shall either (A) deposit the assets or securities payable to the Holder pursuant hereto in trust for the Holder with an "eligible institution" with instructions as to the investment of such property and any proceeds therefrom so as to protect the value of such property for the Holder or (B) distribute to the Holder the assets or securities to which it would be entitled upon exercise and, upon any such distribution pursuant to this clause (B), the provisions of this paragraph (e) shall no longer apply to such event. Such election shall be made by the Company giving written notice thereof to the Holder. For purposes of this subsection 5(e), the term "eligible institution" shall mean a corporation organized and doing business under the laws of the United States of America or of any state thereof, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by Federal or state authority. (f) Sale of Convertible Securities. If and whenever the Company ------------------------------ shall issue, grant or sell Convertible Securities (unless the provisions of subsection 5(d) shall be applicable, in which event this subsection 5(f) shall not apply), there shall be determined the price per share for which shares of Common Stock are issuable upon the conversion or exchange thereof, such determination to be made by dividing (a) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus the average of the maximum and minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange of all such Convertible Securities by (b) the maximum number of shares of Common Stock of the Company issuable upon Conversion or exchange of all of such Convertible Securities; and such issue or sale shall be deemed to be an issue or sale for cash (as of the date of issue or sale of such Convertible Securities) of such maximum number of shares of Common Stock at the price per share so determined. If such Convertible Securities shall by their terms provide for an increase or increases, with the passage of time, in the amount of additional consideration if any, payable to the Company, or in the rate of exchange, upon the conversion or exchange thereof, the adjusted Warrant Price shall, forthwith upon any such increase becoming effective, be readjusted (but to no greater extent than originally adjusted) to reflect the same. (g) Sales Below Market Price. If and whenever the Company shall ------------------------ issue or sell its shares of Common Stock, or be deemed to have issued or sold Common Stock pursuant to the provisions of subsection 5(f) above, for the consideration per share which is below the then fair market value per share for its shares of Common Stock (unless the provisions of subsections 5(a)-5(e) shall be applicable, in which event this subsection 5(g) shall not apply), the following provisions shall apply. An "Adjusted Fair Market Value" shall be computed (to the nearest cent, a half cent or more being considered a full cent) by dividing: - 7 - (i) the sum of (x) the result obtained by multiplying the number of shares of Common Stock of the Company outstanding immediately prior to such issue or sale by the then fair market value, plus (y) the consideration, if any, received or deemed received by the Company upon such issue or sale, by (ii) the number of shares of Common Stock of the Company outstanding and deemed to be outstanding immediately after such issue or sale. The resulting number shall be deemed to be the Adjusted Fair Market Value per share. Thereafter the Warrant Price shall be adjusted to be equal to the product of the Warrant Price in effect immediately prior to such actions, multiplied by a fraction the numerator of which is the Adjusted Fair Market Value per share and the denominator of which is the fair market value per share immediately prior to such actions. Upon any such adjustment of the Warrant Price, the number of shares of Common Stock acquirable upon exercise of this Warrant will be adjusted to the number of shares determined by multiplying the Warrant Price in effect immediately prior to such adjustment by the number of shares of Common Stock acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Warrant Price resulting from such adjustment. (h) Adjustment of Number of Shares. Upon each adjustment in the ------------------------------ Warrant Price pursuant to Section 5 (a), (b) or (c), the number of shares of Common Stock purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of shares purchasable immediately prior to such adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant Price immediately prior to such adjustment and the denominator of which shall be the Warrant Price immediately thereafter. (i) Circumstances with no Adjustment. Notwithstanding any provision -------------------------------- of subsections 5(a) - (g), no adjustment of the Warrant Price or number of shares of Common Stock issuable hereunder shall be made on account of: (i) the issue of any shares of Common Stock upon the conversion of any shares of Preferred Stock of the Company issued and outstanding on April 15, 1996; (ii) the issue of any shares of Common Stock upon the exercise of any warrants issued by the Company on or prior to April 15, 1996; (iii) the issue of any shares of Common Stock to officers, directors or employees of, or consultants to, the Company upon the exercise of any stock option granted prior to April 15, 1996, or pursuant to a stock purchase or option plan or other employee or director stock incentive or compensation program approved in good faith by the Board of Directors of the Company; or - 8 - (iv) the actual issue of any Convertible Securities or shares of Common Stock upon the exercise, conversion or exchange of any Convertible Securities subject to subsections 5 (d), (e) or (f). 6. Notice of Adjustments. Whenever any adjustment may be made pursuant --------------------- to Section 5 hereof, the Company shall promptly prepare a certificate signed by its chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, the Warrant Price after giving effect to such adjustment and the number of shares then purchasable upon exercise of this Warrant, and shall cause copies of such certificate to be promptly mailed (by first class mail, postage prepaid) to the holder of this Warrant at the address specified in Section 10(d) hereof, or at such other address as may be provided to the Company in writing by the holder of this Warrant. 7. Fractional Shares. No fractional shares of Common Stock will be ----------------- issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Warrant Price then in effect. 8. Compliance with the Act. ----------------------- (a) Compliance with the Act. The holder of this Warrant, by ----------------------- acceptance hereof, agrees that this Warrant and the shares of Common Stock to be issued upon exercise hereof are being acquired for such holder's own account for investment with no intention of making or causing to be made any public distribution of all or any portion thereof; and such securities may not be pledged, sold or in any other way transferred in the absence of an effective registration statement for such securities under the Act and registration of such securities under applicable state securities laws or (i) registration under applicable state securities laws is not required and (ii) an opinion of counsel reasonably satisfactory to the Company is furnished to the Company to the effect that registration under the Act is not required. (b) Restrictive Legend. The Warrants and each certificate ------------------ representing (i) shares of the Company's Common Stock issuable upon exercise of the Warrants, or (ii) any other securities issued in respect of the Warrants or the Common Stock issued upon exercise of the Warrants, upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted or unless the securities evidenced by such certificate shall have been registered under the Act) be stamped or otherwise imprinted with a legend in such form as counsel for the Company may deem necessary reflecting the provisions of Section 8(a). Upon request of a holder of such a certificate, the Company shall remove the foregoing legend from the certificate or issue to such holder a new certificate therefor free of any transfer legend, if, with such request, the Company shall have received the opinion referred to in Section 8(a) to the effect that any transfer by such holder or the securities evidenced by such certificate will not violate the Act. - 9 - 9. Transfer and Exchange of Warrant. -------------------------------- (a) Transfer. This Warrant may be transferred or succeeded to by any -------- person; provided however, that the Company is given written notice by the -------- ------- transferee at the time of such transfer stating the name and address of the transferee and identifying the securities with respect to which such rights are being assigned. (b) Exchange. Subject to compliance with the terms hereof, this -------- Warrant and all rights hereunder are transferable, in whole or in part, at the office of the Company by the holder hereof in person or by duly authorized attorney, upon surrender of this Warrant properly endorsed. Each taker and holder of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when endorsed in blank, shall be deemed negotiable; provided, that the last holder of this Warrant as registered on the books of the Company may be treated by the Company and all persons dealing with this Warrant as the absolute owner hereof for any purposes and as the person entitled to exercise the rights represented by this Warrant or to transfer hereof on the books of the Company, any notice to the contrary notwithstanding, unless and until such holder seeks to transfer registered ownership of this Warrant on the books of the Company and such transfer is effected. 10. Registration Rights. ------------------- (a) Certain Definitions. As used in this Section 10, the ------------------- following terms shall have the following meanings: "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Act. "Restricted Securities" shall mean the securities of the Company required to bear or bearing the legend set forth in Section 8(b). "Registrable Securities" shall mean (i) shares of Common Stock issued or issuable pursuant to the exercise of the Warrant and (ii) any Common Stock issued in respect of securities issued pursuant to the exercise of the Warrant upon any stock split, stock dividend, recapitalization or similar event. The terms "register," "registered" and "registrations" shall refer to a registration effected by preparing and filing a registration statement in compliance with the Act and applicable rules and regulations thereunder and the declaration of ordering of the effectiveness of such registration statement. "Registration Expenses" shall mean any and all expenses incident to performance of or compliance with this Agreement by the Company and its subsidiaries, including, without limitation (i) all SEC, stock exchange, NASD and other registration, listing and filing fees, (ii) all fees and expenses incurred in connection with compliance with - 10 - state securities or blue sky laws and compliance with the rules of the NASD or any stock exchange (including reasonable fees and disbursements of counsel in connection with such compliance and the preparation of a blue sky memorandum and legal investment survey), (iii) all expenses of any persons in preparing or assisting in preparing, printing, distributing, mailing and delivering any Registration Statement, any Prospectus, any underwriting agreements, transmittal letters, securities sales agreements, securities certificates and other documents relating to the performance of and compliance with this Agreement, (iv) the fees and disbursements of counsel for the Company and of the independent public accountants of the Company, including the expenses of any "cold comfort" letters required by or incident to such performance and compliance, (v) the fees and expenses of any trustee, transfer agent, registrar, escrow agent or custodian, (vi) the fees and expenses of any special experts or other persons retained by the Company in connection with any Registration Statement, (vii) the expenses incurred in connection with making road show presentations and holding meetings with potential investors to facilitate the distribution and sale of Registrable Securities which are customarily borne by the issuer, (viii) all internal expenses of the Company (including all salaries and expenses of officers and employees performing legal or accounting duties, (ix) expenses, fees and disbursements of a single counsel for all the selling Holders and other security holders, and (x) the expense of any special audits incident to or required by any such registration. "Holder" shall mean any holder of the outstanding Registrable Securities which have not been sold to the public. "Initiating Holders" shall mean any Holder or Holders who in the aggregate hold forty percent (40%) or more of the outstanding Registrable Securities. "Other Shareholders" shall mean any holders of securities of the Company who are entitled, by agreement with the Company, to have securities included in a requested registration of securities of the Company. (b) Request for Registration. If the Company shall receive from ------------------------ Initiating Holders, at any time or times a written request that the Company effect any registration with respect to all or a part of the Registrable Securities, and at such time the Company is eligible to register its securities on Form S-3, the Company will: (i) promptly give written notice of the proposed registration to all other Holders at least 45 days prior to the date the Company anticipates the initial filing of the registration statement covering the Registrable Securities so requested to be registered; and (ii) as soon as practicable, use its diligent best efforts to effect such registration (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable - 11 - regulations issued under the Act) as may be so requested and which would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request given within 30 days after receipt of such written notice from the Company; provided that the Company shall not be obligated to effect, or to take any action to effect, any such registration pursuant to Sections 10(b) and (c): (1) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Act or applicable rules or regulations thereunder; or (2) After the Company has effected two such registrations pursuant to this Section 10(b) and such registrations have been declared or ordered effective by the Commission and the sales of such Registrable Securities shall have closed. Subject to the foregoing clauses (i) and (ii), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request or requests of the Initiating Holders. The registration statement filed pursuant to the request of the Initiating Holders may, subject to the provisions of Section 10(c), include securities of the Company for its own account, or other securities of the Company which are held by officers or directors of the Company or which are held by persons who, by virtue of agreements with the Company, are entitled to include their securities in any such registration. (c) Requested Registration - Underwriting. If the Initiating Holders ------------------------------------- intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Sections 10(b) and (c) and the Company shall include such information in the written notice referred to in Section 10(b)(i). The right of any Holder to registration pursuant to Sections 10(b) and (c) shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder with respect to such participation and inclusion) to the extent provided herein. A Holder may elect to include in such underwriting all or a part of the Registrable Securities it holds. If officers or directors of the Company holding other securities of the Company shall request inclusion in any registration pursuant to Sections 10(b) and (c), or if Other - 12 - Shareholders request such inclusion, the Initiating Holders shall, on behalf of all Holders, offer to include the securities of such officers, directors and Other Shareholders in the underwriting and may condition such offer on their acceptance of the further applicable provisions of this Section 10. The Company shall (together with all Holders, officers, directors and Other Shareholders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for such underwriting by a majority in interest of the Initiating Holders and reasonably acceptable to the Company. If the representative of the underwriter advises the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, the Initiating Holders shall so advise all Holders of Registrable Securities and officers, directors and Other Shareholders whose securities would otherwise be underwritten pursuant to the request described herein, and the number of shares of Registrable Securities and other securities that may be included in the registration and underwriting shall be allocated among all such Holders, officers, directors and Other Shareholders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities and other securities which they had requested to be included in such registration at the time of filing the registration statement. No Registrable Securities or any other securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If any Holder of Registrable Securities, officer, director or Other Shareholder who has requested inclusion in such registration as provided above disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the underwriter and the Initiating Holders. The securities held by such person shall then be withdrawn from registration. If the underwriter has not limited the number of Registrable Securities or other securities to be underwritten, the Company may include its securities for its own account in such registration if the underwriter so agrees and if the number of Registrable Securities and other securities which would otherwise have been included in such registration and underwriting has not thereby been limited. (d) Company Registration. If the Company shall determine to register -------------------- any of its securities either for its own account or the account of a security holder or holders exercising their respective demand registration rights, other than a registration relating solely to a Commission Rule 145 transaction, or a registration on any registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities, the Company will: (i) promptly (and in no event later than at least 45 days before the initial filing with the Commission of the Registration Statement) give to each Holder written notice thereof which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws; and - 13 - (ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made by any Holder within 20 days after receipt of the written notice from the Company described in clause (i) above, except as set forth in Section 10(e). Such written request may specify that all or a part of a Holder's Registrable Securities be included in the Company's registration. (e) Company Registration - Underwriting. If the registration of ----------------------------------- which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 10(d)(i). In such event the right of any Holder to registration pursuant to this Section 10 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the Other Shareholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for underwriting by the Company. If the underwriter determines that marketing factors require a limitation on the number of shares to be underwritten, and (i) if such registration is the first registered offering of the Company's securities to the Public, the underwriter may (subject to the allocation set forth below) exclude from such registration and underwriting some or all of the Registrable Securities which would otherwise be underwritten pursuant to the notice described herein, and (ii) if such registration is other than the first registered offering of the sale of the Company's securities to the public, the underwriter may (subject to the allocation set forth below) limit the number of Registrable Securities and the securities of all Other Shareholders to be included in the registration and underwriting to not less than fifty percent (50%) of the securities included therein (based on aggregate market values). The Company shall advise all holders of securities requesting registration promptly after such determination by the underwriter, and the number of shares of securities that are entitled to be included in the registration and underwriting shall be allocated in the following manner: The number of shares that may be included in the registration and underwriting shall be allocated among all such Holders, officers, directors and Other Shareholders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities and other securities which they had requested to be included in such registration at the time of filing the registration statement. If any Holder of Registrable Securities or any officer, director or Other Shareholder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. (f) Expenses of Registration. All Registration Expenses incurred in ------------------------ connection with any registration, qualification or compliance pursuant to this Section 10 shall be borne by the Company. Each Holder shall pay all underwriting discounts and selling commissions relating to the sale of such Holder's Registrable Securities pursuant to such - 14 - Registration and the fees and expenses of the selling Holder's own counsel (other than the counsel selected to represent all selling Holders) shall be borne by the holders of the securities so registered pro rata on the basis of the number of their shares so registered; provided, however, that the Company shall not be required to pay any Registration Expenses if, as a result of the withdrawal of a request for registration by Initiating Holders, the registration statement does not become effective, in which case the Holders and Other Shareholders who requested registration shall bear such Registration Expenses pro rata on the basis of the number of their shares so included in the registration request, and provided, further, that such registration shall not be counted as a requested registration pursuant to Section 10(b)(ii)(2). (g) Registration on Form S-3. The Company shall use its best efforts ------------------------ to qualify for registration of its securities on Form S-3 or any comparable or successor form or forms; the Company shall register (whether or not required by law to do so) the Common Stock under the Exchange Act in accordance with the provisions thereof, following the effective date of the first registration of any securities of the Company on Form S-1 or Forms SB-1 or SB-2 or any comparable or successor form or forms. (h) Registration Procedures. In the case of each registration ----------------------- effected by the Company pursuant to this Section 10, the Company will keep each Holder advised in writing as to the initiation of each registration and as to the completion thereof. In addition at its expense, the Company will as expeditiously as possible: (i) Prepare and file with the Commission a Registration Statement with respect to such securities on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution thereof, and use its best efforts to cause such filed registration statement to become effective; provided that after the filing of the registration statement, the -------- Company will promptly notify each Selling Holder of Registrable Securities covered by such registration statement of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered; (ii) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of six months; provided, however, that in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such six-month period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold; provided that Rule 415, or any successor rule under the Act, permits an offering on a continuous or delayed basis, and - 15 - provided further that applicable rules under the Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (A) includes any prospectus required by Section 10(a)(3) of the Act or (B) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (A) and (B) above to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the registration statement; (iii) furnish, without charge, such number of prospectuses and such other documents as a Holder from time to time may reasonably request; (iv) use its best efforts to register or qualify the securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions within the United States and Puerto Rico as each holder of such securities shall request (provided, however, the Company shall not be obligated to qualify as a foreign corporation to do business under the laws of any jurisdiction in which it is not then qualified or to file any general consent to service of process), and do such other reasonable acts and things as may be required of it to enable such holder to consummate the disposition in such jurisdiction of the securities covered by such Registration Statement; (v) notify each such Holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of an event which may require the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and promptly make available to each such Holder any such supplement or amendment; (vi) in the event such sale is pursuant to an underwritten offering, use its best efforts to obtain a comfort letter or comfort letters from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters as the Holders of a majority of the shares of Registrable Securities being sold or the managing underwriter, reasonably requests; (vii) use its best efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed; - 16 - (viii) enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are customary and appropriate in order to expedite or facilitate the disposition of such Registrable Securities; and (ix) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months beginning within three months after the effective date of such Registration Statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act. (i) Indemnification. --------------- (i) The Company will indemnify each Holder, each of its officers, directors and partners, and each person who controls such Holder, on whose behalf registration, qualification or compliance has been effected pursuant to Section 10, and each underwriter, if any, and each person who controls any underwriter (within the meaning of the Act and the rules and regulations thereunder) against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each such Holder, each of its officers, directors and partners, and each person who controls such Holder, each such underwriter and each person who controls any such underwriter, for any legal and other expenses reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action; provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises from or is based on any untrue statement or omission or alleged untrue statement or omission based upon written information furnished to the Company by such Holder or underwriter and stated to be specifically for use therein. (ii) Each Holder will, if Registrable Securities held by it are included in the securities as to which such registration, qualification or compliance is being effected, and each Other Shareholder who has the right to register its securities pursuant to Section 10 will be required by the Company to severally, indemnify the Company, each of its directors and officers and each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter (within the meaning of the Act and the rules and regulations thereunder) each other such Holder and Other Shareholder and each of their officers, directors and partners, and each person who - 17 - controls such Holder or Other Shareholder, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will severally reimburse the Company and such Holders, Other Shareholders, directors, officers, partners, persons, underwriters or controlling persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder or Other Shareholder and stated to be specifically for use therein; provided, however, that the obligations of such Holders and Other Shareholders hereunder shall be limited to an amount equal to the proceeds to each such Holder or Other Shareholder of securities sold as contemplated herein. (iii) Each party entitled to indemnification under this Section 10(k) (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder except to the extent the Indemnifying Party is actually prejudiced. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (which consent shall not unreasonably be withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom. (j) Information by Holder. Each Holder of Registrable Securities, --------------------- and each Other Shareholder holding securities included in any registration, shall furnish to the Company such information regarding such Holder or Other Shareholder and the distribution proposed by such Holder or Other Shareholder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Section 10. - 18 - (k) Rule 144 Reporting. With a view to making available the benefits ------------------ of certain rules and regulations of the Commission which may permit the sale of the Restricted Securities to the public without registration, the Company agrees to: (i) Make and keep public information available as those terms are understood and defined in Rule 144 under the Act (and any successor rule to Rule 144) at all times from and after 90 days following the effective date of the first registration statement under the Act filed by the Company for an offering of its securities to the public; and (ii) File with the Commission in a timely manner all reports and other documents required of the Company under the Act and the Exchange Act at any time after it has become subject to such reporting requirements. (l) Transfer or Assignment of Registration Rights. The rights to --------------------------------------------- cause the Company to register the Registrable Securities granted by the Company under Sections 10(b), (c), (d), (e) and (g) may be transferred or assigned by a Holder to a transferee or assignee of any of the Holder's Restricted Securities; provided that the Company is given written notice by a Holder at the time of or within a reasonable time after said transfer or assignment, stating the name and address of said transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned and provided further that the transferee or assignee of such rights assumes the obligations of such Holder under Section 10. 11. Miscellaneous. ------------- (a) No Rights as Shareholder. Except as provided in the Agreement, ------------------------ no holder of the Warrant shall be entitled to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised and the shares purchasable upon the exercise hereof shall have become deliverable, as provided herein. (b) Replacement. On receipt of evidence reasonably satisfactory to ----------- the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement, or bond reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and - 19 - cancellation of this Warrant, the Company, at its expense, will execute and deliver, in lieu of this Warrant, a new Warrant of like tenor and for a like number of underlying shares. (c) Notice of Capital Changes. In case: ------------------------- (i) the Company shall declare any dividend or distribution payable to the holders of its Common Stock; (ii) there shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation or business organization; or (iii) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give the holder of this Warrant written notice, in the manner set forth in subparagraph (d) below, of the date on which a record shall be taken for such dividend, or distribution or for determining shareholders entitled to vote upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and of the date when any such transaction shall take place, as the case may be. Such written notice shall be given at least 30 days prior to the transaction in question and not less than 20 days prior to the record date in respect thereof. In case at any time the Company shall file a registration statement on Form S-1 or the then equivalent form covering the offer and sale by the Company of its Common Stock under the Act, in a public offering, then the Company shall give at least 20 days' prior written notice of the earliest date on which such registration statement may become effective. (d) Notice. Any notice given to either party under this Warrant ------ shall be in writing, and any notice hereunder shall be deemed to have been given upon the earlier of delivery thereof by hand delivery, by courier, or by standard form of telecommunication or three (3) business days after the mailing thereof if sent registered mail with postage prepaid, addressed to the Company at its principal executive offices and to the holder at its address set forth in the Company's books and records or at such other address as the holder may have provided to the Company in writing. (e) No Impairment. The Company will not, by amendment of its ------------- Restated Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions in the Warrant. - 20 - (f) Governing Law. This Warrant shall be governed by and construed ------------- under the laws of the Commonwealth of Massachusetts. IN WITNESS WHEREOF, this Warrant is executed as of this 15th day of April, 1996. BRUNSWICK BIOMEDICAL CORPORATION By: /s/ James H. Miller ---------------------------------------- Title: President - 21 - EXHIBIT 1 NOTICE OF EXERCISE TO: BRUNSWICK BIOMEDICAL CORPORATION 1. The undersigned hereby elects to purchase _________ shares of Common Stock of BRUNSWICK BIOMEDICAL CORPORATION pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full. 2. Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: ___________________________________________ (Name) ___________________________________________ ___________________________________________ (Address) 3. The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares. ___________________________________________ Signature - 22 - EX-4.C 11 SUBORDINATED PROMISSORY NOTE EXHIBIT 4(C) BRUNSWICK BIOMEDICAL CORPORATION Subordinated Promissory Note Wareham, Massachusetts April 15, 1996 ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED, PURSUANT TO AND TO THE EXTENT PROVIDED IN SECTION ONE HEREOF, TO ALL SENIOR DEBT, AS DEFINED THEREIN. Brunswick Biomedical Corporation (the "Company"), a Massachusetts corporation, for value received, hereby promises to pay to Robert Herzstein, as Personal Representative of the Estate of Dr. Stanley J. Sarnoff (together with his successors and assigns, the "Payee"), in lawful money of the United States of America, the principal amount of FOUR MILLION SEVEN HUNDRED THOUSAND DOLLARS ($4,700,000.00), together with such additional amount as may be added to principal on account of deferred interest pursuant to the next paragraph, on or before the earlier of (i) the fifth anniversary of any merger or consolidation (a "Merger") of the Company with or into any other entity as a result of which the shareholders of the Company receive capital stock or securities convertible into capital stock registered under the Securities Exchange Act of 1934, or (ii) December 31, 2001 (such earlier date, the "Maturity Date"). The Company further agrees to pay interest in like money on the principal amount hereof from time to time outstanding at a rate per annum equal to the Applicable Rate (as defined herein) in effect from time to time. Interest shall be computed on the basis of the actual days. Interest accruing on this Note from the date hereof through April 30, 1998 shall be added to the principal amount of this Note on the last day of each calendar month, and shall bear interest thereafter at the Applicable Rate until paid. Interest accruing on this Note after April 30, 1998 shall be payable in cash quarterly in arrears on the last day of each calendar quarter. Interest on this Note shall also be payable upon payment in full of the unpaid principal amount hereof, pursuant to a mandatory prepayment or otherwise. If any payment becomes due hereunder on a day which is not a Business Day (as defined herein), the maturity thereof shall be extended to the next succeeding Business Day and interest on any payment of principal so extended shall be payable at the then Applicable Rate during such extension. This Note is secured by a pledge of the shares of capital stock of STI owned by the Company, junior and subordinate to the pledge securing Senior Debt. SECTION ONE Subordination of Note --------------------- 1.01 Subordination. Anything in this Note to the contrary ------------- notwithstanding, the indebtedness evidenced by this Note shall be subordinate and junior in right of payment, to the extent and in the manner hereinafter set forth, to the prior payment in full in cash of any and all Senior Debt (as herein defined) now existing or hereafter arising. "Senior Debt" shall mean the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, whether or not such interest constitutes an allowed claim), fees, indemnities, amounts reimbursable, expenses, costs of enforcement and other amounts (including, without limitation, obligations of the Company in respect of interest rate hedging obligations) payable with respect to, any indebtedness under (a) the following credit facilities to be provided by Internationale Nederlanden (U.S.) Capital Corporation (the "Initial Senior Lender") to the Company: (i) a bridge loan facility in the maximum principal amount of $11,000,000; (ii) a term loan in the maximum principal amount of $11,000,000 to refinance in full the bridge loan upon consummation of the Merger; and (iii) a $5,000,000 revolving credit facility to refinance in full all indebtedness of STI outstanding as of the Merger; (b) additional indebtedness for borrowed money not to exceed $3,000,000 in outstanding principal amount that recites that it is senior to this Note; and (c) any and all extensions, refinancings, renewals, replacements, refundings, modifications, amendments and restatements of Senior Debt described in clauses (a), (b) or (c) of this definition or any indebtedness that is incurred pursuant to a credit commitment under a credit facility that refinances, replaces or refunds, in whole or in part, indebtedness or unfunded commitments under credit facilities described in clauses (a), (b) or (c) of this definition. The holder or holders from time to time of any Senior Debt are hereinafter referred to individually or collectively, as the context permits, as the "Senior Lender". 1.02 Prohibited Actions. Until the Senior Debt shall have been ------------------ indefeasibly paid in full in cash, the holder of this Note shall not without the prior written consent of the Senior Lender (a) after the occurrence of a default in any of the Senior Debt take action to execute, seize or otherwise collect upon any assets of the Company pursuant to any judgment or decree of a court of law or equity or any non-judicial remedy until the earlier of (i) the date upon which the default in such Senior Debt has been cured to the satisfaction of the Designated Senior Lender or waived by the Designated Senior Lender in writing or (ii) one year after the Senior Lender shall have given notice to the Company of such default, if the Designated Senior Lender shall not have accelerated the maturity of the Senior Debt and such default is not a payment default; or (b) accept from or on behalf of the Company money or property of any sort in whole or partial satisfaction of any indebtedness evidenced by this Note, or accept any prepayment of this Note, other than stock or other equity interests in the Company or indebtedness of the Company that has been subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Senior Lender, except that the holder of this Note may accept regularly scheduled interest payments (the "Periodic Payments") described above and the mandatory prepayment described in Section 4 and principal and interest due with respect to this Note on the Maturity Date, in each case, to the - 2 - extent the Company is not prohibited from making such payments under subsections 1.03 or 1.04 below. 1.03 Default of Senior Debt. Upon receipt by the Company of written ---------------------- notice given by the Designated Senior Lender of a default in any of the Senior Debt, the holder of this Note no longer shall be entitled to receive or accept any payments hereunder, whether Periodic Payments or otherwise, and the holder shall hold the same in trust as trustee for the benefit of the Senior Lender and turn over to the Designated Senior Lender any such payments (other than shares of stock of the Company, or indebtedness of the Company that has been subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Senior Lender, distributed to it to settle any claim described in subsection 1.04 below) it may obtain after the occurrence of such default in the form received and after receiving the Designated Senior Lender's aforesaid notice of default. Such prohibition shall continue until the earliest date upon which (i) the default has been cured to the satisfaction of the Designated Senior Lender or waived by the Designated Senior Lender in writing, (ii) if such default is not a payment default and the Designated Senior Lender within one year after giving notice to the Company of the default shall not have accelerated the maturity of the Senior Debt, or (iii) all Senior Debt has been paid in full. Notwithstanding the foregoing, the Designated Senior Lender may invoke such prohibition no more than once during any consecutive 24 month period, unless a payment default shall have occurred and is continuing. The Company shall promptly notify the Payee, or any subsequent holder of which the Company has received notice and an address, of the Company's receipt of such a notice from the Designated Senior Lender. All such notices from the Designated Senior Lender shall be deemed to have been duly delivered only (i) at the time delivered by hand, if personally delivered, (ii) when received, if deposited in the mail, first-class postage prepaid, return receipt requested, (iii) when transmission is verified, if telecopied, and (iv) on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. The term "Designated Senior Lender" shall initially mean the Initial Senior Lender and, subsequent to the refinancing in full of the Senior Debt described in clauses (a)(ii) and (iii) of the definition of Senior Debt set forth in subsection 1.01, Designated Senior Lender shall mean any lender (or lenders acting collectively) that hold(s) Senior Debt having an aggregate outstanding principal amount and aggregate outstanding commitment(s) of not less than $5,000,000 or any trustee, agent or representative of such lender or lenders, the name and address of whom shall have been given to the Company by the preceding Designated Senior Lender. 1.04 Liquidation Claims. If there shall occur any receivership, ------------------ insolvency, assignment for the benefit of creditors, bankruptcy (voluntary or involuntary), reorganization, or arrangements with creditors (whether or not pursuant to bankruptcy or other insolvency laws), sale of all or substantially all of the assets, dissolution, liquidation, or any other marshalling of the assets and liabilities of the Company (any of the foregoing, a "Liquidation Event"), (i) the Senior Lender shall be entitled to receive payment in full in cash of all Senior Debt then outstanding before the holder of this Note shall be entitled to receive any payment or distribution, whether in cash, securities (other than an equity interest in the Company, or indebtedness of the Company that has been subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Senior Lender, - 3 - distributed in settlement of claims described in this subsection 1.04) or other property, in respect of the principal of, interest on or other amounts due with respect to this Note at the time outstanding, (ii) any payment or distribution, whether in cash, securities (other than an equity interest in the Company, or indebtedness of the Company that has been subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Senior Lender, distributed in settlement of claims described in this subsection 1.04) or other property which would otherwise (but for this subsection 1.04) be payable or deliverable in respect of the amounts due under this Note shall be paid or delivered directly to the Senior Lender (ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt held by each such Senior Lender) or to a trustee or other representative for the Senior Lender, (iii) the holder of this Note agrees to hold for the account of the Senior Lender any and all payments and distributions received by such holder which may be payable or deliverable upon or with respect to this Note, to file appropriate claims or proofs of claim in respect of this Note and to execute and deliver to the Senior Lender such powers of attorney, assignments and other instruments as the Senior Lender may reasonably request to enable it to enforce any and all claims upon or in respect of this Note (other than voting rights in any such proceeding), and (iv) the Senior Lender is hereby irrevocably authorized and empowered (in its name or in the name of the holder of this Note or otherwise) to take any of the actions described in clause (iii) above upon the failure of the holder promptly to take any such actions. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the sale, conveyance or lease of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided below shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this subsection 1.04 if such consolidation, merger, sale, conveyance or lease does not violate the provisions of the Senior Debt or any agreement pursuant to which the Senior Debt is issued. Any payment or distribution, whether in cash, securities (other than an equity interest in the Company, or indebtedness of the Company that has been subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Senior Lender, distributed in settlement of claims described in this subsection 1.04) or other property received by the holder of this Note in contravention of any of the terms of this subsection 1.04 shall be received and held by the holder of this Note in trust as trustee for the benefit of the Senior Lender and shall be promptly turned over to the Senior Lender (pro --- rata in accordance with the Senior Debt held by them or as they may otherwise - ---- direct if there is more than one Senior Lender) for application to the payment of Senior Debt. 1.05 Judgments. If at any time hereafter the holder of this Note obtains --------- a judgment against the Company for the indebtedness evidenced by this Note, such judgment shall be subject to the subordination rights of the Senior Lender to the same extent as is this Note. 1.06 Modifications. The subordination rights of the Senior Lender, and ------------- the obligations of the holder of this Note under this Section One, shall be effective and binding upon any modification, extension, or replacement note of or for this Note and may not be modified or cancelled without the written consent of the Senior Lender. - 4 - 1.07 Subrogation. Upon the repayment in full in cash of all Senior Debt ----------- at the time outstanding, the holder of this Note shall be subrogated to the rights of the Senior Lender (to the extent of payments or distributions previously made to the Senior Lender pursuant to the provisions of this Section One) to receive payments or distributions of assets of the Company applicable to the Senior Debt until this Note shall be repaid in full. No payment over pursuant to the provisions of this Section One to the Senior Lender by the holder of this Note and for the purposes of such subrogation, no payments or distributions to the Senior Lender of any cash, property or securities to which the holder of this Note would be entitled except for the provisions of this Section One, shall, as between the Company, its creditors other than the Senior Lender and the holder of this Note, be deemed to be a payment by the Company to or for the account of the Senior Lender and no payments or distributions applicable to Senior Debt which the holder of this Note receives by reason of its being subrogated to the rights of the Senior Lender pursuant to the provisions of this subsection 1.07 shall, as between the Company, its creditors other than the Senior Lender and the holder of this Note, be deemed to be a payment by the Company to or for the account of the holder of this Note; it being understood that the provisions of this Section One are intended solely for the purpose of defining the relative rights of the holder of this Note, on the one hand, and the Senior Lender, on the other hand. In each case subject to the rights of the Senior Lender under this Section One, nothing contained in this Section One or elsewhere in this Note, is intended to or shall impair, as between the Company and the holder of this Note, the obligation of the Company, which is absolute and unconditional, to pay to the holder of this Note the principal of, and interest, on this Note as and when the same shall become due and payable in accordance with the terms of this Note, or is intended to or shall affect the relative rights of the holder of this Note and creditors of the Company other than the Senior Lender, nor shall anything in this Note prevent the holder of this Note from exercising all remedies otherwise permitted by applicable law upon default under this Note. 1.08 Right of Payee. The Company shall give prompt written notice to -------------- the Payee of any Liquidation Event. The Payee shall be entitled to assume that no such event has occurred unless the Company or any one or more Senior Debt holders or any representative therefor has given such notice. Upon any payment or distribution of assets of the Company referred to in subsection 1.04, the Payee shall be entitled to rely upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, delivered to the Payee, for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section One. 1.09 Obligations of Payee and Holder. By acceptance of this Note, ------------------------------- the holder hereof agrees to be bound by the obligations of the Payee and holder of this Note set forth herein. 1.10 Reliance of Senior Lender. The Payee, by its acceptance of this ------------------------- Note, shall be deemed to acknowledge and agree that the foregoing subordination provisions are, and are intended to be, an inducement to and a consideration of each Senior Lender, whether the - 5 - Senior Debt held by such Senior Lender was created or acquired before or after the creation of the indebtedness evidenced by this Note and whether such Senior Lender is now known or hereafter becomes known, and each Senior Lender shall be deemed conclusively to have relied on such subordination provisions in acquiring and holding, or in continuing to hold, such Senior Debt and shall be entitled to enforce the provisions of Section One. 1.11 Reinstatement. The provisions of this Agreement shall continue to be ------------- effective or be reinstated, as the case may be, if at any time any payment in respect of Senior Debt is rescinded or must otherwise be returned by the Senior Lender in the event of a Liquidation Event, all as though such payment had not been made. 1.12 Subordination Not Impaired. All rights and interests of the Senior -------------------------- Lender under this Section One with respect to Senior Debt and all agreements and obligations of the Payee and each subsequent holder of this Note shall remain in full force and effect irrespective of (i) any change in the time, manner or place of payment of or any other term of Senior Debt or any amendment or waiver of or any consent to departure from any of the terms thereof or (ii) any exchange, release or non-perfection of any security interest or lien in any collateral securing Senior Debt or any release or amendment or waiver of or consent to departure from any guarantee for all or any Senior Debt. SECTION TWO Acceleration ------------ 2.01 Events of Default. If any of the following events shall occur and be ----------------- continuing: (a) The Company shall fail to pay any principal of this Note when due in accordance with the terms hereof (including without limitation any mandatory prepayment), or the Company shall fail to pay any interest on this Note within ten days after any such interest becomes due; provided, however, that to the extent that the holder of this Note shall no longer be entitled to receive or accept any payment hereunder pursuant to subsection 1.03, and, on or prior to the date of expiration of the one year period referenced in such subsection 1.03, the Company (with the consent of the Senior Lender) shall pay all delinquent amounts due to the holder of this Note (without giving regard to any acceleration of this Note), then any acceleration of this Note shall automatically be deemed rescinded and such default shall automatically be deemed cured; or (b) The Company shall default in the observance or performance of any agreement contained in this Note (other than as provided elsewhere in this subsection 2.01) and such default shall continue unremedied for a period of 45 days; or (c) The Company shall be in default on the Senior Debt and the Senior Debt shall have been declared due and payable prior to the date of its scheduled maturity or the - 6 - Company shall have failed to pay the Senior Debt at maturity and such failure shall not have been remedied or waived for a period of 45 days; or (d) (i) The Company shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Company shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Company any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Company any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Company shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (d) of this Section with respect to the Company, automatically the principal amount hereof (with accrued interest thereon) and all other amounts owing under this Note shall immediately become due and payable, and (B) if such event is any other Event of Default, the Payee may, by notice to the Company, declare the principal amount hereof (with accrued interest thereon) and all other amounts owing under this Note to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. SECTION THREE Definitions ----------- 3.01 "Applicable Rate" means (i) from the date hereof through and including the second anniversary of the date hereof, a rate per annum equal to 12% and (ii) after such date, a rate per annum equal to 13%. 3.02 "Business Day" means any day on which the New York Stock Exchange is open for trading and on which commercial banks in the Commonwealth of Massachusetts, the State of New York or the District of Columbia are not authorized or required by law to close. - 7 - 3.03 "Event of Default" means any of the events specified in subsection 2.01, provided that any requirement for the giving of notice, the lapse of time, -------- or both, or any other condition, has been satisfied. 3.04 "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. SECTION FOUR Prepayment ---------- 4.01 Mandatory Prepayment. Provided that no default exists with respect to -------------------- the Senior Debt that has not been cured to the satisfaction of the Designated Senior Lender or waived by the Designated Senior Lender in writing or if such default is not a payment default, for which within one year after giving notice to the Company of such default, the Designated Lender shall not have accelerated the maturity of the Senior Debt, if the Company shall (i) obtain financing, subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Senior Lender, or (ii) raise additional equity from the sale of its capital stock or of rights, options or warrants entitling the holder to subscribe for or purchase capital stock of the Company, excluding upon the exercise of stock options granted to employees, officers, directors or consultants of the Company and excluding the issuance of equity under a dividend reinvestment plan or in connection with the acquisition of stock or assets or to finance the acquisition of stock or assets, then the Company shall prepay this Note in an amount equal to the net cash proceeds of such subordinated debt or equity financing. In addition, if the Senior Debt is paid in full in cash, the net cash proceeds of any debt financing of the Company (other than proceeds applied to payment of the Senior Debt) shall be applied to prepay this Note. Any such prepayment shall be made within 30 days after the receipt of such proceeds. 4.02 Optional Prepayment. The Company shall have the right at any time or ------------------- from time to time, subject to the provisions of Section One, to prepay this Note in whole or in part, together with all accrued and unpaid interest with respect to such prepaid amount. SECTION FIVE Miscellaneous ------------- 5.01 Governing Law. This Note shall be governed by and construed in ------------- accordance with the laws of the Commonwealth of Massachusetts. 5.02 Successors and Assigns. This Note shall be binding upon and inure to ---------------------- the benefit of the Company and its successors and the Payee and its successors and assigns. The Company may not assign its obligations under this Note. - 8 - 5.03 Amendments. This Note may not be modified or discharged orally, but ---------- only by an agreement in writing executed by the party against whom enforcement of any modification or discharge is sought. 5.04 Expenses of Collection. The Company agrees to pay all reasonable out- ---------------------- of-pocket expenses, including counsel fees, incurred by the Payee arising in connection with the collection of amounts due and unpaid hereunder. 5.05 Headings. The headings of the Sections and subsections of this Note -------- are inserted for convenience only and do not constitute a part of this Note. IN WITNESS WHEREOF, the Company has caused this Note to be signed under seal in its corporate name by one of its officers thereunto duly authorized and this Note to be dated as of the day and year first written above. BRUNSWICK BIOMEDICAL CORPORATION By /s/ James H. Miller ----------------------- Name: James H. Miller Title: President -9- EX-4.D 12 SUBORDINATED STOCK PLEDGE AGREEMENT EXHIBIT 4(D) STOCK PLEDGE AGREEMENT ---------------------- STOCK PLEDGE AGREEMENT (this "Agreement") dated as of April 15, 1996 by and between BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation (the "Stockholder"), and ROBERT HERZSTEIN, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF DR. STANLEY J. SARNOFF (the "Seller"). WITNESSETH: WHEREAS, the Seller has agreed to accept a Subordinated Promissory Note dated as of the date hereof executed by the Stockholder (the "Subordinated Note") as part of the consideration for the sale of 1,888,126 shares (the "Shares") of common stock of Survival Technology, Inc. of common stock of Survival Technology, Inc. (the "Company"), a Delaware corporation, by the Seller to the Stockholder; and WHEREAS, the Seller is willing to accept the Subordinated Note upon the condition, among others, that the Stockholder enter into this Agreement to secure the Liabilities (as defined in Section 11 hereof); NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto covenant and agree as follows: 1. Pledge. To secure the prompt, punctual and faithful performance of all ------- and each of the present and future Liabilities, subject to the provisions of Section 4 below, the Stockholder hereby grants to the Seller, for the benefit of the Seller, a security interest (i) in and to the Shares, and pledges, and promises upon release of the Senior Stock Pledge (defined below) to deliver, to the Seller any certificate representing the Shares (the "Pledged Securities"), together with appropriate undated stock powers duly executed in blank, and (ii) in and to all products, proceeds, substitutions, additions, interest, dividends and other distributions in respect thereto, as described in Section 2 below (all of which is referred to hereinafter as the "Collateral"). The Stockholder shall from time to time execute such financing statements and renewals thereof and assignments of account and endorse such instruments and paper as the Seller may reasonably request for the purpose of perfecting or continuing the security interests granted herein. 2. Stock Dividends, Distributions, etc. If, while this Agreement is in ------------------------------------ effect, the Stockholder shall become entitled to receive or shall receive any stock certificate (including, without limitation, any certificate representing a stock dividend or a stock distribution in connection with any reclassification, increase or reduction of capital, or issued in connection with any reorganization), option, warrant or rights, whether as an addition to, in substitution of or in exchange for any Pledged Securities, the Stockholder agrees to accept the same as agent for the Seller and to hold the same in trust on behalf of and for the benefit of the Seller and to deliver the same forthwith to the Seller in the exact form received, with the endorsement of the Stockholder when necessary and/or appropriate undated stock powers duly executed in blank, to be held by the Seller as part of the Collateral. At any time after an Event of Default (as defined in Section 11 hereof) has occurred and is continuing, any sums paid upon or in respect of the Pledged Securities upon the liquidation or dissolution of the Company or any other issuer thereof shall be paid over to the Seller as part of the Collateral; and in case any distribution of capital shall be made on or in respect of the Pledged Securities or any property shall be distributed upon or with respect to the Pledged Securities pursuant to the recapitalization or reclassification of the capital of the issuer thereof or pursuant to the reorganization thereof, the property so distributed shall be delivered to the Seller as part of the Collateral. All sums of money and property so paid or distributed in respect of the Pledged Securities that are received by the Stockholder shall, until paid or delivered to the Seller, be held by the Stockholder in trust as part of the Collateral. 3. Cash Dividends; Voting Rights. Unless and until an Event of Default ------------------------------ has occurred and is continuing, the Stockholder shall be entitled to receive all cash dividends and distributions paid in respect of the Pledged Securities, to vote the Pledged Securities and to give consents, waivers and ratifications, and to take other action in respect of the Pledged Securities. So long as an Event of Default has occurred and is continuing, the Seller shall have the right, upon notice to the Stockholder, to receive all cash dividends paid in respect of the Pledged Securities and to exercise voting rights as specified in Section 7 hereof; provided, however, that prior to any distribution to the Seller, the Stockholder shall be entitled to receive cash dividends and distributions paid in respect of the Pledged Securities to the extent necessary to make payments of amounts due on the Senior Debt (as defined in the Subordinated Note) and only to the extent such amounts are so applied. 4. Subordination to Senior Stock Pledge. ------------------------------------- (a) Notwithstanding any other provision contained herein, the security interest and pledge in and to the Collateral granted to the Seller under this Agreement (such security interest and pledge, the "Junior Lien") shall be junior, subordinate and subject to any other security interest and pledge securing Senior Debt (as defined in the Subordinated Note)(such security interest and pledge, the "Senior Lien"), including, but not limited to, the security interest and pledge created by the Stock Pledge Agreement dated as of April 15, 1996 between the Stockholder and Internationale Nederlanden (U.S.) Capital Corporation, to the extent and in the manner set forth in this Section 4. Capitalized terms used in this Section 4 that are not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Subordinated Note. (b) The Seller hereby agrees that upon disposition of any of the Collateral by the Senior Lender, pursuant to Remedial Action or otherwise, the proceeds of such disposition, after the fees and expenses incurred by Senior Lender in connection with such disposition, shall first be applied to the satisfaction in full in cash of Senior Debt. To the extent any proceeds remain after such application, such proceeds shall be turned over by the Senior Lender to the Seller or as a court of competent jurisdiction shall otherwise direct. - 2 - (c) The Seller hereby agrees that it shall not take any Remedial Action with respect to any of the Collateral granted to the Seller under this Agreement prior to (i) 180 days after the Seller shall have given the Designated Senior Lender written notice that an Event of Default exists under the Subordinated Note, that the Seller has accelerated the maturity of the Subordinated Note and that the Seller intends to take such Remedial Action, provided, however, that (i) if such six-month period expires during any period of time that the ------- Stockholder is not permitted to make and the Seller is not permitted to receive any payments in respect of the Subordinated Note pursuant to subsections 1.02 or 1.03 of the Subordinated Note (a "Blockage Period"), Seller shall not take Remedial Action until the earlier of (x) 30 days after the expiration of such ------- Blockage Period or (y) the number of days after the expiration of such Blockage Period equal to the number of days remaining in such six-month period as of the first day of such Blockage Period and (ii) if such six-month period begins ------ during a Blockage Period, Seller shall not take Remedial Action until the later ----- of (x) the expiration of such six-month period and (y) 30 days after the expiration of such Blockage Period. (d) The Stockholder agrees that in the event the Senior Lender seeks to take any Remedial Action with respect to the Collateral, the Stockholder shall not seek to hinder, delay, impede or seek judicial review of or jurisdiction over the method, manner or actions of the Senior Lender in its pursuit of any Remedial Action. (e) As used in this Section 4, "Remedial Action" means any action or agreement to foreclose upon, take possession of, sell, lease or otherwise dispose of, or in any manner realize or seek to realize upon any of the Collateral, whether pursuant to the Uniform Commercial Code of any state or any other applicable law, pursuant to contractual rights or otherwise, by foreclosure, by self-help repossession, conveyance in lieu of foreclosure, or exercise of any voting rights or proxy with respect to any capital stock. (f) If there shall occur a Liquidation Event (as defined in the Subordinated Note) with respect to the Stockholder, (i) the Senior Lender shall be entitled to receive any payment or distribution in respect of the Collateral until payment in full in cash of all Senior Debt before the Stockholder shall be entitled to receive any payment or distribution in respect of the Collateral, and (ii) any payment or distribution which would otherwise (but for this Section 4) be payable or deliverable to the Stockholder in respect of the Collateral shall be paid or delivered directly to the Senior Lender (ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt held by each such Senior Lender) or to a trustee or other representative of the Senior Lender. (g) In the event that, notwithstanding the terms of this Section 4, the Seller receives any payment or distribution in respect of the Collateral which is rightfully payable to the Senior Lender, then, in any such event, such amount shall, promptly after receipt thereof by the Seller, be paid over in the form received to the Senior Lender for application to Senior Debt. (h) The provisions of this Section 4 shall be effective at all times during the term of this Agreement and notwithstanding (i) any bankruptcy, moratorium, reorganization or other insolvency proceeding with respect to the Stockholder, (ii) the priorities which would - 3 - otherwise result from the order of creation, effectiveness, attachment or perfection of the Senior Lien or the Junior Lien, (iii) the taking of possession of the Collateral by the Senior Lender, the Seller or any other person or entity, (iv) the filing of any financing statement or the recording of any other instrument in any filing or recording office, (v) the order in which any of the indebtedness or obligations secured by the Senior Lien or the Liabilities are created, (vi) whether the Senior Lien or the Junior Lien is now perfected, hereafter ceases to be perfected, is avoidable by any bankruptcy trustee, otherwise is set aside or invalidated, or lapses, or (vii) any other matter whatsoever. The provisions of this Section 4 shall continue to be effective or be reinstated, as the case may be, if at any time any payment in respect of Senior Debt is rescinded or must otherwise be returned by the Senior Lender in the event of a Liquidation Event, as though such payment had not been made. (i) The Seller, by its acceptance of the Subordinated Note and the Junior Lien granted pursuant to this Agreement, shall be deemed to acknowledge and agree that the foregoing subordination provisions in this Section 4 are, and are intended to be, an inducement to and a consideration of each Senior Lender, whether the Senior Debt by such Senior Lender was created by or acquired before or after the Liabilities or the Junior Lien and whether such Senior Lender is now known or hereafter becomes known, and each Senior Lender shall be deemed conclusively to have relied on such subordination provisions in acquiring and holding or in continuing to hold, such Senior Debt and shall be entitled to enforce the provisions of this Section 4. 5. Stockholder's Representations. The Stockholder hereby represents and ------------------------------ warrants as follows: (a) The Stockholder has full capacity and legal right to enter into this Agreement, to be bound hereby and to perform and observe the terms and conditions hereof. (b) This Agreement has been duly executed and delivered by the Stockholder and constitutes the legal, valid and binding obligation of the Stockholder enforceable against it in accordance with its terms, subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency and similar laws affecting creditors' rights generally, to moratorium laws from time to time in effect and to general principles of equity. (c) The execution, delivery and performance by the Stockholder of this Agreement does not and will not (i) violate or constitute a default under any material provision of any agreement, indenture, note or instrument that is binding upon the Stockholder or by which its properties are bound or materially affected, or any order, writ, injunction or decree of any court or governmental instrumentality binding on such Stockholder, or (ii) require any filing with or consent or other act by or in respect of any governmental authority or other person or entity (other than the filing of the appropriate number of UCC-1 financing statements covering the Pledged Securities, if necessary, and any consent obtained by the Stockholder prior to the date hereof) or (iii) constitute a default thereunder or result in the imposition or require the creation of any lien or charge (other than those created, continued or otherwise contemplated hereby) upon the Pledged Securities of the Stockholder. - 4 - (d) The Pledged Securities are held and owned by the Stockholder free and clear of all liens, encumbrances, attachments, security interests, pledges and charges, other than those in favor of the Seller and those created by the Senior Stock Pledge. 6. Stockholder's Covenants. The Stockholder shall: ------------------------ (a) if the Pledged Securities are in the form of a certificated security, within the meaning of the applicable Uniform Commercial Code, (the "Code"), upon release of the Senior Stock Pledge, surrender, or cause to be surrendered, possession of the Pledged Securities to the Seller; (b) if the Pledged Securities are in the form of an uncertificated security, within the meaning of the Code, cause the Company to record this pledge, subject and junior to the Senior Stock Pledge, in the records of the Company relating to the Pledged Securities; (c) execute all such instruments, documents and papers as the Seller may reasonably request now and from time to time hereafter with respect to the perfection of the security interest granted herein and the assignment effected hereby; (d) keep the Pledged Securities free and clear of all liens, encumbrances, attachments, security interests, pledges and charges, except in favor of the Seller or any Senior Lender (as that term is defined in the Subordinated Note) or as permitted by this Agreement; (e) after the release of the Senior Stock Pledge, deliver to the Seller, if and when received by the Stockholder, any item representing or constituting any of the Collateral or proceeds of the Collateral; (f) not cause or permit any of the Collateral presently evidenced by a written certificate to be converted to uncertificated securities, except with the prior written consent of the Seller. Notwithstanding anything to the contrary contained in this Agreement, the Stockholder shall be entitled to sell or transfer or dispose of any Pledged Securities to any other person or entity provided that such sale, transfer or disposition is subject to the security interest granted herein and the transferee executes and delivers to the Seller a Stock Pledge Agreement in the form of this Agreement covering such Pledged Securities. 7. Effect of Default. Upon the acceleration of the Liabilities after an ------------------ Event of Default and subject to the rights of the pledgee under the Senior Stock Pledge and any Senior Lender: (a) the Seller shall have the right to apply the Collateral toward the satisfaction of the Liabilities, to sell or otherwise dispose of the Collateral and/or enforce and collect the Collateral for application towards (but not necessarily in complete satisfaction of) the Liabilities, in addition to all of the rights and remedies of a secured party upon default - 5 - under the Code. The Stockholder shall remain liable to the Seller for any deficiency remaining following such application to any Liabilities. (b) Any and all shares of the Pledged Securities may be registered in the name of the Seller or its nominee, and the Seller or its nominee may thereafter without further notice exercise all voting and corporate rights at any meeting of any issuer and exercise any and all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any shares of the Pledged Securities as if it were the absolute owner thereof, including without limitation, the right to exchange at its discretion any and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization or other readjustment of any issuer or upon the exercise by any issuer or the Seller or such nominee of any right, privilege or option pertaining to any shares of the Pledged Securities, and, in connection therewith, to deposit and deliver any and all of the Pledged Securities with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as it may determine, all without liability except to account for property actually received by it, but the Seller shall have no duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing. The Stockholder acknowledges that any exercise by the Seller of the Seller's rights upon an Event of Default may be subject to compliance by the Seller with state and/or federal law governing the sale of securities. The proceeds of any collection or of any sale or disposition of the Collateral held pursuant to this Agreement shall be applied towards the Liabilities in such order and manner as the Seller determines in its sole discretion, notwithstanding any statute, custom, or usage to the contrary. 8. Private Placements. ------------------- (a) The Stockholder recognizes that the Seller may be unable to effect a public sale of any or all of the Pledged Securities by reason of certain prohibitions contained in the federal securities laws and applicable state or foreign securities laws, but may resort to one or more private sales thereof to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. The Stockholder acknowledges and agrees that any such private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Seller shall be under no obligation to delay a sale of any of the Pledged Securities for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the federal securities laws, or under applicable state securities laws, even if the issuer would agree to do so. (b) The Stockholder further agrees to use its best efforts to do or cause to be done all such other acts and things (other than effect the registration of the Pledged Securities under applicable federal, state or foreign securities laws) as may be necessary to make such sale or sales of any portion or all of the Pledged Securities valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at the Stockholder's - 6 - expense. The Stockholder further agrees that a breach of any of the covenants contained in this Section 8 will cause irreparable injury to the Seller, and that the Seller will have no adequate remedy at law in respect of such breach and, as a consequence, agree that each and every covenant contained in this Section 8 shall be specifically enforceable against the Stockholder. 9. Stockholder to Cooperate. ------------------------- In connection with the sale or transfer of the Collateral in connection with the exercise of remedies pursuant to Section 7 hereof, but only after release of the Senior Stock Pledge: (a) The Stockholder hereby agrees in connection with the sale of any of the Pledged Securities, to endorse in favor of the Seller or its designee any of the Pledged Securities, to cause the transfer of any of the Pledged Securities in such name as the Seller may from time to time determine. (b) In connection with any action to enforce any of the Collateral, the Seller may make such compromise or settlement with respect to the Collateral as the Seller determines to be appropriate. 10. Cumulative Remedies. The rights, remedies, powers, privileges, and -------------------- discretions of the Seller hereunder (the "Seller's Rights and Remedies"), shall be cumulative and not exclusive of any rights or remedies that it otherwise may have. No delay or omission by the Seller in exercising or enforcing any of the Seller's Rights and Remedies shall operate as, or constitute, a waiver thereof. No waiver by the Seller of any Default or of any default under any other agreement shall operate as a waiver of any other default hereunder or under any other agreement. No exercise of any of the Seller's Rights and Remedies and no other agreement or transaction of whatever nature entered into between the Seller and the Stockholder at any time shall preclude any other exercise of the Seller's Rights and Remedies. No waiver by the Seller of any of the Seller's Rights and Remedies on any one occasion shall be deemed a waiver on any subsequent occasion, nor shall it be deemed a continuing waiver. All of the Seller's Rights and Remedies and all of the Seller's rights, remedies, powers, privileges and discretions under any other agreement or transaction are cumulative and not alternative or exclusive and may be exercised by the Seller at such time or times and in such order of preference as the Seller in its sole discretion may determine. 11. Certain Definitions. -------------------- (a) "Event of Default" shall mean an Event of Default as defined in Section 3.03 of the Subordinated Note. (b) "Liabilities" shall mean (i) all liabilities of the Stockholder under the Subordinated Note, and (ii) any additional obligations which the Stockholder may have under this Agreement. - 7 - 12. Waiver by Stockholder. The Stockholder, except as otherwise set forth ---------------------- in the Subordinated Note waives presentment, demand, notice and protest with respect to the Liabilities and the Collateral. 13. Duties of the Seller. The Seller shall have no duty as to the --------------------- collection or protection of the Collateral or any income or distribution thereon, beyond the safe custody of such of the Collateral as may come into the possession of the Seller and shall have no duty as to the preservation of rights against prior parties or any other rights pertaining thereto. The Seller's Rights and Remedies may be exercised without resort or regard to any other source of satisfaction of the Liabilities. 14. Termination. This Agreement and the security interest in the ----------- Collateral created hereby shall terminate when either (i) all of the monetary obligations then outstanding or pending constituting Liabilities have been paid in full or (ii) upon the merger of the Company with or into Survival Technology, Inc. ("STI") or a subsidiary of STI; provided that STI shall have assumed (either by operation of law or by written agreement) and shall be liable for the Liabilities and the Senior Lien on the Pledged Securities shall have terminated, and in either such event the Seller shall promptly return to the Stockholder any of the Collateral in its possession and file all appropriate UCC-3 and other termination statements as may be required to publicly evidence such termination. 15. Binding Agreement. This Agreement shall be binding upon the ------------------ Stockholder and upon the Stockholder's successors and assigns and shall inure to the benefit of the Seller and its respective successors and assigns. 16. Counterparts. This Agreement may be executed in any number of ------------- counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. 17. Complete Agreement. The within Agreement and all other instruments ------------------- executed in connection herewith incorporate all discussions and negotiations between the Seller and the Stockholder concerning the matters included herein and in such other instruments. No such discussions or negotiations shall limit, modify or otherwise affect the provisions hereof. No modification, amendment or waiver of any provision of the within Agreement or of any provision of any other agreement between the Stockholder and the Seller shall be effective unless executed in writing by the party to be charged with such modification, amendment and waiver, and by a duly authorized officer thereof. 18. Use of Originals. This Agreement and all other documents in the ----------------- Seller's possession that relate to the Liabilities may be reproduced by the Seller by any photographic, photostatic, microfilm, micro-card, miniature photographic, xerographic or similar process, and, with the exception of instruments constituting the Collateral, the Seller may destroy the original from which any document was so reproduced. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made - 8 - in the regular course of business) and any enlargement, facsimile or further reproduction shall likewise be admissible in evidence. 19. Governing Law. This Agreement, and all rights and obligations -------------- hereunder, including matters of construction, validity and performance, shall be governed by the laws of the State of New York, except to the extent that the corporation law of the State of Delaware or the Code of another state shall be applicable. 20. Sealed Instrument. It is intended that this Agreement take effect as ------------------ a sealed instrument. IN WITNESS WHEREOF, the undersigned have executed under seal the foregoing Stock Pledge Agreement as of the date first above written. BRUNSWICK BIOMEDICAL CORPORATION By /s/ James H. Miller ------------------------------------------- Title: President /s/ Robert Herzstein ----------------------- Robert Herzstein, as Personal Representative of the Estate of Dr. Stanley J. Sarnoff and not Individually - 9 - EX-5.A 13 NOTE PURCHASE AGREEMENT EXHIBIT 5(A) This NOTE PURCHASE AGREEMENT (this "Agreement") is made as of March 15, 1996 by and between BRUNSWICK BIOMEDICAL CORPORATION, a Massachusetts corporation (the "Company"), and EM INDUSTRIES, INC., a New York corporation ("EMI"). W I T N E S S E T H: ------------------- WHEREAS, the Company desires to purchase from the Estate of Stanley J. Sarnoff (the"Estate"), and the Estate desires to sell to the Company, the Estate's shares of capital stock (the "Shares") of Survival Technology, Inc., a Delaware corporation, pursuant to the terms and conditions of a Stock Purchase Agreement to be dated as of March 18, 1996 by and between the Company and the Estate (the "Stock Purchase Agreement"); and WHEREAS, the Company desires to obtain, and EMI desires to provide, financing for the Company's purchase of the Shares in exchange for the consideration and on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants contained herein and intending to be legally bound hereby, the Company and EMI hereby agree as follows: ARTICLE 1. FINANCING AND CONSIDERATION THEREFOR 1.1 Provision of Financing. EMI hereby agrees to lend to the Company, on ---------------------- the date of and subject to consummation of the Closing of the Stock Purchase Agreement (as such term is defined in the Stock Purchase Agreement)("Closing"), $1,000,000 in immediately available funds by wire transfer to an account to be designated by the Company. Wire transfer instructions are attached hereto as Exhibit A. - --------- 1.2 Consideration for Financing. As consideration for the financing to --------------------------- be provided by EMI as set forth in Section 1.1 above, the Company will execute and deliver to EMI $1,000,000 aggregate principal amount of the Company's Subordinated Notes due 2001 (the "Notes"), such term to include any note or notes issued in substitution therefor. The Notes shall be substantially in the form set out in Exhibit B, with such changes therefrom if any, as may be --------- approved by the Company and EMI. At the Closing, the Company will deliver the Notes to EMI in the form of a single note dated the date of the Closing and payable to EMI, against delivery by EMI of the purchase price therefor as described in Section 1.1. ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF EMI EMI hereby represents and warrants to the Company as follows: 2.1 Organization and Authority. EMI is a corporation duly organized, -------------------------- validly existing and in good standing under the laws of New York, with all requisite corporate power and authority to execute, deliver and perform this Agreement. 2.2 Authorization. All corporate or other actions on the part of EMI ------------- necessary to authorize the execution, delivery and performance of this Agreement have been duly taken. This Agreement has been duly executed and delivered by EMI and, assuming the due authorization, execution and delivery thereof by the Company, constitutes a valid and binding obligation of, and is enforceable against, EMI in accordance with its terms, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency and other laws of general applicability affecting creditors' rights and by general equity principles. 2.3 Approvals and Consents. Neither the execution, delivery or ---------------------- performance by EMI of, nor the consummation of the transactions contemplated by, this Agreement does nor will (with the giving of notice or passage of time or both) conflict with or result in a breach or violation of, or constitute a default under, or result in (or create in any party the right to cause) the acceleration of any performance or the modification, termination, suspension or impairment of, or result in the loss, revocation, impairment, suspension or forfeiture of any rights of EMI under (a) any contract or agreement to which EMI is a party or by which EMI is or may be bound or to which any of its assets is or may be subject; (b) the Certificate of Incorporation or bylaws of EMI, as amended to date; (c) any judgment to or by which EMI or any of its assets is or may be bound; or (d) any law, ordinance or regulation applicable to EMI. No third party consent or governmental approval is required for the execution, delivery and performance by EMI of, and the consummation of the transactions contemplated by, this Agreement. 2.4 Legal and Governmental Proceedings and Judgment. There is no (a) ----------------------------------------------- legal action, claim, proceeding, investigation or controversy pending or, to the best of EMI's knowledge, threatened against or otherwise involving EMI or any of its directors, officers, business or assets or (b) judgment, order, award or consent decree outstanding against or affecting EMI, which in either case does or might adversely affect the ability of EMI to consummate the transactions contemplated hereby. 2.5 Acquisition of Notes for Investment. EMI is an "Accredited Investor" ----------------------------------- within the meaning of Rule 501(a) under the Securities Act of 1933, as amended ("Securities Act"), and is purchasing the Notes to be delivered hereunder for its own account for investment and with no present intention of distributing or reselling such securities. There is no undertaking by the Company to register such securities under the Securities Act, and they cannot be sold unless they are subsequently registered under the Securities Act or an exemption from registration is available. EMI will not transfer any such securities or any interest therein unless, prior to any such transfer, EMI shall have furnished to the Company - 2 - an opinion of counsel satisfactory to the Company to the effect that such transfer is exempted under the Securities Act. Any such assignment, pledge, hypothecation, or other transfer, or attempted assignment, pledge, hypothecation, or other transfer, made without compliance with such requirement shall as against the Company be null and void and of no legal effect. Until such time as such securities may be freely transferable without registration under the Securities Act they will bear legends stating that they have not been registered under the Securities Act and are subject to the above restrictions on transfer. EMI has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of acquiring the Notes pursuant to this Agreement, and has the financial ability to bear the economic risks of subscribing for and holding such securities for investment. 2.6 Source of Funds. No source of funds used by EMI to pay the purchase --------------- price of the Notes includes assets of any "employee benefit plan", as such term is used in Section 3 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 2.7 Finders and Brokers. EMI has not entered into any contract, ------------------- arrangement or understanding with any person which will result in the obligation of the Company to pay any finder's fees, brokerage or agent's commissions or other like payments in connection with the negotiations leading to this Agreement or the consummation of the transactions contemplated hereby. ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to EMI as follows: 3.1 Organization and Authority. The Company is a corporation duly -------------------------- organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts, with all requisite corporate power and authority to carry on its business as currently conducted and to own, lease, use and operate its properties at the places currently located and in the manner currently used or operated. 3.2 Authorization. The Company has all requisite corporate and other ------------- power and authority to execute, deliver and perform this Agreement and the Notes. All corporate or other actions on the part of the Company necessary to authorize the execution, delivery and performance of this Agreement and the Notes have been duly taken. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery thereof by EMI, and upon execution and delivery thereof by the Company, each Note will constitute a valid and binding obligation of, and is, or will be, enforceable against the Company in accordance with its terms. 3.3 Approvals and Consents. Neither the execution, delivery or ---------------------- performance by the Company of, nor the consummation of the transactions contemplated by, this Agreement does or will (with the giving of notice or passage of time or both) conflict with or result in a breach or violation of, or constitute a default under, or result in (or create in any party the right to cause) the acceleration of any performance or the modification, termination, suspension or impairment of, or result in the loss, revocation, impairment, suspension or - 3 - forfeiture of any rights of the Company under (a) any contract or agreement to which the Company is a party or by which the Company is or may be bound or to which any of its assets is or may be subject; (b) the Articles of Organization or Bylaws of the Company, as amended to date; (c) any judgment to or by which the Company or any of its assets is or may be bound; or (d) any law, ordinance or regulation applicable to the Company. No third party consent or governmental approval is required for the execution, delivery and performance by the Company of, and the consummation of the transactions contemplated by, this Agreement. 3.4 Legal and Governmental Proceedings and Judgments. There is no (a) ------------------------------------------------ legal action, claim, proceeding, investigation or controversy pending or, to the best of the Company's knowledge, threatened against or otherwise involving the Company or any of its directors, officers, business or assets or (b) judgment, order, award or consent decree outstanding against or affecting the Company, which in either case does or might adversely affect the ability of the Company to consummate the transactions contemplated hereby. 3.5 Financial Statements. The Company has delivered to EMI a true and -------------------- correct copy of its annual audited consolidated financial statements for the year ended June 30, 1995. Such financial statements present fairly the consolidated financial position and results of operations of the Company and its subsidiaries at such date and for the year then ended in accordance with generally accepted accounting principles consistently applied. The Company has not suffered any material adverse change in its financial condition or results of operations since June 30, 1995 except as disclosed in or contemplated by such consolidated financial statements or in the disclosure schedule attached hereto. 3.6 Finders and Brokers. The Company has not entered into any contract, ------------------- arrangement or understanding with any person which will result in the obligation of EMI to pay any finder's fees, brokerage or agent's commissions or other like payments in connection with the negotiations leading to this Agreement or the consummation of the transactions contemplated hereby. 3.7 INDEMNIFICATION. THE COMPANY HEREBY AGREES TO INDEMNIFY AND HOLD EMI --------------- AND ITS SUBSIDIARIES, AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS (EMI AND SUCH OTHER PARTIES BEING COLLECTIVELY REFERRED TO HEREIN AS THE "EMI INDEMNITEES") HARMLESS FROM, AND TO REIMBURSE EACH SUCH EMI INDEMNITEE FOR, ANY LOSS, DAMAGE, DEFICIENCY, CLAIM, LIABILITY, OBLIGATION, SUIT, ACTION, FEE, COST OR EXPENSE OF ANY NATURE WHATSOEVER, ARISING OUT OF, BASED UPON OR RESULTING FROM (I) ANY INACCURACY IN OR ANY BREACH OF ANY REPRESENTATION AND WARRANTY OF THE COMPANY CONTAINED IN THIS AGREEMENT OR ANY SCHEDULE, CERTIFICATE OR OTHER WRITTEN INSTRUMENT OR DOCUMENT DELIVERED BY THE COMPANY PURSUANT HERETO, OR (II) ANY BREACH OR NONFULFILLMENT OF, OR ANY FAILURE TO PERFORM, ANY OF THE COVENANTS, AGREEMENTS OR UNDERTAKINGS OF THE COMPANY CONTAINED IN OR MADE PURSUANT TO THIS AGREEMENT (ANY INDEMNIFICATION CLAIMS BY THE EMI INDEMNITEES BASED UPON THE MATTERS DESCRIBED IN THIS SECTION 3.7 SEPARATELY REFERRED TO HEREIN AS "EMI INDEMNITY CLAIMS"); PROVIDED, THAT NOTHING CONTAINED HEREIN SHALL AFFECT THE SUBORDINATION OF THE NOTE TO THE SENIOR DEBT AND THE INDEMNITY HEREUNDER SHALL BE SUBJECT TO SUCH SUBORDINATION. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE INDEMNIFICATION OBLIGATIONS OF THE COMPANY UNDER THIS SECTION 3.7 SHALL INCLUDE, WITHOUT - 4 - LIMITATION, ANY LIABILITIES OR OBLIGATIONS ARISING OUT OF ANY AND ALL ACTIONS, CLAIMS, SUITS, PROCEEDINGS, DEMANDS, ASSESSMENTS, JUDGMENTS, RECOVERIES, DAMAGES, COSTS AND EXPENSES OR DEFICIENCIES INCIDENT TO THE DISPOSAL OF ANY SUCH EMI INDEMNITY CLAIM ASSERTED UNDER THIS SECTION 3.7 AND ALL INTEREST, PENALTIES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL OUT-OF-POCKET EXPENSES, REASONABLE INVESTIGATION EXPENSES AND REASONABLE FEES AND DISBURSEMENTS OF ACCOUNTANTS AND COUNSEL) ARISING OUT OF OR RELATED TO ANY SUCH EMI INDEMNITY CLAIMS. ARTICLE 4. MISCELLANEOUS PROVISIONS 4.1 Applicable Law. This Agreement and all actions contemplated hereby -------------- shall be construed in accordance with the laws of the State of New York, applicable to contracts made and to be performed within such jurisdiction and without taking into account any conflicts of laws rules or principles. 4.2 Counterparts. This Agreement may be executed simultaneously in any ------------ number of counterparts. Each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one Agreement. 4.3 Notices. All notices or other communications which are required or ------- permitted to be given to either party hereunder shall be in writing and deemed to have been duly given if delivered personally or sent by facsimile transmission or by express mail or registered or certified mail (postage prepaid, with return receipt requested) to the following address (or such other address as such party may designate from time to time in writing): If to the Company: Brunswick Biomedical Technologies, Inc. 6 Thacher Lane Wareham, MA 02571 Attn: President and Chief Executive Officer Telephone: 508-291-1830 Facsimile: 508-295-6615 If to EMI: EM Industries, Inc. Seven Skyline Drive Hawthorne, New York 10532 Attn: President Telephone: 914-592-4660 Telecopy: 914-592-8775 - 5 - 4.4 Binding Effect; Assignment. This Agreement shall inure to the benefit -------------------------- of and be binding upon each of the parties hereto and their respective successors and assigns, but may not be assigned by either party without the prior written consent of the other. 4.5 Entire Agreement. The terms and conditions herein contained ---------------- constitute the entire agreement between the parties relating to the subject matter of this Agreement and shall supersede all previous communications between the parties with respect to the subject matter of this Agreement. Neither party has entered into this Agreement in reliance upon a representation, warranty or undertaking of the other party which is not set out or referred to in this Agreement. 4.6 Amendment. This Agreement may be varied, amended, or extended only by --------- the written agreement of the parties through their duly authorized officers or representatives. 4.7 Severability. If any provision of this Agreement is held illegal or ------------ unenforceable in a judicial proceeding, such provision shall be severed from this Agreement and shall be inoperative; and the remainder of this Agreement shall remain binding on the parties hereto. 4.8 Headings. The descriptive headings contained in this Agreement are -------- inserted for convenience only and do not constitute a part of this Agreement. 4.9 No Waiver of Rights. No failure or delay on the part of either party ------------------- in the exercise of any power or right hereunder shall operate as a waiver thereof. No single or partial exercise of any right or power hereunder shall operate as a waiver of such right or power or of any other right or power. The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other or subsequent breach hereunder. All rights and remedies existing under this Agreement are cumulative with, and not exclusive of, any rights or remedies otherwise available. 4.10 No Third Party Rights. This Agreement shall not be deemed or --------------------- construed in any way to result in the creation of any rights or obligations in any person not a party to this Agreement. 4.11 Expenses. Each party hereto shall pay its own costs and expenses, -------- including, but not limited to, those of its attorneys and accountants, in connection with this Agreement and the transactions contemplated hereby. - 6 - IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed under seal by their duly authorized officers as of the date first written above. BRUNSWICK BIOMEDICAL CORPORATION By: /s/ James H. Miller ----------------------- James H. Miller President EM INDUSTRIES, INC. By: /s/ Richard K. Hackett -------------------------- Richard K. Hackett President - 7 - EXHIBIT A WIRE TRANSFER INSTRUCTIONS -------------------------- [Omitted from this Schedule 13D] - 8 - EXHIBIT B FORM OF NOTE ------------ [See Exhibit 5(b) to this Schedule 13D] - 9 - EX-5.B 14 SUBORDINATED PROMISSORY NOTE EXHIBIT 5(B) THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT OR PURSUANT TO AN EXEMPTION THEREFROM. BRUNSWICK BIOMEDICAL CORPORATION Subordinated Promissory Note Wareham, Massachusetts April 15, 1996 ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED, PURSUANT TO AND TO THE EXTENT PROVIDED IN SECTION ONE HEREOF, TO ALL SENIOR DEBT, AS DEFINED THEREIN. Brunswick Biomedical Corporation (the "Company"), a Massachusetts corporation, for value received, hereby promises to pay to EM INDUSTRIES, INC. (together with its successors and assigns, the "Payee"), in lawful money of the United States of America, the principal amount of ONE MILLION DOLLARS ($1,000,000.00), together with such additional amount as may be added to principal on account of deferred interest pursuant to the next paragraph. The principal amount of this Note shall be payable in seven equal consecutive quarterly installments, each in the amount of $125,000, payable in cash on the last day of each calendar quarter, beginning on April 30, 1999, and one final payment of all unpaid principal (including such additional amount added to principal on account of deferred interest) payable on or before the earlier of (i) the fifth anniversary of any merger or consolidation (a "Merger") of the Company with or into any other entity as a result of which the shareholders of the Company receive capital stock or securities convertible into capital stock registered under the Securities Exchange Act of 1934, or (ii) December 31, 2001 (such earlier date, the "Maturity Date"). The Company further agrees to pay interest in like money on the principal amount hereof from time to time outstanding at a rate per annum equal to the Applicable Rate (as defined herein) in effect from time to time. Interest shall be computed on the basis of a 365-day year and the actual number of days elapsed. Interest accruing on this Note from the date hereof through April 30, 1998 shall be added to the principal amount of this Note on the last day of each calendar month, and shall bear interest thereafter at the Applicable Rate until paid. Interest accruing on this Note after April 30, 1998 shall be payable in cash monthly in arrears on the last day of each calendar month. Interest on this Note shall also be payable upon payment in full of the unpaid principal amount hereof, at scheduled maturity, pursuant to a mandatory prepayment or otherwise. If any payment becomes due hereunder on a day which is not a Business Day (as defined herein), the maturity thereof shall be extended to the next succeeding Business Day and interest on any payment of principal so extended shall be payable at the then Applicable Rate during such extension. This Note is unsecured. SECTION ONE Subordination of Note --------------------- 1.01 Subordination. Anything in this Note to the contrary ------------- notwithstanding, the indebtedness evidenced by this Note shall be subordinate and junior in right of payment, to the extent and in the manner hereinafter set forth, to the prior payment in full in cash of any and all Senior Debt (as herein defined) now existing or hereafter arising. "Senior Debt" shall mean the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, whether or not such interest constitutes an allowed claim), fees, indemnities, amounts reimbursable, expenses, costs of enforcement and other amounts (including, without limitation, obligations of the Company in respect of interest rate hedging obligations) payable with respect to, any indebtedness under (a) the following credit facilities to be provided by Internationale Nederlanden (U.S.) Capital Corporation (the "Initial Senior Lender") to the Company: (i) a bridge loan facility in the maximum principal amount of $11,000,000; (ii) a term loan in the maximum principal amount of $11,000,000 to refinance in full the bridge loan upon consummation of the Merger; and (iii) a $5,000,000 revolving credit facility to refinance in full all indebtedness of STI outstanding as of the Merger; (b) a Subordinated Promissory Note dated April __, 1996, payable to the Estate of Dr. Stanley J. Sarnoff (the "Estate") and its successors and assigns in the original principal amount of $4,700,000, (c) additional indebtedness for borrowed money not to exceed $3,000,000 in outstanding principal amount that recites that it is senior to this Note; and (d) any and all extensions, refinancings, renewals, replacements, refundings, modifications, amendments and restatements of Senior Debt described in clauses (a), (b), (c) or (d) of this definition or any indebtedness that is incurred pursuant to a credit commitment under a credit facility that refinances, replaces or refunds, in whole or in part, indebtedness or unfunded commitments under credit facilities described in clauses (a), (b) or (c) of this definition. The holder or holders from time to time of any Senior Debt are hereinafter referred to individually or collectively, as the context permits, as the "Senior Lender". 1.02 Prohibited Actions. Until the Senior Debt shall have been ------------------ indefeasibly paid in full in cash, the holder of this Note shall not without the prior written consent of the Senior Lender (a) after the occurrence of a default in any of the Senior Debt take action to execute, seize or otherwise collect upon any assets of the Company pursuant to any judgment or decree of a court of law or equity or any non-judicial remedy until the earlier of (i) the date upon which the default in such Senior Debt has been cured to the satisfaction of the - 2 - Designated Senior Lender or waived by the Designated Senior Lender in writing or (ii) one year after the Senior Lender shall have given notice to the Company of such default, if the Designated Senior Lender shall not have accelerated the maturity of the Senior Debt and such default is not a payment default; or (b) accept from or on behalf of the Company money or property of any sort in whole or partial satisfaction of any indebtedness evidenced by this Note, or accept any prepayment of this Note, other than stock or other equity interests in the Company, or indebtedness of the Company that has been subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Senior Lender, except that the holder of this Note may accept interest payments and scheduled principal payments (the "Periodic Payments") described above and the mandatory prepayment described in Section 4 and principal and interest due with respect to this Note on the Maturity Date, in each case, to the extent the Company is not prohibited from making such payments under subsections 1.03 or 1.04 below. 1.03 Default of Senior Debt. Upon receipt by the Company of written ---------------------- notice given by the Designated Senior Lender of a default in any of the Senior Debt, the holder of this Note no longer shall be entitled to receive or accept any payments hereunder, whether Periodic Payments or otherwise, and the holder shall hold the same in trust as trustee for the benefit of the Senior Lender and turn over to the Designated Senior Lender) any such payments (other than shares of stock of the Company, or indebtedness of the Company that has been subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Designated Senior Lender, distributed to it to settle any claim described in subsection 1.04 below) it may obtain after the occurrence of such default in the form received and after receiving the Designated Senior Lender's aforesaid notice of default. Such prohibition shall continue until the earliest date upon which (i) the default has been cured to the satisfaction of the Designated Senior Lender or waived by the Designated Senior Lender in writing, (ii) if such default is not a payment default and the Designated Senior Lender within one year after giving notice to the Company of the default shall not have accelerated the maturity of the Senior Debt, or (iii) all Senior Debt has been paid in full. Notwithstanding the foregoing, the Designated Senior Lender may invoke such prohibition no more than once during any consecutive 24 month period, unless a payment default shall have occurred and is continuing. The Company shall promptly notify the Payee, or any subsequent holder of which the Company has received notice and an address, of the Company's receipt of such a notice from the Designated Senior Lender. All such notices from the Designated Senior Lender shall be deemed to have been duly delivered only (i) at the time delivered by hand, if personally delivered, (ii) when received, if deposited in the mail, first-class postage prepaid, return receipt requested, (iii) when transmission is verified, if telecopied, and (iv) on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. The term "Designated Senior Lender" shall initially mean the Initial Senior Lender and, subsequent to the refinancing in full of the Senior Debt described in clauses (a)(ii) and (iii) of the definition of Senior Debt set forth in subsection 1.01, Designated Senior Lender shall mean any lender (or lenders acting collectively) that hold(s) Senior Debt having an aggregate outstanding principal amount and aggregate outstanding commitment(s) of not less than $5,000,000 or any trustee, agent or representative of such lender or lenders, the name and address of whom shall have been given to the Company by the preceding Designated Senior Lender. - 3 - 1.04. Liquidation Claims. If there shall occur any receivership, ------------------ insolvency, assignment for the benefit of creditors, bankruptcy (voluntary or involuntary), reorganization, or arrangements with creditors (whether or not pursuant to bankruptcy or other insolvency laws), sale of all or substantially all of the assets, dissolution, liquidation, or any other marshalling of the assets and liabilities of the Company (any of the foregoing, a "Liquidation Event"), (i) the Senior Lender shall be entitled to receive payment in full in cash of all Senior Debt then outstanding before the holder of this Note shall be entitled to receive any payment or distribution, whether in cash, securities (other than an equity interest in the Company, or indebtedness of the Company that has been subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Senior Lender, distributed in settlement of claims described in this subsection 1.04) or other property, in respect of the principal of, interest on or other amounts due with respect to this Note at the time outstanding, (ii) any payment or distribution, whether in cash, securities (other than an equity interest in the Company, or indebtedness of the Company that has been subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Senior Lender, distributed in settlement of claims described in this subsection 1.04) or other property which would otherwise (but for this subsection 1.04) be payable or deliverable in respect of the amounts due under this Note shall be paid or delivered directly to the Senior Lender (ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt held by each such Senior Lender) or to a trustee or other representative for the Senior Lender, (iii) the holder of this Note agrees to hold for the account of the Senior Lender any and all payments and distributions received by such holder which may be payable or deliverable upon or with respect to this Note, to file appropriate claims or proofs of claim in respect of this Note and to execute and deliver to the Senior Lender such powers of attorney, assignments and other instruments as the Senior Lender may reasonably request to enable it to enforce any and all claims upon or in respect of this Note (other than voting rights in any such proceeding), and (iv) the Senior Lender is hereby irrevocably authorized and empowered (in its name or in the name of the holder of this Note or otherwise) to take any of the actions described in clause (iii) above upon the failure of the holder promptly to take any such actions. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the sale, conveyance or lease of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided below shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this subsection 1.04 if such consolidation, merger, sale, conveyance or lease does not violate the provisions of the Senior Debt or any agreement pursuant to which the Senior Debt is issued. Any payment or distribution, whether in cash, securities (other than an equity interest in the Company, or indebtedness of the Company that has been subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Senior Lender, distributed in settlement of claims described in this subsection 1.04) or other property received by the holder of this Note in contravention of any of the terms of this subsection 1.04 shall be received and held by the holder of this Note in trust as trustee for the benefit of the Senior Lender and shall be promptly turned over to the Senior Lender (pro --- rata in accordance with the Senior Debt held by them or as they may otherwise - ---- direct if there is more than one Senior Lender) for application to the payment of Senior Debt. - 4 - 1.05 Judgments. If at any time hereafter the holder of this Note obtains --------- a judgment against the Company for the indebtedness evidenced by this Note, such judgment shall be subject to the subordination rights of the Senior Lender to the same extent as is this Note. 1.06 Modifications. The subordination rights of the Senior Lender, and ------------- the obligations of the holder of this Note under this Section One, shall be effective and binding upon any modification, extension, or replacement note of or for this Note and may not be modified or cancelled without the written consent of the Senior Lender. 1.07 Subrogation. Upon the repayment in full in cash of all Senior Debt ----------- at the time outstanding, the holder of this Note shall be subrogated to the rights of the Senior Lender (to the extent of payments or distributions previously made to the Senior Lender pursuant to the provisions of this Section One) to receive payments or distributions of assets of the Company applicable to the Senior Debt until this Note shall be repaid in full. No payment over pursuant to the provisions of this Section One to the Senior Lender by the holder of this Note and for the purposes of such subrogation, no payments or distributions to the Senior Lender of any cash, property or securities to which the holder of this Note would be entitled except for the provisions of this Section One, shall, as between the Company, its creditors other than the Senior Lender and the holder of this Note, be deemed to be a payment by the Company to or for the account of the Senior Lender and no payments or distributions applicable to Senior Debt which the holder of this Note receives by reason of its being subrogated to the rights of the Senior Lender pursuant to the provisions of this subsection 1.07 shall, as between the Company, its creditors other than the Senior Lender and the holder of this Note, be deemed to be a payment by the Company to or for the account of the holder of this Note; it being understood that the provisions of this Section One are intended solely for the purpose of defining the relative rights of the holder of this Note, on the one hand, and the Senior Lender, on the other hand. In each case subject to the rights of the Senior Lender under this Section One, nothing contained in this Section One or elsewhere in this Note, is intended to or shall impair, as between the Company and the holder of this Note, the obligation of the Company, which is absolute and unconditional, to pay to the holder of this Note the principal of, and interest, on this Note as and when the same shall become due and payable in accordance with the terms of this Note, or is intended to or shall affect the relative rights of the holder of this Note and creditors of the Company other than the Senior Lender, nor shall anything in this Note prevent the holder of this Note from exercising all remedies otherwise permitted by applicable law upon default under this Note. 1.08 Right of Payee. The Company shall give prompt written notice to the -------------- Payee of any Liquidation Event. The Payee shall be entitled to assume that no such event has occurred unless the Company or any one or more Senior Debt holders or any representative therefor has given such notice. Upon any payment or distribution of assets of the Company referred to in subsection 1.04, the Payee shall be entitled to rely upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, delivered to the Payee, for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or - 5 - amounts paid or distributed thereon and all other facts pertinent thereto or to this Section One. 1.09 Obligations of Payee and Holder. By acceptance of this Note, the ------------------------------- holder hereof agrees to be bound by the obligations of the Payee and holder of this Note set forth herein. 1.10 Reliance of Senior Lender. The Payee, by its acceptance of this ------------------------- Note, shall be deemed to acknowledge and agree that the foregoing subordination provisions are, and are intended to be, an inducement to and a consideration of each Senior Lender, whether the Senior Debt held by such Senior Lender was created or acquired before or after the creation of the indebtedness evidenced by this Note and whether such Senior Lender is now known or hereafter becomes known, and each Senior Lender shall be deemed conclusively to have relied on such subordination provisions in acquiring and holding, or in continuing to hold, such Senior Debt and shall be entitled to enforce the provisions of Section One. 1.11 Reinstatement. The provisions of this Agreement shall continue to be ------------- effective or be reinstated, as the case may be, if at any time any payment in respect of Senior Debt is rescinded or must otherwise be returned by the Senior Lender in the event of a Liquidation Event, all as though such payment had not been made. 1.12 Subordination Not Impaired. All rights and interests of the Senior -------------------------- Lender under this Section One with respect to Senior Debt and all agreements and obligations of the Payee and each subsequent holder of this Note shall remain in full force and effect irrespective of (i) any change in the time, manner or place of payment of or any other term of Senior Debt or any amendment or waiver of or any consent to departure from any of the terms thereof or (ii) any exchange, release or non-perfection of any security interest or lien in any collateral securing Senior Debt or any release or amendment or waiver of or consent to departure from any guarantee for all or any Senior Debt. SECTION TWO Acceleration ------------ 2.01 Events of Default. If any of the following events shall occur and be ----------------- continuing: (a) The Company shall fail to pay any principal of this Note when due in accordance with the terms hereof (including without limitation any mandatory prepayment), or the Company shall fail to pay any interest on this Note within ten days after any such interest becomes due; provided, however, that to the extent that the holder of this Note shall no longer be entitled to receive or accept any payment hereunder pursuant to subsection 1.03, and, on or prior to the date of expiration of the one year period referenced in such subsection 1.03, the Company (with the consent of the Senior Lender) shall pay all delinquent amounts due to the holder of this Note (without - 6 - giving regard to any acceleration of this Note), then any acceleration of this Note shall automatically be deemed rescinded and such default shall automatically be deemed cured; or (b) The Company shall default in the observance or performance of any agreement contained in this Note (other than as provided elsewhere in this subsection 2.01) and such default shall continue unremedied for a period of 45 days; or (c) The Company shall be in default on the Senior Debt and the Senior Debt shall have been declared due and payable prior to the date of its scheduled maturity or the Company shall have failed to pay the Senior Debt at maturity and such failure shall not have been remedied or waived for a period of 45 days; or (d) (i) The Company shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Company shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Company any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Company any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Company shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (d) of this Section with respect to the Company, automatically the principal amount hereof (with accrued interest thereon) and all other amounts owing under this Note shall immediately become due and payable, and (B) if such event is any other Event of Default, the Payee may, by notice to the Company, declare the principal amount hereof (with accrued interest thereon) and all other amounts owing under this Note to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. - 7 - SECTION THREE Definitions ----------- 3.01 "Applicable Rate" means (i) from the date hereof through and including the second anniversary of the date hereof, a rate per annum equal to 12% and (ii) after such date, a rate per annum equal to 13%. 3.02 "Business Day" means any day on which the New York Stock Exchange is open for trading and on which commercial banks in the Commonwealth of Massachusetts, the State of New York or the District of Columbia are not authorized or required by law to close. 3.03 "Event of Default" means any of the events specified in subsection 2.01, provided that any requirement for the giving of notice, the lapse of time, -------- or both, or any other condition, has been satisfied. 3.04 "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. SECTION FOUR Prepayment ---------- 4.01 Mandatory Prepayment. Provided that no default exists with respect -------------------- to the Senior Debt that has not been cured to the satisfaction of the Designated Senior Lender or waived by the Designated Senior Lender in writing or if such default is not a payment default, for which within one year after giving notice to the Company of such default, the Designated Lender shall not have accelerated the maturity of the Senior Debt, if the Company shall (i) obtain financing other than the $4,700,000 subordinated note payable to the Estate and any refinancing thereof (the "Seller Note"), subordinated to all Senior Debt upon the same terms as this Note or terms otherwise acceptable to the Senior Lender, or (ii) raise additional equity from the sale of its capital stock or of rights, options or warrants entitling the holder to subscribe for or purchase capital stock of the Company in excess of an amount sufficient to prepay the Seller Note, excluding upon the exercise of stock options granted to employees, officers, directors or consultants of the Company and excluding the issuance of equity in connection with the acquisition of stock or assets or to finance the acquisition of stock or assets or to finance the acquisition of stock or assets, then the Company shall prepay this Note in an amount equal to the net cash proceeds of such subordinated debt or equity financing remaining after prepaying the Seller Note. In addition, if the Senior Debt is paid in full in cash, the net cash proceeds of any debt financing of the Company (other than proceeds applied to payment of the Senior Debt) remaining after - 8 - prepaying the Seller Note shall be applied to prepay this Note. Any such prepayment shall be made within 30 days after the receipt of such proceeds. 4.02 Optional Prepayment. The Company shall have the right at any time or ------------------- from time to time, subject to the provisions of Section One, to prepay this Note in whole or in part, together with all accrued and unpaid interest with respect to such prepaid amount. SECTION FIVE Miscellaneous ------------- 5.01 Governing Law. This Note shall be governed by and construed in ------------- accordance with the laws of the Commonwealth of Massachusetts. 5.02 Successors and Assigns. This Note shall be binding upon and inure to ---------------------- the benefit of the Company and the Payee and their respective successors and assigns, but may not be assigned by either party without the prior written consent of the other, except that the Payee may assign its rights hereunder to any corporation controlling, controlled by or under common control with the Payee at any time. 5.03 Amendments. This Note may not be modified or discharged orally, but ---------- only by an agreement in writing executed by the party against whom enforcement of any modification or discharge is sought. 5.04 Expenses of Collection. The Company agrees to pay all reasonable ---------------------- out-of-pocket expenses, including counsel fees, incurred by the Payee arising in connection with the enforcement of this Note and the collection of amounts due and unpaid hereunder. 5.05 Headings. The headings of the Sections and subsections of this Note -------- are inserted for convenience only and do not constitute a part of this Note. IN WITNESS WHEREOF, the Company has caused this Note to be signed under seal in its corporate name by one of its officers thereunto duly authorized and this Note to be dated as of the day and year first written above. BRUNSWICK BIOMEDICAL CORPORATION By /s/ James H. Miller ----------------------- Name: James H. Miller Title: President - 9 - -----END PRIVACY-ENHANCED MESSAGE-----