REVOLVING CREDIT NOTE
Exhibit
10.2
$35,000,000.00
Worcester,
Massachusetts
June
4, 2008
FOR VALUE RECEIVED, the
undersigned, IPG PHOTONICS
CORPORATION, a Delaware corporation with a principal place of business at
00 Xxx Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the “Borrower”) hereby
promises to pay to
BANK
OF AMERICA, N.A.,
a
national banking association organized and existing under the laws of the United
States of America (the “Bank”), OR ORDER, at
its office at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, or such other
place as the Bank may from time to time specify in writing, the principal sum
of
THIRTY-FIVE
MILLION AND NO/100 DOLLARS ($35,000,000.00)
(or so
much as may be outstanding from time to time) with interest on the unpaid
principal until paid at the rates and in the manner hereinafter provided in
lawful money of the United States of America in immediately available funds,
without counterclaim or set-off and free and clear of, and without any deduction
or withholding for, any taxes or other payments.
This
Revolving Credit Note is issued in conjunction with a Loan Agreement by and
between the Borrower and the Bank dated as of even date herewith (as may be
amended from time to time, the “Agreement”), all the
terms and conditions of which are incorporated herein by
reference. No reference to the Agreement or to any provision thereof
shall affect or impair the absolute and unconditional obligation of the Borrower
to pay the principal of and interest on this Revolving Credit Note as herein
provided. An Event of Default under the Agreement shall also
constitute an Event of Default hereunder. The occurrence of an Event of Default
shall constitute a default (beyond any applicable grace or cure periods) under
each of the other obligations of the Borrower to the
Bank. Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to such terms in the Agreement. “$” or “dollars” denotes
lawful currency of the United States of America.
Interest
shall be calculated on the daily unpaid principal balance of the indebtedness
evidenced by this Revolving Credit Note computed on the basis of the actual
number of days elapsed over a year assumed to have
three hundred sixty (360) days, provided that interest shall be due for the
actual number of days elapsed during each period for which interest is being
charged.
The
unpaid principal of this Revolving Credit Note from time to time outstanding
shall bear interest at the applicable rate per annum, at the Borrower’s written
election from time to time and in accordance with the provisions of this
Revolving Credit Note, as follows:
(a) LIBOR
Rate plus the Applicable Margin (calculated as set forth below) (a “LIBOR Rate Loan”);
or
(b) the
Bank’s Base Rate plus the Applicable Margin (calculated as set forth below),
fully floating (a “Base Rate
Loan”).
The
Applicable Margin will be based upon calculation by the Bank of the Funded Debt
to EBITDA Ratio, as follows:
Funded
Debt
to Applicable
Margin
- Applicable
Margin -
EBITDA
Ratio LIBOR
Rate Base
Rate
less than
1.0 to
1.0 .80% -0.50%
equal to
or greater than
1.0 to
1.0, but less than
1.5 to
1.0
1.00% -0.25%
equal to
or greater than
1.5 to
1.0
1.20% 0
As used
herein, the terms “Funded Debt” and
“EBITDA” shall
have the meanings ascribed to such terms in the Agreement. The Funded
Debt to EBITDA Ratio shall be measured as of the end of each fiscal quarter of
the Borrower over a period comprised of the most recent prior four (4) fiscal
quarters of the Borrower.
The Base
Rate and the LIBOR Rate shall be adjusted as of fifteen (15) Business Days after
the earlier of (x) receipt and review by the Bank of Borrower’s compliance
certificate as required under Section 5.01(B)(3) of the Agreement or (y) the
date on which the financial covenants set forth in Section 5.01(F) of the
Agreement are tested by the Bank. Such adjustments shall apply to
Base Rate Loans effective immediately and to LIBOR Rate Loans made on or after
the applicable date of the adjustment.
If the Borrower
fails to select an interest rate for all or any portion of the unpaid principal
balance of this Revolving Credit Note or if the applicable LIBOR Rate becomes
unavailable, then the interest rate will be the Base Rate plus the Applicable
Margin.
The term
“Base Rate”
means the higher of (a) the Bank’s Prime Rate established from time to time by
the Bank or (b) the Federal Funds Rate, fully floating. The “Prime Rate” means
that variable per annum rate of interest so designated from time to time by the
Bank as its Prime Rate The Prime Rate is a reference rate and does
not necessarily represent the lowest or best rate being charged to any
customer. The “Federal Funds Rate”
means, for any period, a fluctuating interest rate equal for each day during
such period to the weighted average of the rates on overnight Federal Funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the Bank
from three (3) Federal Funds brokers of recognized standing selected by the
Bank.
The term “LIBOR Rate” means, as
applicable to any LIBOR Rate Loan, the rate per annum as determined on the basis
of the offered rates for deposits in U.S. Dollars, for a period of time
comparable to such LIBOR Rate Loan which appears on the Reuters Screen LIBOR01
page (or any successor page) as of 11:00 a.m. London time on the day that is two
(2) Business Days preceding the first day of such LIBOR Rate Loan (the “LIBOR Interest
Period”); provided, however, if the rate described above does not appear
on the Reuters Screen LIBOR01 page (or any successor page) on any applicable
interest determination date, the LIBOR Rate shall be the rate (rounded upward,
if necessary, to the nearest one hundred-thousandth of a percentage point),
determined on the basis of the offered rates for deposits in U.S. dollars for a
period of time comparable to such LIBOR Rate Loan which are offered by four
major banks in the London interbank market at approximately 11:00 a.m. London
time, on the day that is two (2) Business Days preceding the first day of such
LIBOR Rate Loan as selected by the Bank. The principal London office
of each of the four major London banks will be requested to provide a quotation
of its U.S. Dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the basis of the rates
quoted for loans in U.S. dollars to leading European banks for a period of time
comparable to such LIBOR Rate Loan offered by major banks in New York City at
approximately 11:00 a.m. New York City time, on the day that is two (2) Business
Days preceding the first day of such LIBOR Rate Loan. In the event
that the Bank is unable to obtain any such quotation as provided above, it will
be deemed that the LIBOR Rate pursuant to a LIBOR Rate Loan cannot be
determined. In the event that the Board of Governors of the Federal
Reserve System shall impose a Reserve Percentage with respect to LIBOR Rate
deposits of the Bank, then for any period during which such Reserve Percentage
shall apply, the LIBOR Rate shall be equal to the amount determined above
divided by an amount equal to one (1) minus the Reserve
Percentage. “Reserve Percentage”
shall mean the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed on member banks of
the Federal Reserve System against “Euro-currency
Liabilities” as defined in Regulation D. Each LIBOR Rate Loan
shall be in an amount of integral multiples of $100,000.00. The LIBOR
Interest Period must be fixed, upon request by the Borrower for a LIBOR Rate
Loan, for periods of one (1) month, two (2) months, three (3), six (6), nine (9)
and twelve (12) months.
The
Following Business Day Convention shall be used to adjust any relevant date if
that date would otherwise fall on a day that is not a Business
Day. For the purposes herein, the term “Following Business Day
Convention” shall mean that an adjustment will be made if any relevant
date would otherwise fall on a day that is not a Business Day so that the date
will be the first following day that is a Business Day. “Business Day” means,
in respect of any date that is specified in this Revolving Credit Note to be
subject to adjustment in accordance with the Following Business Day Convention,
a day on which commercial banks settle payments in (i) London, if the payment
obligation is calculated by reference to LIBOR, or (ii) New York, if the payment
obligation is calculated by reference to the Base Rate. All payments
hereunder shall be adjusted in accordance with the Following Business Day
Convention.
Interest
on the Base Rate Loans shall be payable monthly in arrears on the first day of
each calendar month, the first such installment of interest to be due and
payable on July 1, 2007. Interest on LIBOR Rate Loans shall be
payable in full at the end of the applicable LIBOR Interest Period if the LIBOR
Interest Period is one (1), two (2) or three (3) months, and quarterly in
arrears if the LIBOR Interest Period is six (6), nine (9) or twelve (12)
months. All principal, interest and other indebtedness due hereunder
if not sooner paid, shall be due and payable on July 26, 2011 (the “Revolving Credit Termination
Date”).
The
Borrower may prepay Base Rate Loans in whole or in part without penalty or
premium. The Borrower may prepay a LIBOR Loan only upon at least
three (3) Business Days prior written notice to the Bank (which notice shall be
irrevocable). The Borrower shall pay to the Bank, upon request of the
Bank, such amount or amounts as shall be sufficient (in the reasonable opinion
of the Bank) to compensate it for any loss, cost, or expense incurred as a
result of: (i) any payment of a LIBOR Loan on a date other than the last day of
the LIBOR Interest Period for such LIBOR Loan; (ii) any failure by the Borrower
to borrow a LIBOR Loan on the date specified by Borrower’s written notice; (iii)
any failure by the Borrower to pay a LIBOR Loan on the date for payment
specified in the Borrower’s written notice. Without limiting the
foregoing, the Borrower shall pay to the Bank a “yield maintenance
fee” in an amount computed as follows: The current rate for
United States Treasury securities (bills on a discounted basis shall be
converted to a bond equivalent) with a maturity date closest to the term chosen
pursuant to the LIBOR Rate Election as to which the prepayment is made, shall be
subtracted from the LIBOR Rate in effect at the time of
prepayment. If the result is zero or a negative number, there shall
be no yield maintenance fee. If the result is a positive number, then
the resulting percentage shall be multiplied by the amount of the principal
balance being prepaid. The resulting amount shall be divided by 360
and multiplied by the number of days remaining the term chosen pursuant to the
LIBOR Rate Election as to which the prepayment is made. Said amount
shall be reduced to present value calculated by using the above referenced
United States Treasury securities rate and the number of days remaining in the
term chosen pursuant to the LIBOR Rate Election as to which prepayment is
made. The resulting amount shall be the yield maintenance fee due to
the Bank upon the payment of a LIBOR Loan. Each reference in this
paragraph to “LIBOR
Rate Election” shall mean the election by the Borrower of LIBOR
Rate. If by reason of an Event of Default, the Bank elects to declare
this Revolving Credit Note immediately due and payable, then any yield
maintenance fee with respect to a LIBOR Loan shall become due and payable in the
same manner as though the Borrower had exercised such right of
prepayment.
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If the
entire amount of any required principal and/or interest is not paid in full
within fifteen (15) days after the same is due, the Borrower shall pay to the
Bank a late fee equal to two percent (2%) of the required payment. Such late
charge payments are made for the purpose of compensating the Bank for its
administrative, costs and expenses in handling late payments and losses in
connection therewith. This provision is not intended to provide a
grace period for any payment otherwise due and payable and shall not constitute
a waiver by the Bank to insist upon the strict performance of any of the
Borrower’s covenants or agreements with, or obligations to, the Bank or to
declare any event of default for any payment not made when it was due and
payable.
All
payments shall be applied first to the payment of all fees, expenses and other
amounts due to the Bank (excluding principal and interest), then to accrued
interest, and the balance on account of outstanding principal; provided,
however, that after an Event of Default, payments will be applied to the
obligations of the Borrower to the Bank as the Bank shall determine in its sole
discretion.
Until the
earlier of the Revolving Credit Termination Date or the occurrence of an Event
of Default, the Borrower may borrow, repay and reborrow hereunder from time to
time, provided that the aggregate principal amount at any time outstanding shall
not exceed the face amount of this Revolving Credit Note.
Upon the
occurrence of an Event of Default (whether or not the Bank has accelerated
payment of this Revolving Credit Note), or after the Revolving Credit
Termination Date or after judgment has been rendered on this Revolving Credit
Note or any other Obligations under the Agreement, the Borrower’s right to
select pricing options shall cease and the unpaid principal of this Revolving
Credit Note, including interest, fees or costs which are not paid when due,
will, at the option of the Bank, bear interest at a rate which is three percent
(3%) per annum greater than the rate of interest which would otherwise be
applicable hereunder (the “Default
Rate”). This may result in compounding of
interest. This will not constitute a waiver of any Event of
Default.
At its
option, and at any time, whether immediately or otherwise, upon the occurrence
of an Event of Default, the Bank may declare this Revolving Credit Note
immediately due and payable without further action of any kind including notice,
further demand or presentment.
The
Borrower hereby authorizes the Bank, without liability on the Bank’s part, to
debit from time to time from the Automatic Payments Deposit Account the
Automatic Payments. If the funds in the Automatic Payments Deposit
Account are insufficient to cover any payment, the Bank shall not be obligated
to advance funds to cover the payment. At any time for any reason,
the Bank may voluntarily terminate Automatic Payments. The Bank shall
provide the Borrower timely notice of any debit made from the Automatic Payments
Deposit Account or termination of Automatic Payments.
The
Borrower hereby grants to the Bank a continuing lien, security interest and
right of set-off as security for all liabilities and obligations to the Bank,
whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property now or hereafter in the possession, custody,
safekeeping or control of the Bank or any entity under the control of Bank of
America Corporation and its successors and assigns, or in transit to any of
them. Upon notice of an Event of Default, the Bank may set off the
same or any part thereof and apply the same to any liability or obligation of
the Borrower even though unmatured and regardless of the adequacy of any other
collateral securing the loan evidenced hereby.
The
Borrower shall pay on demand all expenses of the Bank in connection with the
preparation, administration, default, collection, waiver or amendment of loan
terms, or in connection with the Bank’s exercise, preservation or enforcement of
any of its rights, remedies or options hereunder, including, without limitation,
reasonable fees of outside legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any fees or expenses associated
with travel or other costs relating to any appraisals or examinations conducted
in connection with the Loan or any collateral therefor, and the amount of all
such expenses shall, until paid, bear interest at the rate applicable to
principal hereunder (including any Default Rate) and be an obligation secured by
any collateral.
The
Borrower and each endorser or other person now or hereafter liable for the
payment of any of the indebtedness evidenced by this Revolving Credit Note,
severally, agrees, by making or endorsing this Revolving Credit Note or by
making any agreement to pay any of the indebtedness evidenced by this Revolving
Credit Note, to waive presentment for payment, protest and demand, notice of
protest, demand and of dishonor and non-payment of this Revolving Credit Note,
and consents without notice or further assent: (a) to the substitution,
exchange, or release of any collateral securing this Revolving Credit Note or
any part thereof at any time; (b) to the acceptance by the holder or holders at
any time of any additional collateral or security of this Revolving Credit Note,
(c) to the modification or amendment at any time, and from time to time, of this
Revolving Credit Note, the Agreement and any instrument securing this Revolving
Credit Note, at the request of any person liable hereon; (d) to the granting by
the holder hereof of any extension of the time for payment of this Revolving
Credit Note or for the performance of the agreements, covenants and conditions
contained in this Revolving Credit Note, the Agreement or any instrument
securing this Revolving Credit Note, at the request of any other person liable
hereon; and (e) to any and all forbearances and indulgences whatsoever; and such
consent shall not alter or diminish the liability of any person.
This
Revolving Credit Note shall be governed by, and the rights and obligations of
the parties hereunder shall be construed and interpreted in accordance with, the
laws of The Commonwealth of Massachusetts (excluding the laws applicable to
conflicts or choice of law). The Borrower agrees that any suit for
the enforcement of this Revolving Credit Note or any of the other Loan Documents
may be brought in the courts of The Commonwealth of Massachusetts or any Federal
Court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Borrower by
mail at the address specified herein. The Borrower hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit was brought in an inconvenient court.
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THE
BORROWER AND THE BANK (BY ACCEPTANCE OF THIS REVOLVING CREDIT NOTE) MUTUALLY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS REVOLVING CREDIT NOTE OR ANY OTHER LOAN DOCUMENTS EXECUTED
OR CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY RELATED HERETO, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE BANK RELATING TO THE
ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT
NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS
PROHIBITED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. THE BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO
ACCEPT THIS REVOLVING CREDIT NOTE AND MAKE THE LOAN EVIDENCED BY THIS REVOLVING
CREDIT NOTE.
This Revolving Credit Note is intended
by the parties as the final, complete and exclusive statement of the
transactions evidenced by this Revolving Credit Note. All prior or
contemporaneous promises, agreements and understandings, whether oral or
written, are deemed to be superceded by this Revolving Credit Note, and no party
is relying on any promise, agreement or understanding not set forth in this
Revolving Credit Note. This Revolving Credit Note may not be amended
or modified except by a written instrument describing such amendment or
modification executed by the Borrower and the Bank.
No portion of the proceeds of the
Loan shall be used, in whole or in part, for the purpose of purchasing or
carrying any “margin
stock” as such term is defined in Regulation U of the Board of Governors
of the Federal Reserve System.
The Bank may at any time pledge or
assign all or any portion of its rights under this Revolving Credit Note or the
Agreement (including any portion of the Note) to any of the twelve (12) Federal
Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C.
Section 341. No such pledge or assignment or enforcement thereof
shall release the Bank from its obligations under the Note, the Agreement or any
loan documents related thereto.
Upon receipt of (i) an affidavit of an
officer of the Bank as to the loss, theft, destruction or mutilation of this
Revolving Credit Note or any other loan document which is not of public record,
and (ii) an indemnity by the Bank in favor of the Borrower with respect to
losses, claims or damages resulting therefrom, and, in the case of any such
loss, theft, destruction or mutilation, upon cancellation of this Revolving
Credit Note or other loan document, the Borrower will issue, in lieu thereof, a
replacement Revolving Credit Note or other loan document in the same principal
amount thereof and otherwise of like tenor.
IN
WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note to be
executed by its duly authorized representative as an instrument under seal as of
the day and year first above written.
IPG
PHOTONICS CORPORATION
|
/s/
XXXX XXXXXX
Witness
|
By:
/s/
XXXXXXX X.X. XXXXXX
Name:
Xxxxxxx X.X. Xxxxxx
Title:
Vice President and Chief Financial
Officer
|
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