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EXHIBIT 4.3
CREDIT AGREEMENT
This Credit Agreement is dated May 28, 1999, and is between PERCEPTRON, INC., a
Michigan corporation (the "Borrower"), whose address is 00000 Xxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxx 00000, and BANK ONE, MICHIGAN, a Michigan banking corporation
(the "Bank"), whose address is 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000. The
parties agree as follows:
ARTICLE 1 - DEFINITIONS
"Adjusted EBITDA" for any period means EBITDA for such period, plus Rental
Expense for such period, minus Capital Expenditures for such period.
"Applicable Margin" means the percent per annum added to the Eurodollar Rate if
that rate is chosen by the Borrower, and as determined pursuant to Section 2.9
and by reference to the following matrix:
Funded Debt/ Eurodollar
EBITDA Rate plus
------ ---------
Equal to or greater
than 1.50%
1.00 to 1.00
Less than
1.00 to 1.00 1.25%
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Rate Loans, a day other than Saturday or Sunday on which
the Bank is open for business in Detroit and banks are open for business in New
York and on which dealings in United States dollars are carried on in the London
interbank market, and (ii) for all other purposes, a day other than Saturday or
Sunday on which the Bank is open for business in Detroit.
"Capital Expenditures" for any period means capital expenditures of the Borrower
and its Subsidiaries for such period, as determined on a consolidated basis in
accordance with GAAP.
"Commitment" means the obligation of the Bank (a) to make Loans not exceeding
$15,000,000 minus any outstanding Letters of Credit, and (b) to issue Letters of
Credit not exceeding $1,000,000 so long as the aggregate of the Letters of
Credit plus the outstanding balance of Loans does not exceed $15,000,000.
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"Consolidated" or "consolidated" means, when used with reference to any
financial term in this Agreement, the aggregate for two or more persons of the
amounts signified by such term for all such Persons determined on a consolidated
basis in accordance with GAAP.
"Default" means an event described in Section 7.
"EBITDA" means, for any period, the operating income (before the deduction of
Interest Expense and income tax expense) of the Borrower and its Subsidiaries on
a consolidated basis for such period, plus each of the following with respect to
the Borrower and its Subsidiaries for such period to the extent utilized in
determining such income, without duplication: (i) depreciation and (ii)
amortization of deferred costs and other intangibles.
"Eurodollar Base Rate" means the rate determined by the Bank to be the rate at
which deposits in U.S. dollars are offered to the Bank by first class banks in
the London interbank market at approximately 11 a.m. (London time) two Business
Days prior to the first day of that Eurodollar Interest Period, in the
approximate amount of the relevant Eurodollar Rate Loan and having a maturity
approximately equal to that Eurodollar Interest Period.
"Eurodollar Interest Period" means a period of one, two or three months
commencing on a Business Day selected by the Borrower pursuant to this
Agreement. The Eurodollar Interest Period ends on the day which corresponds
numerically to that date one, two or three months thereafter. If there is no
numerically corresponding day in the next, second or third succeeding month,
that Eurodollar Interest Period ends on the last Business Day of the relevant
month. If a Eurodollar Interest Period would otherwise end on a day which is not
a Business Day, that Eurodollar Interest Period ends on the next succeeding
Business Day, unless that Business Day falls in a new month in which case that
Eurodollar Interest Period ends on the immediately preceding Business Day.
"Eurodollar Rate" means the sum of (i) the quotient of (a) the Eurodollar Base
Rate applicable to that Eurodollar Interest Period divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to that Eurodollar
Interest Period plus (ii) the Applicable Margin per annum. The Eurodollar Rate
will be rounded, if necessary, to the next higher 1/16 of 1%.
"Fixed Charge Coverage Ratio" means the ratio of Adjusted EBITDA to Fixed
Charges.
"Fixed Charges" for any period means the sum, without duplication, of the
following for such period, determined for the Borrower and its Subsidiaries on a
consolidated basis: (i) Interest Expense, plus (ii) Rental Expense, plus (iii)
income tax expense, plus (iv) the aggregate amount of all dividends, payments
and other distributions (including, without limitation, any such payments and
distributions in connection with any redemption, purchase, retirement or other
acquisition of the Borrower's capital stock) paid, payable or otherwise
accumulating with respect to any class of the Borrower's capital stock, plus (v)
all scheduled payments of principal or other sums paid or payable by the
Borrower and its Subsidiaries in respect of Funded Debt.
"Floating Rate" means a rate per annum equal to the difference of (i) the Prime
Rate minus (ii) 1/2% per annum, changing when and as the Prime Rate changes.
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"Funded Debt" of any Person means, without duplication, all indebtedness of such
Person to the Bank, all lease obligations of such person which, in accordance
with GAAP, are or should be capitalized on the books of such Person, and all
other indebtedness of such Person for borrowed money or that otherwise bears
interest, other than Subordinated Debt.
"GAAP" means, as of the date of determination, generally accepted accounting
principles, consistently applied.
"Interest Expense" means, for any period and in respect of any Person, the
interest expense of such Person in respect of such period, determined in
accordance with GAAP.
"Interest Period" means a Eurodollar Interest Period.
"Lending Installation" means any office, branch, subsidiary or affiliate of the
Bank.
"Letter of Credit" means a standby letter of credit issued by the Bank for the
account of the Borrower, as amended or renewed.
"Letter of Credit Documents" means all applications, reimbursement and security
agreements given by the Borrower to the Bank in the Bank's standard form for any
Letter of Credit, and any amendment or renewal.
"Lien" means any security interest, mortgage, pledge, lien, claim, charge,
encumbrance, title retention agreement, lessor's interest under a capitalized
lease or analogous instrument, in, of or on any Person's assets or properties in
favor of any other Person.
"Loan" means any loan made (or any conversion or continuation of any loan) by
the Bank to the Borrower pursuant to this Agreement and the Note.
"Material Adverse Effect" means with respect to any matter that matter (i)
could reasonably be expected to materially and adversely affect the business,
properties, condition (financial or otherwise), or results of operations of the
Borrower and its Subsidiaries, taken as a whole, or (ii) has been brought by or
before any court or arbitrator or any governmental body, agency or official, and
draws into question the validity or enforceability of any material provision of
this Agreement, the Note or any of the Letter of Credit Documents.
"Note" means a promissory note in substantially the form of Exhibit A, duly
executed and delivered to the Bank by the Borrower, including any amendment or
replacement.
"Obligations" means all unpaid principal of and accrued and unpaid interest on
the Note, all accrued and unpaid facility fees, all outstanding Letters of
Credit, and all other obligations of the Borrower to the Bank arising under this
Agreement, the Note, and the Letter of Credit Documents.
"Person" means any corporation, natural person, firm, limited liability company,
joint venture, partnership, trust, unincorporated organization, enterprise,
government or any department or agency of any government.
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"Prime Rate" means the rate per annum equal to the prime rate of interest
announced by the Bank from time to time, changing when and as the prime rate
changes.
"Rate Option" means the Eurodollar Rate or the Floating Rate.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System from time to time in effect and includes any successor or other
regulation or official interpretation of the Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Rental Expense" for any period means the maximum amount of all rents and other
payments (exclusive of property taxes, property and liability insurance premiums
and maintenance costs) paid or required to be paid by the Borrower during such
period under any operating lease in respect of which the Borrower is obligated
as a lessee or user.
"Reserve Requirement" means with respect to a Eurodollar Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Revolving Credit Termination Date" means May 31, 2001.
"Section" means a numbered section of this Agreement, unless another document is
specifically referenced.
"Subordinated Debt" means all debt, obligations and liabilities of the Borrower
to any Person other than the Bank which has been subordinated to the Obligations
pursuant to a subordination agreement reasonably satisfactory in form and
content to the Bank.
"Subsidiary" means any Person more than 50% of the outstanding voting securities
or other voting interests of which are at the time owned or controlled, directly
or indirectly, by the Borrower or by one or more Subsidiaries or by the Borrower
and one or more Subsidiaries, or any similar business organization which is so
owned or controlled.
"Unmatured Default" means an event which but for the lapse of time or the giving
of notice, or both, would constitute a Default.
"Year 2000 Issues" means anticipated costs, problems and uncertainties
associated with the inability of certain computer applications to effectively
handle data including dates on and after January 1, 2000, as such inability
affects the business, operations, and financial condition of the Borrower and of
the Borrower's material customers, suppliers and vendors.
The foregoing definitions are applicable to both the singular and plural forms
of the defined terms. Any accounting terms used but not otherwise defined have
the meanings given them under GAAP.
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ARTICLE 2 - THE LOANS
2.1 COMMITMENT TO LEND. From and including the date of this Agreement and prior
to the Revolving Credit Termination Date, the Bank agrees, on the terms of this
Agreement:
A) to make Loans to the Borrower from time to time in amounts not
exceeding, in the aggregate at any one time outstanding, the amount of the
Commitment as it is reduced from time to time by outstanding Letters of Credit.
B) to issue Letters of Credit as requested by the Borrower in amounts not
exceeding the portion of the Commitment allocated to Letters of Credit as it may
be reduced by Loans and Letters of Credit then outstanding. Notwithstanding
anything in this Agreement to the contrary, the Bank may decline to issue any
requested Letter of Credit on the basis that the beneficiary, the purpose of
issuance or the terms or the conditions of drawing are unacceptable to it in its
reasonable discretion.
2.2 FEES AND REDUCTION OF THE COMMITMENT. The Borrower agrees to pay to the
Bank a facility fee in the amount of $20,000 for this Agreement ($10,000 of
which has been received by the Bank, shall be deemed earned by the Bank and is
non-refundable), and a commitment fee of 1/4% per annum on the daily unused
amount of the Commitment from the date of this Agreement to and including the
Revolving Credit Termination Date, payable on the last day of each quarter and
on the Revolving Credit Termination Date. The Borrower may permanently reduce
the Commitment in whole, or in part in integral multiples of $100,000, upon at
least ten Business Days' written notice to the Bank, which must specify the
amount of any reduction, but the amount of the Commitment may not be reduced
below the outstanding principal amount of the Loans and Letters of Credit. All
accrued commitment fees are payable on the effective date of any termination of
the obligations of the Bank to make Loans.
2.3 LOANS. Subject to the terms of this Agreement, the Borrower may borrow,
repay and reborrow at any time prior to the Revolving Credit Termination Date.
The Loans may be Floating Rate Loans or Eurodollar Rate Loans, or a combination
of them, selected by the Borrower in accordance with Section 2.4. The Loans must
be repaid in full on the Revolving Credit Termination Date. The Bank may book
the Loans at any Lending Installation. The Borrower may from time to time prepay
outstanding Floating Rate Loans in whole or in part without penalty or premium.
A Eurodollar Rate Loan may not be paid prior to the last day of the applicable
Interest Period.
2.4 METHOD OF SELECTING RATE OPTIONS AND INTEREST PERIODS. The Borrower may
select the Rate Option and Interest Period applicable to each Loan from time to
time. The Borrower must give the Bank an irrevocable borrowing notice not later
than 3:30 p.m. Detroit time on the borrowing date of each Floating Rate Loan and
10:00 a.m. Detroit time three Business Days before the borrowing date for each
Eurodollar Rate Loan, specifying:
(I) the borrowing date of that Loan, which must be a Business Day,
(II) the amount of that Loan,
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(III) the Rate Option selected for that Loan, and
(IV) in the case of each Eurodollar Rate Loan, the Interest Period
applicable to it.
Each Eurodollar Rate Loan will bear interest on the outstanding principal amount
for each day during the Interest Period applicable to it from and including the
first day of that Interest Period to (but not including) the last day of that
Interest Period at the interest rate determined as applicable to that Eurodollar
Rate Loan. If at the end of an Interest Period for an outstanding Eurodollar
Rate Loan, the Borrower has failed to select a new Rate Option or to pay that
Loan, then that Loan will be converted to a Floating Rate Loan on and after the
last day of the Interest Period until paid or until the effective date of a new
Rate Option with respect to it is selected by the Borrower. An outstanding
Floating Rate Loan may be converted to a Eurodollar Rate Loan at any time
subject to the notice provisions applicable to the type of Loan selected. The
Borrower may not select a Eurodollar Rate for a Loan if there exists a Default
or Unmatured Default. The Borrower may not select an Interest Period which would
end after the Revolving Credit Termination Date. Each Eurodollar Rate Loan must
be in the minimum amount of $1,000,000 (and in multiples of $100,000 if in
excess of the minimum).
2.5 RATES APPLICABLE AFTER DEFAULT. If any Loan is not paid at maturity,
whether by acceleration or otherwise, (i) each Eurodollar Rate Loan will bear
interest for the remainder of the applicable Interest Period at the rate
otherwise applicable to that Interest Period plus 3% per annum, and (ii) each
Floating Rate Loan will bear interest at a rate per annum equal to the Floating
Rate otherwise applicable to the Floating Rate Loan plus 3% per annum. During
the continuance of any other Default, the Bank may, at its option, by notice to
the Borrower, declare that (a) each Eurodollar Rate Loan will bear interest for
the remainder of the applicable Interest Period at the rate otherwise applicable
to that Interest Period plus 3% per annum, and (b) each Floating Rate Loan will
bear interest at a rate per annum equal to the Floating Rate otherwise
applicable to the Floating Rate Loan plus 3% per annum.
2.6 METHOD OF PAYMENT. All payments of principal, interest, and fees must be
made in immediately available funds to the Bank at the Bank's address specified
pursuant to Section 9.5, or at any other Lending Installation of the Bank
specified in writing by the Bank to the Borrower, by noon (local time) on the
date when due. The Bank is authorized to charge the account of the Borrower
maintained with it for each payment of principal, interest and fees as it
becomes due.
2.7 NOTE; TELEPHONIC NOTICES. The Bank is authorized to record on its books the
date, amount, Rate Option and Interest Period of each Loan, and the date and
amount of each principal payment made under the Note. These records govern
absent manifest error, provided that neither the failure to record nor any error
in that record affects the Borrower's obligations under the Note. The Borrower
authorizes the Bank to extend Loans and effect Rate Option selections based on
telephonic notices made by any person or persons the Bank in good faith believes
to be acting on behalf of the Borrower. The Borrower agrees to deliver promptly
to the Bank a written confirmation, if that confirmation is requested by the
Bank, of each telephonic notice, signed by an authorized officer of the
Borrower. If the written confirmation differs in any material respect from the
action taken by the Bank, the records of the Bank govern, absent manifest error.
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2.8 INTEREST PAYMENT DATES; INTEREST BASIS. Interest accrued on the Loans is
payable (i) for Floating Rate Loans, on the last day of each month, (ii) for
Eurodollar Rate Loans, on the last day of its applicable Interest Period and
(iii) for all Loans, on any date on which the Loan is paid or prepaid, whether
due to acceleration or otherwise. Interest accrued on each Eurodollar Rate Loan,
if any, having an Interest Period longer than three months is also payable on
the last day of each three-month interval during that Interest Period. Interest
and commitment fees are calculated for actual days elapsed on the basis of a
360-day year. Interest is payable for the day a Loan is made but not for the day
of any payment on the amount paid if payment is received prior to noon (local
time) at the place of payment. If any payment of principal of or interest on a
Loan becomes due on a day which is not a Business Day, that payment must be made
on the next succeeding Business Day and, in the case of a principal payment,
that extension of time is included in computing interest.
2.9 APPLICABLE MARGIN ADJUSTMENTS. The Applicable Margin is determined based on
the ratio (the "Ratio") of (i) the Funded Debt of the Borrower as of each fiscal
quarter end (each a "Determination Date") to (ii) the EBITDA of the Borrower for
the four consecutive fiscal quarters then ending, and the pricing matrix in the
definition of Applicable Margin. Each determination and adjustment will only be
applied prospectively, and is made irrespective of any other interest rate
adjustment. Each adjustment, if any, of the Applicable Margin based upon the
Ratio as of each Determination Date shall be made as of the first day of the
second calendar quarter following such Determination Date. Without limiting any
of the other rights and remedies of the Bank under this Agreement, in the event
the Borrower shall fail to deliver the financial statements required under
Section 6.1 when required for any Determination Date, the Applicable Margin
shall be adjusted to, or remain at, as the case may be, the highest level set
forth in the definition of the term "Applicable Margin" until such time as such
financial statements are so delivered and demonstrate that the Applicable Margin
should be set at a different level in accordance with such definition and this
Section 2.9.
2.10 LETTERS OF CREDIT. Subject to the terms of this Agreement, the Borrower may
request Letters of Credit at any time prior to the Revolving Credit Termination
Date. Each request must be in the form of the Letter of Credit Documents. Each
Letter of Credit must expire on the earlier of the Revolving Credit Termination
Date or twelve months after its issuance date.
2.11 LETTER OF CREDIT COMMISSIONS. Each Letter of Credit is subject to a
commission in the amount equal to the greater of $250 or 1% per annum of the
face amount plus the costs of issuance.
ARTICLE 3 - CHANGE IN CIRCUMSTANCES
3.1 YIELD PROTECTION. If any change after the date of this Agreement (whether
or not now contemplated) in any law or governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law), or change after the date of this Agreement (whether or not now
contemplated) in any interpretation of them, or compliance by the Bank with any
of them after any such change becomes effective,
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(I) subjects the Bank or any applicable Lending Installation to any tax,
duty, charge or withholding on or from payments due from the Borrower (excluding
taxation of the overall net income of the Bank or applicable Lending
Installation), or changes the basis of taxation of payments to the Bank in
respect of its Loans or other amounts due to it under this Agreement, or
(II) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, the Bank or any
applicable Lending Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurodollar Rate Loans),
or
(III) imposes any other condition the result of which is to increase the
cost to the Bank or any applicable Lending Installation of making, funding or
maintaining loans or reduces any amount receivable by the Bank or any applicable
Lending Installation in connection with loans, or requires the Bank or any
applicable Lending Installation to make any payment calculated by reference to
the amount of loans held or interest received by it, by an amount deemed
material by the Bank, or
(IV) affects the amount of capital required or expected to be maintained
by the Bank or any Lending Installation or any corporation controlling the Bank,
and the Bank determines the amount of capital required is increased by or based
on the existence of this Agreement or its obligation to make Loans under this
Agreement or of commitments of this type,
then, within 15 days of the Bank's demand, the Borrower must pay the Bank that
portion of the increased expense incurred (including, in the case of Section
3.1(iv), any reduction in the rate of return on capital to an amount below that
which it could have achieved but for the law, rule, regulation, policy,
guideline or directive, and after taking into account the Bank's policies as to
capital adequacy) or reduction in amounts received which the Bank determines is
attributable to making, funding and maintaining its Loans and its Commitment
(after taking into account the Bank's policies with respect to capital
adequacy). The Bank represents that it does not know of any amount that would be
payable under this Section 3.1 as of the date of this Agreement, although there
may be current laws or regulations that may cause an amount to be payable
hereunder after the date of this Agreement. The Bank will not assess amounts
under this Section 3.1 unless the Bank is generally charging such amounts to the
majority of its similarly situated customers.
3.2 AVAILABILITY OF RATE OPTIONS. If the Bank determines that maintenance of
its Eurodollar Rate Loans at a suitable Lending Installation would violate any
applicable law, rule, regulation or directive, whether or not having the force
of law, or if the Bank determines that (i) deposits of a type and maturity
appropriate to match fund Eurodollar Rate Loans are not available to it, or (ii)
a Rate Option does not accurately reflect the cost of making or maintaining a
Loan at that Rate Option, then the Bank may suspend the availability of the
affected Rate Option (other than the Floating Rate) and require any Eurodollar
Rate Loans outstanding under an affected Rate Option to be repaid or converted
to an unaffected Rate Option.
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3.3 FUNDING INDEMNIFICATION. If any payment of a Eurodollar Rate Loan occurs on
a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Rate Loan is
not made on the date specified by the Borrower for any reason other than default
by the Bank, the Borrower indemnifies the Bank for any loss or cost incurred by
it resulting from these facts, including without limitation any loss or cost in
liquidating or employing deposits acquired to fund or maintain the Eurodollar
Rate Loan.
3.4 BANK STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably possible,
the Bank will designate an alternate Lending Installation with respect to
Eurodollar Rate Loans to reduce any liability of the Borrower to the Bank under
Section 3.1 or to avoid the unavailability of a Rate Option under Section 3.2,
so long as that designation is not disadvantageous to the Bank. The Bank will
deliver a written statement as to the amount due, if any, under Section 3.1 or
3.3. That written statement will set forth in reasonable detail the calculations
upon which the Bank determined the amount, and is final, conclusive and binding
on the Borrower in the absence of manifest error. Determination of amounts
payable under those Sections in connection with a Eurodollar Rate Loan will be
calculated as though the Bank funded its Eurodollar Rate Loan through the
purchase of a deposit of the type and maturity corresponding to the deposit used
as a reference in determining the Eurodollar Rate applicable to that Loan,
whether in fact that is the case or not. Unless otherwise provided in this
Agreement, the amount specified in the written statement is payable on demand
after receipt by the Borrower of the written statement. The obligations of the
Borrower under Sections 3.1 and 3.3 survive payment of the Obligations and
termination of this Agreement.
ARTICLE 4 - CONDITIONS PRECEDENT
4.1 INITIAL LOAN OR LETTER OF CREDIT. The Bank is not required to make the
initial Loan or issue the initial Letter of Credit under this Agreement unless
the Borrower has furnished to the Bank whatever opinions of counsel,
certificates of incumbency, resolutions, bylaws and articles of incorporation
which the Bank reasonably requests, and, if requested by the Bank, information
satisfactory to the Bank regarding the Borrower's plan for addressing Year 2000
Issues.
4.2 EACH LOAN. The Bank is not required to make any Loan or issue any Letter of
Credit, unless on the applicable borrowing date (i) there exists no Default or
Unmatured Default, (ii) the warranties contained in Article 5 are true and
correct as of such borrowing date, and (iii) all legal matters incident to
making the Loan or issuing the Letter of Credit, as the case may be, including
without limitation executed and delivered Letter of Credit Documents, are
reasonably satisfactory to the Bank and its counsel.
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ARTICLE 5 - WARRANTIES
The Borrower warrants to the Bank that:
5.1 CORPORATE EXISTENCE AND STANDING. Each of the Borrower and the Subsidiaries
is a corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has all requisite authority to
conduct its business in each jurisdiction in which its business is conducted
except where the failure to have that authority would not have a Material
Adverse Effect.
5.2 AUTHORIZATION AND VALIDITY. The Borrower has the corporate power and
authority and legal right to execute and deliver this Agreement and the Note and
to perform its obligations under them. The execution and delivery by the
Borrower of this Agreement and the Note and the performance of its obligations
under them have been duly authorized by proper corporate proceedings, and this
Agreement and the Note each constitute legal, valid and binding obligations of
the Borrower enforceable against the Borrower in accordance with their
respective terms.
5.3 NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and delivery by the
Borrower of this Agreement and the Note, nor the consummation of the
transactions described in them, nor compliance with their provisions will
violate any law, rule, regulation, order, writ, judgment, injunction, decree or
award binding on the Borrower or any Subsidiary, or the Borrower's or any
Subsidiary's articles of incorporation or bylaws, or the provisions of any
indenture, instrument or agreement to which the Borrower or any Subsidiary is a
party or is subject, or by which it or its property is bound, or conflict with
or constitute a default under any indenture, instrument or agreement, or result
in the creation or imposition of any Lien in, of or on the property of the
Borrower or a Subsidiary pursuant to the terms of any indenture, instrument or
agreement. No order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, or other action
in respect of, any governmental or public body or authority, or any subdivision
of them, is required to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, this Agreement or the Note.
5.4 FINANCIAL STATEMENTS. The December 31, 1998 consolidated financial
statements of the Borrower and the Subsidiaries previously delivered to the Bank
were prepared in accordance with GAAP in effect on the date those statements
were prepared and fairly present the consolidated financial condition and
operations of the Borrower and the Subsidiaries at that date and the
consolidated results of their operations for the period then ended.
5.5 MATERIAL ADVERSE CHANGE. Since December 31, 1998, there has been no
material adverse change in the business, properties, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries, taken
as a whole.
5.6 LITIGATION AND CONTINGENT OBLIGATIONS. Except as disclosed on Schedule 5.6
attached to this Agreement, there is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or, to the knowledge of any of
their officers, threatened against or affecting the Borrower or any Subsidiary
which is reasonably likely to have a Material Adverse Effect. The
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Borrower has no material contingent obligations not provided for or disclosed
in the financial statements referred to in Section 5.4.
5.7 REGULATION U. Margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) constitutes less than 25% of those
assets of the Borrower and its Subsidiaries which are subject to any limitation
on sale, pledge, or other restriction under this Agreement.
5.8 COMPLIANCE WITH LAWS. The Borrower and its Subsidiaries have complied in
all material respects with all applicable statutes, rules, regulations, orders
and restrictions of any domestic or foreign government or any instrumentality or
agency of them, having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties, except to the extent
that the failure to so qualify would not have a Material Adverse Effect.
ARTICLE 6 - COVENANTS
During the term of this Agreement, unless the Bank otherwise consents in
writing:
6.1 FINANCIAL REPORTING. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with GAAP, and furnish to the Bank:
(I) Within 90 days after the close of each of its fiscal years, an
unqualified (except for qualifications relating to changes in accounting
principles or practices reflecting changes in GAAP and required or approved by
the Borrower's independent certified public accountants) audit report certified
by independent certified public accountants, reasonably acceptable to the Bank,
prepared in accordance with GAAP on a consolidated basis for itself and the
Subsidiaries, including a consolidated balance sheet as of the end of that
period, related consolidated statements of income and retained earnings, and a
consolidated statement of cash flows, together with the related consolidating
worksheets for the income statement and balance sheet certified by the chief
financial officer of the Borrower, and a certificate, in form and substance
reasonably satisfactory to the Bank, of the chief financial officer of the
Borrower to the effect that a computation (which computation shall accompany
such certificate and shall be in form and substance reasonably satisfactory to
the Bank) showing compliance with Sections 6.12, 6.13 and 6.14 is in conformity
with the requirements of this Agreement.
(II) Within 60 days after the close of the first three quarterly periods
of each of its fiscal years, for itself and the Subsidiaries, a consolidated
unaudited balance sheet as of the close of each such period and consolidated
statements of income and cash flows for the period from the beginning of that
fiscal year to the end of that quarter, all certified by the chief financial
officer of the Borrower, together with the related consolidating worksheets for
the income statement and balance sheet certified by the chief financial officer
of the Borrower, and a certificate, in form and substance satisfactory to the
Bank, of the chief financial officer of the Borrower to the effect that a
computation (which computation shall accompany such certificate and shall be in
form and substance reasonably satisfactory to the Bank) showing compliance with
Sections 6.12, 6.13 and 6.14 is in conformity with the requirements of this
Agreement.
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(III) Promptly upon furnishing it to its shareholders, copies of all
financial statements, reports and proxy statements so furnished.
(IV) Promptly upon filing them, copies of all registration statements and
annual, quarterly, monthly or other regular reports which the Borrower or any
Subsidiary files with the Securities and Exchange Commission.
(V) Any other information (including non-financial information) which the
Bank or any Lending Installation from time to time reasonably requests.
6.2 USE OF PROCEEDS. The Borrower will, and will cause each Subsidiary to, use
the Letters of Credit and proceeds of the Loans for general corporate purposes.
The Borrower may not, nor may it permit any Subsidiary to, use any of the
Letters of Credit or proceeds of the Loans to purchase or carry any "margin
stock" (as defined in Regulation U).
6.3 CONDUCT OF BUSINESS. The Borrower will, and will cause each Subsidiary to,
carry on and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted, and do
all things necessary to remain duly incorporated, validly existing and in good
standing as a domestic corporation in its jurisdiction of incorporation and
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted, except that, without limiting the requirements
of Section 6.15, the Borrower may dissolve or otherwise terminate the separate
existence of a Subsidiary if that dissolution or termination would not have a
Material Adverse Effect.
6.4 TAXES. The Borrower will, and will cause each Subsidiary to, timely file
complete and correct United States federal and applicable foreign, state and
local tax returns required by law, and pay when due all taxes, assessments and
governmental charges and levies on it or its income, profits or property, except
those which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves have been set aside.
6.5 COMPLIANCE WITH LAWS. The Borrower will, and will cause each Subsidiary to,
comply in all material respects with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject,
except to the extent such noncompliance would not have a Material Adverse
Effect.
6.6 MERGER. The Borrower will not merge or consolidate with or into any other
Person unless the Borrower is the legally surviving corporation and, after
giving effect to the merger or consolidation, no Default or Unmatured Default
exists.
6.7 LIENS. The Borrower will not, nor will it permit any Subsidiary to, create,
incur, or suffer to exist any Lien in, of or on the property of the Borrower or
any Subsidiary, except:
(I) Liens for taxes, assessments or governmental charges or levies on its
property if they are not at the time delinquent or if they can be paid later
without penalty, or are being contested in good faith and by appropriate
proceedings.
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(II) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings and for which
adequate reserves have been set aside on its books.
(III) Liens arising out of pledges or deposits under worker's compensation
laws, unemployment insurance, old age pensions, or other social security or
retirement benefits, or similar legislation.
(IV) Good faith deposits in connection with bids, tenders, contracts or
leases to which the Borrower or any of its Subsidiaries is a party for a purpose
other than borrowing money or obtaining credit, including rent security
deposits.
(V) Pledges or deposits to secure public or statutory obligations of the
Borrower or any of its Subsidiaries, or surety, customs or appeal bonds to which
the Borrower or any of its Subsidiaries is a party.
(VI) Liens affecting real property which constitute minor survey
exceptions or defects or irregularities in title, minor encumbrances, easements
or reservations of, or rights of others for, rights of way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of such real property, provided that all of the
foregoing, in the aggregate, do not at any time materially detract from the
value of said properties or materially impair their use in the operation of the
businesses of the Borrower or any of its Subsidiaries.
(VII) Any Lien created to secure payment of a portion of the purchase
price of, or existing at the time of acquisition of, any tangible fixed asset
acquired by the Borrower or any of its Subsidiaries may be created or suffered
to exist upon such fixed asset if the outstanding principal amount of the
indebtedness secured by such Lien does not at any time exceed the purchase price
paid by the Borrower or such Subsidiary for such fixed asset and such
indebtedness secured by such Liens is permitted under Section 6.9; provided that
such Lien does not encumber any other asset at any time owned by the Borrower or
such Subsidiary, and provided, further, that not more than one such Lien shall
encumber any such fixed asset at any one time.
(VIII) Judgment and other similar liens, the existence of which judgment
does not constitute a Default under Section 7.8.
(IX) The interest or title of a lessor under any lease otherwise
permitted under this Agreement with respect to the property subject to such
lease to the extent performance of the monetary obligations of the Borrower or
any of its Subsidiaries thereunder are not delinquent in an amount in excess of
$100,000 in the aggregate.
(X) Liens existing on the date of this Agreement as described on
Schedule 6.7 attached hereto.
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6.8 NOTICE OF DEFAULT. The Borrower will, and will cause each Subsidiary to,
give prompt notice in writing to the Bank of the occurrence of any Default or
Unmatured Default and of any other development, financial or otherwise, which
might have a Material Adverse Effect or might materially adversely affect the
ability of the Borrower to repay the Obligations.
6.9 DEBT. The Borrower will not, nor will it permit any Subsidiary to, incur or
permit to remain outstanding, debt for borrowed money or installment obligations
in an aggregate principal amount which, together with undertakings of others
guaranteed by the Borrower or for which the Borrower otherwise is secondarily
liable, exceeds $200,000 at any time, except the following ("Permitted Debt"):
(i) indebtedness owing to the Bank or, with respect to the Subsidiaries, any of
the Bank's affiliates, (ii) indebtedness of any Subsidiary of the Borrower owing
to any other Subsidiary of the Borrower, and (iii) other indebtedness reflected
in the latest financial statement of the Borrower furnished to the Bank prior to
execution of this Agreement and not to be paid with proceeds of borrowings under
this Agreement. For purposes of this covenant, the sale of any accounts
receivable is deemed the incurring of debt for borrowed money. Nothing in this
Section shall prohibit trade accounts payable and receivable between the
Borrower and its Subsidiaries or between any Subsidiary of the Borrower and any
other Subsidiary of the Borrower arising in the ordinary course of business and
on terms not less favorable to the Borrower than those which could be obtained
if the related transaction were an arm's length transaction with a person other
than an affiliate.
6.10 GUARANTIES. The Borrower will not, nor will it permit any Subsidiary to,
guarantee or otherwise become or remain secondarily liable on the undertaking of
another in an aggregate amount which, together with the aggregate outstanding
principal amount of debt for borrowed money and other installment obligations of
the Borrower and its Subsidiaries, exceeds $200,000 at any time, except for (i)
endorsement of drafts for deposit and collection in the ordinary course of
business and (ii) guaranties by the Subsidiaries of the Borrower of any
Permitted Debt owing by the Borrower or by any other Subsidiary of the Borrower.
6.11 ADVANCES AND INVESTMENTS. The Borrower will not, nor will it permit any
Subsidiary to, purchase or acquire any securities of, or make any loans or
advances to, or investments in, any Person, except (i) obligations of the United
States Government, open market commercial paper rated one of the top two ratings
by a rating agency of recognized standing, or certificates of deposit in insured
financial institutions, and (ii) loans and advances by any Subsidiary of the
Borrower to any other Subsidiary of the Borrower and advances (without any
repayment obligation) by any Subsidiary of the Borrower to the Borrower. Nothing
in this Section shall prohibit trade accounts payable and receivable between the
Borrower and its Subsidiaries or between any Subsidiary of the Borrower and any
other Subsidiary of the Borrower arising in the ordinary course of business and
on terms not less favorable to the Borrower than those which could be obtained
if the related transaction were an arm's length transaction with a person other
than an affiliate.
6.12 FUNDED DEBT TO EBITDA RATIO. The Borrower will not permit or suffer the
ratio of (i) the Funded Debt of the Borrower as of the fiscal quarter end
corresponding to the determination date to (ii) the EBITDA of the Borrower for
the period of four consecutive quarters then ending
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to exceed (a) 4.50 to 1.00 at December 31, 1999 or (b) 3.00 to 1.00 at March 31,
2000 and thereafter, as of the end of each fiscal quarter.
6.13 EBITDA. The Borrower will not permit its EBITDA for the period commencing
with the first day of the then current fiscal year of the Borrower to the
determination date to be less than (i) ($4,300,000) at Xxxxx 00, 0000, (xx)
($4,800,000) at June 30, 1999, (iii) ($2,600,000) at September 30, 1999, (iv)
$1,200,000 at December 31, 1999, (v) $500,000 at Xxxxx 00, 0000, (xx) $2,000,000
at June 30, 2000, (vii) $4,000,000 at September 30, 2000, (viii) $6,000,000 at
December 31, 2000 and (ix) $500,000 at March 31, 2001.
6.14 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit its Fixed Charge
Coverage Ratio for the period of four consecutive fiscal quarters immediately
preceding the determination date to be less than (i) 1.35 to 1.00 at March 31,
2000 or (ii) 1.50 to 1.00 at June 30, 2000 and thereafter, as of the end of each
fiscal quarter.
6.15 DISPOSITION OF ASSETS. The Borrower will not, nor will it permit any
Subsidiary to, sell, lease, license, transfer, assign or otherwise dispose of
all or a substantial portion of its business, assets, rights, revenues or
property, real, personal or mixed, tangible or intangible, whether in one or a
series of transactions, other than (i) inventory sold in the ordinary course of
business upon customary credit terms, (ii) sales of scrap or obsolete material
or equipment and (iii) transfers between Subsidiaries of the Borrower.
6.16 DIVIDENDS. The Borrower will not make, pay, declare or authorize any
dividend, payment or other distribution in respect of any class of its capital
stock or any dividend, payment or distribution in connection with the
redemption, purchase, retirement or other acquisition, directly or indirectly,
of any shares of its capital stock, other than such dividends, payments or other
distributions to the extent payable solely in shares of the capital stock of the
Borrower. For purposes of this Section 6.16, "capital stock" shall include
capital stock and any securities exchangeable for or convertible into capital
stock and any warrants, rights or other options to purchase or otherwise acquire
capital stock or such securities.
6.17 NEGATIVE PLEDGE LIMITATION. The Borrower will not enter into any agreement,
with any person other than the Bank pursuant hereto, which prohibits or limits
the ability of the Borrower or any Subsidiary to create, incur, assume or suffer
to exist any Lien upon any of its assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, whether now owned or hereafter
acquired.
6.18 YEAR 2000 ISSUES. The Borrower will take all actions reasonably necessary
to assure that Year 2000 Issues will not have a Material Adverse Effect. Upon
the Bank's request, the Borrower will provide the Bank with a description of its
plan to address Year 2000 Issues, including updates and progress reports. The
Borrower will advise the Bank of any reasonably anticipated Material Adverse
Effect as a result of Year 2000 Issues.
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ARTICLE 7 - DEFAULTS
The occurrence of any one or more of the following events constitutes a Default:
7.1 Any warranty made or deemed made by or on behalf of the Borrower or any
Subsidiary to the Bank under or in connection with this Agreement, any Loan, any
Letter of Credit or any certificate or information delivered in connection with
this Agreement or the Note is materially false on the date as of which it is
made.
7.2 The principal of the Note is not paid when due, or any interest or any
facility fee or other obligations under this Agreement or the Note are not paid
within three days after they become due.
7.3 The Borrower breaches any of the terms of Article 6 and, with respect to
any breach under 6.1, 6.3, 6.4, 6.5, 6.7, 6.8, 6.9, 6.10, 6.11, 6.17 or 6.18,
such breach is not remedied within 10 days.
7.4 The Borrower breaches (other than a breach which constitutes a Default
under Section 7.1, 7.2 or 7.3) any of the terms of this Agreement and such
breach is not remedied within thirty days after written notice from the Bank.
7.5 The Borrower or any Subsidiary fails to pay any debt for borrowed money
when due, which individually or together with other such debt as to which any
such failure exists has an aggregate outstanding principal amount in excess of
$100,000; or the Borrower or any Subsidiary defaults in the performance of any
term contained in any agreement under which that debt was created or is
governed, the effect of which is to cause, or to permit the holder or holders of
that debt to cause, that debt to become due prior to its stated maturity; or any
debt of the Borrower or any Subsidiary is declared to be due and payable or
required to be prepaid or repurchased (other than by a regularly scheduled
payment) prior to its stated maturity, which individually or together with other
such debt as to which any such failure exists has an aggregate outstanding
principal amount in excess of $100,000; or the Borrower or any Subsidiary does
not pay, or admits in writing its inability to pay, its debts generally as they
become due.
7.6 The Borrower or any Subsidiary (i) has an order for relief entered with
respect to it under present or future Federal bankruptcy laws, (ii) makes an
assignment for the benefit of creditors, (iii) applies for, seeks, consents to,
or acquiesces in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or any substantial part of its property,
(iv) institutes any proceeding seeking an order for relief under present or
future Federal bankruptcy laws, or seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or fails to
file an answer or other pleading denying the material allegations of any such
proceeding filed against it, (v) takes any corporate action to authorize or
effect any of the foregoing actions set forth in this Section 7.6 or (vi) fails
to contest in good faith any appointment or proceeding described in Section 7.7.
7.7 Without the application, approval or consent of the Borrower or any
Subsidiary, a receiver, trustee, examiner, liquidator or similar official is
appointed for the Borrower or any
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Subsidiary or any substantial part of its property, or a proceeding described in
Section 7.6(iv) is instituted against the Borrower or any Subsidiary and that
appointment continues undischarged or those proceedings continue undismissed or
unstayed for a period of 60 consecutive days.
7.8 The Borrower or any Subsidiary shall fail within 30 days to pay, bond or
otherwise discharge any judgment or order for the payment of money in excess of
$500,000, which is not stayed on appeal or otherwise being appropriately
contested in good faith or is not fully insured against, within the applicable
period of limitations for appealing such judgment or order and prior to the
denial of any such appeal.
7.9 Any reportable event (as defined in Section 4043 of ERISA) occurs in
connection with any plan (as defined in ERISA) which results in or could result
in a Material Adverse Effect and such reportable event is not corrected within
30 days after the occurrence thereof.
7.10 Any Person, or two or more Persons acting in concert, acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 30% or more of the
outstanding shares of the Borrower's voting stock.
ARTICLE 8 - ACCELERATION; REMEDIES; AND AMENDMENTS
8.1 ACCELERATION. If any Default described in Section 7.6 or 7.7 occurs with
respect to the Borrower, the obligation of the Bank to make Loans automatically
terminates and the Obligations are immediately due and payable without any
election or action on the part of the Bank. If any other Default occurs, the
Bank may terminate or suspend its obligation to make Loans, or declare the
Obligations due and payable, or both, whereupon the Obligations are immediately
due and payable, without presentment, demand, protest or notice of any kind, all
of which the Borrower expressly waives.
8.2 PRESERVATION OF RIGHTS. No delay or omission of the Bank to exercise any
right under this Agreement or the Note impairs that right nor can it be
construed to waive any Default or acquiesce in any Default, and the making of a
Loan notwithstanding the existence of a Default or the inability of the Borrower
to satisfy the conditions precedent to that Loan does not constitute a waiver or
acquiescence. Any single or partial exercise of any right does not preclude any
other or further exercise of it or the exercise of any other right, and no
waiver, amendment or other variation of the terms of this Agreement or the Note
is valid unless in writing signed by the Bank and the Borrower and then only to
the extent that writing specifies. All remedies contained in this Agreement and
the Note or by law afforded are cumulative and all are available to the Bank
until the Obligations have been paid in full.
8.3 AMENDMENTS. Subject to the provisions of this Article 8, the Bank and the
Borrower may enter into agreements supplementing this Agreement for the purpose
of adding or modifying this Agreement or the Note or changing in any manner the
rights of the Bank or the Borrower or waiving any Default.
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8.4 SETOFF. In addition to and without limiting any rights of the Bank under
applicable law, if the Borrower becomes insolvent, howsoever evidenced, or any
Default occurs, any and all deposits (including all account balances, whether
provisional or final and whether or not collected or available) and any other
debt at any time held or owing by the Bank to or for the credit or account of
the Borrower may be offset and applied toward the payment of the Obligations
owing to the Bank, whether or all or any part of the Obligations are then due.
ARTICLE 9 - GENERAL PROVISIONS
9.1 SURVIVAL OF WARRANTIES. All warranties of the Borrower contained in this
Agreement survive the delivery of the Note and the making of the Loans and the
issuance of Letters of Credit.
9.2 TAXES. Any taxes (excluding income taxes) or other similar assessments or
charges payable or ruled payable by any governmental authority in respect of
this Agreement and the Note must be paid by the Borrower, together with interest
and penalties, if any.
9.3 EXPENSES; INDEMNIFICATION. The Borrower must reimburse the Bank for any
costs, internal charges and out-of-pocket expenses (including reasonable
attorneys' fees and time charges of attorneys for the Bank, who may be employees
of the Bank) paid or incurred by the Bank in connection with the preparation,
review, execution, delivery, amendment, modification, administration, collection
and enforcement of this Agreement and the Note, provided that such attorneys'
fees in connection with the preparation, review, execution and delivery of this
Agreement and the Note for which the Borrower is responsible shall be only the
portion of the aggregate amount of such fees in excess of $5,000. The Borrower
further indemnifies the Bank, its directors, officers and employees against all
losses, claims, damages, penalties, judgments, liabilities and expenses
(including without limitation all expenses of litigation or preparation for
litigation whether or not the Bank is a party) which any of them pay or incur
arising out of or relating to this Agreement, the Note, the transactions
described in this Agreement or the direct or indirect application or proposed
application of the proceeds of any Loan, provided, however, that the Borrower
shall not be required to indemnify the Bank or any such other person, to the
extent, but only to the extent, that such losses, claims, damages, penalties,
judgments, liabilities or expenses are of a type generally borne by lenders in
the ordinary course of business and are not material in amount in the aggregate,
or which are attributable to the gross negligence or willful misconduct of the
Bank. The obligations of the Borrower under this Section survive the termination
of this Agreement.
9.4 SUCCESSORS AND ASSIGNS. The terms of this Agreement and the Note bind and
benefit the Borrower and the Bank and their respective successors and assigns,
except that the Borrower has no right to assign its rights or obligations under
this Agreement or the Note. The Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any time
sell to one or more banks or other entities participating interests in any Loan,
the Note or the Commitment. The Bank may, with the consent of the Borrower,
which consent may not be unreasonably withheld, assign to one or more banks or
other entities all or any part of its rights and obligations under this
Agreement or the Note, and the Borrower releases the Bank for the amount so
assigned.
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9.5 GIVING NOTICE. Except as otherwise permitted by Section 2.7 with respect to
borrowing notices, all notices, requests and other communications to any party
must be in writing (including bank wire, telex, facsimile transmission or
similar writing) and must be given to a party: (y) in the case of the Borrower
or the Bank, at its address, facsimile number or telex number set forth on the
signature page below, or (z) in the case of any party, whatever other address,
facsimile number or telex number that party specifies for the purpose, by notice
to the other. Each notice, request or other communication is effective (i) if
given by telex, when it is transmitted to the telex number specified in this
Section and the appropriate answerback is received, (ii) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received, (iii) if given by mail, 72 hours after
that communication is deposited in the mails with first class postage prepaid,
addressed as required, or (iv) if given by any other means, when delivered at
the address specified in this Section. However, notices to the Bank under
Article 2 are not effective until received.
ARTICLE 10 - GOVERNING LAW; JURISDICTION; JURY TRIAL WAIVER
10.1 CHOICE OF LAW. This Agreement and the Note are to be construed in
accordance with the internal laws (but not the law of conflicts) of Michigan.
10.2 CONSENT TO JURISDICTION. The Borrower irrevocably submits to the
non-exclusive jurisdiction of any United States federal or Michigan state court
sitting in Michigan in any action or proceeding arising out of or relating to
any Loan, and the Borrower irrevocably agrees that all such claims may be heard
and determined in any such court and irrevocably waives any present and future
objection it may have as to the venue of any action or proceeding brought in
that court, or that court is an inconvenient forum. Any judicial proceeding
by the Borrower against the Bank or any affiliate of the Bank involving,
directly or indirectly, any matter in any way arising out of, related to, or
connected with any Loan must be brought only in a court in Michigan.
10.3 WAIVER OF JURY TRIAL. The Bank and the Borrower knowingly and voluntarily
waive any right either of them to have to a trial by jury in any proceeding
(whether sounding in contract or tort) which is in any way connected with this
or any related agreement, or the relationship established under them. This
provision may only be modified in a written instrument executed by the Bank and
the Borrower.
[The rest of this page intentionally left blank.]
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EXECUTED as of the date first written above.
BORROWER: BANK:
PERCEPTRON, INC. NBD BANK
By: Xxxx X. Xxxxxx By: Xxxxx Xxxxx
----------------------- -------------------------
Its: Vice President Its: Vice President
----------------------- ------------------------
ADDRESS FOR NOTICES: ADDRESS FOR NOTICES:
00000 Xxxxxxx 00000 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000 Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attention: Xxxx Xxxxxx Attention: Xxxxx Xxxxx
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FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of August 24, 1999 (this
"Amendment"), is by and between PERCEPTRON, INC., a Michigan corporation (the
"Borrower"), and BANK ONE, MICHIGAN, a Michigan banking corporation (the
"Bank").
RECITALS
A. The Borrower and the Bank have entered into the Credit Agreement,
dated May 28, 1999 (the "Credit Agreement"), pursuant to which the Bank provides
to the Borrower a revolving credit facility, including letters of credit, in the
aggregate principal amount not to exceed $15,000,000.
B. The Borrower now desires that the Credit Agreement be amended in order
to modify the financial covenants and the pricing terms applicable to the loans
under the Credit Agreement, and the Bank is willing to so amend the Credit
Agreement on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein and in the Credit Agreement contained, the parties hereto
agree as follows:
ARTICLE 1. AMENDMENTS TO CREDIT AGREEMENT
Upon the date that the conditions precedent set forth in Article 2 of this
Amendment are satisfied, which date (the "Amendment Date") shall be determined
by the Bank in its sole discretion, the Credit Agreement hereby is amended as
follows, provided that such amendments pursuant to Sections 1.2, 1.3, 1.4 and
1.5 below shall be deemed retroactively effective as of June 30, 1999:
1.1 The definition of the term "Applicable Margin" in Article 1 is amended
and restated in full as follows:
"Applicable Margin" means the percent per annum added to the
Eurodollar Rate if that rate is chosen by the Borrower, and as
determined pursuant to Section 2.9 and by reference to the following
matrix:
22
Funded Debt/ Eurodollar
EBITDA Rate plus
------ ---------
Greater than 1.625%
3.00 to 1.00
Equal to or
greater than 1.50%
1.00 to 1.00
but not greater
than 3.00 to 1.00
Less than
1.00 to 1.00 1.25%
; provided that the "Applicable Margin" for each existing Loan that bears
interest at the Eurodollar Rate and with respect to which the current Eurodollar
Interest Period commenced prior to the Amendment Date shall continue as it was
at the time of the commencement of such current Eurodollar Interest Period,
through the end of such current Eurodollar Interest Period.
1.2 The following definitions of the terms "Tangible Net Worth" and "Total
Liabilities", respectively are added to Article 1 in alphabetical order:
"Tangible Net Worth" means, as of any date, (a) the amount of any
capital stock, paid in capital and similar equity accounts plus (or
minus in the case of a deficit) the capital surplus and retained
earnings and the amount of any foreign currency translation adjustment
account shown as a capital account, less (b) the net book value of all
items of the following character which are included in assets: (i)
goodwill, including, without limitation, the excess of cost over book
value of any asset, (ii) organization or experimental expenses, (iii)
unamortized debt discount and expense, (iv) patents, trademarks, trade
names and copyrights, (v) treasury stock, (vi) deferred taxes and
deferred charges, (vii) franchises, licenses and permits, and (viii)
other assets which are deemed intangible assets under GAAP; all as
determined for the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP.
"Total Liabilities" means, as of any date, the following, as
determined for the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP: all obligations which, in accordance
with GAAP, are or should be classified as liabilities on a balance
sheet and all contingent liabilities.
1.3 Each reference to "Sections 6.12, 6.13 and 6.14" in subparts (i) and
(ii) of Section 6.1 is deleted, and the following is substituted in place
thereof:
Sections 6.12, 6.13, 6.14 and 6.19.
-2-
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1.4 Sections 6.12, 6.13 and 6.14 are amended and restated in full as
follows:
6.12 FUNDED DEBT TO EBITDA RATIO. The Borrower will not permit or
suffer the ratio of (i) the Funded Debt of the Borrower as of the
fiscal quarter end corresponding to the determination date to (ii) the
EBITDA of the Borrower for the period of four consecutive quarters
then ending to exceed 3.00 to 1.00, such ratio to be determined as of
the end of each fiscal quarter, commencing with the fiscal quarter
ending on or about June 30, 2000.
6.13 EBITDA. The Borrower will not permit its EBITDA to be less than
(i) ($4,300,000) for the period from January 1, 1999 through the end
of its fiscal quarter ending on or about Xxxxx 00, 0000, (xx)
($6,200,000) for the period from January 1, 1999 through the end of
its fiscal quarter ending on or about June 30, 1999, (iii) $1,500,000
for the period from July 1, 1999 through the end of its fiscal quarter
ending on or about September 30, 1999, (iv) $2,100,000 for the period
from July 1, 1999 through the end of its fiscal quarter ending on or
about December 31, 1999, (v) $3,000,000 for the period from July 1,
1999 through the end of its fiscal quarter ending on or about Xxxxx
00, 0000, (xx) $4,500,000 for the period from July 1, 1999 through the
end of its fiscal quarter ending on or about June 30, 2000, (vii)
$1,800,000 for the period from July 1, 2000 through the end of its
fiscal quarter ending on or about September 30, 2000, (viii)
$3,600,000 from the period from July 1, 2000 through the end of its
fiscal quarter ending on or about December 31, 2000 and (ix)
$4,300,000 for the period from July 1, 2000 through the end of its
fiscal quarter ending on or about March 31, 2001.
6.14 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit its
Fixed Charge Coverage Ratio for the period of four consecutive fiscal
quarters immediately preceding the fiscal quarter end corresponding to
the determination date to be less than (i) 1.20 to 1.00 at June 30,
2000, (ii) 1.35 to 1.00 at September 30, 2000 or (iii) 1.50 to 1.00 at
December 31, 2000 and thereafter, as of the end of each fiscal
quarter.
1.5 The following Section 6.19 is added to the end of Article 6:
6.19 TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO. The Borrower will
not permit the ratio of Total Liabilities to Tangible Net Worth to
exceed 1.00 to 1.00 at any time.
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ARTICLE 2. CONDITIONS PRECEDENT TO AMENDMENTS
As conditions precedent to the effectiveness of the amendments to the
Credit Agreement set forth in Article 1 of this Amendment, the Bank shall
receive this Amendment duly executed on behalf of the Borrower, and certified
copies of such documents evidencing necessary corporate action of the Borrower
with respect to this Amendment and the transactions contemplated hereby, as the
Bank may reasonably request and in form and substance satisfactory to the Bank.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Amendment, the Borrower
represents and warrants that:
3.1 The execution, delivery and performance by the Borrower of this
Amendment are within its corporate powers, have been duly authorized by all
necessary corporate action and are not in contravention of any law, rule or
regulation, or any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of the terms of the Borrower's
charter or by-laws, or of any contract or undertaking to which the Borrower is a
party or by which the Borrower or its property is or may be bound or affected.
3.2 This Amendment is a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms.
3.3 No consent, approval or authorization of or declaration, registration
or filing with any governmental authority or any nongovernmental person or
entity, including without limitation any creditor or stockholder of the
Borrower, is required on the part of the Borrower in connection with the
execution, delivery and performance of this Amendment or the transactions
contemplated hereby or as a condition to the legality, validity or
enforceability of this Amendment.
3.4 After giving effect to the amendments contained in Article 1 of this
Amendment, the representations and warranties contained in Article 5 of the
Credit Agreement are true on and as of the date hereof with the same force and
effect as if made on and as of the date hereof.
3.5 No Default or Unmatured Default has occurred and is continuing.
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ARTICLE 4. MISCELLANEOUS
4.1 If the Borrower shall fail to perform or observe any term, covenant or
agreement in this Amendment, or any representation or warranty made by the
Borrower in this Amendment shall prove to have been incorrect in any material
respect when made, such occurrence shall be deemed to constitute a Default.
4.2 All references to the Credit Agreement in any other document,
instrument or certificate referred to in the Credit Agreement or delivered in
connection therewith or pursuant thereto, hereafter shall be deemed references
to the Credit Agreement, as amended hereby.
4.3 Subject to the amendments herein provided, the Credit Agreement shall
in all respects continue in full force and effect.
4.4 Capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement.
4.5 This Amendment shall be governed by and construed in accordance with
the laws of the State of Michigan.
4.6 The Borrower agrees to pay the reasonable fees and expenses of
Xxxxxxxxx Xxxxxx PLLC, counsel for the Bank, in connection with the negotiation
and preparation of this Amendment and the documents referred to herein and the
consummation of the transactions contemplated hereby, and in connection with
advising the Bank as to its rights and responsibilities with respect thereto.
4.7 This Amendment may be executed upon any number of counterparts with
the same effect as if the signatures thereto were upon the same instrument.
[The rest of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first-above written.
PERCEPTRON, INC.
By: /S/ XXXX X. XXXXXX
--------------------------
Its: Vice President
BANK ONE, MICHIGAN
(formerly known as NBD Bank)
By: /S/ XXXXX XXXXX
--------------------------
Its Vice President
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