EXHIBIT 10.4
TERM LOAN AGREEMENT
BY AND BETWEEN
HARDINGE INC.
BORROWER
AND
KEYBANK NATIONAL ASSOCIATION,
LENDER
DATED AS OF MARCH 20, 2001
TABLE OF CONTENTS
ARTICLE I: DEFINITIONS; CONSTRUCTION........................................1
1.01. CERTAIN DEFINITIONS.................................................1
1.02. CONSTRUCTION.......................................................10
1.03. ACCOUNTING PRINCIPLES..............................................10
ARTICLE II: THE TERM LOAN FACILITY.........................................11
2.01. TERM LOAN..........................................................11
2.02. INTEREST RATES.....................................................11
2.03. INABILITY TO DETERMINE RATES.......................................12
2.04. CONVERSION OR RENEWAL OF INTEREST RATE OPTIONS.....................13
2.05. PREPAYMENTS GENERALLY..............................................13
2.06. OPTIONAL PREPAYMENTS...............................................14
2.07. RESERVED...........................................................14
2.08. INTEREST PAYMENT DATES.............................................14
2.09. PAYMENTS GENERALLY; INTEREST ON OVERDUE AMOUNTS....................14
2.10. ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES...................15
2.11. TAXES..............................................................16
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF BORROWER....................17
3.01. ENTITY STATUS......................................................17
3.02. POWER AND AUTHORIZATION............................................17
3.03. EXECUTION AND BINDING EFFECT.......................................18
3.04. GOVERNMENTAL APPROVALS AND FILINGS.................................18
3.05. ABSENCE OF CONFLICTS...............................................18
3.06. AUDITED FINANCIAL STATEMENTS.......................................19
3.07. SOLVENCY...........................................................19
3.08. ABSENCE OF UNDISCLOSED LIABILITIES.................................19
3.09. ABSENCE OF MATERIAL ADVERSE CHANGES................................20
3.10. ACCURATE AND COMPLETE DISCLOSURE...................................20
3.11. OWNERSHIP AND CONTROL..............................................20
3.12. LITIGATION.........................................................20
3.13. ABSENCE OF EVENTS OF DEFAULT.......................................20
3.14. ABSENCE OF OTHER CONFLICTS.........................................20
3.15. TITLE TO PROPERTY..................................................21
3.16. INTELLECTUAL PROPERTY..............................................21
3.17. TAXES..............................................................21
3.18. RESERVED ..........................................................21
3.19. EMPLOYEE BENEFITS..................................................21
3.20. ENVIRONMENTAL MATTERS..............................................22
3.21. SECURITIES LAWS COMPLIANCE.........................................22
3.22. MARGIN REGULATIONS.................................................22
3.23. SUBSIDIARIES.......................................................22
3.24. PARTNERSHIPS, ETC..................................................22
3.25. LABOR RELATION.....................................................23
3.26. NO FORFEITURE......................................................23
ARTICLE IV: CONDITIONS.....................................................23
4.01. CONDITIONS TO ENTERING INTO AGREEMENT AND MAKING LOAN..............23
ARTICLE V: AFFIRMATIVE COVENANTS...........................................25
5.01. BASIC REPORTING REQUIREMENTS.......................................25
5.02. INSURANCE..........................................................26
5.03. COMPLIANCE WITH LAWS CORPORATE EXISTENCE...........................26
5.04. NOTICE OF PROCEEDINGS.............................................27
5.05. ENVIRONMENTAL LAWS.................................................27
5.06. ACCESS TO PREMISES AND RECORDS.....................................27
5.07. NOTICE OF DEFAULT..................................................27
5.08. SUBSIDIARIES.......................................................27
5.09. USE OF PROCEEDS....................................................28
5.10. MATERIAL ADVERSE CHANGES...........................................28
ARTICLE VI: NEGATIVE COVENANTS.............................................28
6.01. FINANCIAL COVENANTS................................................28
6.02. LIENS..............................................................29
6.03. LEASE OBLIGATIONS..................................................30
6.04. LOANS AND ADVANCES AND INVESTMENTS.................................30
6.05. PROHIBITED TRANSACTIONS............................................30
6.06. MARGIN STOCK.......................................................30
6.07. NO ACTIONS LEADING TO FORFEITURE...................................30
6.08. CONSOLIDATIONS MERGERS, ACQUISITION AND SALE OF ASSETS.............30
6.09. AFFILIATE TRANSACTION..............................................31
ARTICLE VII: DEFAULTS......................................................31
7.01. EVENTS OF DEFAULT..................................................31
7.02. CONSEQUENCES OF AN EVENT OF DEFAULT................................33
ARTICLE VIII: [RESERVED]...................................................34
ARTICLE IX: MISCELLANEOUS..................................................34
9.01. HOLIDAYS...........................................................34
9.02. RECORDS............................................................34
9.03. AMENDMENTS AND WAIVERS.............................................34
9.04. NO IMPLIED WAIVER: CUMULATIVE REMEDIES.............................34
9.05. NOTICES............................................................35
9.06. EXPENSES; TAXES; INDEMNITY.........................................35
9.07. SEVERABILITY.......................................................36
9.08. PRIOR UNDERSTANDINGS...............................................36
9.09. DURATION; SURVIVAL.................................................36
9.10. COUNTERPARTS; FURTHER ASSURANCES...................................37
9.11. LIMITATION ON PAYMENTS.............................................37
9.12. SET-OFF............................................................37
9.13. [RESERVED].........................................................38
9.14. SUCCESSORS AND ASSIGNS: PARTICIPATIONS; ASSIGNMENTS................38
9.15. GOVERNING LAW; SUBMISSION TO JURISDICTION: WAIVER OF JURY TRIAL;
LIMITATION OF LIABILITY..........................................39
Exhibit A: Form of Term Loan Note
Schedule 3.23 Subsidiaries
ii
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT (this "Agreement"), dated as of March 20, 2001,
by and between HARDINGE INC. a New York corporation (the "Borrower"), and
KEYBANK NATIONAL ASSOCIATION, a national banking association (the "Lender").
RECITALS:
WHEREAS, the Borrower requested the Lender extend credit to enable the
Borrower to borrow and repay (but not re-borrow) under a term loan provided for
hereunder a principal amount not exceeding $24,000,000, and the Lender has
agreed to make such loan to the Borrower on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I: DEFINITIONS; CONSTRUCTION
------------------------------------
1.01. CERTAIN DEFINITIONS.
--------------------------
In addition to other words and terms defined elsewhere in this Agreement,
as used herein the following words and terms shall have the following meanings,
respectively, unless the context hereof otherwise clearly requires:
"Acquisition Agreement" shall mean the Stock Purchase Agreement by and
between Ziersch Beteilgungs GmbH, as seller, HTT Xxxxxx Xxxxxx Xxxxxxxx XX, and
Hardinge Inc. as purchaser, with respect to the sale and purchase of all the
issued and outstanding shares of stock of HTT Xxxxxx Tripet Xxxxxxxx XX.
"Acquisition Date" shall mean December 20, 2000.
"Affiliate" of a Person (the "Specified Person") shall mean (a) any Person
which directly or indirectly controls, or is controlled by, or is under common
control with, the Specified Person and (b) any director or officer of the
Specified Person or of a Person who is an Affiliate of the Specified Person
within the meaning of the preceding clause (a). For purposes of the preceding
sentence, "control" of a Person means (a) the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise and (b) in any case shall include direct or indirect
ownership (beneficially or of record) of, or direct or indirect power to vote,
20% or more of the outstanding shares of such Person.
"Applicable Margin Ratio" shall mean the ratio of Total Funded Debt
outstanding at the end of the most recently completed fiscal quarter to EBITDA
for the period of the most recently completed fiscal quarter, calculated
pursuant to SECTION 2.02 hereof.
"Arrangement Fee" shall have the meaning set forth in SECTION 4.01 hereof.
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"Basis Point" shall mean one one-hundredth of one percent.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"Borrower" shall have the meaning set forth in the introductory paragraph
hereof.
"Business Day" shall mean any day other than a Saturday, Sunday, public
holiday under the laws of the State of New York or other day on which banking
institutions are authorized or obligated to close in the City of Rochester, New
York.
"Capital Expenditures" shall mean net fixed assets at the beginning of the
period less net fixed assets at the end of the period plus depreciation expense
for the period.
"Capital Lease" shall mean any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Change of Control" shall mean (a) except as to (i) officers and directors
in office as of the date of this Agreement, (ii) the Hardinge Inc. Pension Plan,
Hardinge Inc. Savings Plan or other compensation plan of the Borrower, and (iii)
Chemung Canal Trust Company, the acquisition of ownership, directly or
indirectly, beneficially or of record, of any Person or group (within the
meaning of the Securities Act of 1934 and Rule 13d-5 of the Securities and
Exchange Commission as in effect on the date hereof) of shares representing more
than twenty-five percent (25%) of the aggregate outstanding ordinary voting
power represented by the issued and outstanding capital stock of the Borrower,
or (b) occupation of a majority of the seats (other than vacant seats) on the
board of directors of the Borrower by Persons who are neither (i) nominated by
the board of directors of the Borrower nor (ii) appointed by the directors so
nominated.
"Closing" shall mean such time in which all conditions set forth in
SECTION 4.01 hereof have been satisfied or waived by the parties hereto in
accordance with this Agreement.
"Closing Date" shall mean the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, and regulations thereunder, in each case as
in effect from time to time. References to sections of the Code shall be
construed also to refer to any successor sections.
"Commitment" of the Lender shall mean the Term Loan Commitment of the
Lender.
"Consolidated Interest Expense" means all amounts classified as interest
expense of the Person and its subsidiaries under GAAP.
"Consolidated Net Income" shall mean for any period the net income or loss
of the Borrower and its Subsidiaries for such period determined on a
consolidated basis, without duplication, in accordance with GAAP.
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"Controlled Group Member" shall mean with respect to the Borrower each
trade or business (whether or not incorporated) which together with the Borrower
is treated as a single employer under Section 4001(a)(14) or 4001(b)(1) of ERISA
or Section 414(b), (c), (m) or (o) of the Code.
"Delinquency Rate" shall have the meaning set forth in SECTION 2.09(c)
hereof.
"Dollars" and the symbols "$" and "USD" shall mean lawful money of the
United States of America.
"EBITDA" shall mean, in respect of any period, Consolidated Net Income for
such period (i) minus, to the extent included in the computation of such
Consolidated Net Income, net gains or net losses, arising from the disposition
of property other than in the ordinary course of business; (ii) plus, to the
extent deducted in the computation of such Consolidated Net Income, each of the
following:
1. Consolidated Interest Expense;
2. taxes imposed on or measured by income or excess profits of
the Person and its subsidiaries,
3. the amount of all depreciation, depletion and amortization
allowances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.
"Environmental Approvals" shall mean any Governmental Action pursuant to
or required under any Environmental Law.
"Environmental Claim" shall mean, with respect to any Person, any action,
suit, proceeding, investigation, notice, claim, complaint, demand, request for
information or other communication (written or oral) by any other Person
(including but not limited to any Governmental Authority, citizens' group or
present or former employee of such Person) alleging, asserting or claiming any
actual or potential (a) violation of any Environmental Law, (b) liability under
any Environmental Law or (c) liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
the presence, or release into the environment, of any Environmental Concern
Materials at any location, whether or not owned by such Person.
"Environmental Cleanup Site" shall mean any location which is listed or
proposed for listing on the National Priorities List or on any similar state
list of sites requiring investigation or cleanup, or which is the subject of any
pending or threatened action, suit, proceeding or investigation related to or
arising from any alleged violation of any Environmental Law.
"Environmental Concern Materials" shall mean (a) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollutant, contaminant or any related material, raw
material, substance, product or by-product of any
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substance specified in or regulated or otherwise affected by any Environmental
Law (including but not limited to any "hazardous substance" as defined in CERCLA
or any similar state Law), (b) any toxic chemical or other substance from or
related to industrial, commercial or institutional activities, and (c) asbestos,
gasoline, diesel fuel, motor oil, waste and used oil, heating oil and other
petroleum products or compounds, polychlorinated biphenyls, radon and urea
formaldehyde.
"Environmental Law" shall mean any Law, whether now existing or
subsequently enacted or amended, relating to (a) pollution or protection of the
environment, including natural resources, (b) exposure of Persons, including but
not limited to employees, to Environmental Concern Materials, (c) protection of
the public health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of Environmental Concern Materials or (d)
regulation of the manufacture, use or introduction into commerce of
Environmental Concern Materials including their manufacture, formulation,
packaging, labeling, distribution, transportation, handling, storage or
disposal. Without limitation, "Environmental Law" shall also include any
Environmental Approval and the terms and conditions thereof.
"Eurocurrency Reserve Requirements" shall mean for any day in which a
Fixed LIBOR Rate Loan is calculated, the aggregate (without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) required to be
maintained by a member bank of the Federal Reserve System. Fixed LIBOR Rate
Loans shall be deemed to constitute Eurocurrency Liabilities and to be subject
to such reserve requirements without benefit of or credit for proration,
exceptions or offsets which may be available from time to time to any lender
under Regulation D.
"Event of Default" shall mean any of the Events of Default described in
SECTION 7.01 hereof.
"Existing Indebtedness" shall mean the Indebtedness of the Borrower as set
forth on the Form 10-K filed by the Borrower with the SEC for the year 2000.
"Fiscal Year" shall mean with respect to the Borrower and its
Subsidiaries, the twelve (12) month period beginning January 1 and ending on
December 31.
"Fixed Charges" shall mean the sum of interest expense, current maturities
of long-term debt and current maturities of Capital Leases (all calculated for
the period of measurement of the financial covenant contained herein).
"Fixed Charge Coverage Ratio" shall mean (i) Net Profit, plus Consolidated
Interest Expense and the amount of all depreciation, depletion and amortization
allowances, less Capital Expenditures, divided by (ii) Fixed Charges.
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"Fixed LIBOR Rate" shall mean with respect to each day during each
Interest Period pertaining to the Loan, a rate per annum (based on a year of 360
days and actual days elapsed) determined for the first day of each such Interest
Period in accordance with the following formula rounded upward to the nearest
1/16 of 1% plus the amount of basis points as set forth in SECTION 2.02 hereof:
LIBOR Base Rate
-------------------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Fixed LIBOR Rate Loan" shall mean the Loan as to which the Fixed LIBOR
Rate applies.
"Floating Rate" shall mean a rate per annum (computed on the basis of a
year of 360 days and actual days elapsed) for each day equal to the Prime Rate
for such day as computed prior to 12:00 noon eastern time, such interest rate to
change automatically from time to time effective as of the effective date of
each change in the Prime Rate.
"Floating Rate Loan" shall mean any loan bearing interest at such time at
the Floating Rate in accordance with SECTION 2.03 hereof.
"Forfeiture Proceeding" shall mean any action, proceeding or investigation
affecting the Borrower or any of its Affiliates or Subsidiaries before any
court, governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or the receipt of notice by any such party
that any of them is a suspect in or a target of any governmental inquiry or
investigation, which may result in an indictment of any of them or the seizure
or forfeiture of any of their property.
"Funding Breakage Indemnity" shall have the meaning set forth in SECTION
2.10(b) hereof.
"GAAP" shall have the meaning set forth in SECTION 1.03 hereof.
"Governmental Action" shall have the meaning set forth in SECTION 3.04
hereof.
"Governmental Authority" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"Guarantors" shall mean, collectively, those entities required to become
Guarantors pursuant to SECTION 5.08 hereof.
"Guaranty" or "Guaranties" shall mean a guarantee agreement executed by a
Guarantor, as the same may be amended, supplemented or otherwise modified from
time to time.
"Indebtedness" shall mean, with respect to any Person: (a) indebtedness
of such Person for borrowed money; (b) obligations of such Person as lessee
under Capital Leases, (c) obligations under direct or indirect guarantees in
respect of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in
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respect of, indebtedness or obligations of others of the kinds referred to in
clause (a) and (b) above, (not otherwise reserved for) and (d) defined benefit
pension liabilities in respect of unfunded vested benefits under plans covered
by ERISA calculated consistently with GAAP. Excluded from the term Indebtedness
shall be an amount equal to 90% of the obligations of the Borrower and its
Subsidiaries arising from the sale, pledge, or discounting of customer notes.
"Indemnified Parties" shall mean the Lender, its Affiliates, and the
directors, officers, employees, attorneys and agents of each of the foregoing.
"Interest Period" shall mean with respect to a Fixed LIBOR Rate Loan three
(3) months provided that: each Interest Period shall begin on a Business Day,
and the term "month", when used in connection with an Interest Period, shall be
construed in accordance with prevailing practices in the interbank Fixed LIBOR
market at the commencement of such Interest Period, as determined in good faith
by the Lender (which determination shall be conclusive if made in good faith and
absent manifest error), with successive periods commencing on the same day of
every third month thereafter.
"Interest Rate" means the Fixed LIBOR Rate or the Floating Rate, as the
case may be.
"Late Charge" shall have the meaning set forth in SECTION 2.09(A) hereof.
"Law" shall mean any law (including common law), constitution, statute,
treaty, convention, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.
"Lender" shall have the meaning set forth in the introductory paragraph
hereof.
"LIBOR Base Rate" shall mean with respect to each Interest Period
pertaining to a Fixed LIBOR Rate Loan the rate per annum equal to the rate of
interest at which U.S. Dollar deposits with maturities comparable to such
Interest Period appear on Telerate Page 3750 at 11:00 a.m., London time, two (2)
Business Days prior to the commencement of such Interest Period; PROVIDED,
HOWEVER, that if such rate does not appear on Telerate Page 3750, the LIBOR Base
Rate shall mean a rate per annum equal to the rate of interest at which U.S.
Dollar deposits in an amount approximately equal to the Fixed LIBOR Rate Loan
are offered in immediately available funds in the London interbank market to the
London office of the Bank (or a correspondent bank) by leading banks in the
Fixed LIBOR Rate market at 11:00 a.m., London time, two (2) Business Days prior
to the commencement of such Interest Period. The term "Telerate Page 3750" means
the display designated as "Page 3750" on the Associated Press-Dow Xxxxx Telerate
Service (or such other page as may replace page 3750 on the Associated Press-Dow
Xxxxx Telerate Service or such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
British Bankers' Association interest settlement rates for U.S. Dollar
deposits). Any LIBOR Base Rate determined on the basis of the rate displayed on
Telerate Page 3750 in accordance with the foregoing provisions shall be subject
to corrections, if any, made in such rate and displayed by the Associated
Press-Dow Xxxxx Telerate Service within one (1) calendar day of the time when
such rate is first displayed by such service.
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"Lien" shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, including but not limited to any conditional sale or title retention
arrangement, and any assignment, deposit arrangement or lease intended as, or
having the effect of, security.
"Loan" shall mean the Term Loan made by the Lender to the Borrower under
this Agreement.
"Loan Documents" shall mean this Agreement, the Note, any Guarantees and
the other agreements and instruments extending, renewing, refinancing or
refunding any indebtedness, obligation or liability arising under any of the
foregoing, in each case as the same may be amended, modified or supplemented
from time to time hereafter.
"Loan Party" shall mean the Borrower.
"London Business Day" shall mean a day for dealing in deposits in Dollars
by and among banks in the London interbank market and which is a Business Day.
"Material Adverse Effect" shall mean: (a) a material adverse effect on the
business, operations or condition (financial or otherwise) of the Borrower, its
Affiliates and/or Subsidiaries, individually or taken as a whole, or (b) a
material adverse effect on the ability of the Borrower or any Guarantors to
perform or comply with any of the terms and conditions of any Loan Document.
"Multiemployer Plan" shall mean with respect to the Borrower any employee
pension benefit plan which is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA and to which the Borrower or any Controlled Group
Member has or had an obligation to contribute.
"Net Profit" shall mean net profit as defined by and computed in
accordance with GAAP and as such item is reported from time to time in the
Borrower's consolidated statement of income and retained earnings (or similar
statement) after deduction for payment of all taxes.
"Note" shall mean the Term Loan Note of the Borrower executed and
delivered under this Agreement, together with all extensions, renewals,
refinancing or refundings of any thereof in whole or part.
"Obligations" shall mean with respect to the Borrower all indebtedness,
obligations and liabilities of the Borrower to the Lender from time to time
arising under or in connection with or related to or evidenced by this Agreement
or any other Loan Document, and all extensions, renewals or refinancings
thereof, whether such indebtedness, obligations or liabilities are direct or
indirect, otherwise secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising. Without limitation of the foregoing, such
indebtedness, obligations and liabilities include the principal amount of Loan,
interest, fees, indemnities or expenses under or in connection with this
Agreement or any other Loan Document, and all extensions, renewals and
refinancings thereof, whether or not such Loan was made in excess of the
obligation of the Lender to lend.
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Obligations shall remain Obligations notwithstanding any assignment or transfer
by the Borrower or any subsequent assignment or transfer by the Borrower of any
of the Obligations or any interest therein, unless accompanied by a written
release of the Borrower from and executed by the Lender.
"Office," when used in connection with the Lender, shall mean its office
located at 0000 Xxxxxx & Xxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000, or at such other
office or offices of the Lender or any branch, subsidiary or affiliate thereof
as may be designated in writing from time to time by the Lender to the Borrower
pursuant hereto.
"Participants" shall have the meaning set forth in SECTION 9.14(b) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation established under
Title IV of ERISA or any other governmental agency, department or
instrumentality succeeding to the functions of said corporation.
"Permitted Liens" shall have the meaning set forth in SECTION 6.02 hereof.
"Person" shall mean an individual, corporation, partnership, limited
liability company, trust, unincorporated association, joint venture, joint-stock
company, Governmental Authority or any other entity.
"Plan" means with respect to the Borrower any employee pension benefit
plan within the meaning of Section 3(2) of ERISA (other than a Multiemployer
Plan) covered by Title IV of ERISA by reason of Section 4021 of ERISA, of which
the Borrower or any Controlled Group Member is or has been within the preceding
five (5) years a "contributing sponsor" within the meaning of Section
4001(a)(13) of ERISA, or which is or has been within the preceding five (5)
years maintained for employees of the Borrower or any Controlled Group Member.
"Potential Default" shall mean any event or condition which with notice,
passage of time or both, would constitute an Event of Default.
"Prime Rate" shall mean the rate of interest per annum designated (whether
or not announced) or announced by the Lender from time to time as its prime rate
and used internally by the Lender to calculate the interest payable to it under
notes or other agreements providing for interest based on the Lender's Prime
Rate. The Prime Rate is not necessarily the lowest rate of interest charged by
the Lender; credit may be extended at interest rates both above and below the
Lender's Prime Rate to other borrowers.
"Regular Payment Date" shall mean the twentieth (20th) day of every third
(3rd) calendar month after the date hereof, commencing June 20, 2001.
"Related Litigation" shall have the meaning set forth in SECTION 9.15(b).
"Reportable Event" means (i) a reportable event described in Section 4043
of ERISA and regulations thereunder, (ii) a withdrawal by a substantial employer
from a Plan to which more than one employer contributes, as referred to in
Section 4063(b) of ERISA, (iii) a cessation of operations at a facility causing
more than twenty percent (20%) of Plan participants to be
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separated from employment, as referred to in Section 4068(f) of ERISA, or (iv) a
failure to make a required installment or other payment with respect to a Plan
when due in accordance with Section 412 of the Code or Section 302 of ERISA.
"Responsible Officer" with respect to the Borrower shall mean the Chairman
of the Board and Chief Executive Officer, Chief Financial Officer, Executive
Vice President, Senior Vice President or Treasurer.
"SEC" shall mean the United States Securities and Exchange Commission and
any successor commission, agency or entity.
"Standard Notice" shall mean an irrevocable notice provided to the Lender
on a Business Day which is: (a) the same Business Day in the case of the making
a Loan to the Borrower at the Floating Rate or conversion to or renewal of the
Floating Rate; (b) the same Business Day in the case of prepayment of any
Floating Rate Loan; and (c) at least two (2) Business Days in advance in the
case of selection of the Fixed LIBOR Rate Option. Standard Notice must be
provided no later than 10:00 a.m., New York time, on the last day permitted for
such notice in the case of Standard Notice issued under (a) or (b) above and no
later than 5:00 p.m., New York time, on the last day permitted for notice under
(c) above.
"Subordinated Debt" shall mean Indebtedness of the Borrower or any of the
Guarantors repayment of which is subordinated to the repayment of the
Obligations pursuant to a Subordination Agreement agreed to in writing by the
Lender.
"Subsidiary" shall mean, for any Person, (i) a corporation a majority of
whose voting stock is at the time, directly or indirectly, owned by such person,
by one or more subsidiaries of such Person or by such Person and one or more
subsidiaries of such Person, (ii) a partnership in which such Person or a
subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if such person or its subsidiary is
entitled to receive more than 50% of the assets of such partnership upon its
dissolution, or (iii) any other Person (other than a corporation or partnership)
in which such Person, a subsidiary of such Person or such Person and one or more
subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has (A) at least a majority ownership interest or (B) the
power to elect or direct the election of a majority of the directors or other
governing body of such Person.
"Taxes" shall have the meaning set forth in SECTION 2.11 hereof.
"Term Loan" shall have the meaning set forth in SECTION 2.01(a) hereof.
"Term Loan Commitment" shall have the meaning set forth in SECTION
2.01(a) hereof.
"Term Loan Committed Amount" shall have the meanings set forth in SECTION
2.01(a) hereof.
"Term Loan Maturity Date" shall mean March 1, 2008.
9
"Term Loan Note" shall mean the promissory note of the Borrower executed
and delivered under SECTION 2.01(c) hereof, and any promissory note issued in
substitution therefor, together with all extensions, renewals, refinancings or
refundings thereof in whole or in part.
"Total Funded Debt" shall mean, at a particular date, the sum without
duplication for the Borrower and/or Subsidiaries of (i) all Indebtedness for
borrowed money, including, without limitation, Subordinated Debt, whether
secured or unsecured, and whether maturing in less than or more than one (1)
year, plus (ii) all bonds, notes, debentures or similar debt instruments, plus
(iii) all capitalized lease obligations, plus (iv) any guarantees or similar
instruments or obligations given in connection with the sale, pledge, or
discounting of any notes receivable. Excluded from the term "Total Funded Debt"
shall be an amount equal to ninety percent (90%) of the obligations of the
Borrower and its Subsidiaries arising from the sale, pledge or discounting of
customer notes.
"Unfunded Benefit Liabilities" shall mean, with respect to any Plan, the
amount (if any) by which the present value of all benefit liabilities (within
the meaning of section 4001(a)(16) of ERISA) under the Plan exceeds the fair
market value of all Plan assets allocable to such benefit liabilities, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrower
or any ERISA Affiliate under Title IV of ERISA.
1.02. CONSTRUCTION.
-------------------
Unless the context of this Agreement otherwise clearly requires,
references to the plural include the singular, the singular the plural and the
part the whole; "or" has the inclusive meaning represented by the phrase
"and/or"; and "property" includes all properties and assets of any kind or
nature, tangible or intangible, real, personal or mixed. References in this
Agreement to "determination" (and similar terms) by the Lender include good
faith calculations by the Lender (in the case of quantitative determinations)
and good faith beliefs by the Lender (in the case of qualitative determinations)
and, in either case, after applying reasonable commercial standards for making
such determination. The words "hereof," "herein," "hereunder" and similar terms
in this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. References herein to "out-of-pocket expenses" of a
Person (and similar terms) include, but are not limited to, the reasonable fees
of in-house counsel and other in-house professionals of such Person to the
extent that such fees are routinely identified and specifically charged under
such Persons normal cost accounting system. The section and other headings
contained in this Agreement and the Table of Contents preceding this Agreement
are for reference purposes only and shall not control or affect the construction
of this Agreement or the interpretation thereof in any respect. Section,
subsection and exhibit references are to this Agreement unless otherwise
specified.
1.03. ACCOUNTING PRINCIPLES.
----------------------------
(a) As used herein, "GAAP" shall mean generally accepted accounting
principles in the United States consistently applied.
10
(b) Except as otherwise expressly provided in this Agreement, all
computations and determinations as to accounting or financial matters and
covenants shall be made, and all financial statements to be delivered pursuant
to this Agreement shall be prepared, on a consolidated basis with respect to the
Borrower, its Affiliates and Subsidiaries, in accordance with GAAP, and all
accounting or financial terms shall have the meanings ascribed to such terms by
GAAP.
(c) If there shall be any change in accounting principles under GAAP and
such change results in a change in the calculation of the financial covenants,
standards or terms used in this Agreement or any other Loan Document, then the
Borrower and the Lender agree to enter into negotiations in order to amend such
provisions of this Agreement, so as to equitably reflect such changes in
accounting principles, with the desired result that the criteria for evaluating
the Borrower's and its Affiliates and Subsidiaries' financial condition on a
consolidated basis shall be the same after such changes in accounting principles
as if such changes had not been made.
ARTICLE II: THE TERM LOAN FACILITY
----------------------------------
2.01. TERM LOAN.
----------------
(a) TERM LOAN COMMITMENT. Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, the Lender agrees
(such agreement being herein called the Lender's "Term Loan Commitment") to make
a loan (the "Term Loan") to the Borrower on the date hereof in the aggregate
principal amount of $24,000,000.00.
(b) NATURE OF CREDIT. Within the limits of time and amount set forth in
this SECTION 2.01, and subject to the provisions of this Agreement, the Borrower
may borrow and repay (but not re-borrow) the Term Loan at the Fixed LIBOR Rate
in Dollars. The Fixed LIBOR Rate shall be subject to availability as provided in
this Agreement.
(c) TERM LOAN NOTE. The Term Loan made by the Lender shall be evidenced by
a Term Loan Note of the Borrower, dated the date hereof (the "Term Loan Note")
in substantially the form attached hereto as EXHIBIT A with the blanks
appropriately filled, payable to the order of the Lender in the principal amount
equal to $24,000,000.00.
(d) PAYMENT TERMS. The Borrower shall make quarterly payments on the
Regular Payment Date of principal and/or interest as set forth in the Term Loan
Note to the Lender with respect to the Term Loan until the Term Loan Maturity
Date, at which time the entire outstanding principal balance, all accrued
interest and all other sums due from the Borrower shall be fully due and
payable. Once repaid, in whole or in part, the Term Loan may not be re-borrowed
by the Borrower.
2.02. INTEREST RATE.
--------------------
FIXED LIBOR RATE. The unpaid principal amount of the Term Loan shall bear
interest for each day until due at the Fixed LIBOR Rate for the Interest Period,
determined as of March 20,
11
2001, initially, and thereafter as of each subsequent Regular Payment Date, plus
the amount of Basis Points hereinafter set forth next to the Applicable Margin
Ratio in effect and calculated as of the Borrower's most recently completed
fiscal quarter:
APPLICABLE MARGIN RATIO ADDITIONAL BASIS POINTS
Greater than 2.50 200
Greater than 2.30, but less than 120
or equal to 2.50
Greater than 2.00, but less than 100
or equal to 2.30
Greater than 1.75, but less than 80
or equal to 2.00
Greater than 0, but less than 60
or equal to 1.75
The Additional Basis Points to be added to the Fixed LIBOR Rate on any Loan
shall be calculated or recalculated, as the case may be, in accordance with the
Applicable Margin Ratio schedule hereinbefore set forth and pursuant to the
following paragraph, each such calculation or recalculation, as the case may be,
to be effective as of the twentieth (20th) calendar day of the calendar month
immediately preceding the most recently concluded fiscal quarter or fiscal year,
as the case may be. By way of example and illustration only, on or about April
1, 2001 (or as soon as possible after the Borrower makes the necessary financial
information available to the Lender in accordance with this Agreement), the
Lender shall (i) determine the Fixed LIBOR Rate for the Interest Period as of
March 20, 2001, and (ii) the Applicable Margin Ratio in effect and calculated as
at the end of the most recently concluded fiscal quarter of the Borrower (March
31, 2001). The Lender shall calculate the Additional Basis Points to be added to
such Fixed LIBOR Rate, and the resulting rate of interest shall be effective as
of and shall relate back to March 20, 2001.
Subject to the preceding sentence, the Lender shall give prompt notice to the
Borrower (in any event within ten (10) Business Days of its receipt of the
Borrower's then most-recent quarterly or annual financial statements, as the
case may be, as provided in SECTION 5.01(a) AND (b) hereof) of the Applicable
Margin Ratio (and corresponding Additional Basis Points) determined in
accordance with the definition of the Applicable Margin Ratio based upon the
information for the then most recently completed fiscal quarter or Fiscal Year,
as the case may be, which determinations or adjustments shall be conclusive
absent manifest error, each such determination or adjustment to be effective as
of the first Business Day following the most recently concluded fiscal quarter
or Fiscal Year, as the case may be.
2.03. INABILITY TO DETERMINE RATE.
----------------------------------
If prior to the first day of any Interest Period:
12
(i) the Lender shall have reasonably determined (which determination
shall be conclusive and binding upon the Borrower) that adequate and reasonable
means do not exist for ascertaining the Fixed LIBOR Rate, or
(ii) the Lender has reasonably determined that the Fixed LIBOR Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to the Lender of making or maintaining the Loan during
such Interest Period, or
(iii) Dollar deposits in the principal amounts of the Loan to which
such Interest Period is to be applicable are not generally available in the
London interbank market, then, in any such event, the Lender shall give notice
to the Borrower by fax or telephone as soon as practicable thereafter. If such
notice is given the Loan that was to have been converted to or continued as a
Fixed LIBOR Rate Loan on the first day of such Interest Period shall be
converted to or continued as a Floating Rate Loan. Until such notice has been
withdrawn by the Lender, the Term Loan shall not be made as or converted to or
continued as a Fixed LIBOR Rate Loan.
2.04. CONVERSION OR RENEWAL OF INTEREST RATE OPTIONS.
-----------------------------------------------------
CONVERSION OR RENEWAL. Subject to the provisions of SECTION 2.03 and
SECTION 2.10(b) hereof, and if no Event of Default or Potential Default shall
have occurred and be continuing or shall exist, the Loan shall, without notice
except as provided in SECTION 2.02 hereof, be automatically renewed at the Fixed
LIBOR Rate in effect for such new Interest Period (plus the applicable
Additional Basis Points in accordance with SECTION 2.02 hereof) at any time with
respect to conversion from the Floating Rate, or at the expiration of any
Interest Period with respect to renewals of the Fixed LIBOR Rate. Interest shall
be calculated upon the principal amount of the Term Loan as so converted or
renewed. Interest on the principal amount of the Term Loan converted or renewed
(automatically or otherwise) shall be due and payable on the conversion or
renewal date.
2.05. PREPAYMENTS GENERALLY.
----------------------------
(a) NOTICE. Whenever the Borrower desires or is required to prepay any
part of its Loan, it shall provide Standard Notice to the Lender setting forth
the following information:
(i) The date, which shall be a Business Day, on which the proposed
prepayment is to be made; and
(ii) The total principal amount of such prepayment.
Standard Notice having been so provided, on the date specified in such Standard
Notice, the principal amounts of the Loan specified in such notice, together
with interest and Funding Breakage Indemnity, if applicable, on each such
principal amount to such date, shall be due and payable.
(b) SWAP AGREEMENTS. In addition to the provisions hereinbefore set forth,
prepayments of any borrowing such as the Loan which borrowings are covered by an
interest rate swap agreement or other rate protection mechanism may require
termination or adjustment of such swap agreement or interest rate protection
mechanism and will be subject to the terms and
13
conditions of such swap agreement or interest rate protection mechanism with
respect to prepayment as if they were fully set forth herein and made a part of
this Agreement.
2.06. OPTIONAL PREPAYMENTS.
---------------------------
The Borrower shall have the right at its option from time to time to
prepay the Loan in whole or part without premium or penalty (subject, however,
to SECTION 2.10(b) hereof):
(i) At any time with respect to any part of any Floating Rate Loan; or
(ii) At the expiration of any Interest Period with respect to
prepayment of a Fixed LIBOR Rate Loan.
Any such prepayment shall be made in accordance with SECTION 2.05 hereof.
2.07. [RESERVED. THIS SECTION INTENTIONALLY OMITTED]
----------------------------------------------------
2.08. INTEREST PAYMENT DATES.
-----------------------------
Interest on the Term Loan shall be due and payable on each Regular Payment
Date as provided in the Term Loan Note. After maturity of any part of the Loan
(by acceleration or otherwise), interest on such part of the Loan shall be due
and payable on demand.
2.09. PAYMENTS GENERALLY; INTEREST ON OVERDUE AMOUNTS.
------------------------------------------------------
(a) PAYMENTS GENERALLY. All payments and prepayments to be made by the
Borrower in respect of principal, interest, fees, indemnity, expenses or other
amounts due from the Borrower hereunder or under any Loan Document shall be
payable in Dollars at or prior to 1:00 o'clock p.m., New York time, on the day
when due without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, and an action therefor shall immediately
accrue, without setoff, counterclaim, withholding or other deduction of any kind
or nature. Except for payments under SECTIONS 2.10 hereof, such payments shall
be made to the Lender at its Office in Dollars in funds immediately available at
such Office, and payments under SECTIONS 2.10 hereof shall be made to the Lender
at such domestic account as it shall specify to the Borrower from time to time
in funds immediately available at such account. Any payment or prepayment
received by the Lender after 1:00 o'clock p.m., New York time, on any day shall
be deemed to have been received on the next succeeding Business Day. Any payment
or prepayment not received by the Lender within ten (10) days after the date due
shall be subject to the imposition by the Lender without notice or demand of a
late charge equal to three percent (3%) of the amount of such delinquent payment
(the "Late Charge").
(b) PAYMENTS DUE ON DAY OTHER THAN BUSINESS DAY. If any payment hereunder
(other than payments on a Fixed LIBOR Rate Loan) becomes due and payable on a
day other than a Business Day, such payment date shall be extended to the next
succeeding Business Day, and interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a Fixed LIBOR Rate Loan
becomes due and payable on a day other than a London Business Day, the maturity
thereof shall be extended to the next succeeding London Business Day unless the
result of such extension would be to extend such payment into another calendar
14
month, in which event such payment shall be made on the immediately preceding
London Business Day.
(c) INTEREST ON OVERDUE AMOUNTS. To the extent permitted by law, after
there shall have become due (by acceleration or otherwise) principal, interest,
fees, indemnity, expenses or any other amounts due from the Borrower hereunder
or under any other Loan Document, such amounts shall bear interest for each day
until paid (before and after judgment), payable on demand, at a rate per annum
(in each case based on a year of 360 days and actual days elapsed) which for
each day shall be equal to three percent (3%) above the Floating Rate (the
"Delinquency Rate").
To the extent permitted by law, interest accrued on any amount which has become
due hereunder or under any Loan Document shall compound on a day-by-day basis,
and hence shall be added daily to the overdue amount to which such interest
relates.
2.10. ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES.
-------------------------------------------------------
(a) INCREASED COSTS OR REDUCED RETURN RESULTING FROM TAXES, RESERVES,
CAPITAL ADEQUACY REQUIREMENTS, EXPENSES, ETC. If after the date hereof any Law
or guideline, or interpretation or application thereof by any Governmental
Authority charged with the interpretation or administration thereof or
compliance with any request or directive of any Governmental Authority (whether
or not having the force of law) generally applicable to all lending institutions
in similar circumstances:
(i) subjects the Lender to any tax or changes the basis of taxation
with respect to this Agreement, the Note, the Loan or payments by the Borrower
of principal, interest, commitment fee or other amounts due from the Borrower
hereunder or under the Note (except for taxes on the overall net income or
overall gross receipts of the Lender imposed by the jurisdictions (federal,
state and local) in which the Lender's principal office is located),
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against credits or commitments to extend credit
extended by, assets (funded or contingent) of, deposits with or for the account
of, other acquisitions of funds by, the Lender (other than requirements
expressly included herein in the determination of the Fixed LIBOR Rate
hereunder),
(iii) imposes, modifies or deems applicable any capital adequacy or
similar requirement (A) against assets (funded or contingent) of, or credits or
commitments to extend credit extended by, the Lender or (B) otherwise applicable
to the obligations of the Lender under this Agreement, or
(iv) imposes upon the Lender any other expense with respect to this
Agreement, the Note or its making, maintenance or funding of any Loan or any
security therefor,
and the reasonably determined result of any of the foregoing is to increase the
cost to, reduce the income receivable by, or impose any expense (including loss
of margin) upon the Lender, or in the case of clause (iii) hereof, any Person
controlling the Lender, with respect to this Agreement,
15
the Note or the making, maintenance or funding of the Loan (or, in the case of
any capital adequacy or similar requirement, to have the effect of reducing the
rate of return on the Lender's or controlling Person's capital, taking into
consideration the Lender's or controlling Person's policies with respect to
capital adequacy) by an amount which the Lender deems to be material the Lender
may from time to time notify the Borrower of the amount determined in good faith
(using any averaging and attribution methods) by the Lender (which determination
shall be conclusive, absent manifest error) to be necessary to compensate the
Lender or such Person for such increase, reduction or imposition. Such amount
shall be due and payable by the Borrower to the Lender five (5) Business Days
after such notice is given, together with an amount equal to interest on such
amount from the date two (2) Business Days after the date demanded until such
due date at the Floating Rate. A certificate by the Lender as to the amount due
and payable under this SECTION 2.10(a) from time to time and the method of
calculating such amount shall be conclusive absent manifest error. The Lender
agrees that it will use good faith efforts to notify the Borrower of the
occurrence of any event that would give rise to a payment under this SECTION
2.10(a); PROVIDED, HOWEVER, that any failure of the Lender to give any such
notice shall have no effect on the Borrowers' obligations hereunder.
(b) FUNDING BREAKAGE. In addition to all other amounts payable hereunder,
if and to the extent for any reason any part of any Fixed LIBOR Rate Loan
becomes due (by acceleration or otherwise), or is paid, prepaid or converted to
another interest rate Option (whether or not such payment, prepayment or
conversion is mandatory or automatic and whether or not such payment or
prepayment is then due), on a day other than the last day of the corresponding
Interest Period (the date such amount so becomes due, or is so paid, prepaid or
converted, being referred to as the "Funding Breakage Date") excepting, however,
by reason solely of the Lender's decision, action or election to require such
payment, prepayment or conversion other than by reason of the scheduled maturity
thereof or the occurrence of an Event of Default, the Borrower shall pay the
Lender an amount ("Funding Breakage Indemnity") determined by the Lender by
calculating a sum equal to: (i) the amount of interest which otherwise would
have accrued on the principal amount so paid for the period from and including
the date of such payment to but excluding the last day of the Fixed LIBOR Rate
Interest Period for such Fixed LIBOR Rate Loan at the applicable rate of
interest for such Loan provided for herein; over (ii) the amount of interest the
Lender would have bid in the London interbank market for U.S. Dollars for
amounts comparable to such principal amount and maturities comparable to such
period.
Such Funding Breakage Indemnity shall be due and payable on demand. In
addition, the Borrower shall, on the due date for payment of any Funding
Breakage Indemnity, pay to the Lender an additional amount equal to interest on
such Funding Breakage Indemnity from the Funding Breakage Date to but not
including such due date at the Floating Rate Option (calculated on the basis of
a year of 360 days and actual days elapsed). The amount payable to the Lender
under this SECTION 2.17(b) shall be determined in good faith by the Lender and
such determination shall be conclusive, absent manifest error.
2.11. TAXES.
------------
(a) PAYMENTS NET OF TAXES. Except to the extent prohibited by applicable
law, all payments made by the Borrower under this Agreement or any other Loan
Document shall be made free and clear of, and without reduction or withholding
for or on account of, any present or
16
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, and all liabilities with
respect thereto, excluding, in the case of the Lender, income or franchise taxes
imposed on the Lender (all such non-excluded taxes, levies, imposts, deductions,
charges or withholdings being hereinafter called "Taxes"). If any Taxes are
required to be withheld or deducted from any amounts payable to the Lender under
this Agreement or any other Loan Document, the Borrower shall pay the relevant
amount of such Taxes (net of any tax or other financial benefit the Lender
received in connection therewith as a result of any tax treaties or similar
agreement) and the amounts so payable to the Lender shall be increased to the
extent necessary to yield to the Lender (after payment of all Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement and the other Loan Documents. Whenever any Taxes are
paid by the Borrower with respect to payments made in connection with this
Agreement or any other Loan Document, as promptly as possible thereafter, the
Borrower shall send to the Lender for its own account a certified copy of an
original official receipt received by the Borrower showing payment thereof.
(b) INDEMNITY. The Borrower hereby indemnifies the Lender for the full
amount of all Taxes attributable to payments by or on behalf of the Borrower
hereunder or under any of the other Loan Documents, any Taxes paid by the
Lender, and any present or future claims, liabilities or losses with respect to
or resulting from any omission to pay or delay in paying (which is not caused by
the Lender's willful misconduct or gross negligence) any Taxes (including any
incremental Taxes, interest or penalties that may become payable by the Lender
as a result of any failure to pay such Taxes) as finally determined. Such
indemnification shall be made within thirty (30) days from the date the Lender
makes written demand therefor.
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF BORROWER
-------------------------------------------------------
The Borrower hereby represents and warrants to the Lender as follows:
3.01. ENTITY STATUS.
--------------------
The Borrower and each of its Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its formation, has all power and authority to carry on its
business as now being conducted and to own its properties and is duly licensed
or qualified and in good standing or a foreign corporation in each other
jurisdiction in which its properties are located or in which failure to qualify
would materially and adversely affect the conduct of its business or the
enforceability of contractual rights of the Borrower.
3.02. POWER AND AUTHORIZATION.
------------------------------
The Borrower has the corporate power, capacity and authority to execute,
deliver, perform, and take all actions contemplated by, each Loan Document to
which it is a party, and all such action has, or prior to the Closing Date shall
have, been duly and validly authorized by all necessary corporate (and, if
appropriate, shareholder) proceedings on its part.
17
3.03. EXECUTION AND BINDING EFFECT.
-----------------------------------
This Agreement and the Note have been duly and validly executed and
delivered by the Borrower. This Agreement constitutes, and each other Loan
Document to which Borrower is a party, when executed and delivered by the
Borrower will constitute, the legal, valid and binding obligations of the
Borrower enforceable against the Borrower, in accordance with their respective
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency or other similar laws of general application affecting the
enforcement of creditors rights or by general principles of equity limiting the
availability of equitable remedies.
3.04. GOVERNMENTAL APPROVALS AND FILINGS.
-----------------------------------------
Except pursuant to the rules and regulations adopted from time to time by
the SEC, no approval, order, consent, authorization, certificate, license,
permit or validation of, or exemption or other action by, or filing, recording
or registration with, or notice to, any Governmental Authority (collectively,
"Governmental Action") is or will be necessary or advisable in connection with
execution and delivery of this Agreement or any other Loan Document by the
Borrower, or consummation by the Borrower of the transactions contemplated
hereby or thereby, performance of or compliance with the terms and conditions
hereof or thereof by the Borrower or to ensure the legality, validity, binding
effect or enforceability hereof or thereof, except in each case such filings
and/or recordings of such of the Loan Documents and any related financing
statements as is contemplated by the terms hereof or thereof.
3.05. ABSENCE OF CONFLICTS.
---------------------------
Neither the execution and delivery of this Agreement or any other Loan
Documents by the Borrower, nor consummation by the Borrower of the transactions
contemplated hereby or thereby, nor performance of or compliance with the terms
and conditions hereof or thereof by the Borrower does or will:
(a) violate or conflict with any Law, or
(b) violate, conflict with or result in a breach of any term or condition
of, or constitute a default under, or result in (or give rise to any right,
contingent or otherwise, of any Person to cause) any termination, cancellation,
prepayment or acceleration of performance of, or result in the creation or
imposition of (or give rise to any obligation, contingent or otherwise, to
create or impose) any Lien upon any property of the Borrower pursuant to, or
otherwise result in (or give rise to any right, contingent or otherwise, of any
Person to cause) any change in any right, power, privilege, duty or obligation
of the Borrower, any of its Subsidiaries which would result in a Material
Adverse Effect, under or in connection with,
(i) the certificate of incorporation or by-laws (or other constituent
documents) of the Borrower, or
(ii) any agreement or instrument creating, or evidencing any
Indebtedness to which the Borrower or any of its Subsidiaries is a party or by
which it as any of its properties (now owned or hereafter acquired) may be
subject or bound, or
18
(iii) any agreement or instrument or arrangement to which the
Borrower, any of its Affiliates or Subsidiaries is a party or by which any of
its respective properties (now owned or hereafter acquired) may be subject or
bound.
3.06. AUDITED FINANCIAL STATEMENTS.
-----------------------------------
The Borrower has heretofore furnished to the Lender the consolidated
audited balance sheets of the Borrower and its Subsidiaries as of December 31,
2000 and the related statements of income, cash flows and changes in
stockholders' equity for the fiscal year then ended. Such financial statements
(including the notes thereto) present fairly, to the best of the Borrower's
knowledge, the consolidated financial condition of the Borrower and its
Subsidiaries as of such date, and the results of the operations of the Borrower
and its Subsidiaries, and their respective cash flows, for the period ended on
such date, all in conformity with GAAP.
3.07. SOLVENCY.
---------------
(a) VALUE OF ASSETS. The present fair saleable value of the assets of the
Borrower after giving effect to all the transactions contemplated by the Loan
Documents and the funding of the Term Loan Commitment hereunder exceeds the
amount that will be required to be paid on or with respect of the existing debts
and other liabilities (including contingent liabilities) of the Borrower and its
Subsidiaries as they mature.
(b) CAPITAL. The property of the Borrower does not constitute unreasonably
small capital for the Borrower to carry out its business as now conducted and as
proposed to be conducted including the capital needs of the Borrower.
(c) DEBTS. The Borrower does not intend to, nor does it believe that it
will, incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by the Borrower, and
of amounts to be payable or in respect of debt of the Borrower). The cash
available to the Borrower after taking into account all other anticipated uses
of the cash of the Borrower, is anticipated to be sufficient to pay all such
amounts on or in respect of debt of the Borrower when such amounts are required
to be paid.
(d) JUDGMENTS. The Borrower does not believe that final judgments against
it in actions for money damages will be rendered at a time when, or in an amount
such that, the Borrower will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered). The cash available to the Borrower after
taking into account all other anticipated uses of the cash of the Borrower
(including the payments on or in respect of debt referred to in paragraph (c) of
this SECTION 3.07) is anticipated to be sufficient to pay all such judgments
promptly in accordance with their terms.
3.08. ABSENCE OF UNDISCLOSED LIABILITIES.
-----------------------------------------
Neither the Borrower, any of its Affiliates or Subsidiaries, has any
liability or obligation of any nature whatever (whether absolute, accrued,
contingent or otherwise, whether or not due), forward or long-term commitments
or unrealized or anticipated losses from unfavorable
19
commitments, except (x) as disclosed in the financial statements referred to in
SECTIONS 3.06 hereof, obligations of the Borrower and any Affiliates and
Subsidiaries to any of each other, or otherwise in writing delivered to the
Lender prior to the date hereof, (y) matters that, individually or in the
aggregate, are reasonably expected not to have a Material Adverse Effect, and
(z) liabilities, obligations, commitments and losses incurred after December 31,
2000, in the ordinary course of business and consistent with past practices.
3.09. ABSENCE OF MATERIAL ADVERSE CHANGES.
------------------------------------------
Since December 31, 2000, there has been no material adverse change in the
business, operations or condition (financial or otherwise) or prospects of the
Borrower and its Affiliates or Subsidiaries.
3.10. ACCURATE AND COMPLETE DISCLOSURE.
---------------------------------------
All written information heretofore, contemporaneously and hereafter
provided by or on behalf of the Borrower, any of its Affiliates or Subsidiaries
to the Lender pursuant to or in connection with any Loan Document or any
transaction contemplated hereby or thereby is or will be (as the case may be)
true and accurate in all material respects on the date as of which such
information is dated (or, if not dated, when received by the Lender) and does
not or will not (as the case may be) omit to state any material fact necessary
to make such information not misleading in a material respect at such time in
light of the circumstances in which it was provided.
3.11. OWNERSHIP AND CONTROL.
----------------------------
The outstanding shares of capital stock of the Borrower have been duly
authorized and validly issued and are fully paid.
3.12. LITIGATION.
-----------------
There is no pending or (to the Borrower's knowledge after due inquiry)
threatened action, suit, proceeding or investigation by or before any
Governmental Authority against or affecting the Borrower or any of its
Subsidiaries which, if adversely determined, would result in a Material
Adverse Effect.
3.13. ABSENCE OF EVENTS OF DEFAULT.
-----------------------------------
No event has occurred and is continuing and no condition exists which
constitutes an Event of Default or Potential Default.
3.14. ABSENCE OF OTHER CONFLICTS.
---------------------------------
Neither the Borrower nor any of its Subsidiaries is in violation of or in
conflict with, or is subject to any contingent liability on account of any
violation of or conflict with:
(a) its certificate of incorporation or by-laws (or other constituent
documents), or
20
(b) any agreement or instrument or arrangement to which it is party or by
which it or any of its properties (now owned or hereafter acquired) may be
subject or bound in a manner such that such violation or conflict could have a
Material Adverse Effect.
3.15. TITLE TO PROPERTY.
------------------------
Subject to Permitted Liens, the Borrower and its Subsidiaries have good
and marketable title in fee simple or by lease to all real property owned or
purported to be owned, or leased or purported to be leased, by it and good title
to all other material property of whatever nature owned or purported to be owned
by it, which, as of the date hereof, includes, but is not limited to, all
property reflected in the most recent audited balance sheet referred to in
SECTION 3.06 hereof.
3.16. INTELLECTUAL PROPERTY.
----------------------------
The Borrower, and its Subsidiaries own, or are licensed or otherwise haves
the right to use, all patents, trademarks, service marks, names (trade, service,
fictitious or otherwise), copyrights, technology (including, but not limited to,
computer programs and software), processes, data bases and other rights, free
from material burdensome restrictions, necessary to own and operate its
respective properties and to carry on its respective business as presently
conducted, and presently planned to be conducted, without material conflict with
the rights of others.
3.17. TAXES.
------------
Each of the Borrower and its Subsidiaries has filed (or has obtained
extensions of the time by which it is required to file) all United States
federal income tax returns and all other material tax returns required to be
filed by it and has paid all taxes shown due on the returns so filed as well as
all other taxes, assessments and governmental charges which have become due,
except such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided.
3.18. RESERVED
3.19. EMPLOYEE BENEFITS.
------------------------
The Borrower and each Controlled Group Member have fulfilled their
respective obligations under the minimum funding standards of ERISA and the Code
with respect to each Plan and are in compliance in all material respects with
the presently applicable provisions of ERISA and the Code, and have not incurred
any liability to the PBGC or any Plan or Multiemployer Plan (other than to make
contributions, pay annual PBGC premiums or pay out benefits in the ordinary
course of business).
21
3.20. ENVIRONMENTAL MATTERS.
----------------------------
Each of the Borrower and its Subsidiaries has obtained all environmental,
health and safety permits, licenses and other authorizations required under all
Environmental Laws to carry on, in all material respects, its business as now
being or as proposed to be conducted. Each of such permits, licenses and
authorizations is in full force and effect and each of the Borrower and its
Subsidiaries is in compliance with the material terms and conditions thereof,
and is also in compliance with all other material limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Environmental Law or in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder. No Lien exists and, to the
Borrower's knowledge, no condition exists which is likely to result in the
filing of a Lien, against any property of the Borrower or any of its
Subsidiaries under any Environmental Law which would have individually or in the
aggregate a Material Adverse Effect.
3.21. SECURITIES LAWS COMPLIANCE.
---------------------------------
Neither the Borrower nor any Person acting on any of its behalf has
directly or indirectly offered or sold any interest in the Note or any other
related securities to, solicited offers to buy any such interest or securities
from, or otherwise approached or negotiated in respect of the purchase and sale
or other disposition of any such interest or securities with, any Person so as
to bring the transactions contemplated hereby within the registration provisions
of the Securities Act of 1933, as amended.
3.22. MARGIN REGULATIONS.
-------------------------
No part of the proceeds of the Loan hereunder will be used for the purpose
of buying or carrying any "margin stock," as such term is used in Regulations G
and U of the Board of Governors of the Federal Reserve System, as amended from
time to time, or to extend credit to others for the purpose of buying or
carrying any "margin stock." Neither the Borrower nor any Subsidiary of the
Borrower is engaged in the business of extending credit to others for the
purpose of buying or carrying "margin stock." Neither the Borrower nor any
Subsidiary of the Borrower owns any "margin stock. Neither the making of the
Loan nor any use of proceeds of such Loan will violate or conflict with the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System, as amended from time to time.
3.23. SUBSIDIARIES.
-------------------
As of the date hereof, the Borrower has no Subsidiaries except as set
forth in SCHEDULE 3.23.
3.24. PARTNERSHIPS, ETC.
------------------------
Except as disclosed in THE FORM 10-K OF THE BORROWER FILED WITH THE SEC
FOR THE YEAR 2000, neither the Borrower nor any of its Subsidiaries is a partner
general or limited) of any partnership, is a party to any joint venture or owns
(beneficially or of record) any equity or similar interest in any Person
(including, but not limited to, any interest pursuant to which the
22
Borrower or its Subsidiaries have or may in any circumstance have an obligation
to make capital contributions to, or be generally liable for or on account of
the liabilities, acts or omissions of such other Person).
3.25. LABOR RELATIONS.
----------------------
Neither the Borrower nor any of its Subsidiaries has engaged in any unfair
labor practice which could reasonably be expected to have a Material Adverse
Effect. As of the date hereof, there is (a) no unfair labor practice complaint
pending or, to the best knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries before the National Labor Relations Board
which could reasonably be expected to have a Material Adverse Effect on the
Borrower or any of its Subsidiaries and no grievance or arbitration proceeding
arising out of or under a collective bargaining agreement is so pending or
threatened; (b) no strike, labor dispute, slowdown or stoppage is pending or, to
the best knowledge of the Borrower, threatened against the Borrower or any of
its Subsidiaries; and (c) no union representation question existing with respect
to the employees of the Borrower or any of its Subsidiaries and no union
organizing activities are taking place with respect to any thereof. Immediately
upon the Borrower becoming aware of the occurrence of any of the events
referenced in clauses (a), (b) or (c) above, the Borrower agrees to notify the
Lender of same in writing.
3.26. NO FORFEITURE.
--------------------
Neither the Borrower nor any of its Affiliates or Subsidiaries is engaged
in or proposes to be engaged in the conduct of any business or activity which
could result in a Forfeiture Proceeding and no Forfeiture Proceeding against any
of them is pending or threatened, which would individually or in the aggregate
have a Material Adverse Effect.
ARTICLE IV: CONDITIONS
----------------------
4.01. CONDITIONS TO ENTERING INTO AGREEMENT AND MAKING THE LOAN.
----------------------------------------------------------------
The obligation of the Lender to enter into this Agreement and to make the
Loan on the date hereof is subject to the satisfaction of the following
conditions precedent:
(a) AGREEMENT; NOTE. The Lender shall have received an executed
counterpart of this Agreement, duly executed by the Borrower, and an executed
original Term Loan Note conforming to the requirements hereof, duly executed by
the Borrower.
(b) CORPORATE PROCEEDINGS. The Lender shall have received a certificate by
the Secretary of the Borrower, dated as of or prior to the date hereof as to (i)
true copies of the certificate of incorporation and by-laws (or other
constituent documents) of the Borrower in effect on such date (which, in the
case of the certificate of incorporation or other constituent documents filed or
required to be filed with the Secretary of State or other Governmental Authority
in its jurisdiction of incorporation, shall be certified to be true, correct and
complete by such Secretary of the Borrower as of the date hereof), (ii) true
copies of all corporate (and, when necessary, shareholder) action taken by the
Borrower relative to this Agreement and the other Loan Documents to which its is
a party, and (iii) the incumbency and signature of the respective
23
officers of the Borrower executing this Agreement and the other Loan Documents
to which it is a party, together with satisfactory evidence of the incumbency of
each such officer. The Lender shall have received certificates from the
appropriate Secretaries of State or other applicable Governmental Authorities
dated not more than sixty (60) days before the date hereof showing the good
standing of the Borrower in its state of organization.
(c) INSURANCE. The Lender shall have received a certificate setting forth
all policies of insurance in force with respect to the Borrower, issued by an
insurance agent reasonably acceptable to the Lender, and from an insurance
carrier rated "A-" or better by A.M. Best & Company or a comparable rating
agency, and satisfactory in form, amounts, covered risks and substance to the
Lender.
(d) FINANCIAL STATEMENTS. The Lender shall have received, copies of the
consolidated financial statements, and, at the request of the Lender,
consolidating financial statements referred to in SECTION 3.06.
(e) LEGAL OPINION OF COUNSEL TO BORROWER. The Lender shall have received
an opinion addressed to the Lender, dated the date hereof, of Xxxxxx & Xxxxx,
Elmira, New York, counsel to the Borrower, as to such matters as may be
requested by the Lender and in form and substance satisfactory to the Lender.
(f) FEES, EXPENSES, ETC. All fees and other compensation to be paid to the
Lender pursuant hereto or pursuant to any other written agreement on or prior to
the date hereof shall have been paid or received, and all invoiced expenses
incurred by the Lender pursuant hereto shall have been paid, including, but not
limited to, the Lender's arrangement fee (the "Arrangement Fee") in the amount
of $10,000.
(g) REPRESENTATIONS AND WARRANTIES. Except with respect to the
representations and warranties expressly deemed made as of an earlier date, each
of the representations and warranties made by the Borrower in ARTICLE III hereof
shall be true and correct in all material respects on and as of such date as if
made on and as of such date, both before and after giving effect to the Loan and
the Lender shall have received a certificate by a Responsible Officer of the
Borrower, dated as of or prior to the date hereof to such effect.
(h) NO DEFAULTS. No Event of Default or Potential Default shall have
occurred and be continuing on such date or after giving effect to the Loan.
(i) NO VIOLATIONS OF LAW, ETC. The making or use of the Loan shall not
cause the Borrower to violate or conflict with any Law in any material respect.
(j) NO MATERIAL ADVERSE CHANGE. There shall not have occurred a material
adverse change in the business, operations, assets or condition (financial or
otherwise) of the Borrower or any of its Subsidiaries since December 31, 2000.
There shall not have occurred any other event, act or condition which is likely
to have a Material Adverse Effect.
(k) ADDITIONAL MATTERS. The Lender shall have received such other
certificates, opinions, documents and instruments as may reasonably be requested
by the Lender. All
24
corporate and other proceedings, and all documents, instruments and other
matters in connection with the transactions contemplated by this Agreement and
the other Loan Documents shall be satisfactory in form and substance to the
Lender.
Borrower's acceptance of the proceeds of the Loan shall constitute a
representation and warranty by the Borrower that the conditions set forth in
this SECTION 4.01 have been satisfied in all material respects as of the date
hereof. Failure of the Lender to receive notice from the Borrower to the
contrary before the Loan is made by the Lender shall constitute a further
representation and warranty by the Borrower that the conditions referred to in
this SECTION 4.01 have been satisfied in all material respects as of the date
hereof.
ARTICLE V: AFFIRMATIVE COVENANTS
--------------------------------
The Borrower hereby covenants to the Lender as follows:
5.01. BASIC REPORTING REQUIREMENTS.
-----------------------------------
(a) ANNUAL AUDIT REPORTS. As soon as available and in any event within one
hundred twenty (120) days after the end of each Fiscal Year of the Borrower, a
copy of the annual audited report for such Year for the Borrower and its
Subsidiaries, containing consolidated and consolidating financial statements for
such year certified in a manner acceptable to the Lender by Ernst &Young, LLP or
other independent public accountants acceptable to the Lender.
(b) QUARTERLY REPORTS. As soon as available and in any event within
forty-five (45) days after the end of each of the first three quarters of each
Fiscal Year of the Borrower, consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such quarter and statements of income and retained
earnings and changes in financial position of the Borrower and its Subsidiaries
for the period commencing at the end of the previous Fiscal Year and ending with
the end of such quarter, with a certification by the chief financial officer of
the Borrower that such financial statements fairly present the financial
condition and results of operations of the Borrower in accordance with GAAP, at
the dates and for the periods set forth therein.
(c) QUARTERLY COMPLIANCE CERTIFICATES. The Borrower shall deliver to the
Lender concurrently with the delivery of the financial statements referred to in
subsection (a) and (b) of this SECTION 5.01, a certificate of the chief
financial officer of the Borrower (i) stating that, to the knowledge of such
officer after reasonable investigation, all representations and warranties of
the Borrower set forth in this Agreement remain true and correct on and as of
the date of such certificate as though made on and as of such date, (ii) no
Event of Default or Potential Default has occurred and is continuing or, if any
such Event of Default or Potential Default has occurred and is continuing,
stating the nature and period of existence thereof and the steps which the
Borrower is taking to rectify the same and (iii) stating in reasonable detail
the information and calculations necessary to establish compliance with the
provisions of SECTION 6.01 hereof.
(d) PROJECTIONS. The Borrower will furnish to the Lender within one
hundred twenty (120) days following the commencement of each Fiscal Year such
Year's projections demonstrating the projected financial condition and results
of operations of the Borrower and its
25
Subsidiaries for the period commencing that Fiscal Year. Nothing in this SECTION
5.01(d) shall constitute a representation or warranty that such projections will
be achieved.
(e) CERTAIN OTHER REPORTS AND INFORMATION. Promptly upon their becoming
available to the Borrower, the Borrower shall deliver to the Lender a copy of
all reports which the Borrower sends to any of its security holders, and copies
of all reports and registration statements which the Borrower or any Subsidiary
files with the Securities and Exchange Commission or any national securities
exchange.
(f) FURTHER INFORMATION. The Borrower will promptly furnish to the Lender,
such other information respecting the condition or operations, financial or
otherwise, of the Borrower or any of its Subsidiaries as the Lender may from
time to time reasonably request.
(g) NOTICE OF CERTAIN EVENTS. The Borrower will promptly furnish to the
Lender after the filing or receiving thereof, if and when the Borrower or any
Controlled Group Member (i) gives or is required to give notice to the PBGC of
any Reportable Event with respect to any Plan, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
Reportable Event, a copy of the notice of such Reportable Event given or
required to be given to PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA, promptly followed by a copy of
such notice to the Lender; or (iii) receives notice from the PBGC under Title IV
of ERISA of an intent to terminate or appoint a trustee to administer any Plan,
promptly followed by a copy of such notice to the Lender.
(h) COPIES OF LOAN AGREEMENTS. Promptly upon their becoming available to
the Borrower, the Borrower shall deliver to the Lender a true, accurate and
complete copy of any and all credit and/or loan agreements now or hereafter
entered into by and between the Borrower and/or any of its Subsidiaries with any
other Person (including, but not limited to, any lending institution), together
with any and all modifications, amendments, renewals, extensions, restatements
and/or supplements thereof or thereto. The Borrower will also promptly furnish
to the Lender, such other instruments, agreements, documents and information
with respect to any such credit and/or loan agreements in such form as the
Lender may reasonably request from time to time.
5.02. INSURANCE.
----------------
The Borrower will, and will cause each Subsidiary to, maintain insurance
with insurance companies or associations rated "A-" or better by A. M. Best &
Company or a comparable rating agency in such amounts and against such risks as
is usually carried by owners of similar businesses and properties in the same
general areas in which the Borrower and its Subsidiaries operate.
5.03. COMPLIANCE WITH LAWS. CORPORATE EXISTENCE
-----------------------------------------------
The Borrower shall (a) comply, and cause each of its Subsidiaries to
comply, in all material respects with all applicable laws, rules, regulations
and orders of any governmental
26
authority, the breach of which would materially and adversely affect the
business, operations, prospects or assets or the financial condition or
otherwise of the Borrower. Such compliance shall include, without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges or levies imposed upon it or on its income or profits or upon its
property except to the extent (i) such payment is being contested in good faith
and by proper proceedings, and (ii) adequate reserves are being maintained with
respect thereto; and (b) do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence, rights, franchises,
trade names and preserve all of its property used or useful in the conduct of
its business and keep same in good repair and working condition except for
property it deems no longer useful.
5.04. NOTICE OF PROCEEDINGS.
----------------------------
The Borrower shall promptly give notice in writing to the Lender of all
litigation, arbitral proceedings, regulatory proceedings and Forfeiture
Proceedings affecting the Borrower or any Subsidiary, except litigation or
proceedings which, if adversely determined, could not materially and adversely
affect the consolidated financial condition or the business taken as a whole of
the Borrower and its Subsidiaries.
5.05. ENVIRONMENTAL LAWS.
-------------------------
The Borrower shall comply in all material respects with all Environmental
Laws and provide to the Lender all documentation in connection with such
compliance that the Lender may reasonably request.
5.06. ACCESS TO PREMISES AND RECORDS.
-------------------------------------
At any reasonable time and from time to time, but only to the extent
'relevant to the loan transaction hereunder and the Borrower's ability to
perform under this Agreement, upon reasonable notice and during normal business
hours, the Borrower shall permit the Lender, or any agent or representative
thereof, to examine the records and books of account and visit the properties of
the Borrower or its Subsidiaries and to discuss the affairs, finances and
accounts of the Borrower and any Subsidiary with any of the Borrower's officers
and directors.
5.07. NOTICE OF DEFAULT.
------------------------
In the event any financial officer of the Borrower knows of any default or event
of default under any agreement for or with respect to any Indebtedness to which
the Borrower is a party, or receives notice of any violation, default or event
of default under any such agreement to which it is a party, or any Event of
Default or Potential Default which shall have occurred the Borrower shall
promptly furnish to the Lender a written statement as to such occurrence
specifying the nature and extent thereof and the action (if any) which is
proposed to be taken with respect thereto.
5.08. SUBSIDIARIES.
-------------------
The Borrower shall, give the Lender prompt written notice of the creation,
establishment or acquisition, in any manner, of any Subsidiary not existing on
the date hereof. In the event any
27
Subsidiary is required by the holder of any Indebtedness (other than the Loan)
to execute and deliver a guarantee of payment and/or performance of any such
Indebtedness, or any portion thereof, the Borrower shall cause such Subsidiary
to likewise execute and deliver to the Lender a valid Guaranty of payment and
performance of the Loan and this Agreement by such Subsidiary. Notwithstanding
the immediately preceding sentence, in the event either X. Xxxxxxxxxxxx & Co.,
A.G. or HHT Xxxxxx Tripet Xxxxxxxx XX are required at any time by any lending
institution in the nation of Switzerland to guarantee the payment and/or
performance of any Indebtedness incurred in Switzerland solely by the other, the
Borrower shall not be required, in such instance, to cause the above-described
entity making such guarantee to execute and deliver to the Lender the Guaranty
hereinbefore set forth.
5.09. USE OF PROCEEDS.
----------------------
The Borrower shall apply the proceeds of the Loan hereunder only to
discharge indebtedness of the Borrower associated with its acquisition of HTT
Xxxxxx Tripet Xxxxxxxx Xx. The Borrower shall not use the proceeds of the Loan
hereunder directly or indirectly for any unlawful purpose, in any manner
inconsistent with SECTION 3.22 hereof, or inconsistent with any other provision
of any Loan Document.
5.10. MATERIAL ADVERSE CHANGES.
-------------------------------
The Borrower shall promptly notify the Lender of any litigation matter,
investigation, audit, business development or change in financial condition,
which has resulted in, or which the Borrower or its Subsidiaries reasonably
believes will result in an Event of Default.
ARTICLE VI: NEGATIVE COVENANTS
------------------------------
The Borrower hereby covenants to the Lender as follows:
6.01. FINANCIAL COVENANTS.
--------------------------
During the term hereof, the Borrower on a consolidated basis shall not:
(a) Permit the ratio of (i) Total Funded Debt to the EBITDA of the
Borrower, calculated at the same point in time, to be greater than
2.75 to 1.00 at any time through and including December 31, 2001,
and (ii) Total Funded Debt to the EBITDA of the Borrower, calculated
at the same point in time, to be greater than 2.50 to 1.00 by March
31, 2002 and at the end of each fiscal quarter thereafter, measured
quarterly as of the period of the four (4) most recently completed
fiscal quarters of the Borrower.
(b) Permit the Fixed Charge Coverage Ratio of the Borrower to be less
than 1.80 to 1.00 by March 31, 2001, and at the end of each fiscal
quarter thereafter, measured quarterly as of the period of the four
(4) then most recently completed fiscal quarters of the Borrower.
28
6.02. LIENS.
------------
The Borrower shall not create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien, or any other type of
preferential arrangement, upon or with respect to any of its properties, whether
now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to
assign, any right to receive income, in each case to secure any Debt of any
person or entity, other than the following (collectively "Permitted Liens"):
(a) Liens securing the payment of taxes, assessments or governmental
charges or levies or the demands of suppliers, mechanics, carriers, warehousers,
landlords and other like Persons, provided that (i) they do not in the aggregate
materially reduce the value of any properties subject to the Liens or materially
interfere with their use in the ordinary conduct of the owning business, and
(ii) all claims which the Liens secure are being actively contested in good
faith and by appropriate proceedings;
(b) Liens incurred or deposits made in the ordinary course of business (i)
in connection with worker's compensation, unemployment insurance, social
security and other like laws, or (ii) to secure the performance of letters of
credit, bids, tenders, sales contract, leases, statutory obligations, surety,
appeal and performance bonds and other similar obligations, in each case not
incurred in connection with the borrowing of money, the obtaining of advances or
the payment of the deferred purchase price of property;
(c) Attachment, judgment and other similar Liens arising in connection
with court proceedings provided that (i) execution and other enforcement are
effectively stayed, and (ii) all claims which the Liens secure are being
actively contested in good faith and by appropriate proceedings;
(d) Except as provided in (h) below, Liens on property of a Subsidiary
provided that they secure only obligations owing to the Borrower or another
Subsidiary;
(e) Liens related to lease obligations, and within the limitations,
described in Section 6.03;
(f) Liens against customer notes, which are created in connection with the
sale, pledge or discounting of such customer notes, provided that immediately
after giving effect thereto the Borrower's aggregate liabilities on account of
such Indebtedness secured by such Liens does not exceed $11,000,000.00;
(g) Liens against property leased pursuant to Capital Leases, provided
that the aggregate amount of Indebtedness secured by such Liens does not exceed
$3,000,000.00; and
(h) Liens not exceeding $13,000,000.00 in the aggregate against property
other than inventory or receivables, provided that in each such instance the
Borrower and/or its Subsidiary, as the case may be, grants at the same time to
the Lender a Lien against such property. Notwithstanding the foregoing, Liens
against the receivables of HTT Xxxxxx Xxxxxx Xxxxxxxx XX shall be permitted.
29
6.03. LEASE OBLIGATIONS.
------------------------
The Borrower shall not create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any obligations for the payment of
rental for any property under leases or agreements to lease other than Capital
Leases which would cause the liabilities of the Borrower and its Subsidiaries,
on a consolidated basis, in respect of all such obligations to exceed
$5,000,000.00 payable in any period of 12 months.
6.04. LOANS AND ADVANCES.
-------------------------
The Borrower shall not at any time make or permit to exist any loans or
advances to any Person, except that loans or advances incurred in the normal
course of business (including employee advances and customer notes) are
permitted.
6.05. PROHIBITED TRANSACTIONS.
------------------------------
The Borrower will not, and will not permit any Subsidiary to use the
proceeds of the Loan to acquire any security in any transaction which is subject
to Sections 13 and 14 of the Securities Exchange Act of 1934 or use the proceeds
of the Loan to otherwise acquire any public company other than on a friendly
basis.
6.06. MARGIN STOCK
------------------
The Borrower shall not, and shall not permit any of its Subsidiaries to
use the proceeds of the Loan to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock.
6.07. NO ACTIONS LEADING TO FORFEITURE.
---------------------------------------
Neither the Borrower nor any of its Subsidiaries shall engage in or
purpose to be engaged in the conduct of any business or activity which could
result in a Forfeiture Proceeding, which would, individually or in the
aggregate, result in a Material Adverse Effect.
6.08. CONSOLIDATIONS. MERGERS. ACQUISITIONS AND SALES OF ASSETS.
----------------------------------------------------------------
The Borrower shall not consolidate or merge with or into, or sell, lease
or otherwise dispose of any of its assets to, any Person, or acquire all or any
substantial portion of the properties, assets or shares of stock of any other
organization or permit any Subsidiary to do any of the above, unless the
Borrower is the surviving entity, the transaction is on a friendly basis and
immediately thereafter the Borrower is in compliance with all terms and
provisions of this Agreement and except that:
(a) any Subsidiary may consolidate or merge with the Borrower or any
wholly-owned Subsidiary of the Borrower;
(b) the Borrower or any Subsidiary may sell, lease or otherwise
dispose of any of its inventory in the ordinary course of business and any of
its assets which are obsolete, excess or unserviceable;
30
(c) the Borrower or any Subsidiary may sell, pledge or discount customer
notes;
(d) the Borrower or any Subsidiary may sell, lease or otherwise dispose of
any of its assets (other than as permitted by clauses (a) to (c) inclusive),
PROVIDED that the aggregate net book value of all assets of the Borrower and its
Subsidiaries sold, leased or otherwise disposed of during any fiscal year of the
Borrower pursuant to this clause (d) shall not exceed 5 % of the Consolidated
Tangible Net Worth of the Borrower and its Subsidiaries at the end of the
preceding fiscal year.
All sales, leases or dispositions of assets pursuant to clause (b), (c) or
(d) shall be at fair market value.
Notwithstanding the foregoing, the aggregate amount of acquisitions (net
of amounts paid for with the Borrower's stock) permitted under this section
without the prior written consent of the Lender shall not be greater than
Fifteen Million Dollars ($15,000,000.00) in any consecutive twenty-four (24)
month period, except that for the twenty-four (24) month period next following
the Acquisition Date the amount shall be the lower of Thirty-Six Million Dollars
($36,000,000.00) or the amount paid as provided under the Acquisition Agreement.
6.09. AFFILIATE TRANSACTIONS.
-----------------------------
The Borrower shall not enter into or permit any Subsidiary to enter into
any transaction (including the purchase, sale or exchange of property or the
rendering of any service) with any Affiliate except upon fair and reasonable
terms which are at least as favorable to the Borrower or the Subsidiary as would
be obtained in a comparable arms-length transaction with a non-Affiliate.
ARTICLE VII: DEFAULTS
---------------------
7.01. EVENTS OF DEFAULT.
------------------------
An Event of Default shall mean the occurrence or existence of one or more
of the following events or conditions (for any reason, whether voluntary,
involuntary or effected or required by Law):
(a) The Borrower shall fail to pay when due any installment of principal
of, or interest on, the Note.
(b) Any representation or warranty made by the Borrower herein or in any
other Loan Document, or by the Borrower (or any of its officers) in connection
with this Agreement shall prove to have been incorrect in any material respect
when made.
(c) The Borrower shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement or in any other Loan Document on its
part to be
31
performed or observed and any such failure shall remain unremedied for ten (10)
days after written notice thereof shall have been given to the Borrower by the
Lender.
(d) The Borrower or any of its Subsidiaries shall fail to pay any
Indebtedness (but excluding Indebtedness evidenced by the Note) of the Borrower
or such Subsidiary as the case may be, or any interest or premium thereon, when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness; or
any other default under any agreement or instrument relating to any such
Indebtedness, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such Indebtedness
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated maturity
thereof.
(e) The Borrower or any of its Subsidiaries shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Borrower or
any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property; or the
Borrower or any of its Subsidiaries shall take any corporate action to authorize
any of the actions set forth above in this subsection (e).
(f) Any judgment or order for the payment of money in excess of
$2,500,000.00 shall be rendered against the Borrower or any of its Subsidiaries,
and either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of ten (10)
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect.
(g) Any Controlled Group Member shall fail to pay when due an amount or
amounts aggregating in excess of $250,000.00 which it shall have become liable
to pay to the PBGC or to a Plan; or notice of intent to terminate a Plan or
Plans having aggregate Unfunded Benefit Liabilities in such amount or amounts
which would at such time create a liability in excess of liabilities of such
Plan or Plans recognized prior thereto on the Borrower's financial statements
and which liability would cause a violation of any of the covenants under
Article 6 (collectively, a "Material Plan") shall be filed under Title IV of
ERISA by any Controlled Group Member, any plan administrator any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate or to cause a trustee to be appointed to administer any Material
Plan or a proceeding shall be instituted by a fiduciary of any Material Plan
against any Controlled Group Member to enforce Section 515 of ERISA and such
proceeding shall not have been dismissed within thirty (30) days thereafter; or
a condition shall exist by reason of which the PBGC would be entitled to obtain
a decree adjudicating that any Material Plan must be terminated.
32
(h) Any Forfeiture Proceeding shall have been commenced or the Borrower
shall have given the Lender notice of the commencement of any Forfeiture
Proceeding, which would, individually or in the aggregate result in a Material
Adverse Effect, or the Lender has a good faith basis to believe that a
Forfeiture Proceeding has been threatened or commenced, which would,
individually or in the aggregate, result in a Material Adverse Effect
7.02. CONSEQUENCES OF AN EVENT OF DEFAULT.
------------------------------------------
(a) If an Event of Default specified in subsections (a) through (d) and
(f) through (h) of SECTION 7.01 hereof shall occur and be continuing or shall
exist, then, in addition to all other rights and remedies which the Lender may
have hereunder or under any other Loan Document, at law, in equity or otherwise
(including, but not limited to, under any Guaranty), the Lender shall be under
no further obligation to make the Term Loan hereunder, and the Lender may, by
notice to the Borrower, from time to time do any or all of the following:
(i) Declare the Term Loan Commitment terminated, whereupon such
Commitment will terminate and any fees hereunder shall be immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby waived, and an action therefor shall immediately accrue.
(ii) Declare the unpaid principal amount of the Term Loan, interest
accrued thereon and all other Obligations to be immediately due and payable by
the Borrower without presentment, demand, protest or further notice of any kind,
all of which are hereby waived, and an action or actions therefor shall
immediately accrue.
(b) If an Event of Default specified in subsection (e) of SECTION 7.01
hereof shall occur or exist, then, in addition to all other rights and remedies
which the Lender may have hereunder or under any other Loan Document, at law, in
equity or otherwise, the Term Loan Commitment shall automatically terminate and
the Lender shall be under no further obligation to make the Term Loan, and the
unpaid principal amount of the Term Loan, interest accrued thereon and all other
Obligations shall become immediately due and payable by the Borrower without
presentment, demand, protest or notice of any kind, all of which are hereby
waived, and an action therefor shall immediately accrue.
33
ARTICLE VIII: [RESERVED]
------------------------
[THIS ARTICLE IS INTENTIONALLY OMITTED.]
ARTICLE IX: MISCELLANEOUS
-------------------------
9.01. HOLIDAYS.
---------------
Whenever any payment or action to be made or taken hereunder or under any
other Loan Document shall be stated to be due on a day which is not a Business
Day (or a London Business Day with respect to a Fixed LIBOR Rate Loan), such
payment or action shall, except as otherwise expressly provided in this
Agreement, be made or taken on the next following Business Day (or the next
following London Business Day, as the case may be) and such extension of time
shall be included in computing interest or fees, if any, in connection with such
payment or action.
9.02. RECORDS.
--------------
The unpaid principal amount of the Loan owing to the Lender, the unpaid
interest accrued thereon, the interest rate or rates applicable to such unpaid
principal amount and the duration of such applicability shall at all times be
ascertained from the records of the Lender which shall be conclusive absent
manifest error.
9.03. AMENDMENTS AND WAIVERS.
-----------------------------
Neither this Agreement nor any Loan Document may be amended, modified or
supplemented except in accordance with the provisions of this Section. Any such
amendment, modification or supplement must be in writing and shall be effective
only to the extent set forth in such writing and only if executed by the
Borrower and the Lender and, if the Lender requires, consented to by any
Guarantors.
Any Event of Default or Potential Default waived or consented to in any
such amendment, modification or supplement shall be deemed to be cured and not
continuing to the extent and for the period set forth in such waiver or consent,
but no such waiver or consent shall extend to any other or subsequent Event of
Default or Potential Default or impair any right consequent thereto.
9.04. NO IMPLIED WAIVER: CUMULATIVE REMEDIES.
---------------------------------------------
No course of dealing and no delay or failure of the Lender in exercising
any right, power or privilege under this Agreement or any other Loan Document
shall affect any other or future exercise thereof or exercise of any other
right, power or privilege; nor shall any single or partial exercise of any such
right, power or privilege or any abandonment or discontinuance of steps to
enforce such a right, power or privilege preclude any further exercise thereof
or of any other right, power or privilege. The rights and remedies of the Lender
under this Agreement and any
34
other Loan Document are cumulative and not exclusive of any rights or remedies
which the Lender would otherwise have hereunder or thereunder, at law, in equity
or otherwise.
9.05. NOTICES.
--------------
(a) Except to the extent otherwise expressly permitted hereunder or
thereunder, all notices, requests, demands, directions and other communications
(collectively "notices") under this Agreement or any Loan Document shall be in
writing (including telexed and telecopied communication) and shall be sent by
first-class mail, or by nationally-recognized overnight courier, or by telex or
telecopier (with confirmation in writing mailed first-class or sent by such an
overnight courier), or by personal delivery. All notices shall be sent to the
applicable party at the address stated on the signature pages hereof or in
accordance with the last unrevoked written direction from such party to the
other parties hereto, in all cases with postage or other charges prepaid. Any
such properly given notice to the Lender or the Borrower shall be effective when
received.
(b) The Lender may rely on any notice (whether or not such notice is made
in a manner permitted or required by this Agreement or any Loan Document)
purportedly made by or on behalf of the Borrower by a Responsible Officer, and
the Lender shall not have any duty to verify the identity or authority of any
such Person giving such notice.
9.06. EXPENSES; TAXES; INDEMNITY.
---------------------------------
(a) The Borrower agrees to pay or cause to be paid and to save the Lender
harmless against liability for the payment of all reasonable out-of-pocket costs
and expenses (including but not limited to reasonable fees (not exceeding
$10,000)and expenses of counsel, including local counsel, in-house counsel,
auditors, consulting engineers, appraisers, and all other professional,
accounting, evaluation and consulting costs) incurred by the Lender from time to
time arising from or relating to (i) the negotiation, preparation, execution and
delivery of this Agreement and the other Loan Documents; (ii) the administration
and performance of this Agreement and the other Loan Documents, (iii) any
requested amendments, modifications, supplements, waivers or consents (whether
or not ultimately entered into or granted) to this Agreement or any Loan
Document, and (iv) the enforcement or preservation of rights under this
Agreement or any Loan Document (including, but not limited to, any such costs or
expenses arising from or relating to (A) collection or enforcement of an
outstanding Loan or any other amount owing hereunder or thereunder by the
Lender, and (B) any litigation, proceeding, dispute, work-out, restructuring or
rescheduling related in any way to this Agreement or the Loan Documents), and
(c) enforcement of any Guaranties.
(b) The Borrower hereby agrees to pay all stamp, document, transfer,
recording, filing, registration, search, sales and excise fees and taxes and all
similar impositions now or hereafter determined by the Lender to be payable in
connection with this Agreement or any other Loan Documents or any other
documents, instruments or transactions pursuant to or in connection herewith or
therewith, and the Borrower agrees to save the Lender harmless from and against
any and all present or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such fees, taxes or
impositions.
35
(c) The Borrower hereby agrees to reimburse and indemnify each of the
Indemnified Parties from and against any and all losses, liabilities, claims,
damages, expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements of any kind or nature whatsoever (including, without limitation,
fees and disbursements of counsel for such Indemnified Party in connection with
any investigative, administrative or judicial proceeding commenced or
threatened, whether or not such Indemnified Party shall be designated a party
thereto) that may at any time be imposed on, asserted against or incurred by
such Indemnified Party as a result of, or arising out of, or in any way related
to or by reason of, this Agreement or any other Loan Document, any transaction
from time to time contemplated hereby thereby, or any transaction financed in
whole or in part or directly or indirectly with the proceeds of any Loan (and
without any way limiting the generality of the foregoing, including any
violation or breach of any Environmental Law or any other Law by the Borrower,
or any Affiliate or Subsidiary of the Borrower; any Environmental Claim arising
out of the management, use, control, ownership or operation of property by any
of such Persons, including all onsite and off-site activities involving
Environmental Concern Materials; or any exercise by the Lender of any of its
rights or remedies under this Agreement or any other Loan Document); but
excluding any such losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements resulting solely
from the gross negligence or willful misconduct of such Indemnified Party, as
finally determined by a court of competent jurisdiction. If and to the extent
that the foregoing obligations of the Borrower under this subsection (c), or any
other indemnification obligation of the Borrower hereunder or under any other
Loan Document, are unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable Law.
9.07. SEVERABILITY.
-------------------
The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.
9.08. PRIOR UNDERSTANDINGS.
---------------------------
This Agreement and the other Loan Documents supersede all prior and
contemporaneous understandings and agreements, whether written or oral, among
the parties hereto relating to the transactions provided for herein and therein.
9.09. DURATION; SURVIVAL.
-------------------------
All representations and warranties of the Borrower contained herein or in
any other Loan Document or made in connection herewith or therewith shall
survive the making of, and shall not be waived by the execution and delivery of,
this Agreement or any other Loan Document, any investigation by or knowledge of
the Lender, the making of the Loan, or any other event or condition whatever.
All covenants and agreements of the Borrower contained herein or in any other
Loan Document shall continue in full force and effect from and after the Closing
Date so long as the Borrower may borrow hereunder and until payment in full of
all Obligations.
36
Without limitation, all obligations of the Borrower hereunder or under any other
Loan Document to make payments to or indemnify the Lender shall survive the
payment in full of all other Obligations, termination of the Borrower's right to
borrow hereunder, and all other events and conditions whatever.
9.10. COUNTERPARTS; FURTHER ASSURANCES.
---------------------------------------
(a) This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
(b) The Borrower shall promptly execute, upon request of the Lender, any
further, additional, corrected or amended instruments and documents which may
reasonably be required by the Lender with respect to the Loan being made
hereunder and to evidence compliance with the terms of this Agreement.
9.11. LIMITATION ON PAYMENTS.
-----------------------------
The parties hereto intend to conform to all applicable Laws in effect from
time to time limiting the maximum rate of interest that may be charged or
collected. Accordingly, notwithstanding any other provision hereof or of any
other Loan Document, the Borrower shall not be required to make any payment to
or for the account of the Lender, and the Lender shall refund any payment made
by the Borrower, to the extent that such requirement or such failure to refund
would violate or conflict with nonwaivable provisions of applicable Laws
limiting the maximum amount of interest which may be charged or collected by the
Lender.
9.12. SET-OFF.
--------------
The Borrower hereby agrees that, to the fullest extent permitted by law,
if any Obligation of the Borrower shall be due and payable (by acceleration or
otherwise), the Lender shall have the right, without notice to the Borrower to
set-off against and to appropriate and apply to such Obligation any
indebtedness, liability or obligation of any nature owing to the Borrower by the
Lender, including but not limited to all deposits (whether time or demand,
general or special, provisionally credited or finally credited, whether or not
evidenced by a certificate of deposit) now or hereafter maintained by the
Borrower with the Lender. Such right shall be absolute and unconditional in all
circumstances and, without limitation, shall exist whether or not the Lender or
any other Person shall have given notice or made any demand to the Borrower, or
any other Person, whether such indebtedness, obligation or liability owed to the
Borrower is contingent, absolute, matured or unmatured (it being agreed that the
Lender may deem such indebtedness, obligation or liability to be then due and
payable at the time of such setoff), and regardless of the existence or adequacy
of any collateral, guaranty or any other security, right or remedy available to
the Lender or any other Person. The Borrower hereby agrees that, to the fullest
extent permitted by law, any branch, subsidiary or affiliate of the Lender shall
have the same rights of set-off as the Lender as provided in this Section
(regardless of whether such branch, subsidiary or affiliate would otherwise be
deemed in privity with or a direct creditor of the Borrower). The rights
provided by this SECTION 9.12 are in addition to all other rights of set-off and
banker's lien and all other rights and remedies which the Lender (or any such
branch, subsidiary or affiliate)
37
may otherwise have under this Agreement, any other Loan Document, at law or in
equity, or otherwise, and nothing in this Agreement or any Loan Document shall
be deemed a waiver or prohibition of or restriction on the rights of set-off or
bankers lien of any such Person.
9.13. [RESERVED].
-----------------
[THIS SECTION IS INTENTIONALLY OMITTED.]
9.14. SUCCESSORS AND ASSIGNS: PARTICIPATIONS; ASSIGNMENTS.
----------------------------------------------------------
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the Borrower, the Lender, all future holders of the Note, and
their respective successors and assigns, except that the Borrower may not assign
or transfer any of its rights hereunder or interests herein without the prior
written consent of the Lender, and any purported assignment without such consent
shall be void.
(b) PARTICIPATIONS. The Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable Law, at any time
sell participations to one or more commercial banks or other Persons (each a
"Participant") in all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of the Commitment and the Loan owing to it and the Note held by it
hereunder); PROVIDED, that: the Lender shall remain solely responsible for the
performance of its obligations under this Agreement, and the Borrower shall
continue to deal solely and directly with the Lender in connection with the
Lender's rights and obligations under this Agreement and each of the other Loan
Documents.
(c) ASSIGNMENTS. The Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable Law, at any time assign all
or a portion of its rights and obligations under this Agreement and the other
Loan Documents (including, without limitation, all or any portion of its
Commitment and Loan owing to it and the Note held by it hereunder) to any
Lender, any affiliate of a Lender or to one or more additional commercial banks
or other Persons (each a "Purchasing Lender").
(d) FINANCIAL AND OTHER INFORMATION. The Borrower authorizes the Lender to
disclose to any Participant or Purchasing Lender (each, a "transferee") and any
prospective transferee any and all financial and other information in such
Person's possession concerning the Borrower, its Subsidiaries and Affiliates
which has been or may be delivered to such Person by or on behalf of the
Borrower, its Affiliates and/or Subsidiaries in connection with this Agreement
or any other Loan Document or such Person's credit evaluation of the Borrower,
its Affiliates and Subsidiaries.
(e) ASSIGNMENTS TO FEDERAL RESERVE BANK. The Lender may at any time assign
all or any portion of its rights under this Agreement, including without
limitation the Loan owing to it, and the Note held by it to a Federal Reserve
Bank. No such assignment shall relieve the Lender from its obligations
hereunder.
38
(f) CONFIDENTIALITY. The Lender agrees (on behalf of itself and each of
its affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with safe and sound
banking practices, any non-public information supplied to it by the Borrower
pursuant to this Agreement which is identified by the Borrower as being
confidential at the time the same is delivered to the Lender, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for the Lender, (iii) to bank examiners, auditors or accountants, (iv)
in connection with any litigation to which the Lender is a party, (v) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) first executes
and delivers to the Lender a confidentiality agreement acceptable to the Lender
and the Borrower, or (vi) to the extent such information becomes publicly
available other than as a result of disclosure by the Lender; and provided
further that in no event shall the Lender be obligated or required to return any
materials furnished by the Borrower.
9.15 GOVERNING LAW; SUBMISSION TO JURISDICTION: WAIVER OF JURY TRIAL; LIMITATION
--------------------------------------------------------------------------------
OF LIABILITY.
-------------
(a) GOVERNING LAW. THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS (EXCEPT TO
THE EXTENT, IF ANY, OTHERWISE EXPRESSLY STATED IN SUCH OTHER LOAN DOCUMENTS)
SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD OR REFERENCE TO ITS CHOICE OF LAW PRINCIPLES.
(b) CERTAIN WAIVERS. THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON ARISING
FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY STATEMENT,
COURSE OF CONDUCT, ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION HEREWITH OR
THEREWITH (COLLECTIVELY, "RELATED LITIGATION") MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN MONROE COUNTY, NEW YORK, AND
SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND TO THE FULLEST EXTENT PERMITTED
BY LAW AGREES THAT IT WILL NOT BRING ANY RELATED LITIGATION IN ANY OTHER FORUM
(BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY LENDER TO BRING ANY ACTION,
SUIT OR PROCEEDING IN ANY OTHER FORUM);
(ii) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING
OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM
THAT ANY SUCH RELATED LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, AND
WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION BROUGHT IN
ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER IT;
39
(iii) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO THE BORROWER AT THE ADDRESS FOR NOTICES DESCRIBED IN
SECTION 9.05 HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT
THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW); AND
(iv) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED LITIGATION.
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed and delivered this Term Loan Agreement as of the date
first above written.
HARDINGE INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
Title: Treasurer
Address for Notices:
Hardinge Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attn: Treasurer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxx
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attn: J. Xxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
40
KEYBANK NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxx III
---------------------------------
Xxxxxx X. Xxxxx III
Title: Vice President
Address for Notices:
0000 Xxxxxx & Xxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx III
Vice President, Corporate Banking
and Finance Group
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Boylan, Brown, Code, Xxxxxx & Xxxxxx, LLP
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Corporate Banking Group
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Term Loan Committed Amount: $24,000,000
41
TERM LOAN PROMISSORY NOTE
$24,000,000.00 March 20, 2001
Rochester, New York
FOR VALUE RECEIVED, HARDINGE INC., a New York corporation, the undersigned,
promises to pay to the order of KEYBANK NATIONAL ASSOCIATION, a national banking
association (the "Lender") at its principal office in the City of Rochester, New
York in lawful money of the United States, the sum of TWENTY-FOUR MILLION AND
00/100 DOLLARS, ($24,000,000.00) plus interest thereon at the per annum rate or
rates determined pursuant to the Agreement as defined below.
1. DEFINITIONS. All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the Agreement as defined below.
2. PAYMENTS.
a. The Borrower shall make a payment of interest only on June 20, 2001 on the
outstanding principal balance due hereunder at the per annum rate equal to
the Fixed LIBOR Rate for the Interest Period as of the date hereof, plus
the applicable Additional Basis Points (as calculated pursuant to the
Agreement), from the date hereof to, but not including, June 20, 2001, all
in accordance with the Agreement. Commencing on September 20, 2001 and on
each Regular Payment Date thereafter, to and including December 20, 2002,
the Borrower shall make payments of interest only on the outstanding
principal balance due hereunder at the per annum rate equal to the Fixed
LIBOR Rate for the Interest Period as of each immediately preceding
Regular Payment Date (commencing June 20, 2001), plus the applicable
Additional Basis Points as calculated pursuant to the Agreement (or, if
required pursuant to the Agreement, at the per annum rate equal to the
Floating Rate in effect from time to time), all as calculated and
otherwise determined in accordance with the Agreement. Commencing March
20, 2003 and on each Regular Payment Date thereafter, to and including
December 20, 2007, the Borrower shall make equal quarterly payments of
principal in the amount of One Million Two Hundred Thousand and No/100
Dollars ($1,200,000.00). The Borrower further agrees to pay accrued
interest together with each such principal payment on the outstanding
principal balance due hereunder at the per annum rate equal to the Fixed
LIBOR Rate for the Interest Period as of each
immediately preceding Regular Payment Date (commencing December 20, 2002)
plus the applicable Additional Basis Points calculated pursuant to the
Agreement (or, if required pursuant to the Agreement, at the per annum
rate equal to the Floating Rate in effect from time to time), all as
calculated and otherwise determined in accordance with the Agreement.
b. The unpaid principal balance due hereunder shall bear per annum interest
for each day until due on the basis of the Fixed LIBOR Rate for the
Interest Period as of each Regular Payment Date plus the applicable
Additional Basis Points calculated pursuant to the Agreement (or, if
required pursuant to the Agreement, at the per annum rate equal to the
Floating Rate in effect from time to time) that is actually in effect from
time to time pursuant to, and as calculated and otherwise determined in
accordance with, the Agreement; provided, however, that to the extent
permitted by law, after there shall have become due (by acceleration or
otherwise) principal, interest, fees, indemnity, expenses or any other
amounts due from the Borrower hereunder, under the Agreement or under any
other Loan Document, such amounts shall bear interest for each day until
paid (before and after judgment), payable on demand, at a rate per annum
equal to the Delinquency Rate. Interest due and payable hereunder shall be
based in all instances on a year of 360 days and actual days elapsed.
c. Payments under this Note shall be applied first to fees and expenses of
the Lender, then to any late charges, then to the payment of accrued
interest at the Delinquency Rate, if any, then to the payment of accrued
interest at the Interest Rate actually in effect from time to time
pursuant to the Agreement, and the balance, if any, to the reduction of
principal. If any monthly installment payment is insufficient to pay the
interest due at the Interest Rate actually in effect from time to time
pursuant to the Agreement (and any accrued interest at the Delinquency
Rate), the Lender shall notify the Borrower in the manner specified in the
Agreement setting forth the amount of additional interest due and the
Borrower will remit payment of such sum within ten (10) days following the
giving of such notice.
d. If not sooner paid, the entire outstanding balance of principal plus all
accrued interest (including, but not limited to, accrued interest at the
Delinquency Rate) and other sums shall become immediately due and payable
on March 1, 2008.
This note is the "Term Loan Note" as referred to in, and is entitled to the
benefits, and is subject to the terms, covenants and conditions, of that certain
Term Loan Agreement, dated as of March 20, 2001, by and between the Borrower and
the Lender (as the same may be amended, modified
or supplemented from time to time, the "Agreement"), which among other things
provides for the imposition of late charges, certain Events of Default, the
applicable rate of interest upon the occurrence of an Event of Default, the
acceleration of the maturity hereof upon the occurrence of certain events and
for optional prepayments, in whole and/or in part, in certain circumstances and
upon certain terms and conditions. The Agreement is incorporated herein and made
a part hereof by reference as if fully set forth herein.
The Borrower hereby expressly waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note and the Agreement except as
otherwise expressly provided in the Agreement.
This Note shall be governed by, construed and enforced in accordance with the
laws of the State of New York (for contracts to be executed and performed
entirely in the State) without regard or reference to principles of choice or
conflict of law.
THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON ARISING
FROM OR RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT OR ANY STATEMENT,
COURSE OF CONDUCT, ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION HEREWITH OR
THEREWITH (COLLECTIVELY, "RELATED LITIGATION") MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN MONROE COUNTY, NEW YORK, AND
SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND TO THE FULLEST EXTENT PERMITTED
BY LAW AGREES THAT IT WILL NOT BRING ANY RELATED LITIGATION IN ANY OTHER FORUM
(BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY LENDER TO BRING ANY ACTION,
SUIT OR PROCEEDING IN ANY OTHER FORUM);
(ii) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING
OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM
THAT ANY SUCH RELATED LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, AND
WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION BROUGHT IN
ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER IT;
(iii) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO THE BORROWER AT THE ADDRESS FOR NOTICES DESCRIBED IN
SECTION 9.05 OF THE AGREEMENT, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL
CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN
SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER
PERMITTED BY LAW); AND
(iv) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED LITIGATION.
IN WITNESS WHEREOF, the undersigned has duly executed this Term Loan Promissory
Note on the date first above written.
HARDINGE INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
Its: Treasurer
