EXHIBIT 10.20
The inserts herein are contained in a Rider attached hereto which is made a part
hereof and incorporated herein. +
[Logo of M&T Bank} TERM LOAN AGREEMENT
(Corporation or Partnership)
Buffalo, New York September 30, 1996 $ 3,000,000.00
BORROWER: CVC PRODUCTS. INC.
a |X| Delaware corporation |_| general partnership |_| limited partnership
|_|_________________ having its chief executive office at 000 Xxx Xxxx,
Xxxxxxxxx, XX 00000 Attention: Xxxxxx 0. XxXxxxxxx, Senior Vice President
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
having its chief executive office at One M&T Plaza, Buffalo, New York 14240
Attention: Office of the General Counsel.
The Bank and the Borrower agree as follows:
1. THE LOAN.
a. Loan. Subject to the terms of this Agreement, the Bank shall lend to
the Borrower, and the Borrower shall borrow from the Bank, the principal sum of
$ 3,000,000.00 (the "Loan"), with interest as specified in Borrower's promissory
note to Bank of even date and any replacements, substitutions or amendments from
time to time (the "Note"). See Insert No. 1.
b. Repayment. Payment of principal, interest and all other amounts
pursuant to this Agreement shall be made in lawful money of the United States in
immediately available funds at the Bank's banking office at One M&T Plaza,
Buffalo, New York, or at such other office as may be specified by the Bank.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Borrower for itself and,
unless expressly waived by the Bank, for each subsidiary, parent and other
entity under common control with or at least 50% owned by the Borrower (a
"Subsidiary"; collectively, the Borrower and each Subsidiary are the "Borrower")
represents, warrants and covenants with the Bank that now and continuing
throughout the term of this Agreement:
a. Use of Proceeds. See Insert No. 2.
b. Good Standing; Authority. The Borrower (i) is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it was formed, (ii) is duly authorized to do business in each jurisdiction
in which failure to be so qualified might have a material adverse effect on its
business or assets and (iii) has the power and authority to own each of its
assets and to use them as contemplated now and in the future.
c. Compliance. The Borrower conducts its business and operations and the
ownership of its assets in compliance with each applicable statute, regulation
and other law, including without limitation environmental laws. All approvals,
including without limitation authorizations, permits, consents, franchises,
licenses, registrations, filings, declarations, reports and notices (the
"Approvals") necessary for the conduct of Borrower's business and for the Loan
have been duly obtained and are in full force and effect. The Borrower is in
compliance with the Approvals, with its articles of incorporation and bylaws or
other organizational documents and with each agreement to which it is a party or
by which it or any of its assets is bound. See Insert No. 3.
d. Legality. The execution, delivery and performance by the Borrower of
this Agreement and all related documents (i) are in furtherance of the
Borrower's purposes and within its power and authority; (ii) do not (A) violate
any statute, regulation or other law or any judgment, order or award of any
court, agency or other governmental authority or of any arbitrator or (B)
violate Borrower's certificate of incorporation or other governing instrument,
constitute a default under any agreement binding on Borrower or result in a lien
or encumbrance on any assets of the Borrower; and (iii) have been duly
authorized by all necessary corporate or partnership actions.
e. Fiscal Year. The fiscal year of the Borrower is the calendar year
unless the following blank states otherwise: year ending September 30th.
f. Accounting; Tax Returns and Payment of Claims. The Borrower will
maintain a system of accounting and reserves in accordance with generally
accepted accounting principles, has filed and will file each tax return required
of it and, except as disclosed in an attached Schedule, has paid and will pay
when due each tax, assessment, fee, charge, fine and penalty imposed by any
taxing authority upon it or any of its assets, income or franchises, as well as
all amounts owed to mechanics, materialmen, landlords, suppliers and the like in
the normal course of business.
g. Title to Assets; Insurance. Borrower has good and marketable title to
each of its assets free of security interests, mortgages or other liens or
encumbrances, except as set forth on an attached Schedule titled "Permitted
Liens" or pursuant to the Bank's prior written consent. Borrower will maintain
its property in good repair and will on request provide the Bank with evidence
of insurance coverage satisfactory to Bank, including without limitation fire
and hazard, liability, workers' compensation and business interruption insurance
and flood hazard insurance as required.
h. Judgments and Litigation. There is no pending or threatened claim,
audit, investigation, action or other legal proceeding or judgment, order or
award of any court, agency or other governmental authority or arbitrator which
involves the Borrower or its assets and might have a material adverse effect
upon the Borrower or threaten the validity of this Agreement or any related
document or action. Borrower will immediately notify Bank upon acquiring
knowledge of any such action.
i. Full Disclosure. Neither this Agreement nor any certificate, financial
statement or other writing provided to the Bank by or on behalf of the Borrower
contains any statement of fact that is incorrect or misleading in any material
respect or omits to state any fact necessary to make any such statement not
incorrect or misleading. The Borrower has not failed to disclose to the Bank any
fact that might have a material adverse effect on the Borrower or on the Bank's
decision to lend. See Insert No. 4.
j. Financial and Other Information; Certificates of No Default. During the
term of the Agreement, Borrower shall promptly deliver to Bank copies of all
annual reports, proxy statements and similar information distributed to
shareholders or partners and of all fillings with the Securities and Exchange
Commission and the Pension Benefit Guaranty Corporation and shall provide, in
form satisfactory to the Bank (i) within 45 days after the end of each of its
first three fiscal quarters, consolidated statements of income cash flows for
the quarter, for the corresponding quarter in the previous fiscal year and for
the period from the end of the previous fiscal year, with a consolidated balance
sheet as of the quarter end; (ii) within 20 days after the end of each fiscal
year, consolidated statements of Borrower's income and cash flows and its
consolidated balance sheet as of the end of such fiscal year, setting forth
comparative figures for the preceding fiscal year and to be:
|X| audited |_| reviewed |_| compiled
by Price Waterhouse or another independent certified public accountant
acceptable to the Bank; all such statements shall be certified by Borrower's
chief financial officer or partner to be correct and in accordance with
Borrower's records and to present fairly the results of Borrower's operations
and cash flows and its financial position at year end in conformity with
generally accepted accounting principles and (iii) with each statement of
income, a certificate executed by the Borrower's chief executive and chief
financial officers or managing partners (A) setting forth the computations
required to establish the Borrower's compliance with each financial covenant
during the statement period, (B) stating that the signers of the certificate
have reviewed this Agreement and the operations and condition (financial or
other) of Borrower and each of its Subsidiaries during the relevant period and
(C) stating that no Event of Default occurred during the period, or if an Event
of Default did occur, describing its nature, the date(s) of its occurrence or
period of existence and what action the Borrower has taken with respect thereto.
k. Inspections. Promptly upon the Bank's request, Borrower will permit the
Bank's officers, attorneys or other agents to inspect its premises, examine and
copy its records and discuss its business, operations and financial or other
condition with its responsible officers and independent accountants
1
The inserts herein are contained in a Rider attached hereto which is made a part
hereof and incorporated herein.
8. NOTICES. Written notices to the Borrower by the Bank may be delivered
in person or in writing and shall be delivered three days after being deposited
in the United States mail or transmitted to the Borrower at the last address of
Borrower shown on the Bank's records. Notices to the Bank by the Borrower must
be in writing, refer specifically to this Agreement and be delivered in person
or by mail directed to the Bank at the address slated on page one. Notices shall
be deemed delivered only when actually received by the officer of the Bank
designated on page one.
9. TERM; SURVIVAL. The repayment schedule for the Loan is set forth in the
Note. The term of this Agreement shall continue until all amounts hereunder have
been fully paid to the Bank's satisfaction. Borrower's obligation to pay the
Bank's expenses shall survive the term of this Agreement. Each of Borrower's
representations, warranties, covenants and agreements shall survive during the
term of this Agreement and shall be presumed to have been relied upon by the
Bank.
10. MISCELLANEOUS. This Agreement with the Note and all collateral
documents including without limitation security agreements and guarantees
contains the entire agreement between the Bank and the Borrower with respect to
the Loan, and supereedes every course of dealing, other conduct, oral agreement
and representation previously made by the Bank. No change in this Agreement
shall be effective unless made in a writing duly executed by the Bank. This
Agreement shall be governed by the laws of the State of New York, without regard
to its principles of conflict of laws. This Agreement is a binding obligation
enforceable against the Borrower and its successors and assigns and shall inure
to the benefit of the Bank and its successors and assigns. Each provision of
this Agreement shall be interpreted as consistent with existing law and shall be
deemed amended to the extent necessary to comply with any conflicting law. If a
court deems any provision invalid, the remainder of the Agreement shall remain
in effect. Section headings are for convenience only.
11. CONSENT TO JURISDICTION. In any action or other legal proceeding
relating to this Note, the Borrower (i) consents to the personal jurisdiction of
any State or federal court located in the State of New York, (ii) waives
objection to the laying of venue, (iii) waives personal service of process and
subpoenas, (iv) consents to service of process and subpoenas by registered mail
directed to the Borrower at the last address shown in the holder's records
relating to this Agreement, with such service to be deemed completed five days
after mailing, (v) waives any right to assert any counterclaim or setoff or any
defense based upon a statute of limitations or upon a claim of laches, (vi)
waives its right to attack a final judgment that is obtained as a direct or
indirect result of any such action and (vii) consents to each such final
judgment being sued upon in any court having jurisdiction.
12. WAIVER OF JURY TRIAL. The Bank and the Borrower each waive any right
to trial by jury in connection with this Agreement.
ACCEPTED:
MANUFACTURERS AND TRADERS TRUST COMPANY
CVC PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. XxXxxxxxx
---------------------- -------------------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
Date: 9/30/96 Title: Senior Vice President and Chief
Financial Officer
Date:
-------------------------------
TIN #
-------------------------------
Witness:
-------------------------------
(Signature)
-------------------------------
(Typed Name)
ACKNOWLEDGMENT
STATE OF NEW YORK )
:SS.
COUNTY OF MONROE )
On the 30th day of September in the year 1996, before me personally came Xxxxxx
X. XxXxxxxxx
|_| Partnership to me known and known to me to be a general partner of
the partnership described in and who executed the above
instrument and __he duly acknowledge to me that __he
executed the above instrument for and on the behalf of
said partnership.
|x| Corporation to me known, who being duly sworn, did dispose and say
that __he resides at_________________________
________________________________________________ that
__he is the Senior VP and CFO of CVC Products, Inc. the
corporation described in and which executed the above
instrument; and that __he signed his (her) name thereto
by order of the board of directors of said corporation.
/s/ Xxxxxx X. Forth
----------------------------
Notary Public
XXXXXX X. FORTH
Notary Public, State of New York
Qualified in Monroe County
Commission Expires June 6, 1996
Authorization Confirmed: /s/ [illegible]
----------------------------
3
Schedule of Permitted Liens (for use with Section 2g of this Agreement)
See Attached.
Schedule of Additional Covenants (for use with Section 3 of this Agreement)
None.
Schedule Of Permitted Investments (for use with Section 3i of this Agreement)
See Attached.
Schedule of Permitted Indebtedness (for use with Section 3d of this Agreement)
See Attached.
Schedule of Permitted Loans (for use with Section 3j of this Agreement)
See Attached.
4
Schedule of Permitted Liens
1. The liens or capital lease agreements pursuant to which the following
financing statements were filed:
Monroe County
NYS Financing Financing
Secured Party Statement No. Statement No.
------------- ------------- -------------
(a) LCA Holding Corp. 217806 91-7173
(b) Advanta Leasing Corp. 149980 93-5747
(c) Chemical Bank 421827 88-8780
(d) GE Capital 152967 91-5175
(e) Chemical Bank 236575 74-19113
2. Landlord liens that are not superior to the Bank's security interests.
Schedule of Permitted Investments
1. Corporate bonds in an aggregate amount of no more than $1,000,000.00
per issuance outstanding at any time issued by any corporation organized under
the laws of any State of the United States and rated at least "Prime-1" (or the
then equivalent grade) by Xxxxx'x Investor Service, Inc. or "A-1" (or the then
equivalent grade) by Standard & Poor's Ratings Group.
Schedule of Permitted Indebtedness
1. Debt to Bank
2. Debt secured by Permitted Liens
3. Debt to Nikko Tecno no greater than the principal amount outstanding
on the date hereof
4. Debt to Former Shareholders no greater than the principal amount
outstanding on the date hereof
Schedule of Permitted Loans
1. Loans and advances to employees of Borrower in the ordinary course
of Borrower's business as presently conducted in an aggregate
principal amount not to exceed $250,000.00 at any time outstanding.
2. Loans and advances to suppliers in the ordinary course of Borrower's
business as presently conducted in an aggregate principal amount not
to exceed $250,000.00 at any time outstanding.
3. Pledges or deposits to secure obligations of Borrower under leases
it enters into in the ordinary course of Borrower's business as
presently conducted.
Schedule of Subsidiaries and Affiliates
1. Seagate Technology (Affiliate)
2. Nikko Tecno Co., Inc. (Affiliate)
3. CVC Holdings, Inc. (Affiliate)
Schedule of Benefit Plans
1. Profit Sharing. Borrower offers a qualified 401(k) pension plan to all
permanent employees (Contract No. 4-01135 instituted October 1, 1991). The plan
trustee and investment manager is the Principal Investment/Financial Group -
Pen. Adm. DC4, 000 Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx 00000.
2. Pension. Defined Benefit Plan for the period from October 1, 1973
through September 30, 1991. The plan was frozen on September 30, 1991.
Group Annuity Contracts provided by Mass Mutual Life Insurance
Company, 0000 Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000. Empire
Professional Services, 00 Xxxxx'x Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000 serves as
actuary thereunder.
-2-
RIDER TO TERM LOAN AGREEMENT
DATED SEPTEMBER 30, 1996 BETWEEN
CVC PRODUCTS, INC.
AND
MANUFACTURERS AND TRADERS TRUST COMPANY
This Rider is made to a certain Term Loan Agreement, dated September 30,
1996, between CVC PRODUCTS, INC. ("Borrower") and MANUFACTURERS AND TRADERS
TRUST COMPANY ("Bank"). This Rider is an integral part of the September 30, 1996
Term Loan Agreement. The September 30, 1996 Term Loan Agreement, together with
this Rider, is collectively referred to as the "Agreement".
Page 1 Inserts
Insert No. 1
a. Simultaneously with the execution and delivery hereof (the "Closing"),
Borrower shall execute and unconditionally deliver to Bank a Term Note ("Note")
in the form of Exhibit A attached hereto, with blanks completed to conform
herewith and which will:
(i) Be dated the date hereof (the "Closing Date").
(ii) Be payable to the order of Bank in the principal amount of
$3,000,000.00.
(iii) Except as otherwise provided therein, accrue interest payable
at all times prior to an Event of Default, computed on the
basis of a 360 day year for the actual number of days elapsed,
at the variable rate of the Bank's prime rate plus 1/2% per
annum.
(iv) Be payable, unless sooner accelerated, in 60 consecutive equal
monthly principal payments of $50,000.00 each, with the first
principal payment due November 1, 1996 and subsequent
principal payments of $50,000.00 due the first day of the next
58 months thereafter, followed by a final principal payment of
$50,000.00 together with all other amounts due thereunder on
October 1, 2001 ("Maturity Date"). Payments of accrued
interest on the Note shall be due and payable on the same
dates that principal payments are due thereunder and when the
Note is paid in full, provided, however, that an interest only
payment shall be made on October 1, 1996.
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(V) Provide that the Borrower shall have the option of paying the
principal sum outstanding thereunder to Bank in advance of the
Maturity Date, in whole or in part, at any time and from time
to time without penalty or premium.
Insert No. 2
The Loan proceeds shall be used to repay all principal outstanding under
Borrower's $3,000,000.00 Grid Note, dated August 20, 1996 (the "Existing Grid
Note"), in favor of Bank. The balance of the Loan proceeds shall be retained by
the Borrower for working capital purposes. Upon payment of such amounts under
the Grid Note, Borrower shall execute and deliver to Bank a new Grid Note ("New
Grid Note") which shall be in replacement of and substitution for and not in
payment of the Existing Grid Note. The New Grid Note shall be in the form of
Exhibit B attached hereto with blanks completed to conform herewith and which
will:
(i) Be dated the date hereof (the "Closing Date");
(ii) Be payable to the order of Bank in the principal amount of
$2,500,000.00;
(iii) Except as otherwise provided therein, accrue interest payable
at all times prior to demand, computed on the basis of a 360
day year for the actual number of days elapsed, at the
variable rate of the Bank's prime rate plus 1/2% per annum;
and
(iv) Be payable on demand.
Immediately prior to the making of the Loan, Borrower shall have provided
Bank with a copy of the purchase orders and paid invoices for the capital assets
and equipment that have been purchased or financed with the proceeds from the
Existing Grid Note. Borrower represents and warrants to Bank that equipment and
capital assets so purchased or built have an aggregate original cost of no less
than $3,200,000.00.
Insert No. 3
All hazardous substances at the Borrower's facilities are handled in
compliance with environmental laws. All hazardous substances are disposed of in
compliance with environmental laws.
As used herein, the following definitions shall apply:
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"environment" means any water, including, but not limited to, surface
water and ground water or water vapor; any land, including land surface or
subsurface; stream sediments; air; fish; wildlife; plants; and all other natural
resources or environmental media.
"environmental laws" means all federal, state and local environmental,
land use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances, regulations, codes and rules relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of hazardous
substances and the regulations, rules, ordinances, bylaws, policies, guidelines,
procedures, interpretations, decisions, orders and directives of federal, state
and local governmental agencies and authorities with respect thereto.
"hazardous substances" means, without limitation, any explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, hazardous wastes, hazardous or toxic substances and any other
material defined as a hazardous substance in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections
9601, et. seq.; the Hazardous Materials Transportation Act, as amended, 49
U.S.C. Sections 1801, et. seq.; the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Sections 6901, et. seq.; Articles 15 and 27 of the New York
State Environmental Conservation Law or any other federal, state, or local law,
regulation, rule, ordinance, bylaw, policy, guideline, procedure,
interpretation, decision, order, or directive, whether existing as of the date
hereof, previously enforced or subsequently enacted.
Insert No. 4
Financial Statements. All financial statements furnished by the Borrower
to the Bank (including, without limitation, the consolidated balance sheets as
of September 30, 1994 and September 30, 1995 and the related consolidated
statements of operations, shareholders' equity and cash flows for the 12 months
then ended and the consolidated balance sheets as of December 31, 1995, March
31, 1996 and June 30, 1996 and the related consolidated statements of
operations, shareholders' equity and cash flows for the three months then ended)
are complete and correct, have been prepared in accordance with Generally
Accepted Accounting Principles ("GAAP") consistently applied throughout the
periods indicated, and fairly present the financial condition of the Borrower,
as of the respective dates thereof and the results of the Borrower's operation
and cash flows for the respective periods covered thereby (except with respect
to interim financial statements in which case, said financial statements are
subject to footnotes and year-end closing adjustments which will not result in a
material change to any items set forth therein). Since June 30, 1996, there has
been no material adverse change in the condition, financial or otherwise, of the
Borrower.
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Subsidiaries and Affiliates. The Borrower is a wholly owned subsidiary of
CVC Holdings, Inc. ("CVC Holdings") and neither Borrower nor CVC Holdings has
any subsidiaries or affiliates except those listed in the attached "Schedule of
Permitted Subsidiaries and Affiliates." CVC Holdings' sole asset is the capital
stock of Borrower. Borrower is not a party to any material transaction with any
affiliate other than transactions that are in the ordinary course of business
and upon fair and reasonable terms not materially less favorable than such
entity could obtain or could become entitled to in an arm's length transaction
with an entity that is not an affiliate
As used herein, the following definitions apply:
"affiliates" means any entity which directly or indirectly, or through one
or more intermediaries, controls or is controlled by or is under common control
with Borrower or any subsidiary of Borrower.
"control", "controlled by" or "under common control" means, but is not
limited to, the beneficial ownership (as defined in Rule 1 3(d) promulgated by
the Securities Exchange Commission pursuant to Section 13(d) of the Securities
Exchange Act of 1934, as amended) of 10% or more of the outstanding shares of
the capital stock of any corporation having any voting power for the election of
directors (whether or not at the same time stock of any other class or classes
has or might have voting power by reason of the happening of any contingency) or
10% or more of any equity interest in any non-corporate entity, or any other
interest through which the power to direct the management or policies of a
person may be exercised.
Capitalization. All of the outstanding shares and other equity interests
of Borrower are duly authorized, validly issued, and fully paid. Except for the
Borrower's right to repurchase stock held by its employees under certain
circumstances and the Borrower's Series B preferred stock repurchase obligations
under its Certificate of Incorporation, there is no existing contract,
debenture, security, right, option, warrant, call or similar commitment of any
character calling for or relating to the purchase, repurchase, redemption or
retirement of Borrower's shares or other equity securities by the Borrower.
Leases. The Borrower has undisturbed peaceable possession under all leases
under which it is operating, none of which contain unusual or burdensome
provisions that may materially affect the operations of the Borrower, and all
such leases are in full force and effect.
Existing Indebtedness. Except as disclosed in the attached "Schedule of
Permitted Indebtedness", the Borrower has no outstanding indebtedness or
contingent liabilities (including, without limitation, "off balance sheet"
liabilities) other than those liabilities disclosed in the Borrower's balance
sheet, dated as of June 30, 1996, and wages, salary, trade payables and
operating leases incurred in the ordinary course of business, and is not the
account party with respect to any letters of credit other than those issued by
Bank.
R-4
Borrower and Nikko Tecno Co., Inc. ("Nikko") have agreed to extend the payment
dates on the Borrower's long-term debt to Niko (the "Nikko Debt") as follows:
(i) the $200,000.00 payment due November 13, 1996 has been extended to November
13, 1997, (ii) the $1,000,000.00 payment due November 26, 1996 has been
extended to November 26, 1997 and (iii) the $1,300,000.00 payment due November
26, 1996 has been extended to November 26, 1997. Borrower shall not, without
Bank's prior written consent, modify the terms of any of its existing long-term
debt or make any principal payments at any time for any reason (whether before
or after maturity thereof) or unscheduled payments of interest on the Nikko
Debt.
ERISA Plans. The Borrower does not sponsor, maintain, contribute to or
have any liability with respect to any retirement, pension, profit sharing or
other plan that is subject to ERISA, except for the plans described in the
attached "Schedule of Benefit Plans" (all such plans being referred to as "ERISA
Plans"), true and complete copies of which have been provided to Bank. Neither
the Borrower nor any ERISA affiliate has withdrawn from or terminated any
retirement, pension, profit sharing or other plan subject to ERISA and neither
of them are a member of or contribute to any multiemployer plan. No action,
event, or transaction has occurred that could give rise to a lien, security
interest or encumbrance on the assets of the Borrower as a result of the
application of relevant provisions of ERISA, and the ERISA Plans are in material
compliance with all requirements of ERISA and none of the ERISA Plans are
underfunded.
Margin Securities. No proceeds of the Loan have been or will be used for
the purpose of purchasing or carrying Margin Securities as defined in
Regulation U of the Federal Reserve Board.
Patents, Trademarks and Authorizations. The Borrower owns or possesses all
patents, trademarks, service marks, tradenames, copyrights, licenses,
authorizations and all rights with respect to the foregoing, necessary to the
conduct of its business as now conducted without any material conflict with the
rights of others.
Existing Bank Documents. The following agreements, instruments, notes and
documents executed by the Borrower and/or CVC Holdings with or in favor of the
Bank are all in full force and effect, valid and binding obligations of Borrower
without offset or defense of any kind and Borrower is not in breach of default
thereunder and no events or circumstances exist which with the giving of notice,
lapse of time or both will result in a breach of or default thereunder:
(i) The Existing Grid Note;
(ii) General Security Agreement, dated February 2, 1996, executed
by Borrower in favor of Bank;
R-5
(iii) Continuing Guaranty, dated February 2, 1996, executed by CVC
Holdings in favor of Bank;
(iv) Letter of Credit Reimbursement Agreement, dated November 21,
1995, executed by CVC Holdings in favor of Bank;
(v) General Security Agreement, dated February 2, 1996, executed
by CVC Holdings in favor of Bank; and
(vi) Landlord/Mortgagee Wavier, dated February 2, 1996, executed by
CVC Holdings in favor of Bank.
The agreements, notes, instruments and documents listed in (i) through
(vi) are referred to as the "Existing Bank Documents".
Insert No. 5
or a person or two or more persons acting in concert acquire record or
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) or increase their
record or beneficial ownership of the Company's voting stock of any class,
directly or indirectly, in the amount of twenty-five percent (25%).
Insert No. 5A
Current Ratio. Borrower shall not at any time have a Current Ratio of less
than 1.35 to 1.0.
Tangible Net Worth. Borrower shall not at any time have a Tangible Net
Worth of less than $8,000,000.00 or as of the end of any fiscal year a Tangible
Net Worth which is less than ninety-five percent (95%) of Borrower's Tangible
Net Worth as of the end of the immediately preceding fiscal year.
Total Liabilities to Tangible Net Worth. Borrower shall not at any time
from the date hereof through and including September 30, 1997 have a ratio of
Total Liabilities to Tangible Net Worth of more than 2.5 to 1.0 and as of
October 1, 1997 and thereafter, Borrower shall not at any time have a ratio of
Total Liabilities to Tangible Net Worth of more than 2.0 to 1.0.
Cash Flow Ratio. Borrower shall not have a Cash Flow Ratio of less than
1.1 to 1.0 as of the end of any fiscal quarter.
Backlog. Borrower shall not have at any time confirmed orders from
customers with an aggregate net sales price of less than $14,000,000.00.
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Maximum Negative Net Income. Borrower shall not for any fiscal quarter
have Net Income of less than a negative $100,000.00.
As used herein the following definitions shall apply:
"Capital Assets" means such items as are properly carried as fixed assets,
plants and equipment on the balance sheet of the entity to which they relate in
accordance with Generally Accepted Accounting Principles consistently applied
and on a consolidated basis.
"Current Assets" means, as of the date of determination, the assets
treated as current assets in accordance with Generally Accepted Accounting
Principles consistently applied and on a consolidated basis.
"Capital Expenditures" means any expenditure to purchase Capital Assets
(including capital leases), any expenditure which materially adds to the value
of the entity's Capital Assets and/or appreciably prolongs the life of Capital
Assets, in each case to the extent charged to a capital account in accordance
with Generally Accepted Accounting Principles consistently applied and on a
consolidated basis.
"Current Liabilities" means, as of the date of determination, the
liabilities treated as current liabilities in accordance with Generally Accepted
Accounting Principles consistently applied and on a consolidated basis,
including, without limitation, all liabilities and obligations payable on demand
and with final maturities and sinking fund payments required to be made within
one year after the date on which the determination is made, excluding the Nikko
Debt as it exists on the date hereof.
"Current Ratio" means, as of the date of determination, the ratio of
Current Assets to Current Liabilities.
"Cash Flow Ratio" means, as of the end of any fiscal quarter (a) the sum
(without duplication) for the four fiscal quarters then ended ("Measurement
Period") of (i) Net Income and (ii) depreciation and amortization (to the extent
deducted in determining Net Income) for such period, divided by (b) the sum of
(i) current maturities of Borrower's long-term debt due during the 12 months
immediately following the Measurement Period (excluding the Nikko Debt in the
unpaid amount thereof on the date hereof), (ii) distributions, dividends and
amounts paid or accrued for the repurchase of stock by the Borrower during the
Measurement Period and (iii) Capital Expenditures made by Borrower during the
Measurement Period which are not funded with loans made by Bank (other than
under the New Grid Note or any replacement thereof) or with loans from a third
party approved by Bank in writing.
"GAAP" and "Generally Accepted Accounting Principles" shall mean those
principles, methods and practices set forth in the Opinion and Pronouncements of
the Accounting Principles Board and the Financial Accounting Standards Board of
the American Institute of
R-7
Certified Public Accounts or which have other substantial support, all as in
effect on the date hereof.
"Net Income" means, for the relevant period, net income (determined in
accordance with GAAP consistently applied and on a consolidated basis) after
taxes, excluding in all cases: (a) income or net earnings attributable to
extraordinary and unusual items or attributable to any entity or assets acquired
through any method during the relevant period; and (b) income or net earnings
attributable to an affiliate's operations. Notwithstanding the foregoing,
business received by Borrower from Seagate Technology and Nikko shall not and is
not intended to be excluded from the calculation of Net Income.
"Tangible Net Worth" means, on the date of determination, the sum
(determined in accordance with GAAP consistently applied and on a consolidated
basis) of the capital stock, additional paid-in capital and retained earnings
(or, in the case of an additional paid-in capital or retained earnings deficit,
minus the amount of the deficit) minus (a) treasury stock and (b) all
unamortized debt discount and expenses, unamortized research and development
expense, unamortized deferred charges, goodwill, customer base, patents,
trademarks, service marks, trade names, copyrights together with all items not
previously mentioned and which are required to be classified as intangibles in
accordance with GAAP.
"Total Liabilities" means, at any date, without duplication, all
obligations which, in accordance with GAAP consistently applied and on a
consolidated basis, should be classified upon such Borrower's balance sheet as
liabilities, including current liabilities (including, without limitation, the
Nikko Debt) and long-term liabilities.
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles ("GAAP") as in effect
from time to time, applied on a basis consistent with Borrower's consolidated
financial statements as of and for the 12 month period ended September 30, 1996.
Insert No. 6A
i. Purchase, redeem, retire or otherwise acquire for value any of
Borrower's capital stock or any warrants, rights or options to acquire such
capital stock, now or hereafter outstanding, return any capital to its
stockholders as such, or for any of its subsidiaries do any of the foregoing or
permit any of its subsidiaries or affiliates to purchase, redeem, retire or
otherwise acquire for value any capital stock of the Borrower or the
subsidiaries or any warrants, rights or option to acquire such capital stock,
provided, however, that the Borrower may pay up to a maximum of $100,000.00
during any fiscal year to employees for stock of the Borrower under the terms
of existing stock option plans or stockholders' agreements if no event of
default has occurred hereunder and no event of default will occur hereunder as a
result of such purchase.
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Insert No. 7
which, either individually or together with all other debt of the Borrower
or Guarantor for which payment has been demanded or accelerated, has unpaid
principal of $100,000.00 or more
Insert No. 7A
or any note or other instrument executed in favor of or with Bank
(including, without limitation, the Existing Bank Documents) or debt owed to
Bank by Borrower or any Guarantor is not paid when due
Insert No. 7B
Notwithstanding paragraphs 4(f) and (g) above, it shall not be an event of
default if the Borrower has any lien involuntarily entered against its assets
dismissed or removed within thirty (30) days after being entered or if any
judgement, order or award entered against Borrower is dismissed, vacated or
bonded within forty-five (45) days after such entry, provided that in all such
cases the creditor is stayed from taking any enforcement collection, execution,
levy or foreclosure proceeding on such lien, judgement, order or award. In
addition, it shall not be an event of default under subparagraph 4(e) above if
Borrower has commenced against it any proceeding pursuant to the Bankruptcy Code
dismissed within forty-five (45) days after petition therefor has been filed
with the bankruptcy court.
Automatically upon the commencement of Borrower's or Guarantor's
bankruptcy if voluntary and upon lapse of forty-five (45) days without dismissal
if involuntary, all amounts outstanding hereunder shall become immediately due
and payable. Upon the occurrence of an event of default hereunder, at the
Bank's option, all amounts hereunder shall become immediately due and payable.
As used herein, references to amounts due under this Agreement or due
hereunder shall include all amounts specifically referred to herein and all
principal, interest and other amounts due under the Note and any ancillary
agreements, instruments or other documents.
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IN WITNESS WHEREOF, Borrower and Bank have executed this Rider on
September 30, 1996.
CVC PRODUCTS, INC.
By: /s/ Xxxxxx X. XxXxxxxxx
---------------------------------
Xxxxxx X. XxXxxxxxx, Senior Vice
President and Chief Financial
Officer
Accepted:
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx, Vice President
STATE OF NEW YORK)
COUNTY OF MONROE ) ss:
On this 30th day of September, 1996, before me personally came, XXXXXX X.
XxXXXXXXX, to me known, who, being by me duly sworn, did depose and say that he
is the Senior Vice President and Chief Financial Officer of CVC PRODUCTS, INC.,
the corporation described in and which executed the above instrument; and that
he signed his name thereto by order of the Board of Directors of said
corporation.
XXXXXX X. FORTH
Notary Public, State of New York /s/ Xxxxxx X. Forth
Qualified in Monroe County -------------------
Commission Expires June 6, 1996 Notary Public
STATE OF NEW YORK)
COUNTY OF MONROE ) ss:
On this 30th day of September, 1996, before me personally came XXXXXXX XXXXXXX
to me known, who, being by me duly sworn, did depose and say that he is a Vice
President of MANUFACTURERS AND TRADERS TRUST COMPANY, the corporation described
in and which executed the above instrument; and that he signed his name thereto
by authority granted to him by the Board of Directors of said corporation.
XXXXXX X. FORTH
Notary Public, State of New York /s/ Xxxxxx X. Forth
Qualified in Monroe County -------------------
Commission Expires June 6, 1996 Notary Public
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