1
EXHIBIT 10.1.5
FORBEARANCE AGREEMENT AND FOURTH AMENDMENT
TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
This Forbearance Agreement and Fourth Amendment to Revolving
Credit and Term Loan Agreement (the "Forbearance Agreement and Fourth
Amendment") dated February 28, 1996, is by and among K-Tron International,
Inc., a New Jersey corporation ("K-Tron International") and K-Tron America,
Inc. (formerly known as K-Tron North America, Inc.), a Delaware corporation
("K-Tron America") (each individually, a "Borrower" and collectively, the
"Borrowers"); and also K-Tron Technologies, Inc., a Delaware corporation
("K-Tron Technologies"), K-Tron Investment Co., a Delaware corporation ("K-Tron
Investment"), and K-Tron Patent, Inc., a Delaware corporation ("K-Tron
Patent"), (each individually a "Surety" and collectively, along with K-Tron
International, the "Sureties") (the Borrowers and Sureties are collectively
referred to herein as the "Obligors"); and First Union National Bank (formerly
known as First Fidelity Bank, N.A., which was successor-by-merger to First
Fidelity Bank, N.A., New Jersey) ("First Union"), PNC Bank, N.A. ("PNC"), and
United Jersey Bank (successor-by-merger to United Jersey Bank/South,
N.A.)("UJB") (each individually, a "Bank" and collectively, the "Banks"); and
First Union as agent for the Banks (First Union in such capacity, the "Agent").
BACKGROUND
1. The Borrowers, the Banks and the Agent have entered
into that certain Revolving Credit and Term Loan Agreement dated June 28, 1993
(the "Original Loan Agreement"), as amended by that certain First Amendment to
Loan Agreement dated as of June 30, 1994 (the "First Amendment"), and as
further amended by that certain Forbearance Agreement and Second Amendment to
Revolving Credit and Term Loan Agreement dated April 28, 1995 (the "Forbearance
Agreement and Second Amendment"), and as further amended by that certain
Forbearance Agreement and Third Amendment to Revolving Credit and Term Loan
Agreement, dated June 22, 1995 (the "Forbearance Agreement and Third
Amendment") (collectively, the "Existing Loan Agreement").
2. K-Tron Technologies has executed that certain
Suretyship Agreement dated June 28, 1993, as subsequently amended, in favor of
the Agent (the "Technologies Suretyship Agreement"), pursuant to which K-Tron
Technologies guaranteed and became the surety for the Guaranteed Obligations
(as such term is defined in the 1993 Suretyship Agreement).
3. The Borrowers notified the Banks in December, 1994
that they were projecting certain financial covenant defaults under the
Existing Loan Agreement to occur as of December 31, 1994.
1
2
4. Pursuant to the Forbearance Agreement and Second
Amendment, the Agent and the Banks agreed to forbear from exercising their
rights under the Original Loan Agreement, as amended by the First Amendment and
the other Loan Documents, upon the terms and conditions contained therein,
until not later than July 31, 1995.
5. On April 28, 1995, in conjunction with the execution
of the Forbearance Agreement and Second Amendment, K-Tron International, K-Tron
Patent and K-Tron Investment each executed those certain Guarantee and
Suretyship Agreements (the "KTI Suretyship Agreement", the "KTP Suretyship
Agreement" and the "KTInv Suretyship Agreement", respectively) in favor of the
Agent pursuant to which each Surety guaranteed and became the surety for the
Guaranteed Obligations (as defined in each Surety's respective suretyship
agreement).
6. The Term Loan and the Revolving Credit Loans (as such
terms are defined in the Existing Loan Agreement) matured on July 31, 1995, and
the Obligors, acknowledging that they could not pay the Loans in full on that
date, sought and obtained from the Agent and the Banks their agreement to
continue to forbear from exercising their rights under the Original Loan
Agreement, as amended and the other Loan Documents until February 28, 1996,
upon the terms and conditions contained in the Forbearance Agreement and Third
Amendment.
7. Under the terms of the Existing Loan Agreement, the
Obligors are required to pay to the Agent for the benefit of the Banks all
outstanding principal and accrued interest on the Term Loan and the Revolving
Credit Loans on or before February 28, 1996. The Obligors have informed the
Agent and the Banks that they will be unable to make the required payments by
February 28, 1996.
8. Certain European affiliates of the Obligors, namely
K-Tron (Switzerland) Ltd., K-Tron Vertech Ltd., K-Tron Patent, Ltd., and K-Tron
Asia Pacific Pte. Ltd. (collectively "K-Tron Europe") have recently entered
into a forbearance agreement (the "Swiss Forbearance Agreement") with Swiss
Bank Corp. Aarau ("SBC"), as lead bank, and several other European lenders
(collectively, with SBC, the "Swiss Banks"). The Swiss Forbearance Agreement
imposes certain requirements with regard to transactions between the Obligors
and K-Tron Europe after February 28, 1996 that would violate certain covenants
in the Existing Loan Agreement if such covenants are not amended.
9. Events of Default under the Existing Loan Agreement
have occurred, are now continuing and will continue, the Borrowers believe,
throughout the Forbearance Period (defined hereafter) as a result of, inter
alia, the Borrowers' failure to comply with various covenants in the Existing
Loan Agreement, as
2
3
more fully described on Exhibit 3.1 to the Forbearance Agreement and Second
Amendment (collectively, the "Existing Defaults").
10. The Agent and the Banks have agreed to continue to
forbear for a limited period of time, from exercising their rights under the
Existing Loan Agreement and the other Loan Documents upon the terms and
conditions contained herein.
NOW, THEREFORE, incorporating the Background herein, and for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the Borrowers, the
Sureties, the Banks and the Agent, agree as follows:
ARTICLE 1 - CAPITALIZED TERMS
All capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Existing Loan
Agreement as amended by the provisions of Article 2 of this Forbearance
Agreement and Fourth Amendment.
ARTICLE 2 - AMENDMENTS TO LOAN AGREEMENT
2.1 Amendments to Existing Loan Agreement. The Existing
Loan Agreement is hereby amended as set forth in this Section 2.1. This
Section 2.l amends, restates and supersedes, but shall not be deemed a
satisfaction or cancellation of, the prior amendments to the Original Loan
Agreement set forth in Section 2 of the First Amendment and Section 2.1 in each
of the Forbearance Agreement and Second Amendment and the Forbearance Agreement
and Third Amendment.
(a) The first paragraph of the Original Loan
Agreement is hereby amended by replacing the term "First Fidelity Bank, N.A.
(successor-by-merger to First Fidelity Bank, N.A., New Jersey) with the term,
"First Union National Bank, formerly First Fidelity Bank, N.A.,
successor-by-merger to First Fidelity Bank, N.A., New Jersey." All references
in the Loan Documents to "First Fidelity Bank, N.A." or "FFB" or "First
Fidelity Bank, N.A. New Jersey" are hereby deemed references to "First Union
National Bank".
(b) The first paragraph of the Original Loan
Agreement was amended previously by replacing the term "K-Tron North America,
Inc." with the term "K-Tron America, Inc.," and by replacing the defined term
"K-Tron, N.A." with "K-Tron America"; and the new defined term "K-Tron America"
has replaced the term "K-Tron, N.A." wherever such term appears in the Existing
Loan Agreement and the other Loan Documents.
3
4
(c) The first paragraph of the Original Loan
Agreement was amended previously by replacing the term "United Jersey
Bank/South, N.A." with the term "United Jersey Bank".
(d) The following defined terms and their
definitions in Section 1.1 of the Original Loan Agreement either have been or
are hereby amended and restated in their entirety as follows:
Debt to Net Worth Ratio" means the ratio of Total
Liabilities to Net Worth. For purposes of calculating the
Debt to Net Worth Ratio, (1) the term "Net Worth" of any
Person means consolidated shareholders' equity, computed in
accordance with GAAP and (2) the line item referred to in the
consolidated balance sheets of K-Tron International and
Subsidiaries as "Cumulative translation adjustments" shall be
excluded from shareholders' equity.
"Loan Documents" means the Loan Agreement, the Notes,
the Suretyship Agreement, the Mortgage, the Bank Assignment
Agreements, the Security Agreements, all other Supplemental
Loan Documents and all of the documents, instruments and
agreements executed in connection with any of the foregoing,
together with all amendments and modification thereto.
"Surety" means collectively K-Tron International (in
its capacity as surety for K-Tron America), K-Tron
Technologies, K-Tron Investment and K-Tron Patent.
"Suretyship Agreement" means collectively that
certain Suretyship Agreement dated June 28, 1993 executed by
K-Tron Technologies in favor of the Agent for the benefit of
the Banks, as amended and restated by that certain Amended and
Restated Guaranty and Suretyship Agreement dated April 28,
1995 executed by K-Tron Technologies in favor of the Agent for
the benefit of the Banks, that certain Guaranty and Suretyship
Agreement dated April 28, 1995 executed by K-Tron
International in favor of the Agent for the benefit of the
Banks, that certain Guaranty and Suretyship Agreement dated
April 28, 1995 executed by K-Tron Patent in favor of the Agent
for the benefit of the Banks, and that certain Guaranty and
Suretyship Agreement dated April 28, 1995 executed by K-Tron
Investment in favor of the Banks and the Agent for the benefit
of the Banks.
"Term Loan Maturity Date" means July 31, 1995.
4
5
(e) Section 1.1 of the Original Loan Agreement
either has been amended previously or is hereby amended by adding the following
new defined terms in the appropriate alphabetical order:
"Bank Assignment Agreements" means, collectively,
that certain Assignment and Acceptance Agreement dated August
24, 1993 among K-Tron America, K-Tron International, UJB and
FFB and accepted by FFB on August 24, 1993, and that certain
Assignment and Acceptance Agreement dated August 24, 1993
among K-Tron America, K-Tron International, PNC and FFB and
accepted by FFB on August 24, 1993.
"Collateral" means all property and assets of the
Obligors (and each of them) now or hereafter in the
possession, custody or control of the Agent, the Banks and/or
any Affiliate, in any capacity whatsoever including, but not
limited to, any balance or share of any deposit, trust or
agency account, and all property and assets of the Obligors
(and each of them) now or hereafter subject to a security
agreement, pledge, mortgage, assignment or other document or
agreement granting the Agent and/or the Banks a security
interest therein or lien or encumbrance thereon including,
without limitation, the Collateral (as such term is defined in
each of the Security Agreements) and the Mortgaged Premises.
"First Amendment" means that certain First Amendment
to Loan Agreement dated as of June 30, 1994 by and among the
Borrowers, the Banks and the Agent, together with all
amendments and modifications thereto.
"Forbearance Agreement" means collectively the
Forbearance Agreement and Second Amendment, the Forbearance
Agreement and Third Amendment and the Forbearance Agreement
and Fourth Amendment.
"Forbearance Agreement and Fourth Amendment" means
that certain Forbearance Agreement and Fourth Amendment to
Revolving Credit and Term Loan Agreement dated February 28,
1996, by and among the Borrowers, the Sureties, the Banks and
the Agent, together with all amendments and modifications
thereto.
"Forbearance Agreement and Second Amendment" means
that certain Forbearance Agreement and Second Amendment to
Revolving Credit and Term Loan Agreement dated April 28, 1995,
by and among the Borrowers, the Sureties, the Banks and the
Agent, together with all amendments and modifications thereto.
5
6
"Forbearance Agreement and Third Amendment" means
that certain Forbearance Agreement and Third Amendment to
Revolving Credit and Term Loan Agreement dated June 22, 1995,
by and among the Borrowers, the Sureties, the Banks and the
Agent, together with all amendments and modifications thereto.
"Forbearance Termination Date" shall have the meaning
given to such term in the Forbearance Agreement and Fourth
Amendment.
"K-Tron Investment" means K-Tron Investment Co., a
Delaware corporation.
"K-Tron Patent" means K-Tron Patent, Inc., a Delaware
corporation.
"Loan Agreement" means this Agreement, as amended by
the First Amendment, and as further amended by the Forbearance
Agreement and Second Amendment, and as further amended by the
Forbearance Agreement and Third Amendment, and as further
amended by the provisions of Article 2 of the Forbearance
Agreement and Fourth Amendment.
"Obligors" means the Borrowers and the Surety.
"PNC Bank, N.A." or "PNC" means PNC Bank, N.A., a
national banking association.
"Pro Rata Share" means for each Bank the percentage
set forth opposite such Bank's name on Exhibit 2.1 hereto and
incorporated herein by reference.
"Security Agreements" means collectively that certain
Security Agreement dated as of May 11, 1994 by K-Tron America
in favor of the Agent, as amended and restated by that certain
Amended and Restated Security Agreement dated as of April 28,
1995 by K-Tron America in favor of the Agent for the benefit
of the Banks; that certain General Security Agreement dated as
of April 28, 1995 by K-Tron International in favor of the
Agent for the benefit of the Banks; that certain General
Security Agreement dated as of April 28, 1995 by K-Tron
Technologies in favor of the Agent for the benefit of the
Banks; that certain General Security Agreement dated as of
April 28, 1995, by K-Tron Patent in favor of the Agent for the
benefit of the Banks; that certain General Security Agreement
dated as of April 28, 1995, by K-Tron Investment in favor of
the Agent for the benefit of the Banks; and any and all
6
7
other security agreements executed and/or delivered to the
Agent in connection with the Loan Agreement together with all
amendments and modifications thereto.
"Supplemental Loan Documents" means the Forbearance
Agreement and all documents, instruments and agreements
executed and delivered in connection therewith and as required
thereby.
"United Jersey Bank" or "UJB" means United Jersey
Bank, successor by merger to United Jersey Bank/South N.A., a
New Jersey state chartered bank.
(f) The defined terms "Affiliate" and
"Subsidiary" in Section 1.1 of the Original Loan Agreement were amended
previously by replacing the word "Borrowers" in the definitions thereof with
the word: "Obligors."
(g) Section 2.1 of the Original Loan Agreement is
hereby amended by adding the following at the conclusion of the Section:
The Borrowers acknowledge and agree that the Revolving Credit
Commitments terminated in their entirety on July 31, 1995,
which was the Revolving Credit Termination Date, and the
Revolving Credit Commitments shall not be reinstated.
(h) Section 2.2 of the Original Loan Agreement is
hereby amended and restated in its entirety as follows:
2.2. Interest on the Revolving Credit Loans. The
unpaid principal amount of the Revolving Credit Loans shall
bear interest (i) from and after June 28, 1993 through June
30, 1994 at an annual rate equal to the Base Rate plus 1/4%;
(ii) from and after July 1, 1994 through April 30, 1995 at an
annual rate equal to the Base Rate plus 3/4%; (iii) from and
after May 1, 1995 until June 22, 1995 at an annual rate equal
to the Base Rate plus 1%; (iv) from and after June 23, 1995
through December 12, 1995 at an annual rate equal to the Base
Rate plus 2%; (v) from and after December 13, 1995 through
February 28, 1996 at an annual rate equal to the Base Rate
plus 1.5%; (vi) from and after February 29, 1996 through June
14, 1996 at an annual rate equal to the Base Rate plus 1.75%;
(vii) from and after June 15, 1996 through July 14, 1996 at an
annual rate equal to the Base Rate plus 2.5%; (viii) from and
after July 15, 1996 through October 14, 1996, at an annual
rate equal to the Base Rate plus 3%; and (ix) from and after
October 15, 1996 at an annual rate equal to the Base Rate plus
3.5% (all interest rates remain
7
8
subject to increase upon an "Event of Default"). Such
interest shall be payable: (a) monthly in arrears, on the
fifteenth (15th) day of each month, for the month ending on
the prior day, until the Revolving Credit Loans are repaid in
full, and (b) on the date the Revolving Credit Loans are
repaid in full.
(i) Section 2.3 of the Original Loan Agreement is
hereby amended and restated in its entirety as follows:
2.3. Use of Revolving Credit Loan Proceeds. The
proceeds of the Revolving Credit Loans previously made by the
Banks hereunder shall continue to be used by the Borrowers
only for working capital; and the Banks shall have no
obligation to make any further Revolving Credit Loans.
(j) Section 2.10 of the Original Loan Agreement
was amended and restated previously in its entirety as follows:
2.10. Default Interest. Upon and following an Event
of Default hereunder, whether before or after acceleration of
the indebtedness or entry of judgment, interest on the unpaid
principal balance of the Revolving Credit Loans shall accrue
at an annual rate which is equal to two percent (2%) above the
then applicable rate of interest for the Revolving Credit
Loans ("Revolving Credit Default Interest").
(k) Section 2.11 of the Original Loan Agreement
was amended previously by adding new subsection (D) as follows:
(D) Termination; Non-Renewal. All obligations, if
any, of the Agent and/or the Banks to issue Letters of Credit
terminated effective as of December 13, 1994. The Borrowers
hereby acknowledge that the Agent and the Banks had no
obligation to renew or extend those Letters of Credit expiring
on or after December 13, 1994.
(l) Section 2.12 of the Original Loan Agreement
was amended previously by adding new subsection (D) as follows:
(D) Termination; Non-Renewal. All obligations, if
any, of the Agent and/or the Banks to issue Acceptances
hereunder terminated effective as of December 13, 1994. The
Borrowers hereby acknowledge and agree that the Agent and the
Banks had no obligation to renew those Acceptances maturing
on or after December 13, 1994.
8
9
(m) The first sentence of Section 2.14(A) of the
Original Loan Agreement is hereby amended and restated in its entirety as
follows:
(A) Rate. During the Base Rate Period, K-Tron
America shall pay interest on the unpaid principal amount of
the Term Loan (i) from and after June 28, 1993 through June
30, 1994 at an annual rate equal to the Base Rate plus 1/2%;
(ii) from and after July 1, 1994 through June 22, 1995 at an
annual rate equal to the Base Rate plus 1%; and (iii) from and
after June 23, 1995 through December 12, 1995 at an annual
rate equal to the Base Rate plus 2%; (iv) from and after
December 13, 1995 through February 28, 1996 at an annual rate
equal to the Base Rate plus 1.5%; (v) from and after February
29, 1996 through June 14, 1996 at an annual rate equal to the
Base Rate plus 1.75%; (vi) from and after June 15, 1996
through July 14, 1996 at an annual rate equal to the Base Rate
plus 2.5%; (vii) from and after July 15, 1996 through October
14, 1996 at an annual rate equal to the Base Rate plus 3%;
(viii) from and after October 15, 1996 at an annual rate equal
to the Base Rate plus 3.5% (all interest rates remain subject
to increase upon an "Event of Default"). Such interest shall
be payable: (a) monthly in arrears on the fifteenth (15th) day
of each month, for the month ending on the prior day, until
the Term Loan is repaid in full and (b) on the date the Term
Loan is repaid in full.
(n) Section 2.17 of the Original Loan Agreement
was amended and restated previously in its entirety as follows:
2.17. Default Interest. Upon and following an Event
of Default hereunder, whether before or after acceleration of
the indebtedness or entry of judgment, interest on the unpaid
principal balance of the Term Loans shall accrue at an annual
rate which is equal to two percent (2%) above the then
applicable rate of interest for the Term Loans (the "Term Loan
Default Rate").
(o) Section 2.18 of the Original Loan Agreement
is hereby deleted in its entirety and replaced with the following:
2.18. Payment Prior to the Forbearance Termination
Date. Prior to the Forbearance Termination Date, the
Borrowers may pay the Loans in whole or in part at any time
without premium or penalty with respect to such payment.
9
10
(p) Section 3.1 of the Original Loan Agreement
was amended previously by: (i) deleting therefrom the following: "As security
for payment of the Term Loan, K-Tron, N.A. will execute and deliver to the
Agent a first priority mortgage ("Mortgage")"; and adding in place thereof, the
following:
As security for payment of the Term Loan, the Revolving Credit
Loans and all other obligations and liabilities of K-Tron
America due to the Agent and the Banks, K-Tron America will
execute and deliver to Agent (A) a first priority mortgage, as
the same may be amended from time to time (the "Mortgage")
and by (ii) adding after the words "New Jersey" the following: "as more fully
described in the Mortgage".
(q) Section 8.3 of the Original Loan Agreement was
amended previously to read as follows:
SECTION 8.3 Minimum Fixed Charge Coverage Ratio.
K-Tron America will maintain a fixed Charge Coverage Ratio,
measured on a rolling four quarter basis, of not less than the
following amounts as of the last day of each of the following
fiscal quarters:
Through Fourth
Quarter l994 and
Through Second Through Third Each Fiscal Quarter
Quarter l994 Quarter l994 Thereafter
-------------- -------------- --------------------
1.30:1.00 1.50:1:00 2.00:1.00
For purposes of calculating the Fixed Charge Coverage Ratio
for K-Tron America, there shall be added to the numerator of
the ratio royalty payments made during the relevant period by
K-Tron America to K-Tron Technologies.
(r) Section 8.4 of the Original Loan Agreement
was amended previously in its entirety to read as follows:
SECTION 8.4. Maximum Debt to Net Worth. K-Tron
America will not permit its Debt to Net Worth Ratio to exceed
.70:1.00 as of the last day of each fiscal quarter.
10
11
(s) Section 8.5 of the Original Loan Agreement
was amended and restated previously in its entirety to read as follows:
SECTION 8.5. Minimum Quick Ratio. K-Tron
International will maintain for itself and its Subsidiaries on
a consolidated basis a Quick Ratio of not less than the
following amounts as of the last day of each of the following
fiscal quarters:
Through Second Through Third Quarter l994 and
Quarter l994 Each Fiscal Quarter Thereafter
-------------- -------------------------------
.50:1.00 .55:1.00
(t) Section 8.6 of the Original Loan Agreement
was amended and restated previously in its entirety to read as follows:
SECTION 8.6. Minimum Fixed Charge Coverage Ratio.
K-Tron International will maintain for itself and its
Subsidiaries on a consolidated basis a Fixed Charge Coverage
Ratio, measured on a rolling four quarter basis, of not less
than the following amounts as of the last day of each of the
following fiscal quarters:
Through Fourth
Through Second Through Third Quarter l994
Quarter l994 Quarter l994 and Thereafter
-------------- -------------- ---------------
1.10:1.00 1.30:1.00 1.80:1.00
(u) Section 8.7 of the Original Loan Agreement
was amended previously in its entirety to read as follows:
SECTION 8.7. Maximum Debt to Net Worth. K-Tron
International will not permit its Debt to Net Worth Ratio,
measured for itself and its Subsidiaries on a consolidated
basis, to exceed the following amounts as of the last day of
each of the following fiscal quarters:
Through Fourth
Through Second Through Third Quarter l994
Quarter l994 Quarter l994 and Thereafter
-------------- -------------- ----------------
3.75:1.00 3.50:1.00 3.25:1.00
(v) Section 9.2 of the Original Loan Agreement
was amended previously by adding after the words "If any Event of Default shall
occur and be continuing", the following: "interest on the Term Loans shall
accrue at the Term Loan Default Rate and
11
12
interest on the Revolving Credit Loans shall accrue at the Revolving Credit
Default Rate, and".
(w) Section 11.2 of the Original Loan Agreement
is hereby amended by changing the respective addresses for notices to the
Agent, the Banks, and counsel for the Agent and Banks as follows:
If to the Agent at:
------------------
First Union National Bank
Xxxxx xxx Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Assistant Vice President
Telecopier No.: 000-000-0000
With required copies to:
------------------------
PNC Bank, N.A.
Land Title Building
0xx Xxxxx
Xxxxx & Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Vice President
and Xxxxxxx Xxxxxx, Assistant Vice President
Telecopier No.: 000-000-0000
United Jersey Bank
0000 Xxxxx 0 Xxxxx
XX 0000
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxx, Vice President
and Xxxxxxx X. Xxxxxx, Vice President
Telecopier No.: 000-000-0000
Duane, Morris & Heckscher
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxx, Esquire
Telecopier No.: 000-000-0000
and
Xxxxxxx X. Going, Esquire
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telecopier No.: 000-000-0000
(x) Exhibit 2.1 of the Original Loan Agreement
was amended and restated previously in its entirety as set forth below;
provided, however, that the amendment and restatement of this Exhibit is
intended to reflect the percentage of the Revolving Credit Commitments that
were made by each of the Banks as of April 28, 1995 and shall not be construed
as providing for
12
13
a continued commitment by the Banks to make Revolving Loans as such Commitments
have terminated.
EXHIBIT 2.1
REVOLVING CREDIT COMMITMENTS
Name of Bank Amount Pro Rata Share
------------ ------ --------------
First Union $5,175,000 50%
PNC $2,587,500 25%
UJB $2,587,500 25%
--------------- ---------- ---
Total Revolving $10,350,000 100%
Credit Commitments
(and all such
Commitments are
terminated)
(y) Exhibit 2.13 of the Original Loan Agreement
was amended and restated previously in its entirety as follows to reflect the
percentage of the Term Loan Commitments made by each Bank as of April 28, 1995
(the Term Loan is now mature and owing and all commitments by the Banks to make
Term Loans have terminated):
EXHIBIT 2.13
TERM LOAN COMMITMENTS
Name of Bank Amount Pro Rata Share
------------ ------ --------------
First Union $1,988,889.00 50%
PNC $ 994,444.50 25%
UJB $ 994,444.50 25%
--------------- ------------- ----
Total Term Loan $3,977,778.00 100%
Commitments (and
all such Commitments
are terminated
2.2 Amendments to Forbearance Agreements.
(a) Section 4.13 of the Forbearance Agreement and
Second Amendment and Section 4.13 of the Forbearance Agreement and Third
Amendment are hereby amended by adding the following language at the conclusion
of each Section:
Notwithstanding any provision in this Section or in the Loan
Documents to the contrary, K-Tron International may transfer
or reverse xxxx approximately $600,000 of investment banking,
legal and accounting fees already paid to Xxxxxxxxxxx and
Company, Inc., and other professionals in connection with the
sale of
13
14
Colortronic GmbH ("Colortronic"), but only on the condition
that such transfer and/or reverse billing does not result in
an intercompany credit against future purchases and/or
payments by K-Tron Europe. Only to the extent required by the
Swiss Forbearance Agreement, K-Tron Europe and the Obligors
may net intercompany balances and claims as of March 1, 1996
provided that such netting will not result in the Obligors
being required to make a cash payment or extend credit to
K-Tron Europe (and such netting is hereby deemed to not result
in any payment being due to the Banks pursuant to this Section
4.13).
(b) Section 4.16 of the Forbearance Agreement and
Second Amendment and Section 4.16 of the Forbearance Agreement and Third
Amendment are hereby amended by striking the second sentence in each and
replacing it with the following:
If and to the extent that the Swiss Forbearance Agreement
requires K-Tron Europe to cease paying its share of monthly
corporate expenses (including management fees) the non-payment
of such management fees and expenses by K-Tron Europe shall
not be a Default or Event of Default.
2.3 Amendments to Loan Documents. All references in the
Loan Documents to "First Fidelity Bank, N.A.", "FFB" or "First Fidelity Bank,
N.A., New Jersey" shall be deemed to refer to "First Union National Bank".
2.4 No Other Amendments. Except as expressly set
forth in Article 2 hereof, the Existing Loan Agreement and all other Loan
Documents shall remain in full force and effect and the Borrowers shall comply
with all of the terms, covenants and provisions set forth in the Existing Loan
Agreement and all other Loan Documents, as amended hereby.
ARTICLE 3 - ACKNOWLEDGEMENTS
3.1 Acknowledgement of Defaults; Existing Loan
Documents; Waiver of Defenses. The Obligors acknowledge and agree that:
(a) the Existing Defaults as enumerated in
Exhibit 3.1 attached hereto currently exist;
(b) An Event of Default occurred under the
Loan Documents as a result of K-Tron Europe's violation of its debt-equity
ratio covenant contained in its loan agreement with the Swiss Banks, which
default the Obligors hereby represent occurred due to the Obligors' sale of an
indirect subsidiary of K-Tron International, Colortronic, and certain patents
and
14
15
trademarks theretofore licensed to Colortronic, and regarding which default the
Swiss Banks have agreed to forbear;
(c) the Existing Defaults are material in
nature;
(d) as a result of the Existing Defaults, the
Agent, with the consent of the Required Banks, currently has the right to
demand immediate payment by the Obligors of all amounts outstanding under the
Loan Documents;
(e) the Commitments terminated on July 31,
1995; and the Banks have no obligation under the Loan Documents to make any
Loans, issue Letters of Credit or create Acceptances.
(f) the Loans matured on July 31, 1995 and
became due and payable in full on that date. The non-payment of the Loans is
an Event of Default under the Loan Documents;
(g) the Agent and the Banks are presently
entitled to exercise their remedies under the Loan Documents and applicable
law;
(h) the Loan Documents are valid and
enforceable against those Obligors which are parties thereto in every respect,
and all of the terms and conditions thereof are binding upon such Obligors; and
(i) to the extent that any defenses, set-offs
or counterclaims exist as of this date, the Obligors hereby waive any and all
such defenses, set-offs, and counterclaims which they or any of them may have
to the enforcement by the Agent and/or the Banks of the Loan Documents and to
the exercise by the Agent and/or the Banks of their rights and remedies under
the Loan Documents and/or applicable law.
3.2 Acknowledgment of Indebtedness. The Obligors
acknowledge and agree that as of February 28, 1996:
(a) the Borrowers are indebted and liable to the
Agent and the Banks under the Revolving Credit Loans in the principal amount
of: $4,952,501.00 and interest in the amount of $36,301.08 as of February 28,
1996 for a total of $4,988,802.08; and
(b) K-Tron America is indebted and liable to the
Agent and the Banks under the Term Loan in the principal amount of
$2,727,780.00 and interest in the amount of $17,965.41 for a total of
$2,745,745.41 together with the Agent's and the Banks' reasonable fees, costs
and expenses (the amounts set forth in paragraphs 3.2 (a) and (b) are
collectively referred to herein as, the "Current Outstanding Obligations").
3.3 Acknowledgement of Liens, Collateral and
Priority. The Obligors acknowledge and agree that:
15
16
(a) First Union, for itself and as Agent for the
Banks, has a duly recorded, valid, first-priority mortgage lien on certain real
property of K-Tron America, as more fully described in the Mortgage, as amended
by that certain First Amendment of Mortgage and Security Agreement dated April
28, 1995 between K-Tron America and the Agent (the "Mortgage Amendment"), which
is recorded with the Clerk's Office of Gloucester County, New Jersey, at Book
2884, page 209; the Mortgage being recorded on July 30, 1993, with the Clerk's
Office of Gloucester County, New Jersey, at Book 2433, page 292.
(b) Pursuant to the Mortgage, the Agent also has
duly perfected, first-priority security interests in and liens on certain
personal property of K-Tron America, including fixtures.
(c) First Union for itself and as Agent for the
Banks, also has duly perfected, first-priority security interests in and liens
on all of the property and assets of the Obligors, as more fully described in
the Security Agreements.
(d) The Mortgage as amended by the Mortgage
Amendment and the collateral described in the 1994 Security Agreement, as
amended, and all of the collateral described in the Security Agreements and the
other Loan Documents (the "Existing Collateral") shall secure all of the
Obligations (as hereinafter defined) of the Obligors. For purposes of this
Agreement, the word "Obligations" shall mean any and all obligations,
liabilities and indebtedness of each Obligor to the Agent and/or the Banks of
every kind and description, direct and indirect, absolute and contingent, sole,
joint, several, or joint and several, primary or secondary, due or to become
due, now existing or hereafter arising, regardless of how they arise or by what
agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument and includes obligations to perform acts and refrain
from taking actions as well as obligations to pay money and also includes all
indebtedness, liabilities and obligations of the Obligors or any Obligor to the
Banks evidenced by or arising under the Loan Documents.
3.4 Reaffirmation of Security Interests. The
Obligors hereby reaffirm their prior grant and conveyance to the Agent for the
benefit of the Banks of a continuing security interest in and lien on all
Existing Collateral and reaffirm that the Loan Documents are legal, valid and
binding in every respect against such Obligors that are parties thereto. Each
Obligor hereby confirms, ratifies, reaffirms and acknowledges that the Loan
Documents remain in full force and effect except as the Original Loan Agreement
is expressly amended as described in Article 2 herein. Without limiting the
generality of the foregoing, each Surety hereby confirms, ratifies, reaffirms
and acknowledges that each Suretyship Agreement remains in full force and
effect; and all representations and warranties set forth in each Suretyship
Agreement are true and correct as of the date
16
17
hereof, and there are no defaults thereunder (other than the Existing
Defaults).
ARTICLE 4 - OBLIGORS' COVENANTS
In the event of any inconsistency between this Article 4 and
Article 4 of the Forbearance Agreement and Third Amendment, this Article 4
shall govern. The Obligors covenant and agree as follows from the date hereof
and until the satisfaction of their Obligations, unless the Agent shall
otherwise consent in writing:
4.1 Payments During the Forbearance Period.
(a) The Borrowers shall repay the principal
amount of the Loans to First Union as Agent for the Banks on the dates and in
the amounts set forth below:
Payment Due Date Amount
---------------- ------
March 15, 1996 $100,000.00
April l5, 1996 $100,000.00
May 15, 1995 $100,000.00
June l5, 1996 $100,000.00
July 15, 1996 $100,000.00
August l5, 1996 $225,000.00
September l5, 1996 $225,000.00
October l5, 1996 $225,000.00
November l5, 1996 $275,000.00
December l5, 1996 $275,000.00
January l5, 1997 $275,000.00
Forbearance Termination Date The entire outstanding
(as hereinafter defined) amount of the Loans
(b) The first $1.2 million of principal payments
made pursuant to Section 4.1(a) above and Section 4.1(d) below shall be applied
to the Term Loan, and all other payments of principal shall be applied to the
outstanding principal balances of the Revolving Credit Loans and/ or Term Loans
as the Banks may determine in their sole discretion.
(c) The Obligors shall pay to the Banks a
Forbearance Fee (the "Forbearance Fee") in the amount of 1% of the outstanding
principal balance of all Loans as of February 28, 1996 (the "Closing Date").
One-half of the Forbearance Fee shall be due and payable on the Closing Date;
and one-half of the Forbearance Fee shall be due and payable on June 30, 1996.
However, if the Banks have received payment in full of all principal, interest,
fees and any other amount due under the Loan Documents by June 30, 1996,
payment of the second half of the Forbearance Fee shall be waived.
17
18
(d) (i) The amount of the Borrowers' cash flow
which constitutes excess cash flow ("Excess Cash Flow") shall be determined on
a cumulative basis, at the end of each fiscal quarter, after eliminating
inter-Obligor transactions, as follows (without duplication): Net income
computed in accordance with GAAP plus (+) the sum of: (i) non-cash expenses
("non-cash" shall mean not reasonably expected to be settled in cash during the
upcoming 12 months) including but not limited to depreciation and amortization,
increases in general reserves, and other non-cash charges but not including
charges for 401(k) matching payments that the Borrowers' board of directors are
reasonably expected to approve; and (ii) any net decrease in net working
capital assets and liabilities (excluding cash and current portion of Bank
Group debt); and (iii) the cash proceeds of any financing or borrowing; and
(iv) any dividends, tax refunds, proceeds of the sale or issuance of stock, or
capital contributions received; minus (-) the sum of: (a) non-cash income
including but not limited to decreases in general reserves, and other non-cash
credits; and (b) any net increase in net working capital assets and liabilities
(excluding cash and the current portion of the Loans); and (c) principal
repayments of the Loans (including excess cash flow payments previously made)
and existing capital lease financing (including the AS-400 upgrade) and such
other capital lease financing as may from time to time be approved by the
Agent; and (d) capital expenditures paid (but with a limit of not more than
$125,000 in the Borrowers' first fiscal quarter of 1996, $230,000 through the
Borrowers' second fiscal quarter of 1996, $345,000 through the Borrowers' third
fiscal quarter of 1996 and $400,000 through the Borrowers' fourth fiscal
quarter of 1996, excluding the AS400 upgrade) and (e) a holdback reserve for
the actual 401K contributions payable in the Borrowers' second fiscal quarter
of 1996, actual 1995 federal and state taxes payable during the Forbearance
Period by the Obligors, and required estimated tax payment for 1996, all to the
extent not deducted in determining net income during the Forbearance Period and
(f) such other reserves as may be agreed upon by the Banks and Obligors
resulting from revised financial forecasts.
(ii) At the end of each of Borrowers'
fiscal quarters, the Banks, pursuant to the above formula, shall determine the
amount of the Borrowers' Excess Cash Flow for that period. The amount of any
cash flow determined to be Excess Cash Flow, except to the extent allowed to be
retained by the Borrowers as provided herein, shall be due and payable by the
Borrowers to the Banks within 45 days of the end of each of Borrowers' fiscal
quarters (an "Excess Cash Flow Payment").
(iii) The Excess Cash Flow Payments shall
be applied as follows: (a) the first $150,000 of cumulative Excess Cash Flow
for Borrowers' fiscal quarters ending March 31, 1996 and June 30, 1996 shall be
applied pro rata to each remaining Monthly Principal Payment due to the Banks
for the period between and including August 15, 1996 and January 15, 1997,
effectively reducing the required amounts of those Monthly Principal Payments
by the amount of Excess Cash Flow so applied;
18
19
and (b) 75% of all remaining Excess Cash Flow, including Excess Cash Flow for
the quarters ending September 30, 1996 and December 31, 1996, shall be applied
to the outstanding principal balances of the Revolving Credit and/or Term Loans
as the Banks may determine in their sole discretion in the inverse order of
their maturities (receipt by the Banks of these Excess Cash Flow Payments shall
not in any way reduce the amount of the Monthly Principal Payments required
hereunder). The remaining 25% of Excess Cash Flow may be retained by the
Borrowers.
4.2 Payment of the Agent's and Banks' Attorneys'
Fees, Costs and Expenses and Appraisal. The Borrowers shall pay on or before
the date hereof, and thereafter promptly after demand therefor, all reasonable
attorneys' and other professionals' fees, and out-of-pocket costs and expenses
(including all appraisal fees and expenses) incurred by the Agent and the Banks
in connection with the negotiation, preparation, administration and enforcement
of the Loan Documents including, without limitation, this Forbearance Agreement
and Fourth Amendment, and appraisal of the Banks' Collateral.
4.3 Existing Covenants. Unless otherwise provided
herein, the Borrowers shall comply with all of the covenants set forth in the
Loan Documents.
4.4 Repayment of Term Loan and Revolving Credit
Loans. On or before the Forbearance Termination Date (as hereinafter defined),
the Obligors shall pay to the Agent for the benefit of the Banks all
outstanding principal and accrued interest on the Term Loan and the Revolving
Credit Loans.
4.5 No Transfers of Assets without Agent's Written
Consent. The Obligors shall not convey, transfer, consign, pledge or grant
liens on or security interests in any of their respective assets to any entity
other than the Banks or the Agent except: (a) transfers permitted by the
Security Agreements; and (b) purchase money liens on equipment granted for
purchases of such equipment in the ordinary course of the Obligors' respective
businesses (and refinancings of same).
4.6 No Additional Debt. No Obligor shall incur
additional debt other than debt to the Banks, the Agent and/or trade debt or
equipment leases in the ordinary course of such Obligor's business.
4.7 Other Payments. The Obligors shall not make any
payments during the Forbearance Period, as hereinafter defined, to any bank or
financial institution, other than the Agent or the Banks on account of
indebtedness for money borrowed.
4.8 Cash Flow Forecast. On or before February 28,
1996, the Borrowers shall deliver to the Agent and the Banks their detailed,
cash flow forecast for the Forbearance Period, which shall include a detailed
explanation of all assumptions utilized in formulating the forecast (the
"Forecast"). The
19
20
Forecast shall be prepared on a weekly basis for the first three months of the
Forbearance Period and monthly thereafter for each Borrower and Surety
separately and for all the Obligors combined.
4.9 Actual to Projected Cash Flow. On the second
work day of each week during the Forbearance Period, the Borrowers shall
deliver to the Banks a comparison of their actual cash flow compared to the
Forecast (or any prior forecasts delivered to the Banks, as applicable) for the
prior week, together with any necessary revisions or corrections to the
Forecast (or such prior forecast, as applicable).
4.10 Weekly Certification. On the second business day
of each week during the Forbearance Period, the Borrowers shall deliver to the
Banks the information described on Exhibit 4.10 of this Forbearance Agreement
and Fourth Amendment together with a certification by each Borrower's chief
financial officer or by the chief accounting officer of K-Tron International
(or in such officer's absence, any other appropriate officer) for all Borrowers
as to the truth and accuracy thereof.
4.11 Quarterly Cash Flows. As soon as possible
after the conclusion of each fiscal quarter, the Borrowers shall provide the
Banks with statements of their quarterly cash flows for the fiscal quarter just
ended for the Obligors as a whole.
4.12 Financial Information; Tax Returns. Upon the
filing of any document with the Securities Exchange Commission or any income
tax return or quarterly income tax filing with any governmental agency,
authority or body, the Obligors shall simultaneously deliver to the Agent and
the Banks copies of such documents, returns or filings.
4.13 Research and Development Fees. To the extent
that K-Tron Europe does not pay any of K-Tron International's shared management
costs, the Obligors shall not make any payments to K-Tron Europe for research
and development costs.
4.14 Allocated Expense Budget. Before or on February
28, 1996, K-Tron International shall provide the Banks with an allocated
expense budget for 1996, which shall include line items for corporate overhead,
management fees, research and development and marketing and which shall be
subject to the approval of the Banks.
4.15 No Payments to Affiliates Without Fair
Consideration. No Obligor shall make any payments or transfers to any of its
Affiliates unless fair and reasonable consideration is received therefor and
such Affiliate is not liable to such Obligor for any accounts receivable or
other amounts due to such Obligor. No Obligor shall make any payment to any
non-Obligor Affiliate except for goods actually purchased from such non-Obligor
Affiliate.
20
21
4.16 Inventory Purchases. K-Tron America shall not
purchase more inventory than is reasonably required to fill orders that have
been accepted or budgeted in the Forecast (as may be reasonably updated based
upon business conditions and subject to approval of the Banks) or purchase
inventory from any Affiliate for a price that is higher than prices for
comparable products supplied by entities that are not Affiliates.
4.17 Deposit Accounts. The Obligors shall maintain
all of their deposit and other accounts at First Union except for certain
accounts maintained by the Obligors at Wilmington Trust Company solely to
facilitate patent royalty payments.
4.18 Execution of Other Documents. At the Agent's
request, the Obligors shall execute and deliver to the Agent such other
documents and agreements which the Agent, in its sole and reasonable
discretion, deems necessary or convenient to carry out the terms of this
Forbearance Agreement and Fourth Amendment and the other Loan Documents.
4.19 Refinancing. The Borrowers have represented to
the Agent and the Banks that they will seek refinancing of the Loans during the
Forbearance Period. The Borrowers shall use their best efforts to obtain such
refinancing, which efforts shall include without limitation, the following:
(i) on or before March 15, 1996, the Borrowers shall enter into an agreement
with a financial institution or company pursuant to which such entity shall
commence due diligence to determine whether to issue a commitment for a
refinancing of the Borrowers' indebtedness to the Banks; and (ii) either (a) on
or before June 30, 1996, the Borrowers shall have obtained a commitment for
refinancing of the Borrowers' indebtedness to the Banks or (b) on or before
June 1, 1996, the Borrowers shall have engaged at least two financial
institutions or companies, which shall have commenced or completed due
diligence to determine whether to issue a commitment for refinancing the
Borrowers' indebtedness to the Banks. The Borrowers shall cooperate fully with
such financial institutions or companies, providing them with access to their
facilities and records in order to facilitate their due diligence.
4.20 No Bonuses. The Obligors shall not pay any bonus
compensation to their employees (including officers) other than bonus
compensation to their sales employees based on the Obligors' customary practice
for awarding such bonuses and only if the bonuses are paid in the ordinary
course of the Obligors' business.
4.21 Notice of Defaults. The Obligors shall give the
Agent and the Banks notice of any default or event which would become a default
with the giving of notice or the passage of time under any credit facility to
which any Obligor or affiliate is bound, including, without limitation, the
Swiss Forbearance Agreement.
21
22
4.22 Compliance with Swiss Forbearance Agreement. The
following shall not constitute Events of Default under the Loan Documents:
(a) If and only to the extent required by the
Swiss Forbearance Agreement, K-Tron Europe's cessation of management fee
payments to K-Tron International;
(b) If required by the Swiss Forbearance
Agreement, the transfer by K-Tron Investment of K-Tron Asia Pacific Pte. Ltd.
to K-Tron Switzerland;
(c) If required by the Swiss Forbearance
Agreement, the liquidation and/or transfer of K-Tron Patent AG and K-Tron
Vertech AG to K-Tron Switzerland;
(d) If required by the Swiss Forbearance
Agreement, the netting of intercompany balances between K-Tron Europe and the
Obligors as of March 1, 1996, provided that such netting will not require the
Obligors to make a cash payment or extend credit to K-Tron Europe (and such
netting is hereby deemed to not result in any payment being due to the Banks
pursuant to Section 4.13 of the Forbearance Agreement and Second Amendment and
the Forbearance Agreement and Third Amendment);
(e) If and only to the extent required by the
Swiss Forbearance Agreement, prepayments by the Obligors to K-Tron Europe for
deliveries to the Obligors provided that (a) the Obligors, likewise, shall
require K-Tron Europe to prepay the Obligors for all deliveries from the
Obligors to K-Tron Europe, and (b) the Obligors shall require prepayments by
K-Tron Europe to the Obligors at least to the same extent as K-Tron Europe
requires prepayments by the Obligors. However, to the extent K-Tron Europe
does not require prepayment by the Obligors, the Obligors may make deliveries
to K-Tron Europe without requiring prepayments for such deliveries, provided
that all intercompany balances due to the Obligors from K-Tron Europe shall be
paid within 45 days of the end of the month. The payment and/ or netting of
intercompany balances as a result of deliveries pursuant to the preceding
sentence is hereby deemed to not result in any payment being due to the Banks
pursuant to Section 4.13 of the Forbearance Agreement and Second Amendment and
the Forbearance Agreement and Third Amendment; and
(f) K-Tron Europe's sale of K-Tron France
Sarl and/or Xxxxxx Freres Brazil Ind.e com Ltda.
4.23 Assignment of Income Tax Refunds. The Obligors represent
and warrant to the Banks that they file their federal income tax returns on a
consolidated basis and they are not entitled to a federal income tax refund for
the year ending December 30, 1995. Prior to filing any tax return requesting a
refund, including, without limitation, for the year ending December 30, 1995 or
thereafter, until the Obligations are satisfied, K-Tron International and the
other Obligors shall
22
23
notify the Agent of its or their intent to file a tax return requesting such
refund at least one week before filing such a return so that the assignment of
its income tax refund (and any other necessary or appropriate papers) may be
attached to such tax return prior to the filing thereof. The Obligors shall
deliver to the Agent, immediately upon receipt thereof, any payment received
(with any necessary endorsement) pursuant to any income tax refund to be
applied to permanently reduce such Obligations as the Banks may determine in
their sole discretion; and prior to delivery thereof to the Agent, any such
income tax refund shall be held in trust for the benefit of the Agent and the
Banks.
4.24 Third Party Accounts Payable. Third party
accounts payable of K-Tron America shall not exceed more than $2.5 million at
any time. For purposes of this section, any commissions that are not paid when
due shall be included in K-Tron America's accounts payable.
4.25 Lock Box. The Obligors shall, if they have not
done so previously, enter into lock box agreement(s) with the Agent, in form
and substance satisfactory to the Agent, pursuant to which the Obligors shall
continue to use their best efforts to cause their customers to remit payment
directly to a lock box maintained by the Agent.
4.26 Net Worth. Obligors shall maintain a
consolidated net worth as of the end of each fiscal quarter in an amount that
is not less than $5,000,000. after: (i) eliminating the impact of foreign
exchange rate changes after June 30, 1995 in the equity section of the balance
sheet (as identified by the line item entitled "Cumulative Translation
Adjustment"); and (ii) eliminating the incremental impact of any losses
recognized after June 3, 1995 derived from or attributable to the sale of
K-Tron France Sarl and Xxxxxx Freres Brazil Ind.e com Ltda. Obligors must
deliver the calculation of net worth to the Agent within forty-five (45) days
after the end of each of the first three quarters of each fiscal year of the
Borrowers and within sixty (60) days of the end of the last quarter of each
fiscal year of the Obligors.
ARTICLE 5 - BANK'S COVENANTS
5.1 Forbearance. The Agent and the Banks shall
forbear in the exercise of their rights and remedies (including, without
limitation, the imposition of default rate interest) under the Loan Documents
and applicable law for the period of time (the "Forbearance Period") which
shall be from the date hereof through the date (the "Forbearance Termination
Date") earlier to occur of: (a) January 31, 1997, (b) an Event of Default, as
defined below, other than the Existing Defaults, or (c) June 30, 1996, if
K-Tron International shall not have received an unqualified opinion from Xxxxxx
Xxxxxxxx LLP on K-Tron International's consolidated financial statements for
its fiscal year ended December 30, 1995.
23
24
ARTICLE 6 - CONDITIONS PRECEDENT AND SUBSEQUENT
The Agent's and Banks' obligations hereunder, are conditioned
upon the fulfillment by the Obligors of the following conditions precedent and
subsequent:
6.1 Conditions Precedent to Closing. The
effectiveness of this Forbearance Agreement and Fourth Amendment is expressly
conditioned upon satisfaction of all of the conditions set forth in Section 6.1
hereof, and the failure of the Obligors to satisfy all such conditions shall
cause this Forbearance Agreement and Fourth Amendment to be null and void. The
Obligors shall deliver or cause to be delivered on or before February 28, 1996
to the Agent and the Banks, in form and substance satisfactory to the Agent and
the Banks, the following:
(a) This Forbearance Agreement and Fourth
Amendment duly executed by the Obligors;
(b) Amendments to the other Loan Documents
and the Financing Statements to change the name of First Fidelity Bank, N.A. to
First Union National Bank, or to account for any change of address of any of
the Obligors; duly executed by the Obligors;
(c) K-Tron International shall provide the
Banks with its allocated expense budget for 1996 (including budgeted
expenditures for corporate overhead, management fees, research and development
and marketing) which shall be satisfactory to the Banks;
(d) The Obligors shall have submitted for the
Banks' approval, and the Banks' shall have approved, the Forecast, as more
fully described in Section 4.8 hereof;
(e) Certificates of Incumbency executed by
the Secretary of each Obligor, dated as of the date of this Agreement,
certifying the incumbency and signature of the Officers of each Obligor
executing this Agreement and any other documents to be delivered pursuant
hereto, together with evidence of the incumbency of such Secretary;
(f) Corporate Resolutions for each Obligor;
and
(g) Opinion of Obligors' counsel.
24
25
ARTICLE 7 - GENERAL RELEASE BY THE OBLIGORS;
RELIEF FROM STAY; WAIVERS
7.1 General Release. Each Obligor for itself and all
persons and entities claiming by, through or under such Obligor (collectively,
the "Releasors") hereby jointly and severally unconditionally remise, release
and forever discharge, and reaffirm their prior release of, the Agent and each
Bank and their past, present and future officers, directors, employees, agents,
attorneys, parent, Affiliates, subsidiaries and the heirs, executors, personal
administrators, successors and assigns, as applicable, of any such persons and
entities (collectively, the "Releasees"), of and from any and all actions,
causes of action, suits, claims, counterclaims, defenses, setoffs, liabilities,
damages and demands whatsoever, whether known or unknown, at law or in equity,
direct or indirect, if any, which any of the Releasors ever had, now has, claim
to have had, now claim to have or hereafter can, shall or may claim to have
against any of the Releasees upon or by reason of any matter, cause or thing,
from the beginning of the world to the date hereof arising from or relating to
the Loan Documents, the Supplemental Loan Documents, this Forbearance Agreement
and Fourth Amendment and the related transactions, obligations, and business
dealings between the Agent, on behalf of the Banks, and the Obligors. The
Obligors warrant and represent that they have not assigned, pledged,
hypothecated and/or otherwise divested themselves and/or encumbered all or any
part of the claims being released hereby and that they hereby agree to
indemnify and hold harmless any and all of the Releasees against whom any such
claim so assigned, pledged, hypothecated, divested and/or encumbered is
asserted.
7.2 Relief from the Automatic Stay. In the event
that any Obligor shall: (i) file with any bankruptcy court or be the subject
of any petition under Title 11 of the U.S. Code, as amended (the "Bankruptcy
Code"), (ii) be the subject of any order for relief issued under the Bankruptcy
Code, (iii) file or be the subject of any petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future foreign, federal or state act or law
relating to bankruptcy, insolvency or other relief from creditors, (iv) have
sought or consented to or acquiesced in the appointment of any trustee,
receiver, conservator or liquidator, or (v) be the subject of any order,
judgment or decree entered by any court of competent jurisdiction approving a
petition filed against such party for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future federal or state act or law relating to bankruptcy,
insolvency or other relief from creditors; then, the Agent and the Banks shall
thereupon be entitled to relief from any automatic stay imposed by Section 362
of the Bankruptcy Code or otherwise to exercise any or all of their respective
rights and remedies available under any of the Loan Documents and/or
non-bankruptcy law; and Obligors shall consent to such relief and take all
actions deemed necessary or
25
26
desirable by the Agent and/or the Required Banks to implement this Section.
7.3 Waivers. In the event the Agent and/or the Banks
seek to take possession of any or all of the Collateral by court process, the
Obligors hereby irrevocably waive any bonds and any surety or security relating
thereto required by any statute, court rule or otherwise as an incident to such
possession, and waive any demand for possession prior to the commencement of
any suit or action to recover such Collateral.
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this
Forbearance Agreement and Fourth Amendment, and as partial consideration for
the terms and conditions contained herein, the Obligors represent and warrant
to the Agent and the Banks the following, each and all of which shall survive
the execution and delivery of this Forbearance Agreement and Fourth Amendment
and all of the other documents executed in connection herewith:
8.1 Reaffirmation of Representations and Warranties.
The Obligors hereby reaffirm all of their representations and warranties in
Article 8 of the Forbearance Agreement and Third Amendment as if such
representations and warranties were made as of the date hereof.
8.2 Authorization; Valid and Binding Agreement. All
corporate action required to be taken by each Obligor and its officers,
directors and/or shareholders and all actions required to be taken by their
respective principals for the authorization, execution, delivery and
performance of this Forbearance Agreement and Fourth Amendment and the other
documents contemplated hereby have been taken. Each person executing this
Forbearance Agreement and Fourth Amendment on behalf of an Obligor is an
authorized officer and is authorized to execute same. This Forbearance
Agreement and Fourth Amendment is, and each of the documents executed pursuant
hereto will be, legal, valid, and binding obligations of the party or parties
thereto, enforceable against each such party in accordance with their
respective terms, subject only to bankruptcy, insolvency, reorganization,
moratorium and other laws or equitable principles affecting creditors' rights
generally.
8.3 Corporate Existence. There have been no changes
to the Obligors' Certificates or Articles of Incorporation and By-Laws since
June 22, 1995.
8.4 No Defaults. Subject to Section 4.22 hereof, no
default or Event of Default under the Existing Loan Agreement and the other
Loan Documents, except for those enumerated in Exhibit 3.1 attached hereto
currently exists. In addition, no default, event of default or occurrence that
with the passage of
26
27
time or the giving of notice would constitute such currently exists under the
Swiss Forbearance Agreement.
8.5 Compliance with Laws. The Obligors are in
compliance in all material respects with all laws, regulations and requirements
applicable to their businesses, and have not received, and have no knowledge
of, any order or notice of any governmental investigation or of any violations
or claims of violation of any law, regulation or any governmental requirement.
8.6 Financial Statements; Reporting.
(a) All balance sheets, reports, statements of
income, shareholders' equity and changes in financial position, budgets,
reconciliations, monthly sales reports, monthly accounts receivable reports and
monthly accounts payable reports with respect to the Obligors have been
prepared in form acceptable to the Agent and, if applicable, in conformity with
generally accepted accounting principles and applied on a basis consistent with
that of the preceding fiscal year of the Obligors and present fairly the
financial condition and results of operations for the period covered thereby of
the Obligors. The chief financial officer (or in such officer's absence, any
other appropriate officer) of K-Tron International or each Obligor shall
certify the truth and accuracy of all such financial information. Since
December 31, 1995, there has been no material adverse change in the Obligors'
financial condition or results of operation except as disclosed to the Banks in
writing prior to the date of this Forbearance Agreement and Fourth Amendment.
(b) The Obligors do not know of any facts, other
than those already disclosed in writing to the Agent by the Obligors, that
materially adversely affect or in so far as can be foreseen, will materially
adversely affect the Obligors' ability to perform their Obligations under the
Forbearance Agreement and the Loan Documents.
8.7 Exclusive and First Priority Perfected Lien. The
Agent on behalf of the Banks has, as of the date of this Agreement, and shall
continue to have, until all of the Obligations are paid in full, first
priority, valid perfected (to the extent that the same may be perfected by
filing) liens upon and security interests in all of the collateral, both real
and personal, described in the Security Agreements and the Mortgage, as amended
by the Mortgage Amendment.
ARTICLE 9 - EVENTS OF DEFAULT
Each of the following shall constitute an "Event of Default"
under this Forbearance Agreement and Fourth Amendment and all other Loan
Documents:
9.1 Payment. Failure of any Obligor to make any
payment of principal, interest or other amounts due on the date
27
28
such payment is due under the Loan Agreement, this Forbearance Agreement and
Fourth Amendment and/or under any other Loan Document.
9.2 Covenants. Failure of any Obligor to observe any
non-monetary covenant set forth herein or in any of the Loan Documents which
default is not cured within the time period, if any, specified herein or in the
Loan Documents.
9.3 Agreements Invalid. (a) The validity, binding
nature or enforceability of any material term or provision of this Forbearance
Agreement and Fourth Amendment, any other Supplemental Loan Document or any of
the other Loan Documents is disputed by, on behalf of, or in the right or name
of any Obligor or (b) this Forbearance Agreement and Fourth Amendment, the
Supplemental Loan Documents and the other Loan Documents are found or declared
to be invalid, avoidable, or unenforceable by any court of competent
jurisdiction.
9.4 False Warranties; Breach of Representations. Any
warranty or representation made or reaffirmed by any Obligor in this
Forbearance Agreement and Fourth Amendment or in any other Supplemental Loan
Document or in any certificate or other writing delivered under or pursuant to
this Forbearance Agreement and Fourth Amendment or any other Supplemental Loan
Document, or in connection with any provision of this Forbearance Agreement and
Fourth Amendment or related to the transactions contemplated hereby shall prove
to have been false or incorrect or breached in any material respect as of the
date made.
9.5 Judgments. A final judgment or judgments is
entered, or an order or orders of any judicial authority or governmental entity
is issued against any Obligor (i) for payment of money in the aggregate in
excess of $25,000 or (ii) for injunctive or declaratory relief which would have
a material adverse effect on the ability of any Obligor to conduct its business
as presently conducted; and such judgment or order is not discharged or
execution thereon or enforcement thereof is not stayed pending appeal, within
thirty (30) days after entry or issuance thereof, or, in the event of such a
stay, such judgment or order is not discharged within thirty days after such
stay expires.
9.6 Liens. Any execution, garnishment, attachment,
distraint, or lien is filed, entered, or issued against any Obligor or any of
its property or any order is entered enjoining or restraining any Obligor
and/or restraining or seizing any property of any Obligor which is not stayed,
discharged or bonded within 45 days.
9.7 Bankruptcy or Insolvency of an Obligor.
(a) Any Obligor becomes insolvent, or
generally fails to pay, or is generally unable to pay or admits in writing its
inability to pay its debts as they become due, or
28
29
applies for, consents to or acquiesces in, the appointment of a trustee,
receiver or other custodian for that Obligor, as the case may be, or a
substantial part of its property, or makes a general assignment for the benefit
of creditors;
(b) Any Obligor commences any bankruptcy,
reorganization, debt adjustment, or other case or proceeding under any state or
federal bankruptcy or insolvency law, or any dissolution or liquidation
proceeding;
(c) Any bankruptcy, reorganization, debt
arrangement or other case or proceeding under any state or federal bankruptcy
or insolvency law or any dissolution or liquidation proceeding is involuntarily
commenced against or in respect of an Obligor and the same shall not be stayed
or dismissed within 45 days;
(d) A trustee, receiver or other custodian is
appointed for any Obligor or a substantial part of such entity's property and
the same shall not be stayed or dismissed within 45 days.
9.8 Cross-Default. A default or an event of default
(other than the Existing Defaults) occurs under any Loan Document that is not
cured within the applicable grace period, if any.
9.9 Change in Ownership. A change in control or
ownership or the sale of any division, except as otherwise permitted herein, of
any of K-Tron International's direct or indirect domestic subsidiaries, K-Tron
Switzerland Ltd. and/or K-Tron Holding AG (other than intercompany mergers and
consolidations of foreign subsidiaries).
9.10 Default by K-Tron Europe. The termination,
default or breach of the Swiss Forbearance Agreement or anything that would
entitle the Swiss Banks, or any of them, to demand repayment of the obligations
due to them by K-Tron International, K-Tron Investment or any of the companies
comprising K-Tron Europe.
9.11 Material Adverse Change or Occurrence. Any Obligor
shall have a material adverse change or occurrence.
ARTICLE 10 - REMEDIES
Upon the earlier of (i) the occurrence of any one or more
Events of Default (other than the Existing Defaults), or (ii) January 31, 1997;
(a) all Obligations shall become due and payable immediately and without notice
to the Obligors, (b) the obligations of the Agent and the Banks hereunder shall
terminate automatically and immediately, without notice to the Obligors, and
(c) the Agent and the Banks shall have all the remedies set forth in any of the
Loan Documents and/or under applicable law.
29
30
ARTICLE 11 - MISCELLANEOUS
11.1 Costs, Expenses and Attorneys' Fees. The
Obligors agree to pay on demand by the Agent:
(a) All reasonable out-of-pocket costs and
expenses incurred by the Agent and/or the Banks, including without limitation,
all reasonable fees and out-of-pocket expenses of counsel, accountants and
other professionals for the Agent and/or the Banks in connection with:
(i) the negotiation, preparation and
enforcement of this Forbearance Agreement and Fourth Amendment, all other Loan
Documents and the documents relating thereto;
(ii) the assertion by any person,
entity or organization, other than the Banks, of any claim or lien,
encumbrance, security interest, or other interest in any of the assets of the
Obligors (except to the extent such interest is permitted under any Loan
Document), including any attachment, garnishment, levy, notice of debtor's
examination, notice of examination, judgment lien or execution lien, regardless
of when such fees or expenses are incurred;
(iii) the enforcement or exercise by the
Agent and/or the Banks of the Agent's and/or any Bank's rights or remedies with
respect to the collection of the Obligations or to preserve, protect or enforce
the Agent's and/or any Bank's interests in any bankruptcy, insolvency or
reorganization case which may affect any Obligor and any litigation, dispute,
case, arbitration or action with respect to any attachment, garnishment, levy,
notice of debtor's examination, judgment lien or execution which may affect any
Obligor; and
(b) Any stamp or documentary tax or other
similar taxes and any filing, recording, lien, mortgage, release, satisfaction
or search fees which may be payable in connection with the execution, delivery
or performance of this Forbearance Agreement and Fourth Amendment, all other
Loan Documents or the documents comprising or relating hereto and thereto.
All Obligations provided for in this Section shall survive any termination of
the Banks' and the Agent's obligations under this Forbearance Agreement and
Fourth Amendment.
11.2 Cooperation; Other Documents. At all times
following the execution of this Forbearance Agreement and Fourth Amendment, the
Obligors shall execute and deliver to the Agent, or shall cause to be executed
and delivered to the Agent any other document required by the Agent to protect
its rights under this Forbearance Agreement and Fourth Amendment and shall do
or cause to be done, all such other acts and things as the Agent may reasonably
deem to be necessary or desirable to assure the Agent and the Banks of the
benefit of this Forbearance Agreement and Fourth Amendment and the documents
comprising or relating to this
30
31
Forbearance Agreement and Fourth Amendment. Furthermore, at all times
following the execution of this Forbearance Agreement and Fourth Amendment, the
Agent, the Banks, or their representatives shall have the right to examine each
Obligors' books and records at any time during normal business hours.
11.3 Remedies Cumulative; No Waiver. The
respective rights, powers and remedies of the Agent and Banks in this
Forbearance Agreement and Fourth Amendment and in the documents comprising or
relating to this Forbearance Agreement and Fourth Amendment are cumulative and
not exclusive of any right, power or remedy provided in the Loan Documents, by
law or equity and no failure or delay on the part of the Agent or the Banks in
the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or remedy preclude
any other or further exercise thereof, or the exercise of any other right,
power or remedy.
11.4 Notices. Any notice given pursuant to this
Forbearance Agreement and Fourth Amendment or pursuant to any document
comprising or relating to this Forbearance Agreement and Fourth Amendment shall
be given in conformity with Section 11.2 of the Loan Agreement.
11.5 Survival of Representations and Warranties. All
representations and warranties of the Obligors contained in this Forbearance
Agreement and Fourth Amendment and in the documents comprising or relating to
this Forbearance Agreement and Fourth Amendment shall survive the execution of
this Forbearance Agreement and Fourth Amendment and are material and have been
or will be relied upon by the Agent and the Banks, notwithstanding any
investigation made by any person, entity or organization on either the Agent's
or any Bank's behalf. No implied representations or warranties are created or
arise as a result of this Forbearance Agreement and Fourth Amendment or the
documents comprising or relating to this Forbearance Agreement and Fourth
Amendment. For purposes of the foregoing, all statements in any certificate or
other writing required by this Forbearance Agreement and Fourth Amendment to be
delivered to the Agent on or after the execution of this Forbearance Agreement
and Fourth Amendment by or on behalf of any Obligor pursuant to and in
accordance with this Forbearance Agreement and Fourth Amendment or any document
comprising or relating to this Forbearance Agreement and Fourth Amendment or in
connection with the transactions contemplated thereby shall be deemed to be
representations and warranties contained in this Forbearance Agreement and
Fourth Amendment.
11.6 Integration. This Forbearance Agreement and
Fourth Amendment and all documents referred to, comprising or relating to this
Forbearance Agreement and Fourth Amendment, including, without limitation, the
Loan Documents, constitute the sole agreement of the parties with respect to
the subject matter hereof and thereof and supersede all oral negotiations, term
31
32
sheets and other prior writings with respect to the subject matter hereof and
thereof.
11.7 Amendment and Waiver. No amendment of this
Forbearance Agreement and Fourth Amendment, and no waiver, discharge or
termination of any one or more of the provisions hereof, shall be effective
unless set forth in writing and signed by all of the parties hereto.
11.8 Consistency of Provisions. This Forbearance
Agreement and Fourth Amendment, the other Supplemental Loan Documents, and the
other Loan Documents, and any other document related hereto and thereto are
intended to be consistent. However, in the event of any inconsistencies among
any of such documents, such inconsistency shall not affect the validity or
enforceability of any such document. The Obligors agree that in the event of
any express inconsistency or ambiguity in any of such documents, the terms of
this Forbearance Agreement and Fourth Amendment shall govern.
11.9 Continuing Effectiveness of Loan Agreement. The
Loan Agreement, as amended hereby, and the other Loan Documents shall remain in
full force and effect.
11.10 Counterparts. This Forbearance Agreement and
Fourth Amendment may be executed in one or more counterparts, all of which
taken together shall constitute one and the same agreement.
11.11 Governing Law. This Forbearance Agreement and
Fourth Amendment shall be governed by, and construed in accordance with, the
laws of the State of New Jersey.
11.12 Severability. Any provision of this Forbearance
Agreement and Fourth Amendment which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Forbearance Agreement and Fourth Amendment or affecting the
validity or enforceability of such provision in any other jurisdiction.
11.13 Headings. Article and Section headings in this
Forbearance Agreement and Fourth Amendment are included for convenience of
reference only and shall not constitute a part of this Forbearance Agreement
and Fourth Amendment for any other purpose.
11.14 Successors and Assigns. The provisions of this
Forbearance Agreement and Fourth Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
32
33
11.15 Jurisdiction and Venue. IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR
RELATING TO THIS FORBEARANCE AGREEMENT AND FOURTH AMENDMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER, THE OBLIGORS HEREBY IRREVOCABLY SUBMIT THEMSELVES TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN ANY COUNTY OR FEDERAL
JUDICIAL DISTRICT IN THE STATE OF NEW JERSEY WHERE THE AGENT MAINTAINS AN
OFFICE AND AGREE NOT TO RAISE ANY OBJECTION TO SUCH JURISDICTION OR TO THE
VENUE OF ANY SUCH COURT. THE OBLIGORS AGREE THAT SERVICE OF PROCESS IN ANY
SUCH PROCEEDING MAY BE DULY EFFECTED UPON THEM BY MAILING A COPY THEREOF,
POSTAGE PREPAID TO THE OBLIGORS AT THE ADDRESS SET FORTH IN THE LOAN AGREEMENT
AND/OR THE SECURITY AGREEMENT.
11.16 Waiver of Jury Trial; Damages. EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATING TO THIS
FORBEARANCE AGREEMENT AND FOURTH AMENDMENT OR THE RELATIONSHIP BETWEEN THE
PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANKS AND THE AGENT
TO ENTER INTO THIS FORBEARANCE AGREEMENT AND FOURTH AMENDMENT. IN ADDITION,
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR
RECOVER, IN ANY SUCH JUDICIAL PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE,
CONSEQUENTIAL OR OTHER DAMAGES, EXCEPT FOR ACTUAL DAMAGES.
33
34
IN WITNESS WHEREOF, the Agent, the Banks and the Obligors have
executed this Forbearance Agreement and Fourth Amendment as of the date and
year first above written.
K-TRON INTERNATIONAL, INC.
By: /s/ XXXXXX X. XXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Executive
Vice President, CFO
and Treasurer
K-TRON AMERICA, INC.
By: /s/ XXXXXX X. XXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President and
Treasurer
K-TRON TECHNOLOGIES, INC.
By: /s/ XXXXXX X. XXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
K-TRON PATENT, INC.
By: /s/ XXXXXX X. XXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President and
Treasurer
K-TRON INVESTMENT CO.
By: /s/ XXXXXX X. XXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President and
Treasurer
SIGNATURES CONTINUED ON NEXT PAGE
34
35
FIRST UNION NATIONAL BANK
FOR ITSELF AND AS AGENT FOR THE BANKS
By: /s/ XXXX X. XXXXXX
----------------------------
Name: Xxxx X. Xxxxxx
Title: Assistant Vice President
PNC BANK, N.A.
By: /s/ XXXXXXX XXXXXX
----------------------------
Name: Xxxxxxx Xxxxxx
Title: Assistant Vice President
UNITED JERSEY BANK
By: /s/ XXXXX XXXXX
----------------------------
Name: Xxxxx Xxxxx
Title: Vice President
35
