CONSENT AND THIRD AMENDMENT
TO
CREDIT AGREEMENT
CONSENT AND THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of
September 30, 1999 (this "Consent"), by and among PRECISE HOLDING CORPORATION, a
Delaware corporation ("Parent"), PRECISE TECHNOLOGY, INC., a Delaware
corporation (the "Borrower"), each Subsidiary of the Borrower currently existing
(each a "Subsidiary Guarantor" and collectively, the "Subsidiary Guarantors"),
the banks, financial institutions and other institutional lenders party to the
Credit Agreement referred to below (the "Lenders") and FLEET NATIONAL BANK
("Fleet"), as agent (together with any successor agent, the "Agent") for the
lenders from time to time party thereto (the "Lenders") and as Issuing Bank.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Credit Agreement (as defined below).
WHEREAS, Parent, the Borrower, each Subsidiary of the Borrower
then existing, the Lenders and Fleet are parties to that certain Credit
Agreement, dated as of June 13, 1997 (as the same has been and may be further
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), pursuant to which the Lenders made loans to, and
established credit facilities for, the Borrower;
WHEREAS, the Borrower, Precise Technology of Delaware, Inc.
("Delaware"), Precise Technology of Illinois, Inc. ("Illinois"), Precise TMP,
Inc. ("TMP"), Precise Polestar, Inc. ("Polestar") and Xxxxxx Tool, Mold & Die,
Inc. ("Xxxxxx," and together with Delaware, Illinois, TMP and Polestar, the
"Merged Subsidiaries") have entered into a series of merger agreements effective
June 30, 1999 (with the merger of TMP with and into the Borrower effective July
1, 1999) (the "Merger Agreements"), with the Borrower as the ultimate sole
surviving corporation, and pursuant to which the Borrower has assumed all of the
rights, liabilities and obligations of each Merged Subsidiary (the "Mergers");
WHEREAS, the Borrower desires to create a new Subsidiary, namely
Precise Intellectual Property Holdings Company, Inc., a Delaware corporation
("IP Holdings"), of which 100% of capital stock and 100% of voting power will be
owned by the Borrower, and the Borrower and IP Holdings will enter into an
Intangible Property Assignment and a Patent and Trademark Assignment, each dated
as of September 30, 1999 (the "IP Assignment" and the "P&T Assignment",
respectively), in form and substance satisfactory to the Agent, pursuant to
which the Borrower will transfer to IP Holdings all of its intangible property,
subject to the security interests of the Collateral Agent in such property
pursuant to the Collateral Documents on behalf of the Secured Parties, which
intangible property shall include patents, trademarks and copyrights,
manufacturing processes, know how, trade secrets and other proprietary
information, all of which intangible property is described in the IP Assignment
and the P&T Assignment (collectively, the "Intangible Property");
WHEREAS, pursuant to a License and Royalty Agreement, in form and
substance satisfactory to the Agent, between IP Holdings and the Borrower, dated
as of September 30,
1999 (the "Royalty Agreement"), IP Holdings will grant an exclusive right and
license to use the Intangible Property to the Borrower on an arm's-length basis
to each of the Borrower and IP Holdings in consideration of the payment in cash,
in accordance with the terms of the Royalty Agreement, by the Borrower to IP
Holdings of royalties (the "Royalties");
WHEREAS, after entering into the Royalty Agreement, it is
expected that IP Holdings will from time to time make a loan or loans to the
Borrower in amounts equal to the amount of the Royalties from time to time due
and payable by the Borrower to IP Holdings, which loan or loans will be (i)
evidenced by intercompany promissory notes in form and substance satisfactory to
the Agent (each, an "Intercompany Note") and (ii) expressly subordinated in
right of payment and enforcement to the prior payment in full and enforcement of
all of the Obligations and each such Intercompany Note will be pledged by IP
Holdings to the Collateral Agent pursuant to the Security Agreement (each such
loan, a "Subordinated Loan"); and
WHEREAS, the Borrower has requested, and subject to the terms and
conditions set forth below the Agent and the Lenders are willing to grant, the
consent of the Agent and the Lenders to (i) the creation of IP Holdings, (ii)
the transfer of the Intangible Property to IP Holdings pursuant to the terms of
the IP Assignment and the P&T Assignment, subject to the security interests of
the Collateral Agent in such property pursuant to the Collateral Documents on
behalf of the Secured Parties (the "Transfer"), (iii) the grant by IP Holdings
to the Borrower of an exclusive right and license to use the Intangible Property
pursuant to the terms of the Royalty Agreement, and (iv) certain amendments to
the Credit Agreement, in each case subject to the terms and conditions provided
herein;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and other valuable consideration the receipt and sufficiency of
which are hereby acknowledged, each of the parties hereto hereby agrees as
follows:
1. Consent. (a) Notwithstanding anything to the contrary
contained in Section 5.02(l) of the Credit Agreement, the Agent
and the Lenders consent to the creation by the Borrower of IP
Holdings.
(b) Notwithstanding anything to the contrary contained
in Section 5.02(d) of the Credit Agreement, the Agent and the
Lenders consent to (i) the Transfer and (ii) the grant by IP
Holdings to the Borrower of an exclusive right and license to
use the Intangible Property, and agree that the Borrower and IP
Holdings may enter into the IP Assignment, the P&T Assignment
and the Royalty Agreement.
2. Amendments to Credit Agreement. On and after the Consent
Effective Date, (a) Section 1.01 of the Credit Agreement is hereby amended by
adding the following new definition in alphabetical order:
""Intercompany Note" has the meaning specified in Section
5.02(e)(xi)"; and
-2-
(b) Section 5.02(e)(xi) of the Credit Agreement is hereby amended
by adding the following at the end thereof:
"; provided that (A) in the case of intercompany loans
that are evidenced by an intercompany promissory note (each, an
"Intercompany Note"), each such Intercompany Note shall be in
form and substance satisfactory to the Agent and shall be
pledged by the Borrower or such Subsidiary to the Collateral
Agent pursuant to the Security Agreement and (B) any such
intercompany loans shall be expressly subordinated in right of
payment and enforcement to the prior payment in full and
enforcement of the Obligations and the subordination provisions
in such Intercompany Notes shall be satisfactory to the Agent".
3. Conditions Precedent. The obligation of the Agent and
the Lenders to execute and deliver this Consent and to make any Advance under
the Credit Agreement after the Consent Effective Date (as hereinafter defined)
is subject to the following:
(a) the representations and warranties contained in each
Loan Document are true and correct on and as of the
Consent Effective Date, both before and after giving
effect to this Consent, as though made on and as of such
date, other than any such representations or warranties
that, by their terms, refer to a specific date other
than the Consent Effective Date, in which case such
representations and warranties shall be true and correct
as of such specific date;
(b) no event shall have occurred and be continuing, or
would result from the consummation of any of the
transactions contemplated herein, that constitutes a
Default;
(c) the representations and warranties contained in
Section 4 of this Consent shall be true and correct on
and as of the date hereof;
(d) the Agent shall have received, on behalf of the
Lenders, in each case in form and substance satisfactory
to the Agent, the following documents:
(i) a Patent, Trademark & Copyright Pledge and
Security Agreement (the "IP Security Agreement")
duly executed by IP Holdings in favor of the
Secured Parties, together with (A) appropriate
executed UCC-1 financing statements, and (B) all
other instruments, financing statements and
other documents that the Collateral Agent may
deem necessary or desirable in order to perfect
and protect, and continue and maintain the
perfection of, the security interests granted by
the IP Security Agreement;
(ii) a supplement to the Security Agreement (the
"Security Agreement Supplement") duly executed
by the Borrower and IP Holdings in favor of the
Secured Parties, together with (A) appropriate
executed UCC-1 and UCC-3 financing statements,
(B) certificates representing the capital stock
of IP Holdings, accompanied by undated stock
powers executed in blank, and (C) the Blocked
Account Letters and an Investment Account
Control Agreement, in each case duly executed by
the Borrower in favor of the
-3-
Collateral Agent on behalf of the Secured
Parties and (D) all other instruments, financing
statements and other documents that the
Collateral Agent may deem necessary or desirable
in order to perfect and protect, and continue
and maintain the perfection of, the Liens
created by the Security Agreement, as
supplemented by the Security Agreement
Supplement;
(iii) true and complete copies of the documents
necessary to effect the Mergers (the "Merger
Documents") including, without limitation, the
Merger Agreements, the Agreements and Plans of
Merger, the Certificates of Ownership and Merger
and Articles of Merger, as appropriate for each
of the Merged Subsidiaries and the Borrower;
(iv) a supplement to the Credit Agreement (the
"Credit Agreement Supplement") duly executed by
IP Holdings, together with amended schedules to
the Credit Agreement;
(v) a Subsidiary Guaranty duly executed by IP
Holdings in favor of the Secured Parties;
(vi) evidence of the insurance for IP Holdings
required by the terms of the Security Agreement;
(vii) copies of the resolutions of the Boards of
Directors of the Borrower, each Merged
Subsidiary and IP Holdings authorizing the
Mergers, the Merger Documents and the
consummation of the transactions contemplated
thereby;
(viii) copies of the resolutions of the Board of
Directors of the Borrower and IP Holdings
authorizing the Transfer and the entering into
of the IP Assignment, the P&T Assignment and the
Royalty Agreement and the consummation of the
transactions contemplated thereby;
(ix) certified copies of the resolutions of the
Board of Directors of Parent, the Borrower and
IP Holdings approving the entering into of this
Consent, the Credit Agreement Supplement,
Security Agreement Supplement, IP Security
Agreement and Subsidiary Guaranty (together, the
"Supplemental Loan Documents") to which it is a
party, the creation of the security interests in
the Intangible Property and all other assets of
IP Holdings, the guarantee by IP Holdings of the
Obligations pursuant to the Subsidiary Guaranty,
and all other transactions contemplated by this
Consent, and of all documents evidencing other
necessary corporate action and governmental
approvals, if any, with respect to Parent, the
Borrower and IP Holdings, the Supplemental Loan
Documents and the transactions contemplated
hereby and thereby;
(x) an officer's certificate for IP Holdings
substantially in the form required by Section
3.01(g)(v) of the Credit Agreement, together
with a
-4-
copy of the Certificate of Incorporation of IP
Holdings certified by the Secretary of State of
the State of Delaware;
(xi) a certificate of the treasurer of IP
Holdings, in form, scope and substance
satisfactory to the Agent, attesting to the
Solvency of IP Holdings immediately after giving
effect to the Transfer;
(xii) a favorable opinion of Winston & Xxxxxx,
counsel for the Borrower and its Subsidiaries,
as to such matters as the Agent or its counsel
may reasonably request; and
(xiii) such other approvals, opinions,
certificates, instruments or documents,
including, but not limited to, such financing or
continuation statements, and other filing
documents as the Collateral Agent may deem
necessary in order to perfect and preserve the
pledge, assignment and security interest created
under the Collateral Documents, and as any
Lender through the Agent may reasonably request.
4. Representations and Warranties. In order to induce the Agent
and the Lenders to enter into this Consent, each of Parent, the Borrower and
each Subsidiary Guarantor hereby, jointly and severally, represents and warrants
to the Agent and the Lenders as follows:
(i) that no Default or Event of Default exists on the Consent
Effective Date, both before and after giving effect to this Consent;
(c) that all of the representations and warranties contained in
the Loan Documents shall be true and correct as of the Consent Effective
Date both before and after giving effect to this Consent, with the same
effect as though such representations and warranties had been made on
and as of the Consent Effective Date (it being understood and agreed
that any representation or warranty made as of a specified date shall be
required to be true and correct only as of such specific date);
(d) that the execution, delivery and performance by Parent and
each Loan Party of this Consent and the Supplemental Loan Documents to
which it is a party are within Parent's and such Loan Party's corporate
powers, have been duly authorized by all necessary corporate action, and
do not (i) contravene Parent's and such Loan Party's charter or bylaws
(or equivalent documentation), (ii) violate any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award, (iii)
conflict with or result in the breach of, or constitute a default under,
any material contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument binding on or affecting Parent or such
Loan Party, any of their respective Subsidiaries or any of their
respective properties or assets or (iv) except for the Liens created
under the Loan Documents, result in or require the creation or
imposition of any Lien upon or with respect to any of the properties or
assets of Parent, such Loan Party or any of their respective
Subsidiaries;
-5-
(f) that no authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority or regulatory body
or any other third party is required for the due execution, delivery or
performance by Parent or any Loan Party of this Consent or any of the
Supplemental Loan Documents to which it is a party or for the
consummation of the transactions contemplated hereby and thereby;
(g) that this Consent and each of the Supplemental Loan
Documents to which it is a party has been duly executed and delivered by
Parent and each Loan Party thereto and is the legal, valid and binding
obligation of Parent and each Loan Party thereto, enforceable against
Parent and such Loan Party in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or limiting creditors' rights or by
equitable principles generally (regardless of whether enforcement is
sought in equity or at law);
(h) that there is no action, suit, investigation, litigation or
proceeding affecting Parent, any Loan Party or any of their respective
Subsidiaries, including any Environmental Claim, pending or threatened
before any court, governmental agency or arbitrator that (i) would be
reasonably expected to have a Material Adverse Effect or (ii) affects or
purports to affect the legality, validity or enforceability of this
Consent, the Supplemental Loan Documents, any other Loan Document or the
consummation of the transactions contemplated hereby or thereby; and
(i) other than exceptions to any of the following that would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Borrower's,
Parent's and each of the Subsidiary Guarantor's computer systems and
(ii) equipment containing embedded microchips (including systems and
equipment supplied by others or with which the Borrower's, Parent's or
any of the Subsidiary Guarantor's systems interface) and the testing of
all such systems and equipment, as so reprogrammed, will be completed by
December 1, 1999. The cost to the Borrower, Parent and the Subsidiary
Guarantors of such reprogramming and testing and of the reasonably
foreseeable consequences of year 2000 to the Borrower, Parent and the
Subsidiary Guarantors (including, without limitation, reprogramming
errors and the failure of others' systems or equipment) would not
reasonably be expected to result in a Default or a Material Adverse
Effect.
5. Intercompany Notes. The Borrower hereby agrees and covenants
with the Agent and the Lenders that simultaneously with the making of each
Subordinated Loan by IP Holdings to the Borrower pursuant to the Royalty
Agreement, the Borrower will cause IP Holdings to execute and deliver to the
Agent an appropriate Intercompany Note evidencing such Subordinated Loan and
pledge and deliver such Intercompany Note, duly endorsed in blank, to the
Collateral Agent pursuant to the Security Agreement.
6. Year 2000. Each of Parent and the Borrower shall take, and
shall cause each of its Subsidiaries to take, all action necessary and commit
adequate resources to assure that the computer-based and other systems that it
owns or are used in its business by Parent, the Borrower and each such
Subsidiary are able to effectively process data including dates before, on
-6-
and after January 1, 2000 without experiencing any year 2000 problem that would
reasonably be expected to cause a Material Adverse Effect. At the request of the
Agent, the Borrower shall provide or cause to be provided to the Agent with
assurance and substantiation (including, but not limited to, the results of
internal or external audit reports prepared in the ordinary course of business)
reasonably acceptable to the Agent as to the year 2000 capability of Parent, the
Borrower and their Subsidiaries and their ability to conduct their business and
operations before, on and after January 1, 2000 without experiencing a year 2000
problem causing a Material Adverse Effect. For purposes hereof, "year 2000
problem" means the failure of computer-based and other systems or equipment,
whether of the Borrower, Parent, any Subsidiary Guarantor or otherwise, to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999, and any reprogramming errors
resulting therefrom.
7. Expenses. The Borrower shall pay to the Agent all costs and
expenses incurred by the Agent (including, without limitation, the reasonable
fees and disbursements of counsel) in connection with the preparation and
execution of this Consent.
8. Miscellaneous.
(a) This Consent shall become effective on the date (the
"Consent Effective Date") on which (A) Parent, the Borrower, each Subsidiary
Guarantor then existing, the Agent and the Lenders shall have signed a copy of
this Consent (whether the same or different counterpart) and the Borrower shall
have delivered the same to the Agent (including by way of facsimile device), (B)
all of the conditions contained in Section 3 and all other terms, covenants and
agreements of this Consent are met to the satisfaction of the Agent and the
Lenders, (C) the Agent shall have received a certificate signed by a duly
authorized officer of the Borrower stating that the representations and
warranties contained in Section 4 of this Consent are true, complete and correct
on and as of the date of such certificate as though made on and as of such date,
other than any such representations or warranties that, by their terms, refer to
a date other than the date of such certificate, such certificate in form and
substance satisfactory to the Agent, (D) the Borrower shall have paid in full
the costs and expenses referred to in Section 7, and (E) the Borrower shall have
paid all costs and expenses of counsel to the Agent currently due and owing by
the Borrower.
(b) THIS CONSENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE.
(c) This Consent may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and
the same instrument. Delivery of an executed counterpart of a signature page to
this Consent by telecopier shall be effective as delivery of a manually executed
counterpart of this Consent.
(d) This Consent is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other
-7-
Loan Document. Except as specifically amended herein, all terms and conditions
of the Credit Agreement and every other Loan Document, respectively, and all
obligations of Parent and each Loan Party and rights of the Agent and each
Lender thereunder shall remain in full force and effect.
(e) From and after the Consent Effective Date, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Credit Agreement, and each reference in the Notes and
each of the other Loan Documents to "the Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement, after giving effect to the
Supplemental Loan Documents and as amended and modified by this Consent. From
and after the Consent Effective Date, all references in the Credit Agreement and
all references in the other Loan Documents to the "Loan Documents" shall be
deemed to include this Consent and the Supplemental Loan Documents.
(f) The Credit Agreement, the Notes and each of the other Loan
Documents, as specifically amended and modified by this Consent, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. Without limiting the generality of the foregoing, the Collateral
Documents and all of the Collateral described therein do and shall continue to
secure the payment of all Obligations of the Loan Parties (including IP
Holdings) under the Loan Documents. Parent and Each Loan Party hereby agrees
that (i) Parent and such Loan Party is truly and justly indebted to the Secured
Parties, without defense, counterclaim or offset of any kind in the full amount
of the Secured Obligations and (ii) the Secured Obligations are secured by
valid, perfected, enforceable and unavoidable first priority Liens and security
interests upon the Collateral senior to all other security interests and Liens
upon the Collateral (except as expressly permitted by the Credit Agreement),
granted by Parent and the Loan Parties to the Agent for the ratable benefit of
the Secured Parties.
-8-
IN WITNESS WHEREOF, the parties hereto have caused this Consent to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
PRECISE HOLDING CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title:
PRECISE TECHNOLOGY, INC.,
as Borrower
By /s/ Xxxx X. Xxxxx
--------------------------------------
Name: Xxxx X. Xxxxx
Title: President
PRECISE INTELLECTUAL PROPERTY
HOLDINGS COMPANY, INC.,
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
FLEET NATIONAL BANK, as Agent, as
Collateral Agent and as Issuing Bank
By /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
[Signature Page to the Consent and Third Amendment
to Credit Agreement]
-9-
LENDERS:
--------
FLEET NATIONAL BANK
By /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
BANK AUSTRIA
CREDITANSTALT
CORPORATE FINANCE, INC.
(as successor by assignment to
Creditanstalt AG)
By /s/ Xxxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
By /s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
[Signature Page to the Consent and Third Amendment
to Credit Agreement]
-10-
