THIRD AMENDED AND RESTATED CREDIT AGREEMENT
AND
AMENDMENT TO REIMBURSEMENT AGREEMENT
DATED AS OF DECEMBER 1, 2003
BETWEEN
HURCO COMPANIES, INC.
AND
BANK ONE, NA
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS 1
1.1. Certain Definitions...............................................................................1
1.2. Other Definitions; Rules of Construction.........................................................16
ARTICLE II. THE CREDITS..............................................................................................16
2.1. Commitment.......................................................................................16
2.2. Determination of Dollar Amounts; Required Payments; Termination..................................17
2.3. Reserved.........................................................................................17
2.4. Types of Advances................................................................................17
2.5. Fees; Reductions in Commitment...................................................................17
2.6. Minimum Amount of Each Advance...................................................................18
2.7. Optional Principal Payments......................................................................18
2.8. Method of Selecting Types and Interest Periods for New Advances..................................18
2.9. Conversion and Continuation of Outstanding Advances..............................................18
2.10. Changes in Interest Rate, etc....................................................................19
2.11. Rates Applicable After Default...................................................................19
2.12. Method of Payment................................................................................19
2.13. Noteless Agreement; Evidence of Indebtedness.....................................................20
2.14. Telephonic Notices...............................................................................20
2.15. Interest Payment Dates; Interest and Fee Basis...................................................21
2.16. Lending Installations............................................................................21
2.17. Reserved.........................................................................................21
2.18. Facility LCs.....................................................................................21
2.18.1 Issuance.....................................................................................20
2.18.2. Notice......................................................................................21
2.18.3. Administration; Reimbursement by the Bank...................................................22
2.18.4. Reimbursement by the Borrower...............................................................22
2.18.5. Obligations Absolute........................................................................22
2.18.6. Actions of the Bank.........................................................................22
2.18.7. Indemnification.............................................................................23
2.18.8. Facility LC Collateral Account..............................................................23
2.19. Borrowing Base
Adjustments.......................................................................23
2.20. Security and
Collateral..........................................................................23
2.21 Market Disruption 23
ARTICLE III. YIELD PROTECTION; TAXES.................................................................................24
3.1. Yield Protection.................................................................................24
3.2. Changes in Capital Adequacy Regulations..........................................................25
3.3. Availability of Types of Advances................................................................25
3.4. Funding Indemnification..........................................................................26
3.5. Taxes............................................................................................26
3.6. Bank Statements; Survival of Indemnity...........................................................26
ARTICLE IV. CONDITIONS PRECEDENT.....................................................................................27
4.1. Initial Credit Extension.........................................................................27
4.2. Each Credit Extension............................................................................28
ARTICLE V. REPRESENTATIONS AND WARRANTIES............................................................................28
5.1. Existence and Standing...........................................................................28
5.2. Authorization and Validity.......................................................................29
5.3. No Conflict; Government Consent..................................................................29
5.4. Financial Statements.............................................................................29
5.5. Material Adverse Change..........................................................................29
5.6. Taxes............................................................................................29
5.7. Litigation and Contingent Obligations............................................................29
5.8. Subsidiaries.....................................................................................30
5.9. ERISA............................................................................................30
5.10. Accuracy of Information..........................................................................30
5.11. Regulation U.....................................................................................30
5.12. Material Agreements..............................................................................30
5.13. Compliance With Laws.............................................................................30
5.14. Ownership of Properties..........................................................................30
5.15. Plan Assets; Prohibited Transactions.............................................................30
5.16. Environmental Matters............................................................................31
5.17. Investment Company Act...........................................................................31
5.18. Public Utility Holding Company Act...............................................................31
5.19. Insurance........................................................................................31
5.20. Borrowing Base...................................................................................31
5.21. Disclosure.......................................................................................31
5.22. Intellectual Property............................................................................32
ARTICLE VI. COVENANTS 32
6.1. Financial Reporting..............................................................................32
6.2. Use of Proceeds..................................................................................33
6.3. Notice of Default................................................................................33
6.4. Conduct of Business..............................................................................34
6.5. Taxes............................................................................................34
6.6. Insurance........................................................................................34
6.7. Compliance with Laws.............................................................................34
6.8. Maintenance of Properties........................................................................34
6.9. Inspection.......................................................................................34
6.10 Dividends............................................................................................33
6.11. Indebtedness.....................................................................................34
6.12. Merger...........................................................................................35
6.13. Sale of Assets...................................................................................35
6.14. Investments and Acquisitions.....................................................................35
6.15. Liens............................................................................................36
6.16. Affiliates.......................................................................................36
6.17. Sale and Leaseback Transactions..................................................................37
6.18 Contingent Obligations...............................................................................35
6.19. Reserved.........................................................................................37
6.20. Financial Covenants..............................................................................37
6.20.1 Minimum Consolidated Net Worth.........................................................37
6.20.2 Maximum Consolidated Total Indebtednessto Consolidated Total Capitalization............37
6.20.3 Fixed Charge Coverage Ratio...........................................................37
6.21 Banking Relationship.............................................................................36
6.22. Collateral Documents.............................................................................37
6.23. Further Assurances...............................................................................38
6.24. Accounting Changes...............................................................................38
6.25. Inconsistent Agreements..........................................................................38
ARTICLE VII. DEFAULTS 38
7.1 ...................................................................................................37
7.2 ...................................................................................................37
7.3 ...................................................................................................38
7.4 ...................................................................................................38
7.5 ...................................................................................................38
7.6 ...................................................................................................38
7.7 ...................................................................................................38
7.8 ...................................................................................................38
7.9 ...................................................................................................38
7.10 ...................................................................................................39
7.11 ...................................................................................................39
7.12 ...................................................................................................39
7.13 ...................................................................................................39
7.14 ...................................................................................................39
7.15 ...................................................................................................39
7.16 ...................................................................................................39
7.17 ...................................................................................................39
7.18 ...................................................................................................39
ARTICLE VII A AMENDMENT TO REIMBURSEMENT AGREEMENT...............................................................40
7A1. Administration of Outstanding Facilities.........................................................40
7A2. Amendments to Reibmrusement Agreement............................................................40
ARTICLE VIII. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.........................................................41
8.1. Acceleration; Facility LC Collateral Account.....................................................41
8.2. Amendments.......................................................................................42
8.3. Preservation of Rights...........................................................................42
ARTICLE IX. GENERAL PROVISIONS........................................................................................42
9.1. Survival of Representations......................................................................42
9.2. Governmental Regulation..........................................................................42
9.3. Headings.........................................................................................42
9.4. Entire Agreement.................................................................................43
9.5. Benefits of this Agreement.......................................................................43
9.6. Expenses; Indemnification........................................................................43
9.7. Accounting.......................................................................................43
9.8. Severability of Provisions.......................................................................43
9.9. Nonliability of the Bank.........................................................................44
9.10. Confidentiality..................................................................................44
9.11. Disclosure.......................................................................................44
9.12. Construction of Certain Provisions...............................................................44
9.13. Independence of Covenants........................................................................44
9.14. Interest Rate Limitation.........................................................................44
9.15 USA Patriot Act Notification....................................................................44
ARTICLE X. SETOFF 45
ARTICLE XI. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS........................................................45
11.1. Successors and Assigns...........................................................................45
11.2. Participations...................................................................................45
11.2.1. Permitted Participants; Effect...........................................................45
11.2.2. Voting Rights............................................................................46
11.2.3. Benefit of Setoff........................................................................46
11.3. Dissemination of Information.....................................................................46
ARTICLE XII. NOTICES 46
12.1. Notices..........................................................................................46
12.2. Change of Address................................................................................46
ARTICLE XIII. COUNTERPARTS...........................................................................................47
ARTICLE XIV. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL............................................47
14.1. CHOICE OF LAW....................................................................................47
14.2. CONSENT TO JURISDICTION..........................................................................47
14.3. WAIVER OF JURY TRIAL.............................................................................47
SCHEDULE 1. OTHER INVESTMENTS........................................................................................49
SCHEDULE 2. LENDING INSTALLATIONS....................................................................................50
SCHEDULE 5.8. SUBSIDIARIES AND AFFILIATES OF THE BORROWER............................................................51
SCHEDULE 5.22. INTELLECTUAL PROPERTY OF THE BORROWER AND ITS SUBSIDIARIES............................................52
Other schedules and exhibits (omitted) supplementary are available to The
Commission upon request.
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Borrowing Base Certificate
Exhibit C - Compliance Certificate
Exhibit D - Form of Subsidiary Guaranty
Exhibit E -Hurco Fiscal Year 2004 Plan
Exhibit F - Wire Transfer Instructions
Exhibit G - Form of Opinion
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
AND AMENDMENT TO REIMBURSEMENT AGREEMENT
This Third Amended and Restated Credit Agreement and Amendment to
Reimbursement Agreement, dated as of December 1, 2003, is between Hurco
Companies, Inc., an Indiana corporation, and Bank One, NA, a national banking
association having its principal office in Chicago, Illinois. The parties hereto
agree as follows:
INTRODUCTION
A. Hurco Companies, Inc. (defined below as the Borrower) and the Bank
are parties to that certain Second Amended and Restated Credit Agreement and
Amendment to Reimbursement Agreement dated as of October 31, 2001, (as amended,
the "Existing Credit Agreement"), pursuant to which the Bank has provided to the
Borrower (or certain of the Borrower's Subsidiaries as further described
therein) a revolving credit facility, including letters of credit (the "Existing
Revolving Credit"), all for the purposes and on the terms therein set forth.
B. The Borrower and the Bank, successor by merger to Bank One, Michigan
(formerly known as NBD Bank, Michigan) are parties to a Reimbursement Agreement
(as defined below), pursuant to which the Bank has issued the IRB L/C (as
defined below). The Borrower wishes to amend the Reimbursement Agreement to
coordinate its provisions with those of this Agreement.
C. The Borrower desires to amend and restate the Existing Credit
Agreement to replace the Existing Revolving Credit and refinance the
indebtedness outstanding thereunder, to be used for working capital and general
corporate purposes, and to modify the terms of the Existing Credit Agreement in
certain other respects, and the Bank is willing to do so on the terms herein set
forth.
D. On or about the Effective Date, Hurco Europe Limited, a corporation
organized under the laws of England and Wales and a Subsidiary of the Borrower
("Hurco Europe") will enter into a Letter Loan Agreement with the Bank, whereby
the Bank has agreed to make revolving credit loans in favor of Hurco Europe in
an aggregate amount not to exceed British Pounds Sterling 1,000,000 (the "UK
Facility").
The Bank is willing to undertake these additional matters and amend the
Reimbursement Agreement, all on the terms set forth below.
In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. As used herein, the following terms have
the following respective meanings:
"Active Subsidiary" means a Subsidiary of the Borrower which is not an
Inactive Subsidiary.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or limited liability
company, or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority (by percentage
or voting power) of the outstanding ownership interests of a partnership or
limited liability company.
"Advance" means a borrowing hereunder, (i) made by the Bank on the same
Borrowing Date, or (ii) converted or continued by the Bank on the same date of
conversion or continuation, consisting, in either case, of the aggregate amount
of the several Credit Extensions of the same Type and, in the case of
Eurocurrency Advances, in the same Agreed Currency and for the same Interest
Period.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agreed Currencies" means (i) Dollars, (ii) so long as such currencies
remain Eligible Currencies, British Pounds Sterling and the Euro, and (iii) any
other Eligible Currency which the Borrower requests the Bank to include as an
Agreed Currency hereunder and which is acceptable to the Bank. For the purposes
of this definition, each of the specific currencies referred to in clause (ii),
above shall mean and be deemed to refer to the lawful currency of the
jurisdiction referred to in connection with such currency, e.g., "British Pounds
Sterling " means the lawful currency of Great Britain.
"Agreement" means this Third Amended and Restated Credit Agreement and
Amendment to Reimbursement Agreement, as it may be amended or modified and in
effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.4.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the
Federal Funds Effective Rate for such day plus 1% per annum.
"Applicable Margin" means, with respect to the Eurocurrency Rate,
Floating Rate and Commitment Fees, the applicable percentage rates per annum set
forth in the table below based upon the Total Funded Debt/EBITDA Ratio as of the
date of the applicable Advance or Commitment Fee:
-------------------------------- -------------------- -------------------- -----------------------
Total Funded Debt/EBITDA Ratio Eurocurrency Floating Rate Commitment
Advances Advances Fee
(% per annum) (% per annum) (% per annum)
-------------------------------- -------------------- -------------------- -----------------------
-------------------------------- -------------------- -------------------- -----------------------
Greater than 3.0 2.75% 0% .375%
-------------------------------- -------------------- -------------------- -----------------------
-------------------------------- -------------------- -------------------- -----------------------
Greater than 2.5 and less than 2.0% -.25% .25%
or equal to 3.0
-------------------------------- -------------------- -------------------- -----------------------
-------------------------------- -------------------- -------------------- -----------------------
Greater than 2.0 and less than 1.5% -.50% .25%
or equal to 2.5
-------------------------------- -------------------- -------------------- -----------------------
-------------------------------- -------------------- -------------------- -----------------------
Less than or equal to 2.0 1.0% -.75% .125%
-------------------------------- -------------------- -------------------- -----------------------
Notwithstanding the above, the Applicable Margin with respect to the
Eurocurrency Rate and the Floating Rate shall be adjusted quarterly as necessary
as of the first day of the month following the Bank receiving the financial
statements required pursuant to Section 6.1(ii) allowing the Total Funded
Debt/EBITDA Ratio to be calculated for the quarterly periods ending on each
January 31, April 30, July 31, and October 31. Prior to March 1, 2004, the
Applicable Margin shall be determined based on the Total Funded Debt/EBITDA
Ratio being greater than 2.5 and less than or equal to 3.0.
"Approximate Equivalent Amount" of any currency with respect to any
amount of Dollars shall mean the Equivalent Amount of such currency with respect
to such amount of Dollars on or as of such date, rounded up to the nearest
amount of such currency as determined by the Bank from time to time.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Associated Costs Rate" means that rate quoted to the Bank at the time
the Borrower requests a Eurocurrency Advance in an Agreed Currency other than
Dollars which the Bank determines will be made by a Lending Installation in the
United Kingdom.
"Authorized Officer" means any of the President, Chief Executive
Officer, Chief Financial Officer, or Corporate Controller of the Borrower,
acting singly.
"Bank" means Bank One, NA, a national banking association having its
principal office in Chicago, Illinois, any of its Lending Installations listed
on Schedule 2 attached hereto, and any of their respective successors and
assigns.
"Bond Default", as used in the Reimbursement Agreement, means the
occurrence of an Event of Default under Section 610(h) of the Trust Indenture or
under Section 201(d)(5) of the Trust Indenture, or any corresponding default
under the Loan Agreement referred to in the Trust Indenture.
"Borrower" means Hurco Companies, Inc., an Indiana corporation, and its
successors and assigns.
"Borrowing Base" means, as of any date, an amount equal to the sum,
without duplication, of:
(i) 50% of the book value of Eligible Finished Goods
Inventory as of such date, provided, however,that the
aggregate book value of all Consigned Inventory
included in this calculation shall not exceed
$500,000 at any one time, plus
(ii) 40% of the book value of Eligible Inventory as of
such date, plus
(iii) 80% of the book value of Eligible Trade Receivables
as of such date, plus
(iv) 80% of the book value (such book value in the
aggregate not to exceed $1,250,000) of Eligible
Extended Receivables as of such date.
Notwithstanding the foregoing, assets which are subject to any
Permitted Lien described in subsections (vii), (viii), or (xi) of Section 6.15
shall not be included in calculating the Borrowing Base.
"Borrowing Base Certificate" for any date means an appropriately
completed report as of such date in substantially the form of Exhibit B,
certified as true and correct by an Authorized Officer.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurocurrency Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in Dollars and the
other Agreed Currencies are carried on in the London interbank market (and, if
the Advances which are the subject of such borrowing, payment, or rate selection
are denominated in Euros, a day upon which such clearing system as is determined
by the Bank to be suitable for clearing or settling the Euro is open for
business) and (ii) for all other purposes, a day (other than a Saturday or
Sunday) on which banks generally are open in Chicago for the conduct of
substantially all of their commercial lending activities and interbank wire
transfers can be made on the Fedwire system.
"Business Plan" means the Fiscal Year 2004 Plan prepared by the
Borrower and attached as Exhibit E.
"Capital Expenditures" means, without duplication, any expenditures for
any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with Agreement Accounting Principles.
"Capital Stock" of any person means any equity securities, any
securities exchangeable for or convertible into equity securities, and any
warrants, rights, or other options to purchase or otherwise acquire such
securities.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Cash Equivalent Investments" means (i) short-term obligations of, or
fully guaranteed by, the United States of America, (ii) commercial paper rated
A-1 or better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts
maintained in the ordinary course of business, (iv) certificates of deposit
issued by and time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000, and (v) deposits in the
Pru Account; provided in each case (excepting the Pru Account) that the same
provides for payment of both principal and interest (and not principal alone or
interest alone) and is not subject to any contingency (other than the passage of
time or notice) regarding the payment of principal or interest.
"CIMPlus Purchase" means the purchase of core technology and all
license agreements related to such core technology by Borrower from CIMPlus,
Inc., pursuant to that certain Purchase Agreement dated as of October 24, 2002.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means the "Collateral" under and as defined in the
Collateral Documents.
"Collateral Documents" means, collectively, the Pledge and Security
Agreement dated as of October 31, 2001, executed by the Borrower in favor of the
Bank, the Confirmation of Pledge and Security Agreement of the Borrower of even
date herewith, the Confirmation of Security Agreement (Patent & Licenses) of the
Borrower of even date herewith ,and all other agreements granting a Lien in
favor of the Bank securing the Secured Obligations, as any of the foregoing may
be amended or modified from time to time, including any and all other security
agreements, mortgages and pledge agreements delivered hereafter.
"Collateral Shortfall Amount" is defined in Section 8.1.
"Commitment" means, the obligation of the Bank (a) to make Loans to,
and issue Facility LCs upon the application of, the Borrower in an aggregate
amount not exceeding $8,000,000, reduced by the amount as required pursuant to
Section 2.5(c).
"Computation Date" is defined in Section 2.2.
"Consigned Inventory" means inventory of the Borrower which is Eligible
Finished Goods Inventory but which at the time of determination has been
delivered by the Borrower on consignment to a customer or potential customer of
the Borrower or a university, college, or trade school and in which the Borrower
has perfected its consignment rights.
"Consolidated Assets" as of any date means the aggregate book value of
the total assets of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with Agreement Accounting Principles.
"Consolidated Capital Expenditures" means, with reference to any
period, the Capital Expenditures of the Borrower and its Subsidiaries calculated
on a consolidated basis for such period.
"Consolidated EBITDA" means, with reference to any period, Consolidated
Net Income for such period determined in accordance with Agreement Accounting
Principles plus, to the extent deducted in determining Consolidated Net Income,
(i) Consolidated Interest Expense, (ii) expense for income taxes, (iii)
depreciation, (iv) amortization, (v) extraordinary losses incurred other than in
the ordinary course of business, (vi) non-current asset write downs, and (vii)
non-cash losses on equity interests of Affiliates, minus, to the extent included
in Consolidated Net Income, extraordinary gains realized other than in the
ordinary course of business (including without limitation non-cash gains on
equity interests of Affiliates), all calculated for the Borrower and its
Subsidiaries on a consolidated basis.
"Consolidated Interest Expense" means, with reference to any period,
the interest expense of the Borrower and its Subsidiaries (including the
interest component of Rentals under Capitalized Leases and capitalized interest)
calculated on a consolidated basis for such period.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Net Worth" means, as of any date, (a) the amount of any
Capital Stock, paid-in-capital, and similar equity accounts of the Borrower and
its Subsidiaries calculated on a consolidated basis as of such time, plus (or
minus in the case of a deficit) the capital surplus and retained earnings of the
Borrower and its Subsidiaries calculated on a consolidated basis as of such time
and excluding the amount of Other Comprehensive Income of the Borrower and its
Subsidiaries calculated on a consolidated basis as of such time, less (b) any
treasury stock of the Borrower and its Subsidiaries calculated on a consolidated
basis as of such time.
"Consolidated Total Capitalization" means at any time the sum of
Consolidated Total Indebtedness and Consolidated Net Worth, each calculated at
such time.
"Consolidated Total Indebtedness" means, as of any date, the
Indebtedness of the Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with Agreement Accounting Principles, which, without
duplication, either (a) is interest-bearing and, in accordance with Agreement
Accounting Principles, should be reflected on a consolidated balance sheet of
the Borrower and its Subsidiaries as of such date or (b) consists of Letters of
Credit, valued at the undrawn face amount thereof.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of,
or otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person, or otherwise assures
any creditor of such other Person against loss, including, without limitation,
any comfort letter, operating agreement, take-or-pay contract or the obligations
of any such Person as general partner of a partnership with respect to the
liabilities of the partnership.
"Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or businesses (whether or
not incorporated) under common control which, together with the Borrower or any
of its Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Credit Extension" means the making of an Advance or the issuance of a
Facility LC hereunder
"Credit Extension Date" means the Borrowing Date for an Advance or the
issuance date for a Facility LC.
"Credit Obligations" means all present and future obligations and other
liabilities of the Borrower and its Subsidiaries (without duplication) arising
under or included within the Outstanding Facilities, as amended from time to
time, including without limitation any interest, premium, fees, expenses, and
charges relating thereto and any renewals, extensions, and refundings of the
foregoing. The principal amount of the Credit Obligations shall be the aggregate
of the outstanding principal amount of all loans outstanding under the
Outstanding Facilities plus the undrawn face amount of the IRB L/C and the
Facility LCs plus, the unreimbursed portions of any amounts drawn under the IRB
L/C.
"Default" means an event described in Article VII.
"Dollar Amount" of any currency at any date shall mean (i) the amount
of such currency if such currency is Dollars or (ii) the equivalent in Dollars
of such amount if such currency is any currency other than Dollars, calculated
on the basis of the arithmetical mean of the buy and sell spot rates of exchange
of the Bank for such currency on the London market at 11:00 a.m., London time,
on or as of the most recent Computation Date provided for in Section 2.2.
"Dollars" and "$" shall mean the lawful currency of the United States
of America.
"Domestic Subsidiaries" means all Subsidiaries of the Borrower which
are organized under the laws of one of the states of the United States.
"Effective Date" means the date on which the Borrower satisfies the
conditions set forth in Section 4.1.
"Eligible Currency" means any currency other than Dollars (i) that is
readily available, (ii) that is freely traded, (iii) in which deposits are
customarily offered to banks in the London interbank market, (iv) which is
convertible into Dollars in the international interbank market and (v) as to
which an Equivalent Amount may be readily calculated. If, after the designation
by the Bank of any currency as an Agreed Currency, (x) currency control or other
exchange regulations are imposed in the country in which such currency is issued
with the result that different types of such currency are introduced, (y) such
currency is, in the determination of the Bank, no longer readily available or
freely traded, or (z) in the determination of the Bank, an Equivalent Amount of
such currency is not readily calculable, the Bank shall promptly notify the
Borrower, and such currency shall no longer be an Agreed Currency until such
time as the Bank agrees to reinstate such currency as an Agreed Currency and
promptly, but in any event within five Business Days of receiving such notice
from the Bank, the Borrower shall repay all Loans in such affected currency or
convert such Loans into Loans in Dollars or another Agreed Currency, subject to
the other terms set forth in Article II.
"Eligible Finished Goods Inventory" means, as of any date, all
inventory that is located within or is in transit to the United States (which
shall not be deemed to include any territories of the United States) and that
constitutes finished goods included in the consolidated financial statements of
the Borrower and its Subsidiaries, determined in accordance with Agreement
Accounting Principles, including demonstration models and consigned finished
goods.
"Eligible Inventory" means, as of any date, all inventory that is
located within or is in transit to the United States (which shall not be deemed
to include any territories of the United States), including without limitation
raw materials but excluding finished goods and work in process, included in the
consolidated financial statements of the Borrower and its Subsidiaries,
determined in accordance with Agreement Accounting Principles.
"Eligible Trade Receivables" means, as of any date, all accounts
receivable included in the consolidated financial statements of the Borrower and
its Subsidiaries for products or services sold or rendered by the Borrower in
the ordinary course of business on normal 30 day terms, before reserves for bad
debts, all determined in accordance with Agreement Accounting Principles other
than (i) any such accounts receivable which are more than 90 days past due, (ii)
are due from any Affiliate or Subsidiary of the Borrower, (iii) are payable by
any Person located outside the United States (which shall not be deemed to
include any territories of the United States) and Canada; or (iv) accounts
receivable that are payable by any Person as to which 40% or more of the
aggregate amount of such accounts receivable by such Person to the Company do
not otherwise constitute Eligible Trade Receivables or Eligible Extended
Receivables.
"Eligible Extended Receivables" means as of any date, all accounts
receivable included in the consolidated financial statements of the
Borrower and its Subsidiaries for products or services sold or rendered by the
Borrower in the ordinary course of business with payment terms greater than 30
days, before reserves for bad debts, all determined in accordance with Agreement
Accounting Principles, other than (i) any such accounts receivable which are
more than 60 days past due, (ii) are due from any Affiliate or Subsidiary of the
Borrower, (iii) are payable by any Person located outside the United States
(which shall not be deemed to include any territories of the United States) and
Canada; or (iv) accounts receivable that are payable by any Person as to which
40% or more of the aggregate amount of such accounts receivable by such Person
to the Company do not otherwise constitute Eligible Trade Receivables or
Eligible Extended Receivables.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
(i) the protection of the environment, (ii) the effect of the environment on
human health, (iii) emissions, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water, ground water or
land, or (iv) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.
"Equivalent Amount" of any currency with respect to any amount of
Dollars at any date shall mean the equivalent in such currency of such amount of
Dollars, calculated on the basis of the arithmetical mean of the buy and sell
spot rates of exchange of the Bank for such other currency at 11:00 a.m., London
time, on the date on or as of which such amount is to be determined.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Euro" and/or "EUR" means the euro referred to in Council Regulation
(EC) No. 1103/97 dated June 17, 1997 passed by the Council of the European
Union, or, if different, the then lawful currency of the member states of the
European Union that participate in the third stage of Economic and Monetary
Union.
"Eurocurrency" means any Agreed Currency.
"Eurocurrency Advance" means an Advance which, except as otherwise
provided in Section 2.11, bears interest at the applicable Eurocurrency Rate.
"Eurocurrency Payment Office" of the Bank shall mean, for each of the
Agreed Currencies, the office, branch, affiliate or correspondent bank of the
Bank specified as the "Eurocurrency Payment Office" for such currency in
Schedule 3 hereto or such other office, branch, affiliate or correspondent bank
of the Bank as it may from time to time specify to the Borrower and each Lender
as its Eurocurrency Payment Office.
"Eurocurrency Rate" means, with respect to a Eurocurrency Advance for
the relevant Interest Period, the sum of (i) the quotient of (a) the
Eurocurrency Reference Rate applicable to such Interest Period, divided by (b)
one minus the Reserve Requirement (expressed as a decimal) applicable to such
Interest Period, if any, plus (ii) the Applicable Margin, changing when and as
the Applicable Margin changes, plus, (iii) for Advances booked in the United
Kingdom, the Associated Costs Rate.
"Eurocurrency Reference Rate" means, with respect to a Eurocurrency
Advance for the relevant Interest Period, the applicable British Bankers'
Association LIBOR rate for deposits in the applicable Agreed Currency as
reported by any generally recognized financial information service as of 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period, and having a maturity equal to such Interest Period, provided that, if
no such British Bankers' Association LIBOR rate is available, the applicable
Eurocurrency Reference Rate for the relevant Interest Period shall instead be
the rate determined by the Bank to be the rate at which the Bank offers to place
deposits in the applicable Agreed Currency with first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, in the approximate amount of the
Bank's relevant Eurocurrency Loan and having a maturity equal to such Interest
Period.
"Excluded Taxes" means, in the case of the Bank or applicable Lending
Installation, taxes imposed on its overall net income, and franchise taxes
imposed on it, by (i) the jurisdiction under the laws of which the Bank is
incorporated or organized or (ii) the jurisdiction in which the Bank's principal
executive office or the Bank's applicable Lending Installation is located.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.
"Existing Credit Agreement" is defined in the Introduction to this
Agreement.
"Existing Revolving Credit" is defined in the Introduction to this
Agreement.
"Facility LC" is defined in Section 2.18.1.
"Facility LC Application" is defined in Section 2.18.2.
"Facility LC Collateral Account" is defined in Section 2.18.8.
"Facility Termination Date" means December 1, 2006.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Bank from three Federal
funds brokers of recognized standing selected by the Bank in its sole
discretion.
"Floating Rate" means, for any day, a rate per annum equal to (i) the
Alternate Base Rate for such day plus (ii) the Applicable Margin, in each case
changing when and as the Alternate Base Rate and Applicable Margin change.
"Floating Rate Advance" means an Advance which, except as otherwise
provided in Section 2.11, bears interest at the Floating Rate.
"Guarantors" means Hurco International Inc. and Hurco International
Holdings, Inc. as signatories to the Guaranty and any other Person who
guaranties to the Bank the Borrower's payment and performance of its obligations
under this Agreement and the other Loan Documents, including without limitation
each other Subsidiary which becomes a party to the Guaranty after the date of
this Agreement and their respective successors and assigns.
"Guaranty" means that certain Subsidiary Guaranty, dated of even date
herewith, executed by the Guarantors in favor of the Bank substantially in the
form of Exhibit D.
"Hurco Deferred Compensation Plan" means the unfunded plan adopted by
the Borrower for the purpose of providing deferred compensation for a select
group of management personnel or other employees of the Borrower, as evidenced
by the CORPORATE plan for Retirement Select Plan and Basic Plan Document
effective as of July 1, 1996, as amended, and the related Hurco Deferred
Compensation Plan Trust Agreement.
"Hurco Deferred Compensation Plan Trust Agreement" means the Trust
Agreement dated as of April 11, 1996, between the Borrower and Fidelity
Management Trust Company, as amended.
"Hurco Europe" is defined in the Introduction to this Agreement.
"Hurco GmbH" means Hurco GmbH Werkzeugmaschinen CIM-Bausteine Vertreib
und Service, a corporation organized under the laws of the Federal Republic of
Germany, and an indirect wholly-owned subsidiary of the Borrower.
"Hurco GmbH Facility" means a credit facility of Hurco GmbH in a
maximum principal amount of Three Million Euros obtained from Dresdner Bank or
any affiliate or successor thereof which may be secured by assets of Hurco GmbH
and an unsecured guaranty of payment of the Borrower.
"Hurco Guaranty" means the Hurco Guaranty dated on or about the
Effective Date, executed by the Borrower in favor of the Bank, by which the
Borrower has guaranteed to the Bank the obligations of Hurco Europe under the UK
Facility, as it may be amended, modified or confirmed and in effect from time to
time.
"Inactive Subsidiary" means a Subsidiary of the Borrower not actively
engaged in business, and which has assets with a book value less than or equal
to $10,000. Schedule 5.8 lists all Inactive Subsidiaries existing on the
Effective Date.
"Indebtedness" of a Person means, without duplication, such Person's
(i) obligations for borrowed money (including without limitation, with respect
to the Borrower, all Reimbursement Obligations, all Credit Obligations and all
Rate Management Transactions), (ii) obligations representing the deferred
purchase price of Property or services (other than accounts payable arising in
the ordinary course of such Person's business payable on terms customary in the
trade), (iii) obligations, whether or not assumed, secured by Liens or payable
out of the proceeds or production from Property now or hereafter owned or
acquired by such Person, (iv) obligations which are evidenced by notes,
acceptances, or other instruments, (v) obligations of such Person to purchase
securities or other Property arising out of or in connection with the sale of
the same or substantially similar securities or Property, (vi) Capitalized Lease
Obligations, (vii) all obligations of such Person to purchase goods, property,
or services where payment therefor is required, regardless of whether delivery
of such goods or property or the performance of such services is ever made or
tendered (generally referred to as "take or pay contracts"), (viii) all
liabilities of such person in respect of Unfunded Liabilities under any Plan of
such Person or of any ERISA Affiliate and (ix) any other obligation for borrowed
money or other financial accommodation which in accordance with Agreement
Accounting Principles would be shown as a liability on the consolidated balance
sheet of such Person, including without limitation all obligations of others
similar in character to those described in clauses (i) through (viii) of this
definition for which such Person is contingently liable, as guarantor, surety,
accommodation party, partner or in any other capacity, or in respect of which
obligations such person assures a creditor against loss or agrees to take any
action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including
without limitation all reimbursement obligations of such Person in respect of
letters of credit, surety bonds, or similar obligations, and all obligations of
such Person to advance funds to, or to purchase assets, property or services
from, any other Person in order to maintain the financial condition of such
other Person.
"Intellectual Property" is defined in Section 5.22.
"Interest Period" means, with respect to a Eurocurrency Advance, a
period of one, two, three or six months commencing on a Business Day selected by
the Borrower pursuant to this Agreement. Such Interest Period shall end on the
day which corresponds numerically to such date one, two, three or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade) or contribution of capital by such Person; stocks, bonds, mutual funds,
partnership interests, notes, debentures or other securities owned by such
Person; any deposit accounts and certificate of deposit owned by such Person;
and structured notes, derivative financial instruments and other similar
instruments or contracts owned by such Person.
"IRB Bonds" means the $1,000,000 City of Indianapolis Economic
Development Revenue Bonds (Hurco Companies, Inc. Project), Series 1990, and the
related Loan Agreement dated as of September 1, 1990, between the City of
Indianapolis, Indiana, and the Borrower.
"IRB L/C" means the Irrevocable Letter of Credit No. 252 issued by the
Bank, successor by merger to Bank One, Michigan (formerly NBD Michigan) in favor
of First of America Bank-Indianapolis, in the original face amount of
$1,060,274, pursuant to the Reimbursement Agreement in support of the IRB Bonds,
and any letter of credit issued by the Bank in exchange or replacement therefor.
"LC Fee" is defined in Section 2.5(b).
"LC Obligations" means, at any time, the sum, without duplication, of
(i) the aggregate undrawn stated amount under all Facility LCs outstanding at
such time plus (ii) the aggregate unpaid amount at such time of all
Reimbursement Obligations.
"LC Payment Date" is defined in Section 2.18.3.
"Lending Installation" means, with respect to the Bank, the office,
branch, subsidiary or affiliate of the Bank with respect to each Agreed Currency
listed on Schedule 2 or otherwise selected by the Bank pursuant to Section 2.16.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means the Bank's loan made pursuant to Article II (or any
conversion or continuation thereof).
"Loan Documents" means this Agreement, the Facility LC Applications,
any Notes issued pursuant to Section 2.15, the Reimbursement Agreement, the
Collateral Documents, the Guaranty, and all other agreements and documents
executed or delivered in connection with any of the foregoing at any time, as
each may be amended or modified from time to time.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower or any Subsidiary to perform its obligations under the
Loan Documents to which it is a party, or (iii) the validity or enforceability
of any of the Loan Documents or the rights or remedies of the Bank thereunder.
"Modify" and "Modification" are defined in Section 2.18.1.
"Moody's" means Moody's Investors Service, Inc., and any successor
thereto.
"Mortgage Financing" means a mortgage loan of the Borrower from
American Investments Life Insurance Company, secured by the Borrower's
headquarters and associated fixtures, leases, and rents, in the maximum
principal amount of $5,000,000.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Note" is defined in Section 2.15 and includes any and all notes
executed pursuant to this Agreement, each in the form of Exhibit A.
"Obligations" means all Reimbursement Obligations, Credit Obligations,
and all accrued and unpaid fees and all expenses, reimbursements, indemnities
and other obligations of the Borrower to the Bank or any indemnified party
arising under the Loan Documents.
"Operating Lease" of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.
"Other Comprehensive Income" means that amount reported in the
Borrower's consolidated balance sheet as "Accumulated Other Comprehensive Income
(Loss)" and which is included in total shareholders' equity in accordance with
Agreement Accounting Principles.
"Other Taxes" is defined in Section 3.5(ii).
"Outstanding Credit Exposure" means, as to the Bank at any time, the
sum of (i) the aggregate principal amount of its Advances outstanding at such
time, plus (ii) an amount equal to the LC Obligations at such time.
"Outstanding Facilities" means, collectively and without duplication,
the Advances, the Reimbursement Agreement, the IRB L/C, and the Facility LCs,
each as existing following the Effective Date.
"Participants" is defined in Section 11.2.1.
"Payment Date" means the last day of each quarter.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Liens" means Liens permitted by Section 6.15.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
"Pledge Agreement" means the Pledge and Security Agreement dated as of
October 31, 2001, executed by the Borrower in favor of the Bank.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by the Bank or its parent (which is not necessarily
the lowest rate charged to any customer), changing when and as said prime rate
changes.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"Pru Account" means the Commodities Futures Account maintained by the
Borrower with Prudential Securities, Inc.
"Rate Management Transaction" means any transaction (including an
agreement with respect thereto) now existing or hereafter entered into between
the Borrower and any Person which is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
forward transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including any
option with respect to any of these transactions) or any combination thereof,
whether linked to one or more interest rates, foreign currencies, commodity
prices, equity prices or other financial measures.
"Rate Management Obligations" of a Person means any and all obligations
of such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Reimbursement Agreement" means the Reimbursement Agreement dated as of
September 1, 1990, as amended, between the Borrower and the Bank, successor by
merger to Bank One, Michigan (formerly known as NBD Michigan), pursuant to which
the IRB L/C was issued.
"Reimbursement Obligations" means, at any time, the aggregate of all
obligations of the Borrower then outstanding under Section 2.18 to reimburse the
Bank for amounts paid by the Bank in respect of any one or more drawings under
Facility LCs.
"Rentals" of a Person means the aggregate fixed amounts payable by such
Person under any Operating Lease.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Reports" is defined in Section 9.6.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc., and any successor thereto.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"Schedule" refers to a specific schedule to this Agreement, unless
another document is specifically referenced.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Secured Obligations" means, collectively, (i) the Obligations and (ii)
all Rate Management Obligations owing to the Bank or any of its Affiliates.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (i) represents more than
10% of the consolidated assets of the Borrower and its Subsidiaries as would be
shown in the consolidated financial statements of the Borrower and its
Subsidiaries as at the beginning of the twelve-month period ending with the
month in which such determination is made, or (ii) is responsible for more than
7.5% of the consolidated net sales of the Borrower and its Subsidiaries as
reflected in the financial statements referred to in clause (i) above.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes and Other Taxes.
"Total Funded Debt/EBITDA Ratio" means the ratio of Consolidated Total
Indebtedness as of the end of each fiscal quarter of the Borrower to
Consolidated EBITDA for the four consecutive fiscal quarters then ending.
"Transferee" is defined in Section 11.3.
"Trust Indenture" means the Trust Indenture dated as of September 1,
1990, between the City of Indianapolis, Indiana, and First of America
Bank-Indianapolis, as trustee, as amended from time to time, entered into in
conjunction with the IRB Bonds.
"Type" means, with respect to any Advance, its nature as a Floating
Rate Advance or a Eurocurrency Advance.
"UK Facility" is defined in the Introduction to this Agreement.
"UK Lease Liability" means the amount paid or accrued by the Borrower
or an Affiliate of the Borrower to settle or otherwise satisfy a claim by Land
Securities Ltd., against Hurco Europe for repair costs under the terms of a
sub-lease of the facility previously occupied by Hurco Europe which terminated
in April 2002.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled.
1.2 Other Definitions; Rules of Construction. The foregoing definitions
include both the singular and the plural forms thereof and shall be construed
accordingly. All computations required hereunder and all financial terms used
herein shall be made or construed in accordance with Agreement Accounting
Principles unless such principles are inconsistent with the express requirements
of this Agreement; provided that, if the Borrower notifies the Bank that the
Borrower wishes to amend any covenant in Article VI to eliminate the effect of
any change in Agreement Accounting Principles in the operation of such covenant
(or if the Bank notifies the Borrower that the Bank wishes to amend Article VI
for such purpose), then the Borrower's compliance with such covenant shall be
determined on the basis of Agreement Accounting Principles in effect immediately
before the relevant change in Agreement Accounting Principles became effective,
until either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Borrower and the Bank. Use of the terms "herein", "hereof",
and "hereunder" shall be deemed references to this entire Agreement and not to
the Section or clause in which the term appears. References to "Sections" and
"subsections" shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specifically provided.
ARTICLE II
THE CREDITS
2.1. Commitment.
(a) From and including the Effective Date and prior to the Facility
Termination Date, the Bank agrees, on the terms set forth in this Agreement, to
(i) make Advances to the Borrower in Agreed Currencies from time to time, and
(ii) issue Facility LCs upon the request of the Borrower, in Dollar Amounts not
to exceed in the aggregate principal amount at any time outstanding the lesser
of (A) the amount of the Borrowing Base as of the close of business on the last
day of the month next preceding the date any such Advance is made and (B) the
amount of the Commitment as of the date any such Advance is made, provided,
however, that (A) the aggregate principal amount of Facility LCs outstanding at
any time shall not exceed the amount of the Commitment in effect at such time,
and (B) all Floating Rate Loans shall be made and Facility LCs shall be issued
in Dollars. Subject to the terms of this Agreement, the Borrower may borrow,
repay and reborrow at any time prior to the Facility Termination Date. The
Commitment to extend credit hereunder shall expire on the Facility Termination
Date. The Bank will issue Facility LCs hereunder on the terms and conditions set
forth in Section 2.18.
(b) The Bank agrees that this Agreement consolidates, amends,
restates, and supersedes the Existing Credit Agreement, and the Borrower
acknowledges, accepts, and ratifies the Outstanding Facilities evidenced by this
Agreement. All amounts outstanding under the Existing Credit Agreement on the
Effective Date shall constitute Advances under Section 2.1(a), with each
existing Eurocurrency Advance remaining outstanding under its existing Interest
Period. Each letter of credit, bankers acceptance, and bank guaranty issued by
the Bank for the Borrower's account which is outstanding under the Existing
Credit Agreement on the Effective Date (other than the IRB L/C) shall be treated
for all purposes as Facility LCs issued by the Bank under this Agreement.
2.2. Determination of Dollar Amounts; Required Payments; Termination.
(a) The Bank will determine the Dollar Amount of each Advance as of the date
three Business Days prior to the Borrowing Date or, if applicable, date of
conversion or continuation of the Advance, and on any other Business Day elected
by the Bank in its discretion (each a "Computation Date").
(b) The Outstanding Credit Exposure and all other unpaid
Obligations shall be paid in full by the Borrower on the
Facility Termination Date.
(c) The Borrower shall pay or cause to be paid when due (i) all
regularly scheduled principal payments on the Outstanding
Facilities and (ii) all payments of interest and fees
(including without limitation amendment fees, letter of credit
fees, and commitment fees) which are owing under the
Outstanding Facilities.
2.3. Reserved.
2.4. Types of Advances. The Advances may be Floating Rate Advances
or Eurocurrency Advances, or a combination thereof, selected
by the Borrower in accordance with Sections 2.8 and 2.9.
2.5. Fees; Reductions in Commitment.
(a) Commitment Fee. The Borrower agrees to pay to the Bank a
commitment fee at a per annum rate equal to the Applicable
Margin on the daily unused amount of the Commitment from the
Effective Date to and including the Facility Termination Date,
payable quarterly in arrears and on the Facility Termination
Date. The commitment fee for each fiscal quarter of the
Borrower shall be due and payable within ten (10) days after
the Bank submits a statement to the Borrower of the amount due
for such fiscal quarter, based on the Bank's determination of
the Applicable Margin for such fiscal quarter. For purposes of
calculating the commitment fee hereunder, the principal amount
of each Advance made in an Agreed Currency other than Dollars
shall be the Dollar Amount of such Advance as determined on
the most recent Computation Date with respect to such Advance.
(b) LC Fees. The Borrower shall pay to the Bank (i) with respect
to each standby Facility LC, a letter of credit fee at a per
annum rate equal to the Applicable Margin for Eurocurrency
Advances in effect from time to time on the average daily
undrawn stated amount under such standby Facility LC, subject
to the Bank's standard minimum fee existing at the time of
issuance, such fee to be payable in advance on each Payment
Date, and (ii) with respect to each commercial Facility LC, a
one-time letter of credit fee at times and in amounts as the
Borrower and the Bank may agree from time to time (each such
fee described in this sentence, an "LC Fee"). The Borrower
shall also pay to the Bank at the time each Facility LC is
issued documentary and processing charges in connection with
the issuance or Modification of and draws under Facility LCs
in accordance with the Bank's standard schedule for such
charges as in effect from time to time.
(c) Optional Reductions in Commitment. From time to time, the
Borrower may permanently reduce the Commitment in a minimum
amount of $1,000,000 and in integral multiples of $500,000 (or
the Approximate Equivalent Amount if denominated in an Agreed
Currency other than Dollars), upon written notice to the Bank,
which notice shall specify the amount of any such reduction,
provided, however, that the amount of the Commitment may not
be reduced below the aggregate principal Dollar Amount of the
Outstanding Credit Exposure.
(d) Mandatory Prepayments. Notwithstanding anything in this
Agreement to the contrary, if at any time the aggregate Dollar
Amount of the Outstanding Credit Exposure (calculated, with
respect to those Advances denominated in Agreed Currencies
other than Dollars, as of the most recent Computation Date
with respect to each such Advance) exceeds the lesser of the
Borrowing Base or the Commitment, and upon written notice from
the Bank of such occurrence, the Borrower shall immediately
repay Advances in an aggregate principal amount sufficient to
eliminate any such excess, to be applied first to amounts
outstanding under the Loan, and then to the Facility LC
Collateral Account.
2.6. Minimum Amount of Each Advance. Each Eurocurrency Advance
shall be in the minimum amount of $1,000,000 and in multiples
of $100,000 if in excess thereof (or the Approximate
Equivalent Amount if denominated in an Agreed Currency other
than Dollars), and each Floating Rate Advance shall be in the
minimum amount of $100,000 and in multiples of $10,000 if in
excess thereof, provided, any Floating Rate Advance may be in
the amount of the unused Commitment.
2.7. Optional Principal Payments. The Borrower may from time to
time pay, without penalty or premium, all outstanding Floating
Rate Advances, or, in a minimum aggregate amount of $100,000
or any integral multiple of $10,000 in excess thereof, any
portion of the outstanding Floating Rate Advances. The
Borrower may from time to time pay, subject to the payment of
any funding indemnification amounts required by Section 3.4
but without penalty or premium, all outstanding Eurocurrency
Advances, or, in a minimum aggregate amount of $1,000,000 or
any integral multiple of $100,000 in excess thereof (or the
Approximate Equivalent Amount if denominated in an Agreed
Currency other than Dollars), any portion of the outstanding
Eurocurrency Advances upon three Business Days' prior notice
to the Bank.
2.8. Method of Selecting Types and Interest Periods for New
Advances. The Borrower shall select the Type of Advance and,
in the case of each Eurocurrency Advance, the Interest Period
and Agreed Curency applicable thereto from time to time. The
Borrower shall give the Bank irrevocable notice (a "Borrowing
Notice") not later than Noon (Chicago time) on the Borrowing
Date of each Floating Rate Advance and three Business Days
before the Borrowing Date for each Eurocurrency Advance,
specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurocurrency Advance, the Interest Period
and Agreed Currency applicable thereto.
2.9. Conversion and Continuation of Outstanding Advances. Floating
Rate Advances shall continue as Floating Rate Advances unless
and until such Floating Rate Advances are converted into
Eurocurrency Advances pursuant to this Section 2.9 or are
repaid in accordance with Section 2.7. Each Eurocurrency
Advance shall continue as a Eurocurrency Advance until the end
of the then applicable Interest Period therefor, at which
time:
(i) each such Eurocurrency Advance denominated in Dollars
shall be automatically converted into a Floating Rate Advance unless (x) such
Eurocurrency Advance is or was repaid in accordance with Section 2.7 or (y) the
Borrower shall have given the Bank a Conversion/Continuation Notice requesting
that, at the end of such Interest Period, such Eurocurrency Advance either
continue as a Eurocurrency Advance for the same or another Interest Period or be
converted into a Floating Rate Advance; and
(ii) each such Eurocurrency Advance denominated in an Agreed
Currency other than Dollars shall automatically continue as a Eurocurrency
Advance in the same Agreed Currency with an Interest Period of one month unless
(x) such Eurocurrency Advance is or was repaid in accordance with Section 2.7 or
(y) the Borrower shall have given the Bank a Conversion/Continuation Notice
requesting that, at the end of such Interest Period, such Eurocurrency Advance
continue as a Eurocurrency Advance for the same or another Interest Period.
Subject to the terms of Section 2.6, the Borrower may elect from time
to time to convert all or any part of a Floating Rate Advance into a
Eurocurrency Advance denominated in the same or any other Agreed Currency,
provided, that any conversion of any Eurocurrency Advance shall be made only on
the last day of the Interest Period applicable thereto. The Borrower shall give
the Bank irrevocable notice (a "Conversion/Continuation Notice") of each
conversion of a Floating Rate Advance into a Eurocurrency Advance or
continuation of a Eurocurrency Advance not later than 10:00 a.m. (Chicago time)
at least three Business Days prior to the date of the requested conversion or
continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation,
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued, and,
(iii) the Agreed Currency, amount of such Advance which is to be
converted into or continued as a Eurocurrency Advance and the
duration of the Interest Period applicable thereto.
2.10. Changes in Interest Rate, etc. Each Floating Rate Advance
shall bear interest on the outstanding principal amount
thereof, for each day from and including the date such Advance
is made or is converted from a Eurocurrency Advance into a
Floating Rate Advance pursuant to Section 2.9, to but
excluding the date it is paid or is converted into a
Eurocurrency Advance pursuant to Section 2.9 hereof, at a rate
per annum equal to the Floating Rate for such day. Changes in
the rate of interest on that portion of any Advance maintained
as a Floating Rate Advance will take effect simultaneously
with each change in the Alternate Base Rate. Each Eurocurrency
Advance shall bear interest on the outstanding principal
amount thereof from and including the first day of the
Interest Period applicable thereto to (but not including) the
last day of such Interest Period at the interest rate
determined by the Bank as applicable to such Eurocurrency
Advance based upon the Borrower's selections under Sections
2.8 and 2.9 and otherwise in accordance with the terms hereof.
No Interest Period may end after the Facility Termination
Date.
2.11. Rates Applicable After Default. Notwithstanding anything to
the contrary contained in Section 2.8 or 2.9, during the
continuance of a Default or Unmatured Default the Bank may, at
its option, by notice to the Borrower, declare that no Advance
may be made as, converted into or continued as a Eurocurrency
Advance. During the continuance of a Default the Bank may, at
its option, by notice to the Borrower, declare that (i) each
Eurocurrency Advance shall bear interest for the remainder of
the applicable Interest Period at the rate otherwise
applicable to such Interest Period plus 2% per annum, (ii)
each Floating Rate Advance shall bear interest at a rate per
annum equal to the Floating Rate in effect from time to time
plus 2% per annum and (iii) the LC Fee shall be increased by
2% per annum, provided that, during the continuance of a
Default under Section 7.6 or 7.7, the interest rates set forth
in clauses (i) and (ii) above and the increase in the LC Fee
set forth in clause (iii) above shall be applicable to all
Credit Extensions without any election or action on the part
of the Bank.
2.12. Method of Payment. (a) Each Advance shall be repaid and each
payment of interest thereon shall be paid in the currency in
which such
Advance was made. All payments of the Obligations hereunder shall be made,
without setoff, deduction, or counterclaim, in immediately available funds to
the Bank at the Bank's address specified pursuant to Article XII, or at any
other Lending Installation of the Bank specified in writing by the Bank to the
Borrower, by noon (Chicago time) on the date when due and shall (except in the
case of Reimbursement Obligations for which the Bank has not been fully
indemnified, or as otherwise specifically required hereunder) be applied by the
Bank as it may determine in its sole discretion. The Bank is authorized to
charge any account of the Borrower maintained with the Bank or any of its
Affiliates for each payment of principal, interest, Reimbursement Obligations
and fees as it becomes due hereunder.
(b) Notwithstanding the foregoing provisions of this Section, if, after
the making of any Advance in any currency other than Dollars, currency control
or exchange regulations are imposed in the country which issues such currency
with the result that the type of currency in which the Advance was made (the
"Original Currency") no longer exists or the Borrower is not able to make
payment to the Bank in such Original Currency, then all payments to be made by
the Borrower hereunder in such currency shall instead be made when due in
Dollars in an amount equal to the Dollar Amount (as of the date of repayment) of
such payment due, it being the intention of the parties hereto that the Borrower
take all risks of the imposition of any such currency control or exchange
regulations.
2.13. Noteless Agreement; Evidence of Indebtedness. (i) The Bank shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to the Bank resulting from each Advance made by
the Bank from time to time, including the amounts of principal and interest
payable and paid to the Bank from time to time hereunder.
(ii) The Bank shall also maintain accounts in which it will record (a)
the amount of each Advance made hereunder, the Agreed Currency and Type thereof
and the Interest Period with respect thereto, (b) the amount
of any principal or interest due and payable or to become due and payable from
the Borrower to the Bank hereunder, (c) the original stated amount of each
Facility LC and the amount of LC Obligations outstanding at any time, and (d)
the amount of any sum received by the Bank hereunder from the Borrower.
(iii) The entries maintained in the accounts maintained pursuant to
paragraphs (i) and (ii) above shall be prima facie evidence of the existence and
amounts of the Obligations therein recorded; provided, however, that the failure
of the Bank to maintain such accounts or any error therein shall not in any
manner affect the obligation of the Borrower to repay the Obligations in
accordance with their terms.
(iv) The Bank may request that its Loan be evidenced by a promissory
note (a "Note"). In such event, the Borrower shall prepare, execute and deliver
to the Bank a Note payable to the order of the Bank in a form supplied by the
Bank. Thereafter, the Advances evidenced by such Note and interest thereon shall
at all times (including after any assignment pursuant to Section 11.3) be
represented by one or more Notes payable to the order of the payee named therein
or any assignee pursuant to Section 11.3, except to the extent that the Bank or
assignee subsequently returns any such Note for cancellation and requests that
the Loan once again be evidenced as described in paragraphs (i) and (ii) above.
2.14. Telephonic Notices. The Borrower authorizes the Bank to extend,
convert or continue Advances, effect selections of Agreed Currencies and Types
of Advances and to transfer funds based on telephonic notices made by any person
or persons the Bank in good faith believes to be acting on behalf of the
Borrower, it being understood that the foregoing authorization is specifically
intended to allow Borrowing Notices and Conversion/Continuation Notices to be
given telephonically. The Borrower agrees to deliver promptly to the Bank a
written confirmation, if such confirmation is requested by the Bank, of each
telephonic notice signed by an Authorized Officer. If the written confirmation
differs in any material respect from the action taken by the Bank, the records
of the Bank shall govern absent manifest error.
2.15. Interest Payment Dates; Interest and Fee Basis. Interest accrued
on each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof and at maturity.
Interest accrued on each Eurocurrency Advance shall be payable on the last day
of its applicable Interest Period, on any date on which the Eurocurrency Advance
is prepaid, whether by acceleration or otherwise, and at maturity. Interest
accrued on each Eurocurrency Advance having an Interest Period longer than three
months shall also be payable on the last day of each three-month interval during
such Interest Period. Interest and LC Fees shall be calculated for actual days
elapsed on the basis of a 360-day year, except for interest on Loans denominated
in British Pounds Sterling, which shall be calculated for actual days elapsed on
the basis of a 365-day year. Interest shall be payable for the day an Advance is
made but not for the day of any payment on the amount paid if payment is
received prior to noon (local time) at the place of payment. If any payment of
principal of or interest on an Advance shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment.
2.16. Lending Installations. The Bank may book its Loans and the
Facility LCs at the appropriate Lending Installation listed on Schedule 2 or
such other Lending Installation designated by the Bank in accordance with the
final sentence of this Section 2.16. All terms of this Agreement shall apply to
any such Lending Installation and the Loan, Facility LCs, and any Note issued
hereunder shall be deemed held by the Bank for the benefit of any such Lending
Installation. The Bank may, by written notice to the Borrower, designate
replacement or additional Lending Installations through which Advances will be
made by it or Facility LCs will be issued by it and for whose account Loan
payments or payments with respect to Facility LCs are to be made.
2.17. Reserved.
2.18. Facility LCs.
2.18.1. Issuance.
(a) The Bank agrees, on the terms set forth in this Agreement, to issue
standby and commercial letters of credit (each, a "Facility LC" ) and to renew,
extend, increase, decrease or otherwise modify each Facility LC ("Modify" and
each such action a "Modification"), from time to time from and including the
date of this Agreement and prior to the Facility Termination Date upon the
request of the Borrower; provided that immediately after each such Facility LC
is issued or Modified, (i) the aggregate amount of the outstanding LC
Obligations shall not exceed the Commitment, and (ii) the Outstanding Credit
Exposure shall not exceed the Commitment. No Facility LC shall have an expiry
date later than the earlier of (x) the fifth Business Day prior to the Facility
Termination Date and (y) one year after its issuance.
2.18.2. Notice. Subject to Section 2.18.1, the Borrower shall give the
Bank notice prior to 10:00 a.m. (Chicago time) at least five Business Days prior
to the proposed date of issuance or Modification of each Facility LC specifying
the beneficiary, the proposed date of issuance (or Modification) and the expiry
date of such Facility LC, and describing the proposed terms of such Facility LC
and the nature of the transactions proposed to be supported thereby. The
issuance or Modification by the Bank of any Facility LC shall, in addition to
the conditions precedent set forth in Article IV (the satisfaction of which the
Bank shall have no duty to ascertain), be subject to the conditions precedent
that such Facility LC shall be satisfactory to the Bank and that the Borrower
shall have executed and delivered such application agreement and/or such other
instruments and agreements relating to such Facility LC as the Bank shall have
reasonably requested (each, a "Facility LC Application"). In the event of any
conflict between the terms of this Agreement and the terms of any Facility LC
Application, the terms of this Agreement shall control.
2.18.3. Administration; Reimbursement by the Bank . Upon
receipt from the beneficiary of any Facility LC of any demand for payment under
such Facility LC, the Bank shall promptly notify the Borrower as to the amount
to be paid by the Bank as a result of such demand and the proposed payment date
(the "LC Payment Date"). The responsibility of the Bank to the Borrower shall be
only to determine that the documents (including each demand for payment)
delivered under each Facility LC in connection with such presentment shall be in
conformity in all material respects with such Facility LC. The Bank shall
endeavor to exercise the same care in the issuance and administration of the
Facility LCs as it does with respect to letters of credit in which no
participations are granted.
2.18.4. Reimbursement by the Borrower. The Borrower shall be
irrevocably and unconditionally obligated to reimburse the Bank on or before the
applicable LC Payment Date for any amounts to be paid by the Bank upon any
drawing under any Facility LC, without presentment, demand, protest or other
formalities of any kind; provided that the Borrower shall not be precluded from
asserting any claim for direct (but not consequential) damages suffered by the
Borrower to the extent, but only to the extent, caused by (i) the willful
misconduct or gross negligence of the Bank in determining whether a request
presented under any Facility LC issued by it complied with the terms of such
Facility LC or (ii) the Bank's failure to pay under any Facility LC issued by it
after the presentation to it of a request strictly complying with the terms and
conditions of such Facility LC. All such amounts paid by the Bank and remaining
unpaid by the Borrower shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to (x) the rate applicable to Floating Rate
Advances for such day if such day falls on or before the applicable LC Payment
Date and (y) the sum of 2% plus the rate applicable to Floating Rate Advances
for such day if such day falls after such LC Payment Date. Subject to the terms
of this Agreement (including without limitation the submission of a Borrowing
Notice in compliance with Section 2.8 and the satisfaction of the applicable
conditions precedent set forth in Article IV), the Borrower may request an
Advance hereunder for the purpose of satisfying any Reimbursement Obligation.
2.18.5. Obligations Absolute. The Borrower's obligations under
this Section 2.18 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Bank or any beneficiary of a
Facility LC. The Borrower further agrees with the Bank that the Bank shall not
be responsible for, and the Borrower's Reimbursement Obligation in respect of
any Facility LC shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or forged,
or any dispute between or among the Borrower, any of its Affiliates, the
beneficiary of any Facility LC or any financing institution or other party to
whom any Facility LC may be transferred or any claims or defenses whatsoever of
the Borrower or of any of its Affiliates against the beneficiary of any Facility
LC or any such transferee. The Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Facility LC. The Borrower
agrees that any action taken or omitted by the Bank under or in connection with
each Facility LC and the related drafts and documents, if done without gross
negligence or willful misconduct, shall be binding upon the Borrower and shall
not put the Bank under any liability to the Borrower. Nothing in this Section
2.18.5 is intended to limit the right of the Borrower to make a claim against
the Bank for damages as contemplated by the proviso to the first sentence of
Section 2.18.4.
2.18.6. Actions of the Bank. The Bank shall be entitled to
rely, and shall be fully protected in relying, upon any Facility LC, draft,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the Bank. The
Bank shall be fully justified in failing or refusing to take any action under
this Agreement unless it shall first have received such advice as it reasonably
deems appropriate or it shall first be indemnified to its reasonable
satisfaction against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
2.18.7. Indemnification. The Borrower indemnifies and holds
harmless the Bank, and its directors, officers, agents and employees from and
against any and all claims and damages, losses, liabilities, costs or expenses
which the Bank may incur (or which may be claimed against the Bank by any Person
whatsoever) by reason of or in connection with the issuance, execution and
delivery or transfer of or payment or failure to pay under any Facility LC or
any actual or proposed use of any Facility LC, including, without limitation,
any claims, damages, losses, liabilities, costs or expenses which the Bank may
incur by reason of or in connection with, by reason of or on account of the Bank
issuing any Facility LC which specifies that the term "Beneficiary" included
therein includes any successor by operation of law of the named Beneficiary, but
which Facility LC does not require that any drawing by any such successor
Beneficiary be accompanied by a copy of a legal document, satisfactory to the
Bank, evidencing the appointment of such successor Beneficiary; provided that
the Borrower shall not be required to indemnify the Bank for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by (x) the willful misconduct or gross negligence of the Bank in
determining whether a request presented under any Facility LC complied with the
terms of such Facility LC or (y) the Bank's failure to pay under any Facility LC
after the presentation to it of a request strictly complying with the terms and
conditions of such Facility LC. Nothing in this Section 2.18.7 is intended to
limit the obligations of the Borrower under any other provision of this
Agreement.
2.18.8. Facility LC Collateral Account. The Borrower agrees
that it will, upon the request of the Bank and until the final expiration date
of any Facility LC and thereafter as long as any amount is payable to the Bank
in respect of any Facility LC, maintain a special collateral
account pursuant to arrangements satisfactory to the Bank (the "Facility LC
Collateral Account") at the Bank's office at the address specified pursuant to
Article XII, in the name of such Borrower but under the sole dominion and
control of the Bank and in which such Borrower shall have no interest other than
as set forth in Section 8.1. The Borrower pledges, assigns and grants to the
Bank, a security interest in all of the Borrower's right, title and interest in
and to all funds which may from time to time be on deposit in the Facility LC
Collateral Account to secure the prompt and complete payment and performance of
the Obligations. The Bank will invest any funds on deposit from time to time in
the Facility LC Collateral Account in certificates of deposit of the Bank having
a maturity not exceeding 30 days. Nothing in this Section 2.18.8 shall either
obligate the Bank to require the Borrower to deposit any funds in the Facility
LC Collateral Account or limit the right of the Bank to release any funds held
in the Facility LC Collateral Account in each case other than as required by
Section 8.1.
2.19 Borrowing Base Adjustments. The Borrower agrees that if at any
time any trade account receivable or any inventory of the Borrower fails to
constitute Eligible Finished Goods Inventory, Eligible Trade Receivables,
Eligible Extended Receivables, or Eligible Inventory, as the case may be, for
any reason, the Bank may, at any time and notwithstanding any prior
classification of eligibility, classify such asset as ineligible and exclude the
same from the computation of the Borrowing Base without in any way impairing the
rights of the Bank in and to the same under the Collateral Documents.
2.20 Security and Collateral. To secure the payment when due of any
Note and the other Obligations to the Bank, the Borrower and the Guarantors
shall each execute and deliver, or cause to be executed and delivered, to the
Bank (to the extent not previously executed and delivered) Collateral Documents
granting the following:
(a) Security interests in all present and future
accounts, inventory, equipment, general intangibles, investment property,
deposit accounts, fixtures, and all other personal property of the Borrower
other than property held in the trust existing pursuant to the Hurco Deferred
Compensation Plan Trust Agreement in connection with the Hurco Deferred
Compensation Plan.
(b) Pledges of 100% of the Capital Stock of all
Domestic Subsidiaries (excluding the Guarantors and all Inactive Subsidiaries),
plus a pledge of 66% of the Capital Stock of Hurco International, Inc., and
Hurco International Holdings, Inc.
(c) Guarantees of the Guarantors under the Guaranty.
(d) All other security and collateral described in
the Collateral Documents.
2.21. Market Disruption. Notwithstanding the satisfaction of all
conditions referred to in Article II and Article IV with respect to any Advance
in any Agreed Currency other than Dollars, if there shall occur on or prior to
the date of such Advance any change in national or international financial,
political or economic conditions or currency exchange rates or exchange controls
which would in the reasonable opinion of the Bank make it impracticable for any
Eurocurrency Advances to be denominated in the Agreed Currency specified by the
Borrower, then the Bank shall forthwith give notice thereof to the Borrower, and
such Eurocurrency Advances shall not be denominated in such Agreed Currency but
shall be made on such Borrowing Date in Dollars, in an aggregate principal
amount equal to the Dollar Amount of the aggregate principal amount specified in
the related Borrowing Notice or Conversion/Continuation Notice, as the case may
be, as Floating Rate Advances, unless the Borrower notifies the Bank at least
one Business Day before such date that (i) it elects not to borrow on such date
or (ii) it elects to borrow on such date in a different Agreed Currency, as the
case may be, in which the denomination of such Advances would in the opinion of
the Bank be practicable and in an aggregate principal amount equal to the Dollar
Amount of the aggregate principal amount specified in the related Borrowing
Notice or Conversion/Continuation Notice, as the case may be.
2.22. Judgment Currency. If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due from the Borrower
hereunder in the currency expressed to be payable herein (the "specified
currency") into another currency, the parties agree that the rate of exchange
used shall be that at which in accordance with normal banking procedures the
Bank could purchase the specified currency with such other currency at the
Bank's main Chicago office on the Business Day preceding that on which final,
non-appealable judgment is given. The obligations of the Borrower in respect of
any sum due to the Bank shall, notwithstanding any judgment in a currency other
than the specified currency, be discharged only to the extent that on the
Business Day following receipt by the Bank of any sum adjudged to be so due in
such other currency the Bank may in accordance with normal, reasonable banking
procedures purchase the specified currency with such other currency. If the
amount of the specified currency so purchased is less than the sum originally
due to the Bank in the specified currency, the Borrower agrees, to the fullest
extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify the Bank against such loss, and
if the amount of the specified currency so purchased exceeds the sum originally
due to the Bank in the specified currency, the Bank agrees to remit such excess
to the Borrower.
ARTICLE III
YIELD PROTECTION; TAXES
3.1. Yield Protection. In the event that any applicable law, treaty or
other international agreement, rule, or regulation (whether domestic or foreign)
now or hereafter in effect and whether or not presently applicable to the Bank
or applicable Lending Installation, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by the Bank or applicable Lending
Installation with any guideline, request or directive of any such authority
(whether or not having the force of law), shall (a) affect the basis of taxation
of payments to the Bank of any amounts payable by the Borrower under this
Agreement (other than Excluded Taxes), or (b) shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by the Bank or
applicable Lending Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurocurrency Advances),
or (c) shall impose any other condition with respect to this Agreement, the
Commitment, any Note, or the Loan, or any Facility LC (including without
limitation converting any Eurocurrency Advance denominated in an Agreed Currency
other than the Euro into a Eurocurrency Advance denominated in the Euro), and
the result of any of the foregoing is to increase the cost to the Bank or
applicable Lending Installation of making, funding, or maintaining any
Eurocurrency Advance or any Facility LC or to reduce the amount of any sum
receivable by the Bank or applicable Lending Installation thereon, then the
Borrower shall pay to the Bank, from time to time, upon its request, additional
amounts sufficient to compensate the Bank for such increased cost or reduced sum
receivable. A statement as to the amount of such increased cost or reduced sum
receivable, prepared in good faith and in reasonable detail by the Bank and
submitted by the Bank to the Borrower, shall be conclusive and binding for all
purposes absent manifest error in computation.
3.2. Changes in Capital Adequacy Regulations. In the event that any
applicable law, treaty, or other international agreement, rule, or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to the Bank, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline, request or
directive of any such authority (whether or not having the force of law),
including any risk-based capital guidelines, affects or would affect the amount
of capital required or expected to be maintained by the Bank (or any corporation
controlling the Bank) and the Bank determines that the amount of such capital is
increased by or based upon the existence of the Bank's obligations hereunder and
such increase has the effect of reducing the rate of return on the Bank's (or
such controlling corporation's) capital as a consequence of such obligations
hereunder to a level below that which the Bank (or such controlling corporation)
could have achieved but for such circumstances (taking into consideration its
policies with respect to capital adequacy), then the Borrower shall pay to the
Bank from time to time, upon request by the Bank, additional amounts sufficient
to compensate such Bank (or such controlling corporation) for any increase in
the amount of capital and reduced rate of return which the Bank reasonably
determines to be allocable to the existence of the Bank's obligations hereunder.
A statement as to the amount of such compensation, prepared in good faith and in
reasonable detail by the Bank and submitted to the Borrower, shall be conclusive
and binding for all purposes absent manifest error in computation.
3.3. Availability of Types of Advances. In the event that any
applicable law, treaty, or other international agreement, rule, or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to the Bank, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline, request,
or directive of such authority (whether or not having the force of law),
including without limitation exchange controls, shall make it unlawful or
impossible for the Bank to maintain any Eurocurrency Advance at a suitable
Lending Installation under this Agreement, shall make it impracticable, unlawful
or impossible for, or shall in any way limit or impair ability of, the Borrower
to make or the Bank to receive any payment under this Agreement at the place
specified for payment hereunder, the Bank shall suspend the availability of
Eurocurrency Advances and the Borrower shall, upon receiving notice thereof from
the Bank, repay in full the then-outstanding principal amount of each
Eurocurrency Advance so affected, together with all accrued interest thereon to
the date of payment and all amounts owing to the Bank under Section 3.4, (a) on
the last day of the then-current Interest Period applicable to the Eurocurrency
Advance if the Bank may lawfully continue to maintain the Eurocurrency Advance
to that day, or (b) immediately if the Bank may not continue to maintain the
Eurocurrency Advance to that day.
3.4. Funding Indemnification. If the Borrower makes any payment of
principal with respect to any Eurocurrency Advance on any other date than the
last day of an Interest Period applicable thereto (whether pursuant to Section
2.2, Section 2.5, Section 2.7, Section 8.1, or otherwise), or if the Borrower
fails to borrow any Eurocurrency Advance after notice has been given to the Bank
in accordance with Section 2.8, or if the Borrower fails to make any payment of
principal or interest in respect of a Eurocurrency Advance when due, the
Borrower shall reimburse the Bank on demand for any resulting loss or expense
incurred by the Bank, including without limitation any loss incurred in
obtaining, liquidating, or employing deposits from third parties, whether or not
the Bank shall have funded or committed to fund the Eurocurrency Advance. A
statement as to the amount of such loss or expense, prepared in good faith and
in reasonable detail by the Bank and submitted by the Bank to the Borrower,
shall be conclusive and binding for all purposes absent manifest error in
computation. Calculation of all amounts payable to the Bank under this Section
3.4 shall be made as though the Bank shall have actually funded or committed to
fund the relevant Eurocurrency Advance through the purchase of an underlying
deposit in an amount equal to the amount of the Eurocurrency Advance in the
relevant market and having a maturity comparable to the related Interest Period
and through the transfer of such deposit to a domestic office of the Bank in the
United States; provided, however, that the Bank may fund any Eurocurrency
Advance in any manner it sees fit and the foregoing assumption shall be utilized
only for the purpose of calculating amounts payable under this Section 3.4.
3.5. Taxes. (i) All payments of principal of and interest on the Loan
and other amounts payable by the Borrower hereunder shall be made by the
Borrower without setoff or counterclaim, and, subject to the next succeeding
sentence, free and clear of, and without deduction or withholding for, or on
account of, any Taxes. If any Taxes are imposed, the Borrower will pay such
additional amounts as may be necessary so that payment of principal of and
interest on the Loan and other amounts payable hereunder, after withholding or
deduction for or on account thereof, will not be less than any amount provided
to be paid hereunder and, in any such case, the Borrower will furnish to the
Bank certified copies of all tax receipts evidencing the payment of such amounts
within 45 days after the date any such payment is due pursuant to applicable
law.
(ii) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any Note or
Facility LC Application or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note or Facility LC Application ("Other
Taxes").
(iii) The Borrower indemnifies the Bank for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on
amounts payable under this Section 3.5) paid by the Bank and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. Payments due under this indemnification shall be made within 30 days of
the date the Bank makes demand therefor pursuant to Section 3.6.
3.6. Bank Statements; Survival of Indemnity. To the extent reasonably
possible, the Bank shall designate an alternate Lending Installation with
respect to its Eurocurrency Advances to reduce any liability of the Borrower to
the Bank under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of
Eurocurrency Advances under Section 3.3, so long as such designation is not, in
the judgment of the Bank, disadvantageous to it. The Bank shall deliver a
written statement to the Borrower as to the amount due, if any, under Section
3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in reasonable
detail the calculations upon which the Bank determined such amount and shall be
final, conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
Eurocurrency Advances shall be calculated as though the Bank funded its
Eurocurrency Advances through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the Eurocurrency
Rate applicable to such Credit Extension, whether in fact that is the case or
not. Unless otherwise provided herein, the amount specified in the written
statement of the Bank shall be payable on demand after receipt by the Borrower
of such written statement. The obligations of the Borrower under Sections 3.1,
3.2, 3.4, and 3.5 shall survive payment of the Obligations and termination of
this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Credit Extension. The Bank shall not be required to make
the initial Credit Extension hereunder unless the Borrower has furnished to the
Bank and completed the following matters, all in form and substance satisfactory
to the Bank:
(i) Copies of the articles or certificate of incorporation of the
Borrower and the Guarantors, together with all amendments, and
a certificate of good standing or existence for the Borrower
and each Guarantor, each certified by the appropriate
governmental officer in its jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of
the Borrower and the Guarantors, of each of their respective
by-laws and of each of their respective Board of Directors'
resolutions and of resolutions or actions of any other body
authorizing the execution of the Loan Documents to which the
Borrower and the Guarantors are a party.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower and the Guarantors,
which shall identify by name and title and bear the
signatures of the Authorized Officers and any other officers
of the Borrower and the Guarantors authorized to sign the
Loan Documents to which the Borrower and the Guarantors are a
party, upon which certificate the Bank shall be entitled
to rely until informed of any change in writing by the
Borrower or the Guarantors, as the case may be.
(iv) A certificate, signed by the chief financial officer of the
Borrower, stating that on the initial Credit Extension Date no
Default or Unmatured Default has occurred and is continuing.
(v) A written opinion of the Borrower's and the Guarantors'
counsel, addressed to the Bank in substantially the form of
Exhibit G.
(vi) Any Notes requested by the Bank pursuant to Section 2.15
payable to the order of the Bank.
(vii) Written money transfer instructions, in substantially the form
of Exhibit F, addressed to the Bank and signed by an
Authorized Officer, together with such other related money
transfer authorizations as the Bank may have reasonably
requested.
(viii) If the initial Credit Extension will be the issuance of a
Facility LC, a properly completed Facility LC Application.
(ix) A Confirmation of Pledge and Security Agreement of the
Borrower, the Guaranty substantially in the form of Exhibit D,
a Confirmation of Security Agreement (Patent & Licenses) of
the Borrower, and any other Collateral Documents required by
the Bank duly executed on behalf of the Borrower or the
Guarantors, as the case may be.
(x) The insurance certificate described in Section 5.19.
(xi) A duly completed Borrowing Base Certificate as of the close of
the fiscal month which precedes its delivery date.
(xii) Copies of all governmental and non-governmental consents,
approvals, authorizations, declarations, registrations or
filings, if any, required on the part of the Borrower or the
Guarantors in connection with the execution, delivery,
and performance of the Loan Documents, or the transactions
contemplated thereby or as a condition to the legality,
validity or enforceability of the Loan Documents, certified
as true and correct and in full force and effect as of
the Effective Date by a duly authorized officer of the
Borrower or the Guarantors, or, if none are required, a
certificate of such officer to that effect.
(xiii) Such other documents as the Bank or its counsel may have
reasonably requested.
4.2. Each Credit Extension. The Bank shall not be required to make
any Credit Extension unless on the applicable Credit
Extension Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are
true and correct as of such Credit Extension Date except to
the extent any such representation or warranty is stated to
relate solely to an earlier date, in which case such
representation or warranty shall have been true and correct on
and as of such earlier date.
(iii) All legal matters incident to the making of such Credit
Extension shall be satisfactory to the Bank and its counsel.
(iv) The Bank shall have received a Borrowing Notice or, in the
case of any issuance of a Facility LC, a properly completed
Facility LC Application and such other documentation in
connection therewith as requested by the Bank.
Each Borrowing Notice or request for issuance of a Facility LC with
respect to each such Credit Extension shall constitute a representation and
warranty by the Borrower that the conditions contained in Sections 4.2(i) and
(ii) have been satisfied. The Bank may require a duly completed compliance
certificate in substantially the form of Exhibit C as a condition to making a
Credit Extension.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
5.1. Existence and Standing. Each of the Borrower and its Active
Subsidiaries is a corporation duly and properly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted. The Borrower has all requisite
corporate power to own or lease the properties used in its business and to carry
on its business as now being conducted and as proposed to be conducted.
5.2. Authorization and Validity. The Borrower and each Guarantor, as
the case may be, has the power and authority and legal right to execute and
deliver the Loan Documents to which it is a party and to perform its obligations
thereunder. The execution and delivery by the Borrower and each of the
Guarantors, as the case may be, of the Loan Documents to which it is a party and
the performance of its obligations thereunder have been duly authorized by
proper corporate proceedings, and the Loan Documents to which the Borrower and
each of the Guarantors is a party, as the case may be, constitute legal, valid
and binding obligations of the Borrower and each of the Guarantors, as the case
may be, enforceable against the Borrower or each Guarantor, as the case may be,
in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
5.3. No Conflict; Government Consent. Neither the execution and
delivery by the Borrower or the Guarantors of the Loan Documents to which it is
a party, nor the consummation of the transactions therein contemplated, nor
compliance with the provisions thereof will violate (i) any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on the
Borrower or any of its Subsidiaries or (ii) the Borrower's or any Subsidiary's
articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, or operating or
other management agreement, as the case may be, or (iii) the provisions of any
indenture, instrument or agreement to which the Borrower or any of its
Subsidiaries is a party or is subject, or by which it, or its Property, is
bound, or conflict with or constitute a default thereunder, or result in, or
require, the creation or imposition of any Lien in, of or on the Property of the
Borrower or a Subsidiary pursuant to the terms of any such indenture, instrument
or agreement. No order, consent, adjudication, approval, license, authorization,
or validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by the Borrower or any of its
Subsidiaries, is required to be obtained by the Borrower or any of its
Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under this Agreement, the payment and performance by
the Borrower of the Obligations or the legality, validity, binding effect or
enforceability of any of the Loan Documents.
5.4. Financial Statements. The September 30, 2003, consolidated
financial statements of the Borrower and its Subsidiaries heretofore delivered
to the Bank were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Borrower and
its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.
5.5. Material Adverse Change. Since September 30, 2003, there has been
no change in the business, Property, prospects, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect.
5.6. Taxes. The Borrower and its Subsidiaries have filed all United
States federal tax returns and all other tax returns which are required to be
filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided in accordance with Agreement Accounting Principles
and as to which no Lien exists. No tax liens have been filed and no claims are
being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are adequate.
5.7. Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting the
Borrower or any of its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect or which seeks to prevent, enjoin or delay the making of
any Credit Extensions. Other than any liability incident to any litigation,
arbitration or proceeding which could not reasonably be expected to have a
Material Adverse Effect, the Borrower has no material contingent obligations not
provided for or disclosed in the financial statements referred to in Section
5.4.
5.8. Subsidiaries. Schedule 5.8 contains an accurate list of all
Subsidiaries of the Borrower as of the date of this Agreement, setting forth
their respective jurisdictions of organization and the percentage of their
respective Capital Stock or other ownership interests owned by the Borrower or
other Subsidiaries. All of the issued and outstanding shares of Capital Stock or
other ownership interests of such Subsidiaries have been (to the extent such
concepts are relevant with respect to such ownership interests) duly authorized
and issued and are fully paid and non-assessable. Each Subsidiary of the
Borrower has and will have all requisite corporate power to own or lease the
properties used in its business and to carry on its business as now being
conducted and as proposed to be conducted.
5.9. ERISA. There are no Unfunded Liabilities of any Single Employer
Plans of the Borrower or the Guarantors. Neither the Borrower nor any other
member of the Controlled Group has incurred, or is reasonably expected to incur,
any withdrawal liability to Multiemployer Plans. Each Plan complies in all
material respects with all applicable requirements of law and regulations, no
Reportable Event has occurred with respect to any Plan, neither the Borrower nor
any other member of the Controlled Group has withdrawn from any Plan or
initiated steps to do so, and no steps have been taken to reorganize or
terminate any Plan.
5.10. Accuracy of Information. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Bank in connection
with the negotiation of, or compliance with, the Loan Documents contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of the value of those assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.
5.12. Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect or (ii) any
agreement or instrument evidencing or governing Indebtedness.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property.
5.14. Ownership of Properties. On the date of this Agreement, the
Borrower and its Subsidiaries will have good title, free of all Liens other than
those permitted by Section 6.15, to all of the Property and assets reflected in
the Borrower's most recent consolidated financial statements provided to the
Bank as owned by the Borrower and its Subsidiaries.
5.15. Plan Assets; Prohibited Transactions. The Borrower is not an
entity deemed to hold "plan assets" within the meaning of 29 C.F.R. ss.
2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA)
which is subject to Title I of ERISA or any plan (within the meaning of Section
4975 of the Code), and neither the execution of this Agreement nor the making of
Credit Extensions hereunder gives rise to a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code.
5.16. Environmental Matters. In the ordinary course of its business,
the officers of the Borrower consider the effect of Environmental Laws on the
business of the Borrower and its Subsidiaries, in the course of which they
identify and evaluate potential risks and liabilities accruing to the Borrower
due to Environmental Laws. On the basis of this consideration, the Borrower and
each of its Subsidiaries has concluded that Environmental Laws cannot reasonably
be expected to have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary has received any notice to the effect that its operations are not in
material compliance with any of the requirements of applicable Environmental
Laws or are the subject of any federal or state investigation evaluating whether
any remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which non-compliance or remedial action
could reasonably be expected to have a Material Adverse Effect.
5.17. Investment Company Act. Neither the Borrower nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
5.18. Public Utility Holding Company Act. Neither the Borrower nor any
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
5.19. Insurance. The certificate signed by the President or Chief
Financial Officer of the Borrower, that attests to the existence and adequacy
of, and summarizes, the property and casualty insurance program carried by the
Borrower with respect to itself and its Subsidiaries and that has been furnished
by the Borrower to the Bank, is complete and accurate. This summary includes the
insurer's or insurers' name(s), policy number(s), expiration date(s), amount(s)
of coverage, type(s) of coverage, exclusion(s), and deductibles. This summary
also includes similar information, and describes any reserves, relating to any
self-insurance program that is in effect.
5.20 Borrowing Base. All accounts receivable and inventory of the
Borrower represented or reported by the Borrower to be, or are otherwise
included in, Eligible Finished Goods Inventory, Eligible Trade Receivables,
Eligible Extended Receivables, and Eligible Inventory comply in all respects as
of the date reported with the requirements therefor set forth in the definition
thereof, and the computation of the Borrowing Base set forth in each Borrowing
Base Certificate is true and correct.
5.21 Disclosure. No report or other information furnished in writing or
on behalf of the Borrower or any Guarantor to the Bank in connection with the
negotiation or administration of this Agreement contains any material
misstatement of fact or omits to state any material fact or any fact necessary
to make the statements contained therein not misleading in light of the
circumstances in which they were made. Neither this Agreement, or the Notes, the
Collateral Documents nor any other document, certificate, or report or statement
or other information furnished to the Bank by or on behalf of the Borrower or
any Guarantor in connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to state a material
fact in order to make the statements contained herein and therein not misleading
in light of the circumstances in which they were made. Except as reflected in
the Business Plan, there is no fact known to the Borrower or any Guarantor which
materially and adversely affects, or which in the future may (so far as the
Borrower or any Guarantor can now foresee) materially and adversely affect, the
business, properties, operations or condition, financial or otherwise, of the
Borrower, any Guarantor or any of their respective Subsidiaries, which has not
been set forth in this Agreement or in the other documents, certificates,
statements, reports and other information furnished in writing to the Bank by or
on behalf of the Borrower or any Guarantor in connection with the transactions
contemplated by this Agreement.
5.22 Intellectual Property. Set forth on Schedule 5.22 is a complete
and accurate list of all patents, trademarks, trade names, service marks and
copyrights, and all applications therefor and licenses thereof, of the Borrower
and each of its Subsidiaries showing the jurisdiction in which registered, the
registration number and the date of registration. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all trademarks, trade names, service
marks, copyrights, technology, know-how and processes necessary for the conduct
of its business as currently conducted (the "Intellectual Property") except for
those the failure to own or license which could not reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule 5.22, no claim
has been asserted and is pending by any Person challenging or questioning the
use of any such Intellectual Property or the validity or effectiveness of any
such Intellectual Property, nor does the Borrower or any of its Subsidiaries
know of any valid basis for any such claim, the use of such Intellectual
Property by the Borrower and each of its Subsidiaries does not infringe on the
rights of any Person, and, to the knowledge of the Borrower, no Intellectual
Property has been infringed, misappropriated or diluted by any other Person
except for such claims, infringements, misappropriation and dilutions that, in
the aggregate, could not have a Material Adverse Effect.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Bank shall otherwise
consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Bank:
(i) Within 110 days after the close of each of its fiscal years,
an unqualified audit report certified by independent
certified public accountants acceptable to the Bank, prepared
in accordance with Agreement Accounting Principles on
a consolidated and consolidating basis (except that
consolidated balance sheets and statements of operations and
retained earnings need not be given for Inactive Subsidiaries
or Active Subsidiaries whose only asset is the Capital
Stock of another Subsidiary of the Borrower and consolidating
statements need not be certified by such accountants)
for itself and its Subsidiaries, including balance sheets as
of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of
cash flows, accompanied by (a) any management letter
prepared by said accountants, (b) a certificate of said
accountants that, in the course of their examination
necessary for their certification of the foregoing, they
have obtained no knowledge of any Default or Unmatured
Default, or if, in the opinion of such accountants, any
Default or Unmatured Default shall exist, stating the nature
and status thereof, and (d) a certificate of the Borrower's
chief financial officer or principal accounting officer
as required under Section 6.1(d)(ii).
(ii) Within 30 days after the close of each monthly period,
for itself and its Subsidiaries, consolidated and
consolidating unaudited balance sheets as at the close of
each such period and consolidated and consolidating profit
and loss and reconciliation of surplus statements and a
statement of cash flows for the period from the beginning of
such fiscal year to the end of such month (except that
consolidating balance sheets and statements of operations and
retained earnings need not be given for Inactive
Subsidiaries or Active Subsidiaries whose only asset is the
Capital Stock of another Subsidiary of the Borrower), all
certified by its chief financial officer or principal
accounting officer as fairly presenting the consolidated
financial position of the Borrower and its Subsidiaries
for the periods contained therein and as having been prepared
in accordance with Agreement Accounting Principles,
together with a certificate of such officer demonstrating
compliance with all financial covenants contained in
this Agreement, including without limitation Section 6.20
hereof, and such supporting schedules setting forth such
information as the Bank may reasonably request relating to
such covenants, and stating whether such officer is aware
of any Default or any event or condition which, with notice
or lapse of time, or both, would constitute a Default,
and, if such Default or such an event or condition then
exists and is continuing, a statement setting forth the
nature and status thereof.
(iii) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with
respect to any Plan, a statement, signed by the chief
financial officer of the Borrower, describing said Reportable
Event and the action which the Borrower proposes to take with
respect thereto.
(iv) As soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (a) any notice or claim to
the effect that the Borrower or any of its Subsidiaries is or
may be liable to any Person as a result of the release by the
Borrower, any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or substance into the environment,
and (b) any notice alleging any violation of any federal,
state or local environmental, health or safety law or
regulation by the Borrower or any of its Subsidiaries.
(v) Promptly upon the furnishing thereof to the shareholders of
the Borrower, copies of all financial statements, reports and
proxy statements so furnished.
(vi) Promptly upon the filing thereof, notice regarding the filing
of all registration statements and annual, quarterly, monthly
or other regular reports which the Borrower or any of its
Subsidiaries files with the Securities and Exchange
Commission.
(vii) As soon as available and in any event within 30 days after the
end of each month, a Borrowing Base Certificate, prepared for
the Borrower as of the close of business on the last day of
each month, together with supporting schedules, in form set
forth on Exhibit B, each certified as true and correct by a
duly authorized officer of the Borrower.
(viii) Within 30 days after the end of each month, a report
containing an aging as of the end of the preceding month of
accounts receivable of the Borrower and its Subsidiaries, in a
form satisfactory to the Bank.
(vix) Such other information (including non-financial information) as the
Bank may from time to time reasonably request.
6.2. Use of Proceeds. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Credit Extension for general corporate purposes. The
Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds
of the Advances to purchase or carry any "margin stock" (as defined in
Regulation U).
6.3. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Bank of the occurrence of
any Default or Unmatured Default and of any other development, financial or
otherwise, which could reasonably be expected to have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and do all things necessary to remain duly incorporated or organized,
validly existing and (to the extent such concept applies to such entity) in good
standing as a domestic corporation, partnership or limited liability company in
its jurisdiction of incorporation or organization, as the case may be, and
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States federal and applicable foreign,
state and local tax returns required by law and pay when due all taxes,
assessments and governmental charges and levies upon it or its income, profits
or Property, except those which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been set aside in
accordance with Agreement Accounting Principles.
6.6. Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
all their Property in such amounts and covering such risks as is consistent with
sound business practice, and the Borrower will furnish to the Bank upon request
full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject including,
without limitation, all Environmental Laws.
6.8. Maintenance of Properties. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each Subsidiary to,
permit the Bank, by its representatives and agents, to inspect any of the
Property, books and financial records of the Borrower and each Subsidiary, to
examine and make copies of the books of accounts and other financial records of
the Borrower and each Subsidiary, and to discuss the affairs, finances and
accounts of the Borrower and each Subsidiary with, and to be advised as to the
same by, their respective officers at such reasonable times and intervals as the
Bank may designate.
6.10 Dividends. The Borrower will not, nor will it permit any
Subsidiary to, declare or pay any dividends or make any distributions on its
Capital Stock (other than dividends payable in its own Capital Stock) or redeem,
repurchase or otherwise acquire or retire any of its Capital Stock at any time
outstanding, provided, however, that (i) any Subsidiary may declare and pay
dividends or make distributions to the Borrower or to a Wholly-Owned Subsidiary,
and (ii) the Borrower may redeem, repurchase, or otherwise acquire or retire
shares of its Capital Stock, at a purchase price equivalent to the shares'
then-current fair market value.
6.11. Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(i) The Loan, the other Outstanding Facilities, and the Reimbursement
Obligations.
(ii) Indebtedness arising under Rate Management Transactions.
(iii) The IRB Bonds.
(iv) Indebtedness of any Subsidiary owing to the Borrower or to any
other Subsidiary and indebtedness of the Borrower owing to any
Subsidiary.
(v) The Hurco GmbH Facility, the Mortgage Financing, the UK
Facility, a guaranty of payment of the Hurco GmbH Facility
from the Borrower or any Subsidiary, and the Hurco Guaranty.
(vi) Product warranty obligations incurred in the ordinary course of
business.
(vii) Indebtedness of the Borrower in an aggregate principal amount
from and after the Effective Date not to exceed $350,000
incurred in connection with the CIMPlus Purchase.
(viii) The UK Lease Liability, not to exceed British Pounds Sterling 350,000.
(ix) Indebtedness (other than the Indebtedness permitted under
subsections (i) though (viii) above) which in the aggregate
does not exceed six percent (6%) of the Consolidated Net Worth
existing from time to time.
6.12. Merger. The Borrower will not, nor will it permit any Subsidiary
to, merge or consolidate with or into any other Person, except that a Subsidiary
may merge into the Borrower or a Wholly-Owned Subsidiary.
6.13. Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property (other than
cash) to any other Person, except:
(i) Sales and leases of inventory in the ordinary course of
business, and licensing of software, patents, and other assets
in the ordinary course of business.
(ii) Leases, sales or other dispositions of its Property that,
together with all other Property of the Borrower and its
Subsidiaries previously leased, sold or disposed of (other
than inventory in the ordinary course of business) as
permitted by this Section during the twelve-month period
ending with the month in which any such lease, sale or other
disposition occurs, do not constitute a Substantial Portion of
the Property of the Borrower and its Subsidiaries.
(iii) Sales of the Borrower's Capital Stock, so long as the proceeds are
applied as required by Section 2.5(d)(iv).
6.14. Investments and Acquisitions. The Borrower will not, nor will it
permit any Subsidiary to, make or suffer to exist any Investments (excluding
loans and advances to, and other Investments in, Subsidiaries permitted by
Section 6.11), or commitments therefor, or to create any Subsidiary or to become
or remain a partner in any partnership or joint venture, or to make any
Acquisition of any Person, except:
(i) Cash Equivalent Investments and Investments under the Hurco
Deferred Compensation Plan made pursuant to the Hurco Deferred
Compensation Plan Trust Agreement.
(ii) Existing Investments in Subsidiaries and other Investments in
existence on the date hereof and described in Schedule 1.
(iii) Additional Investments comprised of capital contributions
(whether in the form of cash, a note, or other assets), up to
$1,000,000 in the aggregate, to new or existing Subsidiaries.
6.15. Liens. The Borrower will not, nor will it permit any Subsidiary
to, create, incur, or suffer to exist any Lien in, of or on the Property of the
Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies
on its Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings
and for which adequate reserves in accordance with Agreement
Accounting Principles shall have been set aside on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of
obligations not more than 60 days past due.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions,
or other social security or retirement benefits, or similar
legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a
nature generally existing with respect to properties of a
similar character and which do not in any material way affect
the marketability of the same or interfere with the use
thereof in the business of the Borrower or its Subsidiaries.
(v) Liens in favor of the Bank granted pursuant to any Collateral
Document.
(vi) The interest or title of a lessor under any lease (including
without limitation Capitalized Leases) otherwise permitted
under this Agreement with respect to the property subject to
such lease.
(vii) Liens on the assets of Hurco GmbH to secure the Hurco GmbH Facility.
(viii) Liens on the assets of Hurco Europe to secure the UK Facility.
(ix) A mortgage lien on the Borrower's headquarters and associated
fixtures, leases, and rents to secure the Mortgage Financing.
(x) The lien granted in favor of CIMPlus, Inc. on Property of the
Borrower acquired in connection with the CIMPlus Purchase as
security for Indebtedness permitted by Section 6.11(vii).
(xi) Liens (other than the Liens permitted under subsections (i)
through (x) above) as security for Indebtedness permitted by
Section 6.11(vii) on Property of the Borrower or any
Subsidiary, the book value less applicable depreciation and
amortization of which in the aggregate does not exceed six
percent (6%) of the Consolidated Net Worth existing from time
to time.
6.16. Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with, or
make any payment or transfer to, any Affiliate except in the ordinary
course of business and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than the
Borrower or such Subsidiary would obtain in a comparable arms-length
transaction.
6.17. Sale and Leaseback Transactions. The Borrower will not, nor will
it permit any Subsidiary to, enter into or suffer to exist any Sale and
Leaseback Transaction.
6.18. Contingent Obligations. The Borrower will not, nor will it permit
any Subsidiary to, make or suffer to exist any Contingent Obligation
(including, without limitation, any Contingent Obligation with respect
to the obligations of a Subsidiary), except (i) by endorsement of
instruments for deposit or collection in the ordinary course of
business, (ii) the Reimbursement Obligations, (iii) the Credit
Obligations, (iv) the Guaranty and the Hurco Guaranty, (v) the guaranty
of the Hurco GmbH Facility by the Borrower or any Subsidiary, (vi) the
Guaranty of Underlease dated on or about April 30, 2002, among CMP
Batteries Limited, Hurco Europe, and the Borrower, and (vii) to the
extent permitted by Section 6.11.
6.19. Reserved.
6.20. Financial Covenants.
6.20.1. Minimum Consolidated Net Worth. The Borrower will not permit or
suffer, at the end of each fiscal quarter beginning with the fiscal
quarter ending October 31, 2003, the Consolidated Net Worth to be less
than the sum of (a) $32,000,000 plus, (b) an amount equal to 75% of
positive Consolidated Net Income of the Borrower for the fiscal year
ended October 31, 2003, and for each fiscal year thereafter (excluding
any Other Comprehensive Income for each period), such 75% of
Consolidated Net Income to be added as of the end of each fiscal year
of the Borrower.
6.20.2. Maximum Consolidated Total Indebtedness to Consolidated Total
Capitalization. The Borrower will not permit the ratio, determined as
of the end of each of its fiscal quarters, of (i) Consolidated Total
Indebtedness to (ii) Consolidated Total Capitalization, to be greater
than 0.35 to 1.0.
6.20.3. Fixed Charge Coverage Ratio. The Borrower will not permit the
ratio, determined as of (a) the end of the fiscal quarter ending on
October 31, 2003, for the period of the three fiscal quarters of the
Borrower then ending, (b) the end of each fiscal quarter for the period
of the four fiscal quarters of the Borrower then ending, beginning with
the fiscal quarter ending on January 31, 2004, of (i) Consolidated
EBITDA for such period, minus income taxes included in calculating
Consolidated EBITDA, minus Capital Expenditures incurred during such
period and financed with an Advance or other facility not constituting
long term Indebtedness, minus redemptions of its Capital Stock by the
Borrower, to (ii) principal payments of Indebtedness during such period
(other than principal payments in connection with the CIMPlus Purchase
or the UK Lease Liability) plus Consolidated Interest Expense during
such period, all calculated for the Borrower and its Subsidiaries on a
consolidated basis, to be less than 1.10 to 1.0.
6.21. Banking Relationship. The Borrower will use, and cause its
Domestic Subsidiaries to use, the Bank as its primary bank of account
and related account services.
6.22. Collateral Documents. Promptly, but not more than 10 days after
the event causing the additional collateral requirement, the Borrower
will, and will cause each Guarantor to, (i) execute and deliver
additional Collateral Documents sufficient to grant to the Bank liens
and security interests, securing the Secured Obligations, in any
present or after acquired Collateral (including without limitation
pledging the Capital Stock of any Domestic Subsidiary which is formed
or which ceases to be an Inactive Subsidiary after the date hereof),
and (ii) cause each Domestic Subsidiary which is acquired or created or
which ceases to be an Inactive Subsidiary after the date hereof to
execute and deliver to the Bank a Guaranty and other Collateral
Documents, together with other related documents described in Article
IV sufficient to grant to the Bank liens and security interests in all
Collateral securing the Secured Obligations. The Borrower shall notify
the Bank, within 10 days after the occurrence thereof, of the
acquisition of any Collateral that is not subject to the existing
Collateral Documents, any Person becoming a Subsidiary and any other
event or condition, other than the passage of time, that may require
additional action of any nature in order to preserve the effectiveness
and perfected status of the liens and security interests of the Bank
with respect to all Collateral pursuant to the Collateral Documents,
including without limitation delivering the originals of all promissory
notes and other instruments to the Bank and delivering the originals of
all stock certificates or other certificates evidencing any Capital
Stock which is Collateral at any time.
6.23. Further Assurances. The Borrower will, and will cause each
Guarantor to, execute and deliver within 30 days after request therefor
by the Bank, all further instruments and documents and take all further
action that may be necessary or desirable, or that the Bank may
request, in order to give effect to, and to aid in the exercise and
enforcement of the rights and remedies of the Bank under, this
Agreement, the Notes and the Collateral Documents, including without
limitation causing each lessor of real property to the Borrower, any
Guarantor or any of their respective Subsidiaries to execute and
deliver to the Bank, prior to or upon the commencement of any tenancy,
an agreement in form and substance acceptable to the Bank duly executed
on behalf of such lessor waiving any distraint, lien and similar rights
with respect to any property subject to the Collateral Documents and
agreeing to permit the Bank to enter such premises in connection
therewith. In addition, each of the Borrower and each Guarantor agrees
to deliver to the Bank within 30 days after the acquisition or creation
of any Subsidiary not listed in Schedule 5.8 hereto, supplements to
Schedule 5.8 such that such Schedule, together with such supplements,
shall at all times accurately reflect the information provided for
thereon. Each of the Borrower and each Guarantor further agrees to
deliver to the Bank, on or before each anniversary date of the
Effective Date, a certificate of the chief financial officer of the
Borrower or each Guarantor, as the case may be, stating that such
officer has reviewed the Collateral Documents and that each party
thereto is in compliance with the terms thereof. The Borrower and each
Guarantor shall take, or cause to be taken, all action necessary to
permit such an opinion to be rendered, including filing such financing
statements and continuation statements and executing and delivering
such supplements to the Collateral Documents and other instruments as
may be necessary or desirable in connection with such opinion.
6.24. Accounting Changes. Until the Facility Termination Date and
thereafter until payment in full of accrued interest on the Notes and
the performance of all other Obligations, the Borrower agrees that,
unless the Bank shall otherwise consent in writing it shall not, and
shall not permit any of its Subsidiaries to, change their respective
fiscal years or make any significant changes (i) in accounting
treatment and reporting practices except as permitted by Agreement
Accounting Principles and disclosed to the Bank, or (ii) in tax
reporting treatment except as permitted by law and disclosed to the
Bank.
6.25. Inconsistent Agreements. Until the Facility Termination Date and
thereafter until payment in full of accrued interest on the Notes and
the performance of all other Obligations, the Borrower agrees that,
unless the Bank shall otherwise consent in writing it shall not, and
shall not permit any of its Subsidiaries to, enter into any agreement
containing any provision which would be violated or breached by this
Agreement or any of the transactions contemplated hereby or by
performance by the Borrower or any of its Subsidiaries of the
obligations in connection therewith.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower or any of its Subsidiaries to the Bank under or in connection
with this Agreement, any Credit Extension, or any certificate or information
delivered in connection with this Agreement or any other Loan Document shall be
materially false on the date as of which made or deemed made and such failure
continues for more than five days following written notice thereof to the
Borrower.
7.2. Nonpayment of principal of any Credit Obligation when due,
nonpayment of any Reimbursement Obligation when due, or nonpayment of interest
upon any Credit Extension or of any amendment fee, LC Fee, facility fee or other
obligations under any of the Loan Documents when due, which nonpayment continues
for a period of three days following written notice thereof to the Borrower by
the Bank.
7.3. The breach by the Borrower of any of the terms or provisions of
Section 6.10 through Section 6.25, and such breach continues for more than ten
days following written notice thereof to the Borrower.
7.4. The breach by the Borrower (other than a breach which constitutes
a Default under another Section of this Article VII) of any of the terms or
provisions of this Agreement which is not remedied within thirty days after
written notice from the Bank.
7.5. Failure of the Borrower or any of its Active Subsidiaries or any
Guarantor to pay when due any Indebtedness (other than Indebtedness hereunder
but including the UK Facility); or the default by the Borrower or any of its
Subsidiaries or any Guarantor in the performance (beyond the applicable grace
period with respect thereto, if any) of any term, provision or condition
contained in any agreement under which any such Indebtedness was created or is
governed, including without limitation any Bond Default or any other event shall
occur or condition exist, the effect of which default or event is to cause, or
to permit the holder or holders of such Indebtedness to cause, such Indebtedness
to become due prior to its stated maturity; or any Indebtedness of the Borrower
or any of its Subsidiaries or any Guarantor shall be declared to be due and
payable or required to be prepaid or repurchased (other than by a regularly
scheduled payment) prior to the stated maturity thereof; or the Borrower or any
of its Subsidiaries or any Guarantor shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.
7.6. The Borrower or any of its Subsidiaries or any Guarantor shall (i)
have an order for relief entered with respect to it under the Federal bankruptcy
laws as now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate or partnership action to authorize or
effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail
to contest in good faith any appointment or proceeding described in Section 7.7.
7.7. Without the application, approval or consent of the Borrower or
any of its Active Subsidiaries, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any of its Subsidiaries
or any Substantial Portion of its Property, or a proceeding described in Section
7.6(iv) shall be instituted against the Borrower or any of its Active
Subsidiaries and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 30 consecutive days.
7.8. Any court, government or governmental agency shall condemn, seize
or otherwise appropriate, or take custody or control of, all or any portion of
the Property of the Borrower and its Active Subsidiaries which, when taken
together with all other Property of the Borrower and its Active Subsidiaries so
condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such action occurs,
constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within 30 days
to pay, bond or otherwise discharge one or more (i) judgments or orders for the
payment of money in excess of $100,000 (or the equivalent thereof in currencies
other than U.S. Dollars) in the aggregate, or (ii) nonmonetary judgments or
orders which, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, which judgment(s), in any such case, is/are not
stayed on appeal or otherwise being appropriately contested in good faith.
7.10. There are any Unfunded Liabilities of any Single Employer Plans
for which the Borrower or any Guarantor may be liable or any Reportable Event
shall occur in connection with any Plan.
7.11. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan.
7.12. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Borrower and the other
members of the Controlled Group (taken as a whole) to all Multiemployer Plans
which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding the
plan year in which the reorganization or termination occurs.
7.13. The Borrower or any of its Subsidiaries shall (i) be the subject
of any proceeding or, to its knowledge, investigation pertaining to the release
by the Borrower, any of its Subsidiaries or any other Person of any toxic or
hazardous waste or substance into the environment, or (ii) violate any
Environmental Law, which, in the case of an event described in clause (i) or
clause (ii), could reasonably be expected to have a Material Adverse Effect.
7.14. The occurrence of any "default", as defined in any Loan Document
(other than this Agreement) or the breach of any of the terms or provisions of
any Loan Document (other than this Agreement), which default or breach continues
beyond any period of grace therein provided.
7.15. Nonpayment by the Borrower or any Subsidiary of any Rate
Management Obligation when due or the breach by the Borrower or any Subsidiary
of any term, provision or condition contained in any Rate Management
Transaction.
7.16. Any Guaranty shall fail to remain in full force or effect or any
action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Guaranty, or any Guarantor shall fail to comply with any
of the terms or provisions of any Guaranty to which it is a party, or any
Guarantor shall deny that it has any further liability under any Guaranty to
which it is a party, or shall give notice to such effect.
7.17. Any Collateral Document shall fail to create a valid security
interest in the property identified therein as collateral to be covered thereby,
except as permitted by the terms of the Collateral Documents, and, to the extent
such failure is curable, the Borrower fails to execute an amendment to such
Collateral Document to remedy such failure within ten days after written request
from the Bank and submission to the Borrower of such amendment; or any
Collateral Document shall fail to remain in full force and effect (other than by
reason of any release or termination thereof to which the Bank has agreed) and,
to the extent such failure is curable, the Borrower fails to execute and deliver
to the Bank such documents as are reasonably required by the Bank to reinstate
or replace such Collateral Document within ten days after written request by the
Bank. The Borrower's violation of this Section 7.17 shall not constitute an
Unmatured Default, provided however, the Bank may declare a Default following
any violation of this Section 7.17.
7.18. The representations and warranties set forth in Section 5.15
shall at any time not be true and correct.
ARTICLE VIIA
AMENDMENT TO REIMBURSEMENT AGREEMENT
7A.1. Administration of Outstanding Facilities. The Borrower will pay
or cause to be paid all amounts required to be paid on the Reimbursement
Agreement under Article 3 and perform or cause to be performed all other
obligations contained in the Outstanding Facilities, except to the extent any
such performance would be inconsistent with the requirements of this Agreement.
The Reimbursement Agreement and the IRB L/C shall continue to be governed by the
documents under which they were originally issued, as amended through the
Effective Date, and as further amended under this Agreement below.
7A.2. Amendments to Reimbursement Agreement. After the Effective Date,
the Reimbursement Agreement is amended as follows:
The first two sentences of Section 4.02(b) of the Reimbursement
Agreement are amended to read as follows: "Permit or suffer the breach of any
covenant or agreement contained in Article VI of the Third Amended and Restated
Credit Agreement and Amendment to Reimbursement Agreement among the Company and
Bank One, NA, dated as of December 1, 2003 (as amended or modified from time to
time, the "Credit Agreement"). All such provisions of Article VI, including
definitions of defined terms used therein and exhibits referred to therein, are
incorporated by reference and made a part of this Agreement to the same extent
as if set forth fully herein, except that all cross references shall refer to
the relevant provision or provisions as incorporated herein."
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration; Facility LC Collateral Account. (i) If any Default
described in Section 7.6 or 7.7 occurs with respect to the Borrower, the
obligations of the Bank to make Advances hereunder and the obligation and power
of the Bank to issue Facility LCs shall automatically terminate and the
Obligations shall immediately become due and payable without any election or
action on the part of the Bank and the Borrower will be and become thereby
unconditionally obligated, without any further notice, act or demand, to pay to
the Bank an amount in immediately available funds, which funds shall be held in
the Facility LC Collateral Account, equal to the difference of (x) the amount of
LC Obligations at such time, less (y) the amount on deposit in the Facility LC
Collateral Account at such time which is free and clear of all rights and claims
of third parties and has not been applied against the Obligations (such
difference, the "Collateral Shortfall Amount"). If any other Default occurs, the
Bank may (a) terminate or suspend its obligations to make Advances hereunder and
its obligation and power to issue Facility LCs, or declare the Obligations to be
due and payable, or both, whereupon the Obligations shall become immediately due
and payable, without presentment, demand, protest or notice of any kind, all of
which the Borrower expressly waives, and (b) upon notice to the Borrower and in
addition to the continuing right to demand payment of all amounts payable under
this Agreement, make demand on the Borrower to pay, and the Borrower will,
forthwith upon such demand and without any further notice or act, pay to the
Bank the Collateral Shortfall Amount, which funds shall be deposited in the
Facility LC Collateral Account.
(ii) If at any time while any Default is continuing, the Bank
determines that the Collateral Shortfall Amount at such time is greater than
zero, the Bank may make demand on the Borrower to pay, and the Borrower will,
forthwith upon such demand and without any further notice or act, pay to the
Bank the Collateral Shortfall Amount, which funds shall be deposited in the
Facility LC Collateral Account.
(iii) The Bank may at any time or from time to time after funds are
deposited in the Facility LC Collateral Account, apply such funds to the payment
of the Obligations and any other amounts as shall from time to time have become
due and payable by the Borrower to the Bank under the Loan Documents.
(iv) At any time while any Default is continuing, neither the Borrower
nor any Person claiming on behalf of or through the Borrower shall have any
right to withdraw any of the funds held in the Facility LC Collateral Account.
After all of the Obligations have been indefeasibly paid in full and the
Commitment has been terminated, any funds remaining in the Facility LC
Collateral Account shall be returned by the Bank to the Borrower or paid to
whomever may be legally entitled thereto at such time.
8.2. Amendments. The Bank and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions to the
Loan Documents or changing in any manner the rights of the Borrower hereunder or
waiving any Default hereunder.
8.3. Preservation of Rights. No delay or omission of the Bank to
exercise any right under the Loan Documents shall impair such right or be
construed to be a waiver of any Default or an acquiescence therein, and the
making of a Credit Extension notwithstanding the existence of a Default or the
inability of the Borrower to satisfy the conditions precedent to such Credit
Extension shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation
of the terms, conditions or provisions of the Loan Documents whatsoever shall be
valid unless in writing signed by the Bank, and then only to the extent in such
writing specifically set forth. All remedies contained in the Loan Documents or
by law afforded shall be cumulative and all shall be available to the Bank until
the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and warranties of
the Borrower contained in this Agreement shall survive the making of the Credit
Extensions herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, the Bank shall not be obligated to extend credit
to the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.4. Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Borrower and the Bank and supersede all prior
agreements and understandings among the Borrower and the Bank relating to the
subject matter thereof.
9.5. Benefits of this Agreement. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
9.6. Expenses; Indemnification. (i) The Borrower shall reimburse the
Bank for any costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and reasonable time charges of attorneys for the
Bank, which attorneys may be employees of the Bank) paid or incurred by the Bank
in connection with the preparation, negotiation, execution, delivery,
distribution (including, without limitation, via the internet), review,
amendment, modification, and administration of the Loan Documents. The Borrower
also agrees to reimburse the Bank for any costs, internal charges and
out-of-pocket expenses (including reasonable attorneys' fees and reasonable time
charges of attorneys for the Bank, which attorneys may be employees of the Bank)
paid or incurred by the Bank in connection with the collection and enforcement
of the Loan Documents. Expenses being reimbursed by the Borrower under this
Section include, without limitation, the cost and expense of obtaining an
appraisal of each parcel of real property or interest in real property described
in the Mortgage, which appraisal shall be in conformity with the applicable
requirements of any law or any governmental rule, regulation, policy, guideline
or directive (whether or not having the force of law), or any interpretation
thereof, including, without limitation, the provisions of Title XI of the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended,
reformed or otherwise modified from time to time, and any rules promulgated to
implement such provisions and costs and expenses incurred in connection with the
Reports described in the following sentence. The Borrower acknowledges that from
time to time the Bank may prepare (but shall have no obligation or duty to
prepare) certain audit reports (the "Reports") pertaining to the Borrower's
assets for internal use by the Bank from information furnished to it by or on
behalf of the Borrower, after the Bank has exercised its rights of inspection
pursuant to this Agreement.
(ii) The Borrower further agrees to indemnify the Bank, its affiliates,
and each of its directors, officers and employees against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not
the Bank or any Affiliate is a party thereto) which any of them may pay or incur
arising out of or relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Credit Extension hereunder except to
the extent that they are determined in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the party seeking indemnification. The obligations of the
Borrower under this Section 9.6 shall survive the termination of this Agreement.
9.7. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles, except that any calculation or determination which is to be made on
a consolidated basis shall be made for the Borrower and all its Subsidiaries,
including those Subsidiaries, if any, which are unconsolidated on the Borrower's
audited financial statements.
9.8. Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.9. Nonliability of the Bank. The relationship between the Borrower on
the one hand and the Bank on the other hand shall be solely that of borrower and
lender. The Bank shall not have any fiduciary responsibilities to the Borrower.
The Bank does not undertake any responsibility to the Borrower to review or
inform the Borrower of any matter in connection with any phase of the Borrower's
business or operations. The Borrower agrees that the Bank shall not have
liability to the Borrower (whether sounding in tort, contract or otherwise) for
losses suffered by the Borrower in connection with, arising out of, or in any
way related to, the transactions contemplated and the relationship established
by the Loan Documents, or any act, omission or event occurring in connection
therewith, unless it is determined in a final non-appealable judgment by a court
of competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. The Bank shall
not have any liability with respect to, and the Borrower waives, releases and
agrees not to sue for, any special, indirect, consequential or punitive damages
suffered by the Borrower in connection with, arising out of, or in any way
related to the Loan Documents or the transactions contemplated thereby.
9.10. Confidentiality. The Bank agrees to hold any confidential
information which it may receive from the Borrower pursuant to this Agreement in
confidence, except for disclosure (i) to its Affiliates, (ii) to legal counsel,
accountants, and other professional advisors to such Affiliate or to a
Transferee, (iii) to regulatory officials, (iv) to any Person as requested
pursuant to or as required by law, regulation, or legal process, (v) to any
Person in connection with any legal proceeding to which such Affiliate is a
party, (vi) to such Affiliate's direct or indirect contractual counterparties in
swap agreements or to legal counsel, accountants and other professional advisors
to such counterparties, and (vii) permitted by Section 11.4.
9.11. Disclosure. The Borrower acknowledges and agrees that the Bank
and/or its Affiliates from time to time may hold investments in, make other
loans to or have other relationships with the Borrower and its Affiliates.
9.12. Construction of Certain Provisions.If any provision of this
Agreement refers to any action to be taken by any person, or which such person
is prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such person, whether or not expressly
specified in such provision.
9.13. Independence of Covenants.All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to, or
would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or such condition exists.
9.14. Interest Rate Limitation. Notwithstanding any provisions of this
Agreement or the Notes, in no event shall the amount of interest paid or agreed
to be paid by the Borrower exceed an amount computed at the highest rate of
interest permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Agreement or the Notes at the
time performance of such provision shall be due shall involve exceeding the
interest rate limitation validly prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be
fulfilled shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law. If for any reason whatsoever the Bank shall
ever receive as interest an amount which would be deemed unlawful under such
applicable law, the amount shall be automatically applied to the payment of
principal of the Advances outstanding hereunder (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the
Borrower if such principal and all other obligations of the Borrower to the Bank
have been paid in full.
9.15. USA Patriot Act Notification. The following notification is
provided to Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31
U.S.C. Section 5318:
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To
help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain,
verify, and record information that identifies each person or entity
that opens an account, including any deposit account, treasury
management account, loan, other extension of credit, or other financial
services product. What this means for Borrower: When Borrower opens an
account, Bank will ask for Borrower's name, tax identification number,
business address, and other information that will allow Bank to
identify Borrower. Bank may also ask to see Borrower's legal
organization documents or other identifying documents.
ARTICLE X
SETOFF
In addition to, and without limitation of, any rights of the Bank under
applicable law, if the Borrower becomes insolvent, however evidenced, or any
Default occurs, any and all deposits (including all account balances, whether
provisional or final and whether or not collected or available) and any other
Indebtedness at any time held or owing by the Bank or any Affiliate of the Bank
to or for the credit or account of the Borrower may be offset and applied toward
the payment of the Secured Obligations owing to the Bank, whether or not the
Secured Obligations, or any part thereof, shall then be due.
ARTICLE XI
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
11.1. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, provided that the Borrower may not, without the prior written consent
of the Bank, assign its rights or obligations hereunder or under any Notes and
the Bank shall not be obligated to make any Advance hereunder to any entity
other than the Borrower.
11.2. Participations.
11.2.1. Permitted Participants; Effect. The Bank may, in the
ordinary course of its business and in accordance with applicable law,
at any time sell to one or more banks or other entities
("Participants") participating interests in any Outstanding Credit
Exposure of the Bank, any Note held by the Bank, any Commitment of the
Bank or any other interest of the Bank under the Loan Documents. In the
event of any such sale by the Bank of participating interests to a
Participant, the Bank's obligations under the Loan Documents shall
remain unchanged, the Bank shall remain solely responsible to the
Borrower for the performance of such obligations, the Bank shall remain
the owner of its Outstanding Credit Exposure and the holder of any Note
issued to it in evidence thereof for all purposes under the Loan
Documents, all amounts payable by the Borrower under this Agreement
shall be determined as if the Bank had not sold such participating
interests, and the Borrower shall continue to deal solely and directly
with the Bank in connection with the Bank's rights and obligations
under the Loan Documents.
11.2.2. Voting Rights. Unless otherwise agreed between the
Bank and any Participant, the Bank shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents.
11.2.3. Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in
Article 10 in respect of its participating interest in amounts owing
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as the Bank under the
Loan Documents, provided that the Bank shall retain the right of setoff
provided in Article 10 with respect to the amount of participating
interests sold to each Participant. The Bank agrees to share with each
Participant, and each Participant, by exercising the right of setoff
provided in Article 10, agrees to share with the Bank, any amount
received pursuant to the exercise of its right of setoff, such amounts
to be shared in accordance with their respective pro rata shares of the
Commitment or, if the Commitment is no longer available, in accordance
with their respective pro rata shares of the Outstanding Credit
Exposure.
11.3. Dissemination of Information. The Borrower authorizes the Bank to
disclose to any Participant or any other Person acquiring an interest in the
Loan Documents by operation of law or otherwise (each a "Transferee") and any
prospective Transferee any and all information in the Bank's possession
concerning the creditworthiness of the Borrower and its Subsidiaries, including
without limitation any information contained in any Reports; provided that each
Transferee and prospective Transferee agrees to be bound by Section 9.10 of this
Agreement.
ARTICLE XII
NOTICES
12.1. Notices. Except as otherwise permitted by Section 2.8 with
respect to borrowing notices, all notices, requests and other communications to
any party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party: in
the case of the Borrower or the Bank, at its address or facsimile number set
forth on the signature pages hereof, or in the case of any future party, at such
other address or facsimile number as such future party may hereafter specify for
the purpose by notice to the Bank and the Borrower in accordance with the
provisions of this Section 12.1. Each such notice, request or other
communication shall be effective (i) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and confirmation
of receipt is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered (or, in the case
of electronic transmission, received) at the address specified in this Section;
provided that notices to the Bank under Article II shall not be effective until
received.
12.2. Change of Address. The Borrower and the Bank may each change the
address for service of notice upon it by a notice in writing to the other party
hereto.
ARTICLE XIII
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and either party hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower and the Bank and the
Borrower has notified the Bank by facsimile transmission or telephone that it
has taken such action.
ARTICLE XIV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
14.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF INDIANA, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
14.2. CONSENT TO JURISDICTION. THE BORROWER IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR INDIANA STATE COURT
SITTING IN INDIANAPOLIS, INDIANA, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT
OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE
RIGHT OF THE BANK TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY
OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE BANK OR
ANY AFFILIATE OF THE BANK INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN INDIANAPOLIS, INDIANA.
14.3. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK WAIVE 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,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
[The balance of this page is
intentionally left blank.]
IN WITNESS WHEREOF, the Borrower and the Bank have executed this
Agreement as of the date first above written.
HURCO COMPANIES, INC.
By: /s/ Roger J. Wolf
Roger J. Wolf
Title: Senior Vice President and CFO
One Technology Way
Indianapolis, Indiana 46268
Attention: CFO
Telephone: (317) 293-5309
FAX: (317) 328-2811
BANK ONE, NA,
with its principal office in Chicago, Illinois
By: /s/ Brian D. Smith
Brian D. Smith
Title: First Vice President
Attention: Brian D. Smith
Telephone: (317) 321-7089
FAX: (317) 321-6771