Exhibit 10.10
AMENDED AND RESTATED CREDIT AGREEMENT AND
AMENDMENT TO REIMBURSEMENT AGREEMENT,
effective September 8, 1997
Between the Registrant and NBD Bank, N.A. and NBD Bank
- -ii-
HURCO COMPANIES, INC.
------------------------------------------
AMENDED AND RESTATED
CREDIT AGREEMENT
AND
AMENDMENT TO REIMBURSEMENT AGREEMENT
dated as of September 8, 1997
------------------------------------------
NBD BANK, N.A.
NBD BANK
-i-
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
1.1 Certain
Definitions...........................................................2
1.2 Other Definitions; Rules of
Construction................................................16
ARTICLE 2 THE COMMITMENTS AND THE ADVANCES
2.1 Commitment of the Bank.
................................................................16
2.2 Termination and Reduction of
Commitment.................................................17
2.3
Fees......................................................................18
2.4 Disbursing
Advances.....................................................................19
2.5 Conditions for First
Disbursement.......................................................20
2.6 Further Conditions for
Disbursement.....................................................20
2.7 Subsequent Elections as to
Loans........................................................21
2.8 Limitation of Requests and
Elections....................................................21
2.9 Minimum Amounts; Limitation on Number of Loans;
Etc.....................................22
ARTICLE 3 PAYMENTS AND PREPAYMENTS OF ADVANCES
3.1 Principal Payments and
Prepayments......................................................22
3.2 Interest
Payments....................................................................23
3.3 Letter of Credit Reimbursement
Payments.................................................24
3.4 Payment
Method.......................................................................25
3.5 No Setoff or
Deduction..................................................................26
3.6 Payment on Non-Business Day; Payment
Computations.......................................26
3.7 Additional
Costs........................................................................26
3.8 Illegality and
Impossibility............................................................27
3.9
Indemnification.............................................................28
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
4.1 Corporate Existence and
Power...........................................................28
4.2 Corporate
Authority.....................................................................28
4.3 Binding
Effect.......................................................................29
4.4
Subsidiaries.................................................................29
4.5
Litigation...................................................................29
4.6 Financial
Condition.....................................................................29
4.7 Use of
Advances.....................................................................30
4.8 Consents,
Etc...........................................................................30
4.9
Taxes........................................................................30
4.10 Title to
Properties...................................................................31
4.11
ERISA........................................................................31
4.12
Disclosure...................................................................31
4.13 Environmental and Safety
Matters........................................................31
4.14 No
Default......................................................................32
4.15 No Burdensome
Restrictions..............................................................32
ARTICLE 5 COVENANTS
5.1 Affirmative
Covenants...................................................................32
5.2 Negative
Covenants...................................................................35
ARTICLE DEFAULT
6.1 Events of
Default.......................................................................40
6.2
Remedies......................................................................42
ARTICLE 6A DEFAULT
6A.1 Administration of Outstanding
Facilities................................................43
6A.2 Amendments to NBD Term
Loan.............................................................43
6A.3 Amendments to Reimbursement
Agreement...................................................44
ARTICLE 7 MISCELLANEOUS
7.1 Amendments,
Etc.........................................................................44
7.2
Notices.................................................................45
7.3 No Waiver By Conduct; Remedies
Cumulative...............................................45
7.4 Reliance on and Survival of Various
Provisions..........................................46
7.5 Expenses;
Indemnification...............................................................46
7.6 Successors and
Assigns..................................................................48
7.7
Counterparts..................................................................49
7.8 Governing
Law...........................................................................49
7.9 Table of Contents and
Headings..........................................................50
7.10 Construction of Certain
Provisions......................................................50
7.11 Integration and
Severability............................................................50
7.12 Independence of
Covenants...............................................................50
7.13 Interest Rate
Limitation................................................................50
7.14 Waiver of Jury
Trial....................................................................51
.........EXHIBITS
.........Exhibit A.........Revolving Credit Note
.........Exhibit B.........Request for Advance
.........Exhibit C.........Request for Continuation or Conversion
.........Exhibit D.........Form of Opinion
THIS AMENDED AND RESTATED CREDIT AGREEMENT AND AMENDMENT TO
REIMBURSEMENT AGREEMENT, dated as of September __, 1997 (this "Agreement"), is
among HURCO COMPANIES, INC., an Indiana corporation (the "Company"), NBD BANK,
N.A., a national banking association having its headquarters in Indianapolis,
Indiana (the "Bank"), and NBD BANK, a Michigan banking corporation having its
headquarters in Detroit, Michigan ("NBD Michigan").
INTRODUCTION
To replace an existing credit facility issued in its favor by NBD
Michigan, an affiliate of the Bank, pursuant to the 1996 Credit Agreement (as
defined below), the Company desires to obtain a revolving credit facility,
including letters of credit, in the aggregate principal amount of $22,500,000 in
order to provide funds and other financial accommodations for working capital
and its other general corporate purposes, and the Bank is willing to establish
the credit facility in the Company's favor on the terms set forth below.
The Company further desires to have the Bank assume the Company's term
loan presently issued by NBD Michigan under the Term Loan Agreement (as defined
below).
Autocon and IMS (each as defined below) have separately provided
certain security to NBD Michigan to secure the prompt and complete payment of
amounts due under the 1996 Credit Agreement, and desire to guaranty the
Company's performance under this Agreement.
Contemporaneously herewith, Hurco Europe and Hurco GmbH (each as
defined below), subsidiaries of the Company, are entering into the European
Facility (as defined below) with FCNBD (as defined below) to obtain a certain
credit facility, the amount of which will be limited by the facilities
outstanding hereunder, and the Company and the Guarantors desire to provide a
guaranty to FCNBD of this facility.
The Company and NBD Michigan are parties to a Reimbursement Agreement
(as defined below), pursuant to which NBD Michigan has issued the IRB L/C (as
defined below). The Company desires to amend the Reimbursement Agreement to
coordinate its provisions with those of this Agreement, to have Autocon and IMS
guaranty its obligations thereunder, and to have NBD Michigan acknowledge such
amendments and guaranty. Pursuant to a Participation Agreement of even date
herewith (the "Participation Agreement"), the Bank has purchased a 100 percent
participation in NBD Michigan's rights and obligations under the Reimbursement
Agreement and the IRB L/C.
The Bank is willing to undertake these additional matters, and NBD
Michigan is willing to 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 1
DEFINITIONS
1.1 Certain Definitions. As used herein, the following terms have
the following respective meanings:
"Active Subsidiary" means a Subsidiary of the Company which is
not an Inactive Subsidiary.
"Actuarial Present Value of Accumulated Plan Benefits" means,
with respect to any Plan as of any date, the "Actuarial present value of
accumulated plan benefits" of such Plan as defined in Statement of Financial
Accounting Standards No. 35, determined pursuant to Generally Accepted
Accounting Principles, uniformly applied.
"Advance" means any Loan and any Letter of Credit Advance.
"Affiliate", when used with respect to any person, means any
other person which, directly or indirectly, controls or is controlled by or is
under common control with such person and, with respect to the Company, includes
each officer, director, and person who holds 10% or more of the Company's voting
stock. For purposes of this definition, "control" (including the correlative
meanings of the terms "controlled by" and "under common control with"), with
respect to any person, means possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities or by contract or otherwise.
"Applicable Commitment Fee" means the following per annum rate
in effect on each Interest Payment Date, based upon the ratio of Consolidated
Total Indebtedness to EBITDA, as adjusted on the first day of each fiscal
quarter of the Company, based upon such ratio for the four fiscal quarters
immediately preceding the fiscal quarter most recently ended (e.g., beginning
with the fiscal quarter starting on February 1, the per annum rate shall be
based on the ratio for the four fiscal quarters ending on the prior October 31):
Ratio Commitment Fee
(a) less than or equal to .5 to 1.0 .15%
(b) greater than .5 to 1.0 and less than .20%
or equal to 1.0 to 1.0
(c) greater than 1.0 to 1.0 and less .25%
than or equal to 2.0 to 1.0
(d) greater than 2.0 to 1.0 and less .3125%
than or equal to 2.5 to 1.0
(e) greater than 2.5 to 1.0 .375%
"Applicable Eurodollar Rate Margin" means the following margin
per annum based upon the ratio of Consolidated Total Indebtedness to EBITDA, as
adjusted on the first day of each fiscal quarter of the Company, based upon such
ratio for the four fiscal quarters immediately preceding the fiscal quarter most
recently ended (e.g., beginning with the fiscal quarter starting on February 1,
the margin shall be based on the ratio for the four fiscal quarters ending on
the prior October 31); provided, that, the Eurodollar Rate shall not be adjusted
pursuant to the Applicable Eurodollar Rate Margin for any outstanding Eurodollar
Rate Loan during the applicable Eurodollar Interest Period:
Eurodollar
Ratio Rate Margin
(a) less than or equal to .5 to 1.0 0.75%
(b) greater than .5 to 1.0 and less than 1.00%
or equal to 1.0 to 1.0
(c) greater than 1.0 to 1.0 and less 1.125%
than or equal to 1.5 to 1.0
(d) greater than 1.5 to 1.0 and less 1.375%
than or equal to 2.0 to 1.0
(e) greater than 2.0 to 1.0 and less 1.75%
than or equal to 2.5 to 1.0
(f) greater than 2.5 to 1.0 2.0%
"Asset Sale Proceeds" means the proceeds (net of all
disposition expenses) of selling or otherwise disposing of assets of the Company
or any Subsidiary (other than inventory, machinery, and equipment sold in the
ordinary course of business upon customary credit terms and other than sales of
the Company's Capital Stock) to the extent that the aggregate book value
(disregarding any write-downs of such book value other than ordinary
depreciation and amortization) of the assets disposed of in such sales or other
dispositions (a) in any single year exceeds 5% of the Consolidated Assets at the
end of the prior fiscal year, or (b) in any two successive fiscal years exceeds
10% of the Consolidated Assets at the end of the fiscal year of the prior two
fiscal years for which the amount of the Consolidated Assets is greater, less
all Asset Sale Proceeds paid under Section 3.1(d) resulting from sales or other
dispositions during the first of the two successive fiscal years.
"Autocon" means Autocon Technologies, Inc., an Indiana
corporation and wholly-owned subsidiary of the Company.
"Automatic Termination Date" means May 1, 2000.
"Bond Default", as used in the Reimbursement Agreement, means
the occurrence of an Event of Default under Section 601(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.
"Business Day" means a day other than a Saturday, Sunday, or
other day on which the Bank is not open to the public for carrying on
substantially all of its banking functions in Indianapolis, Indiana.
"Capital Expenditures" means capital expenditures of the
Company and its Subsidiaries, as defined and classified in accordance with
Generally Accepted Accounting Principles, and including, without duplication,
any Capital Lease and capitalized software developments costs of the Company and
its Subsidiaries, computed on a consolidated basis in accordance with Generally
Accepted Accounting Principles.
"Capital Lease" of any person means any lease which, in
accordance with Generally Accepted Accounting Principles, is or should be
capitalized on the person's books.
"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.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations thereunder.
"Commitment" means the commitment of the Bank to make
Revolving Credit Loans and Letter of Credit Advances pursuant to Section 2.1, in
amounts not exceeding an aggregate principal amount outstanding of $22,500,000,
as such amount may be reduced from time to time pursuant to Section 2.2.
"Consolidated" or "consolidated" means, when used with
reference to any financial term in this Agreement, the aggregate for two or more
persons of the amounts signified by such term for all such persons determined on
a consolidated basis in accordance with Generally Accepted Accounting
Principles.
"Consolidated Assets" as of any date means the aggregate book
value of the total assets of the Company and its Subsidiaries determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles.
"Consolidated Fixed Charges" for any period means the sum of:
(a) interest expense (including the interest component of Rentals under Capital
Leases and capitalized interest) of the Company and its Subsidiaries for such
period, determined in accordance with Generally Accepted Accounting Principles,
and (b) Rentals of the Company and its Subsidiaries under all leases other than
Capital Leases.
"Consolidated Fixed Charge Net Income" for any period means
the consolidated net income and net losses of the Company and its Subsidiaries
determined in accordance with Generally Accepted Accounting Principles, but
excluding therefrom (a) any extraordinary gain or loss so classified in
accordance with Generally Accepted Accounting Principles and (b) the net income
or loss of any person (other than a Subsidiary of the Company) in which the
Company or any of its Subsidiaries has an ownership interest and, with respect
to such net income, only to the extent that it has not been received by the
Company or such Subsidiary in the form of dividends or other similar
distributions.
"Consolidated Income Available for Fixed Charges" for any
period means the sum of Consolidated Fixed Charge Net Income for such period,
plus (to the extent deducted in determining Consolidated Fixed Charge Net
Income) (a) all provisions for any federal, state, or other income taxes
(including without limitation the SBT) made by the Company and its Subsidiaries
during such period, (b) interest expense (including the interest component of
Rentals under Capital Leases and capitalized interest) of the Company and its
Subsidiaries during such period, and (c) Rentals of the Company and its
Subsidiaries under all leases other than Capital Leases during such period.
"Consolidated Total Capitalization" means the sum of
consolidated Tangible Net Worth of the Company and its Subsidiaries plus
Consolidated Total Indebtedness, determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles.
"Consolidated Total Indebtedness" means, as of any date, the
Indebtedness of the Company and its Subsidiaries, determined on a consolidated
basis in accordance with Generally Accepted Accounting Principles which (a) is
interest-bearing, and (b), in accordance with Generally Accepted Accounting
Principles, should be reflected on a consolidated balance sheet for the Company
and its Subsidiaries as of such date.
"Contingent Liabilities" of any person means, as of any date,
all obligations of such person or of others for which such person is
contingently liable, as obligor, 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 any letters of credit, surety bonds or
similar obligations (including, without limitation, bankers acceptances) 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.
"Contractual Obligation" means, as to any person, any
provision of any security issued by such person or of any agreement, instrument
or other undertaking to which such person is a party or by which it or any of
its property is bound.
"Credit Obligations" means all present and future obligations
and other liabilities of the Company 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 all 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 face amount of the IRB L/C
and the Letters of Credit plus the unreimbursed portions of any amounts drawn
under the IRB L/C and the Letters of Credit.
"Cumulative Net Income" means, as of any date, the
consolidated net income of the Company and its Subsidiaries (after deduction for
income taxes, including without limitation the SBT) for the period commencing on
May 1, 1997, through the end of the most recently completed fiscal quarter (but
without reduction for any consolidated net loss incurred by the Company and its
Subsidiaries for the period from May 1, 1997, through October 31, 1997, or for
any fiscal quarter in any fiscal year during such period which, as of the end of
such period, has not closed), taken as one accounting period, all as determined
in accordance with Generally Accepted Accounting Principles.
"Currency" means any non-Dollar currency in which a foreign
branch or Affiliate of the Bank is willing to issue a Letter of Credit Advance
under this Agreement or in which FCNBD has made a loan under the European
Facility.
"Default" means any event or condition which might become an
Event of Default with notice or lapse of time or both.
"Dollar Equivalent" means, with respect to each Advance in
Dollars, the amount thereof, and, with respect to each Advance or loan under the
European Facility in a Currency, the sum in Dollars resulting from converting
the amount of such Advance or loan from the relevant Currency into Dollars at
the most favorable spot exchange rate determined by the Bank to be available to
it for purchasing that Currency with Dollars at 11:00 a.m. local time for the
relevant foreign exchange market on the date such Advance or loan is disbursed,
or on such other date as of which the Dollar Equivalent determination is to be
made.
"Dollars" and "$" means the lawful money of the United States
of America.
"Domestic Subsidiaries" means all Subsidiaries of the Company
which are organized under the laws of one of the states of the United States.
"EBITDA" means, for any period, the sum of (i) net income
(without taking into account any extraordinary gains or non-cash extraordinary
losses), (ii) interest expense, (iii) depreciation and amortization, and (iv)
federal, state and local income taxes (including without limitation the SBT), in
each case for the Company and its Subsidiaries, all determined on a consolidated
basis in accordance with Generally Accepted Accounting Principles.
"EBITDAR" means, for any period, the sum of EBITDA and
Rentals, in each case for the Company and its Subsidiaries, determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder.
"ERISA Affiliate" means, with respect to any person, any trade
or business (whether or not incorporated) which, together with such person or
any Subsidiary of such person, would be treated as a single employer under
Section 414 of the Code and the regulations promulgated thereunder.
"Effective Date" means the effective date specified in the
last paragraph of this Agreement.
"Environmental Laws" at any date means all provisions of law,
statute, ordinances, rules, regulations, judgments, writs, injunctions, decrees,
orders, awards and standards promulgated by the government of the United States
of America or any foreign government or by any state, province, municipality or
other political subdivision thereof or therein, or by any court, agency,
instrumentality, regulatory authority or commission of any of the foregoing
concerning the protection of, or regulating the discharge of substances into,
the environment.
"Equity Proceeds" means the amount of proceeds (net of
reasonable issuance expenses) realized from the sale by the Company or any
Subsidiaries of any Capital Stock of the Company or any Subsidiaries other than
(a) sales to officers or employees of the Company or its Subsidiaries upon
exercising options issued pursuant to the "1990 Stock Option Plan of Hurco
Companies, Inc.", or the "Hurco Companies, Inc. 1997 Stock Option and Incentive
Plan", and (b) sales by a Subsidiary to the Company or any other Subsidiary.
"Eurodollar Business Day" means, with respect to any
Eurodollar Rate Loan, a day which is both a Business Day and a day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Eurodollar Interest Period" means, with respect to any
Eurodollar Rate Loan, the period commencing on the day such Eurodollar Rate Loan
is made or converted to a Eurodollar Rate Loan and ending on the day which is
one, two, three, or six months thereafter, as the Company may elect under
Section 2.4 or 2.7, and each subsequent period commencing on the last day of the
immediately preceding Eurodollar Interest Period and ending on the day which is
one, two, three or six months thereafter, as the Company may elect under Section
2.4 or 2.7, provided, however, that (a) any Eurodollar Interest Period which
commences on the last Eurodollar Business Day of a calendar month (or on any day
for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Eurodollar Business Day of the
appropriate subsequent calendar month, (b) each Eurodollar Interest Period which
would otherwise end on a day which is not a Eurodollar Business Day shall end on
the next succeeding Eurodollar Business Day or, if such next succeeding
Eurodollar Business Day falls in the next succeeding calendar month, on the next
preceding Eurodollar Business Day, and (c) no Eurodollar Interest Period which
would end after the Maturity Date (or the Termination Date with respect to any
Revolving Credit Loans) shall be permitted.
"Eurodollar Rate" means, with respect to any Eurodollar Rate
Loan and the related Eurodollar Interest Period, the per annum rate that is
equal to the sum of:
(a) the Applicable Eurodollar Rate Margin, plus
(b)......the rate per annum obtained by dividing (i) the per
annum rate of interest at which deposits in Dollars for such Eurodollar Interest
Period and in an aggregate amount comparable to the amount of such Eurodollar
Rate Loan are offered to the Bank by other prime banks in the London interbank
market at approximately 11:00 a.m. London time on the second Eurodollar Business
Day prior to the first day of such Eurodollar Interest Period by (ii) an amount
equal to one minus the stated maximum rate (expressed as a decimal) of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) that are specified on the first day of
such Eurodollar Interest Period by the Board of Governors of the Federal Reserve
System (or any successor agency thereto) for determining the maximum reserve
requirement with respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) maintained by a member
bank of such System;
all as conclusively determined by the Bank (absent manifest error), such sum to
be rounded up, if necessary, to the nearest whole multiple of one one-hundredth
of one percent (1/100 of 1%).
"Eurodollar Rate Loan" means any Loan which bears interest at
the Eurodollar Rate.
"European Facility" means a facility under which FCNBD, in its
sole discretion, may make revolving credit loans in favor of Hurco Europe and
Hurco GmbH not to exceed $5,000,000 or its Dollar Equivalent (subject to Section
2.1(b)) pursuant to a letter agreement of even date herewith.
"Event of Default" means any of the events or conditions
described in Section 6.1.
"FCNBD" means, collectively, The First National Bank of
Chicago, London Branch, and The First National Bank of Chicago, Frankfort
Branch, each an Affiliate of the Bank, and any successor thereto.
"Federal Funds Rate" means the per annum rate that is equal to
the average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, as published by
the Federal Reserve Bank of New York for such day, or, if such rate is not so
published for any day, the average of the quotations for such rates received by
the Bank from three federal funds brokers of recognized standing selected by the
Bank in its discretion, all as conclusively determined by the Bank, such sum to
be rounded up, if necessary, to the nearest whole multiple of one one-hundredth
of one percent (1/100 of 1%), which Federal Funds Rate shall change
simultaneously with any change in such published or quoted rates.
"Fiscal Year" or "fiscal year" means the fiscal year of the
Company, which presently begins on November 1 of each calendar year and ends on
October 31 of the following calendar year. Each Fiscal Year may be referred to
by reference to the calendar year during which the Fiscal Year ends, and may be
divided into four "fiscal quarters".
"Floating Rate" means the per annum rate equal to the greater
of (a) the Prime Rate in effect from time to time, and (b) the sum of one
percent (1%) per annum plus the Federal Funds Rate in effect from time to time,
which Floating Rate shall change simultaneously with any change in the Prime
Rate or Federal Funds Rate, as the case may be.
"Floating Rate Loan" means any Loan which bears interest at
the Floating Rate.
"Generally Accepted Accounting Principles" means generally
accepted accounting principles in the United States of America as in effect from
time to time, applied on a basis consistent with that reflected in the financial
statements referred to in Section 4.6.
"Guaranty" means the Subsidiary Guaranty of even date herewith
executed by the Guarantors in favor of the Bank, NBD Michigan, and FCNBD.
"Guarantors" means Autocon and IMS as signatories to the
Guaranty and any other person who guaranties to the Bank, NBD Michigan, and
FCNBD the Company's payment and performance of its obligations under this
Agreement and the other Loan Documents.
"Hazardous Materials" includes, without limitation, any
flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances or related materials defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.) and
in the regulations adopted and publications promulgated pursuant thereto, or any
other federal, state or local government law, ordinance, rule or regulation.
"Hurco Europe" means Hurco Europe Limited, a corporation
organized under the laws of England and Wales, and a indirect wholly-owned
subsidiary of the Company.
"Hurco Guaranty" means the Hurco Guaranty of even date
herewith, executed by the Company in favor of FCNBD, by which the Company has
guaranteed to FCNBD the obligations of Hurco Europe and Hurco GmbH under the
European Facility.
"Hurco GmbH" means Hurco GmbH Werkzeugmaschinen CIM-Bausteine
Vertrieb und Service, a corporation organized under the laws of the Federal
Republic of Germany, and a indirect wholly-owned subsidiary of the Company.
"IMS" means IMS Technology, Inc., a Virginia corporation and
wholly-owned subsidiary of the Company.
"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 Company.
"IRB L/C" means the Irrevocable Letter of Credit No. 252
issued by NBD Michigan in favor of First of America Bank-Indianapolis, in the
face amount of $1,060,274, pursuant to the Reimbursement Agreement in support of
the IRB Bonds, and any letter of credit issued in exchange or replacement
therefor.
"Inactive Subsidiary" means a Subsidiary of the Company not
actively engaged in business, and which has assets with a book value less than
or equal to $10,000. Schedule 4.4 lists all Inactive Subsidiaries existing on
the Effective Date.
"Indebtedness" of any person means, as of any date, without
duplication, (a) all obligations of such person for borrowed money, (b) all
obligations of such person as lessee under any Capital Lease, (c) all
obligations which are secured by any Lien existing on any asset or property of
such person, whether or not the obligation secured thereby shall have been
assumed by such person (to the extent of such Lien if such obligation is not
assumed), (d) all obligations of such person for the unpaid purchase price for
goods, property, or services acquired by such person, except for trade accounts
payable arising in the ordinary course of business that are not past due, (e)
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"), (f) all liabilities of such person in
respect of Unfunded Benefit Liabilities under any Plan of such person or of any
ERISA Affiliate, (g) all obligations of such person in respect of any interest
rate or currency swap, rate cap or other similar transaction (valued in an
amount equal to the highest termination payment, if any, that would be payable
by such person upon termination for any reason on the date of determination),
and (h) all obligations of others similar in character to those described in
clauses (a) through (g) 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.
"Intangible Assets" means, for the Company or any of its
Subsidiaries, the net book value, calculated in accordance with Generally
Accepted Accounting Principles, of all items of the following character which
are included in the assets of such person: (i) goodwill, including without
limitation the excess of cost over book value of any asset, (ii) organization or
experimental expenses, (iii) unamortized debt discount and expense, (iv)
patents, trademarks, trade names and copyrights, (v) deferred taxes and deferred
charges, (vi) franchises, licenses and permits, and (vii) other assets which are
deemed intangible assets under Generally Accepted Accounting Principles.
"Interest Payment Date" means (a) with respect to any
Eurodollar Rate Loan, the last day of each Interest Period with respect to such
Eurodollar Rate Loan and, in the case of any Interest Period exceeding three
months, those days that occur during such Interest Period at intervals of three
months after the first day of such Interest Period, and (b) in all other cases,
the last Business Day of each March, June, September, and December occurring
after the date hereof, commencing with the first such Business Day occurring
after the date of this Agreement.
"Interest Period" means any Eurodollar Interest Period.
"Letter of Credit" means a standby or commercial letter of
credit, a time draft, a sight draft, a bankers acceptance, or a bank guaranty,
each having a stated expiry date or a date upon which the draft must be
reimbursed not later than twelve months after the date of issuance and not later
than the fifth Business Day before the Termination Date issued by the Bank for
the account of the Company under an application and related documentation
acceptable to the Bank requiring, among other things, immediate reimbursement by
the Company to the Bank in respect of all drafts or other demand for payment
honored thereunder and all expenses paid or incurred by the Bank relative
thereto.
"Letter of Credit Advance" means any issuance of a Letter of
Credit under Section 2.4 made pursuant to Section 2.1.
"Letter of Credit Documents" is defined in Section 3.3(b).
"Lien" means any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, conditional sale or title
retaining contract, sale and leaseback transaction, financing statement filing,
lessor's or lessee's interest under any lease, subordination of any claim or
right, or any other type of lien, charge, encumbrance, preferential arrangement,
or other claim or right.
"Loan" means any Revolving Credit Loan and the Term Loan. Any
Loan or portion thereof may also be denominated as a Floating Rate Loan or a
Eurodollar Rate Loan and such Loans are referred to herein as "types" of Loans.
"Loan Documents" means, collectively, this Agreement, the
Revolving Credit Note, the Reimbursement Agreement, the Term Loan Agreement, the
Term Note, the European Facility, the Hurco Guaranty, the Guaranty, and all
agreements, instruments, and documents executed pursuant thereto at any time.
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, prospects, or condition (financial or
otherwise) of the Company and its Subsidiaries on a consolidated basis, (b) the
ability of the Company or any Guarantor to perform its obligations under any
Loan Document, or (c) the validity or enforceability of any Loan Document or the
rights or remedies of the Bank under any Loan Document.
"Maturity Date" means, with respect to the Term Loan,
September 30, 1997.
"Multiemployer Plan" means any "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"1996 Credit Agreement" means the Amended and Restated Credit
Agreement and Amendment to Term Loan Agreement dated as of January 26, 1996,
between the Company and NBD Michigan, as amended.
"NBD Assignment" means the Assignment and Assumption Agreement
of even date herewith between NBD Michigan and the Bank.
"Net Assets Available for Benefits" shall mean, with respect
to any Plan as of any date, the "Net assets available for benefits" of such Plan
as defined in Statement of Financial Accounting Standards No. 35, determined
pursuant to Generally Accepted Accounting Principles, uniformly applied.
"Note" means any Revolving Credit Note or any Term Note.
"Outstanding Facilities" means, collectively, the Advances,
the Term Loan Agreement, the Term Note, the Reimbursement Agreement, the IRB
L/C, the Guaranty, the European Facility, the Hurco Guaranty, and the Letters of
Credit, each as existing following the Effective Date.
"Overdue Rate" means (a) in respect of principal of Floating
Rate Loans, a rate per annum that is equal to the sum of two percent (2%) per
annum plus the Floating Rate, (b) in respect of principal of Eurodollar Rate
Loans, a rate per annum that is equal to the sum of two percent (2%) per annum
plus the per annum rate in effect thereon until the end of the then-current
Interest Period for such Loan and, thereafter, a rate per annum that is equal to
the sum of two percent (2%) per annum plus the Floating Rate, and (c) in respect
of other amounts payable by the Company hereunder (other than interest), a per
annum rate that is equal to the sum of two percent (2%) per annum plus the
Floating Rate.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"PML" means Principal Mutual Life Insurance Company, an Iowa
corporation.
"PML Note Agreement" means the Amended and Restated Note
Agreement dated as of March 24, 1994, as amended from time to time, between the
Company and PML.
"PML Notes" means the $12,500,000 11.12% Amended and Restated
Senior Notes due December 1, 2000, issued pursuant to the PML Note Agreement,
and any notes issued by PML in exchange or replacement therefor.
"Permitted Investments" means any investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated not less than "P-1" if rated by Moody's Investors Services, Inc., or not
less than "A-1" if rated by Standard and Poor's Corporation, or (iii) time
deposits or demand deposits with, including certificates of deposit issued by, a
financial institution (which may be the Agent or any other financial
institution) having a long-term debt rating of at least "A" as assigned by a
nationally recognized credit rating agency, provided in each case that such
investment matures within 90 days from the date of its acquisition.
"Permitted Liens" means Liens permitted by Section 5.2(e).
"person" shall include an individual, a corporation, an
association, a partnership, a trust or estate, a joint stock company, an
unincorporated organization, a joint venture, a trade or business (whether or
not incorporated), a government (foreign or domestic), and any agency or
political subdivision thereof, or any other entity.
"Plan" means, with respect to any person, any pension plan
(including a Multiemployer Plan) subject to Title IV of ERISA or to the minimum
funding standards of Section 412 of the Code which has been established or
maintained by such person, any Subsidiary of such person or any ERISA Affiliate,
or by any other person if such person, any Subsidiary of such person or any
ERISA Affiliate could have liability with respect to such pension plan.
"Prime Rate" means the per annum rate announced by the Bank
from time to time as its "prime rate" (it being acknowledged that the announced
rate may not necessarily be the lowest rate charged by the Bank to any of its
customers). The Prime Rate shall change simultaneously with any change in the
announced rate.
"Pro Rata Share" as of any date means, for the Bank, the
percentage obtained by dividing (a) the sum of the outstanding principal amount
of the Term Loan, plus the face amount of the IRB L/C, plus the aggregate amount
outstanding under the Advances, plus the aggregate amount available under the
Commitment, all as of the specified date, by (b) the sum of the amount
calculated under subsection (a) above plus the outstanding principal amount of
the PML Notes as of the specified date. For PML, as of any date, the term "Pro
Rata Share" means the percentage obtained by dividing the outstanding principal
amount of the PML Notes as of the date specified by the amount calculated under
subsection (b) above.
"Prohibited Transaction" means any transaction involving any
Plan which is proscribed by Section 406 of ERISA or Section 4975 of the Code.
"Reimbursement Agreement" means the Reimbursement Agreement
dated as of September 1, 1990, as amended, between the Company and NBD Michigan,
pursuant to which the IRB L/C was issued.
"Rentals" as of the date of any determination thereof means
all fixed payments (including all payments which the lessee is obligated to make
to the lessor on termination of the lease or surrender of the property) payable
by the Company or a Subsidiary of the Company, as lessee or sublessee under a
lease of real or personal property, but exclusive of any amounts required to be
paid by the Company or a Subsidiary of the Company (whether or not designated as
rents or additional rents) on account of maintenance, repairs, insurance, taxes,
assessments, amortization and similar charges. Fixed rents under any so-called
"percentage leases" shall be computed solely on the basis of the minimum rents,
if any, required to be paid by the lessee regardless of sales volume or gross
revenues.
"Reportable Event" means a reportable event as described in
Section 4043(b) of ERISA including those events as to which the thirty (30) day
notice period is waived under Part 2615 of the regulations promulgated by the
PBGC under ERISA.
"Repurchased Shares" is defined in Section 4.7.
"Requirement of Law" means as to any person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such person or any of its property to which such person or
any of its property is subject.
"Revolving Credit Advance" means any Revolving Credit Loan
and any Letter of Credit
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Advance.
"Revolving Credit Loan" means any borrowing under Section 2.4
evidenced by the Revolving Credit Note and made pursuant to Section 2.1.
"Revolving Credit Note" means any promissory note of the
Company evidencing the Revolving Credit Loans, in substantially the form annexed
hereto as Exhibit A, as amended or modified from time to time and together with
any promissory note or notes issued in exchange or replacement therefor.
"SBT" means the so-called Single Business Tax imposed by the
State of Michigan.
"Subordinated Debt" of any person means, as of any date, that
Indebtedness of such person for borrowed money which is expressly subordinate
and junior in right and priority of payment to the Advances and other
Indebtedness of such person to the Bank in manner and by agreement satisfactory
in form and substance to the Bank.
"Subsidiary" of any person means any other person (whether now
existing or hereafter organized or acquired) in which (other than directors
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and of
record, by such person or by one or more of the other Subsidiaries of such
person or by any combination thereof. Unless otherwise specified, reference to
"Subsidiary" means a Subsidiary of the Company.
"Tangible Net Worth" of any person means, as of any date, (a)
the amount of any capital stock, paid-in capital, and similar equity accounts,
plus (or minus in the case of a deficit) the capital surplus and retained
earnings of such person and excluding the amount of any foreign currency
translation adjustment account shown as a capital account of such person, plus
(b) the amount of any Subordinated Debt, less (c) any treasury stock, and less
(d) the Intangible Assets of such person.
"Term Loan" means the term loan issued by NBD Michigan to the
Company under the Term Loan Agreement and evidenced by the Term Note.
"Term Loan Agreement" means the Term Loan Agreement dated as
of September 9, 1991, between the Company and NBD Michigan, as amended from time
to time and as further amended hereby.
"Term Note" means the Fourth Amended and Restated NBD Term
Loan Note of the Company dated January 26, 1996, issued in favor of NBD
Michigan, which evidences the Term Loan, as amended or modified from time to
time and together with any promissory note or notes issued in exchange or
replacement therefor.
"Termination Date" means the earlier to occur of (a) the
Automatic Termination Date and (b) the date on which the Commitment shall be
terminated pursuant to Section 2.2 or 6.2.
"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.
"Unfunded Benefit Liabilities" means, with respect to any Plan
as of any date, the amount of the unfunded benefit liabilities determined in
accordance with Section 4001(a)(18) of ERISA.
1.2 Other Definitions; Rules of Construction. The terms "Bank",
"Company", and "Agreement" are defined in the introductory paragraph of this
Agreement. Such terms, together with the other terms defined in Section 1.1,
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 Generally Accepted
Accounting Principles unless such principles are inconsistent with the express
requirements of this Agreement; provided that, if the Company notifies the Bank
that the Company wishes to amend any covenant in Article 5 to eliminate the
effect of any change in Generally Accepted Accounting Principles in the
operation of such covenant (or if the Bank notifies the Company that the Bank
wishes to amend Article 5 for such purpose), then the Company's compliance with
such covenant shall be determined on the basis of Generally Accepted Accounting
Principles in effect immediately before the relevant change in Generally
Accepted Accounting Principles became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Company
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 2
THE COMMITMENTS AND THE ADVANCES
2.1 Commitment of the Bank.
(a)......Revolving Credit Advances. (i) Subject to the terms
of this Agreement, the Bank agrees to make Revolving Credit Loans to the Company
pursuant to Section 2.4 and Section 3.3, and to issue Letter of Credit Advances
to the Company pursuant to Section 2.4, from time to time from and including the
Effective Date to but excluding the Termination Date, not to exceed in aggregate
principal amount at any time outstanding the amount determined pursuant to
Section 2.1(c).
(ii)...By the NBD Assignment, NBD Michigan has assigned its rights
and obligations under the 1996 Credit Agreement and the Term Loan Agreement to
the Bank. The Bank agrees that this Agreement consolidates, amends, restates,
and supersedes the 1996 Credit Agreement, and the Company acknowledges, accepts,
and ratifies the Outstanding Facilities evidenced by this Agreement. All amounts
outstanding under the 1996 Credit Agreement on the Effective Date shall
constitute Loans under this Agreement, and the Company's obligations to NBD
Michigan under the 1996 Credit Agreement are released. Each letter of credit,
bankers acceptance, and bank guaranty issued by NBD Michigan for the Company's
account which is outstanding under the 1996 Credit Agreement on the Effective
Date (other than the IRB L/C) shall be treated for all purposes as Letters of
Credit issued by the Bank under this Agreement, notwithstanding that NBD
Michigan was and remains the issuer thereunder.
(b)......Term Loan. Subject to the terms of this
Agreement and the NBD
---------
Assignment, the Bank further agrees to continue the Term Loan on the Effective
Date.
(c)......Limitation on Amount of Revolving Credit
Advances. Notwithstanding
anything in this Agreement to the contrary, (i) the aggregate principal amount
of the Revolving Credit Advances made by the Bank at any time outstanding shall
not exceed the amount of the Commitment as of the date any such Advance is made,
provided, however, that the aggregate principal amount of Letter of Credit
Advances outstanding at any time shall not exceed $12,000,000; and (ii) the
aggregate principal amount of the Revolving Credit Advances, plus the principal
amount of loans made to Hurco Europe and Hurco GmbH under the European Facility,
outstanding at any time shall not exceed the amount of $22,500,000.
2.2 Termination and Reduction of Commitment.
(a)......The Company has the right to terminate or reduce the
Commitment at any time and from time to time at its option, provided that (i)
the Company shall give notice of such termination or reduction to the Bank
specifying the amount and effective date thereof, (ii) each partial reduction of
the Commitment shall be in a minimum amount of $1,000,000 and in an integral
multiple of $500,000, (iii) no such termination or reduction shall be permitted
with respect to any portion of the Commitment as to which a request for a
Advance pursuant to Section 2.4 is then pending, and (iv) the Commitment may not
be terminated if any Advances are then outstanding and may not be reduced below
the principal amount of Advances then outstanding. The Commitment or any portion
thereof terminated or reduced pursuant to this Section 2.2, whether optional or
mandatory, may not be reinstated.
(b)......For purposes of this Agreement, a Letter of Credit
Advance (i) shall be deemed outstanding in an amount equal to the sum of the
maximum amount available to be drawn under the related Letter of Credit on or
after the date of determination and on or before the stated expiry date thereof
plus the amount of any draws under such Letter of Credit that have not been
reimbursed as provided in Section 3.3, and (ii) shall be deemed outstanding at
all times on and before such stated expiry date or such earlier date on which
all amounts available to be drawn under such Letter of Credit have been fully
drawn, and thereafter until all related reimbursement obligations have been paid
pursuant to Section 3.3. As provided in Section 3.3, upon each payment made by
the Bank in respect of any draft or other demand for payment under any Letter of
Credit, the amount of any Letter of Credit Advance outstanding immediately prior
to such payment shall be automatically reduced by the amount of each Revolving
Credit Loan deemed advanced in respect of the related reimbursement obligation
of the Company.
2.3 Fees.
(a)......The Company agrees to pay to the Bank a commitment
fee on the amount of the daily average unused amount of the Commitment which
exceeds $5,000,000, for the period from the Effective Date to but excluding the
Termination Date, at a per annum rate equal to the Applicable Commitment Fee in
effect on the relevant date on which the fee is payable. Accrued commitment fees
shall be payable quarterly in arrears on each Interest Payment Date, commencing
on the first such Business Day occurring after the Effective Date, and on the
Termination Date.
(b)......The Company agrees to pay to the Bank on or prior to
the Effective Date an arrangement fee in the amount of $62,500.
(c)......The Company agrees to pay to the Bank a fee for any
Letter of Credit other than a commercial letter of credit, which fee shall be
computed at a rate per annum equal to the Applicable Eurodollar Rate Margin,
multiplied by the maximum amount available to be drawn from time to time under
the Letter of Credit, for the period from and including the Letter of Credit's
issuance date to and including the Letter of Credit's stated expiry date,
subject to the Bank's standard minimum fee existing at the time of issuance, and
without duplication for any fees previously paid to NBD Michigan in connection
with Letters of Credit outstanding under the 1996 Credit Agreement on the
Effective Date. This fee shall be payable quarterly in advance, with an initial
payment due on or before the issuance date of the Letter of Credit, and then on
each Interest Payment Date thereafter. With respect to any Letter of Credit in
the form of a commercial letter of credit, the Company agrees to pay to the Bank
commercial letter of credit fees at times and in amounts as the Company and the
Bank may agree from time to time. Such fees are nonrefundable and the Company
shall not be entitled to any rebate of any portion thereof if the Letter of
Credit does not remain outstanding through its stated expiry date or for any
other reason. The Company further agrees to pay to the Bank, on demand, such
other customary administrative fees, charges, and expenses of the Bank in
respect of issuing, negotiating, accepting, amending, transferring, and paying
each Letter of Credit or otherwise payable pursuant to the application and
related documents under which each Letter of Credit is issued.
2.4 Disbursing Advances.
(a) The Company shall notify the Bank of its request for each
Advance in substantially the form of Exhibit B not later than 11:00 a.m.
Indianapolis time (i) three Eurodollar Business Days prior to the date such
Advance is requested to be made if such Advance is to be made as a Eurodollar
Rate Loan, (ii) five Business Days prior to the date any Letter of Credit
Advance is requested to be made, and (iii) on the Business Day such Advance is
requested to be made in all other cases, which notice shall specify whether a
Eurodollar Rate Loan or Floating Rate Loan or a Letter of Credit Advance is
requested and, in the case of each requested Eurodollar Rate Loan, the
Interest Period to be initially applicable to such Loan, and, in the case of
each Letter of Credit Advance, such information as may be necessary for its
issuance by the Bank. Subject to the terms of this Agreement, the proceeds of
each requested Loan shall be made available to the Company by depositing the
proceeds thereof in immediately available funds, in an account maintained and
designated by the Company at the Bank's principal office.
(b) All Revolving Credit Loans made under Section 2.4 shall be
evidenced by the Revolving Credit Note and the Term Loan shall be evidenced by
the Term Note, and all such Loans shall be due and payable and bear interest
as provided in Article 3. The Company authorizes the Bank to record on any
schedule attached to the Notes, or in its books and records, the date, amount
and type of each Loan and the duration of the related Interest Period (if
applicable), the amount of each payment or prepayment of principal thereon,
and any other applicable information, which schedule or books and records, as
the case may be, shall constitute prima facie evidence of the information so
recorded, provided, however, that failure of the Bank to record, or any error
in recording, any such information shall not relieve the Company of its
obligation to repay the outstanding principal amount of the Loans, all accrued
interest thereon, and all other amounts payable with respect thereto in
accordance with the Notes and this Agreement. Subject to the terms of this
Agreement, the Company may borrow Revolving Credit Loans under this Section
2.4 and under Section 3.3, prepay Revolving Credit Loans pursuant to Section
3.1, and reborrow Revolving Credit Loans under this Section 2.4 and under
Section 3.3.
(c) Subject to the terms of this Agreement, on the date any
Letter of Credit Advance is requested to be made, the Bank shall issue the
related Letter of Credit for the account of the Company. Notwithstanding
anything herein to the contrary, the Bank may decline to issue any requested
Letter of Credit on the basis that the beneficiary, the purpose of issuance,
or the terms of drawing are unacceptable to it in its discretion.
2.5 Conditions for First Disbursement. The obligation of the Bank to
make the first Advance hereunder is subject to the Company delivering the
following documents and the following matters being completed, all in form and
substance satisfactory to the Bank:
(a)......Charter Documents. Certificates of recent date of the
appropriate authority or official of the Company's and the Guarantors'
respective states of incorporation listing all charter documents of the Company
and the Guarantors on file in that office and certifying as to the good standing
and corporate existence of the Company and the Guarantors, together with copies
of such charter documents of the Company and the Guarantors, certified as of a
recent date by such authority or official and certified as true and correct as
of the Effective Date by a duly authorized officer of the Company and the
Guarantors, respectively;
(b)......By-Laws and Corporate Authorizations. The Company's
by-laws, together with all authorizing resolutions and evidence of other
corporate action taken by the Company to authorize its execution, delivery and
performance of this Agreement and the Notes, and the consummation by the Company
of the transactions contemplated hereby, certified as true and correct as of the
Effective Date by a duly authorized officer of the Company, and the Guarantors'
respective by-laws, together with all authorizing resolutions and evidence of
other corporate action taken by the Guarantors to authorize their respective
execution, delivery and performance of the Guaranty, and the consummation by the
Guarantors of the transactions contemplated thereby, certified as true and
correct as of the Effective Date by a duly authorized officer of the respective
Guarantors;
(c)......Incumbency Certificate. A certificate of incumbency
of the Company and each Guarantor containing, and attesting to the genuineness
of, the signatures of those officers authorized to act on behalf of the Company
and the Guarantors in connection with this Agreement, the Notes, and the
Guaranty and their respective consummation of the transactions contemplated
thereby, certified as true and correct as of the Effective Date by a duly
authorized officer of the Company or the Guarantors, as applicable;
(d)......Notes and Guaranties. The Revolving Credit Note
duly executed on behalf of
the Company, and the Guaranty duly executed on behalf of each Guarantor;
(e)......Legal Opinions. The favorable written opinion of
Baker & Daniels, counsel for
the Company and the Guarantors, in the form attached hereto as Exhibit D;
(f)......Consents, Approvals, Etc. Copies of all governmental
and non-governmental consents, approvals, authorizations, declarations,
registrations or filings, if any, required on the part of the Company 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 Company or the Guarantors, or, if none are required, a
certificate of such officer to that effect;
(g)......Fees. The arrangement fee described in Section
2.3(b);
(h)......European Facility and Hurco Guaranty. A letter
agreement, in form and substance satisfactory to the Bank, evidencing the
European Facility, duly executed by Hurco Europe and Hurco GmbH, and the Hurco
Guaranty duly executed by the Company, together with any documents and
certificates required to be delivered thereunder;
(i)......NBD Assignment and Participation Agreement. The NBD
Assignment, duly executed
by NBD Michigan, FCNBD, and the Bank, and the Participation Agreement, duly
executed by NBD Michigan and
the Bank;
(j)......PML Documents. The PML Note Agreement duly executed
by PML and the Company,
and the PML Notes duly executed by the Company; and
(k)......Other. Such other documents, and completing such
other matters, as the Bank
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may reasonably request.
2.6 Further Conditions for Disbursement. The obligation of the Bank to
make any Advance (including the first Advance) is further subject to the
following conditions being satisfied:
(a)......The representations and warranties contained in
Article 4 shall be true and correct on and as of the date such Advance is made
(both before and after such Advance is made) as if such representations and
warranties were made on and as of such date;
(b)......No Default or Event of Default shall exist or shall
have occurred and be continuing on the date such Advance is made (whether before
or after such Advance is made);
(c)......In the case of any Letter of Credit Advance, the
Company shall have delivered to the Bank an application for the related Letter
of Credit and other related documentation requested by and acceptable to the
Bank appropriately completed and duly executed on behalf of the Company.
The Company shall be deemed to have made a representation and warranty to the
Bank at the time of the making of, and the continuation or conversion of, each
Advance to the effect set forth in clauses (a) and (b) of this Section 2.6. For
purposes of this Section 2.6, the representations and warranties contained in
Section 4.6 shall be deemed made with respect to both the financial statements
referred to therein and the most recent financial statements delivered pursuant
to Section 5.1(d)(ii) and (iii).
2.7 Subsequent Elections as to Loans. The Company may elect (a) to
continue a Eurodollar Rate Loan, or a portion thereof, as a Eurodollar Rate
Loan, or (b) may elect to convert a Eurodollar Rate Loan, or a portion thereof,
to a Loan of another type, or (c) elect to convert a Floating Rate Loan, or a
portion thereof, to a Eurodollar Rate Loan, in each case by giving notice
thereof to the Bank in substantially the form of Exhibit C hereto not later than
11:00 a.m. Indianapolis time three Eurodollar Business Days prior to the date
any such continuation of or conversion to a Eurodollar Rate Loan is to be
effective and not later than 11:00 a.m. Indianapolis time one Business Day prior
to the date such continuation or conversion is to be effective in all other
cases, provided that an outstanding Eurodollar Rate Loan may only be converted
on the last day of the then-current Interest Period with respect to such Loan,
and provided, further, if a continuation of a Loan as, or a conversion of a Loan
to, a Eurodollar Rate Loan is requested, such notice shall also specify the
Interest Period to be applicable thereto upon such continuation or conversion.
If the Company shall not timely deliver such a notice with respect to any
outstanding Eurodollar Rate Loan, the Company shall be deemed to have elected to
convert such Eurodollar Rate Loan to a Floating Rate Loan on the last day of the
then-current Interest Period with respect to such Loan.
2.8 Limitation of Requests and Elections. Notwithstanding any other
provision of this Agreement to the contrary, if, upon receiving a request for a
Eurodollar Rate Loan pursuant to Section 2.4, or a request for a continuation of
a Eurodollar Rate Loan as a Eurodollar Rate Loan of the then-existing type or a
request for a conversion of a Floating Rate Loan to a Eurodollar Rate Loan
pursuant to Section 2.7, (a) in the case of any Eurodollar Rate Loan, deposits
in Dollars for periods comparable to the Interest Period elected by the Company
are not available to the Bank in the London interbank market, or (b) the
Eurodollar Rate will not adequately and fairly reflect the cost to the Bank of
making, funding, or maintaining the related Eurodollar Rate Loan, or (c) by
reason of national or international financial, political, or economic conditions
or by reason of any applicable law, treaty, or other international agreement,
rule or regulation (whether domestic or foreign) now or hereafter in effect, or
the 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, it is
impracticable, unlawful, or impossible for, or shall limit or impair the ability
of, (i) the Bank to make or fund the relevant Loan or to continue such Loan as a
Loan of the then-existing type or to convert a Loan to such a Loan, or (ii) the
Company to make or the Bank to receive any payment under this Agreement at the
place specified for payment hereunder or to freely convert any amount paid into
Dollars at market rates of exchange or to transfer any amount paid or so
converted to the address of its principal office specified in Section 7.2, then
the Company shall not be entitled, so long as such circumstances continue, to
request a Loan of the affected type pursuant to Section 2.4 or a continuation of
or conversion to a Loan of the affected type pursuant to Section 2.7. In the
event that such circumstances no longer exist, the Bank shall again consider
requests for Loans of the affected type pursuant to Section 2.4, and for
continuations of and conversions to Loans of the affected type pursuant to
Section 2.7.
Notwithstanding any other provision of this Agreement to the contrary
and in order to give effect to the provisions of Section 3.1(a)(ii), the Company
shall make requests for Eurodollar Rate Loans pursuant to Section 2.4, and
requests for continuations of and conversions to Eurodollar Rate Loans pursuant
to Section 2.7, such that, on each date that any scheduled principal payment is
due with respect to the Term Loan pursuant to Section 3.1(a), either Floating
Rate Loans, or Eurodollar Rate Loans having an Interest Period ending on such
date, or any combination thereof, are outstanding on such date in an aggregate
outstanding principal amount not less than the amount of such principal payment.
2.9 Minimum Amounts; Limitation on Number of Loans; Etc. Except for (a)
Advances which exhaust the entire remaining amount of the Commitments, and (b)
payments required pursuant to Section 3.8, each Eurodollar Rate Loan and each
continuation or conversion pursuant to Section 2.7, and each prepayment thereof
shall be in a minimum amount of $1,000,000 and in an integral multiple of
$100,000, and each Floating Rate Loan and each continuation or conversion
pursuant to Section 2.7, and each prepayment thereof shall be in a minimum
amount of $100,000 and in an integral multiple of $10,000. The aggregate number
of Eurodollar Rate Loans outstanding at any one time under this Agreement may
not exceed six (6). Letter of Credit Advances may be issued in any denomination
acceptable to the Bank.
ARTICLE 3
PAYMENTS AND PREPAYMENTS OF ADVANCES
3.1 Principal Payments and Prepayments.
(a)......Unless earlier payment is required under this
Agreement, (i) the Company shall pay to the Bank the entire outstanding
principal amount of the Revolving Credit Loans on the Termination Date, and (ii)
the Company shall pay to the Bank the outstanding principal amount of the Term
Loan on the Maturity Date, when the entire outstanding principal amount of the
Term Loan shall be due and payable.
(b)......If at any time the principal amounts of the Advances
exceed the Commitment, and upon written notice from the Bank of such occurrence,
the Company shall immediately pay to the Bank an amount not less than the amount
of such excess, to be applied first to the amounts outstanding under the Loans,
and then deposited in an interest-bearing cash collateral account to secure
amounts outstanding under the Letters of Credit.
(c)......The Company 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 letter of
credit fees and commitment fees) which are owing under the Outstanding
Facilities.
(d)......Within fifteen days after the Company closes the
fiscal month in which an asset sale has occurred from which the Company has
received Asset Sale Proceeds, the Company shall pay to the Bank an amount not
less than the Bank's Pro Rata Share as of the end of such month of the Asset
Sale Proceeds, to be applied first to amounts outstanding under the Loans, and
then deposited in an interest-bearing cash collateral account to secure amounts
outstanding under the Letters of Credit. At that time, the Company may also pay
to PML an amount not greater than PML's Pro Rata Share of the Asset Sale
Proceeds, to be applied to the amounts outstanding under the PML Notes.
(e)......The Company may at any time and from time to time
prepay all or a portion of the Loans, without premium or penalty, provided that
the Company shall have notified the Bank not later than 12:00 p.m. Noon
Indianapolis time on the Business Day a payment is to be made, and provided,
further, (i) the Company may not prepay any portion of any Loan as to which an
election for a continuation of or a conversion to a Eurodollar Rate Loan is
pending pursuant to Section 2.4, and (ii) unless earlier payment is required
under this Agreement, any Eurodollar Rate Loan may only be prepaid on the last
day of the then-current Interest Period with respect to such Loan. Upon the
giving of such notice, the aggregate principal amount of such Loan or portion
thereof so specified in such notice, together with such accrued interest and
other amounts, shall become due and payable on the specified prepayment date.
(f)......Prepayments of the Term Loan, whether optional or
mandatory, shall be applied to installments of principal of the Term Loan in the
inverse order of their maturities, and no partial prepayment of the Term Loan
shall reduce the amount or defer the date of the scheduled installments of
principal required to be paid thereon.
3.2 Interest Payments. The Company shall pay interest to the Bank on
the unpaid principal amount of each Loan, for the period commencing on the date
the Loan is made until the Loan is paid in full, on each Interest Payment Date
and at maturity (whether at stated maturity, by acceleration, or otherwise), and
thereafter on demand, at the following rates per annum:
(a)......During such periods that the Loan is a Floating Rate
Loan, the Floating Rate;
(b)......During such periods that the Loan is a Eurodollar
Rate Loan, the Eurodollar Rate applicable to the Loan for each related
Eurodollar Interest Period.
Notwithstanding the foregoing paragraphs (a) and (b), the Company shall pay
interest on demand by the Bank at the Overdue Rate on the outstanding principal
amount of any Loan and any other amount payable by the Company hereunder (other
than interest) at any time on or after an Event of Default unless otherwise
requested in writing by the Bank.
3.3 Letter of Credit Reimbursement Payments.
(a)...... (i) The Company agrees to pay to the Bank, on the
day on which the Bank shall honor a draft or other demand for payment presented
or made under any Letter of Credit, an amount equal to the amount paid by the
Bank in respect of such draft or other demand under such Letter of Credit and
all expenses paid or incurred by the Bank relative thereto. Unless the Company
shall have made such payment to the Bank on such day, upon each such payment by
the Bank, the Bank shall be deemed to have disbursed to the Company, and the
Company shall be deemed to have elected to satisfy its reimbursement obligation
by, a Revolving Credit Loan bearing interest at the Floating Rate for the
account of the Bank in an amount equal to the amount so paid by the Bank in
respect of such draft or other demand under such Letter of Credit. Such
Revolving Credit Loan shall be disbursed notwithstanding any failure to satisfy
any conditions for disbursement of any Loan set forth in Article 2 and, to the
extent of the Revolving Credit Loan so disbursed, the reimbursement obligation
of the Company under this Section 3.3 shall be deemed satisfied; provided,
however, that nothing in this Section 3.3 shall be deemed to constitute a waiver
of any Default or Event of Default caused by failing to satisfy the conditions
for disbursement or otherwise.
.........(ii).....If, for any reason (including without
limitation as a result of the occurrence of an Event of Default with respect to
the Company pursuant to Section 6.1(h)), Floating Rate Loans may not be made by
the Bank as described in Section 3.3(a)(i), then the Company agrees that each
reimbursement amount not paid pursuant to the first sentence of Section
3.3(a)(i) shall bear interest, payable on demand by the Bank, at the interest
rate then applicable to Floating Rate Loans.
(b)......The reimbursement obligation of the Company under
this Section 3.3 shall be absolute, unconditional, and irrevocable and shall
remain in full force and effect until all obligations of the Company to the Bank
hereunder shall have been satisfied, and such obligations of the Company shall
not be affected, modified, or impaired upon the happening of any event,
including without limitation any of the following, whether or not with notice
to, or the consent of, the Company:
(i)......Any lack of validity or enforceability of
any Letter of Credit or any
documentation relating to any Letter of Credit or to any transaction related in
any way to such Letter
of Credit (the "Letter of Credit Documents");
(ii).....Any amendment, modification, or waiver of,
or any consent,
substitution, exchange or release of or failure to perfect any interest in
collateral or security with
respect to, any of the Letter of Credit Documents;
(iii)....The existence of any claim, setoff, defense,
or other right which the
Company may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any persons or entities for whom any such beneficiary or
any such transferee may be acting), the Bank or any other person or entity,
whether in connection with any of the Letter of Credit Documents, the
transactions contemplated herein or therein, or any unrelated transactions;
(iv).....Any draft or other statement or document
presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement
therein being untrue or inaccurate in any respect;
(v)......Payment by the Bank to the beneficiary under
any Letter of Credit
against presentation of documents which do not comply with the Letter of Credit,
including failure of any documents to bear any reference or adequate reference
to such Letter of Credit, so long as such documents substantially comply with
the terms of the Letter of Credit;
(vi).....Any failure, omission, delay, or lack on the
part of the Bank or any
party to any of the Letter of Credit Documents to enforce, assert or exercise
any right, power, or remedy conferred upon the Bank or any such party under this
Agreement or any of the Letter of Credit Documents, or any other acts or
omissions on the part of the Bank or any such party;
(vii) Any other event or circumstance that would,
in the absence of this
clause, result in the release or discharge by operation of law or otherwise of
the Company from performing or observing any obligation, covenant, or agreement
contained in this Section.
No setoff, counterclaim, reduction, or diminution of any obligation or any
defense of any kind or nature which the Company has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the Company
against the Bank. Nothing in this Section shall limit the liability, if any, of
the Bank to the Company pursuant to Section 7.5.
3.4 Payment Method.
(a)......All payments to be made by the Company hereunder will
be made to the Bank in Dollars and in immediately available, freely
transferable, cleared funds not later than 1:00 p.m. Indianapolis time at the
principal office of the Bank specified in Section 7.2. Payments received after
1:00 p.m. at the place for payment shall be deemed to be payments made prior to
1:00 p.m. at the place for payment on the next succeeding Business Day. The
Company hereby authorizes the Bank to charge its account with the Bank in order
to cause timely payment of amounts due hereunder to be made (subject to
sufficient funds being available in such account for that purpose).
(b)......At the time of making each such payment, the Company
shall, subject to the other terms of this Agreement, specify to the Bank the
Loan or other obligation of the Company hereunder to which such payment is to be
applied. In the event that the Company fails to so specify the relevant
obligation or if an Event of Default shall have occurred and be continuing, the
Bank may apply such payments as it may determine in its sole discretion.
3.5 No Setoff or Deduction. All payments of principal of and interest
on the Loans and other amounts payable by the Company hereunder shall be made by
the Company 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 present or future taxes, levies, imposts, duties, fees,
assessments, or other charges of whatever nature, imposed by any governmental
authority, or by any department, agency or other political subdivision or taxing
authority. If any such taxes, levies, imposts, duties, fees, assessments or
other charges are imposed, the Company will pay such additional amounts as may
be necessary so that payment of principal of and interest on the Loans 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 Company 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.
3.6 Payment on Non-Business Day; Payment Computations. Except as
otherwise provided in this Agreement to the contrary, whenever any installment
of principal of, or interest on, any Loan or any other amount due hereunder
becomes due and payable on a day which is not a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day and, in the case
of any installment of principal, interest shall be payable thereon at the rate
per annum determined in accordance with this Agreement during such extension.
Computations of interest and other amounts due under this Agreement shall be
made on the basis of a year of 360 days for the actual number of days elapsed,
including the first day but excluding the last day of the relevant period.
3.7 Additional Costs.
(a)......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), shall (a) affect the basis of taxation of payments
to the Bank of any amounts payable by the Company under this Agreement (other
than taxes imposed on the overall net income of the Bank, by the jurisdiction,
or by any political subdivision or taxing authority of any such jurisdiction, in
which the Bank has its principal office), 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 (c)
shall impose any other condition with respect to this Agreement, or any of the
Commitments, the Notes, or the Loans or any Letter of Credit, and the result of
any of the foregoing is to increase the cost to the Bank of making, funding, or
maintaining any Eurodollar Rate Loan or any Letter of Credit or to reduce the
amount of any sum receivable by the Bank thereon, then the Company 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 to the
extent, in the case of any Eurodollar Rate Loan, the Bank is not compensated
therefor in computing the interest rate applicable to such Eurodollar Rate Loan.
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 Company, shall be conclusive and binding for all purposes absent
manifest error in computation.
(b)......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 Company 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 Company, shall be conclusive and binding for all
purposes absent manifest error in computation. The Bank may, at its option,
specify that such amounts be paid by way of an increase in the commitment fees
payable by the Company pursuant to Section 2.3(a).
3.8 Illegality and Impossibility. 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 Loan under this Agreement, shall make it impracticable, unlawful or
impossible for, or shall in any way limit or impair ability of, the Company to
make or the Bank to receive any payment under this Agreement at the place
specified for payment hereunder, the Company shall, upon receiving notice
thereof from the Bank, repay in full the then-outstanding principal amount of
each Loan so affected, together with all accrued interest thereon to the date of
payment and all amounts owing to the Bank under Section 3.8, (a) on the last day
of the then-current Interest Period applicable to the Loan if the Bank may
lawfully continue to maintain the Loan to that day, or (b) immediately if the
Bank may not continue to maintain the Loan to that day.
3.9 Indemnification. If the Company makes any payment of principal with
respect to any Eurodollar Rate Loan on any other date than the last day of an
Interest Period applicable thereto (whether pursuant to Section 3.7, Section
6.2, or otherwise), or if the Company fails to borrow any Eurodollar Rate Loan
after notice has been given to the Bank in accordance with Section 2.4, or if
the Company fails to make any payment of principal or interest in respect of a
Eurodollar Rate Loan when due, the Company 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 Loan. 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
Company, shall be conclusive and binding for all purposes absent manifest error
in computation. Calculation of all amounts payable to the Bank under this
Section 3.9 shall be made as though the Bank shall have actually funded or
committed to fund the relevant Eurodollar Rate Loan through the purchase of an
underlying deposit in an amount equal to the amount of the Loan 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 Eurodollar Rate
Loan in any manner it sees fit and the foregoing assumption shall be utilized
only for the purpose of calculating amounts payable under this Section 3.9.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank that:
4.1 Corporate Existence and Power. Each of the Company and its Active
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the state of its jurisdiction of incorporation or
organization, and is duly qualified to do business, and is in good standing, in
all additional jurisdictions where such qualification is necessary under
applicable law. The Company 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, and to execute and deliver this
Agreement and the Notes and to engage in the transactions contemplated by this
Agreement.
4.2 Corporate Authority. The execution, delivery and performance by the
Company of this Agreement and the Notes have been duly authorized by all
necessary corporate action and are not in contravention of any law, rule or
regulation, or any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of the terms of the Company's
charter or by-laws, or of any contract or undertaking to which the Company is a
party or by which the Company or any of its property may be bound or affected
and will not result in the imposition of any Lien except for Permitted Liens.
The execution, delivery and performance by the Guarantors of the Guaranty have
been duly authorized by all necessary corporate action and are not in
contravention of any law, rule or regulation, or any judgment, decree, writ,
injunction, order or award of any arbitrator, court or governmental authority,
or of the terms of the Guarantors' charter or by-laws, or of any contract or
undertaking to which any Guarantor is a party or by which any Guarantor or any
of their respective property may be bound or affected and will not result in the
imposition of any Lien except for Permitted Liens.
4.3 Binding Effect. This Agreement is, and the Notes and the Guaranty
when delivered hereunder will be, legal, valid and binding obligations of the
Company and the Guarantors, respectively, which are signatories thereto,
enforceable against each of them in accordance with their respective terms.
4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the
corporate name, jurisdiction of incorporation, and ownership of each Active
Subsidiary, and the corporate name of each Inactive Subsidiary. Each Subsidiary
of the Company and each corporation becoming a Subsidiary of the Company after
the date hereof is and will be a corporation duly organized, validly existing,
and in good standing under the laws of its jurisdiction of incorporation and is
and will be duly qualified to do business in each additional jurisdiction where
such qualification is or may be necessary under applicable law. Each Subsidiary
of the Company 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. All outstanding shares of capital
stock of each Subsidiary of the Company have been and will be validly issued and
are and will be fully paid and nonassessable and, except as otherwise indicated
in Schedule 4.4 hereto or disclosed in writing to the Bank from time to time,
are and will be owned, beneficially and of record, by the Company or another
Subsidiary of the Company, free and clear of any Liens.
4.5 Litigation. Except as set forth in Schedule 4.5 hereto, there is no
action, suit or proceeding pending or, to the best of the Company's knowledge,
threatened against or affecting the Company or any of its Subsidiaries before or
by any court, governmental authority, or arbitrator, which if adversely decided
might have a Material Adverse Effect and, to the best of the Company's
knowledge, there is no basis for any such action, suit or proceeding.
4.6 Financial Condition. The consolidated balance sheet of the Company
and its Subsidiaries and the related consolidated statements of operations and
cash flows and consolidated changes in shareholders equity of the Company and
its Subsidiaries for the fiscal year ended October 31, 1996, and reported on by
the Company's independent certified public accountants, and the interim
consolidated balance sheet and interim consolidated statements of operations and
cash flows and consolidated changes in shareholders equity of the Company and
its Subsidiaries, as of or for the six-month period ended on April 30, 1997,
copies of which have been furnished to the Bank, fairly present, and the
financial statements of the Company and its Subsidiaries delivered pursuant to
Section 5.1(d) will fairly present, the consolidated financial position of the
Company and its Subsidiaries as at the respective dates thereof, and the
consolidated results of operations of the Company and its Subsidiaries for the
respective periods indicated, all in accordance with Generally Accepted
Accounting Principles consistently applied (subject, in the case of any interim
statements, to year-end audit adjustments). Except as reflected in the financial
statements delivered to the Bank for the period ended April 30, 1997, there has
been no event or development which has had or could reasonably be expected to
have a Material Adverse Effect since October 31, 1996. Except as reflected in
the financial statements delivered to the Bank for the period ended April 30,
1997, and except for any letters of credit, bankers acceptances, and bankers
guaranties issued by the Bank or NBD Michigan since October 31, 1996, there is
no material Contingent Liability of the Company or any of its Subsidiaries that
is not reflected in such financial statements or in the notes thereto.
4.7 Use of Advances. The Company will use the proceeds of the Advances
for its general corporate purposes, and to repurchase shares of its common stock
from time to time at prevailing market prices (any shares so purchased, the
"Repurchased Shares"). Neither the Company nor any of its Subsidiaries extends
or maintains, in the ordinary course of business, credit for the purpose,
whether immediate, incidental, or ultimate, of buying or carrying margin stock
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any Advance will be used for the
purpose, whether immediate, incidental, or ultimate, of buying or carrying any
such margin stock or maintaining or extending credit to others for such purpose.
After applying the proceeds of each Advance, such margin stock will not
constitute more than 25% of the value of the assets (either of the Company alone
or of the Company and its Subsidiaries on a consolidated basis) that are subject
to any provisions of this Agreement that may cause the Advances to be deemed
secured, directly or indirectly, by margin stock.
4.8 Consents, Etc. Except for such consents, approvals, authorizations,
declarations, registrations or filings delivered by the Company pursuant to
Section 2.5(f), if any, each of which is in full force and effect, no consent,
approval, or authorization of, or declaration, registration, or filing with, any
governmental authority or any nongovernmental person or entity, including
without limitation any creditor, lessor or stockholder of the Company or any of
its Subsidiaries, is required on the part of the Company or any Guarantor in
connection with the execution, delivery, and performance of the Loan Documents,
or the transactions contemplated hereby or thereby, or as a condition to the
legality, validity, or enforceability of any of the Loan Documents.
4.9 Taxes. The Company and its Subsidiaries have filed all tax returns
(foreign and domestic; federal, state, and local) required to be filed and have
paid all taxes shown thereon to be due, including interest and penalties, or
have established adequate financial reserves on their respective books and
records for payment thereof in accordance with Generally Accepted Accounting
Principles. Neither the Company nor any of its Subsidiaries knows of any actual
or proposed tax assessment or any basis therefor, and no extension of time for
the assessment of deficiencies in any tax has been granted by the Company or any
such Subsidiary.
4.10 Title to Properties. Except as otherwise disclosed in the latest
balance sheet delivered pursuant to Section 4.6 or 5.1(d), the Company or one or
more of its Subsidiaries have good and marketable fee simple title to all of the
real property, and a valid and indefeasible ownership interest in all of the
other properties and assets reflected in said balance sheet or subsequently
acquired by the Company or any such Subsidiary. All of such properties and
assets are free and clear of any Lien, except for Permitted Liens.
4.11 ERISA. The Company, its Domestic Subsidiaries, their ERISA
Affiliates, and their respective Plans are in compliance in all material
respects with those provisions of ERISA and of the Code which are applicable
with respect to any Plan. No Prohibited Transaction and no Reportable Event has
occurred with respect to any such Plan. None of the Company, any of its Domestic
Subsidiaries, or any of their ERISA Affiliates is an employer with respect to
any Multiemployer Plan. The Company, its Domestic Subsidiaries, and their ERISA
Affiliates have met the minimum funding requirements as currently applicable
under ERISA and the Code with respect to each of their respective Plans, if any,
and have not incurred any liability to the PBGC or any Plan. The execution,
delivery, and performance of the Loan Documents do not constitute a Prohibited
Transaction. The Actuarial Present Value of Accumulated Plan Benefits does not
exceed the Net Assets Available for Benefits with respect to any Plan of the
Company, its Domestic Subsidiaries, or their ERISA Affiliates on an on-going
basis.
4.12 Disclosure. No report or other information furnished in writing by
or on behalf of the Company or any Guarantor or any of their officers or agents
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 necessary to make the statements contained therein not misleading
in light of the circumstances in which they were made. Neither this Agreement or
the other Loan Documents, nor any other document, certificate, report, or
statement or other information furnished to the Bank by or on behalf of the
Company or any Guarantor in connection with the transactions contemplated herein
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. There is no fact known to
the Company or any Guarantor which has, or which in the future may have (so far
as the Company can now foresee) a Material Adverse Effect, 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 Company or any Guarantor in connection with the transactions contemplated
hereby.
4.13 Environmental and Safety Matters. The Company and each of its
Subsidiaries is in material compliance with all national, state, and local laws,
ordinances, and regulations relating to safety and industrial hygiene or to the
environmental condition, including without limitation all Environmental Laws in
jurisdictions in which the Company or any such Subsidiary owns or operates, or
has owned or operated, a facility or site, or arranges or has arranged for
disposal or treatment of hazardous substances, solid waste, or other wastes,
accepts or has accepted for transport any hazardous substances, solid wastes, or
other wastes or holds or has held any interest in real property or otherwise,
except where the failure to so comply will not have a Material Adverse Effect.
No demand, claim, notice, action, administrative proceeding, investigation, or
inquiry, whether brought by any governmental authority, private person or
entity, or otherwise, arising under, relating to or in connection with any
Environmental Laws is pending or threatened against the Company or any of its
Subsidiaries, any real property in which the Company or any of its Subsidiary
holds or has held an interest, or any past or present operation of the Company
or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries (a)
is the subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any toxic substances,
radioactive materials, hazardous wastes, or related materials into the
environment, (b) has received any notice of any toxic substances, radioactive
materials, hazardous waste, or related materials in or upon any of its
properties in violation of any Environmental Laws, (c) knows of any basis for
any such investigation, notice, or violation, or (d) owns or operates, or has
owned or operated, property which appears on the United States National Priority
List or any other governmental listing which identifies sites for remedial
clean-up or investigatory actions, except as disclosed on Schedule 4.13 hereto,
and as to such matters disclosed on such Schedule, none will have a Material
Adverse Effect. No release, threatened release or disposal of hazardous waste,
solid waste, or other wastes is occurring or has occurred on, under, or to any
real property in which the Company or any of its Subsidiaries holds any interest
or performs any of its operations, in violation of any Environmental Law.
4.14 No Default. Neither the Company nor any Subsidiary is in default
or has received any written notice of default under or with respect to any of
its Contractual Obligations in any respect which could have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.
4.15 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation applicable to the Company or any Subsidiary could have a Material
Adverse Effect on the financial condition or business of the Company and its
Subsidiaries.
ARTICLE 5
COVENANTS
5.1 Affirmative Covenants. The Company covenants and agrees that, until
the Termination Date and thereafter until the principal of and accrued interest
on the Notes has been paid in full and all other obligations of the Company and
the Guarantors under this Agreement and the other Loan Documents have been
performed, unless the Bank shall otherwise consent in writing, it shall, and
shall cause each of its Active Subsidiaries to:
(a)......Preservation of Corporate Existence, Etc. Do or cause
to be done all things necessary to preserve, renew, and keep in full force and
effect its legal existence, except to the extent permitted by Section 5.2(f),
and its qualification as a foreign corporation in good standing in each
jurisdiction in which such qualification is necessary under applicable law, and
the rights, licenses, permits (including those required under Environmental
Laws), franchises, patents, copyrights, trademarks, and trade names material to
conducting its business, and defend all of the foregoing against all claims,
actions, demands, suits, or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority.
(b)......Compliance with Laws, Etc. Comply in all material
respects with all applicable laws, rules, regulations, and orders of any
governmental authority, whether federal, state, local, or foreign (including
without limitation ERISA, the Code, and Environmental Laws), in effect from time
to time, and pay and discharge promptly when due all taxes, assessments, and
governmental charges or levies imposed upon it or upon its income, revenues or
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials, and supplies or otherwise, which, if unpaid,
might give rise to Liens upon such properties or any portion thereof, except to
the extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the Company
or any of its Subsidiaries in accordance with Generally Accepted Accounting
Principles.
(c)......Maintenance of Properties; Insurance. Maintain,
preserve, and protect all property that is material to the conduct of the
business of the Company or any of its Subsidiaries and keep such property in
good repair, working order, and condition and from time to time make or cause to
be made all needful and proper repairs, renewals, additions, improvements, and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times in accordance with
customary and prudent business practices for similar businesses; and maintain in
full force and effect insurance with responsible and reputable insurance
companies or associations in such amounts, on such terms, and covering such
risks, including fire and other risks insured against by extended coverage, as
is usually carried by companies engaged in similar businesses and owning similar
properties similarly situated, and maintain in full force and effect public
liability insurance, insurance against claims for personal injury or death, or
property damage occurring in connection with any of its activities or any
properties owned, occupied or controlled by it, in such amount as the Company
shall reasonably deem necessary, and maintain such other insurance as may be
required by law or as may be reasonably requested by the Bank for purposes of
assuring compliance with this Section.
(d) Reporting Requirements. Furnish to the Bank the
following:
(i)......Promptly and in any event within three
calendar days after becoming
aware of the occurrence of (A) any Default or Event of Default, (B) the
commencement of any material litigation against, by, or affecting the Company or
any of its Subsidiaries (not including the patent infringement litigation
instituted by the Company or any of its Subsidiaries, unless material
counterclaims are brought against the Company or any of its Subsidiaries), and
any material developments therein, or (C) entering into any material contract or
undertaking that is not entered into in the ordinary course of business other
than IMS entering into documents reflecting patent infringement settlements and
related patent license agreements, or (D) any development in the business or
affairs of the Company or any of its Subsidiaries which has resulted in or which
is likely in the reasonable judgment of the Company to result in a Material
Adverse Effect, a statement of the Company's chief financial officer setting
forth details of each such Default or Event of Default or such litigation,
material contract, or undertaking or development and the action which the
Company or its Subsidiary, as the case may be, has taken and proposes to take
with respect thereto;
...........................(ii).....As soon as available and in any event within
60 days after the end of each fiscal quarter of the Company, the consolidated
and consolidating balance sheet of the Company and its Subsidiaries as of the
end of such quarter, and the related consolidated and consolidating statements
of operations and cash flows (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 Company), for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the corresponding
date or period of the preceding fiscal year, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the Company's chief
financial officer or principal accounting officer as fairly presenting the
consolidated financial position of the Company and its Subsidiaries for the
periods contained therein and as having been prepared in accordance with
Generally Accepted Accounting Principles, together with a certificate of such
officer demonstrating compliance with the covenants contained in Sections
5.2(a), (b), (c), (g), and (j), 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 Event of Default or any event or
condition which, with notice or lapse of time, or both, would constitute an
Event of Default, and, if such an Event of 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 available and in any event within
110 days after the end of each fiscal year of the Company, a copy of the
consolidated and consolidating balance sheet of the Company and its
Subsidiaries, each as of the end of such fiscal year, and the related
consolidated and consolidating statements of operations and cash flows for such
fiscal year and consolidated changes in shareholders equity (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 Company), with a
customary audit report of independent certified public accountants selected by
the Company and reasonably acceptable to the Bank, which report shall be without
any qualifications (it being acknowledged that explanatory text highlighting or
emphasizing information provided in the financial statements and which is not
expressed as a qualification to the report is not to be deemed a qualification),
together with (A) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in the course of their
review of such financial statements, they have become aware of any Event of
Default or any event or condition which, with notice or lapse of time, or both,
would constitute an Event of Default, and, if such an Event of Default or such
an event or condition then exists and is continuing, a statement setting forth
the nature and status thereof and (B) a certificate of the Company's chief
financial officer or principal accounting officer as required under Section
5.1(d)(iii);
(iv).....Promptly after the sending or filing
thereof, copies of all reports,
proxy statements, and financial statements which the Company or any of its
Subsidiaries sends to or files with any of their respective security holders or
any securities exchange or the Securities and Exchange Commission or any
successor agency thereof; and
(v)......Promptly and in any event within 10 calendar
days after receiving or
becoming aware thereof (A) a copy of any notice of intent to terminate any Plan
of the Company, its Subsidiaries, or any ERISA Affiliate filed with the PBGC,
(B) a statement of the Company's chief financial officer setting forth the
details of any Reportable Event with respect to any such Plan, (C) a copy of any
notice that the Company, any of its Subsidiaries, or any ERISA Affiliate may
receive from the PBGC relating to the intention of the PBGC to terminate any
such Plan or to appoint a trustee to administer any such Plan, or (D) a copy of
any notice of failure to make a required installment or other payment within the
meaning of Section 412(n) of the Code or Section 302(f) of ERISA with respect to
any such Plan; and
(vi).....Promptly, such other information respecting
the business, properties,
operations, or condition, financial or otherwise, of the Company or any of its
Subsidiaries as the Bank may from time to time reasonably request.
(e)......Accounting; Access to Records, Books, Etc. Maintain a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in accordance
with Generally Accepted Accounting Principles and to comply with the
requirements of this Agreement and, at any reasonable time and from time to
time, permit the Bank or any agents or representatives thereof to examine and
make copies of and abstracts from the records and books of account of, and visit
the properties of, the Company and its Subsidiaries, and to discuss the affairs,
finances, and accounts of the Company and its Subsidiaries with their respective
directors, officers, employees, and independent auditors, and by this provision
the Company authorizes such persons to discuss such affairs, finances and
accounts with the Bank.
(f)......Further Assurances. Execute and deliver within 30
days after the Bank's request all further instruments and documents and take all
further action that may be necessary or desirable, or that the Bank may
reasonably request, in order to give effect to, and to aid in exercising and
enforcing the Bank's rights and remedies under, the Loan Documents.
(g)......Additional Guarantors. Promptly have each Subsidiary
which has total assets exceeding $1,000,000 (as shown on the latest balance
sheet delivered under subsections (d)(ii) or (iii)) become a Guarantor by
executing a document substantially in the form of the Guaranty.
5.2 Negative Covenants. Until the Termination Date and thereafter until
payment in full of the principal of and accrued interest on the Notes and the
performance of all other obligations of the Company under this Agreement, the
Company agrees that, unless the Bank shall otherwise consent in writing it shall
not, and shall not permit any of its Subsidiaries to:
(a) Indebtedness Ratio. Create, assume, incur, guarantee or
otherwise become liable for, directly or indirectly, any Indebtedness, other
than Indebtedness of the Company and its Subsidiaries which, after giving effect
thereto and the application of the proceeds thereof, would result in
Consolidated Total Indebtedness of the Company and its Subsidiaries then to be
outstanding, determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles, exceeding 50% of the Consolidated Total
Capitalization.
(b)......Fixed Charge Ratio. As of the end of each fiscal
quarter, permit the ratio of Consolidated Income Available for Fixed Charges to
Consolidated Fixed Charges for the preceding twelve months to be less than 1.25
to 1.0.
(c)......Tangible Net Worth. Permit or suffer consolidated
Tangible Net Worth of the Company and its Subsidiaries as of the last day of
each fiscal quarter ending after the Effective Date to be less than the sum of
(i) $20,000,000 plus (ii) an amount equal to fifty percent (50%) of Cumulative
Net Income of the Company and its Subsidiaries at the end of the fiscal quarter
plus (iii) an amount equal to seventy-five percent (75%) of the aggregate Equity
Proceeds received by the Company or its Subsidiaries after the Effective Date
and on or prior to the end of the fiscal quarter.
(d)......Indebtedness. Create, incur, assume or in any
manner become liable in respect
of, or suffer to exist, any Indebtedness other than:
(i)......The Outstanding Facilities and the IRB
Bonds;
(ii).....The Indebtedness outstanding under the PML
Note Agreement and the PML
Notes having the same terms as those existing on the Effective Date, but no
extension or renewal thereof shall be permitted;
(iii)....Indebtedness (other than Indebtedness
permitted under subsections
(d)(i) and (d)(ii)) in aggregate outstanding principal amount not exceeding 15%
of the consolidated Tangible Net Worth of the Company and its Subsidiaries from
time to time in the aggregate; and
(iv).....Indebtedness of any Subsidiary of the
Company owing to the Company or
to any other Subsidiary of the Company.
(e)......Liens. Create, incur or suffer to exist any Lien on
any of the assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, whether now owned or hereafter acquired, of the Company
or any of its Subsidiaries, other than:
(i)......Liens for taxes not delinquent or for taxes
being contested in good
faith by appropriate proceedings and as to which adequate financial reserves
have been established on its books and records in accordance with Generally
Accepted Accounting Principles;
(ii).....Liens (other than any Lien imposed by ERISA
or any Environmental Law)
created and maintained in the ordinary course of business which would not have a
Material Adverse Effect and which constitute (A) pledges or deposits under
worker's compensation laws, unemployment insurance laws or similar legislation,
(B) good faith deposits in connection with bids, tenders, contracts or leases to
which the Company or any of its Subsidiaries is a party for a purpose other than
borrowing money or obtaining credit, including rent security deposits, (C) liens
imposed by law, such as those of carriers, warehousemen and mechanics, if
payment of the obligation secured thereby is not yet due, (D) Liens securing
taxes, assessments or other governmental charges or levies not yet subject to
penalties for nonpayment, (E) pledges or deposits to secure public or statutory
obligations of the Company or any of its Subsidiaries, or surety, customs or
appeal bonds to which the Company or any of its Subsidiaries is a party, and (F)
any Lien created to secure payment of a portion of the purchase price of, or
existing at the time of acquisition of, any tangible fixed asset acquired by the
Company or any of its Subsidiaries if the outstanding principal amount of the
Indebtedness secured by the Lien does not at any time exceed the purchase price
for the asset, the aggregate Indebtedness secured by such Liens does not
increase by more than $500,000 during any single fiscal year, and such Lien does
not encumber any other asset at any time by the Company or any Subsidiary;
(iii)....Liens affecting real property which
constitute minor survey
exceptions or defects or irregularities in title, minor encumbrances, easements
or reservations of, or rights of others for, rights of way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of such real property, provided that all of the
foregoing, in the aggregate, do not at any time materially detract from the
value of said properties or materially impair their use in the operation of the
businesses of the Company or any of its Subsidiaries;
(iv).....Liens as security for Indebtedness permitted
by Section 5.2(d)(iii)
which in the aggregate does not exceed five percent (5%) of the consolidated
Tangible Net Worth of the Company and its Subsidiaries existing from time to
time; and
(v)......The interest or title of a lessor under any
lease (including without
limitation Capital Leases) otherwise permitted under this Agreement with respect
to the property subject to such lease to the extent performance of the
obligations of the Company or its Subsidiary thereunder are not delinquent.
(f)......Merger; Acquisitions; Etc. Purchase or otherwise
acquire, whether in one or a series of transactions, all or a substantial
portion of the business, assets, rights, revenues, or property, real, personal
or mixed, tangible or intangible, of any person, or all or a substantial portion
of the capital stock of or other ownership interest in any other person; nor
merge or consolidate or amalgamate with any other person or take any other
action having a similar effect, nor enter into any joint venture or similar
arrangement with any other person, provided, however, that this Section shall
not prohibit any merger or acquisition if (i) the Company or a Subsidiary of the
Company shall be the surviving or continuing corporation thereof, (ii)
immediately before and after such merger or acquisition, no Default or Event of
Default shall exist or shall have occurred and be continuing and the
representations and warranties contained in Article 4 shall be true and correct
on and as of the date thereof (both before and after such merger or acquisition
is consummated) as if made on the date such merger or acquisition is
consummated, and (iii) prior to the consummation of such merger or acquisition,
the Company shall have provided to the Bank an opinion of counsel and a
certificate of the chief financial officer of the Company (attaching
computations to demonstrate compliance with all financial covenants hereunder),
each stating that such merger or acquisition complies with this Section and that
any other conditions under this Agreement relating to such transaction have been
satisfied.
(g)......Disposition of Assets. Sell, lease, or otherwise
transfer or dispose of all or a substantial portion of its business, assets,
rights, revenues or property, real, personal or mixed, tangible or intangible,
whether in one or a series of transactions, other than (i) inventory sold in the
ordinary course of business upon customary credit terms, (ii) trade-ins of any
equipment in conjunction with acquiring replacement equipment, (iii) sales of
the Company's Capital Stock, (iv) leases of real property, (v) sales of obsolete
or surplus machinery and equipment in the ordinary course of business so long as
the purchase price is paid in cash or immediately available funds, if,
immediately before and after such transaction, no Default or Event of Default
shall exist or shall have occurred and be continuing, and (vi) other sales,
leases, transfers, or dispositions so long as (A) no Default or Event of Default
shall exist or shall have occurred and be continuing, and (B) all Asset Sale
Proceeds from such sales and dispositions are applied as required under Section
3.1(d).
(h)......Nature of Business. Make any substantial change in
the nature of its business from that engaged in on the date of this Agreement or
engage in any businesses which are substantially different from the businesses
engaged in on the date of this Agreement.
(i)......Dividends and Other Restricted Payments. Make, pay,
declare, or authorize any dividend, payment, or other distribution in respect of
any class of its capital stock or any dividend, payment, or distribution in
connection with the redemption, purchase, retirement, or other acquisition,
directly or indirectly, of any shares of its capital stock, or any payment or
other distribution to its officers or directors outside the ordinary course of
business, to the extent such payments or distributions would cause or result in
the occurrence of a Default or Event of Default.
(j)......Capital Expenditures. Acquire or contract to acquire
any fixed asset or make any other Capital Expenditure if the aggregate purchase
price and other acquisition costs of all such fixed assets acquired and other
Capital Expenditures made by the Company and any of its Subsidiaries during any
fiscal quarter, together with the Capital Expenditures made during the prior
three fiscal quarters, would exceed, on a consolidated basis, an amount equal to
the greater of (i) the amount which would allow the ratio of EBITDAR to the sum
of Consolidated Fixed Charges plus Capital Expenditures to be not less than 1.25
to 1.0 for the four fiscal quarters immediately preceding the date of the
proposed Capital Expenditure and (ii) the consolidated depreciation and
amortization expense of the Company and its Subsidiaries for such four fiscal
quarter period.
(k)......Investments, Loans, and Advances. Purchase or
otherwise acquire any capital stock of or other ownership interest in, or debt
securities of or other evidences of Indebtedness of, any other person; nor make
any loan or advance of any of its funds or property or make any other extension
of credit to, or make any investment or acquire any interest whatsoever in, any
other person; nor incur any Contingent Liability; other than (i) extensions of
trade credit made in the ordinary course of business on customary credit terms
and commission, travel and similar advances made to officers and employees in
the ordinary course of business, (ii) Permitted Investments, (iii) those
investments, loans, advances, and other transactions not exceeding 15% of the
consolidated Tangible Net Worth of the Company and its Subsidiaries from time to
time in the aggregate, (iv) related to Letters of Credit issued hereunder, (v)
product warranty obligations incurred in the ordinary course of business, (vi)
Contingent Liabilities incurred with respect to Indebtedness of the Company or
any Subsidiary, and (vii) in connection with Subsidiaries established in
connection with a transaction permitted under Section 5.2(f).
(l)......Transactions with Affiliates. Enter into, become a
party to, or become liable in respect of, any contract or undertaking with any
Affiliate except in the ordinary course of business and on terms not less
favorable to the Company or such Subsidiary than those which could be obtained
if such contract or undertaking were an arms length transaction with a person
other than an Affiliate.
(m)......Sale and Leaseback Transactions. Become or remain
liable in any way, whether directly or by assignment or as a guarantor or other
contingent obligor, for the obligations of the lessee or user under any lease or
contract for the use of any real or personal property if such property is owned
on the date of this Agreement or thereafter acquired by the Company or any of
its Subsidiaries and has been or is to be sold or transferred to any other
person and was, is, or will be used by the Company or any such Subsidiary for
substantially the same purpose as such property was used by the Company or such
Subsidiary prior to such sale or transfer.
(n)......Negative Pledge Limitation. Enter into any agreement
with any person other than the Bank pursuant hereto or PML pursuant to the PML
Note Agreement which prohibits or limits the ability of the Company or any
Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its
assets, rights, revenues, or property, real, personal or mixed, tangible or
intangible, whether now owned or hereafter acquired, other than the Repurchased
Shares.
(o)......Accounting Changes. Change its fiscal year or make
any significant changes (i) in accounting treatment and reporting practices
except as permitted by generally accepted accounting principles and disclosed to
the Bank, or (ii) in tax reporting treatment except as permitted by law and
disclosed to the Bank.
(p)......Inconsistent Agreements. 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 Company
or any of its Subsidiaries of its obligations in connection therewith.
ARTICLE 6
DEFAULT
6.1 Events of Default. The occurrence of any one of the following
events or conditions shall be deemed an "Event of Default" hereunder unless
waived pursuant to Section 8.1:
(a)......Nonpayment. The Company shall fail to pay when due
any principal of the Notes, or any reimbursement obligation under Section 3.3
(whether by deemed disbursement of a Revolving Credit Loan or otherwise), or
fail to pay any interest on the Notes or any fees or any other amount payable
hereunder, which failure continues for a period of three days following written
notice thereof to the Company by the Bank; or
(b)......Misrepresentation. Any representation or warranty
made by the Company herein or in any other certificate, report, financial
statement, or other document furnished by or on behalf of the Company or any of
its Subsidiaries in connection with this Agreement shall prove to have been
incorrect in any material respect when made or deemed made and such failure
continues for more than five days following written notice thereof to the
Company; or
(c)......Certain Covenants. The Company shall fail to perform
or observe the covenants set forth in Section 5.2(a) through 5.2(p), and such
failure continues for more than ten days following written notice thereof to the
Company; or
(d)......Other Defaults. The Company or any of its
Subsidiaries fails to perform or observe any other term, covenant or agreement
contained in this Agreement or any other Loan Document, and any such failure
shall remain unremedied for more than thirty days after notice thereof shall
have been given to the Company by the Bank; or
(e)......Cross-Default. The Company or any of its Subsidiaries
shall fail to pay any part of the principal of, the premium, if any, or the
interest on, or any other payment of money due under any of its Indebtedness
(other than Indebtedness hereunder but including the European Facility) beyond
any period of grace provided with respect thereto, or fails to perform or
observe any other term, covenant, or agreement contained in, or if any other
event or condition occurs or exists under, any agreement, document or instrument
evidencing or securing any such Indebtedness, or under which any such
Indebtedness was incurred, issued, or created, beyond any period of grace, if
any, provided with respect thereto; or
(f)......Judgments. One or more judgments or orders for the
payment of money in an aggregate amount exceeding the Dollar Equivalent of
$100,000 shall be rendered against the Company or any of its Subsidiaries which
are not covered by insurance subject to ordinary deductibles, or any other
judgment or order (whether or not for the payment of money) shall be rendered
against or shall affect the Company or any of its Subsidiaries which causes or
could cause a Material Adverse Effect and either (i) such judgment or order
shall have remained unsatisfied and the Company or such Subsidiary shall not
have taken action necessary to stay enforcement thereof by reason of pending
appeal or otherwise, prior to the expiration of the applicable period of
limitations for taking such action or, if such action shall have been taken, a
final order denying such stay shall have been rendered, or (ii) enforcement
proceedings shall have been commenced by any creditor upon any such judgment or
order; or
(g).....ERISA. The occurrence of a Reportable Event that
results in or could result in liability of the Company or any of its
Subsidiaries or their ERISA Affiliates to the PBGC or to any Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or the occurrence of any Reportable Event which could constitute
grounds for termination of any Plan of the Company or any of its Subsidiaries or
their ERISA Affiliates by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer any such Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or the filing by the Company, any of its Subsidiaries, or any of their
ERISA Affiliates of a notice of intent to terminate a Plan or the institution of
other proceedings to terminate a Plan; or the Company, any of its Subsidiaries,
or any of their ERISA Affiliates shall fail to pay when due any liability to the
PBGC or to a Plan; or the PBGC shall have instituted proceedings to terminate,
or to cause a trustee to be appointed to administer, any Plan of the Company,
any of its Subsidiaries, or any of their ERISA Affiliates; or any person engages
in a Prohibited Transaction with respect to any Plan which results in or could
result in liability of the Company, any of its Subsidiaries, any of their ERISA
Affiliates, any Plan of the Company, any of its Subsidiaries, or their ERISA
Affiliates or fiduciary of any such Plan; or failure by the Company, any of its
Subsidiaries, or any of their ERISA Affiliates to make a required installment or
other payment to any Plan within the meaning of Section 302(f) of ERISA or
Section 412(n) of the Code that results in or could result in liability of the
Company, any of its Subsidiaries, or any of their ERISA Affiliates to the PBGC
or any Plan; or the withdrawal of the Company, any of its Subsidiaries, or any
of their ERISA Affiliates from a Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(9a)(2) of ERISA; or the
Company, any of its Subsidiaries, or any of their ERISA Affiliates becomes an
employer with respect to any Multiemployer Plan without the prior written
consent of the Bank; or
(h)......Insolvency, Etc. The Company, any Guarantor, or any
of its Active Subsidiaries shall be dissolved or liquidated (or any judgment,
order or decree therefor shall be entered), or shall generally not pay its debts
as they become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors, or
shall institute, or there shall be instituted against the Company, any
Guarantor, or any of its Active Subsidiaries any proceeding or case seeking to
adjudicate it a bankrupt or insolvent or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of it
or its debts under any law relating to bankruptcy, insolvency, or reorganization
or relief or protection of debtors or seeking the entry of an order for relief,
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its assets, rights, revenues or property,
and, if such proceeding is being contested by the Company, the relevant
Guarantor, or the Active Subsidiary, as the case may be, in good faith by
appropriate proceedings, such proceeding shall remain undismissed or unstayed
for a period of 60 days; or the Company, the relevant Guarantor, or the Active
Subsidiary shall take any action (corporate or other) to authorize or further
any of the actions described above in this subsection; or
(i)......Loan Documents. Any event of default described in any
Loan Document shall have occurred and be continuing, or any material provision
of any Loan Document shall at any time for any reason cease to be valid and
binding and enforceable against any obligor thereunder, or the validity, binding
effect, or enforceability thereof shall be contested by any person, or any
obligor shall deny that it has any or further liability or obligation
thereunder, or any Loan Document shall be terminated or be declared ineffective
or inoperative or in any way cease to provide to the Bank the benefits purported
to be created thereby.
6.2 Remedies.
(a)......Upon the occurrence and during the continuance of any
Event of Default, the Bank may, by notice to the Company, (i) terminate the
Commitments or (ii) declare the outstanding principal of, and accrued interest
on, the Notes, all unpaid reimbursement obligations in respect of drawings under
Letters of Credit, and all other amounts owing under this Agreement to be
immediately due and payable, and (iii) demand immediate delivery of cash
collateral in respect of all outstanding Letters of Credit, and the Company
agrees to deliver such cash collateral upon demand, in an amount equal to the
maximum amount that may be available to be drawn at any time prior to the stated
expiry of all outstanding Letters of Credit, or any one or more of the
foregoing, whereupon the Commitments shall terminate forthwith and all such
amounts, including such cash collateral, shall become immediately due and
payable, provided that in the case of any event or condition described in
Section 6.1(h) with respect to the Company or any Guarantor, the Commitments
shall automatically terminate forthwith and all such amounts, including such
cash collateral, shall automatically become immediately due and payable without
notice; in all cases without demand, presentment, protest, diligence, notice of
dishonor, or other formality, all of which are expressly waived. Such cash
collateral delivered in respect of outstanding Letters of Credit shall be
deposited in a special cash collateral account to be held by the Bank as
collateral security for the payment and performance of the Company's obligations
under this Agreement to the Bank.
(b)......In addition to the remedies provided in Section
6.2(a), the Bank and NBD Michigan may exercise and enforce any and all other
rights and remedies available to it, whether arising under the Loan Documents or
under applicable law, in any manner deemed appropriate by the Bank or NBD
Michigan, as appropriate, including suit in equity, action at law, or other
appropriate proceedings, whether for the specific performance (to the extent
permitted by law) of any covenant or agreement contained in the Loan Documents
or in aid of the exercise of any power granted in the Loan Documents.
(c)......Upon the occurrence and during the continuance of any
Event of Default, the Bank and any of its Affiliates may at any time and from
time to time, without notice to the Company (any requirement for such notice
being expressly waived by the Company) set off and apply against any and all of
the obligations of the Company now or hereafter existing under this Agreement,
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by the Bank or any of
its Affiliates to or for the credit or the account of the Company or any
Guarantor and any property of the Company or any Guarantor from time to time in
the possession of the Bank or any of its Affiliates, irrespective of whether or
not the Bank shall have made any demand hereunder and although such obligations
may be contingent and unmatured. The Company grants to the Bank a lien on and
security interest in all such deposits, indebtedness, and property as collateral
security for the payment and performance of the Company's obligations under this
Agreement. The Bank's rights under this Section 6.2(c) are in addition to other
rights and remedies (including without limitation other rights of setoff) which
it may have.
ARTICLE 6A
AMENDMENTS TO TERM LOAN AGREEMENT
AND REIMBURSEMENT AGREEMENT
6A.1 Administration of Outstanding Facilities. The Company will pay or
cause to be paid all amounts required to be paid on the Term Loan Agreement and
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 Term Loan 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 by the NBD Assignment, and as
further amended under this Agreement below.
6A.2 Amendments to NBD Term Loan. By the NBD Assignment, the Term Loan
has been assigned by NBD Michigan to the Bank. After the Effective Date, the
Term Loan Agreement is amended as follows:
(a)......Definitions. All references in the Term Loan
Agreement to "the Bank" shall mean the Bank, as defined herein. Section 1.1 of
the Term Loan Agreement is amended by amending and restating the following
definition, to read as follows: "'New Facility Credit Agreement' shall mean the
Amended and Restated Credit Agreement and Amendment to Reimbursement Agreement
dated as of September __, 1997, among the Borrower, NBD Bank, and the Bank, as
such agreement may be amended from time to time."
(b)......Payment Provisions of the Term Loan. The Term Note
(as defined in the Term Loan Agreement) shall continue to refer to the Term
Note, as assigned by NBD Michigan to the Bank. The Term Loan Agreement is
further modified to provide that, notwithstanding any provisions therein to the
contrary, on and after the Effective Date (as defined in this Agreement),
interest shall accrue on the Term Loan at the per annum rate equal to the
Eurodollar Rate or the Floating Rate (each as defined in this Agreement), at the
Company's option, and be payable on each Interest Payment Date (as defined in
this Agreement).
(c)......Covenants. The first paragraph of Section 5.1 of the
Term Loan Agreement is amended and restated to delete references and
incorporation therein of the referenced Sections of the Credit Agreement (as
defined therein), and to insert in lieu thereof and incorporate by reference the
covenants set forth in Section 5.1 and Section 5.2 of this Agreement, including
definitions of defined terms used therein and exhibits referred to therein,
except that (i) all cross-references shall refer to the relevant provision or
provisions as incorporated therein, (ii) references therein to "hereof",
"hereto", "herein", and "Agreement" shall refer to the Term Loan Agreement, and
(iii) references in such sections as incorporated therein to the defined term
"Event of Default" shall be deemed references to that term as defined in the
Term Loan Agreement.
(d)......Events of Default. Section 6.1 of the Term Loan
Agreement is amended and restated to delete references and incorporation therein
of the referenced Sections of the Credit Agreement (as defined therein) and to
insert in lieu thereof and incorporate by reference the Events of Default set
forth in Sections 6.1 of this Agreement, including definitions of defined terms
used therein and exhibits referred to therein, except that (i) all
cross-references shall refer to the relevant provision or provisions as
incorporated therein, and (ii) references therein to "hereof", "hereto",
"herein", and "Agreement" shall refer to the Term Loan Agreement.
6A.3 Amendments to Reimbursement Agreement. After the Effective
Date, the Reimbursement
Agreement is amended as follows:
(a)......Repayment of Reimbursement Obligation. Section
1.06(a) of the Reimbursement Agreement is redesignated as Section 1.06, and
Section 1.06(b) of the Reimbursement Agreement (improperly designated as Section
6.01(b) in Section 4.3(a) of the 1996 Credit Agreement) is deleted.
(b)......Negative Covenants. 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 Section
5.2 of the Amended and Restated Credit Agreement and Amendment to Reimbursement
Agreement among the Company, the Bank, and NBD Bank, N.A., dated as of September
__, 1997 (as amended or modified from time to time, the "Credit Agreement"). All
such provisions of Section 5.2, 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 7
MISCELLANEOUS
7.1 Amendments, Etc. No amendment, modification, termination or waiver
of any provision of this Agreement nor any consent to any departure therefrom
shall be effective unless the same shall be in writing and signed by the Company
and the Bank. Any such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
7.2 Notices.
(a)......Except as otherwise provided in Section 7.2(c)
hereof, all notices and other communications hereunder shall be in writing and
shall be delivered or sent to the Company and the Guarantors at Hurco Companies,
Inc., One Technology Way, Indianapolis, Indiana 46268, Attention: Chief
Financial Officer, Facsimile No. (317)-328-2811 Facsimile Confirmation No.
(317)-293-5309, and to the Bank and NBD Michigan at the respective addresses set
forth on the signature pages hereto, or to such other address as may be
designated by a party by notice to the other parties hereto. All notices and
other communications shall be deemed to have been given at the time of actual
delivery thereof to such address, or, unless sooner delivered, (i) if sent by
certified or registered mail, postage prepaid, to such address, on the third day
after the date of mailing, or (ii) if sent by facsimile transmission, upon
confirmation of receipt by telephone at the number specified for confirmation,
provided, however, that notices to the Bank and NBD Michigan shall not be
effective until received.
(b)......Notices by the Company to the Bank with respect to
terminations or reductions of the Commitments pursuant to Section 2.2, requests
for Advances pursuant to Section 2.4, requests for continuations or conversions
of Loans pursuant to Section 2.7, and notices of prepayment pursuant to Section
3.1 shall be irrevocable and binding on the Company.
(c)......Any notice to be given by the Company to the Bank
pursuant to Sections 2.4, 2.7, or 3.1, and any notice to be given by the Bank or
NBD Michigan hereunder, may be given by telephone, and all such notices given by
the Company must be immediately confirmed in writing in the manner provided in
Section 7.2(a). Any such notice given by telephone shall be deemed effective
upon receipt thereof by the party to whom such notice is to be given. The
Company shall indemnify and hold harmless the Bank and NBD Michigan from any and
all losses, damages, liabilities, and claims arising from the Bank's or NBD
Michigan's good faith reliance on any such telephone notice.
7.3 No Waiver By Conduct; Remedies Cumulative. No course of dealing on
the part of the Bank or NBD Michigan, nor any delay or failure on the part of
the Bank or NBD Michigan in exercising any right, power, or privilege hereunder
shall operate as a waiver of such right, power, or privilege or otherwise
prejudice the Bank's or NBD Michigan's rights and remedies hereunder; nor shall
any single or partial exercise thereof preclude any further exercise thereof or
the exercise of any other right, power or privilege. No right or remedy
conferred upon or reserved to the Bank or NBD Michigan under this Agreement or
the other Loan Documents is intended to be exclusive of any other right or
remedy, and every right and remedy shall be cumulative and in addition to every
other right or remedy granted thereunder or now or hereafter existing under any
applicable law. Every right and remedy granted by this Agreement or the other
Loan Documents or by applicable law to the Bank or NBD Michigan may be exercised
from time to time and as often as may be deemed expedient by the Bank or NBD
Michigan and, unless contrary to the express provisions of the Loan Documents,
irrespective of the occurrence or continuance of any Default or Event of
Default.
7.4 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations, and warranties of the Company and the
Guarantors made herein or in any certificate, report, financial statement, or
other document furnished by or on behalf of the Company or the Guarantors in
connection with this Agreement shall be deemed to be material and to have been
relied upon by the Bank and NBD Michigan, notwithstanding any investigation
heretofore or hereafter made by the Bank or NBD Michigan or on the Bank's or NBD
Michigan's behalf, and those covenants and agreements of the Company set forth
in Sections 3.7, 3.9, and 7.5 hereof shall survive the repayment in full of the
Advances and the termination of the Commitments.
7.5 Expenses; Indemnification.
(a)......The Company agrees to pay, or reimburse the Bank and
NBD Michigan for the payment of, on demand, (i) the reasonable fees and expenses
of their counsel, including without limitation the fees and expenses of Messrs.
Dickinson, Wright, Moon, Van Dusen & Freeman, in connection with the
preparation, execution, delivery, and administration of this Agreement and the
other Loan Documents, and in connection with advising the Bank and NBD Michigan
as to their rights and responsibilities with respect thereto, and in connection
with any amendments, waivers, or consents in connection therewith, and (ii) all
stamp and other taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing, or recording of this Agreement or any
other Loan Document, or the consummation of the transactions contemplated
hereby, and any and all liabilities with respect to or resulting from any delay
in paying or omitting to pay such taxes or fees, and (iii) all reasonable costs
and expenses of the Bank and NBD Michigan (including reasonable fees and
expenses of counsel and whether incurred through negotiations, legal proceedings
or otherwise) in connection with any Default or Event of Default or the
enforcement of, or the exercise or preservation of any rights under, this
Agreement or the other Loan Documents or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement, and (iv)
all reasonable costs and expenses of the Bank and NBD Michigan (including
reasonable fees and expenses of counsel) in connection with any action or
proceeding relating to a court order, injunction, or other process or decree
restraining or seeking to restrain the Bank from paying any amount under, or
otherwise relating in any way to, any Letter of Credit and any and all costs and
expenses which any of them may incur relative to any payment under any Letter of
Credit.
(b)......The Company indemnifies and agrees to hold harmless
the Bank, and its Affiliates, officers, directors, employees, and agents,
harmless from and against any and all claims, damages, losses, liabilities,
costs or expenses of any kind or nature whatsoever which the Bank or any such
person may incur or which may be claimed against any of them by reason of or in
connection with any Letter of Credit, and neither the Bank nor any of its
Affiliates, officers, directors, employees, or agents shall be liable or
responsible for: (i) the use which may be made of any Letter of Credit or for
any acts or omissions of any beneficiary in connection therewith; (ii) the
validity, sufficiency, or genuineness of documents or of any endorsement
thereon, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent, or forged; (iii) payment by the Bank
to the beneficiary under any Letter of Credit against presentation of documents
which do not comply with the terms of any Letter of Credit, including failure of
any documents to bear any reference or adequate reference to such Letter of
Credit; (iv) any error, omission, interruption, or delay in transmission,
dispatch, or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit; or (v) any other event or circumstance
whatsoever arising in connection with any Letter of Credit; provided, however,
that the Company shall not be required to indemnify the Bank and such other
persons, and the Bank shall be liable to the Company to the extent, but only to
the extent, of any direct, as opposed to consequential or incidental, damages
suffered by the Company which were caused by (A) the Bank's wrongful dishonor of
any Letter of Credit after the presentation to it by the beneficiary thereunder
of a draft or other demand for payment and other documentation strictly
complying with the terms and conditions of such Letter of Credit, or (B) the
Bank's payment to the beneficiary under any Letter of Credit against
presentation of documents which do not substantially comply with the terms of
the Letter of Credit to the extent, but only to the extent, that such payment
constitutes gross negligence or willful misconduct of the Bank. It is understood
that in making any payment under a Letter of Credit, the Bank will rely on
documents presented to it under such Letter of Credit as to any and all matters
set forth therein without further investigation and regardless of any notice or
information to the contrary, and such reliance and payment against documents
presented under a Letter of Credit substantially complying with the terms
thereof shall not be deemed gross negligence or willful misconduct of the Bank
in connection with such payment. It is further acknowledged and agreed that the
Company may have rights against the beneficiary or others in connection with any
Letter of Credit with respect to which the Bank is alleged to be liable and it
shall be a precondition of the assertion of any liability of the Bank under this
Section that the Company shall first have exhausted all remedies in respect of
the alleged loss against such beneficiary and any other parties obligated or
liable in connection with such Letter of Credit and any related transactions.
(c)......The Company indemnifies and agrees to hold harmless
the Bank, and its Affiliates, officers, directors, employees, and agents, from
and against any and all claims, damages, losses, liabilities, costs, or expenses
of any kind or nature whatsoever (including reasonable attorneys fees and
disbursements incurred in connection with any investigative, administrative or
judicial proceeding whether or not such person shall be designated as a party
thereto) which the Bank or any such person may incur or which may be claimed
against any of them by reason of or in connection with entering into this
Agreement or the transactions contemplated hereby, including without limitation
those arising under Environmental Laws; provided, however, that the Company
shall not be required to indemnify the Bank or such other person, to the extent,
but only to the extent, that such claim, damage, loss, liability, cost, or
expense is attributable to the gross negligence or willful misconduct of the
Bank.
(d) In consideration of the execution and delivery of this
Agreement by the Bank and NBD Michigan and the extension of the Commitments,
the Company hereby indemnifies, exonerates, and holds the Bank and each of its
Affiliates, officers, directors, employees, and agents (collectively, the
"Indemnified Parties") free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities, and damages, and expenses
incurred in connection therewith (irrespective of whether any such Indemnified
Party is a party to the action for which indemnification hereunder is sought),
including reasonable attorneys' fees and disbursements (collectively, the
"Indemnified Liabilities"), incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to:
(i)......any transaction financed or to be financed
in whole or in part,
directly or indirectly, with the proceeds of any Advance;
(ii).....the entering into and performance of this
Agreement and any other
agreement or instrument executed in connection herewith by any of the
Indemnified Parties (including any action brought by or on behalf of the Company
as the result of any determination by the Bank not to fund any Advance);
(iii)....any investigation, litigation, or proceeding
related to any
acquisition or proposed acquisition by the Company or any of its Subsidiaries of
any portion of the
stock or assets of any person, whether or not the Bank is party thereto;
(iv).....any investigation, litigation, or proceeding
related to any
environmental cleanup, audit, compliance, or other matter relating to the
protection of the environment or the release by the Company or any of its
Subsidiaries of any Hazardous Material; or
(v)......the presence on or under, or the escape,
seepage, leakage, spillage,
discharge, emission, discharging, or releasing from, any real property owned or
operated by the Company or any of its Subsidiaries of any Hazardous Material
(including any losses, liabilities, damages, injuries, costs, expenses, or
claims asserted or arising under any Environmental Law), regardless of whether
caused by, or within the control of, the Company or such Subsidiary, except for
any such Indemnified Liabilities arising for the account of a particular
Indemnified Party by reason of the activities of the Indemnified Party on the
property of the Company conducted subsequent to a foreclosure on such property
by the Bank or by reason of the relevant Indemnified Party's gross negligence or
willful misconduct or breach of this Agreement, and if and to the extent that
the foregoing undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law. The Company shall be obligated to indemnify the Indemnified Parties for all
Indemnified Liabilities subject to and pursuant to the foregoing provisions,
regardless of whether the Company or any of its Subsidiaries had knowledge of
the facts and circumstances giving rise to such Indemnified Liability.
7.6 Successors and Assigns.
(a)......This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
provided that the Company may not, without the prior consent of the Bank, assign
its rights or obligations hereunder or under the Notes and the Bank shall not be
obligated to make any Advance hereunder to any entity other than the Company.
(b)......The Bank may sell to any financial institution or
institutions, and such financial institution or institutions may further sell, a
participation interest (undivided or divided) in, the Advances and the Bank's
rights and benefits under this Agreement and the Notes, and to the extent of
that participation interest, such participant or participants shall have the
same rights and benefits against the Company under Sections 3.7, 3.9, and 6.2(c)
as it or they would have had if such participant or participants were the Bank
making the Advances to the Company hereunder, provided, however, that (i) the
Bank's obligations under this Agreement shall remain unmodified and fully
effective and enforceable against the Bank, (ii) the Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Bank shall remain the holder of its Notes for all purposes of this
Agreement, (iv) the Company shall continue to deal solely and directly with the
Bank in connection with the Bank's rights and obligations under this Agreement,
and (v) the Bank shall not grant to its participant any rights to consent or
withhold consent to any action taken by the Bank under this Agreement.
(c)......From time to time in its sole discretion, the Bank
may appoint agents for the purpose of servicing and administering this Agreement
and the transactions contemplated hereby and enforcing or exercising any rights
or remedies of the Bank provided under this Agreement, the Notes or otherwise.
In furtherance of such agency, the Bank may from time to time direct that the
Company provide notices, reports, and other documents contemplated by this
Agreement (or duplicates thereof) to such agent. The Company consents to the
appointment of such agent and agrees to provide all such notices, reports, and
other documents and to otherwise deal with such agent acting on behalf of the
Bank in the same manner as would be required if dealing with the Bank itself.
7.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
7.8 Governing Law. This Agreement is a contract made under, and shall
be governed by and construed in accordance with, the law of the State of Indiana
applicable to contracts made and to be performed entirely within such State and
without giving effect to choice of law principles of such State. Each of the
Company, the Bank, and NBD Michigan further agrees that any legal or equitable
action or proceeding with respect to this Agreement, the Notes, or the
transactions contemplated hereby shall be brought in any court of the State of
Indiana, or in any court of the United States of America sitting in Indiana, and
the Company, the Bank, and NBD Michigan each submits to and accepts generally
and unconditionally the jurisdiction of those courts with respect to its person
and property. The Company irrevocably appoints Roger J. Wolf, whose address in
Indiana is c/o Hurco Companies, Inc., One Technology Way, Indianapolis, Indiana
46268, as its agent for service of process and irrevocably consents to the
service of process in connection with any such action or proceeding by personal
delivery to such agent or to the Company, or by the mailing thereof by
registered or certified mail, postage prepaid to the Company at its address for
notices pursuant to Section 7.2. The Company shall at all times maintain such an
agent in Indiana for such purpose and shall notify the Bank of such agent's
address in Indiana within ten days of any change of address. Nothing in this
paragraph shall affect the Bank's or NBD Michigan's right to serve process in
any other manner permitted by law or limit the Bank's or NBD Michigan's right to
bring any such action or proceeding against the Company or its property in the
courts of any other jurisdiction. The Company, the Bank, and NBD Michigan each
irrevocably waives any objection to the laying of venue of any such action or
proceeding in the above described courts.
7.9 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for the convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
7.10 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.
7.11 Integration and Severability. This Agreement and the Notes,
together with the other Loan Documents, embody the entire agreement and
understanding among the Company, the Bank, and NBD Michigan, and supersede all
prior agreements and understandings, relating to the subject matter hereof and
thereof. In case any one or more of the obligations of the Company under the
Loan Documents shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining obligations of the
Company shall not in any way be affected or impaired thereby, and such
invalidity, illegality or unenforceability in one jurisdiction shall not affect
the validity, legality or enforceability of the obligations of the Company under
the Loan Documents in any other jurisdiction.
7.12 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 or an Event of Default if such action is taken or
such condition exists.
7.13 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 Company 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 Company
if such principal and all other obligations of the Company to the Bank have been
paid in full.
7.14 Waiver of Jury Trial. The Bank, NBD Michigan, and the Company,
after consulting or having had the opportunity to consult with counsel,
knowingly, voluntarily and intentionally waive any right any of them may have to
a trial by jury in any litigation based upon or arising out of this Agreement or
any related instrument or agreement or any of the transactions contemplated by
this Agreement or any course of conduct, dealing, statements (whether oral or
written) or actions of any of them. Neither the Bank, NBD Michigan, nor the
Company shall seek to consolidate, by counterclaim or otherwise, any such action
in which a jury trial has been waived with any other action in which a jury
trial cannot be or has not been waived. These provisions shall not be deemed to
have been modified in any respect or relinquished by any party hereto except by
a written instrument executed by such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written, which
shall be the Effective Date of this Agreement.
HURCO COMPANIES, INC.
By /s/ Roger J. Wolf
Roger J. Wolf
Its: Senior Vice President and
Chief Financial Officer
Address for Notices:........................ NBD BANK, N.A.
One Indiana Square.......................... By /s/ Scott C. Morrison
---------------------
Indianapolis, Indiana 46266................
.......................... Its: Vice President
Attention: Scott C. Morrison
Facsimile No.: (317)-266-6042
Facsimile Confirmation No.: (317)-266-7351
Address for Notices:........................ NBD BANK
One Indiana Square.......................... By_ /s/ Scott C. Morrison
---------------------
Indianapolis, Indiana 46266................
.......................... Its: Vice President
Attention: Scott C. Morrison
Facsimile No.: (317)-266-6042
Facsimile Confirmation No.: (317)-266-7351
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