CREDIT AGREEMENT
among
HARDINGE INC.
(the "Borrower")
the Banks signatory hereto
and
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
as Agent
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Dated as of February 28, 1996
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Table of Contents
TITLE PAGE
ARTICLE 1 DEFINITIONS; ACCOUNTING TERMS.................................................................. 1
Section 1.01 Definitions........................................................................... 1
Section 1.02 Accounting Terms...................................................................... 8
ARTICLE 2 THE CREDIT..................................................................................... 8
Section 2.01 The Loans............................................................................. 8
Section 2.02 The Notes............................................................................. 8
Section 2.03 Purpose............................................................................... 9
Section 2.04 Borrowing Procedures.................................................................. 9
Section 2.05 Prepayments........................................................................... 9
Section 2.06 Interest Periods...................................................................... 9
Section 2.07 Interest.............................................................................. 9
Section 2.08 Certain Notices.......................................................................10
Section 2.09 Payments Generally....................................................................10
ARTICLE 3 YIELD PROTECTION; ILLEGALITY; ETC..............................................................10
Section 3.01 Additional Costs......................................................................10
Section 3.02 Limitation on Types of Loans..........................................................12
Section 3.03 Illegality............................................................................12
Section 3.04 Certain Variable Rate Loans pursuant to
Sections 3.01 and 3.03................................................................12
Section 3.05 Certain Compensation..................................................................12
ARTICLE 4 CONDITIONS PRECEDENT...........................................................................13
Section 4.01 Documentary Conditions Precedent......................................................13
Section 4.02 Additional Conditions Precedent.......................................................14
ARTICLE 5 REPRESENTATIONS AND WARRANTIES.................................................................14
Section 5.01 Incorporation, Good Standing and Due Qualification....................................14
Section 5.02 Corporate Power and Authority; No Conflicts...........................................14
Section 5.03 Government Approval ..................................................................14
Section 5.04 Legally Enforceable Agreements........................................................14
Section 5.05 Financial Statements..................................................................15
Section 5.06 Litigation ...........................................................................15
Section 5.07 Margin Stock..........................................................................15
Section 5.08 Use of Loan Proceeds..................................................................15
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Section 5.09 Tax Returns ..........................................................................15
Section 5.10 ERISA ................................................................................15
Section 5.11 Subsidiaries .........................................................................15
Section 5.12 Ownership and Liens...................................................................15
Section 5.13 Hazardous Materials...................................................................16
Section 5.14 No Defaults on Other Agreements.......................................................16
Section 5.15 Partnerships..........................................................................16
Section 5.16 No Forfeiture.........................................................................16
Section 5.17 Solvency..............................................................................17
ARTICLE 6 AFFIRMATIVE COVENANTS..........................................................................17
Section 6.01 Compliance with Laws, Corporate Existence.............................................17
Section 6.02 Reporting Requirements................................................................18
Section 6.03 Notice of Proceedings ................................................................19
Section 6.04 Insurance ............................................................................19
Section 6.05 Environmental Laws ...................................................................19
Section 6.06 Access to Premises and Records........................................................19
Section 6.07 Notice of Default.....................................................................19
Section 6.08 Subsidiaries..........................................................................20
Section 6.09 Material Adverse Changes .............................................................20
ARTICLE 7 NEGATIVE COVENANTS.............................................................................20
Section 7.01 Liens, Etc............................................................................20
Section 7.02 Lease Obligations.....................................................................21
Section 7.03 Prohibited Transactions...............................................................21
Section 7.04 Margin Stock..........................................................................22
Section 7.05 Consolidations, Mergers, Acquisitions and Sales of Assets.............................22
Section 7.06 Affiliate Transactions................................................................22
Section 7.07 Loans and Advances ...................................................................22
Section 7.08 Guaranties ...........................................................................23
Section 7.09 No Activities Leading to Forfeiture...................................................23
ARTICLE 8 FINANCIAL COVENANTS............................................................................23
Section 8.01 Working Capital.......................................................................23
Section 8.02 Net Worth.............................................................................23
Section 8.03 Debt .................................................................................24
Section 8.04 Cash Flow.............................................................................24
Section 8.05 Total Liabilities to Tangible Net Worth...............................................24
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ARTICLE 9 EVENTS OF DEFAULT..............................................................................24
Section 9.01 Events of Default.....................................................................24
Section 9.02 Remedies..............................................................................25
ARTICLE 10 THE AGENT; RELATIONS AMONG BANKS, ETC..........................................................26
Section 10.01 Appointment, Powers and Immunities of Agent...........................................26
Section 10.02 Reliance by Agent.....................................................................26
Section 10.03 Defaults..............................................................................27
Section 10.04 Rights of Agent as a Bank.............................................................27
Section 10.05 Indemnification of Agent..............................................................27
Section 10.06 Documents.............................................................................28
Section 10.07 Non-Reliance on Agent and Other Banks.................................................28
Section 10.08 Failure of Agent to Act...............................................................28
Section 10.09 Resignation or Removal of Agent.......................................................28
Section 10.10 Amendments Concerning Agency Function.................................................29
Section 10.11 Liability of Agent....................................................................29
Section 10.12 Transfer of Agency Function...........................................................29
Section 10.13 Non-Receipt of Funds by the Agent.....................................................29
Section 10.14 Taxes.................................................................................30
Section 10.15 Several Obligations and Rights of Banks...............................................30
Section 10.16 Pro Rata Treatment of Loans, Etc......................................................30
Section 10.17 Sharing of Payments Among Banks.......................................................30
ARTICLE 11 MISCELLANEOUS..................................................................................31
Section 11.01 Amendments and waivers................................................................31
Section 11.02 Usury.................................................................................31
Section 11.03 Expenses and Indemnification..........................................................31
Section 11.04 Survival..............................................................................32
Section 11.05 Assignment; Participations............................................................32
Section 11.06 Notices...............................................................................33
Section 11.07 Setoff................................................................................33
Section 11.08 Jurisdiction; Immunities..............................................................33
Section 11.09 Table of Contents; Headings...........................................................34
Section 11.10 Severability..........................................................................34
Section 11.11 Counterparts..........................................................................35
Section 11.12 Integration...........................................................................35
Section 11.13 Governing Law; Submission to Jurisdiction.............................................35
Section 11.14 Confidentiality.......................................................................35
Section 11.15 Treatment of Certain Information......................................................35
Section 11.16 Currency..............................................................................35
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EXHIBITS
Exhibit A Form of Note
Exhibit B Authorization Letter
Exhibit C Opinion of Counsel for Borrower
Exhibit D Confidentiality Agreement
SCHEDULES
Schedule I Subsidiaries of Borrower
Schedule II Hazardous Materials
Schedule III Partnerships of Borrower
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CREDIT AGREEMENT
CREDIT AGREEMENT dated as of February 28, 1996 among HARDINGE INC., a
corporation organized under the laws of New York (the "Borrower"), each of the
banks which is a signatory hereto (individually a "Bank" and collectively the
"Banks") and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national
banking association organized under the laws of the United States of America,
as agent for the Banks (in such capacity, together with its successors in such
capacity, the "Agent").
The Borrower desires that the Banks extend credit as provided herein
and the Banks are prepared to extend such credit. Accordingly, the Borrower,
the Banks and the Agent agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement the following
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa):
"Affiliate" means any Person: (a) which directly or indirectly
controls, or is controlled by, or is under common control with, the Borrower
or any of its Subsidiaries; (b) which directly or indirectly beneficially owns
or holds 5% or more of any class of voting stock of the Borrower or any such
Subsidiary; (c) 5% or more of the voting stock of which is directly or
indirectly beneficially owned or held by the Borrower or such Subsidiary; or
(d) which is a partnership in which the Borrower or any of its Subsidiaries is
a general partner. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract, or otherwise.
"Agent's Account" means account number 900-9-000002 maintained by the
Agent at the Principal Office and any other account designated by the Agent.
"Agreement" means this Credit Agreement, as amended or supplemented
from time to time. References to Articles, Sections, Exhibits, schedules and
the like refer to the Articles, Sections, Exhibits, schedules and the like of
this Agreement unless otherwise indicated.
"Authorization Letter" means the letter agreement executed by the
Borrower in the form of Exhibit B.
"Banking Day" means (a) any day on which commercial banks are not
authorized or required to close in New York City, and (b) whenever such day
relates to a Eurodollar Loan or notice with respect to any Eurodollar Loan, a
day on which dealings in Dollar deposits are also carried out in the London
interbank market.
"Basis Point" means one one-hundredth of one percent.
1
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Commitment" means, with respect to each Bank, the obligation of such
Bank to make a Loan under this Agreement in the aggregate principal amount
following, as such amount may be modified from time to time:
The Chase Manhattan Bank (National Association): $6,656,250.00
Chemical Bank 6,656,250.00
Marine Midland Bank 4,437,500.00
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Total: $17,750,000.00
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"Consolidated Assets" means all assets of Borrower and its
Consolidated Subsidiaries treated as assets in accordance with GAAP.
"Consolidated Capital Expenditures" means for any period, the Dollar
amount of gross expenditures (including obligations under Capital Leases) made
for fixed assets, real property, plant and equipment, and all renewals,
improvements and replacements thereto, (but not repairs thereof) incurred
during such period for the Borrower and its Consolidated Subsidiaries, as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Assets" means all assets of the Borrower and
its Consolidated Subsidiaries, treated as current assets in accordance with
GAAP.
"Consolidated Current Liabilities" means all liabilities of the
Borrower and its Consolidated Subsidiaries, treated as current liabilities in
accordance with GAAP, including without limitation (a) all obligations payable
on demand or within one (1) year after the date in which the determination is
made, and (b) installment and sinking fund payments required to be made within
one (1) year after the date on which determination is made, but excluding any
such indebtedness renewable or extendable at the option of the obligor under,
or payable from the proceeds of other indebtedness which may be incurred
pursuant to the provisions of any revolving credit agreements or other similar
agreement.
"Consolidated Net Income" means for any period the net income of the
Borrower and its Consolidated Subsidiaries for such period determined on a
consolidated basis without duplication, in accordance with GAAP.
"Consolidated Subsidiary" means any Subsidiary whose accounts are or
are required to be consolidated with the accounts of the Borrower in
accordance with GAAP.
"Consolidated Tangible Net Worth" means Tangible Net Worth of the
Borrower and its Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
2
"Consolidated Total Unsubordinated Liabilities" means all items on a
consolidated basis, in accordance with GAAP consistently applied, which would
properly be included (a) on the liability side of the balance sheet (other
than Subordinated Debt, capital stock, capital surplus and retained earnings),
or (b) as obligations under direct or indirect guarantees or obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise
assure a creditor against loss in respect of, indebtedness or obligations of
others; provided, however, excluded therefrom shall be all but 10% of the
obligations resulting from the sale, pledge or discount of customer notes by
Borrower and its Subsidiaries.
"Controlled Group" shall have the meaning assigned to such term in
Section 6.02(e) hereof.
"Debt" means, with respect to any Person: (a) indebtedness of such
Person for borrowed money; (b) obligations of such Person as lessee under
Capital Leases, (c) obligations under direct or indirect guarantees in respect
of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clause (a)
and (b) above, (not otherwise reserved for) and (d) defined benefit pension
liabilities in respect of unfunded vested benefits under plans covered by
ERISA calculated consistently with GAAP. Excluded from the term Debt shall be
an amount equal to 90% of the obligations of the Borrower and its Subsidiaries
arising from the sale, pledge, or discounting of customer notes.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any Loan and,
to the extent permitted by law, any other amount payable by the Borrower under
this Agreement or any Note that is not paid when due (whether at stated
maturity, by acceleration or otherwise), a rate per annum during the period
from and including the due date, to, but excluding the date on which such
amount is paid in full equal to 2% above the Variable Rate as in effect from
time to time plus the Margin (if any) (provided that, if the amount so in
default is principal of a Eurodollar Loan and the due date thereof is a day
other than the last day of the Interest period therefor, the "Default Rate"
for such principal shall be, for the period from and including the due date
and to but excluding the last day of the Interest period therefor, 2% above
the interest rate for such Loan as provided in section 2.10 hereof and,
thereafter, the rate provided for above in this definition).
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Domestic Subsidiaries" means any Subsidiary formed and currently
existing under the laws of the United States of America or a State thereof.
"Earnings Before Interest and Taxes" means Consolidated Net Income
prior to the deduction of interest expense and prior to the deduction for
federal, state or foreign corporate income and corporate franchise taxes.
3
"Effective Date" means February 29, 1996 or, if later, the date on
which the conditions contained in Article IV have been satisfied.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport, or handling-of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"Eurodollar Loan" means any Loan when and to the extent the interest
rate therefor is determined on the basis of the definition "LIBO Base Rate."
"Event of Default" has the meaning given such term in Section 9.01.
"Facility Documents" means this Agreement, the Notes and the
Authorization Letter.
"Federal Funds Rate" means, for any day, the rate per annum equal to
the weighted average of the rates on overnight federal funds transactions as
published by the Federal Reserve Bank of New York for such day (or for any day
that is not a Banking Day, for the immediately preceding Banking Day).
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting the Borrower or any of its Subsidiaries or Affiliates before any
court, governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or the receipt of notice by any such
party that any of them is a suspect in or a target of any governmental inquiry
or investigation, which may result in an indictment of any of them or the
seizure or forfeiture of any of their property.
"Funded Debt" means, with respect to any Person, all Debt of such
Person for borrowed money.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis
consistent with those used in the preparation of the financial statements
referred to in Section 5.05 (except for changes concurred in by the Borrower's
independent public accountants).
"Hazardous Materials" means any substance regulated under any
Environmental Laws.
4
"Interest Period" means the period initially commencing on the
Effective Date and ending on May 29, 1996 and thereafter commencing on the
last day of each Interest Period and ending, as the Borrower may select
pursuant to Section 2.06 on the twenty-ninth (29th) day in the first, second,
third or sixth calendar month thereafter, provided that each such Interest
Period which commences on the last Banking 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 Banking Day of the
appropriate subsequent calendar month.
"Lending Office" means, for each Bank and for each type of Loan, the
lending office of such Bank (or of an affiliate of such Bank) designated as
such for such type of Loan on its signature page hereof or such other office
of such Bank (or of an affiliate of such Bank) as such Bank may from time to
time specify to the Agent and the Borrower as the office by which its Loans of
such type are to be made and maintained.
"Liens" shall have the meaning assigned to such term in Section 7.01
hereof.
"LIBO Base Rate" means with respect to any Eurodollar Loan the
arithmetic mean, as calculated by the Agent, of the respective rates per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1%) quoted at
approximately 11:00 a.m. London time by the principal London branch of the
Principal Reference Bank two Banking Days prior to the first day of the
Interest Period for such Loan for the offering to leading banks in the London
interbank market of Dollar deposits in immediately available funds, for a
period, and in an amount, comparable to such Interest Period and principal
amount of the Eurodollar Loan. If the Principal Reference Bank is no longer
quoting on the London interbank market, the LIBO Base Rate shall be determined
by the Agent on the basis of quotes from a Reference Bank (other than the
Agent) selected by the Agent.
"LIBO Rate" means, for any Eurodollar Loan, a rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined by the Agent to
be equal to the sum of the quotient of (a) the LIBO Base Rate for such Loan
for the Interest Period therefor, divided by (b) one minus the Reserve
Requirement for such Loan for such Interest Period.
"Loans" means the loans made by the Banks pursuant to Section 2.01
(each a "Loan).
"Margin" means for each Variable Rate Loan and Eurodollar Loan the
lowest applicable margin on the table next following, computed as of the date
this Agreement based upon Borrower's financial statements for the immediately
preceding four fiscal quarters for income statement items and the most recent
fiscal quarter for balance sheet items, and adjusted thereafter on the first
day of each Interest Period based on information for the immediately preceding
four fiscal quarters for income statement items and the immediately preceding
fiscal quarter for balance sheet items.
5
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(a) Ratio of Funded Debt to Earnings Variable Rate Loans Eurodollar Loans
Before Interest & Taxes
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Equal to less than 1.0 0 Basis Points 45 Basis Points
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Greater than 1.0 and less than or equal 0 Basis Points 65 Basis Points
to 2.0
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Greater than 2.0 and less than or equal 0 Basis Points 85 Basis Points
to 3.0
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Greater than 3.0 0 Basis Points 100 Basis Points
============================================================================================================================
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Maturity Date" means February 28, 2003.
"Net Worth" means, at any date of determination thereof, the sum for
the Borrower and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) of (a) the amount of common stock; plus
(b) the amount of any preferred stock that does not have any requirement for
the Borrower to purchase, redeem, retire or otherwise acquire the same; plus
(c) the amount of additional paid-in-capital and retained earnings (or, in the
case of an additional paid-in-capital or retained earnings deficit, minus the
amount of such deficit); plus (d) cumulative pension liability adjustments
(or, in the case of negative adjustments, minus the amount of such
adjustments); plus (e) cumulative foreign currency translation adjustments
(or, in the case of negative adjustments, minus the amount of such
adjustments); plus (f) any other items which under GAAP are included in
shareholders equity (or, in the case of items excluded from shareholders
equity, minus such items); and minus (g) the cost of treasury stock.
"Note" means the Note of the Borrower in the form of Exhibit A hereto
evidencing the Loans made by the Banks hereunder.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Plan" shall have the meaning assigned to such term in Section 6.02
(e) hereof.
"Prime Rate" means that rate of interest from time to time announced
by the Principal Reference Bank at its principal office as its prime
commercial lending rate.
6
"Principal Office" means the principal office of the Agent, presently
located at 1 Chase Manhattan Plaza, New York, New York 10081.
"Principal Reference Bank" means The Chase Manhattan Bank (National
Association), its successors and assigns.
"Quarterly Dates" shall mean the twenty-eighth (28th) day of
February, May, August, and November in each year, the first of which shall be
the first such day after the date of this Agreement.
"Reference Banks" means The Chase Manhattan Bank (National
Association), Chemical Bank and Marine Midland Bank.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change after
the date of this Agreement in United States federal, state, municipal or
foreign laws or regulations (including without limitation Regulation D) or the
adoption or making after such date of any interpretations, directives or
requests applying to a class of banks including such Bank of or under any
United States, federal, state, municipal or foreign laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
"Required Banks" means, at any time while no Loans are outstanding,
Banks having at least 75% of the aggregate amount of the Commitment and, at
any time while Loans are outstanding, Banks holding at least 75% of the
aggregate outstanding principal amount of the Loans.
"Reserve Requirement" means, for any Interest Period for any
Eurodollar Loan, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during the Interest Period for such Loan under Regulation D by member banks of
the Federal Reserve System in New York City with deposits exceeding
$1,000,000,000.00 against in the case of Eurodollar Loans, "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall also reflect any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change against (i) any category of liabilities which includes
deposits by reference to which the LIBO Base Rate for Eurodollar Loans is to
be determined as provided in the definition of "LIBO Base Rate" in this
Section 1.01 or (ii) any category of extensions of credit or other assets
which include Eurodollar Loans.
7
"Subordinated Debt" means Debt subordinated to the Banks on terms and
conditions satisfactory to the Banks.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.
"Tangible Net Worth" shall have the meaning assigned to such term in
Section 8.02 hereof.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all benefit liabilities (within
the meaning of section 4001(a)(16) of ERISA) under the Plan exceeds the fair
market value of all Plan assets allocable to such benefit liabilities, as
determined on the most recent valuation date of the Plan and in accordance
with the provisions of ERISA for calculating the potential liability of the
Borrower or any ERISA Affiliate under Title IV of ERISA.
"Variable Rate" means, for any day, the higher of (a) the Federal
Funds Rate for such day plus fifty (50) Basis Points, and (b) the Prime Rate
for such day.
"Variable Rate Loan" means any Loan when and to the extent the
interest rate for such Loan is determined in relation to the Variable Rate.
Section 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
ARTICLE 2. THE CREDIT.
Section 2.01. The Loans. (a) Subject to the terms and conditions of
this Agreement, each of the Banks severally agree to make a Loan to the
Borrower in the amount of its Commitment on the Effective Date. The Loans may
be outstanding as Variable Rate Loans or Eurodollar Loans (each a "type" of
Loan). The Loan of each Bank shall be maintained as a Variable Rate Loan
and/or a Eurodollar Loan pro rata according to the amount of its respective
Commitment. The Loans of each type of each Bank shall be made and maintained
at such Bank's Lending Office for such type of Loan.
(b) The principal of each Loan shall be payable in twenty (20)
quarterly installments commencing on May 28, 1998 and continuing on each
Quarterly Date thereafter to and including the Maturity Date when the entire
unpaid principal balance and accrued and unpaid interest shall be due and
payable. Any payment date which is not a Banking Day shall be extended to the
next Banking Day unless, in the case of a Eurodollar Loan, such Banking Day
would fall in the
8
next calendar month, in which event payment shall be due on the immediately
preceding Banking Day.
Section 2.02. The Notes. (a) The Loan of each Bank shall be evidenced
by the Borrower's promissory note in favor of such Bank substantially in the
form of Exhibit A hereto, dated the date of this Agreement, payable to the
order of such Bank and otherwise duly completed and executed by the Borrower.
(b) The date, amount, interest rate and duration of Interest Period
for the Loan made by each Bank to the Borrower and each payment made on
account of the principal thereof, shall be recorded by such Bank on its books
and, on the schedule attached to each Note or any continuation thereof;
provided, however, that the failure of such Bank to make, or any error in
making, any such recordation shall not affect the obligations of Borrower to
make a payment when due of any amount owing hereunder or under such Note in
respect of the Loan evidenced by such Note.
Section 2.03. Purpose. The Borrower shall use the proceeds of the
Loans for the permanent financing of the acquisition of L. Kellenberger & Co.,
A.G.
Section 2.04. Borrowing Procedures. On the Effective Date each Bank
shall, through its Lending Office and subject to the conditions of this
Agreement, make the amount of the Loan to be made by it on such day available
to the Agent at the Principal Office and in immediately available funds for
the account of the Borrower. The amount so received by the Agent shall,
subject to the conditions of this Agreement, be made available to the
Borrower, in immediately available funds, by the Agent crediting an account of
the Borrower designated by the Borrower and maintained with the Agent at the
Principal Office.
Section 2.05. Prepayments. The Borrower shall have the right to
prepay the Loans at any time or from time to time in multiples of One Hundred
Fifty Thousand Dollars ($150,000.00) to be applied to principal in inverse
order of maturity; provided that: (a) the Borrower shall give the Agent notice
of each such prepayment as provided in Section 2.08; (b) Eurodollar Loans may
not be prepaid, except on the last day of the Interest Period for such Loan,
and (c) all such prepayments shall be applied as provided in Section 10.16.
Section 2.06. Interest Periods. Prior to the expiration of each
Interest Period, Borrower may select a new Interest Period of any duration in
accordance with the definition of Interest Period in Section 1.01, subject to
the following limitations: (a) no Interest Period may extend beyond the
Maturity Date; (b) no Interest Period for a Eurodollar Loan shall have a
duration less than one month and if any such proposed Interest Period would
otherwise be for a shorter period, such Interest Period shall not be
available; and (c) if an Interest Period would end on a day which is not a
Banking Day, such Interest Period shall be extended to the next Banking Day,
unless, in the case of a Eurodollar Loan, such Banking Day would fall in the
next calendar month in which event such Interest Period shall end on the
immediately preceding Banking Day.
9
Section 2.07. Interest. (a) Interest shall accrue on the outstanding
and unpaid principal amount of each Loan for the period from and including the
Effective Date at the following rates per annum: (i) for a Variable Rate Loan,
at a variable rate per annum equal to the Variable Rate plus any Margin, and
(ii) for a Eurodollar Loan, at a fixed rate equal to the LIBO Rate plus the
Margin. If the principal amount of any Loan and any other amount payable by
the Borrower hereunder or under a Note shall not be paid when due (at stated
maturity, by acceleration or otherwise), interest shall accrue at the Default
Rate on such amount to the full extent permitted by law from and including
such due date to but excluding the date such amount is paid in full.
(b) The interest rate on each Variable Rate Loan shall change when
the Variable Rate changes and interest on each such Loan shall be calculated
on the basis of a year of 365 days for the actual number of days elapsed.
Interest on each Eurodollar Loan shall be calculated on the basis of a year of
360 days for the actual number of days elapsed. Promptly after the
determination of any interest rate provided for herein or any change therein,
the Agent shall notify the Borrower and the Banks thereof.
(c) Accrued interest shall be due and payable upon any payment of
principal and on the last day of the Interest Period with respect thereto, in
the case of an Interest Period greater than three (3) months at three month
intervals after the first day of such Interest Period; provided that interest
accruing at the Default Rate shall be due and payable from time to time on
demand of the Agent.
Section 2.08. Certain Notices. (a) Notices by the Borrower to the
Agent of each prepayment pursuant to Section 2.05, the Interest Period
pursuant to Section 2.06 and the interest rate election to be made pursuant to
Section 2.07, shall be irrevocable and shall be effective only if received by
the Agent before (i) 10:00 a.m. New York time on the day thereof with respect
to Variable Rate Loans, and (ii) 12:00 noon New York time three Banking Days
prior thereto with respect to Eurodollar Loans. (b) Each such notice shall
specify the Interest Period and rate selection, and in the case of prepayment,
the date of prepayment (which shall be a Banking Day). If Borrower shall fail
to give the Agent notice as required in this Section 2.08, each Loan shall be
a Variable Rate Loan for an Interest Period continuing to the first day
following the next Quarterly Date.
Section 2.09. Payments Generally. Borrower hereby unconditionally
promises to pay to the Agent, all payments under this Agreement and the Note
in Dollars and in immediately available funds not later than 1:00 p.m. New
York time on the relevant dates specified above (each such payment made after
such time on such due date to be deemed to have been made on the next
succeeding Banking Day) to the Agent's Account for the account of each Bank.
If the due date of any payment under this Agreement or the Notes would
otherwise fall on a day which is not a Banking Day, such date shall be
extended to the next succeeding Banking Day and interest shall be payable for
any principal so extended for the period of such extension. Each payment
received by the Agent hereunder or under any Note for the account of a Bank
shall be paid promptly to such Bank, in immediately available funds, for the
account of such Bank's Lending Office.
10
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01. Additional Costs. (a) The Borrower shall pay directly
to each Bank from time to time on demand such amounts as such Bank may
reasonably determine to be necessary to compensate it for any costs which such
Bank determines are attributable to its making or maintaining any Eurodollar
Loans under this Agreement or its Note or its obligation to make any such
Loans hereunder, or any reduction in any amount receivable by such Bank
hereunder in respect of any such Loans or such obligation (such increases in
costs and reductions in amounts receivable being herein called "Additional
Costs"), resulting from any Regulatory Change, or any Reserve Requirement for
any such Loans which: (i) changes the basis of taxation of any amounts payable
to such Bank under this Agreement or its Note in respect of any of such Loans
(other than taxes imposed on the overall net income of such Bank or of its
Lending Office for any of such Loans by the jurisdiction in which such Bank
has its principal office or such Lending Office); or (ii) imposes or modifies
any reserve, special deposit, deposit insurance or assessment, minimum
capital, capital ratio or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, such
Bank (including any of such Loans or any deposits referred to in the
definition of "LIBO Base Rate" in Section 1.01); or (iii) imposes any other
condition affecting this Agreement or its Note (or any of such extensions of
credit or liabilities). Each Bank will notify the Borrower of any event
occurring after the date of this Agreement which will entitle such Bank to
compensation pursuant to this Section 3.01(a) as promptly as practicable after
it obtains knowledge thereof and determines to request such compensation. The
amount payable to any such Bank shall be computed from the date of the
occurrence giving rise to Additional Cost, or the date that is 120 days prior
to the date of demand by such Bank, whichever is later. If any Bank requests
compensation from the Borrower under this section 3.01(a), or under section
3.01(c), the Borrower may, by notice to such Bank (with a copy to the Agent),
suspend the obligation of such Bank to maintain Loans of the type with respect
to which such compensation is requested (in which case the provisions of
section 3.04 shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 3.01, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities
of such Bank which includes deposits by reference to which the interest rate
on Eurodollar Loans is determined as provided in this Agreement or a category
of extensions of credit or other assets of such Bank which includes Eurodollar
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Bank so elects by
notice to the Borrower (with a copy to the Agent), the obligation of such Bank
to make Loans of such type hereunder shall be suspended until the date such
Regulatory Change ceases to be in effect (in which case the provisions of
Section 3.04 shall be applicable).
(c) Without limiting the effect of the foregoing provisions of this
Section 3.01 (but without duplication), the Borrower shall pay directly to
each Bank from time to time on request such amounts as such Bank may
reasonably determine to be necessary to compensate such Bank for any costs
which it determines are attributable to the maintenance of capital by it or
any of
11
its Affiliates pursuant to any future law or regulation of any jurisdiction or
any interpretation, directive or request (whether or not having the force of
law and whether in effect on the date of this Agreement or thereafter) of any
court or governmental or monetary authority in respect of its Loan hereunder
or its obligation to make its Loan hereunder (such compensation to include,
without limitation, an amount equal to any reduction in return on assets or
equity of such Bank to a level below that which it could have achieved but for
such law, regulation, interpretation, directive or request). Each Bank will
notify the Borrower if it is entitled to compensation pursuant to this Section
3.01(c) as promptly as practicable after it determines to request such
compensation. The amount payable to any Bank shall be computed from the date
of the occurrence entitling such Bank to compensation, or the date that is one
hundred twenty (120) days prior to the date of demand by such Bank, whichever
is later.
(d) Determinations and allocations by a Bank for purposes of this
Section 3.01 of the effect of any Regulatory Change pursuant to subsections
(a) or (b), or of the effect of capital maintained pursuant to subsection (c),
on its costs of making or maintaining Loans or its obligation to make Loans,
or on amounts receivable by, or the rate of return to, it in respect of Loans
or such obligation, and of the additional amounts required to compensate such
Bank under this Section 3.01, shall be conclusive, provided that such
determinations and allocations are made on a reasonable basis.
Section 3.02. Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if:
(a) the Agent determines (which determination shall be conclusive)
that quotations of interest rates for the relevant deposits referred to in the
definition of "LIBO Rate" in Section 1.01 are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining
the rate of interest for any type of Eurodollar Loans as provided in this
Agreement; or
(b) the Required Banks determine (which determination shall be
conclusive) and notify the Agent and the Borrower (which notice shall include
each Bank's respective calculation of cost) that the relevant rates of
interest referred to in the definition of "LIBO Base Rate" in Section 1.01
upon the basis of which the rate of interest for any type of Eurodollar Loans
is to be determined do not adequately cover the cost to the Banks of making or
maintaining such Loans;
then the Agent shall give the Borrower and each Bank prompt notice
thereof, and so long as such condition remains in effect, the Banks shall be
under no obligation to make or maintain a Loan of such type.
Section 3.03. Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for any Bank or its Lending
Office to honor its obligation to make or maintain a Eurodollar Loan
hereunder, then such Bank shall promptly notify the Borrower thereof (with a
copy to the Agent) and such Bank's obligation to make or maintain a Eurodollar
Loan hereunder shall be suspended until such time as such Bank may again make
12
and maintain such affected Loan (in which case the provisions of Section 3.04
shall be applicable).
Section 3.04. Certain Variable Rate Loans pursuant to Sections 3.01
and 3.03. If the obligations of any Bank to make a Loan of a particular type
(Loans of such type being herein called "Affected Loans" and such type being
herein called the "Affected Type") shall be suspended pursuant to Section 3.01
or 3.03, a Loan which would otherwise be maintained by such Bank as a Loan of
the Affected Type shall be made instead as Variable Rate Loan and, if an event
referred to in Section 3.01(b) or 3.03 has occurred and such Bank so requests
by notice to the Borrower (with a copy to the Agent), the Affected Loan of
such Bank then outstanding shall be automatically converted into Variable Rate
Loan on the date specified by such Bank in such notice.
Section 3.05. Certain Compensation. The Borrower shall pay to the
Agent for the account of each Bank, upon the request of such Bank through the
Agent, such amount or amounts as shall be sufficient (in the reasonable
opinion of such Bank) to compensate it for any loss, cost or expense which
such Bank reasonably determines is attributable to any payment to such Bank of
a Eurodollar Loan made by such Bank on a date other than the last day of an
Interest Period for such Loan (whether by reason of acceleration or
otherwise);
Without limiting the foregoing, such compensation shall include an
amount equal to the excess, if any, of: (i) the amount of interest which
otherwise would have accrued on the principal amount so paid or not borrowed
for the period from and including the date of such payment or failure to
borrow to but excluding the last day of the Interest Period for such Loan (or,
in the case of a failure to borrow, to but excluding the last day of the
Interest Period for such Loan which would have commenced on the date specified
therefor in the relevant notice) at the applicable rate of interest for such
Loan provided for herein; over (ii) the amount of interest (as reasonably
determined by such Bank) such Bank would have bid in the London interbank
market (if such Loan is a Eurodollar Loan) for deposits in Dollars for amounts
comparable to such principal amount and maturities comparable to such period.
ARTICLE 4. CONDITIONS PRECEDENT.
Section 4.01. Documentary Conditions Precedent. The obligations of
the Banks to make the Loans constituting the borrowing hereunder are subject
to the condition precedent that the Agent shall have received on or before the
date of such Loans each of the following, in form and substance satisfactory
to the Agent and its counsel:
(a) the Notes duly executed by the Borrower;
(b) the Authorization Letter duly executed by the Borrower;
(c) a certificate of the Secretary or Assistant Secretary of the
Borrower, dated the Effective Date, attesting to all corporate action taken by
the Borrower, including resolutions of
13
its Board of Directors authorizing the execution, delivery and performance of
the Facility Documents to which it is a party and each other document to be
delivered pursuant to this Agreement;
(d) a certificate of the Secretary or Assistant Secretary of the
Borrower, dated the Effective Date, certifying the names and true signatures
of the officers of the Borrower authorized to sign the Facility Documents to
which it is a party and the other documents to be delivered by the Borrower
under this Agreement;
(e) a certificate of a duly authorized officer of the Borrower, dated
the Closing Date, stating that the representations and warranties in Article 5
are true and correct on such date as though made on and as of such date and
that no event has occurred and is continuing which constitutes a Default or
Event of Default;
(f) a favorable opinion of counsel for the Borrower, dated the
Closing Date, in substantially the form of Exhibit C and as to such other
matters as the Agent or any Bank may reasonably request;
(g) a recently dated certificate of the Secretary of State of the
State of Borrower's formation as to its good standing.
Section 4.02. Additional Conditions Precedent. The obligations of the
Banks to make the Loans shall be subject to the further conditions precedent
that on the date of such Loan:
(a) the following statements shall be true: (i) the representations
and warranties contained in Article 5 are true and correct on and as of the
Effective Date as though made on and as of such date; and (ii) no Default or
Event of Default has occurred and is continuing, or would result from such
Loan; and
(b) the Agent shall have received such approvals, opinions or
documents as the Agent or any Bank may reasonably request.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants that:
Section 5.01. Incorporation, Good Standing and Due Qualification. The
Borrower and each of its Subsidiaries is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of
its formation, has all power and authority to carry on its business as now
being conducted and to own its properties and is duly licensed or qualified
and in good standing or a foreign corporation in each other jurisdiction in
which its properties are located or in which failure to qualify would
materially and adversely affect the conduct of its business or the
enforceability of contractual rights of the Borrower.
14
Section 5.02. Corporate Power and Authority: No Conflicts. The
execution, delivery and performance by the Borrower of the Facility Documents
are within the Borrower's corporate powers, have been duly authorized by all
necessary corporate action, and do not contravene (a) the Borrower's charter
or by-laws,or (b) any law or any contractual restriction or provision binding
on or affecting the Borrower.
Section 5.03. Governmental Approval. No authorization or approval or
other action by, and no notice to or filing with, any governmental authority
or regulatory body is required for the due execution, delivery and performance
by the Borrower of the Facility Documents to which the Borrower is a party.
Section 5.04. Legally Enforceable Agreements. Each Facility Document
to which Borrower is a party is, or when delivered hereunder will be, legal,
valid and binding obligations of the Borrower enforceable against the Borrower
in accordance with their respective terms.
Section 5.05. Financial Statements. The balance sheets of the
Borrower and its Subsidiaries as at December 31, 1994, and the related
statements of income and retained earnings of the Borrower and its
Subsidiaries for the fiscal year then ended, and the unaudited balance sheets
of the Borrower and its Subsidiaries as at September 30, 1995 and the related
statements of income and retained earnings, copies of which have been
furnished to each Bank, fairly present the financial condition of the Borrower
and its Subsidiaries at such date and the results of the operations of the
Borrower and its subsidiaries for the period ended on such date, all in
accordance with GAAP, and since September 30, 1995, there has been no material
adverse change in such condition or operations.
Section 5.06. Litigation. There is no pending or threatened action or
proceeding affecting the Borrower or any of its Subsidiaries before any court,
governmental agency or arbitrator, which may materially adversely affect the
financial condition or operations of the Borrower or any Subsidiary.
Section 5.07. Margin Stock. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System).
Section 5.08. Use of Loan Proceeds. No part of the proceeds of the
Loans will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (a) to purchase or to carry margin stock or to
extend credit to others for the purpose of purchasing or carrying margin
stock, or to refund indebtedness originally incurred for such purpose, or (b)
for any purpose which violates or is inconsistent with the provisions of the
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System.
Section 5.09. Tax Returns. Each of the Borrower and its Subsidiaries
has filed (or has obtained extensions of the time by which it is required to
file) all United States federal income tax returns and all other material tax
returns required to be filed by it and has paid all taxes shown due on the
returns so filed as well as all other taxes, assessments and governmental
15
charges which have become due, except such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been provided.
Section 5.10. ERISA. Each member of the Controlled Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan subject to the provisions thereof and is in
compliance in all material respects with the presently applicable provisions
of ERISA and the Code, and has not incurred any liability to the PBGC or a
Plan under Title IV of ERISA.
Section 5.11. Subsidiaries. Other than the proposed formation of a
subsidiary in the Peoples Republic of China, the Borrower has no Subsidiaries
other than those set forth on Schedule I attached hereto as amended from time
to time.
Section 5.12. Ownership and Liens. Each of the Borrower and its
Subsidiaries has good and marketable title to its material properties and
assets reflected on the balance sheet referred to in Section 5.05 hereof,
except for such properties and assets as have been disposed of since the date
of such balance sheet as no longer used or useful in the conduct of its
business or as have been disposed of in the ordinary course of business, and
all such properties and facets are free and clear of mortgages, pledges,
liens, charges and other encumbrances, except for mortgages on real estate
located in Switzerland in the approximate amount of 7,000,000 Swiss Francs and
liens incurred in the ordinary course of business, any encumbrances that do
not materially interfere with the use or operation of such property or assets
and except as required or permitted by the provisions hereof or as disclosed
in the balance sheet referred to in Section 5.05 hereof or otherwise disclosed
to the Banks.
Section 5.13. Hazardous Materials. Except as set forth in Schedule II
hereof, and qualified in each instance whereby a breach of this representation
set forth in this Section 5.13 would materially and adversely affect the
business, operations, assets or financial condition of the Borrower, the
Borrower is in compliance in all material respects with all Environmental Laws
governing Hazardous Materials and the Borrower has not used Hazardous
Materials on, from, or affecting any property now owned or occupied or
hereafter owned or occupied by the Borrower in any manner which violates
Federal, state or local laws, ordinances, rules, regulations, or policies
governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials, and that,
to the best of the Borrower's knowledge, no prior owner of any such property
or any tenant, subtenant, prior tenant or prior subtenant have used Hazardous
Materials on, from, or affecting such property in any manner which violates
Federal, state or local laws, ordinances, rules, regulations, or policies
governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials; without
limiting the foregoing, the Borrower shall not cause or permit any property
owned or occupied by it to be used to generate, manufacture, refine,
transport, treat, store, handle, dispose, transfer, produce or process
Hazardous Materials, except in compliance with all applicable Federal, state
and local laws or regulations, nor shall the Borrower cause or permit, as a
result of any intentional or unintentional act or omission on its part or any
tenant or subtenant, a release of Hazardous Materials onto any property owned
or occupied by the Borrower or onto any other property; the
16
Borrower shall comply with and ensure compliance by all tenants and subtenants
with all applicable Environmental Laws, whenever and by whomever triggered,
and shall obtain and comply with any and all approvals, registrations or
permits required thereunder.
Section 5.14. No Default on Other Agreements. Neither the Borrower or
any of its Subsidiaries is in default in any manner which would materially and
adversely affect the business, properties or assets, operations or condition
(financial or otherwise) of the Borrower in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in
any agreement or instrument to which it is a party.
Section 5.15. Partnerships. Except as set forth on Schedule III,
neither the Borrower nor any of its Subsidiaries is a partner in any
partnership.
Section 5.16. No Forfeiture. Neither the Borrower nor any of its
Subsidiaries or Affiliates is engaged in or proposes to be engaged in the
conduct of any business or activity which could result in a Forfeiture
Proceeding and no Forfeiture Proceeding against any of them is pending or
threatened, which would individually or in the aggregate materially and
adversely affect the business, operations, assets or financial condition of
the Borrower or any of its Subsidiaries.
Section 5.17. Solvency. (a) The present fair saleable value of the
assets of the Borrower after giving effect to all the transactions
contemplated by the Facility Documents and the funding of all Commitments
hereunder exceeds the amount that will be required to be paid on or in respect
of the existing debts and other liabilities (including contingent liabilities)
of the Borrower and its Subsidiaries as they mature.
(b) The property of the Borrower does not constitute unreasonably
small capital for the Borrower to carry out its business as now conducted and
as proposed to be conducted including the capital needs of the Borrower.
(c) The Borrower does not intend to, nor does it believe that it
will, incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by the Borrower,
and of amounts to be payable on or in respect of debt of the Borrower). The
cash available to the Borrower after taking into account all other anticipated
uses of the cash of the Borrower, is anticipated to be sufficient to pay all
such amounts on or in respect of debt of the Borrower when such amounts are
required to be paid.
(d) The Borrower does not believe that final judgments against it in
actions for money damages will be rendered at a time when, or in an amount
such that, the Borrower will be unable to satisfy any such judgments promptly
in accordance with their terms (taking into account the maximum reasonable
amount of such judgments in any such actions and the earliest reasonable time
at which such judgments might be rendered). The cash available to the Borrower
after taking into account all other anticipated uses of the cash of the
Borrower (including the payments on or in respect of debt referred to in
paragraph (c) of this Section
17
5.17), is anticipated to be sufficient to pay all such judgments promptly in
accordance with their terms.
ARTICLE 6. AFFIRMATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall
have any Commitment under this Agreement, the Borrower shall, unless the Banks
shall otherwise consent in writing:
Section 6.01. Compliance with Laws, Corporate Existence (a) Comply,
and cause each of its Subsidiaries to comply, in all material respects with
all applicable laws, rules, regulations and orders of any governmental
authority, the breach of which would materially and adversely affect the
business, operations, prospects or assets or the financial condition or
otherwise of the Borrower. Such compliance shall include, without limitation,
paying before the same become delinquent all taxes, assessments and
governmental charges or levies imposed upon it or on its income or profits or
upon its property except to the extent (i) such payment is being contested in
good faith and by proper proceedings, and (ii) adequate reserves are being
maintained with respect thereto; and (b) do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate
existence, rights, franchises, trade names and preserve all of its property
used or useful in the conduct of its business and keep same in good repair and
working condition except for property it deems no longer useful.
Section 6.02. Reporting Requirements. Furnish directly to each of the
Banks:
(a) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Borrower,
consolidated balance sheets of the Borrower and its Subsidiaries as of the end
of such quarter and statements of income and retained earnings and changes in
financial position of the Borrower and its Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, with a certification by the chief financial officer of the
Borrower that such financial statements fairly present the financial condition
and results of operations of the Borrower in accordance with GAAP, at the
dates and for the periods set forth therein;
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the annual report for such
year for the Borrower and its Subsidiaries, containing consolidated and
consolidating financial statements for such year certified in a manner
acceptable to the Required Banks by Ernst & Young or other independent public
accountants acceptable to the Required Banks;
(c) with the statements submitted under subsections (c) and (b)
above, a certificate signed by the chief financial officer of the Borrower or
the certified public accountants, as the case may be, stating (i) the
requirements of Section 4.02 hereof and (ii) the calculation of all financial
covenants and ratios required under Article 8 hereof;
18
(d) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any of its security holders, and copies of
all reports and registration statements which the Borrower or any Subsidiary
files with the Securities and Exchange Commission or any national securities
exchange;
(e) promptly after the filing or receiving thereof, if and when the
Borrower or any member of the Controlled Group (as defined below) (i) gives or
is required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan (as defined below) under
Title IV of ERISA, or knows that the plan administrator of any Plan has given
or is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to PBGC; (ii)
receives notice of complete or partial withdrawal liability under Title IV of
ERISA, promptly followed by a copy of such notice to the Bank; or (iii)
receives notice from the PBGC under Title IV of ERISA of an intent to
terminate or appoint a trustee to administer any Plan, promptly followed by a
copy of such notice to the Bank.
As used in this Subsection 6.02(e), "Controlled Group" means all
members of a control group of corporations and all trades or businesses
(whether or not incorporated) under common control, which together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of
the Code of 1954, and "Plan" means at any time an employee pension benefit
plan which is covered by Title IV of ERISA or is subject to the minimum
funding standards under Section 412 of the Code and is either (x) maintained
by the Borrower or any member of the Controlled Group for employs of the
Borrower or any member of the Controlled Group, or (xx) maintained pursuant to
a collective bargaining agreement or similar arrangement under which more than
one employer makes contributions and to which the Borrower or any member of
the Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions;
(f) prior to the end of each fiscal year of the Borrower, a budget
(in format satisfactory to the Banks) for the succeeding fiscal year of the
Borrower, plus from time to time any revisions or modifications to such budget
within 15 days of the adoption of such revision or modification; and
(g) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its subsidiaries as any Bank
through the Agent may from time to time reasonably request.
Section 6.03. Notice of Proceedings. Promptly give notice in writing
to the Agent and each of the Banks of all litigation, arbitral proceedings,
regulatory proceedings and Forfeiture Proceedings affecting the Borrower or
any Subsidiary, except litigation or proceedings which, if adversely
determined, could not materially and adversely affect the consolidated
financial condition or the business taken as a whole of the Borrower and its
Subsidiaries.
Section 6.04. Insurance. The Borrower will, and will cause each
Subsidiary to, maintain insurance with insurance companies or associations
rated "A-" or better by A.M. Best &
19
Company or a comparable rating agency in such amounts and against such risks
as is usually carried by owners of similar businesses and properties in the
same general areas in which the Borrower and its subsidiaries operate.
Section 6.05. Environmental Laws. Comply in all material respects
with all Environmental Laws and provide to the Agent all documentation in
connection with such compliance that the Agent may reasonably request.
Section 6.06. Access to Premises and Records. At any reasonable time
and from time to time, but only to the extent relevant to the loan transaction
hereunder and the Borrower's ability to perform under the Credit Agreement,
upon reasonable notice and during normal business hours, the Borrower shall
permit the Agent and each of the Banks, or any agent or representative thereof
to examine the records and books of account and visit the properties of the
Borrower or its subsidiaries and to discuss the affairs, finances and accounts
of the Borrower and any Consolidated Subsidiary with any of the Borrower's
officers and directors.
Section 6.07. Notice of Default. In the event any financial officer
of the Borrower knows of any default or event of default under any agreement
to which the Borrower is a party or any Event of Default which shall have
occurred or knows of the occurrence of any event which, upon notice or lapse
of time or both, would constitute an Event of Default, promptly furnish to the
Agent a written statement as to such occurrence specifying the nature and
extent thereof and the action (if any) which is proposed to be taken with
respect thereto.
Section 6.08. Subsidiaries. Give the Agent prompt written notice of
the creation, establishment or acquisition, in any manner, of any Subsidiary
not existing on the date hereof. Borrower will cause each newly formed or
acquired Domestic Subsidiary whose assets equal or exceed by amount 10% of the
Borrower's Consolidated Assets to jointly, severally, and unconditionally
guarantee payment of the Loan and performance of all of the obligations of the
Borrower created by this Agreement.
Section 6.09. Material Adverse Changes. The Borrower shall promptly
notify the Bank of any litigation matter, investigation, audit, business
development or change in financial condition, which has resulted in, or which
the Borrower or its Subsidiaries reasonably believes will result in an Event
of Default.
ARTICLE 7. NEGATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall
have any Commitment under this Agreement, the Borrower shall not without the
written consent of the Banks:
Section 7.01. Liens, Etc. Create or suffer to exist, or permit any of
its Subsidiaries to create or suffer to exist, any Lien, or any other type of
preferential arrangement, upon or with respect to any of its properties,
whether now owned or hereafter acquired, or assign, or permit
20
any of its Subsidiaries to assign, any right to receive income, in each case
to secure any Debt of any person or entity, other than:
(a) Liens securing the payment of taxes, assessments or governmental
charges or levies or the demands of suppliers, mechanics, carriers,
warehousers, landlords and other like Persons, provided that (i) they do not
in the aggregate materially reduce the value of any properties subject to the
Liens or materially interfere with their use in the ordinary conduct of the
owning business, and (ii) all claims which the Liens secure are being actively
contested in good faith and by appropriate proceedings;
(b) Liens incurred or deposits made in the ordinary course of
business (i) in connection with worker's compensation, unemployment insurance,
social security and other like laws, or (ii) to secure the performance of
letters of credit, bids, tenders, sales contract, leases, statutory
obligations, surety, appeal and performance bonds and other similar
obligations, in each case not incurred in connection with the borrowing of
money, the obtaining of advances or the payment of the deferred purchase price
of property;
(c) attachment, judgment and other similar Liens arising in
connection with court proceedings provided that (i) execution and other
enforcement are effectively stayed, and (ii) all claims which the Liens secure
are being actively contested in good faith and by appropriate proceedings;
(d) Liens on property of a Subsidiary provided that they secure only
obligations owing to the Borrower or another Subsidiary;
(e) Liens related to lease obligations, and within the limitations,
described in Section 7.02;
(f) Liens against customer notes, which are created in connection
with the sale, pledge or discounting of such customer notes, provided that
immediately after giving effect thereto the Borrower's aggregate liabilities
on account of such Debt secured by such Liens does not exceed $11,000,000.00;
and
(g) Liens against property leased pursuant to Capital Leases,
provided that the aggregate amount of Debt secured by such Liens does not
exceed $3,000,000.00.
For the purposes of this Agreement, the term "Lien" shall mean any
interest in property securing any Debt or obligation owed to, or a claim by, a
Person other than the owner of the property, whether the interest is based on
common law, statute or contract (including the security interest or lien
arising from a mortgage, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes). The term
"Lien" shall not include minor reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions and other minor
title exceptions affecting property, provided that they do not constitute
security for a monetary obligation. For the purposes of this Agreement, the
Borrower or a Subsidiary shall be deemed to be the owner of any property which
it has acquired or holds
21
subject to a conditional sale agreement, Capital Lease or other arrangement
pursuant to which title to the property has been retained by or vested in some
other Person for security purposes, and such retention or vesting shall be
deemed to be a Lien. In connection with any sale, pledge or discounting of
Borrower's or its subsidiaries' customer notes, a "Lien" or "Liens" shall be
deemed to exist to the extent of (i) the amount of any sums withheld from the
Borrower or any Subsidiary in any such transaction, plus (ii) the amount of
any obligation of the Borrower or any Subsidiary resulting from the
non-payment of any customer notes involved in any such transaction.
Section 7.02. Lease Obligations. Create or suffer to exist, or permit
any of its Subsidiaries to create or suffer to exist, any obligations for the
payment of rental for any property under leases or agreements to lease other
than Capital Leases which would cause the liabilities of the Borrower and its
Subsidiaries, on a consolidated basis, in respect of all such obligations to
exceed $5,000,000.00 payable in any period of 12 months.
Section 7.03. Prohibited Transactions. Use the proceeds of any Loan
to acquire any security in any transaction which is subject to Sections 13 and
14 of the Securities Exchange Act of 1934 or use the proceeds of any Loan to
otherwise acquire any public company other than on a friendly basis.
Section 7.04. Margin Stock. Use the proceeds of any Loan to purchase
or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
Section 7.05. Consolidations, Mergers, Acquisitions and Sales of
Assets. Consolidate or merge with or into, or sell, lease or otherwise dispose
of any of its assets to, any Person, or acquire all or any substantial portion
of the properties, assets or shares of stock of any other organization or
permit any Subsidiary to do any of the above, unless the Borrower is the
surviving entity, the transaction is on a friendly basis and immediately
thereafter the Borrower is in compliance with all terms and provisions of this
Agreement and except that:
(a) any Subsidiary may consolidate or merge with the Borrower or any
wholly-owned Subsidiary of the Borrower;
(b) the Borrower or any Subsidiary may sell, lease or otherwise
dispose of any of its inventory in the ordinary course of business and any of
its assets which are obsolete, excess or unserviceable;
(c) the Borrower or any Subsidiary may sell, pledge or discount
customer notes;
(d) the Borrower or any Subsidiary may sell, lease or otherwise
dispose of any of its assets (other than as permitted by clauses (a) to (c)
inclusive), provided that the aggregate net book value of all assets of the
Borrower and its Subsidiaries sold, leased or otherwise disposed of during any
fiscal year of the Borrower pursuant to this clause (d) shall not exceed 5% of
the
22
Consolidated Tangible Net Worth of the Borrower and its Subsidiaries at the
end of the preceding fiscal year.
All sales, leases or dispositions of assets pursuant to clause (b),
(c) or (d) shall be at fair market value.
Notwithstanding the foregoing, the aggregate amount of acquisitions
(net of amounts paid for with the Borrower's stock) permitted under this
section from and after the Effective Date shall not be greater than
$10,000,000.00 in any consecutive 24 month period without the prior written
consent of the Required Banks.
Section 7.06. Affiliate Transactions. Enter into or permit any
Subsidiary to enter into any transaction (including the purchase, sale or
exchange of Property or the rendering of any service) with any Affiliate
except upon fair and reasonable terms which are at least as favorable to the
Borrower or the Subsidiary as would be obtained in a comparable arms-length
transaction with a non-Affiliate.
Section 7.07. Loans and Advances. Make or permit to exist any loans
or advances to any Person, except that loans or advances incurred in the
normal course of business (including employee advances and customer notes) are
permitted.
Section 7.08. Guaranties. Become or permit any Subsidiary to become
liable for or permit any of its Property to become subject to any guaranty
except guaranties under which the maximum aggregate amount of indebtedness,
dividend or other obligation being guarantied can be mathematically determined
at the time of issuance. Each Guaranty permitted by this Section 7.08 must
comply with the requirements of Section 8.01 (if it is included among
Consolidated Current Liabilities) and with the requirement of Sections 8.03
and 8.05.
Section 7.09. No Activities Leading to Forfeiture. Neither the
Borrower nor any of its Subsidiaries or Affiliates shall engage in or propose
to be engaged in the conduct of any business or activity which could result in
a Forfeiture Proceeding, which would, individually or in the aggregate,
materially and adversely affect the business, operations, assets or financial
condition of the Borrower or any of its Subsidiaries.
23
ARTICLE 8. FINANCIAL COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall
have any Commitment under this Agreement:
Section 8.01. Working Capital. The Borrower shall maintain at all
times an excess of Consolidated Current Assets over Consolidated Current
Liabilities of not less than $50,000,000.00. Consolidated Current Liabilities
shall not include the current portion of the indebtedness evidenced by the
Notes or of any other indebtedness maturing more than one year after the date
of its creation.
Section 8.02. Net Worth. The Borrower shall maintain a Consolidated
Tangible Net Worth, at all times during each fiscal year of not less than the
amount set forth below opposite such fiscal year:
Fiscal Year Ending
December 31 Amount
1995 $125,000,000
1996 128,000,000
1997 131,000,000
1998 134,000,000
1999 137,000,000
2000 140,000,000
2001 143,000,000
2002 146,000,000
The term "Consolidated Tangible Net Worth" shall mean the total
shareholders' equity prior to any cumulative foreign currency translation
adjustments minus intangible assets.
Section 8.03. Debt. The Borrower shall not create or suffer to exist,
or permit any of its Subsidiaries to create or suffer to exist, any Debt if,
immediately after giving effect to such Debt and the receipt and application
of any proceeds thereof, the aggregate amount of Debt of the Borrower and its
Subsidiaries, on a consolidated basis, would exceed 60% of the Consolidated
Tangible Net Worth of the Borrower and its Subsidiaries.
Section 8.04. Cash Flow. The Borrower shall maintain a Cash Flow
Ratio at all times of not less than 2.0 to 1.0.
"Cash Flow Ratio" means the ratio at the end of each fiscal quarter
equal to (a) the sum of Consolidated Net Income plus depreciation,
amortization and other non-cash expenses for the previous four consecutive
fiscal quarters divided by (b) the current portion (i.e. due within one year)
of long term Debt.
24
Section 8.05. Total Liabilities to Tangible Net Worth. The Borrower
shall not permit the ratio of Consolidated Total Unsubordinated Liabilities to
Consolidated Tangible Net Worth to be greater than .75 to 1.0 at any time.
ARTICLE 9. EVENTS OF DEFAULT.
Section 9.01. Events of Default. Any of the following events shall be
an "Event of Default":
(a) The Borrower shall fail to pay when due any installment of
principal of, or interest on, any Note; or
(b) Any representation or warranty made by the Borrower herein or in
any other Facility Document, or by the Borrower (or any of its officers) in
connection with this Agreement shall prove to have been incorrect in any
material respect when made; or
(c) The Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement or in any other Facility
Document on its part to be performed or observed and any such failure shall
remain unremedied for 10 days after written notice thereof shall have been
given to the Borrower by the Agent or any Bank; or
(d) The Borrower or any of its Subsidiaries shall fail to pay any
Debt (but excluding Debt evidenced by the Notes) of the Borrower or such
Subsidiary as the case may be, or any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Debt; or any
other default under any agreement or instrument relating to any such Debt, or
any other event, shall occur and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of
such default or event is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof; or
(e) The Borrower or any of its Subsidiaries shall generally not pay
its debts as such debts 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 any proceeding shall be instituted by or against the Borrower or
any of its Subsidiaries 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 of debtors, or seeking
the entry of an order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its property; or
the Borrower or any of its Subsidiaries shall take any corporate action to
authorize any of the actions set forth above in this subsection (e); or
25
(f) Any judgment or order for the payment of money in excess of
$2,500,000.00 shall be rendered against the Borrower or any of its
Subsidiaries, and either (i) enforcement proceedings shall have been commenced
by any creditor upon such judgment or order or (ii) there shall be any period
of 10 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
(g) Any member of the Controlled Group shall fail to pay when due an
amount or amounts aggregating in excess of $250,000.00 which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans having aggregate Unfunded
Benefit Liabilities in such amount or amounts which would at such time create
a liability in excess of liabilities of such Plan or Plans recognized prior
thereto on the Borrower's financial statements and which liability would cause
a violation of any of the covenants under Article 7 (collectively, a "Material
Plan") shall be filed under Title IV of ERISA by any member of the Controlled
Group, any plan administrator any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Material Plan or a proceeding shall
be instituted by a fiduciary of any Material Plan against any member of the
Controlled Group to enforce Section 515 of ERISA and such proceeding shall not
have been dismissed within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating
that any Material Plan must be terminated;
(h) Any Forfeiture Proceeding shall have been commenced or the
Borrower shall have given any Bank written notice of the commencement of any
Forfeiture Proceeding, which would, individually or in the aggregate,
materially and adversely affect the business, operations, assets or financial
condition of the Borrower or any of its Subsidiaries, or any Bank has a good
faith basis to believe that a Forfeiture Proceeding has been threatened or
commenced, which would, individually or in the aggregate, materially and
adversely affect the business, operations, assets or financial condition of
the Borrower or any of its subsidiaries.
Section 9.02. Remedies. If any Event of Default shall occur and be
continuing, the Agent shall, upon request of the Required Banks, by notice to
the Borrower, (a) declare the Commitments to be terminated, whereupon the same
shall forthwith terminate, and (b) declare the outstanding principal of the
Notes, all interest thereon and all other amounts payable under this Agreement
and the Notes to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of
which are hereby expressly waived by the Borrower; provided that, in the case
of an Event of Default referred to in Section 9.01(e) or Section 9.01(h)
above, the Commitments shall be immediately terminated, and the Notes, all
interest thereon and all other amounts payable under this Agreement shall be
immediately due and payable without notice, presentment, demand protest or
other formalities of any kind, all of which are hereby expressly waived by the
Borrower.
26
ARTICLE 10. THE AGENT; RELATIONS AMONG BANKS AND BORROWER.
Section 10.01. Appointment, Powers and Immunities of Agent. Each Bank
hereby irrevocably (but subject to removal by the Required Banks pursuant to
Section 10.09) appoints and authorizes the Agent to act as its agent hereunder
and under any other Facility Document with such powers as are specifically
delegated to the Agent by the terms of this Agreement and any other Facility
Document, together with such other powers as are reasonably incidental
thereto. The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and any other Facility Document, and
shall not by reason of this Agreement be a trustee for any Bank. The Agent
shall not be responsible to the Banks for any recitals, statements,
representations or warranties made by the Borrower or any officer or official
of the Borrower or any other Person contained in this Agreement or any other
Facility Document, or in any certificate or other document or instrument
referred to or provided for in, or received by any of them under, this
Agreement or any other Facility Document, or for the value, legality,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Facility Document or any other document or instrument
referred to or provided for herein or therein, for the perfection or priority
of any collateral security for the Loans or for any failure by the Borrower to
perform any of its obligations hereunder or thereunder. The Agent may employ
agents and attorneys-in-fact and shall not be responsible, except as to money
or securities received by it or its authorized agents, for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder or under any other Facility
Document or in connection herewith or therewith, except for its or their own
gross negligence or willful misconduct. The Borrower shall pay any fee agreed
to by the Borrower and the Agent with respect to the Agent's services
hereunder.
Section 10.02. Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof
by telephone, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. The Agent may deem and
treat each Bank as the holder of the Loan made by it for all purposes hereof
unless and until a notice of the assignment or transfer thereof satisfactory
to the Agent signed by such Bank shall have been furnished to the Agent but
the Agent shall not be required to deal with any Person who has acquired a
participation in any Loan from a Bank. As to any matters not expressly
provided for by this Agreement or any other Facility Document, the Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by the Required Banks, and
such instructions of the Required Banks and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks and any other holder of
all or any portion of any Loan.
Section 10.03. Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or Event of Default (other than the
non-payment of principal of or interest on the Loans to the extent the same is
required to be paid to the Agent for the account
27
of the Banks) unless the Agent has received notice from a Bank or the Borrower
specifying such Default or Event of Default. In the event that the Agent
receives such a notice of the occurrence of a Default or Event of Default, the
Agent shall give prompt notice thereof to the Banks (and shall give each Bank
prompt notice of each such non-payment). The Agent shall (subject to Section
10.08) take such action with respect to such Default or Event of Default which
is continuing as shall be directed by the Required Banks; provided that,
unless and until the Agent shall have received such directions, the Agent may
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Banks; and provided further that the Agent shall not be required to take
any such action which it determines to be contrary to law.
Section 10.04. Rights of Agent as a Bank. With respect to its
Commitment and the Loan made by it, the Agent in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any other Bank
and may exercise the same as though it were not acting as the Agent, and the
term "Bank" or "Banks" shall, unless the context otherwise indicates, include
the Agent in its capacity as a Bank. The Agent and its affiliates may (without
having to account therefor to any Bank) accept deposits from, lend money to
(on a secured or unsecured basis), and generally engage in any kind of
banking, trust or other business with, the Borrower (and any of its
affiliates) as if it were not acting as the Agent, and the Agent may accept
fees and other consideration from the Borrower for services in connection with
this Agreement or otherwise without having to account for the same to the
Banks. Although the Agent and its affiliates may in the course of such
relationships and relationships with other Persons acquire information about
the Borrower, its Affiliates and such other Persons, the Agent shall have no
duty to disclose such information to the Banks.
Section 10.05. Indemnification of Agent. The Banks agree to indemnify
the Agent (to the extent not reimbursed under section 11.03 or under the
applicable provisions of any other Facility Document, but without limiting the
obligations of the Borrower under Section 11.03 or such provisions), ratably
in accordance with the aggregate unpaid principal amount of the Loans made by
the Banks (without giving effect to any participations, in all or any portion
of such Loans, sold by them to any other Person) (or, if no Loans are at the
time outstanding, ratably in accordance with their respective Commitments),
for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of this Agreement, any other Facility
Document or any other documents contemplated by or referred to herein or the
transactions contemplated hereby or thereby (including, without limitation,
the costs and expenses which the Borrower is obligated to pay under Section
11.03 or under the applicable provisions of any other Facility Document but
excluding, unless a Default or Event of Default has occurred, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or
of any such other documents or instruments; provided that no Bank shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.
28
Section 10.06. Documents. The Agent will forward to each Bank,
promptly after the Agent's receipt thereof, a copy of each report, notice or
other document required by this Agreement or any other Facility Document to be
delivered to the Agent for such Bank.
Section 10.07. Non-Reliance on Agent and Other Banks. Each Bank
agrees that it has, independently and without reliance on the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and its Subsidiaries
and decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or any other Facility Document. The Agent shall not be required to keep itself
informed as to the performance or observance by the Borrower of this Agreement
or any other Facility Document or any other document referred to or provided
for herein or therein or to inspect the properties or books of the Borrower or
any Subsidiary. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of the Borrower or any Subsidiary (or any of their
Affiliates) which may come into the possession of the Agent or any of its
affiliates. The Agent shall not be required to file this Agreement, any other
Facility Document or any document or instrument referred to herein or therein,
for record or give notice of this Agreement, any other Facility Document or
any document or instrument referred to herein or therein, to anyone.
Section 10.08. Failure of Agent to Act. Except for action expressly
required of the Agent hereunder, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall have
received further assurances (which may include cash collateral) of the
indemnification obligations of the Banks under Section 10.05 in respect of any
and all liability and expense which may be incurred by it by reason of taking
or continuing to take any such action.
Section 10.09. Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving written notice thereof to the Banks and the
Borrower, and the Agent may be removed at any time with or without cause by
the Required Banks; provided that the Borrower and the other Banks shall be
promptly notified thereof. Upon any such resignation or removal, the Required
Banks shall have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Required Banks and shall have accepted
such appointment within 30 days after the retiring Agent's giving of notice of
resignation or the Required Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a bank which has an office in New York, New York. The Required Banks
or the retiring Agent, as the case may be, shall upon the appointment of a
successor Agent promptly so notify the Borrower and the other Banks. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the
29
retiring Agent shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article 10 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Agent.
Section 10.10. Amendments Concerning Agency Function. The Agent shall
not be bound by any waiver, amendment, supplement or modification of this
Agreement or any other Facility Document which affects its duties hereunder or
thereunder unless it shall have given its prior consent thereto.
Section 10.11. Liability of Agent. The Agent shall not have any
liabilities or responsibilities to the Borrower on account of the failure of
any Bank to perform its obligations hereunder or to any Bank on account of the
failure of the Borrower to perform its obligations hereunder or under any
other Facility Document. This Section 10.11 shall not be construed to limit
the Agent's liability or responsibility where the Agent is acting as a Bank
under this Agreement.
Section 10.12. Transfer of Agency Function. Without the consent of
the Borrower or any Bank, the Agent may at any time or from time to time
transfer its functions as Agent hereunder to any of its offices wherever
located, provided that the Agent shall promptly notify the Borrower and the
Banks thereof.
Section 10.13. Non-Receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Bank or the Borrower (either one as appropriate
being the "Payor") prior to the date on which such Bank is to make payment
hereunder to the Agent of the proceeds of a Loan or the Borrower is to make
payment to the Agent, as the case may be (either such payment being a
"Required Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to the Agent, the Agent may
assume that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available
to the intended recipient on such date and, if the Payor has not in fact made
the Required Payment to the Agent, the recipient of such payment (and, if such
recipient is the Borrower and the Payor Bank fails to pay the amount thereof
to the Agent forthwith upon demand, the Borrower) shall, on demand, repay to
the Agent the amount made available to it together with interest thereon for
the period from the date such amount was so made available by the Agent until
the date the Agent recovers such amount at a rate per annum equal to the
average daily Federal Funds Rate for such period.
Section 10.14. Withholding Taxes. Each Bank represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any U.S. tax and will furnish to the Agent such forms,
certifications, statements and other documents as the Agent may request from
time to time to evidence such Bank's exemption from the withholding of any
U.S. tax imposed by any domestic jurisdiction or to enable the Agent to comply
with any applicable laws or regulations relating thereto. Without limiting the
effect of the foregoing, if any Bank is not created or organized under the
laws of the United States of America or any state thereof, in the event that
the payment of interest by the Borrower is treated for U.S. income tax
purposes
30
as derived in whole or in part from sources from within the U.S., such Bank
will furnish to the Agent Form 4224 or Form 1001 of the Internal Revenue
Service, or such other forms, certifications, statements or documents, duly
executed and completed by such Bank as evidence of such Bank's exemption from
the withholding of U.S. tax with respect thereto. The Agent shall not be
obligated to make any payments hereunder to such Bank in respect of any Loan
or such Bank's Commitment until such Bank shall have furnished to the Agent
the requested form, certification, statement or document.
Section 10.15. Several Obligations and Rights of Banks. The failure
of any Bank to make the Loan to be made by it on the date specified therefor
shall not relieve any other Bank of its obligation to make its Loan on such
date, but no Bank shall be responsible for the failure of any other Bank to
make the Loan to be made by such other Bank. The amounts payable at any time
hereunder to each Bank shall be a separate and independent debt, and each Bank
shall be entitled to protect and enforce its rights arising out of this
Agreement, and it shall not be necessary for any other Bank to be joined as an
additional party in any proceeding for such purpose.
Section 10.16. Pro Rata Treatment of Loans, Etc. Except to the extent
otherwise provided (a) the borrowings under Section 2.04 shall be made from
the Banks pro rata according to the amounts of their respective Commitment;
and (b) each prepayment and payment of principal of or interest on Loans of a
particular type and a particular Interest Period shall be made to the Agent
for the account of the Banks pro rata in accordance with the respective unpaid
principal amounts of such Loans held by such Banks.
Section 10.17. Sharing of Payments Among Banks. If a Bank shall
obtain payment of any principal of or interest on any Loan made by it through
the exercise of any right of setoff, banker's lien, counterclaim, or by any
other means (including any payment obtained from or charged against any Third
Party), it shall promptly purchase from the other Banks participations in (or,
if and to the extent specified by such Bank, direct interests in) the Loans
made by the other Banks in such amounts, and make such other adjustments from
time to time as shall be equitable to the end that all the Banks shall share
the benefit of such payment (net of any expenses which may be incurred by such
Bank in obtaining or preserving such benefit) pro rata in accordance with the
unpaid principal and interest on the Loans held by each of them. To such end
the Banks shall make appropriate adjustments among themselves (by the resale
of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees that any Bank so purchasing a
participation (or direct interest) in the Loans made by other Banks may
exercise all rights of setoff, banker's lien, counterclaim or similar rights
with respect to such participation (or direct interest). Nothing contained
herein shall require any Bank to exercise any such right or shall affect the
right of any Bank to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness of the Borrower.
31
ARTICLE 11. MISCELLANEOUS.
Section 11.01. Amendments and Waivers. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower, the Agent
and the Required Banks, or by the Borrower and the Agent acting with the
consent of the Required Banks and any provision of this Agreement may be
waived by the Required Banks or by the Agent acting with the consent of the
Required Banks; provided that no amendment, modification or waiver shall,
unless by an instrument signed by all of the Banks or by the Agent acting with
the consent of all of the Banks: (a) increase or extend the term, or extend
the time or waive any requirement for the reduction or termination, of the
Commitments, (b) extend the date fixed for the payment of principal of or
interest on any Loan or any fee payable hereunder, (c) reduce the amount of
any payment of principal thereof or the rate at which interest is payable
thereon or any fee payable hereunder, (d) alter the terms of this Section
11.01, (e) amend the definition of the term "Required Banks" or (f) waive any
of the documentary conditions precedent set forth in Section 4.01 hereof and
provided, further, that any amendment of Article 10 hereof or any amendment
which increases the obligations of the Agent hereunder shall require the
consent of the Agent. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
Section 11.02. Usury. Anything herein to the contrary
notwithstanding, the obligations of the Borrower under this Agreement and the
Notes shall be subject to the limitation that payments of interest shall not
be required to the extent that receipt thereof would be contrary to provisions
of law applicable to a Bank limiting rates of interest which may be charged or
collected by such Bank.
Section 11.03. Expenses and Indemnification. The Borrower shall
reimburse the Agent and the Banks on demand for all costs, expenses, and
charges (including, without limitation, fees and charges of external legal
counsel for the Agent and each Bank and costs allocated by their respective
internal legal departments) incurred by the Agent or the Banks in connection
with the enforcement of this Agreement or the Notes by reason of any Event of
Default or any event which, after the giving of notice or passage of time, or
both, would constitute an Event of Default. The Borrower agrees to indemnify
and hold harmless the Agent and each Bank from and against any and all claims,
damages, liabilities and expenses (including, without limitation, fees and
disbursements of counsel) (each an "Indemnified Liability") which may be
incurred by or asserted against the Agent or such Bank in connection with or
arising out of any threatened or actual litigation, or proceeding related to
any acquisition or proposed acquisition by the Borrower, or by any Subsidiary,
of all or any portion of the stock of substantially all the assets of any
Person whether or not the Agent or such Bank is a party thereto. The Borrower
agrees that any Indemnified Liability will be promptly paid to the Person to
be indemnified upon the written demand of such Person.
32
Section 11.04. Survival. The obligations of the Borrower under
Sections 3.01, 3.05 and 11.03 shall survive the repayment of the Loans and the
termination of the Commitments.
Section 11.05. Assignment; Participations.
(a) This Agreement shall be binding upon, and shall inure to the
benefit of, the Borrower, the Agent, the Banks and their respective successors
and assigns, except that the Borrower may not assign or transfer its rights or
obligations hereunder.
(b) Each Bank may, with the consent of the Agent and the Borrower
(which consent will not be unreasonably withheld or delayed) assign all or any
part of its Commitments, its Note or Loans to another bank or other Person
provided, however, that (i) no such consent by the Borrower or the Agent shall
be required in the case of any assignment to another Bank; and (ii) any such
partial assignment shall be made in an amount of at least $2,500,000.00. Upon
execution and delivery by the assignee to the Borrower and the Agent of an
instrument in writing pursuant to which such assignee agrees to become a
"Bank" hereunder (if not already a Bank) having the Commitment and Loan
specified in such instrument, and upon consent thereto by the Borrower and the
Agent, to the extent required above, the assignee shall have, to the extent of
such assignment (unless otherwise provided in such assignment with the consent
of the Borrower and the Agent), the obligations, rights and benefits of a Bank
hereunder holding the Commitment and Loans (or portions thereof) assigned to
it (in addition to the Commitment and Loans, if any, theretofore held by such
Assignee) and the assigning Bank shall, to the extent of assignment, be
released from the Commitment (or portion thereof) so assigned. Upon each such
assignment the assignee shall pay the Agent an assignment fee of $2,500.00.
(c) A Bank may sell or agree to sell to one or more banks or other
Persons a participation in all or any part of any Loans held by it, or in its
Commitment, in which event each purchaser of a participation (a "Participant")
shall not, except as otherwise provided in Section 10.17 hereof, have any
rights or benefits under this Agreement or any Note (the participant's rights
against such Bank in respect of such participation to be those set forth in
the agreements executed by such Bank in favor of the Participant). All amounts
payable by the Borrower to any Bank under Section 2 hereof in respect of Loans
held by it and its Commitment, shall be determined as if such Bank had not
sold or agreed to sell any participations in such Loan and Commitment, and as
if such Bank were funding each of such Loan and Commitment in the same way
that it is funding the portion of such Loan and Commitment in which no
participations have been sold. The agreement executed by such Bank in favor of
the Participant shall not give the Participant the right to require such Bank
to take or omit to take any action hereunder except action directly relating
to (i) the extension of the Maturity Date, (ii) the extension of a payment
date with respect to any fees payable hereunder or any portion of the
principal of or interest on any amount outstanding hereunder allocated to such
participant, (iii) the reduction of the principal amount outstanding
hereunder, or (iv) the reduction of the rate of interest payable on such
amount or any amount of fees payable hereunder to a rate or amount, as the
case may be, below that which the Participant is entitled to receive under its
agreement with such Bank.
33
(d) In addition to the assignments and participations permitted under
paragraphs (b) and (c) above, any Bank may assign and pledge all or any
portion of its Loan and Note to (i) any affiliate of such Bank, or (ii) any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any operating Circular
issued by such Federal Reserve Bank. No such assignment shall release the
assigning Bank from its obligations hereunder.
(e) A Bank may furnish any information concerning the Borrower or any
of its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and participants),
provided that such Bank shall require any assignee or participant (prospective
or otherwise) to agree in writing to maintain the confidentiality of such
information.
Section 11.06. Notices. All notices, requests and other
communications provided for herein (including, and not by way of limitation,
any modifications of, or waivers, requests or consents under, this Agreement)
shall be given or made in writing (including and not by way of limitation by
telecopy), or, with respect to notices given pursuant to Section 2.04 hereof,
by telephone confirmed in writing by telex, telecopier or other writing by the
close of business on the day notice is given, delivered (or telephoned, as the
case may be) to the intended recipient at the "Address for Notices" specified
below its name on the signature pages hereof); or, as to any party, at such
other address as shall be designated by such party in a notice to each other
party. Except as otherwise provided in this Agreement, (a) notices shall be
given to the Agent by telephone, confirmed by telex, telecopy or other writing
by the close of business on the day notice is given, and (b) notices to the
Banks and to the Borrower by telecopy, commercial overnight courier service,
ordinary mail, or telex addressed to such party at its address on the
signature page of this Agreement. Notices shall be effective: (i) if given by
mail, three (3) days after deposit in the mails with first class postage
prepaid, addressed as aforesaid; (ii) if given by telex, when the telex is
transmitted to the telex number as aforesaid, and (iii) in all other cases
when delivered or received. Provided, however, that notices to the Agent and
the Banks shall be effective upon receipt.
Section 11.07. Setoff. The Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim a
Bank may otherwise have, each Bank shall be entitled, at its option, to offset
balances (general or special, time or demand, provisional or final) held by it
for the account of the Borrower at any of such Bank's offices, in Dollars or
in any other currency, against any amount payable by the Borrower to such Bank
under this Agreement or such Bank's Note which is not paid when due
(regardless of whether such balances are then due to the Borrower), in which
case it shall promptly notify the Borrower and the Agent thereof; provided
that such Bank's failure to give such notice shall not affect the validity
thereof. Payments by the Borrower hereunder shall be made without setoff or
counterclaim.
SECTION 11.08. JURISDICTION; IMMUNITIES. (a) THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR
UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY
34
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
NOTES, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE OR FEDERAL COURT. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF
ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
OF SUCH PROCESS TO THE BORROWER AT ITS ADDRESS SPECIFIED IN SECTION 11.06. THE
BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER FURTHER WAIVES
ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR
PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. THE BORROWER
FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE AGENT SHALL
BE BROUGHT ONLY IN NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN
NEW YORK COUNTY. THE BORROWER WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL.
(b) Nothing in this Section 11.08 shall affect the right of the Agent
or any Bank to serve legal process in any other manner permitted by law or
affect the right of the Agent or any Bank to bring any action or proceeding
against the Borrower or its property in the courts of any other jurisdictions.
(c) To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
from service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, the
Borrower hereby irrevocably waives such immunity in respect of its obligations
under this Agreement and the Notes.
Section 11.09. Table of Contents; Headings. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 11.10. Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without in any manner
affecting the validity or enforceability thereof in any other jurisdiction or
the remaining provisions hereof in any jurisdiction.
Section 11.11. 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 party hereto may execute this Agreement by
signing any such counterpart.
35
Section 11.12. Integration. The Facility Documents set forth the
entire agreement among the parties hereto relating to the transactions
contemplated thereby and supersede any prior oral or written statements or
agreements with respect to such transactions.
SECTION 11.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT
EXCLUDING ALL OTHER CONFLICT-OF-LAW RULES.
Section 11.14. Confidentiality. Each Bank and the Agent agrees (on
behalf of itself and each of its affiliates, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Borrower pursuant to this Agreement which is identified
by the Borrower as being confidential at the time the same is delivered to the
Banks or the Agent, provided that nothing herein shall limit the disclosure of
any such information (a) to the extent required by statute, rule, regulation
or judicial process, (b) to counsel for any of the Banks or the Agent, (c) to
bank examiners, auditors or accountants, (d) in connection with any litigation
to which any one or more of the Banks is a party, (e) to any assignee or
participant (or prospective assignee or participant) so long as such assignee
or participant (or prospective assignee or participant) first executes and
delivers to the respective Bank a Confidentiality Agreement in substantially
the form of Exhibit D hereto; or (f) to the extent such information becomes
publicly available other than as a result of disclosure by a Bank; and
provided further that in no event shall any Bank or the Agent be obligated or
required to return any materials furnished by the Borrower.
Section 11.15. Treatment of Certain Information. The Borrower (a)
acknowledges that services may be offered or provided to it (in connection
with this Agreement or otherwise) by each Bank or by one or more of their
respective subsidiaries or affiliates and (b) acknowledges that any
information delivered to each Bank or its subsidiaries or affiliates regarding
the Borrower may be shared among such Bank and such subsidiaries and
affiliates. This Section 11.15 shall survive the repayment of the Loans and
the termination of the Commitments.
Section 11.16. Currency. This is an international loan transaction in
which the specification of Dollars and payment in State of New York, is of the
essence, and Dollars shall be the currency of account in all events relating
to the Loans. The payment obligations of the Borrower under this Agreement and
the Notes shall not be discharged by an amount paid in another currency or in
another place, whether pursuant to a judgment or otherwise, to the extent that
the amount so paid on conversion to Dollars and transferred to the place of
payment under normal banking procedures does not yield the amount of Dollars
due hereunder. If for the purpose of obtaining a judgment in any court it is
necessary to convert a sum due hereunder in Dollars into another Currency (the
"Second Currency"), the rate of exchange which shall be applied shall be that
at which in accordance with the normal banking procedures the Agent could
purchase Dollars with the Second Currency on the Business Day next preceding
that on which such judgment is rendered. The obligation of the Borrower in
respect of any sum due from it
36
to the Agent or any Bank hereunder (an "Entitled Person") shall,
notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day following
receipt by such Entitled Person of any sum adjudged to be due hereunder or
under the Notes in the Second Currency, such Entitled Person may in accordance
with normal banking procedures purchase and transfer to place of payment,
Dollars with the amount of the Second Currency so adjudged to be due; and the
Borrower hereby, as a separate obligation and notwithstanding any judgment,
agrees to indemnify such Entitled Person against, and to pay such Entitled
Person on demand in Dollars, any difference between the sum originally due to
such Entitled Person in Dollars in the amount of Dollars so purchase and
transferred.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
HARDINGE INC.
By:
----------------------------------------------------
Robert E. Agan, Chairman of the Board, President and
Chief Executive Officer
Address for Notices:
One Hardinge Drive
Elmira, New York 14902
Telephone No.: (607) 734-2281
Telecopier No.: (607) 734-5517
37
AGENT:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By
----------------------------------------------------
Michelle Benedict-Jones, Vice President
Address for Notices:
4 Chase MetroTech Center
13th Floor
Brooklyn, New York 11245
Attention: New York Agency
Telex: 6720516 CMBNYAUW
Alternate Telex: 62910 CMBUW
Telephone No.: (718) 242-7977
Telecopier No.: (718) 242-6910
38
BANKS:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By
----------------------------------------------------
Michelle Benedict-Jones, Vice President
Lending Office and Address for Notices:
One Chase Square
Rochester, New York 14643
Attention: Hardinge Loan Officer
Telephone No.: (716) 258-5437
Telecopier No.: (716) 258-7604
39
CHEMICAL BANK
By
----------------------------------------------------
Christine McLeod, Vice President
Lending Offices:
1975 Lake Street
Elmira, New York 14901
Attention: Christine McLeod, Vice President
Telephone No.: (607) 734-4227
Telecopier No.: (607) 734-7645
Address for Notices:
4 New York Plaza, 17th Floor
New York, New York 10004-2477
Attention: Ruth Tortorici
Telephone No.: (212) 623-2508
Telecopier No.: (212) 797-3426
Telex: CHEMUS 3321BF
40
MARINE MIDLAND BANK
By
----------------------------------------------------
Ronald W. Lesch, Vice President
Lending Offices:
One Marine Midland Plaza
Binghamton, New York 13902
Attention: Ronald W. Lesch, Vice President
Telephone No.: (607) 772-5670
Telecopier No.: (607) 772-5611
Address for Notices:
One Marine Midland Plaza
Binghamton, New York 13902
Attention: Patricia Peaslee, Regional Support
Telephone No.: (607) 772-5670
Telecopier No.: (607) 772-5611
21480.03
41
EXHIBIT A
[Form of Note]
PROMISSORY NOTE
$__________________ ____________, 19__
New York, New York
HARDINGE INC. (the "Borrower"), a corporation organized under the
laws of New York, for value received, hereby promises to pay to the order of
_________________________________ (the "Bank") at the principal office of The
Chase Manhattan Bank (National Association), at 1 Chase Manhattan Plaza New
York, New York 10081 or at such other place as required by the Credit
Agreement referred to below, for the account of the appropriate Lending Office
of the Bank, the principal amount of $__________________ in lawful money of
the United States of America and in immediately available funds, on the
date(s) and in the manner provided in the Credit Agreement referred to below.
The Borrower also promises to pay interest on the unpaid principal balance of
the Loan in like money, for the period such balance is outstanding, at said
principal office for the account of said Lending Office, at the rates of
interest as provided in the Credit Agreement, on the dates and in the manner
provided in said Credit Agreement.
The date and amount of the Loan made by the Bank to the Borrower
under the Credit Agreement referred below, interest rate, Interest Period,
maturity date and each payment of principal thereof, shall be recorded by the
Bank on its books and, prior to any transfer of this Note (or, at the
discretion of the Bank, at any other time), endorsed by the Bank on the
schedule attached hereto or any continuation thereof; provided, however, the
failure of the Bank to make any such recordation or endorsement shall not
affect the obligations of the Borrower to make payment when due of any amount
owing under the Credit Agreement or hereunder in respect of the Variable Rate
Loans made by the Bank.
This is one of the Notes referred to in that certain Credit Agreement
(as amended from time to time the "Credit Agreement") dated as of February 28,
1996 among the Borrower, the Banks named therein (including the Bank) and the
Agent and evidences the Loan made by the Bank thereunder. All terms not
defined herein shall have the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
principal upon the occurrence of certain Events of Default and for prepayments
on the terms and conditions specified therein.
The Borrower waives presentment, notice of dishonor, protest and any
other notice or formality with respect to this Note. The Borrower waives to
the full extent permitted by applicable law the right to trial by jury in any
legal proceeding arising out of or relating to this Note.
This Note shall be governed by, and interpreted and construed in
accordance with, the laws of the State of New York, including Section 5-1401
of the New York General Obligations Law (or any similar successor provision
thereto) but excluding all other conflict-of-law rules.
HARDINGE INC.
By
--------------------------------
Name:
Title:
SCHEDULE TO NOTE
Duration
Amount Interest of Interest Amount of Balance Notation
Date of Loan Rate Period Payment Outstanding By
EXHIBIT B
[Form of Authorization Letter]
___________________, 1996
The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center, 13th Floor
Brooklyn, New York 11245
Attn: New York Agency
Re: Credit Agreement dated as of February 28, 1996 (the "Credit
Agreement") among Hardinge Inc. the Banks named therein, and
The Chase Manhattan Bank (National Association) as Agent for
said Banks
Ladies and Gentlemen:
In connection with the captioned Credit Agreement, we hereby
designate any one of the following persons to give to you instructions,
including notices required pursuant to the Agreement, orally or by telephone
or teleprocess:
NAME (Typewritten)
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
Instructions may be honored on the oral, telephonic or teleprocess
instructions of anyone purporting to be any one of the above designated
persons even if the instructions are for the benefit of the person delivering
them. We will furnish you with confirmation of each such instruction either by
telex (whether tested or untested) or in writing signed by any person
designated above (including any telecopy which appears to bear the signature
of any person designated above) on the same day that the instruction is
provided to you but your responsibility with respect to any instruction shall
not be affected by your failure to receive such confirmation or by its
contents.
You shall be fully protected in, and shall incur no liability to us
for, acting upon any instructions which you in good faith believe to have been
given by any person designated above, and in no event shall you be liable for
special, consequential or punitive damages. In addition, we agree to hold you
and your agents harmless from any and all liability, loss and expense arising
directly or indirectly out of instructions that we provide to you in
connection with the Credit Agreement except for liability, loss or expense
occasioned by the gross negligence or willful misconduct of you or your
agents.
Upon notice to us, you may, at your option, refuse to execute any
instruction, or part thereof, without incurring any responsibility for any
loss, liability or expense arising out of such refusal if you in good faith
believe that the person delivering the instruction is not one of the persons
designated above or if the instruction is not accompanied by an authentication
method that we have agreed to in writing.
We will promptly notify you in writing of any change in the persons
designated above and, until you have actually received such written notice and
have had a reasonable opportunity to act upon it, you are authorized to act
upon instructions, even though the person delivering them may no longer be
authorized.
Very truly yours,
HARDINGE INC.
By
-----------------------------
Name:
Title:
EXHIBIT C
[Letterhead of counsel to the Borrower]
[Closing Date]
The Chase Manhattan Bank (National Association)
1 Chase Manhattan Plaza
New York, New York 10081
[other Banks]
Ladies and Gentlemen:
We have acted as counsel to Hardinge Inc. (the "Borrower") in
connection with the execution and delivery of that certain Credit Agreement
(the "Credit Agreement") dated as of February 28, 1996 among the Borrower, the
Banks signatory thereto and The Chase Manhattan Bank (National Association) as
Agent. Except as otherwise defined herein, all terms used herein and defined
in the Credit Agreement or any agreement delivered thereunder shall have the
meanings assigned to them therein.
In connection with the preparation of this Opinion, we have examined
originals or counterparts, executed on behalf of the Borrower, of the Facility
Documents and the exhibits attached thereto in originals or copies, certified
to our satisfaction, of such records, certificates and documents as we deemed
relevant and necessary as a basis for rendering this Opinion.
Based upon the foregoing, and having regard to such legal
considerations as we deem relevant, we are of the opinion that:
1. The Borrower and to the best of our knowledge, each of its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
power and authority to carry on its business as presently being conducted and
to own its properties, and is duly licensed or qualified and in good standing
as a foreign corporation in each other jurisdiction in which its properties
are located or in which failure to qualify would materially and adversely
affect either the conduct or its business or the enforceability of contractual
rights of the Borrower.
2. The execution, delivery and performance by the Borrower of the
Facility Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) require any consent or
approval of its stockholders; (b) contravene its charter or by-laws; (c)
contravene any law or to the best of our knowledge contractual restriction or
provision binding on or affecting the Borrower.
3. No authorization or approval or other action by, and no notice to
or filing with any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower of the Facility
Documents.
4. The Credit Agreement is, and the other Facility Documents when
executed thereunder will be, legal, valid and binding obligations enforceable
in accordance with their respective terms, except that (a) the availability of
equitable remedies may be limited by principals of equity, and (b) enforcement
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or affecting the
enforcement of the rights of creditors generally.
5. Each Facility Document to which the Borrower is a party is, or
when delivered under the Credit Agreement will be, a legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance
with its terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting creditors'
rights generally.
6. There is no pending, or to our knowledge threatened actions, suits
or proceedings against or affecting the Borrower or any of its Subsidiaries
before any court, governmental agency or arbitrator, which may, in any one
case or in the aggregate, materially adversely affect the financial condition
or operations of the Borrower or of any such Subsidiary, or the ability of the
Borrower to perform its obligations under the Facility Documents to which it
is a party.
Very truly yours,
EXHIBIT D
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Credit Agreement dated as of February 28, 1996 between Hardinge
Inc., the Banks party thereto, and The Chase Manhattan Bank
(National Association) as Agent.
Dear ________________
As a Bank, party to the above-referenced Credit Agreement (the
"Credit Agreement"), we have agreed with Hardinge Inc. (the "Borrower")
pursuant to Section 11.14 of the Credit Agreement to use reasonable
precautions to keep confidential, except as otherwise provided therein, all
non-public information identified by the Borrower as being confidential at the
time the same is delivered to us pursuant to the Credit Agreement.
As provided in said Section 11.14, we are permitted to provide you,
as a prospective [holder of a participation in the Loans (as defined in the
Credit Agreement)] [assignee Bank], with certain of such non-public
information subject to the execution and delivery by you, prior to receiving
such non-public information, of a Confidentiality Agreement in this form. Such
information will not be made available to you until your execution and return
to us of this Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on behalf
of yourself and each of your affiliates, directors, officers, employees and
representatives) that (A) such information will not be used by you except in
connection with the proposed [participation] [assignment] mentioned above and
(B) you shall use reasonable precautions, in accordance with your customary
procedures for handling confidential information and in accordance with safe
and sound banking practices, to keep such information confidential, provided
that nothing herein shall limit the disclosure of any such information (i) to
the extent required by statute, rule, regulation or judicial process, (ii) to
your counsel or to counsel for any of the Banks or the Agent, (iii) to bank
examiners, auditors or accountants, (iv) in connection with any litigation to
which you or any one or more of the Banks is a party; or (v) to the extent
such information becomes publicly available other than as a result of
disclosure other than as a result of disclosure by a Bank. Provided further,
that, unless specifically prohibited by applicable law or court order, you
agree, prior to disclosure thereof, to notify the Borrower of any request for
disclosure of any such non-public information (x) by any governmental agency
or representative thereof (other than any such request in connection with an
examination of your financial condition by such governmental agency) or (y)
pursuant to legal process; and provided finally that in no event
shall you be obligated to return any materials furnished to you pursuant to
this Confidentiality Agreement.
Would you please indicate your agreement to the foregoing by signing
at the place provided below the enclosed copy of this Confidentiality
Agreement.
Very truly yours,
[Insert Name of Bank]
By:
---------------------------------
The foregoing is agreed to
as of the date of this letter.
[Insert name of prospective
participant or assignee]
By:
-----------------------------
SCHEDULE I
Subsidiaries of Borrower
Jurisdiction Percentage
Name and Address of Incorporation of Ownership
Hardinge Credit Co., Inc.
One Hardinge Drive
Elmira, New York 14902 New York 100%
Hardinge Technologies Systems,Inc.
One Hardinge Drive
Elmira, New York 14902 New York 100%
Morrison Machine Products, Inc.
One Hardinge Drive
Elmira, New York 14902 New York 100%
Canadian Hardinge Machine Tools, Ltd.
Toronto, Canada Canada 100%
Hardinge Machine Tools, Ltd.
Exeter, England United Kingdom 100%
Hardinge Brothers GmbH
Krefield, West Germany Federal Republic of Germany 100%
L. Kellenberger & Co., A.G. Switzerland 100%
Kellenberger, Inc. New York 100%
SCHEDULE II
Hazardous Materials
In December, 1992, Hardinge removed an underground waste oil tank at
its College Avenue facility. Environmental sampling following the removal of
the tank disclosed the presence of hydrocarbon contamination in surrounding
soils. An environmental consultant retained by Hardinge prepared a site
assessment and an action plan for on-site remediation which were adopted and
approved by the New York State Department of Environmental Conservation. The
project is on site. Remediation commenced in the Fall of 1995.
SCHEDULE III
Partnerships of Borrower
Egret Aviation Co. Ownership of airplane with three other companies.
Box 228
Elmira, New York 14902
21480.03