AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of January 23, 1998
among
FARREL CORPORATION,
FARREL LIMITED,
▇▇▇▇▇▇ ▇▇▇▇ LIMITED
AND
THE CHASE MANHATTAN BANK
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of January 23, 1998
among FARREL CORPORATION, a corporation organized under the laws of Delaware
(the "U.S. Company"), FARREL LIMITED, a corporation organized under the laws of
England and Wales ("Farrel Limited") and ▇▇▇▇▇▇ ▇▇▇▇ LIMITED, a corporation
organized under the laws of England and Wales ("▇▇▇▇▇▇ ▇▇▇▇" and together with
Farrel Limited, the "U.K. Companies") (each a "Borrower" and, collectively, the
"Borrowers") and THE CHASE MANHATTAN BANK, a New York banking corporation (the
"Bank").
WHEREAS, the U.S. Company, Farrel Limited and the Bank have entered
into that certain Credit Agreement dated as of March 20, 1993, as amended (the
"Existing Credit Agreement") pursuant to which the Bank has extended credit to
such Borrowers evidenced as by certain promissory notes issued by such Borrowers
to the Bank (the "Existing Notes"); and
WHEREAS, this Agreement amends and restates in its entirety the
Existing Credit Agreement in order to, among other things, increase the amount
available for borrowing, provide for the issuance of a Term Loan, and add ▇▇▇▇▇▇
▇▇▇▇ as a Borrower hereunder.
NOW THEREFORE, the Borrowers and the Bank 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):
"Accounting Month" means each fiscal month of the Borrowers, it being
understood that each fiscal year of the Borrowers is divided into four fiscal
quarters of 13 weeks each, and each such fiscal quarter is divided approximately
into two four-week months and one five-week month.
"Acquisition" means the acquisition by ▇▇▇▇▇▇ ▇▇▇▇ of the ▇▇▇▇▇▇▇ ▇▇▇▇
Rubber Machinery business owned by ▇▇▇▇▇▇▇ ▇▇▇▇, FSRM and PRC, pursuant to the
terms of the Acquisition Documents.
"Acquisition Documents" mean that certain Agreement dated December 4,
1997, among ▇▇▇▇▇▇▇ ▇▇▇▇, FSRM, PRC, ▇▇▇▇▇▇ ▇▇▇▇, Farrel Limited and EIS Group
plc, and all other agreements, instruments or documents entered into in
connection therewith or delivered pursuant thereto.
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"Additional Costs" has the meaning assigned to such term in Section
3.01.
"Affiliate" means any Person: (a) which directly or indirectly
controls, or is controlled by, or is under common control with, any Borrower or
any of their Subsidiaries; (b) which directly or indirectly beneficially owns or
holds five percent or more of any class of voting stock of any Borrower or any
such Subsidiary; (c) five percent or more of the voting stock of which is
directly or indirectly beneficially owned or held by any Borrower or any such
Subsidiary; or (d) which is a partnership in which any Borrower or any of their
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.
"Agency Fee" has the meaning assigned to such term in Section 2.11(b).
"Aggregate Outstandings" means the sum of, without duplication, (A) the
aggregate principal amount of Loans outstanding at such time, plus (B) the L/C
Obligations.
"Agreement" means this Amended and Restated 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.
"Alternative Currency" means any currency other than Dollars or Pounds
Sterling which is freely transferrable and convertible into Dollars, and for
which Chase London quotes a per annum interest rate for the offering to leading
banks in the London interbank market of deposits.
"Application" means an application in such form as the Bank may specify
from time to time, requesting the Bank to open a Letter of Credit.
"Backlog Certificate" means each certificate delivered by the Borrowers
substantially in the form of Exhibit B-2.
"Banking Day" means any day on which commercial banks are not
authorized or required to close in New York City, and whenever such day relates
to a Fixed Rate Loan or notice with respect to any Fixed Rate Loan, a day on
which dealings in Dollar deposits are also carried out in the London interbank
market.
"Borrowing Base" means at any date of determination thereof, the sum of
(i) 85% of Eligible U.S. Receivables at such date plus (ii) 50% of Eligible U.S.
Inventory at such date plus (iii) 85% of
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Eligible U.K. Receivables at such date plus (iv) 50% of Eligible U.K. Inventory
at such date; the Borrowing Base shall be determined by the Bank monthly based
upon a Borrowing Base Certificate submitted by the Borrowers to the Bank and
certified as accurate and complete by the senior financial officer of the U.S.
Company.
"Borrowing Base (U.S.)" means at the date of determination thereof, the
sum of (i) 85% of Eligible U.S. Receivables at such date plus (ii) 50% of
Eligible U.S. Inventory at such date; the Borrowing Base (U.S.) shall be
determined by the Bank monthly based upon a Borrowing Base Certificate submitted
by the Borrowers to the Bank and certified as accurate and complete by the
senior financial officer of the U.S. Company.
"Borrowing Base Certificate" means each certificate delivered by the
Borrowers substantially in the form of Exhibit B-1.
"Capital Expenditure" means, with respect to any Person, any
expenditure made or obligation incurred by such Person to purchase, acquire or
construct fixed assets, plant and equipment (including renewals, improvements,
replacements and incurrence of obligations under Capital Leases) less cash
revenues received by such Person from the sale of fixed assets, plant and
equipment.
"Capital Lease" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP.
"Chase London" means the London branch of the Bank.
"Closing Date" means the date this Agreement has been executed by each
of the Borrowers and the Bank.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitments" mean the Revolving Credit Commitment and the Term Loan
Commitment.
"Commitment Fee" has the meaning assigned to such term in Section
2.11(a).
"Consolidated Subsidiary" means any Subsidiary whose accounts are or
are required to be consolidated with the accounts of any Borrower in accordance
with GAAP.
"Consolidated Tangible Net Worth" means Tangible Net Worth of the
Borrowers and their Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with GAAP.
"Current Assets" means all assets of the Borrowers treated as current
assets in accordance with GAAP, excluding prepaid expenses.
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"Current Liabilities" means all liabilities of the Borrowers treated as
current liabilities in accordance with GAAP, including without limitation (a)
all obligations payable on demand or within one year after the date on which the
determination is made (but not including the obligations under this Agreement in
the one year period prior to the Termination Date) and (b) installment and
sinking fund payments required to be made within one year after the date on
which the determination is made, but excluding all such liabilities or
obligations which are renewable or extendable at the option of the Borrowers to
a date more than one year from the date of determination.
"Debt" means, with respect to any Person: (a) indebtedness of such
Person for borrowed money; (b) indebtedness for the deferred purchase price of
property or services (except trade payables in the ordinary course of business);
(c) Unfunded Benefit Liabilities of such Person (if such Person is not a
Borrower, determined in a manner analogous to that of determining Unfunded
Benefit Liabilities of the Borrowers); (d) the face amount of any outstanding
letters of credit issued for the account of such Person; (e) obligations arising
under acceptance facilities; (f) guaranties, endorsements (other than for
collection in the ordinary course of business) and other contingent obligations
to purchase, to provide funds for payment, to supply funds to invest in any
Person, or otherwise to assure a creditor against loss; (g) obligations secured
by any Lien on property of such Person; and (h) obligations of such Person as
lessee under Capital Leases.
"Debt Service Charges" means, for any fiscal year, the sum of (i) all
scheduled payments of principal during such period on or with respect to Debt of
the Borrowers or their Consolidated Subsidiaries (including without limitation
imputed principal on Capital Leases), plus (ii) Interest Expense during such
period.
"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 Borrowers under
this Agreement, the Notes, the Letters of Credit or the Facility Documents 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 two percent
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 Fixed Rate 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, two percent above the interest rate for
-4-
such Loan as provided in Section 2.10 hereof and, thereafter, the rate provided
for above in this definition.
"Direct Borrowing Sublimit" means the amount of the lesser of (i)
$10,000,000 plus 50% of the amount of ---- backlog of the Borrowers in excess of
$40,000,000 or (ii) $15,000,000.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBIT" means, for any fiscal year, (i) the consolidated net income of
the Borrowers and their Consolidated Subsidiaries plus (ii) all taxes accrued
with respect to such fiscal year which are calculated and charged upon the
profits of the Borrowers and their Consolidated Subsidiaries plus (iii) all
Interest Expense accrued with respect to such fiscal year.
"EBITDA" means, for any fiscal year, (i) EBIT for such period, plus
(ii) the aggregate amounts of depreciation and amortization to the extent that
such amounts were deducted in the computation of EBIT for such period.
"Eligible Receivables" of a Borrower means the gross amount of the
accounts receivable of such Borrower that arose in the ordinary course of
business of such Borrower and are free and clear of any and all Liens and claims
of others, less any re-bills and chargebacks (but excluding chargebacks of
previously disputed items which have been subsequently agreed to by the
customer) of any nature (whether issued, owing, granted, or outstanding), less
customary reserves for: slow paying accounts (which shall be defined as any and
all accounts the payment of which is due and owing for a period of 90 or more
days from the due date of the invoice in respect thereof); credit balances which
are over 90 days past due; that portion of any account which is less than 90
days past due if more than one-half of the total amount in respect of such
account is more than 90 days past due; sales to the other Borrowers, to any
Subsidiary of the Borrowers or sales to any entity affiliated with the Borrowers
in any way; sales to financially unsound customers; dilution (which is a reserve
for such Borrower's normal pattern of returns, discounts, claims, credits,
allowances and other reductions in the Borrowers' receivables).
"Eligible U.K. Inventory" means the net amount of the inventory of the
Borrowers located in the United Kingdom that is owned by such Borrowers free and
clear of any and all Liens or claims of others, including raw materials and
work-in-process, but less any packaging materials and supplies, damaged or
unsalable goods returned or rejected by such Borrower?s customers, goods to be
returned to the Borrowers? suppliers, goods in transit to third parties (other
than the Borrowers? agents or warehouses and goods out at contractors), and less
any reserves required for special
-5-
order goods (unless built for a specific order), and market value declines.
"Eligible U.S. Inventory" means the net amount of the inventory of the
Borrowers located in the United States of America that is owned by such
Borrowers free and clear of any and all Liens or claims of others, including raw
materials and work-in-process, but less any packaging materials and supplies,
damaged or unsalable goods returned or rejected by such Borrower's customers,
goods to be returned to the Borrowers' suppliers, goods in transit to third
parties (other than the Borrowers' agents or warehouses) and goods out at
contractors, and less any reserves required for special order goods (unless
built for a specific order), and market value declines.
"Eligible U.K. Receivables" means Eligible Receivables of the U.K.
Companies.
"Eligible U.S. Receivables" means Eligible Receivables of the U.S.
Company.
"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.
"ERISA Affiliate" means any corporation or trade or business which is a
member of any group of organizations (i) described in section 414(b) or (c) of
the Code of which any Borrower is a member, or (ii) solely for purposes of
potential liability under section 302(c)(11) of ERISA and section 412(c)(11) of
the Code and the lien created under section 302(f) of ERISA and section 412(n)
of the Code, described in section 414(m) or (o) of the Code of which any
Borrower is a member.
"ERISA Event" means (i) a "reportable event" described in section 4043
of ERISA and the regulations thereunder with respect to any Title IV Plan (other
than a reportable event not subject to the provision for 30-day notice to the
PBGC under such regulations); (ii) the filing of a notice of intent to terminate
a
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Title IV Plan under section 4041 of ERISA; (iii) the institution of proceedings
to terminate a Title IV Plan by the PBGC; (iv) any other event or condition that
might reasonably be expected to constitute grounds under section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Title
IV Plan or the imposition of any material liability under Title IV of ERISA; (v)
an event requiring notification under section 4041(c)(3)(c) of ERISA with
respect to a Title IV Plan; (vi) the withdrawal, as described in ERISA section
4063, of any ERISA Affiliate from a Title IV Plan during a plan year in which it
was a "substantial employer" (as defined in section 4001(a)(2) of ERISA); (vii)
with respect to any Title IV Plan, the cessation of operations at a facility in
the circumstances described in section 4068(f) of ERISA; (viii) the adoption of
an amendment to a Title IV Plan requiring the provision of security to such plan
pursuant to section 307 of ERISA; (ix) with respect to any ERISA Affiliate, the
failure to make a payment required under section 412 of the Code or section 302
of ERISA which failure has not been cured within thirty (30) days; (x) a Pension
Plan having an "accumulated funding deficiency" (as defined in section 412 of
the Code and section 302 of ERISA) whether or not waived; (xi) the application
for, or receipt of, a funding waiver from the Internal Revenue Service with
respect to any Pension Plan; (xii) the adoption of an amendment to any Pension
Plan that pursuant to section 401(a)(29) of the Code or section 307 of ERISA
would result in the loss of tax-exempt status of the trust of which such plan is
a part if either Borrower or an ERISA Affiliate fails to timely provide security
to the Plan in accordance with the provisions thereof or such sections; or
(xiii) a Pension Plan intended to be qualified under section 401(a) of the Code
ceases to be so qualified or its related trust ceases to be exempt under section
501(a) of the Code.
"Event of Default" has the meaning given such term in Section 9.01.
"Facility Documents" means this Agreement, the Notes, the Letters of
Credit, and any Interest Rate Protection Agreement to which the Bank is a party,
as each may be amended or supplemented from time to time.
"Facility Fee" has the meaning assigned to such term in Section
2.11(b).
"Federal Funds Rate" means, for any day, the rate per annum (expressed
on a 365/366 day basis of calculation if the rate on the Variable Rate Loans is
so calculated) 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).
-7-
"Fixed Base Rate" means with respect to any Interest Period for a Fixed
Rate Loan: the rate per annum (rounded upwards, if necessary, to the nearest
1/16 of one percent) quoted at approximately 11:00 a.m. London time by Chase
London two Banking Days prior to the first day of such Interest Period for the
offering to leading banks in the London interbank market of Dollar deposits,
Pound Sterling deposits or deposits of an Alternative Currency, as the case may
be, in immediately available funds, for a period, and in an amount, comparable
to the Interest Period and principal amount of the related Fixed Rate Loan which
shall be made by the Bank and outstanding during such Interest Period.
"Fixed Rate" means, for any Fixed Rate Loan for any Interest Period
therefor, a rate per annum (rounded upwards, if necessary, to the nearest 1/100
of one percent) determined by the Bank to be equal to the quotient of (i) the
Fixed Base Rate for such Loan for such Interest Period, divided by (ii) one
minus the Reserve Requirement for such Loan for such Interest Period.
"Fixed Rate Loan" means any Loan when and to the extent the interest
rate therefor is determined on the basis of the definition "Fixed Base Rate."
"Foreign Exchange Contract" means a contract pursuant to which any
Borrower purchases or sells foreign currency for a fixed Pounds Sterling or
Dollar amount at a future date.
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting any Borrower or any of their 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 is reasonably likely to result in an indictment of any of
them or the seizure or forfeiture of any of their property.
"▇▇▇▇▇▇▇ ▇▇▇▇" means ▇▇▇▇▇▇▇ ▇▇▇▇ & Company (Manchester) Limited, a
corporation organized under the laws of England and Wales.
"FSRM" means ▇▇▇▇▇▇▇ ▇▇▇▇ Rubber Machinery Limited, a corporation
organized under the laws of England and Wales.
"Funded Debt" means, with respect to any Person, all Debt of such
Person for money borrowed which by its terms matures more than one year from the
date as of which such Funded Debt is incurred, and any Debt of such Person for
money borrowed maturing within one year from such date which is renewable or
extendable at the option of the obligor to a date beyond one year from such date
(whether or not theretofore renewed or extended), including any such
indebtedness renewable or extendable at the option of the obligor
-8-
under, or payable from the proceeds of other indebtedness which may be incurred
pursuant to, the provisions of any revolving credit agreement or other similar
agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect, 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 with by the Borrowers' independent public accountants).
"Hazardous Materials" means any substance regulated under Environmental
Laws and includes, without limitation, any hazardous or toxic waste, substance
or material; asbestos or PCBs; petroleum products including gasoline, fuel oil,
crude oil, diesel oil and various constituents of such products; and any other
chemicals, materials or substances which are regulated under Environmental Laws.
"Interest Expense" means all payments made by the Borrowers and their
Subsidiaries of interest, finance charges, the portion of capital lease payments
attributable to the time value of money and other fees, charges and expenses
extracted in exchange for the forbearance from the collection of money.
"Interest Period" means, with respect to any Fixed Rate Loan, the
period commencing on the date such Loan is made, converted from a Variable Rate
Loan or renewed, as the case may be, and ending, as the respective Borrower may
select pursuant to Section 2.06, on the numerically corresponding day in the
first, second or third calendar month thereafter, provided that in the case of
the Term Loan, the initial interest period will commence on the Closing Date and
shall end on March 31, 1998 and for each subsequent interest period thereafter
the respective Borrower may only select as an ending date, the numerically
corresponding date in the third month after commencement and provided further
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 calendar month.
"Interest Rate Protection Agreements" means any interest rate swap,
cap, collar agreement or similar arrangement between any Borrower and the Bank
providing for the transfer or mitigation of interest risks either generally or
under specific contingencies.
"Issuing Bank" means the Bank or Chase London, as the case may be, in
its capacity as issuer of any Letter of Credit.
"L/C Fee Payment Date" means the date of issuance of each L/C and each
three month anniversary thereof.
-9-
"L/C Obligations" means at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to subsection 2.01(e)(iv).
"Letters of Credit" means standby, trade and documentary letters of
credit and bank guarantees and performance bonds issued under Section
2.01(e)(i).
"Lending Office" means, for each type of Loan, the lending office of
the Bank designated as such for such type of Loan on its signature page hereof
or such other office of the Bank (or of an affiliate of the Bank) as the Bank
may from time to time specify to the Borrowers as the office by which like Loans
are to be made and maintained.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
"Loans" mean the Revolving Credit Loans and the Term Loan made by the
Bank pursuant to Section 2.01.
"Margin" means, (a) for a Variable Rate Loan, 0% and (b) for a Fixed
Rate Loan, 1.25% if such Loan is a Revolving Credit Loan and 1.75% if such Loan
is a Term Loan.
"Multiemployer Plan" means a Plan defined as such in section 3(37) of
ERISA to which contributions have been made by either of the Borrowers or any
ERISA Affiliate, or as to which either of the Borrowers or any ERISA Affiliate
has any direct or indirect fixed or contingent liability.
"Notes" means the Revolving Credit Note and the Term Note.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a Plan (including, but not limited to, a Title IV
Plan) that is an "employee benefit pension plan" as defined in section 3(2) of
ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by any of the
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Borrowers or any ERISA Affiliate, or as to which any of the Borrowers or any
ERISA Affiliate has any direct or indirect fixed or contingent liability,
excluding any Multiemployer Plan.
"Pounds Sterling" and the sign "?" mean lawful money of the United
Kingdom.
"Principal Office" means the principal office of the Bank, presently
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"PRC" means PRC Fabrications Limited, a corporation organized under the
laws of the England and Wales.
"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 any change after the date of this Agreement
in United States federal, state, municipal or United Kingdom or other 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 the Banks of or under any United States
federal, state, municipal or United Kingdom or other 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.
"Reimbursement Obligation" means the obligation of the Borrowers to
reimburse the Bank pursuant to subsection 2.01(e)(iv) for amounts drawn under
the Letters of Credit.
"Reserve Requirement" means, for any Fixed Rate Loan for any Interest
Period therefor, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding $1,000,000,000 against
"Eurocurrency liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall 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 Fixed Base Rate is to be determined as
provided in the definition of "Fixed Base Rate" in this Section 1.01 or (ii) any
category of extensions of credit or other assets which include Fixed Rate Loans.
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"Retiree Welfare Plan" means a Welfare Plan that provides for
continuing benefits or coverage for any participant or any beneficiary of a
participant after such participant's termination of employment, other than as
may be required by COBRA at the expense of the participant or the beneficiary of
the participant.
"Retiree Welfare Plan Liability" means with respect to a Retiree
Welfare Plan the total value as of the determination date of all expected
postretirement benefit obligations determined in accordance with the Financial
Accounting Standard No. 106, determined without regard to the effective date of
the standards set forth in the Financial Accounting Standard No. 106.
"Revolving Credit Commitment" means the obligation of the Bank to make
Revolving Credit Loans under this Agreement in the aggregate principal amount of
$18,500,000 or an equivalent amount denominated in Pounds Sterling, or an
Alternative Currency, as such amount may be reduced or otherwise modified from
time to time.
"Revolving Credit Loan" has the meaning assigned to such term in
Section 2.01(a) hereof.
"Revolving Credit Note" means the promissory note issued by the
Borrowers in the form of Exhibit A-1 hereto evidencing the Revolving Credit
Loans made by the Bank hereunder and all promissory notes delivered in
substitution or exchange therefor, as amended or supplemented from time to time.
"Revolving Credit Termination Date" means December 31, 1999; provided
that if such date is not a Banking Day, the Revolving Credit Termination Date
shall be the next succeeding Banking Day (or, if such next succeeding Banking
Day falls in the next calendar month, the next preceding Banking Day); and
provided further that the Bank may extend the Revolving Credit Termination Date
by providing written notice to the Borrowers.
"SEC" means the Securities and Exchange Commission.
"SEC Filings" means the U.S. Company's Registration Statement on Form
S-1, File No. 33-43539 as filed with the SEC on January 13, 1992, pursuant to
the Securities Act of 1933, as amended, and any subsequent report on Form 10-Q
and on Form 10-K.
"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" means, at any date of determination thereof,
consolidated stockholders equity of the Borrowers,
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determined in accordance with GAAP, eliminating the effect of accumulated
foreign currency translation adjustments therefrom and adding thereto (a)
subordinated debt which is subordinated to all obligations owed to the Bank on
terms and conditions acceptable to the Bank and (b) an amount equal to any
reserve or charge, if any, in an amount not in excess of $700,000 resulting from
FASB 106.
"Term Loan" has the meaning assigned to such term in Section 2.01(b)
hereof.
"Term Loan Commitment" means the obligation of the Bank to make the
Term Loan under this Agreement, in the aggregate principal amount of $6,500,000
or an equivalent amount in Pounds Sterling.
"Term Note" means the promissory note issued by ▇▇▇▇▇▇ ▇▇▇▇ in the form
of Exhibit A-2 hereto evidencing the Term Loan made by the Bank hereunder and
all promissory notes delivered in substitution or exchange therefor, as amended
or supplemented from time to time.
"Term Note Termination Date" means December 31, 2002; provided that if
such date is not a Banking Day, the Termination Date shall be the next
succeeding Banking Day (or, if such next succeeding Banking Day falls in the
next calendar month, the next preceding Banking Day); and provided further that
the Bank may extend the Termination Date by providing written notice to the
Borrowers.
"Title IV Plan" means a Plan covered by Title IV of ERISA.
"Transaction Fee" has the meaning assigned to such term in Section
2.11(c).
"U.K. Base Rate" means that rate of interest from time to time
announced by Chase London at its principal office in the United Kingdom as its
base rate.
"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 either
Borrower or any ERISA Affiliate under Title IV of ERISA.
"Uniform Customs" means the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"U.S. Prime Rate" means that rate of interest from time to time
announced by the Bank at the Principal Office as its prime commercial lending
rate.
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"Variable Rate" means, for any day, (a) in the case of Dollar
borrowing, the higher of (i) the Federal Funds Rate for such day plus 1/4 of one
percent and (ii) the U.S. Prime Rate for such day, and (b) in the case of Pounds
Sterling borrowings, the U.K. Base Rate plus one and 1/4 percent.
"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.
"Welfare Plan" means a Plan that is an "employee welfare benefit plan"
within the meaning of section 3(1) of ERISA.
Section 1.2. 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, the Bank agrees to make revolving credit loans (the "Revolving
Credit Loans") to any Borrower from time to time from and including the date
hereof to and including the Revolving Credit Termination Date
(i) in the case of each of the U.K. Companies, up to but not
exceeding in the aggregate principal amount at any one time
outstanding, the amount of the lesser of
(A) the Revolving Credit Commitment less L/C
Obligations less the aggregate principal amount of Revolving
Credit Loans outstanding from the Bank to the U.S. Company and
the other U.K. Company;
(B) the Borrowing Base less L/C Obligations less the
aggregate principal amount of Revolving Credit Loans
outstanding from the Bank to the U.S. Company and the other
U.K. Company less the principal amount of the Term Loan
outstanding; or
(C) the Direct Borrowing Sublimit less the aggregate
principal amount of Revolving Credit Loans outstanding from
the Bank to the U.S. Company and the other U.K. Company; and
(ii) in the case of the U.S. Company, up to but not exceeding
in the aggregate principal amount at any one time outstanding, the
amount of the lesser of
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(A) the Revolving Credit Commitment less L/C
Obligations less the principal amount of Revolving Credit
Loans outstanding from the Bank to the U.K. Companies;
(B) the Borrowing Base (U.S.) less L/C Obligations
issued by the Bank for the benefit of the U.S. Company less
the excess, if any, of (x) the Aggregate Outstandings from the
Bank to or for the benefit of the U.K. Companies over (y) the
sum of 85% of the Eligible U.K. Receivables plus 50% of
Eligible U.K. Inventory less the principal amount of the Term
Loan outstanding; or
(C) the excess, if any, of the Direct Borrowing
Sublimit over the principal amount of Revolving Credit Loans
outstanding from the Bank to the U.K. Companies.
The Revolving Credit Loans shall be due and payable on the Revolving Credit
Termination Date.
(b) Subject to the terms and conditions of this Agreement, the Bank
agrees to make a term loan (the "Term Loan") to ▇▇▇▇▇▇ ▇▇▇▇ on the Closing Date,
in an amount equal to the amount of its Term Loan Commitment. The Term Loan
shall be repaid in twenty quarterly equal installments of principle each such
installment to be payable on the last day of each March, June, September and
December beginning on March 31, 1998 and ending on the Term Loan Termination
Date.
(c) The Loans may be made in Dollars, Pounds Sterling or an Alternative
Currency as follows: (i) any Loan made pursuant to Subsection 2.01(f) shall be
made in Pounds Sterling; (ii) any other Variable Rate Loan shall be made in
Dollars; (iii) the Term Loan shall be made in Pounds Sterling; and (iv) any
Fixed Rate Loan shall be made in the currency specified by the respective
Borrower in the notice of borrowing received by the Bank in accordance with
Section 2.08.
(d) The Loans may be outstanding as Variable Rate Loans or Fixed Rate
Loans (each a "type" of Loan) as follows: (i) any Loan outstanding pursuant to
subsection 2.01(f) shall be a Variable Rate Loan; (ii) any Loan outstanding in
an Alternative Currency shall be a Fixed Rate Loan; and (iii) any other Loan
outstanding shall be the type of Loan specified by the respective Borrower in
the notice of such borrowing or conversion thereof received by the Bank in
accordance with Section 2.08.
(e) (i) Subject to the terms and conditions hereof, the Bank agrees to
issue Letters of Credit for the account of any Borrower on any Banking Day prior
to the Revolving Credit Termination Date in such form as may be approved from
time to time by the Bank; provided that the Bank shall have no obligation to
issue any Letter of Credit.
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(A) for the benefit of any U.K. Company if, after giving
effect to such issuance, the Aggregate Outstandings from the Bank to or
for the benefit of the U.K. Companies (other than the principal amount
of the Term Loan outstanding) would exceed the lesser of
(1) the Revolving Credit Commitment less the
Aggregate Outstandings from the Bank to or for the benefit of
the U.S. Company; or
(2) the Borrowing Base less the Aggregate
Outstandings from the Bank to or for the benefit of the U.S.
Company; or
(B) for the benefit of the U.S. Company if, after giving
effect to such issuance, the Aggregate Outstandings from the Bank to or
for the benefit of the U.S. Company would exceed the lesser of
(1) the Revolving Credit Commitment less the
Aggregate Outstandings from the Banks to or for the benefit of
the U.K. Companies (other than the principal amount of the
Term Loan outstanding); or
(2) the Borrowing Base (U.S.) less the excess, if
any, of (x) the Aggregate Outstandings from the Bank to or for
the benefit of the U.K. Companies over (y) the sum of 85% of
the Eligible U.K. Receivables plus 50% of Eligible U.K.
Inventory, less the principal amount of the Term Loan
outstanding.
Each Letter of Credit shall be denominated in Dollars, Pounds Sterling
or an Alternative Currency. On the Revolving Credit Termination Date each
Borrower for whose benefit a Letter of Credit has been issued must (i) deposit
in accounts maintained at the Issuing Bank(s) cash reserves for the benefit of
the Issuing Bank(s) in the amount of all L/C Obligations for any Letters of
Credit of such Issuing Bank(s) to remain outstanding for the benefit of such
Borrower after the Revolving Credit Termination Date including reasonable
estimated commissions, out-of-pocket charges and handling fees, or (ii)
otherwise provide for a financial institution acceptable to the Bank to
indemnify the Issuing Bank(s) against loss in connection with such outstanding
L/C Obligations issued for the benefit of such Borrower pursuant to
indemnification documentation in form and substance satisfactory to the Bank.
(ii) Any Borrower may from time to time request that the Bank
issue a Letter of Credit by delivering to the Bank at its address for notices
specified herein an Application therefor, completed to the satisfaction of the
respective Issuing Bank, and such other certificates, documents and other papers
and information
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as the Issuing Bank may reasonably request. Upon receipt of any Application, the
Issuing Bank will process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit in such customized form as may reasonably be requested by the Borrower
(but in no event shall the Issuing Bank issue any Letter of Credit later than
five Banking Days after receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Bank and the respective Borrower. The
Issuing Bank shall furnish a copy of such Letter of Credit to the respective
Borrower promptly following the issuance thereof.
(iii) (A) The Borrowers shall pay to the Issuing Bank a letter
of credit commission with respect to each Letter of Credit, payable in the same
currency as that in which such Letter of Credit is denominated, computed at the
rate per annum equal to 7/8 of one percent, calculated on the basis of a year of
360 days for the actual days elapsed, of the aggregate undrawn amount under such
Letter of Credit on the date on which such fee is calculated. Such commissions
shall be payable quarterly in advance on each L/C Fee Payment Date to occur
after the issuance of a Letter of Credit and shall be nonrefundable.
(B) In the case of an assignment of all or any part of
the Loans or Commitments pursuant to Section 11.05 of this Agreement, the letter
of credit commission referred to in Clause (A) above shall be paid to the
Issuing Bank for the account of the participating banks, pro rata according
to their respective commitments.
(iv) The Borrowers agree to reimburse the Issuing Bank for
each draft presented under any Letter of Credit and paid by the Issuing Bank for
the amount of (a) such draft so paid and (b) any taxes (other than income
taxes), fees, charges or other costs or expenses incurred by the Issuing Bank in
connection with such payment. Each such payment shall be made to the Issuing
Bank at its address for notices specified herein in the same currency as that in
which such Letter of Credit is denominated and in immediately available funds on
the date that such draft is paid. It is expressly understood and agreed that (a)
the reimbursement obligations and fees with respect to the Letters of Credit
issued for the benefit of the U.S. Company hereunder are solely the obligation
of the U.S. Company and that the U.K. Companies shall have no liability with
respect to such obligations and (b) all other obligations of the Borrowers
pursuant to Section 2.01(e) are the joint and several obligations of the
Borrowers.
(v) The Borrowers' obligations under this subsection shall be
absolute and unconditional under any and all circumstances
-17-
and irrespective of any set-off, counterclaim or defense to payment which the
Borrowers may have or have had against the Bank or any beneficiary of a Letter
of Credit. The Borrowers also agree with the Bank that the Bank shall not be
responsible for, and the Borrowers' Reimbursement Obligations under subsection
(iv) shall not be affected by, among other things, the validity or genuineness
of documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any dispute between or among
the Borrowers and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or any claims whatsoever of the
Borrowers against any beneficiary of such Letter of Credit or any such
transferee. The Bank shall not be liable for any error, omission, interruption
or delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by the Issuing Bank's gross negligence or willful misconduct.
The Borrowers agree that any action taken or omitted by the Bank under or in
connection with any Letter of Credit or the related drafts or documents, if done
in the absence of gross negligence or willful misconduct and in accordance with
the standards of care specified in the Uniform Customs, shall be binding on the
Borrowers and shall not result in any liability of the Bank to the Borrowers.
(vi) If any draft shall be presented for payment under any
Letter of Credit, the Issuing Bank shall promptly notify the Borrowers of the
date and amount thereof. The responsibility of the Issuing Bank to the Borrowers
in connection with any draft presented for payment under the Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.
(vii) To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 2.01(e), the provisions of this Section 2.01(e) shall apply.
(f) Subject to the terms and conditions hereof, the Bank shall
automatically advance as Revolving Credit Loans hereunder, without the
requirement of a formal borrowing notice from the Borrowers, up to an aggregate
amount of ?1,000,000 to the U.K. Companies? demand deposit accounts maintained
at Chase London from time to time in order to provide sufficient available funds
to honor checks and drafts drawn on such accounts. Each such check and draft
requiring any advance under this subsection 2.01(f) shall constitute a request
by the Borrowers to the Bank for the borrowing of a Variable Rate Loan in the
amount of such advance on the date of such check or draft.
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Section 2.02. The Note. The Revolving Credit Loans shall be evidenced
by a single promissory note in favor of the Bank, substantially in the form of
Exhibit A-1, dated the Closing Date , duly completed and executed. The Term Loan
shall be evidenced by a single promissory note in favor of the Bank,
substantially in the form of Exhibit A-2, dated the Closing Date, duly completed
and executed.
Section 2.03. Purpose. ▇▇▇▇▇▇ ▇▇▇▇ shall use the proceeds of the Term
Loan and the Revolving Credit Loans borrowed by it to repay the funds borrowed
from Farrel Limited to finance the Acquisition and for general corporate
purposes and the other Borrowers shall use the proceeds of the Revolving Credit
Loans for general corporate purposes. Such proceeds shall not be used for the
purpose, whether immediate, incidental or ultimate, of buying or carrying
"margin stock" within the meaning of Regulation U.
Section 2.04. Borrowing Procedures. Any Borrower which intends to
effect a borrowing shall give the Bank notice of each borrowing to be made
hereunder as provided in Section 2.08. Not later than 12:00 noon New York City
time on the date of such borrowing in the case of a borrowing of a Variable Rate
Loan or 12:00 noon New York City time on the Banking Day three Banking Days
prior to the date of such borrowing in the case of a Fixed Rate Loan, the Bank
shall through the appropriate Lending Office and subject to the conditions of
this Agreement, make the amount of the Loan to be made on such day available to
such Borrower, in immediately available funds, by the Bank crediting an account
of such Borrower designated by such Borrower and maintained at the appropriate
Lending Office.
Section 2.05. Prepayments and Conversions. The Borrowers shall have the
right to make prepayments of principal, or to convert one type of Loan into
another type of Loan, at any time or from time to time; provided that: (a) the
respective Borrower shall give the Bank notice of each such prepayment or
conversion as provided in Section 2.08; (b) Fixed Rate Loans may be prepaid or
converted only on the last day of an Interest Period for such Loans unless the
Borrowers concurrently with any such prepayment or conversion shall pay to the
Banks any compensation called for under Section 3.04. In the case of the Term
Loan, all prepayments shall be applied to the principal installments of the Term
Loan in the inverse order of their maturities.
Section 2.06. Interest Periods; Renewals. (a) In the case of each Fixed
Rate Loan, the respective Borrower shall select an Interest Period of any
duration in accordance with the definition of Interest Period in Section 1.01,
subject to the following limitation: (i) no Interest Period may extend beyond
the Revolving Credit Termination Date (in the case of a Revolving Credit Loan)
or the Term Loan Termination Date (in the case of the Term Loan); (ii)
notwithstanding clause (i) above, no Interest Period shall have a
-19-
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;
(iii) 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 such Banking
Day would fall in the next calendar month in which event such Interest Period
shall end on the immediately preceding Banking Day; and (iv) no more than five
Interest Periods may be outstanding at any one time.
(b) Upon notice to the Banks as provided in Section 2.08, the
respective Borrower may renew any Fixed Rate Loan on the last day of the
Interest Period therefor as the same type of Loan with an Interest Period of the
same or different duration in accordance with the limitations provided above. If
such Borrower shall fail to give notice to the Bank of such a renewal, such
Fixed Rate Loan shall automatically become a Variable Rate Loan at the then
applicable Dollar equivalent on the last day of the current Interest Period;
provided that the foregoing shall not prevent the conversion of any type of Loan
into another type of Loan in accordance with Section 2.05.
Section 2.07. Changes of Commitment. Immediately following the making
of the Term Loan, the Term Loan Commitment shall be terminated on the Closing
Date and shall not be reinstated. The Borrowers shall have the right to reduce
or terminate the amount of unused Revolving Credit Commitment at any time or
from time to time, provided that: (a) the Borrowers shall each give notice of
each such reduction or termination to the Bank as provided in Section 2.08; and
(b) each partial reduction shall be in an aggregate amount at least equal to
$1,000,000. The Revolving Credit Commitment once reduced or terminated may not
be reinstated.
Section 2.08. Certain Notices. Notices by the respective Borrower to
the Bank of each borrowing pursuant to Section 2.04, and each prepayment or
conversion pursuant to Section 2.05, each renewal pursuant to Section 2.06(b),
and each reduction or termination of the Revolving Credit Commitment pursuant to
Section 2.07 shall be irrevocable and shall be effective only if received by the
Bank not later than 12:00 noon New York City time, and (a) in the case of
borrowings and prepayments of, conversions into and (in the case of Fixed Rate
Loans) renewals of (i) Variable Rate Loans, given on the Banking Day therefor;
(ii) Fixed Rate Loans, given three Banking Days prior thereto; (b) in the case
of reductions or termination of the Revolving Credit Commitment, given three
Banking Days prior thereto. Each such notice shall specify the Loans to be
borrowed, prepaid, converted or renewed and the amount (subject to Section 2.09)
and type of the Loan to be borrowed or converted, or prepaid or renewed (and, in
the case of a conversion, the type of Loans to result from such conversion, the
currency in which such Loan is to be made and, in the case of a Fixed Rate Loan,
the Interest Period therefor) and the date of the borrowing or prepayment, or
conversion or renewal (which shall be
-20-
a Banking Day). Each such notice of reduction or termination shall specify the
amount of the Revolving Credit Commitment to be reduced or terminated.
Section 2.09. Minimum Amounts. Except for (i) Loans made pursuant to
Section 2.01(f), and (ii) Variable Rate Loans which exhaust the full remaining
amount of the Revolving Credit Commitment, prepayments or conversions which
result in the prepayment or conversion of all Loans of a particular type or the
entire Term Loan, each borrowing, prepayment, conversion and renewal of
principal of Loans of a particular type shall be in an amount at least equal to
(i) $100,000 in the case of Variable Rate Loans and (ii) $1,000,000 or larger
amounts in increments of $100,000 or the respective Alternative Currency
equivalent, in the case of Fixed Rate Loans made in Dollars or such Alternative
Currency, and ?500,000 or larger amounts in increments of ?100,000 in the case
of Fixed Rate Loans made in Pounds Sterling (borrowings, prepayments,
conversions or renewals of or into Loans of different types or, in the case of
Fixed Rate Loans, having different Interest Periods at the same time hereunder
to be deemed separate borrowings, prepayments, conversions and renewals for the
purposes of the foregoing, one for each type of Interest Period). Anything in
this Agreement to the contrary notwithstanding, the aggregate principal amount
of Fixed Rate Loans having concurrent Interest Periods shall be at least equal
to $1,000,000, $500,000 or such amounts in any Alternative Currency as shall be
determined by the Bank in the case of Fixed Rate Loans made in Dollars, Pounds
Sterling or an Alternative Currency, respectively. The Bank may in its sole
discretion agree to advance Fixed Rate Loans in smaller denominations upon the
request of the Borrowers.
Section 2.10. Interest. (a) Interest shall accrue on the outstanding
and unpaid principal amount of each Loan for the period from and including the
date of such Loan to but excluding the date such Loan is due at the following
rates per annum: (i) for a Variable Rate Loan, at a variable rate per annum
equal to the Variable Rate plus the Margin and (ii) for a Fixed Rate Loan, at a
fixed rate equal to the Fixed Rate plus the Margin. If the principal amount of
any Loan and any other amount payable by the Borrowers hereunder including
Letters of Credit reimbursement obligations or under the Notes shall not be paid
when due (at stated maturity, by acceleration or otherwise), interest shall
accrue on such amount to the fullest extent permitted by law from and including
such due date to but excluding the date such amount is paid in full at the
Default Rate.
(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 360 days for the actual number of days elapsed. Interest on
each Fixed Rate Loan shall be calculated on the basis of a year of 360 days for
the actual number of days elapsed.
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(c) Accrued interest shall be due and payable in arrears upon any
payment of principal or conversion and (i) for each Variable Rate Loan, on the
last day of each March, June, September and December, commencing the first such
date after such Loan; (ii) for each Fixed Rate Loan, on the last day of the
Interest Period with respect thereto; provided that interest accruing at the
Default Rate shall be due and payable from time to time on demand of the Bank.
(d) Interest shall be payable in the currency which is applicable to
each respective loan.
Section 2.11. Fees. (a) The Borrowers shall pay to the Bank a
commitment fee (the "Commitment Fee") in Dollars on the daily average of the
lesser of (i) the Direct Borrowing Sublimit less the amount of the Revolving
Credit Loans outstanding and (ii) the Revolving Credit Commitment less the
Aggregate Outstandings (excluding the Term Loan) for the period from and
including the Closing Date to the earlier of the date the Revolving Credit
Commitment is terminated or the Revolving Credit Termination Date at a rate
equal to 3/8 of one percent per annum, calculated on the basis of a year of 360
days for the actual number of days elapsed. The accrued Commitment Fee shall be
due and payable in arrears upon any termination of the Revolving Credit
Commitment and on the last day of each March, June, September and December,
commencing on the first such date after the Closing Date.
(b) Agency Fee; Facility Fee. The Borrowers shall pay to the Bank an
agency fee (the "Agency Fee") of $25,000 per annum which shall be due and
payable in arrears on March 31 of each year commencing March 31, 1998 and on the
termination date of the Revolving Credit Commitment for the pro rata portion of
the year to such date.
(c) Transaction Fee. The Borrowers shall pay to the Bank a transaction
fee (the "Transaction Fee") equal to $50,000 on the Closing Date.
(d) Advisory Fee. Upon the parties? execution of this Agreement and the
closing of the transactions contemplated hereby, the Bank shall be deemed to
have earned the balance of the $80,000 advisory fee set forth in the Fifth
Amendment to the Existing Credit Agreement, which amount was previously paid by
the U.S. Company, and thereupon the Letter Agreement dated October 30, 1995
shall be deemed terminated and of no further force or effect.
Section 2.12. Payments Generally. All payments under this Agreement or
the Notes shall be made in Dollars, Pounds Sterling or in the respective
Alternative Currency, as appropriate, in immediately available funds not later
than 1:00 p.m. New York City 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
-22-
the next succeeding Banking Day) at the applicable Lending Office. The Bank may
(but shall not be obligated to) debit the amount of any such payment which is
not made by such time to any ordinary deposit account of any Borrower with the
Bank. The Borrowers shall, at the time of making each payment under this
Agreement, the Notes, the Letters of Credit or any other Facility Document,
specify to the Bank the principal, other amount payable by the Borrowers under
this Agreement, the Notes, the Letters of Credit or such other Facility Document
to which such payment is to be applied (and in the event that it fails to so
specify, or if a Default or Event of Default has occurred and is continuing, the
Bank may apply such payment as it may elect in its sole discretion). If the due
date of any payment under this Agreement, the Notes, the Letters of Credit or
any other Facility Document 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.
Section 2.13. No Withholding; Gross-Up. All payments on account of
principal of an interest on the Notes and all other amounts payable under this
Agreement, the Notes, the Letters of Credit or the other Facility Documents
shall be made without withholding for or on account of any present or future
taxes imposed by any Governmental Authority. If any such withholding is so
required, each Borrower shall make the withholding and pay the amount withheld
to the appropriate Governmental Authority before penalties attach thereto or
interest accrues thereon.
Section 2.14. Currency Equivalent. For purposes of the provisions of
this Article 2, (a) the equivalent in Dollars of Pounds Sterling or any
Alternative Currency shall be determined each month on the earlier of (i) the
tenth day of such month or (ii) the date the Borrowers deliver to the Bank a
Borrowing Base Certificate and a Backlog Certificate pursuant to Section
6.08(c), by using the quoted spot rate at which the Bank offers to exchange
Dollars for such currency at 11:00 A.M. (New York City time) on such date and
shall remain in effect until determined in the next subsequent month and (b) the
equivalent in any Pounds Sterling or any Alternative Currency of Dollars shall
be determined each month on the earlier of (i) the tenth day of such month or
(ii) on the date the Borrowers deliver to the Bank a Borrowing Base Certificate
and a Backlog Certificate pursuant to Section 6.08(c) by using the quoted spot
rate at which the Bank offers to exchange such currency for Dollars at 11:00
A.M. (New York time) on such date and shall remain in effect until determined in
the next subsequent month.
Section 2.15. Foreign Exchange. Upon request of any Borrower the Bank
will, subject to market conditions and availability, enter into Foreign Exchange
Contracts for the account of the Borrowers in amounts up to ?3,000,000. Such
Foreign Exchange Contracts shall be subject to the Bank's normal policies and
procedures for such transactions, including its underwriting
-23-
requirements and the payment by the Borrowers of the Bank's customary fees and
charges for such transactions, and shall be accomplished pursuant to
documentation satisfactory in all respects to the Bank. Any such documentation
shall be deemed to be Facility Documents hereunder and under the terms and
provisions of the other Facility Documents.
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01. Additional Costs. (a) The Borrowers shall pay to the Bank
from time to time on demand such amounts as the Bank may reasonably determine to
be necessary to compensate it for any costs which the Bank reasonably determines
are attributable to the making or maintaining any Fixed Rate Loans under this
Agreement or the Notes or the obligation to make any such Loans hereunder, or
any reduction in any amount receivable by the 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 which: (i) changes the basis of taxation of any amounts
payable to the Bank under this Agreement or the Notes in respect of any of such
Loans (other than taxes imposed on the overall net income of the Bank or of any
Lending Office for any of such Loans by the jurisdiction in which the Principal
Office, the principal office of Chase London or such Lending Office is located);
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, the Bank (including any of such Loans or any deposits referred
to in the definition of "Fixed Base Rate" in Section 1.01); or (iii) imposes any
other condition affecting this Agreement or the Notes (or any of such extensions
of credit or liabilities). The Bank will notify the Borrowers of any event
occurring after the date of this Agreement which will entitle the Bank to
compensation pursuant to this Section 3.01(a) as promptly as practicable after
it obtains knowledge thereof and determine to request such compensation.
(b) Without limiting the effect of the foregoing provisions of this
Section 3.01, in the event that, by reason of any Regulatory Change, the 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
the Bank which includes deposits by reference to which the interest rate on
Fixed Rate Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of the Bank which includes Fixed Rate Loans
or (ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if the Bank so elects by notice
to the Borrowers, the obligation of the Bank to make or renew, and to convert
Loans of any other type into, Loans of such type hereunder shall be
-24-
suspended until the date such Regulatory Change ceases to be in effect, and the
Borrowers shall on the last day(s) of the then current Interest Period(s) for
the outstanding Loans of such type, either prepay such Loans or convert such
Loans into another type of Loan in accordance with Section 2.05.
(c) Without limiting the effect of the foregoing provisions of this
Section 3.01 (but without duplication), the Borrowers shall pay to the Bank from
time to time on request such amounts as the Bank may reasonably determine to be
necessary to compensate the Bank for any costs which it reasonably determines
are attributable to the maintenance by it or any of its affiliates pursuant to
any 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 of capital in respect of its Loans hereunder or its obligation to make
Loans hereunder (such compensation to include, without limitation, an amount
equal to any reduction in return on assets or equity of the Bank to a level
below that which it could have achieved but for such law, regulation,
interpretation, directive or request). The Bank will notify the Borrowers if it
is entitled to compensation pursuant to this Section 3.01(c) as promptly as
practicable after it determines to request such compensation.
(d) Determinations and allocations by the 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
the costs of making or maintaining Loans or the obligation to make Loans, or on
amounts receivable by, or the rate of return to, the Bank in respect of Loans or
such obligation, and of the additional amounts required to compensate the 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 the Bank reasonably determines (which determination
shall be conclusive) that:
(a) quotations of interest rates for the relevant deposits referred to
in the definition of "Fixed Base 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 Fixed Rate Loans as provided in this
Agreement; or
(b) the relevant rates of interest referred to in the definition of
"Fixed Base Rate" in Section 1.01 upon the basis of which the rate of interest
for any type of Fixed Rate Loans is to be determined do not adequately cover the
cost to the Bank of making or maintaining such Loans; then the Bank shall give
the Borrowers prompt notice thereof, and so long as such condition
-25-
remains in effect, the Bank shall be under no obligation to make or renew Loans
of such type or to convert Loans of any other type into Loans of such type and
the Borrowers shall, on the last day(s) of the then current Interest Period(s)
for the outstanding Loans of the affected type, either prepay such Loans or
convert such Loans into another type of Loans in accordance with Section 2.05.
Section 3.03. Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for the Bank or any Lending
Office to (a) honor its obligation to make or renew Fixed Rate Loans hereunder
or convert Loans of any type into Loans of such type, or (b) maintain Fixed Rate
Loans hereunder, then the Bank shall promptly notify the Borrowers thereof and
the Bank's obligation to make or renew Fixed Rate Loans and to convert other
types of Loans into Loans of such type hereunder shall be suspended until such
time as the Bank may again make, renew or convert and maintain such affected
Loans and the Borrowers shall, on the last day(s) of the then current Interest
Period for the outstanding Fixed Rate Loans, as the case may be (or on such
earlier date as the Bank may specify to the Borrowers and, if the Bank shall
require such prepayment, the Borrowers shall not be liable to pay the
compensation otherwise due pursuant to Section 3.04), either prepay such Loans
or convert such Loans into another type of Loans in accordance with Section
2.05.
Section 3.04. Certain Compensation. The Borrowers shall pay to the
Bank, upon the request of the Bank, such amount or amounts as shall be
sufficient (in the reasonable opinion of the Bank) to compensate the Bank for
any loss, cost or expense which the Bank reasonably determines is attributable
to:
(a) any payment, prepayment, conversion or renewal of a Fixed Rate Loan
on a date other than the last day of an Interest Period for such Loan (whether
by reason of acceleration or otherwise); or
(b) any failure by the Borrowers to borrow, convert into or renew a
Fixed Rate Loan to be made, converted into or renewed by the Bank on the date
specified therefor in the relevant notice under Section 2.04, 2.05 or 2.06, as
the case may be.
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, prepaid, converted
or renewed or not borrowed, converted or renewed for the period from and
including the date of such payment, prepayment or conversion or failure to
borrow, convert or renew to but excluding the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, convert
or renew, 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
-26-
amount of interest (as reasonably determined by the Bank) the Bank would have
bid in the London interbank market (if such Loan is a Fixed Rate Loan) for
deposits in Dollars, Pounds Sterling or any applicable Alternative Currency, as
the case may be, for amounts comparable to such principal amount and maturities
comparable to such period. A determination of the Bank as to the amounts payable
pursuant to this Section 3.04 shall be conclusive absent manifest error.
ARTICLE 4. CONDITIONS PRECEDENT
Section 4.01. Documentary Conditions Precedent to Initial Borrowing.
The obligation of the Bank to make the Loans constituting the initial borrowing
or to issue any Letters of Credit is subject to the condition precedent that the
Bank shall have received on or before the Closing Date each of the following, in
form and substance satisfactory to the Bank and its counsel:
(a) counterparts of this Agreement duly executed by the Borrowers;
(b) the Notes duly executed by the Borrowers;
(c) certificates of the Secretary or Assistant Secretary of each of the
Borrowers, dated the Closing Date, attesting to the Certificate of Incorporation
(or Charter), the Bylaws and all corporate action taken by the Borrowers,
including resolutions of 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) certificates of the Secretary or Assistant Secretary of each of the
Borrowers, dated the Closing Date, certifying the names and true signatures of
the officers of such Borrower authorized to sign the Facility Documents to which
it is a party and the other documents to be delivered by such Borrower under
this Agreement;
(e) certificates of a duly authorized officer of each of the Borrowers,
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, all agreements and conditions required to be complied with by such date
have been performed and complied with and that no event has occurred and is
continuing which constitutes a Default or Event of Default;
(f) good standing certificates and certified copies of all charter
documents with respect to each of the Borrowers certified by the secretary of
state of its jurisdiction of incorporation in the case of the U.S. Company and
the Registrar of Companies in the case of the U.K. Companies, and evidence that
each of the Borrowers is qualified as a foreign corporation in good standing in
every other jurisdiction in which the nature of its business so requires, except
where failure to be so qualified and in good standing does not, in any one case
or in the aggregate, materially adversely
-27-
affect the financial condition, operations, properties or business of the
Borrowers, taken as a whole, or the ability of the Borrowers to perform their
obligations under the Facility Documents.;
(g) favorable opinions of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, U.S. counsel for the
Borrowers and McFarlanes, U.K. counsel for the Borrowers, dated the Closing
Date, in substantially the forms contained in Exhibits C-1 and C-2, respectively
and as to such other matters as the Bank may reasonably request;
(h) evidence that the Acquisition shall have been consummated in
accordance with the Acquisition Documents;
(i) a certificate of a duly authorized officer of ▇▇▇▇▇▇ ▇▇▇▇, dated
the Closing Date, attaching true and correct copies of (i) all material consents
under any indenture, agreement, lease or instrument obtained in connection with
the Acquisition and (ii) all consents and authorizations required or advisable
in connection with the Acquisition under any law, rule or regulation;
(j) certified complete and correct copies of the Acquisition Documents
(including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any);
(k) certified complete and correct copies of each of the financial
statements referred to in Section 5.05;
(l) an initial borrowing notice of the Borrowers relating to the Loans
to be made and the Letters of Credit to be issued on the Closing Date together
with a letter from the Borrowers containing wire transfer instructions and
account information relating to the funds to be made available by the Bank to
the Borrowers on the Closing Date; and
(m) a Borrowing Base Certificate calculated as of a date not more than
30 days prior to the Closing Date.
Section 4.02. Additional Conditions Precedent. The obligation of the
Bank to make the Loans pursuant to a borrowing which increases the amount
outstanding hereunder (including the initial borrowing) or to issue any Letters
of Credit 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
hereof and in the other Facility Documents are true and correct in all material
respects on and as of the date of such Loan or the issuance of such Letter of
Credit 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 or the issuance of such Letter of Credit; and
-28-
(b) the Bank shall have received such approvals, opinions or documents
as the Bank may reasonably request.
Section 4.03. Deemed Representations. Each notice of borrowing or
request for the issuance of a Letter of Credit hereunder and acceptance by any
Borrower of the proceeds of such borrowing or the benefit of such Letter of
Credit shall constitute a representation and warranty that the statements
contained in Section 4.02(a) are true and correct both on the date of such
notice or request and, unless the Borrowers otherwise notify the Bank prior to
such borrowing or such issuance, as of the date of such borrowing or such
issuance.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
The Borrowers hereby jointly and severally represent and warrant, that
(after giving effect to the Acquisition):
Section 5.01. Incorporation, Good Standing and Due Qualification. Each
of the Borrowers and each of their Subsidiaries is duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its assets and to
transact the business in which it is now engaged or proposed to be engaged, and
is duly qualified as a foreign corporation and in good standing under the laws
of each other jurisdiction in which such qualification is required, except where
failure to be so qualified and in good standing does not, in any one case or in
the aggregate, materially adversely affect the financial condition, operations,
properties or business of the Borrowers or any such Subsidiary, taken as a
whole, or the ability of the Borrowers to perform their obligations under the
Facility Documents.
Section 5.02. Corporate Power and Authority; No Conflicts. The
execution, delivery and performance by each of the Borrowers 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 that has not been obtained; (b) contravene its charter or
by-laws; (c) violate any provision of, or require any filing, registration,
consent or approval under, any law, rule, regulation (including, without
limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Borrowers
or any of their Subsidiaries or Affiliates; (d) result in a breach of or
constitute a default or require any consent under any material indenture, loan
or credit agreement or any other material agreement, lease or instrument to
which any Borrower is a party or by which it or its properties may be bound or
affected; (e) result in, or require, the creation or imposition of any Lien upon
or with respect to any of the properties now owned or hereafter acquired by any
Borrower; or (f) cause any Borrower (or any Subsidiary or Affiliate of such
Borrower, as the case may be) to be in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree,
-29-
determination or award or any such indenture, agreement, lease or instrument.
Section 5.03. Legally Enforceable Agreements. Each Facility Document
to which any of the Borrowers is a party is, or when delivered under this
Agreement will be, a legal, valid and binding obligation of such Borrower
enforceable against such Borrower in accordance with its material terms, except
to the extent that such enforcement may be limited by applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights generally.
Section 5.04. Litigation. As of the Closing Date, there are no
actions, suits or proceedings pending or, to the knowledge of the Borrowers,
threatened, against or affecting the Borrowers or any of their Subsidiaries
before any court, governmental agency or arbitrator, which are reasonably likely
to, in any one case or in the aggregate, materially adversely affect the
financial condition, operations, properties or business of the Borrowers or any
such Subsidiary, taken as a whole, or the ability of the Borrowers to perform
their obligations under the Facility Documents, except for such matters as are
disclosed in the U.S. Company's SEC Filings.
Section 5.05. Financial Statements.
(a) The consolidated and consolidating balance sheet of the Borrowers
and their Consolidated Subsidiaries (other than ▇▇▇▇▇▇ ▇▇▇▇) as at December 31,
1996, and the related consolidated and consolidating income statement and
statements of cash flows and changes in stockholders' equity of such Borrowers
and Consolidated Subsidiaries for the fiscal year then ended, and the
accompanying footnotes, together with the opinion thereon, of the U.S. Company?s
independent certified public accountants, copies of which have been furnished to
the Bank, and the interim consolidated and consolidating balance sheet of the
Borrowers and their Consolidated Subsidiaries other than ▇▇▇▇▇▇ ▇▇▇▇ as at
September 30, 1997 and the related consolidated and consolidating income
statement and statements of cash flows and changes in stockholders? equity of
such Borrowers and Consolidated Subsidiaries for the nine-month period then
ended, copies of which have been furnished to the Bank, are complete and correct
in all material respects and fairly present the financial condition of the
Borrowers and their Consolidated Subsidiaries as at such dates and the results
of the operations of such Borrowers and Consolidated Subsidiaries for the
periods covered by such statements, all in accordance with GAAP consistently
applied (subject to year-end adjustments in the case of the interim financial
statements). There are no liabilities of the Borrowers or any of their
Consolidated Subsidiaries (other than ▇▇▇▇▇▇ ▇▇▇▇), fixed or contingent, which
are material and which should have been but are not reflected in the financial
statements or in the notes thereto, other than liabilities arising in the
ordinary course of business since December 31, 1996. No information, exhibit or
report furnished by the Borrowers to the Bank in connection with the Existing
Credit Agreement at the time such material was provided to the Bank contained
any material misstatement of fact or omitted to state a material fact or any
-30-
fact necessary to make the statement contained therein not materially
misleading. Since December 31, 1996, there has been no material adverse change
in the condition (financial or otherwise), business, operations or prospects of
the Borrowers or any of their Subsidiaries, taken as a whole.
(b) The opening balance sheet of ▇▇▇▇▇▇ ▇▇▇▇ as at the closing of the
Acquisition, a copy of which has been furnished to the Bank, is complete and
correct in all material respects and fairly presents the financial condition of
▇▇▇▇▇▇ ▇▇▇▇ as of such date.
Section 5.06. Taxes. Each of the Borrowers and their Subsidiaries has
filed all tax returns (federal, state and local) required to be filed and has
paid all material taxes, assessments and governmental charges and levies thereon
to be due, including interests and penalties. The federal income tax liability
of the Borrowers and their Subsidiaries has been audited by the Internal Revenue
Service and has been finally determined and satisfied for all taxable years up
to and including the taxable year ended April, 1994.
Section 5.07. ERISA. (a) Each Plan is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, the applicable provisions of ERISA, the Code and any other applicable
federal or state law, and, other than events or conditions for which the
Borrowers have furnished a report to the Bank, no event or condition is
occurring or exists concerning which the Borrowers would be under an obligation
to furnish a report to the Bank in accordance with Section 6.08(h) hereof.
(b) As of December 31, 1996, the amount of all Unfunded Benefit
Liabilities under all Title IV Plans does not exceed approximately $400,000. As
of the date these representations are made with respect to any Loan under this
Agreement, the Unfunded Benefit Liabilities of all Title IV Plans have not
increased in an amount that is material (as specified in Section 6.08(h)(ii)
hereof.
(c) Retiree Welfare Plan Liability of the Borrower with respect to all
the Retiree Welfare Benefit Plans does not exceed $3,500,000. As of the date
these representations are made with respect to any Loan under this Agreement,
the Retiree Welfare benefit Plan Liability with respect to all the Retiree
Welfare benefit Plans have not increased in an amount that is material (as
specified in Section 6.08(h)(ii)).
(d) With respect to each Pension Plan:
(i) if the plan is intended to be tax-qualified under
section 401(a) of the Code, it is so qualified, its related trust is
tax-exempt under section 501 of the Code, and either the plan and
trust have been determined by the Internal Revenue Service to be
qualified and exempt from tax under
-31-
sections 401 and 501 of the Code or application for such
determinations has been or will be filed with the Internal Revenue
Service and responses regarding the same have not been received; and
(ii) there has been no ERISA Event and there is no
outstanding material liability with respect to any termination of such
Pension Plan.
(e) With respect to each Pension Plan or Welfare Plan:
(i) Except as set forth in Schedule III, there are no claims
(other than claims for benefits in the normal course), actions or
lawsuits asserted or instituted against any Plan, or to the knowledge
of the Borrowers, any Multiemployer Plan; and the Borrowers have no
knowledge of any threatened litigation or claims against the assets of
any Plan or against any fiduciary thereof with respect to the
operation of any such plan that in the aggregate could have a material
adverse effect on the financial condition or prospects of the
Borrowers or any ERISA Affiliate or the ability of the Borrowers to
perform their obligations hereunder.
(ii) All reports with respect to any Plan required under
ERISA, the Code or any other applicable law to be filed, the failure
of which to file that is reasonably likely to, in the aggregate,
result in liability of any of the Borrowers in a material amount, have
been filed, and all such reports are true and correct in all material
respects as of the date given.
(iii) The Borrowers have not engaged in a "prohibited
transaction" as defined in section 4975 of the Code and Title I of
ERISA or participated in a breach of fiduciary responsibility (as
described in section 502(1) of ERISA) that would subject any of them
(after giving effect to any exemption) to the tax or penalty on
prohibited transactions imposed by section 4975 of the Code or section
502 of ERISA, or any other liability, the amount of which is material.
(iv) Any bond required under ERISA to be obtained by any
Person with respect to any Plan has been obtained and is in full force
and effect, except where the failure of which is not reasonably likely
to result in liability to the Borrowers and their ERISA Affiliates in
an amount in excess of $20,000.
(f) Each Welfare Plan has complied with the notice, continuation of
coverage, and other applicable requirements under section 4980B of the Code in
all material respects.
(g) No Plan is a Multiemployer Plan.
Section 5.08. Subsidiaries and Ownership of Stock. Schedule I is a
complete and accurate list of the Subsidiaries of the Borrowers as of the
Closing Date, showing the jurisdiction of
-32-
incorporation or organization of each such Subsidiary and showing the percentage
of the Borrowers' ownership of the outstanding stock or other interest of each
such Subsidiary as of the Closing Date. All of the outstanding capital stock or
other interest of each such Subsidiary has been validly issued, is fully paid
and nonassessable and is owned by the Borrowers free and clear of all Liens.
Section 5.09. Credit Arrangements. Schedule II is a complete and
correct list as of the Closing Date of all credit agreements and indentures, and
all material guaranties and Capital Leases presently in effect providing for or
relating to the borrowing of money (including agreements and arrangements for
the issuance of letters of credit or for acceptance financing) in respect of
which the Borrowers or any of their Subsidiaries is in any manner directly or
contingently obligated as of the Closing Date; and the maximum principal or face
amounts of the credit in question, outstanding and which can be outstanding, are
correctly stated.
Section 5.10. Operation of Business. Each of the Borrowers and their
Subsidiaries possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct its business
substantially as now conducted and as presently proposed to be conducted, except
where failure of such possession will not, in any one case or in the aggregate,
materially adversely affect the financial condition, operations, properties or
business of the Borrowers or any such Subsidiary, taken as a whole, or the
ability of the Borrowers to perform their obligations under the Facility
Documents.
Section 5.11. Hazardous Materials. The Borrowers and each of their
Subsidiaries have obtained all material permits, licenses and other
authorizations which are required on the Closing Date under all Environmental
Laws which are applicable to the ongoing business operations of the Borrowers.
The Borrowers and each of their Subsidiaries are in material compliance with the
terms and conditions of all such material permits, licenses and authorizations,
and with respect to the ongoing business operations of the Borrowers are also in
material compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except as disclosed in Schedule IV. To the
extent the Borrowers or any of their Subsidiaries has failed to so comply, such
failure will not have a material adverse effect on the consolidated financial
condition, operations, business or prospects of the Borrowers and their
Consolidated Subsidiaries.
In addition, except as set forth in Schedule IV hereto:
(a) To the best of the Borrowers' knowledge, no notice, notification,
demand, request for information, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed and no investigation or
review is pending or
-33-
threatened by any governmental or other entity with respect to any alleged
failure by the Borrowers or any of their Subsidiaries to have any permit,
license or authorization required in connection with the conduct of the business
of the Borrowers or any of their Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, release or disposal, or any
release as defined in 42 U.S.C. ?9601(22) ("Release"), of any Hazardous
Materials generated by the Borrowers or any of their Subsidiaries, except as
disclosed in Schedule IV.
(b) Except as disclosed in Schedule IV, neither the Borrowers nor any
of their Subsidiaries has handled any Hazardous Material, on any property now
owned or leased by the Borrowers or any of their Subsidiaries to an extent that
it has, or may reasonably be expected to have, a material adverse effect on the
consolidated financial condition, operations, business or prospects taken as a
whole of the Borrowers and their Consolidated Subsidiaries.
(c) As of the Closing Date no oral or written notification of a
Release of a Hazardous Material has been filed by or on behalf of the Borrowers
or any of their Subsidiaries, except as disclosed in Schedule IV, and no
property now owned or leased by the Borrowers or any of their Subsidiaries is
listed or proposed for listing on the National Priority List promulgated
pursuant to CERCLA.
(d) As of the Closing Date there are no Liens of record arising under
or pursuant to any Environmental Laws on any of the real property or properties
owned or leased by the Borrowers or any of their Subsidiaries, and the Borrowers
have no knowledge of government actions which have been taken or are in process
which could subject any of such properties to such Liens and neither the
Borrowers nor any of their Subsidiaries would be required to place any notice or
restriction relating to the presence of Hazardous Materials at any property
owned by it in any deed to such property.
(e) As of the Closing Date there have been no environmental
investigations, studies, audits, tests, reviews or other analyses conducted by
or which are in the possession of the Borrowers or any of their Subsidiaries in
relation to any property or facility now owned or leased by the Borrowers or any
of their Subsidiaries which have not been made available to the Bank.
Section 5.12. No Default on Outstanding Judgments or Orders. As of the
Closing Date, each of the Borrowers and their Subsidiaries has satisfied all
judgments that have been in effect for any period of 30 consecutive days, and
neither the Borrowers nor any of their Subsidiaries is in default with respect
to any judgment, writ, injunction, decree, or material rule or regulation of any
court, arbitrator or federal, state, municipal or other Governmental Authority,
commission, board, bureau, agency or instrumentality, domestic or foreign as of
the date hereof.
Section 5.13. No Defaults on Other Agreements. Neither the Borrowers
nor any of their Subsidiaries is a party to any indenture, loan or credit
agreement or any lease or other agreement
-34-
or instrument or subject to any charter or corporate restriction which is
reasonably likely to have a material adverse effect on the business, properties,
assets, operations or conditions, financial or otherwise, of the Borrowers or
any of their Subsidiaries, taken as a whole, or the ability of the Borrowers to
carry out their obligations under the Facility Documents to which they are a
party.
Section 5.14. Labor Disputes and Acts of God. As of the Closing Date,
neither the business nor the properties of any Borrower or of any of their
Subsidiaries are affected by any fire, explosion, accident, strike, lockout or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of
the public enemy or other casualty (whether or not covered by insurance),
materially and adversely affecting such business or properties or the operation
of such Borrower or any such Subsidiary.
Section 5.15. Governmental Regulation. Neither Borrower nor any of
their Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Investment Company Act of 1940, the Interstate Commerce
Act, the Federal Power Act or any statute or regulation limiting its ability to
incur indebtedness for money borrowed as contemplated hereby.
Section 5.16. No Forfeiture. No Forfeiture Proceeding against any
Borrower is pending or threatened.
Section 5.17. Solvency.
(a) The present fair salable value of the assets of the Borrowers after
giving effect to all the transactions contemplated by the Facility Documents and
the funding of all Commitments and the issuance of the Letters of Credit
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 Borrowers and their Subsidiaries as they mature.
(b) The property of each Borrower does not constitute unreasonably
small capital for such Borrower to carry out its business as now conducted and
as proposed to be conducted, including the capital needs of each Borrower.
(c) No Borrower intends to, nor does any Borrower 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 respective
Borrower, and of amounts to be payable on or in respect of debt of such
Borrower). The cash available to each Borrower, after taking into account all
other anticipated uses of the cash of such Borrower, is anticipated to be
sufficient to pay all such amounts on or in respect of debt of such Borrower
when such amounts are required to be paid.
(d) No Borrower believes that final judgments against it in actions for
money damages will be rendered at a time when, or in an amount such that, such
Borrower will be unable to satisfy any such
-35-
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 each Borrower after taking into account all other anticipated uses of the
cash of such Borrower (including the payments on or in respect of debt referred
to in paragraph (c) of this Section 5.17), is anticipated to be sufficient to
pay all such judgments promptly in accordance with their terms.
Section 5.18. Representations and Warranties in the Acquisition
Documents. The Bank has received a complete and correct copy of the Acquisition
Documents (including all exhibits, schedules and disclosure letters referred to
therein or delivered pursuant thereto, if any) and all amendments thereto,
waivers relating thereto and other side letters or agreements affecting the
terms thereof. The Acquisition Documents have been duly executed and delivered
by the Borrowers who are parties thereto and are in full force and effect with
respect to such Borrowers. Each of the representations and warranties set forth
in each of the Acquisition Documents of any Borrowers party thereto, and to the
knowledge of the Borrowers, of each other Person party thereto, were true and
correct in all material respects on and as of the date made (except for
representations and warranties specifically relating to a time period other than
the date of execution of the Acquisition Documents or the date of closing of the
transactions contemplated by the Acquisition Documents). Each Acquisition
Document is a legal, valid and binding obligation of the Borrowers party
thereto, enforceable against such Persons in accordance with its terms, except
to the extent that such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors? rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
All transactions contemplated by the Acquisition Documents to be consummated on
or prior to the Closing Date have been consummated without amendment, waiver or
modification of the terms thereof.
ARTICLE 6. AFFIRMATIVE COVENANTS
So long as the Notes shall remain unpaid, any Letters of Credit shall
remain outstanding or the Bank shall have any Commitment under this Agreement,
each Borrower shall:
Section 6.01. Maintenance of Existence. Preserve and maintain, and
cause each of its material Subsidiaries to preserve and maintain, its corporate
existence and good standing in the jurisdiction of its incorporation, and
qualify and remain qualified, and cause each of its material Subsidiaries to
qualify and remain qualified, as a foreign corporation in each jurisdiction in
which such qualification is required, except where failure to do so shall not
have a material adverse effect on the financial condition or prospects of the
Borrowers and their Subsidiaries, taken as a whole, or the ability of the
Borrowers to perform their obligations hereunder.
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Section 6.02. Conduct of Business. Continue, and cause each of its
Subsidiaries to continue, to engage in a business of substantially the same type
as conducted by it on the date of this Agreement.
Section 6.03. Maintenance of Properties. Maintain, keep and preserve,
and cause each of its Subsidiaries to maintain, keep and preserve, all of its
properties (tangible and intangible), necessary in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
Section 6.04. Maintenance of Records. Keep, and cause each of its
Subsidiaries to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP, reflecting all financial
transactions of the Borrowers and their Subsidiaries.
Section 6.05. Maintenance of Insurance. Maintain, and cause each of
its Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or similar business and
similarly situated, which insurance may provide for reasonable deductibility
from coverage thereof.
Section 6.06. Compliance with Laws. Comply, and cause each of its
Subsidiaries to comply, in all respects with all applicable laws, rules,
regulations and orders, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property, except to the extent in good faith
duly contested in accordance with all applicable laws, rules, regulations and
procedures and for which adequate reserves are provided, as reasonably
determined by the Bank, and except where failure to do so shall not have a
material adverse effect on the financial condition or prospects of the Borrowers
and their Subsidiaries, taken as a whole, or the ability of the Borrowers to
perform their obligations hereunder.
Section 6.07. Right of Inspection. At any reasonable time and from
time to time upon advance notice, permit the Bank or any agent or representative
thereof, to examine and make copies and abstracts from the records and books of
account of, and visit the properties of, such Borrower and any of its
Subsidiaries, and to discuss the affairs, finances and accounts of such Borrower
and any such Subsidiary with any of their respective officers and directors and
such Borrower's independent accountants.
Section 6.08. Reporting Requirements. Furnish to the Bank:
(a) as soon as available and in any event within 90 days after the end
of each fiscal year of the Borrowers, a consolidated and consolidating balance
sheet of the Borrowers and their Consolidated Subsidiaries as of the end of such
fiscal year and a consolidated and consolidating income statement and
consolidated
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statements of cash flows and changes in stockholders' equity of the Borrowers
and their Consolidated Subsidiaries for such fiscal year, all in reasonable
detail and, if required by the SEC, stating in comparative form the respective
consolidated and consolidating figures for the corresponding date and period in
the prior fiscal year and all prepared in accordance with GAAP and as to the
consolidated statements accompanied by an opinion thereon acceptable to the Bank
by Ernst & Young, L.L.P. or other independent accountants of national standing
selected by the Borrowers;
(b) 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 Borrowers, a
consolidated and consolidating balance statement of the Borrowers and their
Consolidated Subsidiaries as of the end of such quarter and a consolidated and
consolidating income statement and consolidated statements of cash flows and
changes in stockholders' equity, of the Borrowers and their Consolidated
Subsidiaries for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, all in reasonable detail and, if
required by the SEC, stating in comparative form the respective consolidated and
consolidating figures for the corresponding date and period in the previous
fiscal year and all prepared in accordance with GAAP and certified by senior
financial officers of each of the Borrowers (subject to changes resulting from
audit and year-end adjustments);
(c) as soon as practicable and in any event within 10 days after the
end of each Accounting Month, a Borrowing Base Certificate and a Backlog
Certificate.
(d) promptly upon receipt thereof, copies of any management letters
submitted to the Borrowers or any of their Subsidiaries by independent certified
public accountants in connection with examination of the financial statements of
the Borrowers or any such Subsidiary made by such accountants;
(e) simultaneously with the delivery of the financial statements
referred to above, a certificate of the senior financial officer of each of the
Borrowers (i) certifying that to the best of their knowledge no Default or Event
of Default has occurred and is continuing or, if a Default or Event of Default
has occurred and is continuing, a statement as to the nature thereof and the
action which is proposed to be taken with respect thereto, and (ii) with
computations demonstrating compliance with the covenants contained in Article 8;
(f) promptly after the commencement thereof, notice of all actions,
suits and proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, affecting the
Borrowers or any of their Subsidiaries which, if determined adversely to such
Borrower or such Subsidiary, could have a material adverse effect on the
financial condition, properties or operations of such Borrower or such
Subsidiary, taken as a whole;
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(g) as soon as possible and in any event within ten days after
becoming aware of the occurrence of each Default or Event of Default a written
notice setting forth the details of such Default or Event of Default and the
action which is proposed to be taken by the Borrowers with respect thereto;
(h) as soon as possible, and in any event within 15 days after any
Borrower knows or has reason to know that any of the events or conditions
specified below with respect to any Plan shall have occurred or exist, a
statement signed by a senior financial officer of such Borrower setting forth
details respecting such event or condition and the action, if any, which such
Borrower or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC by such
Borrower or an ERISA Affiliate with respect to such event or condition):
(i) ERISA Event with respect to a Plan; and
(ii) an increase in the Unfunded Benefit Liabilities of one
or more Pension Plans after the date of this Agreement in an amount
which is material in relation to the financial condition of the
Borrowers and their Subsidiaries, on a consolidated basis; provided,
however, that such increase shall not be deemed to be material so long
as it does not exceed during any consecutive 3-year period $500,000.
(i) promptly after the request of the Bank, copies of each annual
report filed pursuant to section 104 or Section 4065 of ERISA with respect to
each Plan (including, to the extent required by ERISA, the related financial and
actuarial statements and supporting statements);
(j) promptly after the furnishing thereof, copies of any statement or
report furnished to any other party pursuant to the terms of any indenture, loan
or credit or similar agreement involving an amount in any one case or in the
aggregate in excess of $500,000 and not otherwise required to be furnished to
the Bank pursuant to any other clause of this Section 6.08;
(k) within 10 days after the sending or filing thereof, copies of all
proxy statements, financial statements and reports which any Borrower or any of
their Subsidiaries sends to its stockholders, and copies of all regular,
periodic and special reports, and all registration statements which any Borrower
or any such Subsidiary files with the SEC or any Governmental Authority which
may be substituted therefor, or with any national securities exchange;
(l) promptly after the commencement thereof or promptly after any
Borrower knows of the commencement or threat thereof, notice of any Forfeiture
Proceeding; and
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(m) such other information respecting the condition or operations,
financial or otherwise, of any Borrower or any of their Subsidiaries as the Bank
may from time to time reasonably request.
Section 6.09. Environmental Indemnification. It is understood and
agreed among the Borrowers, Subsidiaries and the Bank that the Borrowers and
each of their Subsidiaries shall be solely responsible for all environmental
liabilities, as described below, and the Borrowers and each of their
Subsidiaries agree to release, defend, indemnify and hold harmless the Bank, and
their present and future officers, directors, employees, agents, shareholders,
attorneys and all of their respective heirs, representatives, successors and
assigns from and against all losses, liabilities, suits, obligations, demands,
fines, damages, judgments, injuries, administrative orders, consent agreements
and orders, penalties, actions, causes of actions, changes, costs and expenses
(including reasonable attorneys' fees and consultants' fees), claims, including
but not limited to claims arising out of loss of life, injury to persons,
property or business, or damages to natural resources, whether based on strict
liability, tort, contract, implied or expressed warranty, statute, regulation,
common law, or other Environmental Law, arising in connection with or the result
of (i) any past, present or future existence, use, handling, storage,
transportation, manufacture, release or disposal of any Hazardous Materials in,
on, or under the Borrowers' or such Subsidiaries past, present or future
properties, buildings or assets, or in connection with the Borrowers' or such
Subsidiaries business operations, whether foreseeable or unforeseeable,
regardless of the source, time of occurrence or the time of discovery; or (ii)
any past, present or future violation (or alleged violation) of an Environmental
Law in connection with the ownership, operation or control of the Borrowers' or
such Subsidiaries properties, buildings, assets or business operations. The
foregoing indemnification includes, without limitation, indemnification against
all costs in law or in equity, of removal, response, investigation or
remediation of any kind, and the disposal of any Hazardous Materials, and all
costs of determining whether the Borrowers or such Subsidiaries are in
compliance with all applicable Environmental Laws. Notwithstanding the
foregoing, if any such liability shall arise solely as a consequence of the
affirmative actions of the Bank or as a consequence of the gross negligence of
the Bank, the Borrowers shall not be liable for the indemnity contemplated
hereby.
ARTICLE 7. NEGATIVE COVENANTS
So long as the Notes shall remain unpaid, any Letter of Credit shall
remain outstanding or the Bank shall have any Commitment under this Agreement,
the Borrowers shall not:
Section 7.01. Debt. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist Debt,
except:
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(a) Debt of the Borrowers under this Agreement, the Notes, the Letters
of Credit or the other Facility Documents;
(b) Debt described in Schedule II, and any renewals, extensions or
refinancings thereof;
(c) Debt of any Borrower to any other Borrower or to any Subsidiary or
of any such Subsidiary to any Borrower or another such Subsidiary;
(d) Debt in an aggregate amount not in excess of $500,000 and which is
secured by purchase money liens meeting the requirements of subsection 7.03(i);
(e) Other Debt in an aggregate amount not in excess of $1,000,000 on a
consolidated basis;
(f) Subordinated Debt, which is subordinated to the Borrowers'
obligations to the Bank on terms and conditions acceptable to the Bank; and
(g) Debt of the Borrowers evidenced by the Facility Loan Letter, dated
December 3, 1990, relating to a loan of ?500,000 from National Westminster Bank,
PLC in favor of Farrel Limited (the ?NatWest Facility?).
Section 7.02. Guaranties, Etc. Assume, guaranty, endorse or otherwise
be or become directly or contingently responsible or liable, or permit any of
its Subsidiaries to assume, guarantee, endorse or otherwise be or become
directly or indirectly responsible or liable (including, but not limited to, an
agreement to purchase any obligation, stock, assets, goods or services or to
supply or advance any funds, assets, goods or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of any Person against loss) for the
obligations of any Person, except guaranties of Debt permitted under Section
7.01, and guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
Section 7.03. Liens. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien, upon or with respect to any of its properties, now owned or hereafter
acquired, except:
(a) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(b) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than 30 days, or which are
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being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established;
(c) Liens under workers' compensation, unemployment insurance, social
security or similar legislation (other than ERISA);
(d) Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(e) Judgment and other similar Liens arising in connection with court
proceedings; provided that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings;
(f) Easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by such Borrower or any such Subsidiary of the
property or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
(g) Liens securing obligations of any such Subsidiary to any Borrower
or another such Subsidiary;
(h) Purchase money Liens on any property hereafter acquired or the
assumption of any Lien on property existing at the time of such acquisition, or
a Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease; provided that:
(i) any property subject to any of the foregoing is acquired by
such Borrower or any such Subsidiary in the ordinary course of its
business and the Lien on any such property is created
contemporaneously with such acquisition;
(ii) the obligation secured by any Lien so created, assumed or
existing shall not exceed the cost as of the time of acquisition of the
property covered thereby to such Borrower or such Subsidiary acquiring
the same;
(iii) each such Lien shall attach only to the property so acquired
and fixed improvements thereon; and
(iv) the obligations secured by such Lien are permitted by the
provisions of Section 7.01; and
(i) a Lien securing the NatWest Facility.
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Section 7.04. Leases. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
obligation as lessee for the rental or hire of any real or personal property,
except: (a) leases existing on the date of this Agreement and any extensions or
renewals thereof; (b) leases (other than Capital Leases) which do not in the
aggregate require the Borrowers and their Subsidiaries on a consolidated basis
to make payments (including taxes, insurance, maintenance and similar expense
which any Borrower or any such Subsidiary is required to pay under the terms of
any such lease) in any fiscal year of the Borrowers in excess of $1,000,000; (c)
leases between any Borrower and any such Subsidiary or between any such
Subsidiaries; (d) Capital Leases permitted by Section 7.03 and which do not in
the aggregate require the Borrowers and their Subsidiaries on a consolidated
basis to make payments (including taxes, insurance, maintenance and similar
expense which any Borrower or any such Subsidiary is required to pay under the
terms of any such Capital Lease) in any fiscal year of the Borrowers in excess
of $1,000,000.
Section 7.05. Investments. Make, or permit any of its Subsidiaries to
make, any loan or advance to any Person or purchase or otherwise acquire, or
permit any such Subsidiary to purchase or otherwise acquire, any capital stock,
assets, obligations or other securities of, make any capital contribution to, or
otherwise invest in, or acquire any interest in, any Person, including, without
limitation, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ GmbH or any other Subsidiary which is not a
Borrower and, further expressly provided, that the U.S. Company will make no
such investment in the U.K. Companies except: (a) direct obligations of the
United States of America or any agency thereof with maturities of one year or
less from the date of acquisition; (b) commercial paper of a domestic issuer
rated at least "A-1" by Standard & Poor's Corporation or "P-1" by ▇▇▇▇▇'▇
Investors Service, Inc.; (c) certificates of deposit with maturities of one year
or less from the date of acquisition issued by the Bank or an affiliate of the
Bank, or any commercial bank operating within the United States of America
having capital and surplus in excess of $500,000,000; (d) for stock, obligations
or securities received in settlement of debts (created in the ordinary course of
business) owing to such Borrower or any such Subsidiary; and (e), in the case of
the U.S. Company, the repurchase of its own issued and outstanding common stock
for a purchase price in any one case or in the aggregate not in excess of
$350,000 in any fiscal year.
Section 7.06. Dividends. Declare or pay any dividends, purchase,
redeem, retire or otherwise acquire for value any of its capital stock now or
hereafter outstanding, or make any distribution of assets to its stockholders as
such whether in cash, assets or in obligations of such Borrower, or allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption or retirement of any shares of its capital
stock, or make any other distribution by reduction of capital or otherwise in
respect of any shares of its capital stock or permit any of its Subsidiaries to
purchase or otherwise acquire
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for value any stock of any Borrower or another such Subsidiary, except that: (a)
any Borrower may declare and deliver dividends and make distributions payable
solely in common stock of such Borrower; (b) any Borrower may purchase or
otherwise acquire shares of its capital stock by exchange for or out of the
proceeds received from a substantially concurrent issue of new shares of its
capital stock; and (c) the U.S. Company may pay cash dividends in any fiscal
quarter in amounts in any one case or in the aggregate not in excess of (i) the
amount spent to repurchase such company?s issued and outstanding capital stock
in accordance with Section 7.05(e) hereof during such four fiscal quarters and
(ii) 25% of the cumulative consolidated net income after taxes during the most
recently completed four fiscal quarters, less the cumulative total amount of
dividends paid in respect of its capital stock during such four fiscal quarters.
Notwithstanding the foregoing, the Bank acknowledges and agrees that from April
23, 1997 through June 30, 1998, the U.S. Company may pay cash dividends in
respect of its capital stock in an aggregate amount of not more than four
million ($4,000,000) and that the taking of such action by the U.S. Company
shall not constitute a breach or violation of this Section 7.06; provided,
however, that at the time such action is to be taken by the U.S. Company, if at
all, the Borrowers shall not otherwise be in default of this Section 7.06 as
regards or as a result of any other action or transaction and shall not be in
default of any other terms or conditions of this Agreement.
Section 7.07. Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of, or permit any of its Subsidiaries to sell, lease, assign,
transfer or otherwise dispose of, any of its now owned or hereafter acquired
assets (including, without limitation, shares of stock and indebtedness of such
Subsidiaries, receivables and leasehold interests) except (a) if, after giving
effect to such transaction, the aggregate amount of the greater, in each
instance, of (x) the net book value, or (y) the fair market value, of all such
properties and assets so disposed of in any fiscal year is less than the lesser
of $2,000,000 or 5% of Consolidated Tangible Net Worth as of the beginning of
such fiscal year, (b) for inventory disposed of in the ordinary course of
business; (c) the sale or other disposition of assets no longer used or useful
in the conduct of its business; (d) if all proceeds thereof (after payment of
reasonable expenses of the transaction) shall promptly be applied either (i) to
the acquisition by the Borrowers or such Subsidiaries of other assets which are
necessary or useful in its business or (ii) to the prepayment of an equal
principal amount of the Loans in accordance with the terms of this Agreement;
and (e) that any such Subsidiary may sell, lease, assign or otherwise transfer
its assets to any Borrower.
Section 7.08. Stock of Subsidiaries, Etc. Sell or otherwise dispose of
any shares of capital stock of any of its Subsidiaries, except in connection
with a transaction permitted under Section 7.10, or permit any such Subsidiary
to issue any additional shares of its capital stock, except directors'
qualifying shares.
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Section 7.09. Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate or permit any of its Subsidiaries
to enter into any transaction, including, without limitation, the purchase, sale
or exchange of property or the rendering of any service, with any Affiliate,
except (a) in the ordinary course of and pursuant to the reasonable requirements
of such Borrower's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to such Borrower or such Subsidiary than it would obtain
in a comparable arm's length transaction with a Person not an Affiliate, (b)
transactions between Borrowers, and (c) transactions entered into prior to the
Closing Date between Affiliates as disclosed on the U.S. Company's SEC Filings,
whether or not at arm's length.
Section 7.10. Mergers, Etc. Merge or consolidate with, or sell, assign,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person, or acquire all or substantially all of the
assets or the business of any Person (or enter into any agreement to do any of
the foregoing), or permit any of its Subsidiaries to do so except that: (a) any
such Subsidiary may merge into or transfer assets to such Borrower; or (b) any
such Subsidiary may merge into or consolidate with or transfer assets to any
other such Subsidiary
Section 7.11. No Activities Leading to Forfeiture. Engage in or cause
or suffer any of its Subsidiaries or Affiliates to engage in or propose to be
engaged in the conduct of any business or activity which are reasonably likely
to result in a Forfeiture Proceeding.
Section 7.12. ERISA Compliance. Take or omit to take any action, or
permit any ERISA Affiliate to take or omit to take any action, that constitutes
or would result in a liability of any Borrower or an ERISA Affiliate in an
amount in excess of $500,000 with respect to (i) an ERISA Event, (ii) failure to
comply with the requirements of COBRA by any Welfare Plan, (iii) failure to
comply with the requirements of ERISA, the Code or any other applicable law by,
or with respect to, any Pension or Welfare Plan, (iv) increase in Unfunded
Benefit Liability with respect to a Pension Plan, (v) liability with respect to
any Welfare Plan other than a Retiree Welfare Plan, or (vi) liability of the
Borrowers or any ERISA Affiliate with respect to any Retiree Welfare Plan in
excess of $3,500,000.
ARTICLE 8. FINANCIAL COVENANTS
So long as the Notes shall remain unpaid, any Letter of Credit shall
remain outstanding or the Bank shall have any Commitment under this Agreement:
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Section 8.01. Minimum Tangible Net Worth. The Borrowers shall maintain
at all times a Consolidated Tangible Net Worth of not less than $23,000,000.
Section 8.02. Leverage RatioSection. The Borrowers shall maintain at
all times a ratio of consolidated total liabilities plus L/C Obligations to
Consolidated Tangible Net Worth of not greater than 1.75 to 1.
Section 8.03. Interest Coverage. The Borrowers shall maintain for each
fiscal year a ratio of EBIT to Interest Expense of not less than 3 to 1.
Section 8.04. Current Ratio. The Borrowers shall maintain at all times
Current Assets in an amount equal to not less than 1.5 times Current
Liabilities.
Section 8.05. Debt Service Coverage. The Borrowers shall maintain for
each fiscal year a ratio of (a) EBITDA minus Capital Expenditures to (b) Debt
Service Charges of not less than 1.25 to 1.
ARTICLE 9. EVENTS OF DEFAULT
Section 9.01. Events of Default. Any of the following events shall be
an "Event of Default":
(a) the Borrowers shall: (i) fail to pay the principal of the Notes or
any Reimbursement Obligations as and when due and payable; or (ii) fail to pay
interest on the Notes or any fee or other amount due hereunder within five days
of when due and payable;
(b) any representation or warranty made or deemed made by any Borrower
in this Agreement or in any other Facility Document to which it is a party or
which is contained in any material certificate, document, opinion, financial or
other statement furnished at any time under or in connection with any Facility
Document shall prove to have been incorrect in any material respect on or as of
the date made or deemed made;
(c) the Borrowers shall: (i) fail to perform or observe any term,
covenant or agreement contained in Section 2.03 or Article 8; or (ii) fail to
perform or observe any term, covenant or agreement on its part to be performed
or observed (other than the obligations specifically referred to elsewhere in
this Section 9.01) in any Facility Document and such failure shall continue for
30 consecutive days after written notice received from the Bank;
(d) any Borrower or any of their respective Subsidiaries shall: (i)
fail to pay any indebtedness in an amount in excess of $500,000, including but
not limited to indebtedness for borrowed money (other than the payment
obligations described in (a) above), of such Borrower or such Subsidiary, as the
case may be, or any
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interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise); or (ii) fail to perform or
observe any term, covenant or condition on its part to be performed or observed
under any agreement or instrument relating to any such indebtedness, when
required to be performed or observed, if the effect of such failure to perform
or observe is to accelerate, or to permit the acceleration of, after the giving
of notice or passage of time, or both, the maturity of such indebtedness,
whether or not such failure to perform or observe shall be waived by the holder
of such indebtedness; or any such indebtedness 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; and, in either event such
failure or default shall continue for 30 consecutive days after written notice
received from the Bank;
(e) any Borrower or any of their respective Subsidiaries: (A) (i) shall
generally not, or be unable to, or shall admit in writing its inability to, pay
its debts as such debts become due; or (ii) shall make an assignment for the
benefit of creditors, petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for it or a substantial part of its assets; or
(iii) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (iv) shall have had any
such petition or application filed or any such proceeding shall have been
commenced against it, in which an adjudication or appointment is made or order
for relief is entered, or which petition, application or proceeding remains
undismissed for a period of 30 days or more; or shall be the subject of any
proceeding under which its assets may be subject to seizure, forfeiture or
divestiture (other than a proceeding in respect of a Lien permitted under
Section 7.03(b)); or (v) by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application or proceeding or
order for relief or the appointment of a custodian, receiver or trustee for all
or any substantial part of its property; or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a period
of 30 days or more or (B) (i) without prejudice to any other provision of
Article 9 the following events in relation to the U.K. Companies shall also be
Event of Default:
(i) the passing by either U.K. Company of a resolution for the
liquidation of such U.K. Company other than for the purpose of a bona
fide amalgamation or reconstruction on terms previously approved in
writing by the Bank;
(ii) the presentation for a tribunal for the making of an
administration order in respect of either U.K. Company;
(iii) the making of a proposal under Part I of the United
Kingdom Insolvency ▇▇▇ ▇▇▇▇ or under any statutory re-enactment or
modification thereof for a composition in
-47-
satisfaction of either U.K. Company's debts or a scheme of arrangement
of its affairs;
(iv) the appointment of any person as an administrative
receiver of either U.K. Company; and
(v) the appointment of a manager of either U.K. Company's
property or any substantial part thereof.
(f) one or more judgments, decrees or orders for the payment of money
in excess of $500,000 in the aggregate shall be rendered against any Borrower or
any of their respective Subsidiaries and such judgments, decrees or orders shall
continue unsatisfied and in effect for a period of 30 consecutive days without
being vacated, discharged, satisfied or stayed or bonded pending appeal;
(g) any event or condition shall occur or exist with respect to any
Plan concerning which any Borrower is under an obligation to furnish a report to
the Bank in accordance with Section 6.08(h) hereof and as a result of such event
or condition, together with all other such events or conditions, such Borrower
or any ERISA Affiliate has incurred or in the opinion of the Bank is reasonably
likely to incur a liability with respect to a Title IV Plan, the PBGC or a
section 4042 Trustee (or any combination of the foregoing) that is in excess of
$500,000;
(h) the Unfunded Benefit Liabilities of one or more Pension Plans have
increased after the date of this Agreement in an amount that is material (as
specified in Section 6.08(h)(ii) hereof);
(i) during any period of 12 consecutive months, commencing before or
after the date of this Agreement, individuals who at the beginning of such
12-month period were directors of Farrel Corporation cease for any reason to
constitute a majority of the board of directors of the U.S. Company; or
(j) any Forfeiture Proceeding shall have been commenced or any Borrower
shall have given the Bank written notice of the commencement of any Forfeiture
Proceeding as provided in Section 6.08(l).
Section 9.02. Remedies. If any Event of Default shall occur and be
continuing, the Bank may, by notice to the Borrowers, (a) declare the
Commitments to be terminated, whereupon the same shall forthwith terminate and
so shall the obligations of the Issuing Bank to issue and Letters of Credit, and
(b) declare the outstanding principal of the Notes, all interest thereon and all
other amounts payable under this Agreement, the Notes, the Letters of Credit and
the other Facility Documents 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 Borrowers; provided that, in the
case of an Event of Default referred to in Section 9.01(e) above, the
Commitments shall be immediately terminated, and the
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Notes, all interest thereon, all Reimbursement Obligations and all other amounts
payable under this Agreement, the Letters of Credit or the other Facility
Documents 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 Borrowers.
ARTICLE 10. UNCONDITIONAL GUARANTY.
Section 10.01. Guarantied Obligations. Each of the U.S. Company and
Farrel Limited (each of the foregoing entities in such capacity individually a
"Guarantor" and collectively the "Guarantors"), jointly and severally, in
consideration of the execution and delivery of this Agreement by the Bank,
hereby irrevocably and unconditionally guarantees to the Bank, as and for such
Guarantor's own debt, until final payment has been made the due and punctual
payment in full in cash in the applicable currency of all obligations of ▇▇▇▇▇▇
▇▇▇▇ with respect to the Term Loan (the ?Guarantied Obligations?), in each case
when and as the same shall become due and payable, whether at maturity, pursuant
to mandatory or optional prepayment, by acceleration or otherwise, all in
accordance with the terms and provisions of this Agreement, the Term Note and
the other Facility Documents, it being the intent of the Guarantors that the
guaranty set forth in this Section 10.01 (the "Unconditional Guaranty") shall be
a guaranty of payment and not a guaranty of collection.
Section 10.02. Performance Under This Agreement. In the event ▇▇▇▇▇▇
▇▇▇▇ fails to make, on or before the due date thereof, any payment of the
principal of, or interest on, the Term Note, or if ▇▇▇▇▇▇ ▇▇▇▇ shall fail to
perform, keep, observe, or fulfill any other obligation referred to in Section
10.01 hereof in the manner provided in this Agreement, the Term Note or the
other Facility Documents, and any such failure shall remain uncured at the
expiration of any applicable cure period provided herein or in the other
Facility Documents, the Guarantors shall cause forthwith to be paid the moneys,
or to be performed, kept, observed, or fulfilled each of such obligations, in
respect of which such failure has occurred.
Section 10.03. Waivers. To the fullest extent permitted by law, each
Guarantor does hereby waive:
(a) notice of acceptance of the Unconditional Guaranty;
(b) notice of any borrowings under this Agreement by ▇▇▇▇▇▇ ▇▇▇▇;
(c) notice of the amount of the Guarantied Obligations, subject to each
Guarantor's right to make inquiry of the Bank to ascertain the amount of the
Guarantied Obligations at any reasonable time;
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(d) notice of adverse change in the financial condition of ▇▇▇▇▇▇ ▇▇▇▇,
or any other guarantor or any other fact that might increase each Guarantor's
risk hereunder;
(e) notice of presentment for payment, demand, protest, and notice
thereof as to the Term Note or any other Facility Document;
(f) notice of any Default or Event of Default by ▇▇▇▇▇▇ ▇▇▇▇;
(g) all other notices and demands to which each Guarantor might
otherwise be entitled (except if such notice or demand is specifically otherwise
required to be given to each Guarantor hereunder or under the other Facility
Documents);
(h) the right by statute or otherwise to require the Bank to institute
suit against ▇▇▇▇▇▇ ▇▇▇▇ or any other guarantor or to exhaust the rights and
remedies of the Bank against ▇▇▇▇▇▇ ▇▇▇▇ or any other guarantor, each Guarantor
being bound to the payment of each and all Guarantied Obligations, whether now
existing or hereafter accruing, as fully as if such Guarantied Obligations were
directly owing to the Bank by each Guarantor;
(i) any defense arising by reason of any disability or other defense
(other than the defense that the Guarantied Obligations shall have been fully
and finally performed and indefeasibly paid) of ▇▇▇▇▇▇ ▇▇▇▇ or by reason of the
cessation from any cause whatsoever of the liability of ▇▇▇▇▇▇ ▇▇▇▇ in respect
thereof; and
(j) any stay (except in connection with a pending appeal), valuation,
appraisal, redemption or extension law now or at any time hereafter in force
which, but for this waiver, might be applicable to any sale of property of each
Guarantor made under any judgment, order or decree based on this Agreement, and
each Guarantor covenants that it will not at any time insist upon or plead, or
in any manner claim or take the benefit or advantage of such law.
Until all of the Guarantied Obligations shall have been paid in full, each of
the Guarantors hereby agrees to completely subordinate any right of subrogation,
reimbursement, or indemnity whatsoever in respect thereof and any right of
recourse to or with respect to any property of ▇▇▇▇▇▇ ▇▇▇▇. Nothing shall
discharge or satisfy the obligations of any Guarantor hereunder except the full
and final performance and indefeasible payment in cash in the applicable
currency of the Guarantied Obligations by such Guarantor, upon which the Bank
agrees to transfer and assign its interest in the Term Note to such Guarantor
without recourse, representation or warranty of any kind (other than that the
Bank owns the Term Note and that the Term Note is free of Liens created by the
Bank). All of the Guarantied Obligations shall in the manner and subject to the
limitations provided herein for the acceleration thereof forthwith become due
and payable without notice.
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Section 10.04. Releases. Each of the Guarantors consents and agrees
that, without notice to or by such Guarantor and without affecting or impairing
the obligations of such Guarantor hereunder, the Bank, in the manner provided
herein, by action or inaction, may:
(a) compromise or settle, extend the period of duration or the time for
the payment, or discharge the performance of, or may refuse to, or otherwise
not, enforce, or may, by action or inaction, release all or any one or more
parties to, the Term Note;
(b) grant other indulgences to ▇▇▇▇▇▇ ▇▇▇▇ in respect thereof;
(c) amend or modify in any manner and at any time (or from time to
time) the Term Note in accordance with Section 11.01 or otherwise;
(d) release or substitute any one or more of the endorsers or
guarantors of the Guarantied Obligations whether parties hereto or not; and
(e) exchange, enforce, waive, or release, by action or inaction, any
security for the Guarantied Obligations (including, without limitation, any of
the collateral therefor) or any other guaranty of any of the Guarantied
Obligations.
Section 10.05. Marshaling. Each of the Guarantors consents and agrees
that:
(a) the Bank shall be under no obligation to marshal any assets in
favor of each Guarantor or against or in payment of any or all of the Guarantied
Obligations; and
(b) to the extent ▇▇▇▇▇▇ ▇▇▇▇ or any other guarantor makes a payment or
payments to the Bank, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
or required, for any of the foregoing reasons or for any other reason, to be
repaid or paid over to a custodian, trustee, receiver, or any other party under
any bankruptcy law, common law, or equitable cause, then to the extent of such
payment or repayment, the Guarantied Obligations or part thereof intended to be
satisfied thereby shall be revived and continued in full force and effect as if
said payment or payments had not been made and such Guarantor shall remain
liable for such Guarantied Obligation.
Section 10.06. Liability. Each of the Guarantors agrees that the
liability of such Guarantor in respect of this Article 10 shall not be
contingent upon the exercise or enforcement by the Bank of whatever remedies the
Bank may have against ▇▇▇▇▇▇ ▇▇▇▇ or any other guarantor or the enforcement of
any Lien or realization upon any security the Bank may at any time possess.
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Section 10.07. Unconditional Obligation. The Unconditional Guaranty set
forth in this Article 10 is an absolute, unconditional, continuing and
irrevocable guaranty of payment and performance and shall remain in full force
and effect until the full and final payment of the Guarantied Obligations
without respect to future changes in conditions, including change of law or any
invalidity or irregularity with respect to the issuance or assumption of any
obligations (including, without limitation, the Term Note) of or by ▇▇▇▇▇▇ ▇▇▇▇
or any other guarantor, or with respect to the execution and delivery of any
agreement (including, without limitation, the Term Note and the other Facility
Documents) of ▇▇▇▇▇▇ ▇▇▇▇ or any other guarantor.
Section 10.08. Election to Perform Obligations. Any election by any of
the Guarantors to pay or otherwise perform any of the Guarantied Obligations,
whether pursuant to this Article 10 or otherwise, shall not release such
Guarantor from any of its other obligations under the Notes, the Letters of
Credit or any of the other Facility Documents.
Section 10.09. No Election. The Bank shall have the right to seek
recourse against any one or more of the Guarantors to the fullest extent
provided for herein for such Guarantor's obligations under this Agreement
(including, without limitation, this Article 10) in respect of the Guarantied
Obligations. No election to proceed in one form of action or proceeding, or
against any party, or on any obligation, shall constitute a waiver of the Bank?s
right to proceed in any other form of action or proceeding or against other
parties unless the Bank has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, no action or
proceeding by the Bank against ▇▇▇▇▇▇ ▇▇▇▇ or any Guarantor under any document
or instrument evidencing Guarantied Obligations shall serve to diminish the
liability of any of the Guarantors under this Agreement (including, without
limitation, this Article 10) except to the extent that the Bank finally and
unconditionally shall have realized payment by such action or proceeding,
notwithstanding the effect of any such action or proceeding upon such
Guarantor's right of subrogation against ▇▇▇▇▇▇ ▇▇▇▇.
Section 10.10. Other Enforcement Rights. The Bank may proceed, as
provided in Article 10 hereof, to protect and enforce the Unconditional Guaranty
by suit or suits or proceedings in equity, at law or in bankruptcy, and whether
for the specific performance of any covenant or agreement contained herein
(including, without limitation, in this Article 10) or in execution or aid of
any power herein granted; or for the recovery of judgment for the obligations
hereby guarantied or for the enforcement of any other proper, legal or equitable
remedy available under applicable law.
Section 10.11. Delay or Omission; No Waiver. No course of dealing on
the part of the Bank and no delay or failure on the part of the Bank to exercise
any right hereunder (including, without limitation, this Article 10) shall
impair such right or operate as
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a waiver of such right or otherwise prejudice the Bank's rights, powers and
remedies hereunder. Every right and remedy given by the Unconditional Guaranty
or by law to the Bank may be exercised from time to time as often as may be
deemed expedient by the Bank.
Section 10.12. Restoration of Rights and Remedies. If the Bank shall
have instituted any proceeding to enforce any right or remedy under the
Unconditional Guaranty, or under the Term Note, and such proceeding shall have
been discontinued or abandoned for any reason, or shall have been determined
adversely to the Bank, then and in every such case, the Bank, ▇▇▇▇▇▇ ▇▇▇▇ and
the Guarantors shall, except as may be limited or affected by any determination
in such proceeding, be restored severally and respectively to their respective
former positions hereunder and thereunder, and thereafter, subject as aforesaid,
the rights and remedies of the Bank shall continue as though no such proceeding
had been instituted.
Section 10.13. Cumulative Remedies. No remedy under this Agreement
(including, without limitation, this Article 10), the Notes, or any of the other
Facility Documents is intended to be exclusive of any other remedy, but each and
every remedy shall be cumulative and in addition to any and every other remedy
given under this Agreement (including, without limitation, this Article 10), the
Notes, or any of the other Facility Documents.
Section 10.14. Survival. The obligations of the Guarantors under this
Article 10 shall survive the transfer and payment of any Guarantied Obligation
until the indefeasible payment in full of all the Guarantied Obligations.
Section 10.15. No Withholding; Gross-Up. Each payment by a Guarantor
shall be made without withholding for or on account of any present or future
taxes imposed by any Governmental Authority. If any such withholding is so
required, such Guarantor shall make the withholding and pay the amount withheld
to the appropriate Governmental Authority before penalties attach thereto or
interest accrues thereon.
Section 10.16. Payment in Applicable Currency. Any payment of a
Guarantied Obligation required to be made pursuant to this Agreement shall be
made in the currency in which such Guarantied Obligation is required to be made
pursuant to this Agreement, the Term Note or any other Facility Document.
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 Borrowers and the Bank,
and any provision of this Agreement may be waived by the Borrowers and the Bank.
No failure on the part of the Bank to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof
-53-
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 Borrowers 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
the Bank limiting rates of interest which may be charged or collected by the
Bank.
Section 11.03. Expenses. The Borrowers shall reimburse the Bank on
demand for all out-of-pocket costs, expenses and charges (including, without
limitation, fees and charges of external legal counsel for the Bank) incurred by
the Bank in connection with the preparation, performance or enforcement of this
Agreement, the Notes or the other Facility Documents. The Borrowers agree to
indemnify the Bank and its directors, officers, employees and agents from, and
hold each of them harmless against, any and all losses, liabilities, claims,
damages or expenses incurred by any of them arising out of or by reason of any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to any actual or
proposed use by any Borrower or any of its Subsidiaries of the proceeds of the
Loans, including, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified).
Section 11.04. Survival. The obligations of the Borrowers under
Sections 3.01, 3.04 and 11.03 shall survive the repayment of the Loans and the
termination of the Commitments.
Section 11.05. Assignment; Participations. This Agreement shall be
binding upon, and shall inure to the benefit of, the Borrowers, the Bank and
their respective successors and assigns, except that the Borrowers may not
assign or transfer their rights or obligations hereunder. The Bank shall, at the
request of the Borrowers, from time to time, assign all or any part of any Loans
or Commitments to any other bank or other entity as the Borrowers may designate
and, in connection therewith, the Bank shall agree to amend the Credit Agreement
in a manner customary for a multi-lender credit facility, under which the Bank
shall act as agent bank so long as the Bank is a party to this Agreement;
provided, however, the Bank shall have no obligation to agree to an assignment
which will result in the Commitments of the Bank being less than 50% of the
aggregate amount of the Commitments of all banks unless the Borrowers arrange
(by assignment, termination or otherwise) to reduce the Commitments of the Bank
to zero. Additionally, the Bank may, with the prior written consent of the
Borrowers, which consent shall not be unreasonably withheld, assign or sell
participations in, all or any part of any Loans or Commitments to another bank
or
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other entity. In the case of an assignment, the assignee shall have, to the
extent of such assignment (unless otherwise provided therein), the same rights,
benefits and obligations as it would have if it were the Bank hereunder. In the
case of a participation, the participant shall have no rights under the Facility
Documents and all amounts payable by the Borrowers under Article 3 shall be
determined as if the Bank had not sold such participation. The agreement
executed by the Bank in favor of the participant shall not give the participant
the right to require the Bank to take or omit to take any action hereunder
except action directly relating to (i) the extension of a payment date with
respect to any portion of the principal of or interest on any amount outstanding
hereunder allocated to such participant, (ii) the reduction of the principal
amount outstanding hereunder or (iii) 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 the Bank. The Bank may furnish any information
concerning the Borrowers in the possession of the Bank from time to time to
assignees and participants (including prospective assignees and participants);
provided that the Bank shall require any such prospective assignee or such
participant (prospective or otherwise) to agree in writing to maintain the
confidentiality of such information.
Section 11.06. Notices. Unless the party to be notified otherwise
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to the Bank and to
the Borrowers by ordinary mail or telex addressed to such party at its address
on the signature page(s) of this Agreement. Notices shall be effective: (a) if
given by mail, 72 hours after deposit in the mails with first-class postage
prepaid, addressed as aforesaid; and (b) if given by telex, when the telex is
transmitted to the telex number as aforesaid; provided that notices to the Bank
shall be effective upon receipt.
Section 11.07. Waiver of Setoff Rights. The Bank hereby expressly
waives any right of setoff, recoupment, banker?s liens or counterclaim it may
now or hereafter have with regard to any of the Borrowers and any right to which
it may now or hereafter be entitled to offset balances held by the Bank for the
account of any of the Borrowers against any obligations of the Borrowers now or
hereafter owed to the Bank.
Section 11.08. Jurisdiction; Immunities. (a) EACH BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY CONNECTICUT STATE OR UNITED
STATES FEDERAL COURT SITTING IN CONNECTICUT COUNTY OVER ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTES, AND EACH BORROWER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CONNECTICUT STATE OR FEDERAL
COURT. EACH 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
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11.06. EACH 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. EACH 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. EACH
BORROWER FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE BANK
SHALL BE BROUGHT ONLY IN CONNECTICUT STATE OR UNITED STATES FEDERAL COURT
SITTING IN CONNECTICUT COUNTY. EACH BORROWER WAIVES ANY RIGHT IT MAY HAVE TO
JURY TRIAL.
(b) Nothing in this Section 11.07 shall affect the right of the Bank
to serve legal process in any other manner permitted by law or affect the right
of the Bank to bring any action or proceeding against the Borrowers or their
property in the courts of any other jurisdictions.
(c) To the extent that any 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, such Borrower
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement, the Notes, the Letters of Credit and the other Facility Documents.
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.
Section 11.12. Integration. The Facility Documents set forth the
entire agreement between 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 LAW OF THE STATE OF
CONNECTICUT.
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Section 11.14. Confidentiality. The Bank agree (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 nonpublic information supplied to it by the
Borrowers pursuant to this Agreement which is identified by the Borrowers as
being confidential at the time the same is delivered to the Bank, 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
counsel for the Bank, (iii) to bank examiners, auditors or accountants, (iv) in
connection with any litigation to which the Bank is a party or (v) 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 Bank a Confidentiality Agreement in substantially the form
of Exhibit D hereto; and provided finally that in no event shall the Bank be
obligated or required to return any materials furnished by the Borrower.
Section 11.15. Treatment of Certain Information Each Borrower (a)
acknowledges that services may be offered or provided to it (in connection with
this Agreement or otherwise) by the Bank or by one or more of its subsidiaries
or affiliates and (b) acknowledges that information delivered to the Bank by the
Borrowers may be provided to each such subsidiary and affiliate.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
FARREL CORPORATION
By:/s/ Rolf ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
---------------------------
Name: Rolf ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman,CEO and President
Address for Notices:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Attn: Senior Financial Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
FARREL LIMITED
By:/s/ Rolf ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------
Name: Rolf ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman,CEO and President
Address for Notices:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Attn: Senior Financial Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇ LIMITED
By:/s/ Rolf ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------
Name: Rolf ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Director
Address for Notices:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Attn: Senior Financial Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE CHASE MANHATTAN BANK
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
-59-