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EXHIBIT 10.1
CREDIT AGREEMENT
By and Between
HIGH VOLTAGE ENGINEERING CORPORATION
As Borrower,
and
FLEET NATIONAL BANK
As Lender
Dated as of August 8, 1997
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS...................................1
Section 1.01 Definitions..............................................1
Section 1.02 Accounting Terms.........................................9
Section 1.03 Terms Defined Elsewhere..................................9
ARTICLE 2. THE CREDIT........................................................10
Section 2.01 The Revolving Credit....................................10
Section 2.02 Borrowing Base..........................................10
Section 2.03 Requests for Advances...................................13
Section 2.04 Unused Fee..............................................14
Section 2.05 Interest on Advances....................................14
Section 2.06 Additional Interest Payments............................15
Section 2.07 Computation of Interest and Fees........................15
Section 2.08 Yield Protection........................................15
Section 2.09 Lender Certificates; Survival of Indemnity..............17
Section 2.10 Availability of Rate Options; LIBOR Rate Advance
Protection............................................17
Section 2.11 Reliance on Representations and Actions of Borrower.....18
Section 2.12 Letters of Credit.......................................18
Section 2.13 Foreign Exchange Contracts..............................19
Section 2.14 Prepayment Fee..........................................20
ARTICLE 3. CONDITIONS OF LENDING.............................................20
Section 3.01 Conditions to Funding...................................20
Section 3.02 Conditions to each Advance..............................23
ARTICLE 4. PAYMENT AND REPAYMENT.............................................24
Section 4.01 Mandatory Prepayment....................................24
Section 4.02 Voluntary Prepayment....................................24
Section 4.03 Notice of Prepayment; Payment and Interest Cutoff.......24
Section 4.04 Method of Payment.......................................24
ARTICLE 5. REPRESENTATIONS AND WARRANTIES....................................24
Section 5.01 Corporate Existence, Good Standing, Etc.................24
Section 5.02 Principal Place of Business; Location of Records........25
Section 5.03 Qualification...........................................25
Section 5.04 Guarantors..............................................25
Section 5.05 Corporate Power.........................................25
Section 5.06 Valid and Binding Obligations...........................26
Section 5.07 Other Agreements........................................26
Section 5.08 Payment of Taxes........................................27
(i)
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Section 5.09 Financial Statements....................................27
Section 5.10 Stock...................................................27
Section 5.11 Changes in Condition....................................27
Section 5.12 Title to Real Property..................................27
Section 5.13 Title to Personal Property..............................28
Section 5.14 Patents; Trademarks; Etc................................28
Section 5.15 Litigation..............................................28
Section 5.16 Compliance with Laws and Contracts, Etc.................29
Section 5.17 Pension Plans; Employees and Benefits...................30
Section 5.18 Outstanding Borrowed Funds Indebtedness.................30
Section 5.19 Employment Practices....................................30
Section 5.20 Regulation U............................................31
ARTICLE 6. REPORTS...........................................................31
Section 6.01 Monthly Financial Statements and Reports................31
Section 6.02 Annual Projections......................................31
Section 6.03 Annual Financial Statements.............................31
Section 6.04 Notice of Defaults......................................32
Section 6.05 Notice of Litigation....................................32
Section 6.06 Notice of Loss of Contracts.............................32
Section 6.07 Communications with Others..............................32
Section 6.08 Reportable Events.......................................32
Section 6.09 Annual Pension Reports..................................33
Section 6.10 Multiemployer Pension Plans.............................33
Section 6.11 Reports to Other Creditors..............................33
Section 6.12 Management Letters......................................34
Section 6.13 New Subsidiaries; Subordinated Indebtedness.............34
Section 6.14 Miscellaneous...........................................34
ARTICLE 7. FINANCIAL RESTRICTIONS............................................34
Section 7.01 Maximum Total Leverage Ratio............................34
Section 7.02 Total Fixed Charge Coverage Ratio.......................34
ARTICLE 8. AFFIRMATIVE COVENANTS.............................................34
Section 8.01 Taxes and Other Obligations.............................35
Section 8.02 Maintenance of Property.................................35
Section 8.03 Insurance...............................................35
Section 8.04 Records, Accounts and Places of Business................36
Section 8.05 Inspection..............................................36
Section 8.06 Change in Officers or Directors.........................36
Section 8.07 Existence and Business..................................36
Section 8.08 Use of Proceeds.........................................36
Section 8.09 Participation in Multiemployer Pension Plan.............36
(ii)
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ARTICLE 9. NEGATIVE COVENANTS................................................37
Section 9.01 Restrictions on Borrowed Funds Indebtedness............37
Section 9.02 Restriction on Liens...................................37
Section 9.03 Investments............................................39
Section 9.04 Disposition of Assets..................................40
Section 9.05 Assumptions, Guaranties, Etc. of Indebtedness of Other
Persons..............................................40
Section 9.06 Mergers and Acquisitions...............................40
Section 9.07 Payment of Obligations.................................41
Section 9.08 ERISA..................................................42
Section 9.09 Restricted Payments....................................42
Section 9.10 Transactions with Affiliates...........................42
Section 9.11 Agreements Restricting Pledge of Assets................43
Section 9.12 Payments in Respect of Subordinated Indebtedness.......43
ARTICLE 10. EVENTS OF DEFAULT AND REMEDIES...................................43
Section 10.01 Events of Default......................................43
Section 10.02 Remedies...............................................45
Section 10.03 Setoff.................................................45
ARTICLE 11. WAIVERS; AMENDMENTS; REMEDIES....................................45
ARTICLE 12. LIMITATION ON LIABILITY; INDEMNIFICATION.........................46
ARTICLE 13. MISCELLANEOUS....................................................46
Section 13.01 Successors and Assigns.................................46
Section 13.02 Assignments and Participations.........................47
Section 13.03 Confidentiality........................................47
Section 13.04 Survival of Representations............................47
Section 13.05 Governmental Regulation................................47
Section 13.06 Notices................................................47
Section 13.07 Entire Agreement.......................................48
Section 13.08 Governing Law..........................................48
Section 13.09 Headings...............................................48
Section 13.10 Counterparts...........................................49
Section 13.11 Bank Holidays..........................................49
Section 13.12 Expenses; Indemnification..............................49
Section 13.13 Severability of Provisions.............................49
Section 13.14 Nonliability of Lender.................................50
Section 13.15 Schedules..............................................50
Section 13.16 Term of Agreement......................................50
Section 13.17 Waiver of Jury Trial...................................50
(iii)
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1.01 Control Persons
Schedule 2.12 Outstanding Letters of Credit
Schedule 5.02 Places of Business; Location of Records
Schedule 5.05 Corporate Power
Schedule 5.07 Other Agreements
Schedule 5.08 Payment of Taxes
Schedule 5.10 Outstanding Capital Stock
Schedule 5.11 Changes in Condition
Schedule 5.12 Real Property
Schedule 5.13 Personal Property Title Exceptions
Schedule 5.14 Patent and Trademark Exceptions
Schedule 5.15 Litigation
Schedule 5.16 Environmental Liabilities
Schedule 5.17 Pension Plans
Schedule 5.19 Collective Bargaining Agreements
Schedule 8.03 Insurance
Schedule 9.01 Indebtedness
Schedule 9.02 Liens
Schedule 9.03 Investments
Schedule 9.05 Guaranties
Schedule 9.10 Transactions with Affiliates
Schedule 9.11 Pledge of Assets
EXHIBIT A Form of Revolving Credit Note
EXHIBIT B Form of Compliance Certificate
EXHIBIT C Form of Borrowing Base Certificate
(iv)
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of August 8, 1997 by and
between HIGH VOLTAGE ENGINEERING CORPORATION, a Massachusetts corporation, as
Borrower (the "Borrower") and FLEET NATIONAL BANK, as lender (the "Lender").
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Definitions. In addition to the terms defined elsewhere in
this Agreement, unless otherwise specifically provided herein, the following
terms shall have the following meanings for all purposes when used in this
Agreement, and in any note, certificate, report or other document made or
delivered in connection with this Agreement:
"1996 Financing Agreements" shall mean the Sanwa Agreement; the
Note Agreement dated as of May 9, 1996 relating to $20,000,000 of 10.84%
Senior Secured Notes due May 1, 2003; the Senior Unsecured Note
Agreement dated as of May 9, 1996 relating to $7,000,000 of 12.09%
Senior Unsecured Notes; and the Securities Purchase Agreement dated as
of May 9, 1996 relating to $25,000,000 of 14% Senior Subordinated Notes
due May 1, 2004 and warrants to purchase Common Stock.
"Acquired Company" shall mean any Person, 100% of the outstanding
capital stock or beneficial interests of which is acquired by or issued
to the Borrower or any Subsidiary in connection with a Permitted
Acquisition.
"Advance" shall mean any loan made hereunder (which shall not
include contingent liabilities under the L/Cs or Foreign Exchange
Contracts).
"Affiliate" shall mean, with respect to any person, any other
Person which directly or indirectly controls, or is controlled by or
under common control with, such Person. For purposes hereof, a Person
shall be deemed to "control" another Person if such person owns more
than 10% of the outstanding common stock of such other Person.
"Applicable Margin" shall mean 1/4% per annum with respect to any
Base Rate Advance and 1 1/2% per annum with respect to any LIBOR Rate
Advance.
"Agreement" shall mean this Credit Agreement, as amended or
supplemented from time to time. References to Articles, Sections,
Exhibits, Schedules and the like refer to the Articles, Sections,
Exhibits, Schedules and the like of this Agreement unless otherwise
indicated.
"Banking Day" shall mean a day on which banks are generally open
to conduct commercial banking business in Boston, Massachusetts.
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"Base Financial Statements" shall mean the consolidated audited
financial statements of Borrower and its Subsidiaries as of April 26,
1997 and for the year then ended, together with all notes to such
financial statements.
"Base Rate" shall mean the rate of interest announced from time
to time by the Lender as its "Base Rate," it being understood that such
rate is a reference rate, not necessarily the lowest, which serves as
the basis upon which effective rates of interest are calculated for
obligations making reference thereto.
"Base Rate Advance" shall mean any Advance hereunder upon which
interest will accrue on the basis of the Base Rate.
"Borrowed Funds Indebtedness" shall mean any Indebtedness of
Borrower or any of its Subsidiaries for borrowed money (including,
without limitation, the Lender Obligations, the Senior Notes and all
Subordinated Indebtedness), but excluding contingent letter of credit
obligations and warrants to purchase Common Stock.
"Capital Expenditures" shall mean all expenditures made or
incurred by any Person which are capitalized under generally accepted
accounting principles, excluding all expenditures relating to any
Permitted Acquisition incurred in connection with such Permitted
Acquisition.
"Cash Flow" shall mean EBITDA less (a) Capital Expenditures made
or incurred during any period to the extent not financed through
capitalized leases or purchase money financing and (b) all taxes paid or
required to be paid in such period excluding up to an aggregate of
$1,200,000 related to a settlement made in fiscal 1997 with the Internal
Revenue Service.
A "Change in Control" shall mean that the Persons listed on
Schedule 1.01 no longer hold shares of capital stock of the Borrower
sufficient to elect a majority of the directors of the Borrower.
"CIP Agreements" shall mean those certain contingent interest
payment agreements and other agreements which Borrower and certain of
its Subsidiaries entered into with BancBoston Capital Inc. pursuant to
which Borrower and certain of its Subsidiaries may be required to make
certain contingent interest payments to BancBoston Capital Inc.
"CIP Payments" shall mean those certain contingent interest
payments which the Borrower and certain of its Subsidiaries may be
required to make to BancBoston Capital Inc. pursuant to the CIP
Agreements.
"Commitment" shall mean the commitment of the Lender to make
Advances or other extensions of credit under this Agreement.
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"Common Stock" shall mean the common stock, par value $.01 per
share, of the Borrower.
"Default" shall mean an Event of Default as defined in Article
10, or an event or condition which with the passage of time or giving of
notice, or both, would become such an Event of Default.
"Distribution" shall mean: (a) the declaration or payment of any
dividend on or in respect of any shares of any class of capital stock of
Borrower, other than dividends payable solely in shares of or rights to
acquire capital stock of Borrower; (b) the purchase or other retirement
of any shares of any class of capital stock of Borrower, directly or
indirectly; and (c) any other distribution on or in respect of any
shares of any class of capital stock of Borrower other than a dividend
payable solely in shares of or rights to acquire capital stock of
Borrower.
"EBITDA" shall mean, for any period, the Net Income of Borrower
and its Subsidiaries plus any interest, taxes, depreciation and
amortization deducted in calculating the Net Income of Borrower and its
Subsidiaries for such period, calculated on a consolidated basis and
determined in accordance with generally accepted accounting principles.
In addition, during the first quarter of fiscal 1998 of the Borrower,
EBITDA shall also include the Net Income of PHI and its subsidiaries for
the fourth quarter of fiscal 1997 of PHI plus any interest, taxes,
depreciation and amortization deducted in calculating such Net Income.
"Fixed Charges" shall mean for any period the sum of (a) interest
paid or required to be paid in such period with respect to Borrowed
Funds Indebtedness (excluding any prepayment penalty incurred or make
whole premium paid in connection with the termination of the 1996
Financing Agreements, the settlement of the CIP Agreements and the
redemption of warrants to purchase Common Stock in connection with the
termination of the 1996 Financing Agreements), (b) regularly scheduled
principal paid or required to be paid in such period with respect to
Borrowed Funds Indebtedness (excluding Borrowed Funds Indebtedness which
is refinanced), (c) all regularly scheduled capital lease obligations
paid or scheduled to be paid, and (d) all Distributions made.
"Funds Available for Restricted Payments" shall mean (a)
$2,500,000 plus, from July 28, 1997 forward, 50% of the Borrower's
cumulative Net Income less (b) all Restricted Payments made after the
date of this Agreement excluding Restricted Payments made from the
proceeds of (i) a sale of capital stock, (ii) a refinancing, on terms
approved by the Lender, of the Senior Notes, or (iii) Subordinated
Indebtedness.
"Generally accepted accounting principles" shall mean generally
accepted accounting principles as defined by controlling pronouncements
of the Financial Accounting Standards Board, as from time to time
supplemented and amended.
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"Guarantors" shall mean each of the Borrower's domestic
Subsidiaries.
"Guaranty Agreements" shall mean the Guaranties of the
obligations of the Borrower to the Lender under this Agreement executed
by the Guarantors, as such Guaranties may be amended, modified or
supplemented from time to time.
"Guaranty" or "Guarantee" or "Guaranties" shall include any
arrangement whereby a Person is or becomes liable in respect of any
Indebtedness or other obligation of another and any other arrangement
whereby credit is extended to another obligor on the basis of any
promise of a guarantor, whether that promise is expressed in terms of an
obligation to pay the Indebtedness of such obligor, or to purchase or
lease assets under circumstances that would enable such obligor to
discharge one or more of its obligations, or to maintain the capital,
the working capital, solvency or general financial condition of such
obligor, whether or not such arrangement is listed in the balance sheet
of the guarantor or referred to in a footnote thereto, except for
endorsements made in connection with the deposit of items for credit or
collection in the ordinary course of business.
"Hazardous Material" shall mean, collectively, any pollutant,
toxic or hazardous material or waste, including any "hazardous
substance" or "pollutant" or "contaminant" as defined in Section 101(14)
of the Comprehensive Environmental Response, Compensation and Liability
Act (or any successor statute) or regulated as toxic or hazardous under
the Resource Conservation and Recovery Act of 1976 or any similar state
or local statute or regulation, and the rules and regulations
thereunder, all as from time to time in effect.
"Hedge Agreements" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements designed to hedge against fluctuations in interest rates or
foreign exchange rates.
"Indebtedness" shall mean, as to any Person, all obligations,
contingent and otherwise, which in accordance with generally accepted
accounting principles consistently applied should be classified upon
such Person's balance sheet as liabilities, but in any event including
liabilities secured by any mortgage, pledge, security interest, lien,
charge or other encumbrance existing on property owned or acquired by
such Person whether or not the liability secured thereby shall have been
assumed, letters of credit open for account (including L/Cs issued in
accordance with Section 2.12 hereof), and all obligations on account of
Guaranties (excluding the Guaranty Agreements), endorsements and any
other contingent obligations in respect of the Indebtedness of others
whether or not reflected on such balance sheet or in a footnote thereto.
"Interest Period" shall mean with respect to any LIBOR Rate
Advance, the period commencing on the date of such LIBOR Rate Advance
and ending one, two, three or six months thereafter, as the Borrower may
request as provided in Section 2.05 hereof. The
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expiration date of an Interest Period shall mean the last day of such
Interest Period unless such day is not a Banking Day, then on the next
succeeding Banking Day.
"Investment" shall mean: (a) any stock, evidence of Indebtedness
or other security of another Person; (b) any loan, advance, contribution
to capital, extension of credit (except for current trade and customer
accounts receivable for inventory sold or services rendered in the
ordinary course of business and payable in accordance with customary
trade terms and for notes issued by the purchaser of assets from the
Borrower or a Guarantor representing a deferred portion of the purchase
price of such assets) to another Person; (c) any purchase of stock or
other securities of another Person or any business or undertaking of
another Person (whether by purchase of assets or securities) or any
commitment or option to make any such purchase; and (d) any other
investment, whether existing on the date of this Agreement or thereafter
made. The term "Investment" shall not include ordinary advances to
employees for travel expenses, drawing accounts and similar expenditures
made in the ordinary course of business or advances or prepayments to
suppliers in the ordinary course of business.
"L/C Fee" shall mean 1.5% per annum of the face amount of each
L/C issued pursuant to this Agreement.
"Lender" shall mean Fleet National Bank.
"Lender Agreements" shall mean this Agreement, the Note, the
L/Cs, the Foreign Exchange Contracts, the Security Documents and any
other present or future agreement from time to time entered into between
or among Borrower or any of its Subsidiaries and the Lender relating to
this Agreement, each as from time to time amended or modified, and all
statements, reports, documents and certificates (including without
limitation the Guaranty Agreements) delivered by Borrower or any of its
Subsidiaries to the Lender in connection therewith.
"Lender Obligations" shall mean all present and future
obligations and Indebtedness of Borrower or any of its Subsidiaries
owing to the Lender under this Agreement, the Note or any other Lender
Agreements, including, without limitation, the obligations to pay the
Advances from time to time evidenced by the Note and obligations to pay
interest, commitment fees and other fees and charges from time to time
owed under any Lender Agreements.
"LIBOR Banking Day" shall mean any day on which dealings are
carried on in the London Interbank Market and banks are open to conduct
commercial banking business in London, England and are not required or
authorized to be closed in Boston, Massachusetts.
"LIBOR Rate Advance" shall mean any Advance hereunder upon which
interest will accrue on the basis of a formula including as a component
thereof the LIBOR Rate.
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The expiration date of any LIBOR Rate Advance shall mean the last day of
the Interest Period of such LIBOR Rate Advance.
"LIBOR Rate" shall mean for any Interest Period for any LIBOR
Rate Advance, the rate of interest determined by the Lender, at
approximately 11:00 a.m. Boston, Massachusetts time on the Rate Fixing
Day as being the rate at which deposits in U.S. dollars are offered to
it by first-class banks in the London Interbank Market for deposit for
such Interest Period in amounts comparable to the aggregate principal
amount of LIBOR Rate Advances to which such Interest Period relates.
"Maturity Date" shall mean August 1, 2002.
"Maximum Credit Amount" shall mean $25,000,000.
"Maximum Total Leverage Ratio" shall mean, at any time, the ratio
of (a) the aggregate principal amount of all Borrowed Funds Indebtedness
outstanding on the date of calculation to (b) EBITDA for the
twelve-month period ending on the date of calculation (provided that
EBITDA will be calculated on an annualized basis during fiscal 1998 of
the Borrower based upon the EBITDA incurred from the beginning of such
fiscal year to the date of calculation).
"Multiemployer Pension Plan" shall mean a multiemployer plan
within the meaning of Section 4001(a)(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), in which Borrower or
any of its Subsidiaries is a participating employer.
"Net Income" shall mean the net income (or loss) after taxes of
any Person, calculated on a consolidated basis in accordance with
generally accepted accounting principles, excluding extraordinary gains
or losses.
"Note" shall mean collectively any promissory notes executed by
the Borrower in favor of the Lender in connection herewith. The initial
Note shall be substantially in the form of Exhibit A hereto.
"Pension Plan" shall mean a pension benefit plan maintained for
the employees of Borrower or any of its Subsidiaries subject to Title IV
of ERISA.
"Permitted Acquisition" shall mean the acquisition by Borrower or
any of its Subsidiaries of a Person in accordance with Section 9.06
hereof.
"Person" shall mean an individual, corporation, partnership,
joint venture, association, estate, joint stock company, trust,
organization, business, or a government or agency or political
subdivision thereof.
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"PHI" shall mean Physical Electronics, Inc.
"PHI Acquisition" shall mean the acquisition by the Borrower of
PHI by means of the merger of a wholly-owned subsidiary of the Borrower
with and into PHI.
"PHI Acquisition Documents" shall mean that certain Agreement and
Plan of Merger dated May 7, 1997 by and among Borrower, Lauren
Corporation, a wholly-owned subsidiary of Borrower, PHI Acquisition
Holdings, Inc. and, as to specific provisions only, Chase Venture
Capital Associates, L.P.
"PHI Joint Venture" shall mean that certain joint venture between
PHI and ULVAC, a Japanese company, which resells the services of PHI's
surface analysis instruments in the Japanese market.
"Rate Fixing Day" shall mean in the case of any LIBOR Rate
Advance, the second LIBOR Banking Day preceding the Banking Day on which
an Interest Period begins.
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System from time to time in effect and shall
include any successor or other regulation or official interpretation of
said Board of Governors relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"Regulation U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System from time to time in effect and shall
include any successor or other regulation or official interpretation of
said Board of Governors relating to the extension of credit by banks for
the purpose of purchasing or carrying margin stocks applicable to member
banks of the Federal Reserve System.
"Reportable Event" shall mean an event reportable to the Pension
Benefit Guaranty Corporation under Section 4043 of Title IV of ERISA,
unless exempted from the reporting requirements by regulations of the
Pension Benefit Guaranty Corporation.
"Resale Facility" shall mean the facilities of the Borrower
located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇; ▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇; and ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇.
"Reserve Requirement" shall mean the applicable aggregate reserve
requirement (including all basic, supplemental, marginal and other
reserves) which is imposed under Regulation D on the Lenders against
"Euro-currency Liabilities" (as defined in Regulation D).
"Restricted Payments" shall mean any Distributions and payments
of principal on account of, or the purchase, acquisition or other
retirement of, the Senior Notes or Subordinated Indebtedness.
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"Sanwa Agreement" shall mean that certain loan agreement, dated
as of May 9, 1996, by and among the Borrower, certain Subsidiaries,
Sanwa Business Credit Corporation and the financial institution parties
thereto.
"Security Documents" shall mean the Security Agreements, and any
other agreements or instruments from time to time granting or purporting
to grant the Lender a lien in any property for the benefit of the Lender
to secure the Lender Obligations.
"Senior Notes" shall mean the $135,000,000 10 1/2% Senior Notes
issued by the Borrower pursuant to the Offering Memorandum dated August
5, 1997 and due in the year 2004.
"Series A Preferred Stock" shall mean the 33,000 shares of Series
A Senior Redeemable Preferred Stock issued by the Borrower pursuant to
the Offering Memorandum dated August 5, 1997.
"Series B Preferred Stock" shall mean that certain Series B
Preferred Stock issued by the Borrower and being redeemed on or prior to
the date of this Agreement.
"Series C Preferred Stock" shall mean that certain Series C
Preferred Stock issued by the Borrower and being redeemed on or prior to
the date of this Agreement.
"Subordinated Indebtedness" shall mean Indebtedness of Borrower
and its Subsidiaries which shall be subordinated to the Lender
Obligations hereunder; provided that (a) at the time such Subordinated
Indebtedness is incurred, no Event of Default has occurred or would
occur as a result of such incurrence, and (b) the documentation
evidencing such Subordinated Indebtedness shall have been delivered to
the Lender and shall contain all of the following characteristics: (i)
it shall be unsecured, (ii) it shall bear a market rate of interest,
(iii) it shall not require principal repayments thereof prior to the
Maturity Date, (iv) it shall have financial covenants (including
covenants relating to incurrence of Indebtedness) which are meaningfully
less restrictive than those set forth herein, (v) it shall have no
restrictions on the Borrower's ability to grant liens securing
Indebtedness ranking senior to such Subordinated Indebtedness, (vi) it
shall permit the incurrence of senior Indebtedness under this Credit
Agreement (and under any refinancings hereof), (vii) it may be
cross-accelerated with the Lender Obligations and other senior
Indebtedness of the Borrower (but shall not be cross-defaulted except
for payment defaults which the senior lenders have not waived) and may
be accelerated upon bankruptcy, (viii) it shall provide that (A) upon
any payment or distribution of the assets of the Borrower (including the
commencement of a bankruptcy proceeding) of any kind or character, all
of the Lender Obligations (including interest accruing after the
commencement of any bankruptcy proceeding at the rate specified for the
applicable Lender Obligation, whether or not such interest is an
allowable claim in any such proceeding) shall be paid in full prior to
any payment being received by the holders of the Subordinated
Indebtedness, (B) until all of the Lender Obligations (including the
interest
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described in subclause (A) above) are paid in full, any payment or
distribution to which the holders of the Subordinated Indebtedness would
be entitled but for the subordination provisions of the type described
in clauses and (ix) and (x) hereof shall be made to the Lender, and (C)
the holders of the senior Indebtedness shall be entitled to vote the
Subordinated Indebtedness, (ix) it shall provide that in the event of a
payment default under Sections 10.01(a) or (b) hereof, the Borrower may
not pay the principal of, or any interest, fees other amounts payable
with respect to the Subordinated Indebtedness until the Lender
Obligations have been paid in full in cash, (x) it shall provide that in
the event of any other Event of Default, the Lender shall be permitted
to block payments of principal, interest, fees and all other amounts
payable with respect to the Subordinated Indebtedness for a period of
180 days, and (xi) it shall acknowledge that none of the provisions
outlined in part (b) of this definition can be amended, modified or
otherwise altered without the prior written consent of the Lender.
"Subsidiary" shall mean any Person of which Borrower shall now or
hereafter at the time own, directly or indirectly through one or more
Subsidiaries or otherwise, sufficient voting stock (or other beneficial
interest) to entitle it to elect at least a majority of the board of
directors or trustees or similar managing body. The term "Subsidiary"
shall not include any employee benefit plan of Borrower or any of its
Subsidiaries or any entity appointed or established by Borrower or any
of its Subsidiaries for or pursuant to the terms of any such plan.
"Total Fixed Charge Ratio" shall mean, at any time, the ratio of
Cash Flow to Fixed Charges, both reflected for the twelve-month period
ending on the date of calculation (provided that Cash Flow and Fixed
Charges will be calculated on an annualized basis during fiscal 1998 of
the Borrower based upon the Cash Flow and Fixed Charges incurred from
the beginning of such fiscal year to the date of calculation).
"W.P. ▇▇▇▇▇ Lease" shall mean the Lease Agreement by and between
Corporate Property Associates 8, L.P., as landlord, and the Borrower, as
tenant, dated November 10, 1988, for the premises in Sterling,
Massachusetts and the Lease Agreement by and between Corporate Property
Associates 8, L.P., as landlord, and Datcon Instrument Company, as
tenant, dated November 10, 1988, for the premises located in Lancaster,
Pennsylvania.
Section 1.02 Accounting Terms. All accounting terms used and not defined
in this Agreement shall be construed in accordance with generally accepted
accounting principles consistently applied, and all financial data required to
be delivered hereunder shall be prepared in accordance with such principles.
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Section 1.03 Terms Defined Elsewhere. The following terms, defined
elsewhere in this Agreement as set forth below, shall have the respective
meanings therein defined:
Section of Agreement
Term Where Defined
---- --------------------
"Borrowing Base" Section 2.02(a)
"Borrowing Base Certificate" Section 2.02(e)
"Code" Section 6.10
"Compliance Certificate" Section 6.01
"Control Group Person" Section 6.10
"Eligible Receivables" Section 2.02(b)
"Eligible Inventory" Section 2.02(e)
"Event of Default" Section 10.01
"Foreign Exchange Contracts" Section 2.13
"L/Cs" Section 2.12
ARTICLE 2. THE CREDIT
Section 2.01 The Revolving Credit. Subject to the terms and conditions
of this Agreement and so long as there exists no Default, the Lender agrees to
make such Advances as Borrower may from time to time request, by notice to the
Lender in accordance with Section 2.03, provided, however, that no Advance shall
be made after the Maturity Date and no Advance shall exceed an amount determined
by subtracting:
(a) the aggregate outstanding balance of all Advances plus the
aggregate potential amount available to be drawn under all L/Cs issued
by the Lender for the account of the Borrower in accordance with Section
2.12 hereof and 20% the aggregate potential liability under all Foreign
Exchange Contracts issued by the Lender for the account of the Borrower
in accordance with Section 2.13 hereof; from
(b) the lesser of (i) the Maximum Credit Amount or (ii) the
Borrowing Base.
The Borrower shall execute and deliver to the Lender the Note to evidence the
Advances. Subject to the foregoing limitations and the provisions of Section
2.14 and Article 4 hereof, the Borrower shall have the right to prepay and
reborrow the Advances. All outstanding Advances and all interest accrued and
unpaid thereon and all fees and expenses shall be paid in full on the Maturity
Date.
Section 2.02 Borrowing Base.
(a) Borrowing Base. The "Borrowing Base" at any time shall mean
(A) the sum of (i) 85% of the Net Value of Eligible Receivables, plus
(ii) 50% of the Net Value of
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Eligible Joint Venture Receivables; provided, however, that in no
event shall the aggregate amount under (ii) exceed $4,000,000 plus (iii)
60% of Eligible Inventory, provided, however, that in no event shall the
amount under (iii) above exceed $17,500,000 in the aggregate.
(b) Eligible Receivables. "Eligible Receivables" shall mean all
rights to payment due and to become due to the Borrower or any of the
Guarantors other than the following: (i) rights to payment which remain
unpaid as of ninety (90) days after the due date specified on the
original invoice with respect thereto, or, in any event, as of one
hundred twenty (120) days after the date of such original invoice; (ii)
all rights to payment owing by a single debtor, including a currently
scheduled right to payment, if fifty percent (50%) or more of the
balance owing by such debtor is ineligible by reason of the criterion
set forth in clause (i) of this subsection (b); (iii) rights to payment
with respect to which the debtor is an Affiliate of Borrower or any of
Subsidiary or a director, officer or employee of Borrower, any
Subsidiary or any Affiliate of the any thereof; (iv) rights to payment
in excess of $250,000 in the aggregate with respect to which the debtor
is the United States of America or any department, agency or
instrumentality or prime contractor thereof unless Borrower or the
applicable Guarantor has complied in a manner satisfactory to the Lender
with the Federal Assignment of Claims Act of 1940, as amended, relative
to the assignment of such rights to payment; (v) rights to payment in
excess of $6,000,000 in the aggregate at any time outstanding with
respect to which the debtor is not a resident of the United States
unless the debtor has supplied Borrower or the applicable Guarantor with
an irrevocable letter of credit against which the Lender is permitted to
draw directly, issued by a financial institution sufficient to cover
such right to payment in form and substance satisfactory to the Lender
and without right of setoff and the right of payment is invoiced in the
United States and is payable in full in United States dollars; (vi)
rights to payment arising with respect to goods which have not been
shipped and delivered to the debtor, except for ▇▇▇▇-and-hold sales
requested in writing in advance by the debtor in a form acceptable to
the Lender; (vii) rights to payment which are not invoiced (and dated as
of the date of such invoice) and sent to the debtor within five (5) days
after delivery of the underlying goods to or performance of the
underlying services for the debtor; (viii) rights to payment with
respect to which the Lender does not have a first and valid fully
perfected lien or which are not free and clear of any other lien
whatsoever; (ix) rights to payment with respect to which the debtor is
the subject of bankruptcy or a similar insolvency proceeding or has made
an assignment for the benefit of creditors or whose assets have been
conveyed to a receiver or trustee; (x) rights to payment with respect to
which the debtor's obligation to make payment is conditional upon or
subject to any repurchase obligation or return right (except for product
exchanges in the ordinary course of business pursuant to distribution
agreements containing terms customary in the industry in which Borrower
or such Guarantor operates), as with sales made on a guaranteed sale,
sale on approval (except with respect to rights to payment in connection
with which debtors are entitled to return inventory solely on the basis
of the quality of such inventory) or consignment basis; (xi) contra
rights to payment in excess of $100,000 in the aggregate from any one
debtor of the Borrower or any Guarantor or $250,000 in the aggregate
from
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all debtors of the Borrower and the Guarantors as a whole, but only to
the extent of the amount of the accounts payable owed by Borrower or the
applicable Guarantor to the debtor; (xii) rights to payment in excess of
$1,000,000 with respect to which the debtor is located in any state
denying creditors access to its courts in the absence of a Notice of
Business Activities Report or other similar filing unless Borrower or
the applicable Guarantor has either qualified as a foreign corporation
authorized to transact business in such state or has filed a Notice of
Business Activities Report or similar filing with the applicable state
agency in such state for the then current year, which states include
among others, New Jersey and Minnesota; and (xiii) rights to payment
evidenced by chattel paper or any instrument of any kind, to the extent
possession of such chattel paper or instrument is not delivered to the
Lender.
The "Net Value" of an Eligible Receivable and an Eligible Joint Venture
Receivable shall be its face amount, net of any discount for prompt
payment and net of any other amount (however denominated) representing
payment of finance charges, late charges, or interest (computed at not
less then market rates).
(c) Eligible Joint Venture Receivables. "Eligible Joint Venture
Receivables" shall mean all rights to payment due or to become due to
the Borrower or any of the Guarantors which are (i) outstanding not more
than ninety (90) days after the due date specified on the original
invoice with respect thereto, (ii) due from the PHI Joint Venture, and
(iii) otherwise meet the criteria for Eligible Receivables.
(d) Exclusion of Eligible Receivables. The Lender from time to
time may exclude any otherwise Eligible Receivables or Eligible Joint
Venture Receivables from the class of Eligible Receivables or Eligible
Joint Venture Receivables, as applicable, based on the Lender's
reasonable determination as to the creditworthiness of the obligor or as
to the aggregate amount of receivables owing by such obligor and its
affiliates. The Lender shall give notice to the Borrower of the terms of
any such exclusion. Except as otherwise expressly stated in such notice,
all such exclusions shall be continuing and cumulative, and an exclusion
as to any obligor shall apply in the aggregate to all receivables of
such obligor and its affiliates. The Borrower shall, not later than five
(5) Banking Days after the Lender effects any such exclusion, deliver to
the Lender a revised Borrowing Base Certificate reflecting the Borrowing
Base as redetermined in accordance with such exclusion. The making of an
Advance in reliance on a Borrowing Base Certificate shall not affect the
Lender's right later to exclude any receivables in accordance with this
Section 2.02(d). No Eligible Receivable or Eligible Joint Venture
Receivable excluded under this Section 2.02(d) shall be included by the
Borrower in any later Borrowing Base Certificate without written
permission by the Lender.
(e) Eligible Inventory. "Eligible Inventory" shall mean at any
time finished goods or raw materials held by the Borrower or any
Guarantor, which meet each of the following requirements at such time:
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(1) The Borrower or a Guarantor has good title to such
Eligible Inventory, free and clear of any lien, except for liens
in favor of the Lender securing the Lender Obligations, and such
Eligible Inventory and proceeds thereof are subject to such a
valid and perfected first lien in favor of the Lender;
(2) Any finished goods are in good and merchantable
condition and are readily saleable by the Borrower or a Guarantor
in the ordinary course of its business and any raw materials are
useable by the Borrower or Guarantor in the ordinary course of
its business;
(3) Such Eligible Inventory is located in the United
States, and such Eligible Inventory is in the possession of the
Borrower or a Guarantor at the locations set forth on Schedule
5.02 hereto;
(4) Such Eligible Inventory is not reasonably deemed by
the Lender to be obsolete or non-marketable; and
(5) Such Eligible Inventory is valued at the lower of cost
or market.
(f) Borrowing Base Certificates. On the date hereof and on or
before the twenty-first day of each month, the Borrower shall furnish to
the Lender a certificate ("Borrowing Base Certificate") substantially in
the form of Exhibit C hereto, appropriately completed, signed by the
Treasurer, Chief Accounting Officer or Chief Financial Officer of
Borrower and setting forth the Borrowing Base and the other information
required therein. In addition, the Lender may request a Borrowing Base
Certificate upon request for any Advance by the Borrower if the
aggregate outstanding balance of all Advances plus the aggregate
potential amount available to be drawn under all L/Cs and 20% of the
aggregate potential liability under all Foreign Exchange Contracts at
the time of such request exceeds 90% of the Borrowing Base. In the event
the Borrower is required to deliver a Borrowing Base Certificate
pursuant to the previous sentence, the Borrowing Base shall be
calculated based upon Eligible Receivables outstanding as of a date not
more than five (5) business days prior to the date of such certificate
(which date shall be specified) and Eligible Inventory as of the end of
the month preceding delivery of such certificate.
Section 2.03 Requests for Advances. Each request for an Advance shall be
made by Borrower to the Lender on a Banking Day and may be (a) in any amount for
a Base Rate Advance and (b) in a minimum amount of $500,000 and in integral
multiples of $100,000 for a LIBOR Rate Advance; provided, however that the
Borrower may not have more than six (6) LIBOR Rate Advances outstanding at any
one time. Each such request shall state the requested date of such Advance
(which date, in the case of a LIBOR Rate Advance, shall be not less than two
Banking Days after the date of such request) and amount of, and the choice of
interest rate to apply to, such Advance and, for LIBOR Rate Advances, the
duration of the Interest Period, which shall not in any event extend beyond the
Maturity Date.
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Each Advance shall be made as follows: (a) with respect to Base Rate
Advances, if notice is received by the Lender from Borrower prior to 2:00 p.m.
Boston, Massachusetts time on a Banking Day, then by the close of business on
such Banking Day, and otherwise on the next Banking Day thereafter or such later
Banking Day as Borrower may request; and (b) with respect to LIBOR Rate
Advances, on the second Banking Day after the Lender receives notice from
Borrower, if such notice is received by the Lender prior to 11:00 a.m. Boston,
Massachusetts time on a Banking Day, and otherwise on the third Banking Day
thereafter or such later Banking Day as Borrower may request. Each request for
an Advance shall be made to the Lender in writing or by telephone by a duly
authorized representative of Borrower, and the Lender may rely upon any
telephone request which the Lender in good faith believes is made by such a
representative. The Borrower agree to indemnify and hold the Lender harmless for
any action, including the making of Revolving Credit Advances hereunder, and any
loss or expense, taken or incurred by the Lender as a result of its good faith
reliance upon such telephone request.
The Borrower hereby agrees (a) that the Lender shall be entitled to rely
upon any Borrowing Base Certificate and Compliance Certificate delivered
hereunder until each such certificate is superseded by a more recent
certificate, and (b) that each request for an Advance and each request for the
issuance of an L/C, whether by telephone or in writing or otherwise, shall
constitute a confirmation by the Borrower of the representations and warranties
contained in the most recent Borrowing Base Certificate and Compliance
Certificate delivered to the Lender.
Section 2.04 Unused Fee. From the date hereof to and including the
Maturity Date, the Borrower shall pay to the Lender the following quarterly
unused fees for each fiscal quarter computed as follows:
Quarterly Unused Fee = .005 x (MC - ORCA - OLC) x N/360
where: MC = the Maximum Credit Amount
ORCA = the daily average principal amount of all Advances
outstanding during such quarter
OLC = the daily average of the aggregate amount available to be
drawn under all L/Cs outstanding during such quarter
N = the aggregate number of days in such fiscal quarter
This quarterly unused fee shall be payable in arrears on the first day
of each April, July, October and January commencing October 1, 1997, and on the
Maturity Date.
Section 2.05 Interest on Advances. The Borrower shall pay interest on
the unpaid principal amount of each Advance from time to time outstanding at the
rate per annum equal to the Base Rate plus the Applicable Margin or the LIBOR
Rate plus the Applicable Margin as chosen in accordance with Section 2.03. If
the Borrower fails to state the choice of interest rate to apply to any Advance,
the Borrower shall be deemed to have chosen an interest rate based on
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the Base Rate. LIBOR Rate Advances shall automatically convert to Base Rate
Loans at the end of the applicable Interest Period unless the Borrower gives
notice to continue the same as a LIBOR Rate Advance, which notice must be
received by the Lender prior to 11:00 a.m. Boston, Massachusetts time two
Banking Days prior to the end of the applicable Interest Period and must specify
the duration of the next Interest Period to apply to such LIBOR Rate Advance.
Each request by the Borrower for the conversion of any Base Rate Advance into a
LIBOR Rate Advance and each notification by the Borrower of the continuation of
any existing LIBOR Rate Advance into a new Interest Period shall be deemed to
constitute a request by the Borrower for a new LIBOR Rate Advance. Interest on
Advances shall be payable monthly in arrears on the first day of each month,
commencing on September 1, 1997, and continuing until all amounts payable under
the Note shall have been fully paid; provided, however, that all accrued and
unpaid interest on a LIBOR Rate Advance shall be payable on the date of
expiration of the Interest Period with respect to each such LIBOR Rate Advance
for an Interest Period of three months or less and every three months for an
Interest Period longer than three months. On the Maturity Date or the earlier
acceleration or maturity of the Note, all accrued and unpaid interest on, and
all unpaid fees and expenses with respect to, the Note and this Agreement shall
be due and payable in full.
Section 2.06 Additional Interest Payments. In addition to the payments
of principal and interest on the Note, the Borrower shall, on demand, pay to the
Lender interest on (a) any overdue installments of principal, (b) to the extent
not prohibited by applicable law which cannot be waived, any installments of
interest that are overdue for a period of five (5) days after written notice
from the Lender to the Borrower, and (c) any overdue payment of a commitment fee
or other amount payable hereunder, at a rate which is two (2) percent in excess
of the rate otherwise applicable.
Section 2.07 Computation of Interest and Fees. The Borrower hereby
authorizes the Lender to charge against any account of the Borrower with the
Lender an amount equal to the accrued interest and principal and other amounts
from time to time due and payable to the Lender hereunder and under all other
Lender Agreements. Interest hereunder and under the Note and fees payable
hereunder shall be computed on the basis of a 360-day year for the number of
days actually elapsed. The annual rates of interest to which the rates
determined under this Agreement are equivalent are the rates hereunder
multiplied by the actual number of days in the year and divided by 360. Any
increase or decrease in the interest rate on the Note resulting from a change in
the Base Rate shall be effective immediately from the date of such change.
Section 2.08 Yield Protection. If any future law or any governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any interpretation thereof, or compliance of the Lender with
such:
(a) subjects the Lender to any tax, duty, charge or withholding
on or from payments due from the Borrower (excluding taxation of the
overall net income of the Lender), or changes the basis of taxation of
payments to the Lender in respect of any of the Advances or other
amounts due the Lender hereunder; or
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(b) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, the Lender (other than the Reserve Requirement, to the
extent it is taken into account in determining the interest rate
applicable to LIBOR Rate Advances); or
(c) imposes any other condition the result of which is to
increase the cost to the Lender of making, funding or maintaining the
Advances hereunder or reduces any amount receivable by the Lender in
connection with the Advances, or requires the Lender to make any payment
calculated by reference to the amount of loans held or interest received
by it, by an amount deemed material by the Lender; or
(d) affects the amount of capital required or expected to be
maintained by the Lender or any corporation controlling the Lender and
the Lender determines that the amount of capital required is increased
by or based upon the existence of this Agreement or its obligation to
make the Advances hereunder or its Commitment;
then, within 30 days of demand by the Lender (which demand shall be accompanied
by a statement setting forth the basis of such demand), the Borrower shall pay
the Lender that portion of such reasonable increased expense incurred after the
Lender shall have allocated the same fairly and equitably among all customers of
any class generally affected thereby (including, in the case of clause (d)
above, any reduction in the rate of return on capital to an amount below that
which the Lender could have achieved but for such change in regulation after
taking into account the Lender's policies as to capital adequacy) or reduction
in an amount received which is attributable to making, funding and maintaining
the Lender's loans hereunder. The Borrower shall not be required to make any
such payment for such increased expenses arising ninety (90) days before the
date of such request (unless and only to the extent such law, rule, regulation,
policy, guideline, directive or interpretation applies retroactively to a period
prior to ninety (90) days before the date of such request, in which case, the
Borrower shall not be required to make any payment for increased expenses
resulting from such retroactive application unless the Lender provides such
request within ninety (90) days after the Lender reasonably should have become
aware of such rule, regulation, policy, guideline, directive or interpretation).
If the Lender shall subsequently recoup costs for which the Lender has
heretofore been compensated by the Borrower, the Lender shall remit to the
Borrower the amount of such recoupment.
The Lender agrees that as promptly as practicable after it becomes aware
of the occurrence of an event or the existence of a condition that would cause
it to be affected under Section 2.08(a) through (d), the Lender will give notice
thereof to the Borrower and, to the extent so requested by the Borrower and not
inconsistent with the Lender's internal policies, the Lender shall use
reasonable efforts and take such actions as are reasonably appropriate if as a
result thereof the additional moneys which would otherwise be required to be
paid to the Lender pursuant to such subsections would be materially reduced, or
the illegality or other adverse circumstances which would otherwise require a
conversion of such Advances or result in the inability to make such Advances
pursuant to such sections would cease to exist, and in each case if, as
determined by the
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Lender in its sole discretion, the taking of such actions would not adversely
affect such Advances or the Lender or otherwise be disadvantageous to the
Lender. To the extent practicable and applicable, the Lender shall allocate cost
increases among its customers in good faith and on an equitable basis.
Section 2.09 Lender Certificates; Survival of Indemnity. In order to
seek reimbursement or indemnification pursuant to Sections 2.08 or 2.10(b), the
Lender shall deliver a certificate to Borrower stating the amount due
thereunder. Such certificate of the Lender as to the amount due under Sections
2.08 or 2.10(b) shall be final, conclusive and binding on the Borrower in the
absence of manifest error. Determination of amounts payable under Sections 2.08
or 2.10(b) in connection with a LIBOR Rate Advance shall be calculated as though
the Lender funded its LIBOR Rate Advance through the purchase of a deposit of
the type and maturity corresponding to the deposit used as a reference in
determining the LIBOR Rate applicable to such LIBOR Rate Advance, whether in
fact that is the case or not. Unless otherwise provided herein, the amount
specified in the certificate shall be payable on demand after receipt by the
Borrower of the certificate. The obligations of the Borrower under Sections 2.08
and 2.10(b) shall survive the payment of all Lender Obligations and termination
of this Agreement.
Section 2.10 Availability of Rate Options; LIBOR Rate Advance
Protection.
(a) In the event that the Lender shall determine that:
(1) By reason of circumstances affecting the London
Interbank Market, adequate and reasonable methods do not exist
for ascertaining LIBOR which would otherwise be applicable during
any Interest Period; or
(2) The making or continuation of any LIBOR Rate Advance
has been made impracticable or unlawful by (A) the occurrence of
a contingency that materially and adversely effects the London
Interbank Market or (B) compliance by the Lender in good faith
with any applicable law or governmental regulation, guideline or
order or interpretation or change thereof by any governmental
authority charged with the interpretation or administration
thereof or with any request or directive of any such governmental
authority (whether or not having the force of law);
then the Lender shall forthwith give notice of such determination (which
shall be conclusive and binding on the Borrower) to Borrower. In such
event the obligations of the Lender to make LIBOR Rate Advances shall be
suspended until the Lender determines that the circumstances giving rise
to such suspension no longer exist, whereupon the Lender shall notify
Borrower.
(b) If (1) the Borrower makes any request for a LIBOR Rate
Advance and, prior to the funding of such LIBOR Rate Advance, revokes
such request, or (2) due to acceleration of the maturity of the Notes or
due to any other reason Lender receives
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payment of any installment of principal of any LIBOR Rate Advance on any
date prior to the last day of the then-current Interest Period, then, in
each case, the Borrower shall upon demand and receipt of a certificate
from the Lender with respect thereto and containing the information
described in Section 2.09, pay forthwith to the Lender any amounts
required to compensate the Lender for any losses, costs or reasonable
expenses which the Lender may have incurred as a result of such
revocation or payment, including, without limitation, any loss or
reasonable expense incurred by reason of the liquidation or redeployment
of funds acquired by the Lender to fund or maintain principal of such
LIBOR Rate Advance.
Section 2.11 Reliance on Representations and Actions of Borrower.
Borrower agrees that the Lender may rely upon any representation, warranty,
certificate, notice, document or telephone request which purports to be executed
or made or which the Lender in good faith believes to have been executed or made
by Borrower or any of its executive officers, and Borrower further agrees to
indemnify and hold the Lender harmless for any action, including the making of
Advances hereunder, and any loss or expense, taken or incurred by any of them as
a result of their good faith reliance upon any such representation, warranty,
certificate, notice, document or telephone request.
Section 2.12 Letters of Credit.
(a) Issuance Procedures. The Borrower may request and the Lender
will issue letters of credit (collectively "L/Cs") for the account of
the Borrower. With each request, the Borrower shall deliver to the
Lender an L/C application and L/C agreement together with the proposed
form of such L/C (which, together with all schedules and exhibits
thereto, shall be in form and substance satisfactory to the Lender and
its counsel) and such other certificates, documents and other papers and
information as the Lender may reasonably request. All L/Cs must have an
expiry date which is (1) not more than one year following the date of
issuance thereof; provided, however, that such L/C may be subject to
automatic renewal for one or more additional periods of one year in the
absence of notice of termination from the Lender to the beneficiary and
(2) not later than the Maturity Date. Within five Banking Days following
receipt of the above-described documents in satisfactory form, the
Lender shall issue such L/C; provided that the Borrower would be
entitled to an Advance on such date in the amount of the requested L/C.
(b) Reimbursement. On each date that any amount is drawn under an
L/C, the Lender shall be authorized to either (1) charge the Borrower's
account to the extent funds are available, or (2) make demand upon the
Borrower, for the amount so drawn or paid. In the event the Lender
charges the Borrower's account for any amount drawn or paid under any
L/C, the Lender shall promptly notify Borrower. The Borrower agrees to
pay on demand any and all reasonable expenses incurred by the Lender in
enforcing any rights under this Section 2.12. In the event any L/C is
payable in foreign currency, the Borrower shall reimburse the Lender at
the Lender's selling rate of exchange on the date such reimbursement is
made.
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(c) Commission. The Borrower agrees to pay the Lender (1) the L/C
Fee with respect to each L/C, which L/C Fee shall be due and payable
quarterly in advance for each L/C, and (2) all transactional fees, at
the Lender's customary rate, which transactional fees shall be paid at
the time they are incurred by the Lender.
(d) Method of Payment. The Lender is authorized to obtain
reimbursement for the amount drawn under any L/C issued by the Lender
and for all commissions and fees owed by the Borrower in connection any
such issuance, by the making of Base Rate Advances hereunder and shall
promptly notify Borrower thereof. The Borrower agrees that the Lender
may make any such Base Rate Advance even if the making of such Base Rate
Advance causes the outstanding balance of all Revolving Credit Advances
to exceed the limits set forth in Section 2.01 hereof, and the Borrower
further agrees that the making of such Base Rate Advance by the Lender
in excess of the limits set forth in Section 2.01 hereof shall
constitute an automatic Default under Section 10, entitling the Lender
to exercise all rights and remedies available to them under this
Agreement and applicable law.
(e) Amount. The aggregate amount available to be drawn under all
L/Cs outstanding at any time shall not exceed $5,000,000.
(f) Existing Letters of Credit. Attached hereto as Schedule 2.12
is a list of currently outstanding letters of credit issued by the
Lender for the account of the Borrower, which letters of credit shall be
deemed issued pursuant to this Section 2.12.
Section 2.13 Foreign Exchange Contracts.
(a) Issuance Procedures. From time to time, the Borrower may
request, and the Lender may agree, to enter into Foreign exchange
contracts (collectively "Foreign Exchange Contracts") on behalf of the
Borrower. All Foreign Exchange Contracts must have a maturity date which
is (1) not more than one year following the effective date of such
contract and (2) not later than the Maturity Date.
(b) Reimbursement. On each date that any Foreign Exchange
Contract matures, the Lender shall be authorized to either (1) charge
the Borrower's account, or (2) make demand upon the Borrower, for the
amount to be paid thereunder by the Borrower. In the event the Lender
charges the Borrower's account for any amount to be paid under any
Foreign Exchange Contract, the Lender shall promptly notify Borrower.
The Borrower agrees to pay on demand any and all reasonable expenses
incurred by the Lender in enforcing any rights under this Section 2.13.
In the event any amount to be paid under a Foreign Exchange Contract is
payable in foreign currency, the Borrower shall reimburse the Lender at
the Lender's selling rate of exchange on the date such reimbursement is
made.
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(c) Fees. The Borrower agrees to pay the Lender all transactional
fees on Foreign Exchange Contracts, at the Lender's customary rate,
which transactional fees shall be paid at the time they are incurred by
the Lender.
(d) Method of Payment. The Lender is authorized to obtain
reimbursement for any amount due to the Lender under a Foreign Exchange
Contract and for all fees owed by the Borrower in connection therewith,
by the making of Base Rate Advances hereunder and shall promptly notify
Borrower thereof. The Borrower agrees that the Lender may make any such
Base Rate Advance even if the making of such Base Rate Advance causes
the outstanding balance of all Advances to exceed the limits set forth
in Section 2.01 hereof, and the Borrower further agrees that the making
of such Base Rate Advance by the Lender in excess of the limits set
forth in Section 2.01 hereof shall constitute an automatic Default under
Section 10, entitling the Lender to exercise all rights and remedies
available to them under this Agreement and applicable law.
(e) Amount. The aggregate amount payable under all Foreign
Exchange Contracts outstanding at any time shall not exceed $5,000,000.
Section 2.14 Prepayment Fee. Borrower may, upon not less than five (5)
days prior written notice to Lender specifying the date of prepayment, prepay
all Advances in full and terminate the Commitment; provided, however, that the
Borrower shall pay to Lender as liquidated damages and compensation for the
costs of being prepared to make funds available to Borrower hereunder an amount
determined as follows: (A) two percent (2%) of the Maximum Credit Amount for any
prepayment made during the first year after the date of this Agreement, (B) one
percent (1%) of the Maximum Credit Amount for any prepayment made during the
second year after the date of this Agreement, (C) one-half of one percent (.5%)
of the Maximum Credit Amount for any prepayment made during the third year after
the date of this Agreement, or (D) one-half of one percent (.5%) of the Maximum
Credit Amount for any prepayment made during the fourth year after the date of
this Agreement.
ARTICLE 3. CONDITIONS OF LENDING
Section 3.01 Conditions to Funding. The Lender's obligations to make the
Advances provided for herein shall be subject to compliance by the Borrower of
all covenants and agreements contained in this Agreement, and to the
satisfaction, at or before the date of execution hereof, of all of the following
conditions precedent:
(a) Receipt of Documents. The Lender shall have received each of
the following, in form and substance satisfactory to the Lender and its
counsel or in the form attached hereto as an Exhibit, as the case may
be:
(1) The Note. The Note duly executed by the Borrower;
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(2) Certificates of the Clerk/Secretary or Assistant
Clerk/Assistant Secretary of the Borrower. Certificates of the
Clerk/Secretary or Assistant Clerk/Assistant Secretary of the
Borrower and each of the Guarantors, dated the date of execution
of this Agreement, containing copies of the charter documents of
such Borrower or Guarantor as certified by the Secretary of State
of such Borrower's or Guarantor's jurisdiction of incorporation,
the by-laws of the Borrower or Guarantor, and resolutions of the
Board of Directors duly authorizing the execution, delivery and
performance by the Borrower or the Guarantor of all of the Lender
Agreements to which the Borrower or such Guarantor is a party and
all other transactions contemplated thereby, such certificates
also shall certify that such charter documents, by-laws and
resolutions are complete and accurate and shall certify as to the
names and true signatures of the officers authorized to sign the
Lender Agreements;
(3) Certificate of the Treasurer, Chief Financial Officer
or Chief Accounting Officer of Borrower. A certificate of the
Treasurer, Chief Financial Officer or Chief Accounting Officer of
Borrower dated the date of execution of this Agreement, to the
effect that the conditions stated in Sections 3.01(g) and 3.01(i)
hereof have been satisfied;
(4) Opinion of Counsel. Opinion of ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇,
counsel to the Borrower and the Guarantors, dated the date of
execution of this Agreement; and
(5) Certain Security Documents pertaining to Personal
Property. The Lender shall have received the following, each of
which shall be in form and substance satisfactory to the Lender:
(i) Security Agreements, duly executed on behalf of
the Borrower and each of the Guarantors (as amended, modified or
supplemented from time to time, the "Security Agreements").
(ii) Evidence of the completion of all recordings
and filings of or with respect to, and of all other actions with
respect to, the above Security Documents as may be necessary or,
in the opinion of the Lender, desirable to create or perfect the
liens created or purported to be created by such Security
Documents as valid, continuing and perfected liens in favor of
the Lender securing the Lender Obligations, having the priority
purported to be given such liens under such Security Documents;
and evidence of the payment of any necessary fee, tax or expense
relating to such recording or filing.
(iii) The Guaranty Agreements, duly executed and
delivered by each of the Guarantors and in full force and effect.
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(iv) Evidence that all other actions necessary or,
in the opinion of the Lender, desirable to create, perfect or
protect the liens created or purported to be created by the above
Security Documents have been taken.
(6) PHI Acquisition Documents. A photocopy of a fully
executed original counterpart of each PHI Acquisition Document
and each of the other documents, agreements, certificates or
instruments delivered or to be delivered in connection with the
transactions contemplated by the PHI Acquisition Documents shall
have been delivered to the Lender; and each such PHI Acquisition
Document or other document, agreement, certificate or instrument
shall be in the form thereof heretofore determined by the Lender
to be satisfactory to it.
(7) Other Documents. Such other documents, certificates
and opinions as the Lender may reasonably request.
(b) Representations and Warranties. The representations and
warranties herein and those made by or on behalf of the Borrower in any
other Lender Agreement shall be correct as of the date of execution of
this Agreement, with the same effect as if made at and as of such time.
(c) No Default, Etc. There shall exist no Default prior to, upon
the making of, or after giving effect to, any of the Advances hereunder.
(d) Legality. The making of the Advances evidenced by the Note
shall not be prohibited by any law or governmental order or regulation
applicable to the Lender, or to the Borrower and all necessary consents,
approvals and authorizations of any Person for all the loans made
pursuant to this Agreement shall have been obtained.
(e) Litigation. There shall exist no litigation, at law or in
equity, or any proceeding before any federal, state, provincial or
municipal board or other governmental or administrative agency pending
or threatened, or, to the best knowledge of the Borrower, any basis
therefore, with respect to the Advances being made hereunder.
(f) Closing Fee. The Borrower shall have paid to the Lender a
closing fee in the amount of $62,500 (0.25% of the Maximum Credit
Amount), which amount shall be reduced by any amounts previously
collected by the Lender from the Borrower in connection with this
Agreement.
(g) PHI Acquisition. The PHI Acquisition shall have been duly
consummated in accordance with the PHI Acquisition Documents.
(h) PHI Field Examination. The Lender shall have completed to its
satisfaction a field examination of the books, records, accounts and
inventory of PHI.
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(i) Offering. The offering of (i) $135,000,000 10 1/2% Senior
Notes due 2004, (ii) the 33,000 Units consisting of 33,000 shares of 12
1/2% Series A Senior Redeemable Preferred Stock, 82.7429 shares of
Common Stock and warrants to purchase 82.7429 shares of Common Stock,
shall have been consummated as described in the Offering Memorandum
dated August 5, 1997.
(j) Absence of Certain Changes. Since the date of the Base
Financial Statements, there shall not have been any change in the
financial condition, properties, assets, liabilities, business or
operations of the Borrower or any of the Guarantors which change by
itself or in conjunction with all other such changes, whether or not
arising in the ordinary course of business, has been materially adverse
with respect to the Borrower or any of the Guarantors, taken as a whole.
(k) Redemption of Preferred Stock. The Borrower shall have
redeemed all outstanding shares of Series B Preferred Stock and all
outstanding shares of Series C Preferred Stock.
(l) CIP Payments. The Borrower shall have made a complete and
final settlement of all CIP Payments by paying to BancBoston Capital
Inc. an aggregate amount of not more than $6,750,000.
Section 3.02 Conditions to each Advance. The Lender's obligations to
make Advances to the Borrower from time to time pursuant to this Agreement shall
be subject to compliance by the Borrower, with the covenants and agreements
contained in this Agreement and each other Lender Agreement, and to the
satisfaction, at or before making each Advance, of all of the following
conditions precedent:
(a) Representations and Warranties. The representations and
warranties herein and those made by or on behalf of the Borrower in any
other Lender Agreement shall be correct as of the date on which any
Advance is made with the same effect as if made at and as of such time
(except with respect to transactions not prohibited hereby) and except
that references in Article 5 to the Base Financial Statements shall
refer to the most recent quarterly or annual financial statements
furnished to the Lender pursuant to Article 6 hereof.
(b) No Default, Etc. On the date of any Advance hereunder, there
shall exist no Default prior to, upon the making of, and after giving
effect to, the Advance.
(c) Legality. The making of the requested Advance shall not be
prohibited by any law or governmental order or regulation applicable to
the Lender or the Borrower and all necessary consents, approvals and
authorizations of any Person for any such Advance shall have been
obtained.
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(d) Borrowing Base Certificate. The Lender shall have received a
Borrowing Base Certificate as to the computation of credit available to
the Borrower pursuant to Section 2.02(f) dated as of June 28, 1997.
ARTICLE 4. PAYMENT AND REPAYMENT
Section 4.01 Mandatory Prepayment. If at any time the aggregate
outstanding principal balance of all Advances outstanding exceeds the amount
available under Section 2.01, then the Borrower shall immediately repay to the
Lender an amount equal to such excess.
Section 4.02 Voluntary Prepayment. With respect to a Base Rate Advance
and, subject to the provisions of Section 2.14, the Borrower may make
prepayments to the Lender on account of any outstanding principal amount of the
Note, without premium or penalty. Any outstanding principal amount of a LIBOR
Rate Advance may be prepaid prior to the expiration date of the relevant
Interest Period, subject to the provisions of Sections 2.10(b) and 2.14.
Section 4.03 Notice of Prepayment; Payment and Interest Cutoff. Notice
of each prepayment to be made pursuant to Section 4.02 hereof shall be given to
the Lender not later than 12:00 noon Boston, Massachusetts time on the date of
such prepayment and shall specify the type and total principal amount of
outstanding Advances to be paid on such date. Notice of prepayment having been
given in compliance with this Section 4.03, the amount specified to be prepaid
shall become due and payable on the date specified for prepayment and from and
after said date (unless the Borrower shall default in the payment thereof)
interest thereon shall cease to accrue. Unpaid interest on the principal amount
so prepaid accrued to the date of prepayment shall be due on the date of
prepayment.
Section 4.04 Method of Payment. All prepayments and all other payments
provided for under this Agreement may be charged by the Lender against the
Borrower's account with the Lender.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make
the Advances from time to time as contemplated hereby, the Borrower hereby makes
the following representations and warranties:
Section 5.01 Corporate Existence, Good Standing, Etc. Each of Borrower
and its Subsidiaries (a) is a corporation validly organized, legally existing
and in good standing under the laws of the jurisdiction in which it is organized
and (b) has all requisite corporate power and authority to own or to hold under
lease its properties and conduct its business as now conducted and as proposed
to be conducted by it. The Borrower has the corporate power to enter into and
perform this Agreement, and all other Lender Agreements delivered by it on the
date hereof.
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Section 5.02 Principal Place of Business; Location of Records. The
principal place of business of Borrower and each of its Subsidiaries is listed
on Schedule 5.02. The locations of the principal books and records or true and
complete copies thereof relating to the accounts and contracts of Borrower and
its Subsidiaries as of the date hereof are listed on Schedule 5.02.
Section 5.03 Qualification. Borrower and each of its Subsidiaries is
duly qualified, licensed and authorized to do business and is in good standing
as a foreign corporation in each jurisdiction where its failure to be so
qualified, licensed or authorized to do business would have a material adverse
effect upon the business, properties, assets, operations or condition, financial
or otherwise, of Borrower and its Subsidiaries, taken as a whole.
Section 5.04 Guarantors. Borrower owns 100% of the outstanding capital
stock of each of the Guarantors.
Section 5.05 Corporate Power. Except as set forth in Schedule 5.05, the
execution, delivery and performance of this Agreement, the Note and all other
Lender Agreements and other documents delivered by the Borrower or any of the
Guarantors to the Lender, and the incurrence of Indebtedness to the Lender
hereunder or thereunder, now or hereafter owing:
(a) are within the corporate power of the Borrower or the
Guarantor party thereto having been duly authorized by the Board of
Directors or other similar governing body of such Borrower or Guarantor,
and, if required by law, by such Borrower's or Guarantor's charter
documents or by its by-laws, and/or by such Borrower's or Guarantor's
stockholders;
(b) do not require any approval or consent of, or filing with,
any governmental agency or other Person (or such approvals and consents
have been obtained and delivered to the Lender) and are not in
contravention of law or the terms of the charter documents or by-laws of
such Borrower or Guarantor or any amendment thereof, except to such
extent as shall have no material adverse effect on the business,
properties, assets, operations or condition, financial or otherwise, of
Borrower and its Subsidiaries, taken as a whole; and
(c) do not and will not
(1) result in a breach of or constitute a default under
any indenture or loan or credit agreement or any other agreement,
lease or instrument to which either the Borrower or any of the
Guarantors are a party or by which the Borrower or any of the
Guarantors, or any of their respective properties are bound or
affected, except to such extent as shall have no material adverse
effect on the business, properties, assets, operations or
condition, financial or otherwise, of Borrower and its
Subsidiaries, taken as a whole,
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(2) result in, or require, the creation or imposition of
any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature on any property now
owned or hereafter acquired by the Borrower or any of the
Guarantors, except as provided in the Lender Agreements, or
(3) result in a violation of or default under any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination, award, indenture, agreement, lease or instrument
now in effect having applicability to the Borrower or any of the
Guarantors, or to any of their respective properties, except to
such extent as shall have no material adverse effect on the
business, properties, assets, operations or condition, financial
or otherwise, of Borrower and its Subsidiaries, taken as a whole.
Section 5.06 Valid and Binding Obligations. This Agreement, the Note,
and all the other Lender Agreements executed in connection herewith and
therewith constitute, or will constitute when delivered, the valid and binding
obligations of the Borrower or the Guarantors who are parties thereto,
enforceable in accordance with their respective terms.
Section 5.07 Other Agreements.
(a) Neither Borrower nor any of its Subsidiaries is a party to
any indenture, loan or credit agreement (other than agreements or
instruments evidencing Indebtedness permitted by Sections 9.01 and
9.06), or any lease or other agreement or instrument, or subject to any
charter or corporate restriction, which is likely to have a material
adverse effect on the business, properties, assets, operations or
condition, financial or otherwise of Borrower and its Subsidiaries,
taken as a whole, or on the Borrower's ability to carry out any of the
provisions of this Agreement, the Note or any of the Lender Agreements
executed in connection herewith and therewith.
(b) Except as set forth on Schedule 5.07 hereto, neither Borrower
nor any of its Subsidiaries is a party to any agreement or instrument,
or subject to any charter or corporate restriction, which would prohibit
Borrower or any of its Subsidiaries from pledging or granting a security
interest in or lien on all or any of the assets of Borrower or its
Subsidiaries in favor of the Lender as security for the Lender
Obligations, except for:
(1) agreements or instruments evidencing Indebtedness
permitted under Sections 9.01(c), 9.01(d), 9.01(e), 9.01(f),
9.01(g), or 9.01(i) but only to the extent such agreements or
instruments prohibit Borrower or its Subsidiaries from pledging
or granting in favor of the Lender a security interest in or lien
on the specific assets pledged to secure such Indebtedness;
(2) agreements or instruments evidencing Indebtedness
permitted under Section 9.06; or
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(3) contracts, leases and contract and lease rights that,
pursuant to applicable law or regulation or their terms, are not
assignable.
Section 5.08 Payment of Taxes. Except as set forth in Schedule 5.08
hereto, Borrower and each of its Subsidiaries has filed all federal, state,
county, local, foreign or other income tax, excise tax, sales tax, use tax,
gross receipts tax, franchise tax, employment and payroll related tax, property
tax and all other tax returns which are required to be filed by it and has paid,
or made adequate provision for the payment of, all taxes which have or may
become due pursuant to said returns or to assessments received, for which the
failure to file or pay would have a material adverse effect upon the financial
condition of Borrower and its Subsidiaries, taken as a whole. The Borrower has
no knowledge of any material assessments for any taxes for which adequate
reserves have not been established.
Section 5.09 Financial Statements. The Base Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved and present fairly in all
material respects the financial condition of Borrower and its Subsidiaries,
subject, in the case of interim financial statements, to audit and year-end
adjustment.
Section 5.10 Stock. As of August 8, 1997, there were presently issued
and outstanding by the Borrower the shares of capital stock indicated on
Schedule 5.10. All such shares of stock are validly issued, fully paid and
non-assessable. As of the date hereof, Borrower does not have any other capital
stock of any class outstanding.
Section 5.11 Changes in Condition. Except as set forth in Schedule 5.11
hereto, since the date of the Base Financial Statements, there has been no
material adverse change in the business or assets or in the condition, financial
or otherwise, of Borrower and its Subsidiaries, taken as a whole. Except as set
forth on Schedule 5.11 hereto or as contemplated by this Agreement, neither
Borrower nor any of its Subsidiaries has any known contingent liabilities of any
material amount which are not referred to in the Base Financial Statements or
other written materials provided to the Lender (other than contingent
liabilities of Subsidiaries of Borrower acquired after the date of the Base
Financial Statements that are not included within the Base Financial
Statements).
Section 5.12 Title to Real Property.
(a) Borrower and its Subsidiaries have good and marketable title
to the real property described as owned by them in Schedule 5.12 hereto,
subject only to the liens and other encumbrances described in said
Schedule 5.12 or as otherwise permitted by Section 9.02.
(b) All material leases of real property necessary to the
operation by Borrower and its Subsidiaries of their businesses are in
full force and effect.
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Section 5.13 Title to Personal Property. Except as set forth on Schedule
5.13, Borrower and its Subsidiaries have good and marketable title to all
personal property and assets of every type and description used by them in their
business, free and clear of any and all mortgages, liens, pledges, privileges,
charges or encumbrances of every kind, nature and description, except for liens
permitted by Section 9.02, and all properties and assets of Borrower and its
Subsidiaries used by them in their business are in their possession or custody
or under their control and all of their operating assets are in good operating
condition and repair, normal wear and tear excepted, except where the failure
(a) to possess or have custody or control of such assets or (b) to maintain such
assets in good operating condition and repair, would not have a material adverse
affect on the business, operations or financial condition of Borrower and its
Subsidiaries, taken as a whole.
Section 5.14 Patents; Trademarks; Etc.
(a) Except as set forth in Schedule 5.14 hereto, Borrower and
each of its Subsidiaries has the rights to use all patents, trade
secrets, trademarks, trade names, brand names, service marks and
copyrights, designs, permits, labels, packages and displays which are
necessary or desirable for the businesses or operations of Borrower or
its Subsidiaries as now conducted or as proposed to be conducted and
where the failure to so have such rights would have a material adverse
affect on the business, operations or financial condition of Borrower
and its Subsidiaries, taken as a whole.
(b) All of such patents, trade secrets, trademarks, trade names,
brand names, service marks and copyrights are valid and in full force
and effect, and there is no claim by or demand of any person pertaining
to, and there is no pending or (to the best knowledge of the Borrower)
threatened action, suit, proceeding or investigation relating to, or the
outcome of which, either individually or in the aggregate with any other
such claim or demand, could materially affect, any rights of Borrower or
its Subsidiaries in respect of any patents, trade secrets or copyrights
used in the business operations of Borrower and its Subsidiaries; nor to
the knowledge of the Borrower is there a basis for any such claim, suit,
proceeding or investigation.
(c) Neither Borrower nor any of its Subsidiaries is a party to or
bound by any agreement or contract (whether written or oral) containing
any covenant prohibiting it from competing in any business with any
Person in any territory presently conducted or proposed to be conducted
by it or from competing with any Person or prohibiting it from doing any
kind of business presently conducted or proposed to be conducted by it,
other than those covenants which in the aggregate are not likely to have
a material adverse affect on the business, operations or financial
condition of Borrower and its Subsidiaries, taken as a whole.
Section 5.15 Litigation. Except as set forth in Schedule 5.15 hereto,
there is no material litigation, at law or in equity, or any proceeding before
any federal, state, provincial or municipal board or other governmental or
administrative agency pending or threatened, or to the knowledge of the
Borrower, any basis therefor, which involves a material risk of any judgment or
liability
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not covered by insurance which may result, either individually or in the
aggregate, in any material adverse change in the business or assets or in the
condition, financial or otherwise, of Borrower and its Subsidiaries, taken as a
whole, and no judgment, decree, or order of any federal, state, provincial or
municipal court, board or other governmental or administrative agency has been
issued against Borrower or any of its Subsidiaries which has or is not
reasonably likely to have a material adverse effect on the business or assets or
on the condition, financial or otherwise, of Borrower and its Subsidiaries,
taken as a whole.
Section 5.16 Compliance with Laws and Contracts, Etc.
(a) Borrower and each of its Subsidiaries is in compliance in all
material respects with, each provision of any applicable law, or any
judgment, decree or order of any court or governmental or regulatory
authority, bureau, agency or official applicable to Borrower or its
Subsidiaries or the business or operations of Borrower or its
Subsidiaries, except where the failure to so comply is not reasonably
likely to, individually or in the aggregate, have a material adverse
effect on the financial position, business, or operations of Borrower
and its Subsidiaries, taken as a whole.
(b) To the best knowledge of the Borrower, Borrower and each of
its Subsidiaries is in compliance in all material respects with the
Clean Air Act, the Federal Water Pollution Control Act, the Marine
Protection Research and Sanctuaries Act, the Resource Conservation and
Recovery Act of 1976, the Comprehensive Environmental Response,
Compensation and Liability Act and any similar state or local statute or
regulation in effect in any jurisdiction in which any properties of
Borrower or any Subsidiary is located or where any of them conducts its
business, and with all applicable published rules and regulations (and
applicable standards and requirements) of the United States
Environmental Protection Agency and of any similar agencies in states or
foreign countries in which Borrower or any of its Subsidiaries conducts
its business other than those which in the aggregate are not likely to
have a material adverse affect on the financial position, business or
operations of Borrower and its Subsidiaries, taken as a whole.
(c) Except as set forth in Schedule 5.16 hereto, to the best
knowledge of the Borrower, no Hazardous Material is present in any real
property currently or formerly owned or operated by Borrower or any of
its Subsidiaries except that which is not likely to have a material
adverse effect on the financial position, business or operations of
Borrower and its Subsidiaries, taken as a whole.
(d) Except as set forth in Schedule 5.16 hereto, to the best
knowledge of the Borrower, there are no investigations, actions and
proceedings, of whatsoever nature arising under any applicable law which
pertain to the protection of the environment to which Borrower or any of
its Subsidiaries is a party or to which any of their businesses or
assets are subject which are reasonably likely to have a material
adverse effect on Borrower and its Subsidiaries or their assets,
properties or businesses, taken as a whole, and there are no facts known
to the Borrower that would in the judgment of the
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management of the Borrower provide a basis for any such investigation,
action or proceeding relating to the environment or to the discharge of
matter into the air, ground or water which are reasonably likely to have
a material adverse effect on the business, operations or financial
condition of Borrower and its Subsidiaries, taken as a whole.
(e) None of Borrower or its Subsidiaries is in violation of or in
default under any provision of its charter documents or by-laws, or any
provision of any contract, agreement or instrument (including, without
limitation, any writing evidencing any Indebtedness or any guarantee) to
which Borrower or any of its Subsidiaries is a party or by which
Borrower or any of its Subsidiaries or any of their properties is bound
or affected, the violation or default under or in respect of which are
reasonably likely to, individually or in the aggregate, materially
adversely affect the financial position, business or operations of
Borrower and its Subsidiaries, taken as a whole.
Section 5.17 Pension Plans; Employees and Benefits.
(a) Borrower and its Subsidiaries have listed on Schedule 5.17
all of their Pension Plans. All of the Pension Plans of Borrower and its
Subsidiaries are in material compliance with the provisions of ERISA.
None of such Pension Plans which are subject to the minimum funding or
termination insurance provisions of ERISA have a funding deficiency as
of the date hereof.
(b) Neither Borrower nor any of its Subsidiaries has incurred or
expects to incur any withdrawal liability to a Multiemployer Pension
Plan under the provisions of Section 4201 of ERISA.
(c) Each of Borrower and its Subsidiaries has complied with all
withholding, FICA and other employment tax obligations, except where the
failure to so comply would not have a material adverse effect on the
business, operations or financial condition of Borrower and its
Subsidiaries, taken as a whole.
Section 5.18 Outstanding Borrowed Funds Indebtedness. Neither Borrower
nor any of its Subsidiaries has any outstanding Borrowed Funds Indebtedness,
other than Borrowed Funds Indebtedness permitted under Section 9.01.
Section 5.19 Employment Practices. To the best of Borrower's knowledge,
Borrower and its Subsidiaries are in substantial compliance with all federal and
state laws respecting employment and employment practices, terms and conditions
of employment and wages and hours, other than those which in the aggregate are
not reasonably likely to have a material adverse effect on the financial
position, business or operations of Borrower and its Subsidiaries, taken as a
whole. Neither Borrower nor any of its Subsidiaries is engaged in any unfair
labor practice. Schedule 5.19 lists all collective bargaining agreements
covering any domestic employees of Borrower or any of its Subsidiaries.
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Section 5.20 Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of the assets of Borrower and its Subsidiaries, taken
as a whole.
ARTICLE 6. REPORTS
Section 6.01 Monthly Financial Statements and Reports. As soon as
available, and in any event within 30 days after the end of the first eleven
fiscal months of Borrower (except such period may be 65 days with respect to
first fiscal month of the fiscal year of Borrower and 45 days with respect to
the last fiscal month of each fiscal quarter of Borrower), the Borrower shall
furnish to the Lender:
(a) an unaudited consolidated and consolidating balance sheet of
Borrower and its Subsidiaries as of the end of such month and the
related unaudited year-to-date consolidated and consolidating statements
of earnings, stockholders' equity and cash flows for such month, which
statements shall be accompanied by a certificate in substantially the
form of Exhibit B ("Compliance Certificate") executed by the Chief
Financial Officer, Treasurer or Chief Accounting Officer of Borrower.
Borrower shall notify the Lender by telephone on the day that it
delivers each Compliance Certificate;
(b) an aging of the Borrower's and the Guarantors' accounts
receivable, on a consolidated basis, as of the end of the subject fiscal
quarter or, at the request of the Lender, as of the end of any other
period, signed by such person whom the Lender reasonably believes to be
authorized to act in this regard on behalf of the Borrower and the
Guarantors, in such form as the Lender may specify from time to time;
and
(c) a certificate concerning the Borrower's and the Guarantors'
inventory, on a consolidated basis, as of the end of the subject month
signed by the Chief Financial Officer, Treasurer or Chief Accounting
Officer, in such form as the Lender may specify from time to time.
Section 6.02 Annual Projections. As soon as available, but in any event
within 30 days after the commencement of each fiscal year, the Borrower shall
furnish to the Lender a report on annual projections of Borrower and each of its
Subsidiaries for such fiscal year.
Section 6.03 Annual Financial Statements. As soon as available, but in
any event within 90 days after the end of each fiscal year of Borrower, the
Borrower shall furnish to the Lender a consolidated balance sheet of Borrower
and its Subsidiaries as of the end of such fiscal year and the related
consolidated statements of earnings, stockholders' equity and of cash flows for
such fiscal year, in each case reported on by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or by another
independent certified public accounting firm of recognized national standing
reasonably acceptable to the Lender, to the effect that such statements present
fairly, in all material respects the financial position of Borrower and its
Subsidiaries for the periods covered in accordance with generally accepted
accounting
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principles, said report to be without qualification, except in cases of
unresolved litigation and accounting changes with which such accountants concur,
together with the statement of such accountants that they have caused the
provisions of Article 7 and 9 of this Agreement to be reviewed and that nothing
has come to their attention to lead them to believe that any Default exists
under such Articles or specifying any Default thereunder and the nature thereof,
and a Compliance Certificate executed by the Chief Financial Officer, Treasurer
or Chief Accounting Officer of Borrower. The Borrower also shall furnish to the
Lender an unaudited consolidating balance sheet of Borrower and its Subsidiaries
as of the end of each fiscal year of Borrower and the related unaudited
consolidating statements of earnings, stockholders equity and cash flows for
each such fiscal year.
Section 6.04 Notice of Defaults. As soon as possible, and in any event
within three Banking Days after any executive officer of Borrower or any of its
Subsidiaries knows of the occurrence of any Default, the Borrower shall furnish
the Lender with the statement of the Chief Financial Officer, Treasurer or Chief
Accounting Officer of Borrower, setting forth details of such Default and the
action which the Borrower has taken or propose to take with respect thereto.
Section 6.05 Notice of Litigation. Promptly after the commencement
thereof, the Borrower shall furnish the Lender with written notice of all
actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting Borrower or any of its Subsidiaries, which, if adversely determined,
would materially affect the business, properties, or financial or operating
condition of Borrower and its Subsidiaries, taken as a whole.
Section 6.06 Notice of Loss of Contracts. Promptly after the occurrence
thereof, the Borrower shall notify the Lender of any material adverse change in,
or loss of, any contract, agreement or arrangement to which Borrower or any of
its Subsidiaries is a party, which accounted for in excess of five percent (5%)
of the consolidated total revenues of Borrower and its Subsidiaries, taken as a
whole, during the four most recently-ended fiscal quarters.
Section 6.07 Communications with Others. Promptly after the sending
thereof, the Borrower shall furnish the Lender with copies of all proxy
statements, financial statements and reports which Borrower sends to all members
of any class of stockholders as a group or to all bondholders as a group, and
copies of all regular, periodic and special reports and all registration
statements which Borrower files with the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or with any
national or regional securities exchange.
Section 6.08 Reportable Events. At any time that Borrower or any of its
Subsidiaries has a Pension Plan, the Borrower shall furnish to the Lender within
thirty (30) days after Borrower or any of its Subsidiaries has notified the
Pension Benefit Guaranty Corporation that a Reportable Event with respect to any
such Pension Plan has occurred, a statement of the Chief Financial Officer,
Treasurer or Chief Accounting Officer of Borrower, setting forth the details of
such Reportable Event and the action which the Borrower has taken or proposes to
take with respect
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thereto, together with a copy of the notice of such Reportable Event to the
Pension Benefit Guaranty Corporation.
Section 6.09 Annual Pension Reports. At any time that Borrower or any of
its Subsidiaries has a Pension Plan, the Borrower shall at the request of the
Lender furnish to the Lender, promptly after the filing thereof with the
Internal Revenue Service, the Secretary of Labor, the Pension Benefit Guaranty
Corporation or other appropriate government agency, copies of each annual report
(including schedules and attachments) which is filed with respect to each
Pension Plan for each such plan year. Upon request, the Borrower also shall
furnish to the Lender.
(a) a statement of assets and liabilities of such Pension Plan as
of the end of such plan year and statements of changes in fund balance
and in financial position, or a statement of changes in net assets
available for plan benefits, for such plan year;
(b) a report of an independent certified public accountants of
recognized standing acceptable to the Lender relating to such Pension
Plan to the extent that any such report for the Pension Plan is required
by law; and
(c) an actuarial statement of such Pension Plan applicable to
such plan year, together with an opinion of an enrolled actuary of
recognized standing acceptable to the Lender, to the extent that any
such statement or opinion for the Pension Plan is required by law.
Section 6.10 Multiemployer Pension Plans. If Borrower or any of its
Subsidiaries or any Person which is a member of the controlled group or under
common control with Borrower or any of its Subsidiaries (within the meaning of
Section 414(b) of the Internal Revenue Code of 1986, as amended (the "Code"), or
Section 4001(b)(1) of ERISA) (a "Control Group Person") is required to make
contributions to a Multiemployer Pension Plan, (a) the Borrower shall notify the
Lender within thirty (30) days after the withdrawal from such Multiemployer
Pension Plan by Borrower or any of its Subsidiaries or any such Control Group
Person of the event giving rise to any such withdrawal if such withdrawal could
reasonably result in the imposition of any material withdrawal liability on such
Company or any such Control Group Person pursuant to Section 4201 of ERISA, and
(b) the Borrower shall promptly provide the Lender with copies of all
assessments of such withdrawal liability received by Borrower or any of its
Subsidiaries or any such Control Group Person.
Section 6.11 Reports to Other Creditors. Promptly after filing the same,
the Borrower shall furnish to the Lender copies of any compliance certificate
and other information that is material to the Lender or requested by the Lender
and is furnished to any other holder of the securities (including the Senior
Notes, the Series A Senior Preferred Stock and any other debt obligations) of
Borrower or any of its Subsidiaries pursuant to the terms of any indenture, loan
or credit or similar agreement and not otherwise required to be furnished to the
Lender pursuant to any other provision of this Agreement.
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Section 6.12 Management Letters. Promptly after the receipt thereof, the
Borrower shall furnish to the Lender copies of any management letter addressed
to the Audit Committee of the Board of Directors of Borrower from Borrower's
independent public accountants.
Section 6.13 New Subsidiaries; Subordinated Indebtedness. Within thirty
days after the end of each quarter in which an acquisition has occurred, the
Borrower shall furnish to the Lender (a) a complete list of all Subsidiaries
updated to reflect all Subsidiaries formed, acquired, dissolved or merged out of
existence during such quarter, (b) a list of all Subordinated Indebtedness
outstanding as of the end of such quarter setting forth the holders and the
amounts of such Indebtedness, (c) Subordination Agreements from the holders of
all Subordinated Indebtedness issued during such quarter, and (d) with respect
to any Subsidiary formed or acquired during such quarter (i) such instruments,
agreements and other documents as the Lender may deem necessary or appropriate
to reflect that such Subsidiary has become jointly and severally liable for all
Lender Obligations (collectively, the "Joinder Documents"), (ii) a certificate
of a corporate officer of such Subsidiary attesting as to its charter documents,
by-laws, the resolutions of the Board of Directors authorizing the execution,
delivery and performance of the Joinder Documents, and the incumbency of the
officers authorized to sign the Joinder Documents.
Section 6.14 Miscellaneous. The Borrower shall provide the Lender with
such other information as the Lender may from time to time reasonably request
respecting the business, properties, condition or operations, financial or
otherwise, of Borrower or any of its Subsidiaries.
ARTICLE 7. FINANCIAL RESTRICTIONS
On and after the date hereof, until all of the Lender Obligations shall
have been paid in full, the Borrower shall cause Borrower and its Subsidiaries
to observe the following covenants:
Section 7.01 Maximum Total Leverage Ratio. Borrower and its Subsidiaries
on a consolidated basis shall at all times maintain a Maximum Total Leverage
Ratio at the end of each fiscal quarter not in excess of the ratio on Schedule
7.01 attached hereto set forth next to such fiscal quarter.
Section 7.02 Total Fixed Charge Coverage Ratio. Borrower and its
Subsidiaries on a consolidated basis shall maintain a Total Fixed Charge
Coverage Ratio (i) at the end of the second and third quarter of Borrower's 1998
fiscal year not less than .75:1.00 and (ii) at the end of each subsequent fiscal
quarter not less than 1.00:1.00.
ARTICLE 8. AFFIRMATIVE COVENANTS
On and after the date hereof, until all of the Lender Obligations shall
have been paid in full, the Borrower covenants that it will comply, and will
cause each of its Subsidiaries to comply, with the following covenants and
provisions:
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Section 8.01 Taxes and Other Obligations. Each of Borrower and its
Subsidiaries (i) will duly pay and discharge, or cause to be paid and
discharged, when the same shall become due and payable, all material taxes,
assessments and other governmental charges, imposed upon it and its properties,
sales and activities, or upon the income or profits therefrom, as well as the
claims for labor, materials, or supplies which if unpaid might by law become a
lien or charge upon any of its properties, and (ii) will promptly pay or cause
to be paid when due, or in conformance with customary trade terms (but not later
than ninety (90) days from the due date in the case of trade debt), all lease
obligations, trade debt and all other Indebtedness incident to the operations of
Borrower and its Subsidiaries; provided, however, that neither Borrower nor any
of its Subsidiaries shall be required to make any such payment at any time while
it shall be contesting in good faith by appropriate actions its obligations to
do so if it shall have set aside on its books reserves (segregated to the extent
required by generally accepted accounting principles) adequate with respect
thereto, all determined in accordance with generally accepted accounting
principles and reflected in the financial statements to be delivered to the
Lender under Section 6.03. Each of Borrower and its Subsidiaries shall cause all
required tax returns and all amounts shown as due therein to be timely filed
(after giving effect to any extensions) and paid, as the case may be, and take
all other steps necessary to maintain its good standing under the laws of its
state of incorporation and the laws of any jurisdiction where it is qualified,
licensed and authorized to do business as a foreign corporation, except where
the failure to be so qualified, licensed or authorized to do business as a
foreign corporation would not have a material adverse effect upon the business,
properties, assets, operations or condition, financial or otherwise, of Borrower
and its Subsidiaries, taken as a whole.
Section 8.02 Maintenance of Property. Each of Borrower and its
Subsidiaries shall maintain its property in good repair and working order,
ordinary wear and tear excepted. Each of Borrower and its Subsidiaries shall
replace and improve its property as necessary for the conduct of its business.
Section 8.03 Insurance. Each of Borrower and its Subsidiaries (a) will
keep its principal assets which are of an insurable character insured by
financially sound and reputable insurers against loss or damage by fire,
explosion or hazards, by extended coverage in an amount and with deductibles at
least as favorable as those generally maintained by companies in similar
businesses similarly situated, and (b) will maintain with financially sound and
reputable insurers workmen's compensation insurance and insurance against other
hazards and risks and liability to persons and property as customary for
companies in similar businesses similarly situated; provided, however, that it
may effect workmen's compensation insurance or similar coverage with respect to
operations in any particular state or other jurisdiction through an insurance
fund operated by such state or jurisdiction and may also be a self-insurer with
respect to workmen's compensation and with respect to group medical benefits
under any medical benefit plan of Borrower or any of its Subsidiaries. The
Borrower will upon request of the Lender, render to the Lender a statement in
reasonable detail as to all insurance coverage required by this Section. A
description of the material elements of insurance coverage of each of Borrower
and its Subsidiaries as of the date hereof is set forth on Schedule 8.03.
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Section 8.04 Records, Accounts and Places of Business. Each of Borrower
and its Subsidiaries shall maintain comprehensive and accurate records and
accounts in accordance with generally accepted accounting principles. The
Borrower will, upon the request of the Lender, notify the Lender of (a) changes
in the places of business and or locations of books and records of Borrower and
its Subsidiaries and (b) any additional places of business or locations of books
and records of Borrower and its Subsidiaries which may arise hereafter.
Section 8.05 Inspection. At any reasonable time and from time to time,
each of Borrower and its Subsidiaries shall permit the Lender and any of its
agents or representatives, at the Borrower's expense, to examine and make copies
of and abstracts from the records and books of account and inventory of, and
visit the properties of, and conduct field examinations of, each of Borrower and
its Subsidiaries and to discuss the affairs, finances and accounts of Borrower
or any of its Subsidiaries with any officer or director of Borrower or any of
its Subsidiaries; provided, however, that, prior to the occurrence of an Event
of Default, the Borrower will not be required to pay for more than one such
inspection in any fiscal year unless the aggregate outstanding balance of all
Advances plus the aggregate potential amount available to be drawn under all
L/Cs issued by the Lender for the account of the Borrower in accordance with
Section 2.12 hereof and 20% the aggregate potential liability under all Foreign
Exchange Contracts issued by the Lender for the account of the Borrower in
accordance with Section 2.13 hereof averaged over the 60 day period prior to a
second inspection during any fiscal year exceeds (i) 50% of the Maximum Credit
Amount or (ii) 50% of the average Borrowing Base during such period, in which
case the Borrower shall be required to pay for such second inspection.
Section 8.06 Change in Officers or Directors. Borrower will promptly
notify the Lender in writing if any of the present senior executive officers or
any directors of Borrower ceases to serve in such capacities, for any reason.
Section 8.07 Existence and Business. Except for mergers and
consolidations permitted under Section 9.06 hereof, the Borrower shall maintain
its corporate existence and shall comply in all material respects with all valid
and applicable statutes, rules and regulations, except where the failure to so
comply would not be likely to have a material adverse effect on the financial
position, business or operations of Borrower and its Subsidiaries, taken as a
whole.
Section 8.08 Use of Proceeds. The proceeds of the Advances will be used
for working capital and other lawful general corporate purposes of the Borrower
or the Guarantors. None of the Borrower or any of the Guarantors will use any of
the proceeds of the Advances to purchase or carry "margin stock" (as defined in
Regulation U).
Section 8.09 Participation in Multiemployer Pension Plan. The Borrower
shall promptly notify the Lender in writing in the event that Borrower or any of
its Subsidiaries commences participation in a Multiemployer Pension Plan with
liabilities in excess of $1,000,000.
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ARTICLE 9. NEGATIVE COVENANTS
On and after the date hereof, until all of the Lender Obligations shall
have been paid in full, the Borrower covenants that it will not, and will not
permit any of its Subsidiaries to, directly or indirectly:
Section 9.01 Restrictions on Borrowed Funds Indebtedness. Create, incur,
suffer or permit to exist, or assume or guarantee, either directly or
indirectly, or otherwise become or remain liable with respect to, any Borrowed
Funds Indebtedness, except the following:
(a) Indebtedness consisting of Lender Obligations;
(b) Subordinated Indebtedness incurred in connection with a
Permitted Acquisition;
(c) Indebtedness in connection with the Senior Notes;
(d) Guaranties permitted under Section 9.05;
(e) An aggregate of $5,000,000 of Indebtedness incurred under
capitalized leases and acquisitions of fixed assets;
(f) Indebtedness incurred in connection with the issuance of
notes (i) by the Borrower to any domestic Subsidiary, (ii) by any
domestic Subsidiary to the Borrower, or (iii) by any domestic Subsidiary
to any other domestic Subsidiary;
(g) Indebtedness incurred in connection with the W.P. ▇▇▇▇▇ Lease
or any refinancing or replacement thereof not to exceed $9,000,000;
(h) Indebtedness of foreign Subsidiaries not subject to a
Guaranty by the Borrower or any Guarantor; and
(i) The existing Indebtedness attached hereto as Schedule 9.01;
and
(j) Additional Borrowed Funds Indebtedness in an aggregate amount
not to exceed $2,000,000.
Section 9.02 Restriction on Liens. Create or incur or suffer to be
created or incurred or to exist any encumbrance, mortgage, pledge, lien, charge
or other security interest of any kind upon any of its property or assets of any
character, whether now owned or hereafter acquired, or transfer any of such
property or assets for the purposes of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to payment of
its general creditors, or acquire or agree or have an option to acquire any
property or assets upon conditional sale or other title retention agreement,
device or arrangement or suffer to exist for a period of more than
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30 days after the same shall have been incurred (without posting adequate
security therefor) any Indebtedness against it which if unpaid might by law or
upon bankruptcy or insolvency, or otherwise, be given any priority whatsoever
over its general creditors, or sell, assign, pledge or otherwise transfer for
security any of its accounts, contract rights, general intangibles, or chattel
paper (as those terms are defined in the Massachusetts Uniform Commercial Code)
with or without recourse; provided, however, that Borrower or any of its
Subsidiaries may create or incur or suffer to be created or incurred or to
exist:
(a) Deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security, in connection with casualty
insurance, to secure the performance of covenants, performance bonds,
and liens for taxes, assessments or governmental charges or levies and
liens to secure claims for labor, material or supplies or in connection
with contested claims to the extent that payment thereof shall not at
the time be required to be made in accordance with Section 8.01;
(b) Encumbrances in the nature of zoning restrictions, easements,
and rights or restrictions of record on the use of real property which
do not materially detract from the value of such property or impair its
use in the business of the owner or lessee;
(c) Liens created by or resulting from any litigation or legal
proceeding which is currently being contested in good faith by
appropriate proceedings;
(d) Liens arising by operation of law to secure landlords,
lessors or renters under leases or rental agreements made in the
ordinary course of business and confined to the premises or property
rented;
(e) the pledge of notes from Subsidiaries to secure the Senior
Notes as described in the Offering Memorandum dated July 11, 1997;
(f) Liens to secure any of the Lender Obligations;
(g) Liens to secure the Indebtedness of foreign Subsidiaries
permitted by Section 9.01(h), provided that such liens are limited to
the assets of foreign Subsidiaries;
(h) Liens to secure the Indebtedness permitted by Section 9.01(e)
and (j), provided that the liens are limited to the assets subject to
the particular capitalized lease or fixed asset acquired with such
Indebtedness; and
(i) the existing liens set forth on Schedule 9.02 attached
hereto.
Nothing contained in this Section 9.02 shall permit Borrower or any
Subsidiary to incur any Indebtedness or take any other action or permit to exist
any other condition which would be in contravention of any other provision of
this Agreement.
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Section 9.03 Investments. Have outstanding or hold or acquire or make or
commit itself to acquire or make any Investment, including, without limitation,
any Investment in any Affiliate, except the following:
(a) Investments having a maturity of less than one year from the
date thereof by Borrower or any Subsidiary in or consisting of:
(1) commercial paper rated at least P-1 by ▇▇▇▇▇'▇
Investors Service, Inc., or at least A-1 by Standard & Poor's
Corporation or similarly rated by any successor to either of such
rating services;
(2) certificates of deposit, sweep accounts, time
deposits, demand deposits, repurchase agreements, and Hedge
Agreements of or with the Lender;
(3) certificates of deposit, time deposits and demand
deposits of any United States financial institution having
capital and surplus in excess of $100,000,000 and whose
short-term debt is rated AA or better by Standard & Poor's
Corporation or Aa2 or better by ▇▇▇▇▇'▇ Investors Service, Inc.,
or similarly rated by any successor to either of such rating
services; or
(4) obligations of the United States government or any
agency thereof which are backed by the full faith and credit of
the United States or any state thereof and which mature not more
than one year from the date of acquisition thereof;
(b) mutual funds that invest primarily in Investments described
in Section 9.03(a);
(c) Investments permitted in accordance with Section 9.06;
(d) Investments in Borrower or any of its Subsidiaries;
(e) Investments by foreign Subsidiaries of funds arising from
such foreign Subsidiaries' operations;
(f) Loans and advances to employees of the Borrower and the
Guarantors in an aggregate amount not to exceed $1,000,000;
(g) the existing Investments set forth on Schedule 9.03 attached
hereto; and
(h) Additional Investments in an aggregate amount not to exceed
$100,000.
Neither Borrower nor any of its Subsidiaries shall make any Investment
permitted by this Section 9.03 unless immediately after such Investment there
shall exist no Default.
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Section 9.04 Disposition of Assets. Sell, lease, assign or otherwise
dispose of any assets (other than to Borrower or any of its Subsidiaries)
without the prior written consent of the Lender, except the following:
(a) Inventory or equipment sold, leased, assigned or otherwise
disposed of in the ordinary course of business;
(b) other assets (including product lines) of Borrower or any of
its Subsidiaries disposed of at their fair market value, provided that
(i) the aggregate fair market value of all such assets does not exceed
$1,000,000 during any fiscal year, and (ii) such assets are disposed of
at their fair market value; or
(c) the Resale Facilities at their fair market values.
Section 9.05 Assumptions, Guaranties, Etc. of Indebtedness of Other
Persons. Assume, guarantee, endorse or otherwise become directly or contingently
liable (including, without limitation, by way of agreement, contingent or
otherwise, to purchase, provide funds for payment, supply funds to or otherwise
invest in any Person or otherwise assure the creditors of any such Person
against loss) in connection with any Indebtedness of any other Person (other
than the Borrower or any of its Subsidiaries), except for the following:
(a) guaranties by endorsement of negotiable instruments for
deposit or collection;
(b) L/Cs issued by the Lender hereunder for the account of the
Borrower or any Subsidiary;
(c) Investments permitted by Section 9.03;
(d) the Guaranty Agreements;
(e) the existing guaranties listed on Schedule 9.05 hereto; and
(f) Additional guaranties in an aggregate amount not to exceed
$100,000.
Section 9.06 Mergers and Acquisitions. Without the prior written consent
of Lender, enter into any merger or consolidation with or acquire all of capital
stock of or all or substantially all of the assets of any Person (whether in one
transaction or in a series of transactions), except that:
(a) any Guarantor may merge with Borrower, provided that Borrower
is the surviving corporation;
(b) any Guarantor may merge with any Guarantor;
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(c) Borrower or any of its Subsidiaries may merge with or acquire
all of the capital stock of or all or substantially all of the assets of
a Person, provided that:
(1) prior to and immediately after giving effect thereto,
no Default (including under Section 8.07 and including under
Article 7, assuming that the financial restrictions set forth in
Article 7 are applied immediately after giving effect to such
acquisition) shall exist;
(2) prior to and immediately after giving effect thereto,
the amount available for Advances under Section 2.01 is equal to
or greater than $5,000,000;
(3) the cost of such merger or acquisition as required to
be reported on the books of Borrower or such Subsidiary in
accordance with generally accepted accounting principles does not
exceed $750,000;
(4) the cost of such merger or acquisition, plus the cost
of all prior mergers or acquisitions made in accordance with this
Section 9.06(c) during the same fiscal year, does not exceed
$2,000,000;
(5) any Indebtedness issued in connection with such
acquisition shall be Subordinated Indebtedness or otherwise
permitted under this Agreement; and
(6) if such Person is acquired through the formation of or
the purchase of outstanding capital stock of any Acquired Company
(other than foreign Subsidiaries) and, unless the Lender, in its
discretion, shall have determined that such Acquired Company is
not significant to the business or operations of Borrower and its
Subsidiaries, such Acquired Company shall become jointly and
severally liable for all Lender Obligations by executing such
instruments, agreements or other documents as the Lender may deem
necessary or appropriate.
Section 9.07 Payment of Obligations. Fail to make any payment on account
of Borrowed Funds Indebtedness having an outstanding principal balance of
$500,000 or more, now or hereafter incurred or owed by Borrower or any of its
Subsidiaries, when such payment is due (after giving effect to any applicable
grace periods) (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), or fail to perform or observe any provision
of any agreement or instrument relating to such Borrowed Funds Indebtedness and
such failure shall permit the holder thereof to accelerate such Borrowed Funds
Indebtedness, or fail to perform or observe any other material agreement to
which Borrower or any of its Subsidiaries is a party or by which it or any of
its properties is bound or affected, unless any of the foregoing failures shall
be waived by the parties to such obligations; provided, however, that Borrower
or any of its Subsidiaries may refuse to make any payment on account of Borrowed
Funds Indebtedness other than Borrowed Funds Indebtedness owed to the Lender or
to perform or observe any agreement or provision other than to the Lender, the
validity or application of which is being contested in good faith by appropriate
proceedings, if
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(a) Borrower or such Subsidiary has set aside reserves deemed by
the independent certified public accountants of Borrower to be adequate
for the payment, performance or observance of the Indebtedness or
agreement or provision so contested; and
(b) such contest does not endanger any rights or properties, the
loss of which would have a material, adverse effect on the business
properties or financial or other condition of Borrower and its
Subsidiaries, taken as a whole.
Section 9.08 ERISA.
(a) At any time while Borrower or any of its Subsidiaries
maintains a Pension Plan subject to Section 412 of the Code, (1) permit
any accumulated funding deficiency to occur with respect to such Pension
Plan, (2) not comply in all material respects with the provisions of
ERISA and the Code which are applicable to the Pension Plans or (3)
permit a lien under Section 4068 of ERISA to attach to the assets of
Borrower or any of its Subsidiaries as a result of the voluntary or
involuntary termination of a Pension Plan and a subsequent failure of
Borrower or any of its Subsidiaries that is liable under Title IV of
ERISA to pay termination liability to the Pension Benefit Guaranty
Corporation; and
(b) Withdraw or permit any Control Group Person (as such term is
defined in ERISA) to withdraw, in whole or in part, from any
Multiemployer Pension Plan so as to give rise to withdrawal liability
exceeding $350,000 in the aggregate.
Section 9.09 Restricted Payments. Make any Restricted Payment except
that, to the extent available from Funds Available for Restricted Payments, the
Borrower may:
(a) make Distributions with respect of any shares of any class of
capital stock of Borrower; and
(b) make payments of principal or redeem Senior Notes or
Subordinated Indebtedness,
provided, however, that prior to and immediately after giving effect to
any such Distribution or other payment, no Default (including under
Section 8.07 and including under Article 7 assuming that the financial
restrictions set forth in Article 7 are applied immediately after giving
effect to such redemption) shall exist.
Section 9.10 Transactions with Affiliates. Except for transactions
expressly permitted in this Agreement, neither Borrower nor any of its
Subsidiaries shall sell or transfer any assets to, or purchase or acquire any
assets of, or otherwise engage in any material transaction with, any Affiliate
(other than Borrower or its Subsidiaries) or any officer or director of Borrower
or any of its Subsidiaries, except upon fair and reasonable terms comparable to
those Borrower or its Subsidiaries could obtain or could become entitled to in
an arm's-length transaction with a Person who was not any such Affiliate and
except (i) the payment of management fees to Hyde Park
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Holdings, Inc., ▇▇▇▇▇▇▇▇ Press, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and their affiliates in an
aggregate amount of not more than $750,000 per fiscal year, and (ii)
transactions pursuant to arrangements existing as of the date hereof described
on Schedule 9.10 hereto and in Securities and Exchange Commission filings.
Section 9.11 Agreements Restricting Pledge of Assets. Except as set
forth in Schedule 9.11 hereto, neither Borrower nor any of its Subsidiaries
shall enter into any agreement or instrument with any person that would prohibit
Borrower or any of its Subsidiaries from pledging or granting a security
interest in or lien on all or any of its assets to or in favor of the Lender as
security for the Lender Obligations.
Section 9.12 Payments in Respect of Subordinated Indebtedness. Neither
Borrower nor any of its Subsidiaries shall make any payment in respect of
Subordinated Indebtedness, except as expressly provided under the terms of the
applicable subordination agreement among the holder of such Subordinated
Indebtedness, the issuer of such Subordinated Indebtedness, and the Lender.
ARTICLE 10. EVENTS OF DEFAULT AND REMEDIES
Section 10.01 Events of Default. Each of the following events shall be
deemed to be Events of Default hereunder:
(a) The Borrower shall fail to make any payment in respect of the
principal of, or interest or fees on or in respect of, any of the Lender
Obligations within five (5) days after the due date thereof, whether at
the stated payment dates or by acceleration or otherwise;
(b) The Borrower shall fail to perform or observe any of the
terms, covenants, conditions or provisions of Article 7 or Sections
8.03, 8.05 or 9.07 hereof and such failure shall continue for a period
of ten (10) days after written notice from the Lender to the Borrower;
(c) Any material representation or warranty made or deemed made
by the Borrower herein or in any other Lender Agreement or which is
contained in any certificate, document or financial or other statement
furnished at any time under or in connection with this Agreement shall
prove to have been incorrect in any material respect on or as of the
date made or deemed made;
(d) The Borrower shall fail to perform or observe any of the
other terms, covenants, conditions or provisions to be performed or
observed by the Borrower under this Agreement or any other Lender
Agreement (other than as provided in paragraphs (a) through (c) of this
Section), and such failure shall continue for a period of 30 days after
written notice from the Lender to Borrower;
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(e) A Change in Control shall have occurred;
(f) Borrower or any of its Subsidiaries shall be involved in
financial difficulties as evidenced:
(1) by its commencement of a voluntary case under Title 11
of the United States Code as from time to time in effect, or by
its authorizing, by appropriate proceedings of its board of
directors or other governing body, the commencement of such a
voluntary case;
(2) by its filing an answer or other pleading admitting or
failing to deny the material allegations of a petition filed
against it commencing an involuntary case under said Title 11, or
seeking, consenting to or acquiescing in the relief therein
provided, or by its failing to controvert timely the material
allegations of any such petition;
(3) by the entry of an order for relief in any
involuntary case commenced under said Title 11;
(4) by its seeking relief as a debtor under any applicable
law, other than said Title 11, of any jurisdiction relating to
the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors, or by its
consenting to or acquiescing in such relief;
(5) by the entry of an order by a court of competent
jurisdiction (A) finding it to be bankrupt or insolvent, (B)
ordering or approving its liquidation, reorganization or any
modification or alteration of the rights of its creditors, or (C)
assuming custody of, or appointing a receiver or other custodian
for all or a substantial part of its property and such order
shall not be vacated or stayed on appeal or otherwise stayed
within 60 days;
(6) by the filing of a petition against it under said
Title 11 which shall not be vacated within 60 days; or
(7) by its making an assignment for the benefit of, or
entering into a composition with, its creditors, or appointing or
consenting to the appointment of a receiver or other custodian
for all or a substantial part of its property;
(g) There shall have occurred a judgment against Borrower or any
of its Subsidiaries in any court for an amount in excess of $500,000,
and from which no appeal has been taken or with respect to which all
appeal periods have expired, unless such judgment is, to the Lender's
reasonable satisfaction, insured against in full (subject to applicable
deductibles) or shall have been satisfied within sixty (60) days of
occurrence or all appeal periods have expired; or
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(h) Any Guaranty of the Lender Obligations shall at any time
after its execution and delivery and for any reason (except as a result
of action of the Lender) cease to be in full force and effect, or shall
be declared null and void, or the validity or enforceability thereof
shall be contested or denied by such other party to such Guaranty.
Section 10.02 Remedies. Upon the occurrence of an Event of Default, in
each and every case, the Lender may proceed to protect and enforce the rights of
the Lender hereunder and under applicable law, by suit in equity, action at law
and/or other appropriate proceeding either for specific performance of any
covenant or condition contained in this Agreement or any other Lender Agreement
or in any instrument delivered to the Lender pursuant hereto or thereto, or in
aid of the exercise of any power granted in this Agreement, any Lender Agreement
or any such instrument, including, without limitation, requiring that all
outstanding L/Cs be fully cash collateralized, declaring all or any part of the
unpaid balance of the Lender Obligations then outstanding to be forthwith due
and payable, whereupon such unpaid balance or part thereof shall become so due
and payable without presentation, protest or further demand or notice of any
kind, all of which are hereby expressly waived to the extent not prohibited by
applicable law that may not be waived, and the Lender may proceed to enforce
payment of such balance or part thereof in such manner as it may elect; provided
that if there shall have occurred an Event of Default under Sections 10.01(f),
the unpaid balance of the Lender Obligations shall automatically become due and
payable and the Lender shall take any action it deems necessary or advisable to
enforce payment of such balance and to protect and enforce the rights of the
Lender hereunder and under applicable law.
Section 10.03 Setoff. In addition to, and without limitation of, any
rights of the Lender under applicable law, upon the occurrence of an Event of
Default, any Indebtedness from the Lender to the Borrower (including all account
balances, whether provisional or final and whether or not collected or
available) may be offset and applied toward the payment of the Lender
Obligations.
ARTICLE 11. WAIVERS; AMENDMENTS; REMEDIES
Except as otherwise expressly set forth in any particular provision of
this Agreement, any consent or approval required or permitted by this Agreement
or in any other Lender Agreement to be given by the Lender may be given, and any
term or condition of this Agreement or of any Lender Agreement may be amended,
and the performance or observance by the Borrower of any term of this Agreement
or any other Lender Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) by the Lender only by
written consent with respect thereto. No delay or omission on the Lender's part
in exercising its rights and remedies against the Borrower or any other
interested party shall constitute a waiver. The Lender's waiver of any breach by
the Borrower in one or more instances shall not constitute or otherwise be an
implicit waiver of subsequent breaches. To the extent not prohibited by
applicable law which cannot be waived, and other than express notice
requirements set forth herein, the Borrower hereby agrees to waive, and does
hereby absolutely and irrevocably waive (a) all
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51
presentments, demands for performance, notices of nonperformance, protests,
notices of protest and notices of dishonor in connection with any of the
Indebtedness evidenced by the Note, (b) any requirement of diligence or
promptness on the Lender's part in the enforcement of its rights under the
provisions of this Agreement or any Lender Agreement, and (c) any and all
notices of every kind and description which may be required to be given by any
statute or rule of law with respect to its liability (1) under this Agreement or
in respect of the Indebtedness evidenced by the Note or any other Lender
Obligation or (2) under any other Lender Agreement, except as may be expressly
provided under such Agreement. No course of dealing between the Borrower and the
Lender shall operate as a waiver of any of the Lender's rights under this
Agreement or any Lender Agreement or with respect to any of the Lender
Obligations. This Agreement shall be amended only by a written instrument
executed by the Borrower and the Lender, making explicit reference to this
Agreement. The Lender's rights and remedies under this Agreement and under all
subsequent agreements between or among the Borrower and the Lender shall be
cumulative and any rights and remedies expressly set forth herein shall be in
addition to, and not in limitation of, any other rights and remedies which may
be applicable to the Lender in law or at equity.
ARTICLE 12. LIMITATION ON LIABILITY; INDEMNIFICATION
Any instrument made by or transferred from the Borrower and released or
endorsed by the Lender is without recourse against the Lender, and the Borrower
agrees that the Lender is not responsible for the accuracy or authenticity of
any such document. The Borrower agrees that the Lender does not have
responsibility for any of the debts of the Borrower including, without
limitation, claims for wages or claims for payment for material supplied to the
Borrower. The Borrower shall defend the Lender against all claims that the
Lender is responsible for any matter referred to in this Article 12. The
Borrower shall indemnify the Lender and hold the Lender harmless in respect of
all such claims.
ARTICLE 13. MISCELLANEOUS
Section 13.01 Successors and Assigns. Whenever in this Agreement or in
any other Lender Agreement, any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such Person;
and all terms and provisions of this Agreement and any of the other Lender
Agreements, including all covenants, promises and agreements by or on behalf of
the Borrower, a Guarantor or the Lender, shall be binding upon and inure to the
benefit of the Borrower, such Guarantor and the Lender and their respective
permitted successors and assigns. The Borrower authorizes the Lender to disclose
to any permitted purchaser or prospective permitted purchaser of any interest
(including a participation interest) in any Lender Obligations any financial or
other information pertaining to Borrower or its Subsidiaries; provided that such
purchaser or prospective purchaser has agreed to comply with the provisions of
Section 13.03 with respect to such information.
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Section 13.02 Assignments and Participations. Neither the Borrower nor
any of the Guarantors may assign any of its rights or obligations under this
Agreement, the Note or any other Lender Agreement, without the prior written
consent of the Lender. The Lender may, without the prior written consent of
Borrower, assign, sell, participate, transfer or otherwise dispose of any
portion of its interests, rights and obligations under this Agreement and the
other Lender Agreements; provided, however, that the Lender maintains a
Commitment of at least $5,000,000.
Section 13.03 Confidentiality. The Lender agrees to hold confidential
all non-public information which it may receive from or with respect to Borrower
and its Subsidiaries pursuant to this Agreement or any other Lender Agreement,
except for disclosure to (a) legal counsel, accountants, and other professional
advisors to the Lender who agree to keep such information confidential, (b) as
required by law, regulation, or legal process, (c) in connection with any legal
proceeding to which the Lender is a party, and (d) a permitted assignee or
participant who agrees to comply with this Section 13.03.
Section 13.04 Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall survive the
execution of this Agreement and the delivery of the Note and the making of the
Advances herein contemplated.
Section 13.05 Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, the Lender shall not be obligated to
extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
Section 13.06 Notices. All notices and other communications made or
required to be given pursuant to this Agreement shall be in writing. Any notice,
demand or other communication in connection with this Agreement shall be deemed
to be given if given in writing (including telecopy or similar teletransmission)
addressed as provided below (or to the addressee at such other address as the
addressee shall have specified by notice actually received by the addressor),
and if either (a) actually delivered in fully legible form to such address or
(b) in the case of a letter, five days shall have elapsed after the same shall
have been deposited in the United States mails, with first-class postage prepaid
and registered or certified.
\ (1) If to the Lender, as follows:
FLEET NATIONAL BANK
One Federal Street
Mail Code: MAOFD04G
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
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With a copy to:
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP
Exchange Place
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, P.C.
(2) If to the Borrower, as follows:
HIGH VOLTAGE ENGINEERING CORPORATION
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
Chief Financial Officer
With a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇, Esq.
Section 13.07 Entire Agreement. This Agreement and the documents and
other materials contemplated hereby constitute the entire agreement of the
Borrower and the Lender and express their entire understanding with respect to
credit advanced or to be advanced by the Lender to the Borrower.
Section 13.08 Governing Law. This Agreement shall be governed by and
construed and enforced under the internal laws (and not the law of conflicts) of
The Commonwealth of Massachusetts, but giving effect to federal laws applicable
to national banks. The Borrower hereby irrevocably submits to the non-exclusive
jurisdiction of any United States federal or Massachusetts state court sitting
in Boston in any action or proceedings arising out of or relating to any Lender
Agreements and the Borrower hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in any such court.
Section 13.09 Headings. Section headings in this Agreement are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of this Agreement.
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Section 13.10 Counterparts. This Agreement and amendments to it may be
executed in several counterparts, each of which shall be an original. The
several counterparts shall constitute a single Agreement.
Section 13.11 Bank Holidays. Whenever any payment to be made under this
Agreement shall become due on a day on which the Lender is required or permitted
by law to remain closed, such payment may be made on the next succeeding Banking
Day on which the Lender is open, and such extension shall be included in
computing the interest in connection with such payment.
Section 13.12 Expenses; Indemnification. The Borrower shall reimburse
the Lender for any reasonable costs, internal charges and out-of-pocket expenses
(including reasonable attorneys' fees and time charges of attorneys for the
Lender) paid or incurred by the Lender in connection with (i) the preparation,
review, execution, delivery, administration, amendment, modification or
administration of this Agreement and any of the other Lender Agreements and
related instruments and documents and (ii) the Lender's due diligence review of
the Borrower and its Subsidiaries, including the Lender's field examinations of
the books, records, accounts and inventory of the Borrower and its Subsidiaries,
including PHI. The Borrower shall reimburse the Lender for any reasonable costs,
internal charges and out-of-pocket expenses (including reasonable attorneys'
fees and time charges of attorneys for the Lender, which attorneys may be
employees of the Lender, as the case may be) paid or incurred by the Lender in
connection with the collection and enforcement of this Agreement and any of the
other Lender Agreements and related instruments and documents. The Borrower
further agrees to indemnify the Lender, its directors, officers and employees
against all losses, claims, damages, penalties, judgments, liabilities and
reasonable expenses (including, without limitation, all expenses of litigation
or preparation therefor whether or not the Lender is a party thereto) which any
of them may pay or incur in connection with litigation or investigation of,
against or involving Borrower or any of its Subsidiaries arising out of or
relating to (A) this Agreement, (B) the other Lender Agreements, (C) the
transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any loan hereunder (other than
litigation commenced by Borrower or any of its Subsidiaries against the Lender
which seeks enforcement of the rights of Borrower or any of its Subsidiaries
hereunder or under any Lender Agreement which litigation is resolved by the
entry of an order, decree or judgment from a court of competent jurisdiction in
favor of Borrower or its Subsidiaries and adverse to the Lender), or (D) the
Borrower's proposed acquisition of TVM Group, Inc. and its subsidiaries,
provided that the Lender shall not be indemnified hereunder for any loss, claim,
damage, penalty, judgment, liability or expense resulting from its gross
negligence or wilful misconduct. The obligations of the Borrower under this
Section 13.12 shall survive the termination of this Agreement. The Borrower also
agrees to pay all stamp and other taxes in connection with the execution and
delivery of this Agreement and related instruments and documents.
Section 13.13 Severability of Provisions. Any provision in any Lender
Agreement that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions of such Lender Agreement in
that jurisdiction or the operation, enforceability, or validity of that
provision
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in any other jurisdiction, and to this end the provisions of all Lender
Agreements are declared to be severable.
Section 13.14 Nonliability of Lender. The relationships between the
Borrower and the Lender shall be solely that of borrower and lender. The Lender
shall have no fiduciary responsibilities to the Borrower. The Lender undertake
no responsibility to the Borrower to review or inform the Borrower of any matter
in connection with any phase of the Borrower's businesses or operations.
Section 13.15 Schedules. Each reference herein to a particular Schedule
hereto shall be deemed to refer to such Schedule as updated from time to time by
the Borrower and delivered to the Lender.
Section 13.16 Term of Agreement. This Agreement shall terminate whenever
all of the following conditions shall have been met: (i) all principal and
interest on all Advances and all other amounts due and payable under this
Agreement have been paid and discharged in full, (ii) all L/Cs and other
financial accommodations provided by the Lender under this Agreement shall have
been terminated or an indemnity provided in a form acceptable to the Lender,
(iii) the Borrower shall have no further right to borrow under this Agreement;
and (iv) the Borrower shall have provided the Lender with a general release in
form acceptable to the Lender. Until each of the foregoing contributions are
satisfied, the Lender shall have no obligation to release financing statements
or guarantees or return any other collateral securing the obligations of the
Borrower to the Lender. The provisions of this Article 13 shall survive
termination of this Agreement.
Section 13.17 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, THE BORROWER HEREBY WAIVES AND COVENANTS
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT
TO TRIAL BY JURY IN ANY FORUM IN RESPECT TO ANY ISSUE, CLAIM, DEMAND, ACTION,
CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE NOTE OR ANY
OTHER LENDER AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE
LENDER OBLIGATIONS OR IN ANY WAY CONNECTED WITH THE DEALINGS OF THE BORROWER OR
THE LENDER IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. The
Borrower acknowledges that it has been informed by the Lender or its authorized
representatives that the provisions of this Section constitute a material
inducement upon which the Lender are relying and will rely in making the
Advances and other credit extensions from time to time under this Agreement and
any other present or future agreement relating to the Lender Obligations. The
Lender or its authorized representatives may file an original counterpart or a
copy of this Section with any court as written evidence of consent by the
Borrower to the waiver of the right to trial by jury.
[END OF TEXT]
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IN WITNESS WHEREOF, the Borrower and the Lender have caused this Credit
Agreement to be executed by their proper and duly authorized officers as of the
date first written above.
"BORROWER"
HIGH VOLTAGE ENGINEERING CORPORATION
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
--------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Chief Financial Officer
"LENDER"
FLEET NATIONAL BANK
/s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
57
EXHIBIT A
REVOLVING CREDIT NOTE
$25,000,000 August 8 1997
FOR VALUE RECEIVED, the undersigned HIGH VOLTAGE ENGINEERING
CORPORATION, a Massachusetts corporation (the "Company"), hereby promises to pay
to the order of FLEET NATIONAL BANK ("FLEET"), in lawful money of the United
States of America in immediately available funds at its office at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the principal sum of Twenty-Five Million
Dollars ($25,000,000) or such lesser sum as may from time to time be outstanding
under the terms of a Credit Agreement between the Company and FLEET of even date
herewith (the "Credit Agreement").
The Company promises to pay interest on the unpaid principal balance at
the rates and at the times provided in the Credit Agreement. This Note may be
prepaid only in accordance with the terms of the Credit Agreement.
This Note will become due and payable at the Maturity Date (as defined
in the Credit Agreement) and earlier upon the occurrence of an Event of Default
(as defined in the Credit Agreement). The undersigned agrees to pay all
reasonable legal fees and other costs of collection of this Note as set forth in
the Credit Agreement.
No delay or omission on the part of the holder in exercising any right
hereunder shall operated as a waiver of such right, nor shall any waiver on one
occasion be deemed to be an amendment or waiver of any such right with respect
to any future occasion. The undersigned and any and every endorser and guarantor
of this Note regardless of the time, order or place of signing hereby waives
presentment, demand, protest and notice of every kind and assents to any one or
more indulgences, to any substitution, exchange or release of collateral (if at
any time there be available collateral to the holder of this Note) and to the
addition or release of any other party or persons primarily or secondarily
liable.
This Note shall be governed and construed under the laws of the
Commonwealth of Massachusetts and shall be deemed to be under seal.
HIGH VOLTAGE ENGINEERING CORPORATION
By:
----------------------------------
Name
Title:
WITNESS:
----------------------------
58
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Ladies and Gentlemen:
Pursuant to the provisions of that certain Credit Agreement dated as of
August 8, 1997 (the "Agreement"), between Fleet National Bank (the "Lender") and
High Voltage Engineering Corporation (the "Company"), the undersigned hereby
certifies as follows:
1. The representations and warranties contained in Article 5 of the
Agreement are true and correct on and as of the date hereof as
if made on and as of such date (except to the extent that such
representations and warranties expressly relate to an earlier
date and except for changes which are not in the aggregate
materially adverse to the Lender);
2. Since the end of the last fiscal year, neither the business nor
assets nor the condition, financial or otherwise, of the Company
has been adversely affected in any material manner [except
describe];
3. Except as set forth in the documents attached hereto and except
as heretofore disclosed in a previous Compliance Certificate,
there has been no change in the charter documents of the Company
as certified to the Lender at closing;
4. The financial statements submitted herewith are in compliance
with the applicable provisions of Section 6.01 of the Agreement
and have been prepared in accordance with generally accepted
accounting principles consistent with those applied in the
preparation of the Base Financial Statement furnished to the
Lender, present fairly the information contained therein and the
financial condition of the Company, and are correct in all
material respects, subject in the case of interim statements to
normal year-end adjustments and absence of certain footnotes
required under generally accepted accounting principles [except
describe];
5. The undersigned has reviewed the provisions of the Agreement and
there is no Event of Default thereunder, and no condition which,
with the passage of time or giving of notice or both, would
constitute an Event of Default thereunder [except describe];
6. Attached hereto are calculations demonstrating that, based upon
the financial statements of the Company submitted herewith, the
Company is in compliance with all applicable financial
covenants; and
59
7. Except as set forth in the documents attached hereto, there has
been no change in the chief executive officer or other places of
business of the Company or any of the Guarantors since the last
Compliance Certificate.
Terms defined in the Agreement and not otherwise expressly defined
herein or in the Schedule attached hereto are used herein or therein with the
meanings so defined in the Agreement.
In witness whereof, the undersigned has executed this Certificate on the
_____ day of ____________________, 199_.
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title:Chief Financial Officer
60
SCHEDULE A
To Compliance Certificate
Financial Covenant Compliance Computations as of*
1. Section 7.01 Maximum Total Leverage Ratio of Borrower
and its Subsidiaries on a Consolidated Basis
Borrowed Funds Indebtedness = $____________
EBITDA = $____________
The radio of the aggregate principal amount of all Borrowed
Funds Indebtedness outstanding to EBITDA for the twelve-month
period ending [date of last Fiscal quarter] is ______:1.0
which does not exceed ______:1.0 as required by Section 7.01
2. Section 7.02 Total Fixed Charge Coverage Ratio of Borrower
and its Subsidiaries on a Consolidated Basis
Cash Flow = $____________
Fixed Charges = $____________
The ratio of Cash Flow to Fixed Charges is ______:1.0 which is
not less than ____:1.0 as required by Section 7.02
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* Insert date of most recently completed fiscal quarter