Exhibit 10.1
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RESTATED LOAN AGREEMENT
Dated as of September 14, 1995
between
KULICKE AND ▇▇▇▇▇ INDUSTRIES, INC.
and
MIDLANTIC BANK, N.A.
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RESTATED LOAN AGREEMENT
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THIS LOAN AGREEMENT, dated as of September 14, 1995 (herein called the
"Agreement"), is entered into between KULICKE AND ▇▇▇▇▇ INDUSTRIES, INC.
("Borrower") and MIDLANTIC BANK, N.A. ("Bank").
WITNESSETH:
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A. Borrower desires to establish certain financing arrangements with and
borrow funds from Bank and Bank is willing to establish such arrangements for
and make loans and advances to Borrower under the terms and provisions
hereinafter set forth.
B. The parties desire to define the terms and conditions of their
relationship and to reduce their agreements to writing.
C. It is intended hereby to restate the terms of all prior agreements
between the parties relative to the credit facilities included herein, including
the terms of that certain Loan Agreement dated November 27, 1991 as amended to
date.
NOW, THEREFORE, the parties hereto, intending to be legally bound, covenant
and agree as follows:
SECTION 1 DEFINITIONS AND RULES OF INTERPRETATION.
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SECTION 1.01 Definitions.
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"American" shall mean American Fine Wire Corp., an Alabama corporation.
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"American Acquisition Agreement" shall mean that certain Agreement and Plan
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of Acquisition, dated as of the date hereof, among Borrower, Kulicke and ▇▇▇▇▇
Acquisition Corporation, Circle "S" Industries, Inc. and certain shareholders of
Circle "S" Industries, Inc., a copy of which is attached hereto as Exhibit
"1.01(A)".
"Annual Financial Statements" shall mean the annual financial statements of
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Borrower and its consolidated subsidiaries, including all notes thereto, which
statements shall include a balance sheet as of the end of a calendar year and an
income statement and a statement of cash flows for such year, all setting forth
in comparative form the corresponding figures from the previous year, all
prepared in conformity with Generally Accepted Accounting Principles and
accompanied by a financial audit of independent certified public accountants who
are reasonably satisfactory to the Bank which shall state that such accountants
have audited such financial statements and that such financial statements are in
conformity with Generally Accepted Accounting Principles.
"Bank Indemnitees" shall mean the Bank, any pledgee, assignee or subsequent
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holder or owner of any Note or any interest in any Note, including each
Participant, any affiliate, successor, assign or subsidiary of the Bank or any
Participant, and each of their respective shareholders, members, directors,
officers, employees, counsel, agents and contractors, as well as their
respective heirs, beneficiaries, administrators, executors, personal
representatives, trustees, receivers, successors and assigns.
"Business Day" shall mean a day, other than a Saturday or Sunday, on which
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Bank is open for business.
"Closing Date" shall mean the date of this Agreement.
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"Collateral Documents" shall mean all of the documents and instruments to
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be executed and delivered to Bank pursuant to Sections 2 and 3 hereof.
"Current Ratio" shall mean, as of any date, the ratio of current assets to
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current liabilities, determined in accordance with GAAP.
"Debt" shall mean, as of any date, all debts and liabilities as would be
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shown on a balance sheet prepared in accordance with GAAP, and shall
specifically include without limitation all contingent liabilities.
"EBITDA" shall mean Pre Tax Earnings plus the sum of depreciation and
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amortization and interest expense during the period for which Pre Tax Earnings
was calculated.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
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amended.
"Event of Default" shall mean an event specified in Section 7 hereof.
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"Financial Statements" means any Annual Financial Statements.
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"Fixed Charges" means the sum of (a) principal and interest payments on
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Funded Debt, (b) Unfunded Capital Expenditures, and (c) all federal, state and
local income taxes whether paid or accrued.
"Fixed Charge Coverage Ratio" shall mean, as of any date, the ratio of (a)
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EBITDA for the 12 months then ended, to (b) Fixed Charges for such period.
"Funded Debt" means, as of any date, all Indebtedness for borrowed money
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(including without limitation the current portion of such Indebtedness and
including further, without limitation obligations under financing leases but not
obligations under operating leases) which (a) matures more than one year from
such
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date or (b) is an installment on a note, lease or similar contract which
has one or more other installments which mature more than one year from such
date. Cash advances under the Revolving Loan are not Funded Debt.
"Generally Accepted Accounting Principles" or "GAAP" shall mean, with
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respect to any Person, such accounting practice as, in the opinion of the
independent accountants retained by such Person and who are reasonably
acceptable to the Bank, conforms at the time to generally accepted accounting
principles, consistently applied. Generally accepted accounting principles
means those principles and practices which are (a) recognized as such by the
Financial Accounting Standards Board, (b) applied for all periods after the date
hereof in a manner consistent with the manner in which such principles and
practices were applied to the most recent financial statements of the relevant
Person furnished to the Bank, and (c) consistently applied for all periods after
the date hereof so as to reflect properly the financial condition, and results
of operations and cash flows, of such Person. If any change in any accounting
principle or practice is required by the Financial Accounting Standards Board in
order for such principle or practice to continue as a generally accepted
accounting principle or practice, all reports and financial statements required
hereunder shall be prepared in accordance with such change. Solely for purposes
of this Agreement, if any such material change is made, then either (i) the
financial covenants shall be appropriately modified by agreement between the
parties to reflect such change or (ii) if no such agreement is reached, the
financial covenant compliance computations shall be computed without regard to
such change.
"Indebtedness" shall mean all items of indebtedness, obligation or
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liability, due or to become due, liquidated or unliquidated, direct or
contingent, joint or several, of any nature whatsoever and out of whatever
transaction arising, including, without limitation:
(A) All indebtedness guaranteed, directly or indirectly, in any manner, or
endorsed (other than for collection or deposit in the ordinary course of
business) or discounted with recourse;
(B) All indebtedness in effect guaranteed, directly or indirectly, through
agreements, contingent or otherwise to (l) purchase such indebtedness, (2)
purchase, sell or lease (as lessee or lessor) property, products, materials or
supplies, or to purchase or sell services, primarily for the purpose of
enabling any debtor to make payment of such indebtedness or to assure the owner
of the indebtedness against loss, or (3) supply funds to or in any other manner
invest in any debtor;
(C) All indebtedness secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be secured by)
any mortgage, deed of trust, pledge,
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lien, security interest or other charge or encumbrance upon property owned or
acquired subject to such mortgage, deed of trust, pledge, lien, security
interest, charge or encumbrance, whether or not the liabilities secured thereby
have been assumed; and
(D) All indebtedness incurred as the lessee of goods or services under
leases that, in accordance with GAAP, consistently applied, should be reflected
on the lessee's balance sheet.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
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amended.
"Laws" shall mean all ordinances, statutes, rules, regulations, orders,
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injunctions, writs or decrees of any government or political subdivision or
agency thereof or any court or similar entity established by any thereof.
"Leverage Ratio" means, as of any date, the ratio of (a) Debt (other than
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Subordinated Indebtedness) as of such date to (b) Tangible Net Worth on such
date.
"Loans" shall mean collectively the Term Loan and the Revolving Loan.
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"Material Adverse Effect" shall mean any specified event, condition or
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occurrence as to Borrower which individually or in the aggregate with any other
such event, condition or occurrence and whether through the effect on Borrower's
business, property, prospects, profits or condition (financial or otherwise) or
otherwise could reasonably be expected to (a) result in, to the extent not fully
covered by insurance, any liability, loss, forfeiture, penalty, costs, fine,
expense, payment or other monetary obligation or loss of property of Borrower in
excess of 5% of Borrower's consolidated shareholder's equity, determined in
accordance with GAAP, as reflected in Borrower's then most recently prepared
annual or quarterly financial statements, and/or (b) materially impair the
ability of the Borrower to meet all of its Obligations to the Bank.
"Notes" shall mean, collectively, the Term Note and the Revolving Loan
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Note.
"Obligations" shall mean the obligations of Borrower to pay the principal
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of and interest on the Notes and to satisfy and perform all of its other
existing and future obligations, liabilities and indebtedness to Bank, whether
hereunder, under any of the Collateral Documents, or otherwise, whether matured
or unmatured, direct or contingent, joint or several, including, without
limitation, any extensions, modifications, renewals thereof and substitutions
therefor.
"Participants" shall mean each Person to which Bank may
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pursuant to Section 2.12 hereof sell participations in all or any portion of
the Loans.
"Permitted Investments" shall mean (a) direct obligations of, or
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obligations fully and unconditionally guaranteed by, the United States of
America, (b) deposit accounts in, or certificates of deposit issued by, any
commercial bank in the United States of America having total capital and surplus
in excess of Seventy Five Million Dollars ($75,000,000) or certificates of
deposit which are fully insured by the Federal Deposit Insurance Corporation,
(c) investment grade (rated in one of the four highest rating categories)
commercial paper, bankers' acceptances or similar financial instruments, (d)
investment grade bonds (rated in one of the four highest rating categories), (e)
mutual funds having at least eighty percent (80%) of their assets in cash and/or
investments included in (a), (b), (c) or (d) above and/or (f) investments of the
type described in Exhibit "1.01(B)".
"Permitted Liens" shall mean:
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(A) Liens for taxes, assessments or similar charges incurred in the
ordinary course of business which are not yet due and payable;
(B) Pledges or deposits made in the ordinary course of business to secure
repayment of workers' compensation, or to participate in any fund in connection
with compensation, insurance, old-age pensions or other social security
programs, as well as any underlying lien, if any, being replaced by such pledge
or deposit;
(C) Liens of mechanics, materialmen, warehousemen, carriers, or other like
lienors, securing obligations incurred in the ordinary course of business that
are not yet due and payable;
(D) Good faith pledges or deposits made in the ordinary course of business
to secure performance of bids, tenders, contracts (other than for the repayment
of borrowed money) or leases, not in excess of ten percent (10%) of the
aggregate amount due thereunder unless the amount due thereunder is less than
$1,000,000, or to secure statutory obligations, or surety, appeal, indemnity,
performance or other similar bonds required in the ordinary course of business,
as well as any underlying lien, if any, being replaced by such pledge, deposit
or bond;
(E) Liens in favor of Bank; and
(F) Purchase money security interests covering real estate or equipment in
favor of the vendor or financier thereof, provided that the principal amount
secured by each such security interest does not exceed the unpaid purchase price
for such equipment.
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"Person" shall mean any individual, corporation, participation,
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association, joint-stock company, trust, unincorporated organization, joint
venture, court or government division or agency thereof.
"Pre-Tax Earnings" shall mean gross revenues and other proper income
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credits, less all proper income charges other than taxes on income, all
determined in accordance with Generally Accepted Accounting Principles; provided
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that there shall not be included in such revenues or charges (a) any gains
resulting from the write-up of assets; (b) any proceeds of any life insurance
policy; or (c) any gain or loss which is classified as "extraordinary" in
accordance with Generally Accepted Accounting Principles. Pre-Tax Earnings can
be less than zero for all purposes of this Agreement.
"Rates" shall mean the respective rates of interest specified in Section 2
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of this Agreement.
"Revolving Loan" shall mean the Revolving Loan facility established
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pursuant to Section 2 of this Agreement.
"Revolving Loan Limit" shall mean $10,000,000.
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"Revolving Loan Note" shall mean promissory note evidencing Borrower's
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obligation to repay the Revolving Loan.
"Revolving Loan Termination Date" shall mean March 30, 1996 or such other
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later date to which Bank and Borrower may (without obligation to do so)
hereafter agree in writing in connection with any renewal or extension of the
Revolving Loan.
"Subordinated Indebtedness" shall mean Indebtedness the repayment of which
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is subordinated to the Loans and all other Obligations in form and manner
satisfactory to Bank.
"Tangible Net Worth" shall mean the excess of assets over liabilities as
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would be shown on a balance sheet of Borrower, prepared in accordance with GAAP,
consistently applied, plus Subordinated Indebtedness, provided that such amounts
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are to be net of amounts carried on the books of Borrower for any of the
following: (i) unamortized debt discount and expense, (ii) patents, patent
applications, copyrights, trademarks, trade names, goodwill (including any
excess of cost over net assets of businesses acquired), experimental or
organization expenses and other like reserves and intangible assets, (iii) loans
and advances (other than advances for employee relocation or expenses in the
ordinary course of business) to employees, officers, directors, shareholders or
any other Person, and (iv) investments (other than Permitted Investments and
investments permitted pursuant to Section 6.02(A) hereof) or other interests
(whether debt, equity or otherwise) in any Person.
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"Term Loan" shall mean the Term Loan to be made pursuant to Section 2.04 of
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this Agreement.
"Term Note" shall mean a promissory note evidencing Borrower's obligation
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to repay the Term Loan.
"Unfunded Capital Expenditures" shall mean capital expenditures for which
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no Debt has been incurred.
"Working Capital" shall mean the excess of current assets over current
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liabilities as would be shown on a balance sheet of Borrower, prepared in
accordance with GAAP, consistently applied. For purposes of the computation of
Working Capital, all outstanding cash advances under the Revolving Loan shall be
treated as current liabilities.
SECTION 1.2 Interpretation of Financial Measurements;
Financial Statements.
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Except where specifically otherwise provided herein, all financial
measurements shall be computed for Borrower and its consolidated subsidiaries on
a consolidated basis, and all references herein to financial statements of the
Borrower shall be references to such consolidated financial statements.
SECTION 2 THE LOANS.
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SECTION 2.01 Revolving Loan. Under and subject to the terms and conditions
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of this Agreement and within the Revolving Loan Limit and as requested by an
authorized officer of Borrower from time to time through but not including the
Revolving Loan Termination Date, Bank hereby establishes a Revolving Loan
facility (the "Revolving Loan") pursuant to which Bank will make cash advances
and issue letters of credit from time to time or for the account of Borrower.
Unless sooner terminated pursuant to any other provision of this Agreement, the
Revolving Loan will terminate and the entire principal balance of the Revolving
Loan, together with all unpaid accrued interest thereon, shall be repaid on the
Revolving Loan Termination Date, without notice or demand. Each advance under
the Revolving Loan shall be made or issued following the giving of notice by an
authorized officer of Borrower to Bank (which notice shall be given not later
than three (3) Business Days preceding the Business Day on which such cash
advance is required), specifying the date of borrowing and the amount thereof.
Cash advance shall be in multiples of $50,000. Upon fulfillment of all
applicable conditions to such advance set forth herein, Bank will make such
funds available to the Borrower at Bank's main office by depositing same in
Borrower's deposit account with Bank. The outstanding principal balance under
the Revolving Loan may fluctuate from time to time, to be reduced by repayments
made by Borrower, to be increased by future loans, advances and extensions of
credit which may be made by Bank, to or for the
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benefit of Borrower.
SECTION 2.02 The Revolving Loan Note. Contemporaneously herewith, Borrower
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will execute and deliver to Bank the Revolving Loan Note to evidence Borrower's
obligation to repay Bank for all amounts due or which may become due in
connection with the Revolving Loan, with interest, all as more fully described
in the Revolving Loan Note, the terms of which are incorporated herein by
reference.
SECTION 2.03 Use Of Revolving Loan Proceeds. Advances under the Revolving
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Loan shall be used by the Borrower exclusively for working capital.
SECTION 2.04 The Term Loan. The Bank will under the terms and subject to
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the conditions of this Agreement, make a term loan (the "Term Loan") to Borrower
in the principal sum of up to $50,000,000. To the extent that, pursuant to the
Agreement and Plan of Acquisition included in the definition of the American
Acquisition Agreement, a portion of the consideration payable by Borrower
thereunder is payable by issuance of the promissory notes referred to therein,
up to $45,000,000 of the proceeds of the Term Loan will be advanced by Bank
in the form of issuance of one or more letters of credit (the "American Letters
of Credit") for Borrower's account and for the benefit of the holders of said
promissory notes, in the form of Exhibit "2.04" hereto. The Term Loan
(including the amount of draws made under the American Letters of Credit) will
be repaid as set forth in the Term Note. If on the date on which the entire
principal balance of the Term Loan is due (either at maturity, by acceleration,
pursuant to Section 6.01(L) hereof, or otherwise) or is otherwise repaid by
Borrower there remain outstanding any letters of credit, including without
limitation the American Letters of Credit, Borrower will pay to Bank cash in the
face amount thereof to be held by Bank for use to reimburse itself for and upon
any draw thereafter made under any such letter of credit.
SECTION 2.05 The Term Note. Contemporaneously herewith, Borrower will
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execute and deliver to Bank the Term Note to evidence Borrower's obligation to
repay to Bank, with interest, the principal amount of the Term Loan, all as more
fully set forth in the Term Note, the terms of which are incorporated herein by
reference.
SECTION 2.06 Use of Term Loan Proceeds. The proceeds of the Term Loan
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(including issuance of the American Letters of Credit) shall be advanced
concurrently with closing under the American Acquisition Agreements ("Advance
Date"), and shall be used by Borrower exclusively for the purpose of paying the
consideration payable by Borrower under the American Acquisition Agreements.
SECTION 2.07 Interest Rates and Calculation of Interest.
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(A) As used in this Section 2.07, the following terms shall have the
following meanings:
(i) "Applicable LIBOR Rate Margin" means with respect to principal of the
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Term Loan, .50 percentage points during the Bridge Period and, if the LIBOR Rate
Option is selected for the Term Period as set forth in Section 2.07(B)(2)
hereof, 1.00 percentage point during the Term Period.
(ii) "Applicable Prime Rate Margin" means with respect to principal of the
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Revolving Loan, .25 percentage points.
(iii) "Bridge Period" means, with respect to the Term Loan, the 90 day
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period after the Advance Date.
(iv) "Fixed Rate" means, with respect to the Term Loan if a fixed rate is
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selected for the Term Period as set forth in Section 2.07(B)(2) hereof, a fixed
rate of interest equal to 115 basis points above the rate in effect (as
reflected in the Wall Street Journal or other financial reporting service, as
reasonably determined by Bank) 5 Business Days prior to the date on which such
Fixed Rate is to be effective for U.S. Treasury Securities having a five year
term, such Fixed Rate to remain fixed for the Term Period of the Term Loan.
(v) "Good Business Day" means any day when both Bank and banks in London,
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England are open for business.
(vi) "LIBOR Rate" means, with respect to principal of the Term Loan during
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the Bridge Period and, if the LIBOR Rate option is selected for the Term Period
as set forth in Section 2.07(B)(2) hereof, during the Term Period, for any day
during each Rate Period, (a) the per annum rate of interest determined by Bank
as being the composite rate available to Bank at approximately 11:00 a.m. London
time in the London Interbank Market, as referenced by Telerate (page 3750), in
accordance with the usual practice in such market, for the Rate Period elected
by Borrower, in effect two (2) Good Business Days prior to the date on which
such LIBOR Rate is to be effective for deposits of dollars in amounts equal (as
nearly as may be estimated) to that portion of the principal balance of the Term
Loan for which such election is being made as of the time of such determination,
as such rate (the "Base Rate") may be adjusted by the reserve percentage
applicable during the Rate Period (or if more than one such percentage shall be
applicable, the daily average of such percentages for those days in such Rate
Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including without limitation, any emergency, supplemental or other
marginal reserve requirement) for the Bank with respect to liabilities or assets
consisting of or including "Eurocurrency Liabilities" as such term
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is defined in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time, having a term equal to such Rate Period
("Eurocurrency Reserve Requirement"), plus (b) the Applicable LIBOR Rate Margin.
Such reserve adjustment shall be effectuated by calculating, and the LIBOR Rate
shall be equal to, (a) the quotient of (i) the Base Rate divided by (ii) one
minus the Eurocurrency Reserve Requirement, plus (b) the Applicable LIBOR Rate
Margin.
(vii) "Notification" means, with respect to all periods in which the LIBOR
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Rate is in effect, telephonic notice (which shall be irrevocable) by an
authorized officer of a Borrower to Bank, which notice shall be given no later
than 10:00 a.m. Philadelphia time, on the day which is at least 4 Business Days
prior to the Business Day on which such rate is to become effective, which
notice shall specify (a) that a LIBOR Rate is being selected for a portion of
outstanding principal of the Term Loan, (b) the principal amount of Term Loan to
be subject to such rate; (c) the Rate Period(s) selected; and (d) the date on
which such request is to become effective (which date shall be a date selected
in accordance with Section 2.07(B) hereof).
(viii) "Prime Rate" means a per annum rate of interest, equal to the rate
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of interest in effect from time to time at Bank as its Prime Rate (which is not
necessarily the lowest interest rate charged by Bank for loans), and whether or
not announced or otherwise communicated to Borrower, such Prime Rate to change
from time to time as of the effective date of each change in Prime Rate.
(ix) "Rate Period" means, with respect to all periods in which to the
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LIBOR Rate is in effect, the period of time for which a particular LIBOR Rate
shall apply to a portion of the principal of the Term Loan. Rate Periods for
principal earning interest at the LIBOR Rate shall, during the Bridge Period, be
for periods of 30, 60 or 90 days, and, during the Term Period, shall be for
periods of 30, 60, 90 or 180 days, and for no other length of time, provided
that no Rate Period may end on other than a Business Day, or after the maturity
date of the Term Loan.
(x) "Repayment Premium" means the amount which Borrower shall pay to
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Bank as a premium in connection with a repayment of outstanding principal of the
Term Loan earning interest at the Fixed Rate at the time of repayment, which
amount shall be the amount determined by Bank (which determination shall be
conclusive) to be the difference between (a) the present value of the interest
payments that would have been paid for the balance of the Term Period to Bank by
Borrower on such repaid portion of principal accruing at the Fixed Rate but for
such repayment, and (b) the present value of the interest payments that would be
paid for the balance of the Rate Period or Term Period, as applicable, to Bank
at the United States Treasury Rate if on or about the date of repayment Bank
made a hypothetical investment of the repaid portion of principal accruing at a
fixed rate of interest in United
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States Treasury securities maturing on or about the last date of the Term Period
and bearing interest accruing from the date of repayment.
(xi) "Term Period" means the 5 year period commencing after the
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expiration of the Bridge Period.
(xii) "United States Treasury Rate" means (a) a rate of interest per
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annum, equal to (rounded downward to the nearest 1/100 of 1%) the annual yield
(as reflected in the Wall Street Journal or other financial reporting services,
as reasonably determined by Bank) Bank could obtain by purchasing on the date of
repayment of the Term Loan, United States Treasury Securities with semi-annual
interest payments, maturing on or about the last date of the Term Period amounts
approximately equal to that amount of the repaid portion which was applied to
principal earning interest at the Fixed Rate at the time of repayment, plus (b)
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115 basis points.
(B) (1) The outstanding principal balance of cash advances under the
Revolving Loan shall earn interest at the Prime Rate minus the Applicable Prime
Rate Margin (the "Prime-Based Rate").
(2) The outstanding principal balance of the Term Loan shall, during
the Bridge Period, earn interest at the LIBOR Rate, and shall, during the Term
Period, earn interest at either the Fixed Rate or the LIBOR Rate, as shall be
selected by Borrower by written notice to Bank not less than 5 Business Days
prior to the commencement of the Term Period.
(3) Whenever the LIBOR Rate is in effect, Borrower will from time to
time provide Bank with such Notifications such that one or more LIBOR Rates for
one or more Rate Periods shall at all time be in effect for the entire principal
balance of the Term Loan, subject in all events to the other provisions of this
Section 2.07(B). Should any Rate Period expire without Borrower having provided
Bank with a Notification as to the Rate Period to next apply to the principal of
the Term Loan subject to the expired Rate Period, Borrower will be deemed to
have elected a 30 day Rate Period for such principal.
(4) Borrower understands and agrees: (i) that the LIBOR Rate
applicable to any portion of outstanding principal of the Term Loan may be
different from the LIBOR Rate applicable to any other portion of outstanding
principal of the Term Loan, (ii) that no more than 5 portions of principal of
the Term Loan bearing interest at the LIBOR Rate may be outstanding at any one
time, (iii) that the minimum amount of principal to which any LIBOR Rate shall
apply shall be $2,500,000, and (iv) that Bank shall have the right to terminate
any Rate Period, and the interest rate applicable thereto, prior to maturity of
such Rate Period, if Bank determines in good faith (which determination shall be
conclusive) that continuance of such interest rate has been made unlawful by
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any Law to which Bank or any Participant may be subject, in which event the
principal to which such terminated Rate Period relates thereafter shall earn
interest at the Prime-Based Rate.
(5) Borrower shall indemnify Bank and any Participant against any and all
loss or expense (excluding loss of margin) which Bank or such Participant has
sustained or incurred as a consequence of: (a) any payment of any principal
amount earning interest at the LIBOR Rate on a day other than the last day of
the corresponding Rate Period (whether or not any such payment is made pursuant
to acceleration upon or after an Event of Default, demand by Bank otherwise made
under this Agreement, by reason of optional or mandatory prepayment, or for any
other reason, and whether or not any such payment is consented to by Bank,
unless Bank shall have expressly waived such indemnity in writing); (b) any
attempt by Borrower to revoke in whole or part any Notification given pursuant
to this Agreement; or (c) any attempt by Borrower to convert or renew any
principal amount earning interest at the LIBOR Rate on a day other than the last
day of the corresponding Rate Period (whether or not such conversion or renewal
is consented to by Bank, unless Bank shall have expressly waived such indemnity
in writing).
(6) In the event that, as a result of any changes in applicable Law or the
interpretation thereof, it becomes unlawful for Bank or any Participant to
maintain Eurodollar liabilities sufficient to fund any LIBOR Rate loan, then
Bank's obligations to convert to or maintain a LIBOR Rate shall be suspended
until such time as Bank or such Participant may again cause the LIBOR Rate to be
applicable to its share of the Term Loan and such principal earning interest at
the LIBOR Rate shall accrue interest instead at the Prime-Based Rate.
(7) The LIBOR Rate may, upon five (5) days' prior notice to Borrower, be
adjusted by Bank on a prospective basis to take into account the additional or
increased cost of maintaining any necessary reserves for Eurodollar deposits
(but without duplication for any adjustment made on account of Eurocurrency
Reserve Requirements in determining the LIBOR Rate) or increased costs due to
changes in applicable law or regulation or the interpretation thereof occurring
subsequent to the commencement of the then applicable Rate Period, including but
not limited to changes in tax laws (except changes of general applicability in
corporate income tax laws as they affect financial institutions) and changes in
the reserve requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor) that increase the cost to Bank or any
Participant of funding the LIBOR Rate. Bank shall promptly give Borrower notice
of such a determination and proposed adjustment, which determination shall be
conclusive as to the correctness of the fact and the amount of such proposed
adjustment. The Borrower may, by written notice to Bank provided within two (2)
Business Days after the date of Bank's notice to Borrower of such proposed
adjustment, (a) request Bank to furnish to Borrower a statement setting forth
the basis for
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adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, and/or (b) prepay that portion of principal of the Term Loan
accruing interest at the LIBOR Rate with respect to which such adjustment is
made, together with the Repayment Premium thereon, and/or (c) elect to have that
portion of principal of the Term Loan accruing interest at the LIBOR Rate accrue
interest, effective on the first Business Day after Bank's receipt of such
written notice, at the Prime-Based Rate for the balance of the applicable Rate
Period.
(8) In the event that the Borrower shall have requested the LIBOR Rate
in accordance herewith and Bank shall have reasonably determined that Eurodollar
deposits equal to the amount of the principal to earn interest at the LIBOR Rate
and for the Rate Period specified are unavailable, impractical or unlawful with
respect to Bank or any Participant, or that the rate based on the LIBOR Rate
will not adequately and fairly reflect the cost to Bank or any Participant of
the LIBOR Rate applicable to the specified Rate Period, of making or maintaining
the principal amount of the Term Loan at the LIBOR Rate specified by the
Borrower during the Rate Period specified, or that by reason of circumstances
affecting Eurodollar markets, adequate and reasonable means do not exist for
ascertaining the rate based on the LIBOR Rate applicable to the specified Rate
Period, Bank shall promptly give notice of such determination to the Borrower
that the LIBOR Rate is not available. A determination by Bank hereunder shall be
conclusive evidence of the correctness of the fact and amount of such additional
costs or unavailability. Upon such a determination, (i) the right of Borrower to
select, convert to, or maintain a LIBOR Rate shall be suspended until Bank shall
have notified the Borrower that such conditions shall have ceased to exist, and
(ii) that portion of the Term Loan subject to the requested LIBOR Rate shall
accrue interest instead at the Prime-Based Rate.
(C) Interest shall be computed on the basis of a 360 day year but charged
for the actual number of days elapsed.
(D) If, at any time, any of the Rates shall be finally determined by any
court of competent jurisdiction, governmental agency or tribunal to exceed the
maximum rate of interest permitted by any applicable Laws, then, for such time
as such Rate would be deemed excessive, application thereof shall be suspended
and there shall be charged in lieu thereof the maximum rate of interest
permissible under such Laws.
(E) Should there occur an Event of Default under this Agreement, then
interest on the Loans shall automatically without notice or demand increase to a
rate per annum which is two (2) percentage points higher than the otherwise
applicable Rate(s) ("Default Rate"). Interest at the Default Rate shall
continue to accrue notwithstanding the entry of any judgment hereon or on any of
the Notes, and all such judgments shall bear interest at the Default Rate
provided for herein.
13
(F) Interest shall be payable monthly on the first day of each calendar
month or, as to interest accruing at the LIBOR Rate, on the last day of the Rate
Period or on the 90th day of the Rate Period if the Rate Period exceeds 90 days.
SECTION 2.08 Payments to Bank. All payments of interest on and principal
----------------
of the Loans, all fees and all other sums payable to Bank hereunder shall be
paid directly to Bank in immediately available funds, in such currency of the
United States of America as is, at the time of payment, legal tender for the
payment of public and private debts. To the extent Bank sends Borrower
statements of any amounts due or outstanding hereunder for interest or
principal, such statements shall be considered correct and conclusively binding
on Borrower unless Borrower notifies Bank in writing to the contrary within ten
(10) days of the date of any statement which it deems to be incorrect specifying
the reason for its position. Bank is hereby irrevocably authorized to charge
Borrower's deposit accounts with Bank, and/or charge the Revolving Loan, for any
and all principal, interest and any other amounts due from Borrower to Bank
hereunder and under any of the Collateral Documents.
SECTION 2.09 Due Date Extension. If any payment of principal of, or
------------------
interest on any of the Loans or any payment of any fee provided for herein or
any other amount due hereunder shall fall due on a day which is not a Business
Day of Bank, then such due date shall be extended to the next succeeding
Business Day and additional interest and fees shall accrue and be payable for
the period of such extension.
SECTION 2.10 Mandatory Prepayment; Optional Prepayment;
Application of Payments; Repayment Premium.
------------------------------------------
(a) In the event the aggregate principal amount of the Revolving Loan
(including the face amount of all outstanding letters of credit and all related
reimbursement obligations) shall at the time of any determination of the
Revolving Loan Limit be in excess of the Revolving Loan Limit at such time,
Borrower will forthwith without notice or demand, repay and reduce the principal
balance of the Revolving Loan in an aggregate amount equal to such excess.
(b) Borrower may at its option but subject to the terms of subpart (c)
below, prepay the principal of the Loans from time to time and in whole or in
part, with any such prepayment of the Term Loan to be applied in the inverse
order of maturity. For this purpose, and for purposes of subpart (c) below,
Borrower will at the time of prepayment designate the portion(s) of principal
earning interest at a particular Rate(s) to which such prepayment is to be
applied.
(c) In the event Borrower elects or is required to prepay principal of
the Term Loan bearing interest at the Fixed Rate pursuant to subpart (b) above,
Borrower shall pay to Bank
14
together with such prepayment a Repayment Premium.
(d) Notwithstanding anything in subparts (a)-(b) to the contrary, upon
acceleration by Bank of the Obligations after the occurrence of an Event of
Default, Bank may apply any and all payments to any portion of the Loans in any
order as it shall in its discretion determine.
SECTION 2.11 Fees.
----
Borrower agrees to pay Bank the following fees:
(A) Unused Commitment Fee. Borrower shall pay Bank an Unused Commitment
---------------------
Fee equal to 1/4 of 1% of the daily average unused amount of the Revolving Loan,
calculated and payable quarterly in arrears.
(B) Letter of Credit Fees. Borrower shall pay to Bank in connection with
---------------------
letters of credit 1% per annum (calculated on the basis of a 360-day year) on
the face amount thereof, payable upon issuance and on each anniversary thereof.
SECTION 2.12 Participations. Borrower acknowledges that the Bank may from
--------------
time to time sell participations in all or any portion of the Loans to one or
more Persons (each a "Participant") as participant of Bank in the Loans. In
this regard, Borrower agrees that Bank may from time to time provide financial
and other information concerning the Borrower to each Participant as well as to
any or prospective participant.
SECTION 3 CONDITIONS.
-----------
The making of the Loans hereunder is subject to the following conditions
precedent (all documents to be in form and substance satisfactory to Bank and
its counsel):
SECTION 3.01 Documents Required for the Closing. The Borrower shall have
----------------------------------
duly delivered to the Bank the following on the Closing Date:
(A) The Notes, duly executed on behalf of Borrower;
(B) A certified (as of the date of the Closing hereof) copy of
resolutions of board of directors of Borrower authorizing the execution,
delivery and performance of this Agreement, the Notes, the Collateral Documents
and each other document and instrument to be delivered pursuant hereto and any
other instrument, agreement or document referred to herein;
(C) A certified (as of the date of the Closing) copy of Borrower's by-
laws;
(D) A certificate (dated the date of the Closing) of Borrower's corporate
secretary or assistant secretary as to the
15
incumbency and specimen signatures of the officers of Borrower executing this
Agreement, the Notes, the Collateral Documents and each other document to be
delivered pursuant hereto or thereto;
(E) A copy, certified as of the most recent date practicable by the
appropriate Secretary of State, of Borrower's articles of incorporation,
together with a certificate (dated the date of the Closing) of Borrower's
corporate secretary or assistant secretary to the effect that such certificate
of incorporation has not been amended since the date of the aforesaid
certification;
(F) Certificates, as of the most recent dates practicable, of the
aforesaid Secretaries of State, the Secretary of State of each state in which
Borrower is qualified as a foreign corporation, and the department of revenue or
taxation of each of the foregoing states, as to the subsistence and good
standing of Borrower;
(G) A written opinion of counsel to Borrower, dated the date of the
Closing and addressed to the Bank, in form and substance satisfactory to Bank
and its counsel;
(H) A certificate, dated the date of the Closing, signed by the
president or a vice president of Borrower to the effect that:
(1) The representations and warranties set forth in Section 5 of
this Agreement are true, complete and correct as of the date of the Closing;
(2) No Event of Default hereunder, and no event which, with the
giving of notice or the passage of time, or both, could become such an Event of
Default, has occurred as of the date of the Closing;
(3) No material adverse change has occurred in the Borrower's
financial condition since that reflected in the most recent Financial Statements
delivered to Bank; and
(4) All conditions to Closing set forth in this Agreement have
been fulfilled.
SECTION 3.02 Certain Events. At the time of the Closing and each request
--------------
for an advance or letter of credit under the Revolving Loan, no Event of Default
shall have occurred and be continuing, and no event shall have occurred and be
continuing which, with the giving of notice or the passage of time, or both,
could constitute an Event of Default.
SECTION 3.03 American Acquisition Agreement. It is an express condition
------------------------------
to the making of the Term Loan that (a) all transactions contemplated by the
American Acquisition Agreement will be consummated currently therewith in
accordance with the terms thereof and in all events on or before December 31,
1995 and
16
(b) to the extent that a portion of the Term Loan Proceeds are in the
form of issuance by Bank of the American Letters of Credit, Borrower will
execute and deliver to Bank a letter of credit reimbursement agreement in form
and substance acceptable to Bank.
SECTION 4. [INTENTIONALLY OMITTED]
SECTION 5 REPRESENTATIONS, WARRANTIES AND SURVIVAL.
----------------------------------------
SECTION 5.01 Representations and Warranties. To induce Bank to enter
------------------------------
into this Agreement, Borrower represents and warrants to Bank that:
(A) Borrower is a corporation duly organized, validly existing and in
good standing under the Laws of its state of incorporation as shown on Exhibit
"5.01(A)" hereto; Borrower has the lawful power to own its property and to
engage in the business it conducts, and is duly qualified and in good standing
in each of the jurisdictions where the nature of its business makes such
qualification necessary and where the failure to so qualify would have a
Material Adverse Effect; the states in which Borrower is qualified to do
business, and the addresses and counties of all places of business of Borrower,
are as set forth in Exhibit "5.01(A)" to this Agreement;
(B) Borrower is not in default with respect to any of its existing
Indebtedness where such default would have a Material Adverse Effect, and the
making and performance of this Agreement, the Notes and the Collateral Documents
will not (immediately, with the passage of time, or with the giving of notice
and the passage of time):
(1) Violate the charter, minutes or by-law provisions of Borrower
or violate any Laws or result in a default under any contract, agreement or
instrument to which Borrower is a party or by which Borrower or its property is
or may be bound, where the same would have a Material Adverse Effect, or
(2) Result in the creation or imposition of any security interest
in, or lien or encumbrance upon, any of the assets of Borrower, except such as
are in favor of Bank;
(C) Borrower has the power and authority to enter into and perform
this Agreement, the Notes and the Collateral Documents and to incur the
Obligations herein and therein provided for, and has taken all proper and
necessary action, corporate or otherwise, to authorize the execution, delivery
and performance of this Agreement, the Notes and the Collateral Documents;
(D) This Agreement is and the Collateral Documents and the Notes when
executed and delivered will be, valid, binding and enforceable against Borrower
in accordance with their respective terms, except to the extent that the
enforceability thereof is
17
limited by bankruptcy and similar laws and equitable principles affecting the
rights of creditors generally;
(E) Except as disclosed in Exhibit "5.01(E)" to this Agreement, there
are no judgments or judicial or administrative orders or proceedings or other
litigation pending, or threatened, against or affecting Borrower in any court or
before any governmental authority or arbitration board or tribunal, and Borrower
is not in violation of any order of any court, governmental authority,
arbitration board or tribunal or administrative agency, or any applicable
statute, regulation or ordinance of the United States of America, or of any
state, city, town, municipality, county or of any other jurisdiction, or of any
agency thereof (including without limitation, environmental laws and
regulations), which would have a Material Adverse Effect;
(F) As of the date of the most recent Financial Statements, Borrower
has not had any Indebtedness which is required by GAAP to be disclosed therein
including, without limitation, liabilities for taxes and any interest or
penalties relating thereto, except to the extent reflected (in a footnote or
otherwise) and reserved against in the Financial Statements or as disclosed in
or permitted by this Agreement. Borrower does not know of any basis for the
assertion against it of any liability required by GAAP to be disclosed in the
Financial Statements not fully reflected and reserved against therein;
(G) Borrower has filed all federal, state and local tax returns and
other reports as required by Law to be filed by it prior to the date hereof, has
paid or caused to be paid all taxes, assessments and other governmental charges
that are due and payable prior to the date hereof, and has made adequate
provision for the payment of such taxes, assessments or other charges accruing
but not yet payable, where the failure to do any of the foregoing would have a
Material Adverse Effect, except to the extent that Borrower is contesting the
same in good faith and by appropriate proceeding and an adequate reserve has
been made therefor. Borrower has no knowledge of any deficiency or additional
assessment against it in connection with any taxes, assessments or charges not
provided for on its books the failure to pay any of which would have a Material
Adverse Effect;
(H) Except as otherwise disclosed in Exhibit "5.01(H)" to this
Agreement, Borrower has complied with all applicable Laws the noncompliance with
which would have a Material Adverse Effect with respect to (1) restrictions,
specifications or other requirements pertaining to products that it manufactures
and sells or to the services it performs, or that it intends to manufacture,
sell or perform, (2) the conduct or planned conduct of its business operations,
and (3) the use, maintenance and operation or planned use, maintenance and
operation of the real and personal property owned or leased by it in the
operation or planned operation of its business. Exhibit "5.01(H)" to this
Agreement discloses any and all such noncompliance by Borrower with all such
applicable Laws as
18
of the date hereof;
(I) All necessary consents, approvals or authorizations of, or filing,
registration or qualification with, any Person required to be obtained by
Borrower in connection with the execution and delivery of this Agreement, the
Notes and the Collateral Documents or the undertaking or performance of any
Obligation hereunder or thereunder has been obtained;
(J) Any employee benefit plan including those subject to ERISA
maintained by Borrower or to which Borrower contributed or contributes meets the
minimum funding standards established in Section 302 of ERISA and complies in
all material respects with all applicable requirements of ERISA and of the
Internal Revenue Code and with all applicable rulings and regulations issued
under the provisions of ERISA and the Internal Revenue Code, and no Prohibited
Transaction or Reportable Event, within the meaning of Section 4043 of ERISA,
has occurred and is outstanding with respect to any employee benefit plan of
Borrower. Furthermore, no employee benefit plan, including pension plan, has
asserted or threatened to assert a claim or demand for withdrawal liability
under ERISA as a result of any withdrawal from any said plan by Borrower or any
member of its Controlled Group which has occurred on or before the date hereof;
(K) Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System), and no
part of the proceeds of the Loans will be used, directly or indirectly, to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock;
(L) Borrower has obtained all licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its property and
assets and to the conduct of its business, the failure to obtain which would
have a Material Adverse Effect;
(M) Borrower is not a guarantor or surety of, or otherwise responsible
in any manner with respect to, any undertaking of any other Person except as set
forth in the Financial Statements;
(N) Borrower has no knowledge of any violations which would have a
Material Adverse Effect of any state or federal statutes, regulations, laws or
orders pertaining to environmental matters, including, without limitation the
federal Comprehensive Environmental Response Compensation and Liability Act
("CERCLA"), Environmental Cleanup Responsibility Act ("ECRA") and the federal
Resource Conservation and Recovery Act ("RCRA") relating to the operations and
properties of Borrower;
(O) Borrower has not received a summons, citation,
19
notice, directive, letter or other communication, written or oral, from any
state or federal agency concerning any intentional or unintentional action or
omission by Borrower resulting in any material releasing, spilling, leaking,
pumping, pouring, emitting, emptying, dumping or otherwise disposing of
Hazardous Waste (as defined in 12 U.S.C. (S) 6903(5)) or Hazardous Substance (as
defined in 42 U.S.C. (S) 9609(14));
(P) Borrower has no corporate affiliates other than as set forth in
Exhibit "5.01(P)" hereto;
(Q) There are no liens, security interests or other encumbrances on or
affecting any of Borrower's personal or real property, other than Permitted
Liens.
SECTION 5.02 Survival. By completing the Closing, Bank does not thereby
--------
waive any breach of warranty or misrepresentation made by Borrower hereunder, or
under any other document or agreement delivered to Bank at Closing or otherwise
referred to herein, and all of Bank's claims and rights resulting from any
breach or misrepresentation by Borrower is expressly reserved by Bank. All of
the foregoing representations and warranties set forth in this Section 5 shall
survive until all Obligations hereunder are paid and satisfied in full.
SECTION 5.03 No Default. Each request by a Borrower that Bank make an
----------
advance or issue a letter of credit under the Loans shall, as of the date of
such request, constitute a representation and warranty by Borrower to Bank that
no Event of Default or event which with the passage of time or the giving of
notice or both would constitute an Event of Default exists hereunder.
SECTION 6 COVENANTS.
---------
SECTION 6.01 Affirmative Covenants. Borrower covenants and agrees with
---------------------
Bank that, so long as any of the Obligations hereunder remain unsatisfied or
Bank has any commitment in connection therewith, it will comply with the
following covenants:
(A) Borrower will furnish to Bank:
(1) Within one hundred five (105) days after each fiscal year of
Borrower, a copy of Borrower's Annual Financial Statements;
(2) Within sixty (60) days of the close of each of the first
three fiscal quarters, and within one hundred twenty (120) days of the
close of its fiscal year, a copy of Borrower's Form 10Q for such fiscal
quarter and with its Form 10K for such fiscal year, as filed with the
Securities and Exchange Commission;
(3) Concurrently with the foregoing, a certificate of Borrower,
certified by its chief financial officer,
20
reflecting compliance or non-compliance with the financial covenants set
forth in Exhibit 6.01(L).
(B) Borrower will maintain its properties in good condition and repair
(normal wear and tear excepted), and will pay and discharge or cause to be paid
and discharged when due, the cost of repairs to or maintenance of the same, and
will pay or cause to be paid all rental payments due.
(C) Borrower will carry insurance with reputable insurers in form and
amount and against fire (with extended coverage), liability and such other risks
as are customary with companies in the same or similar business in the same area
as Borrower.
(D) Borrower will pay or cause to be paid when due, all taxes,
assessments and charges or levies imposed upon Borrower or on any of its
property or which it is required to withhold and pay over, except where
contested in good faith by appropriate proceedings with adequate reserves
therefor (as determined by Borrower's certified public accountants) having been
set aside on its books.
(E) Borrower will maintain complete and accurate books and records and
will permit access by Bank during business hours to such books and records and
will permit Bank to inspect its properties and operations. Bank may at any time
and from time to time on reasonable notice to Borrower, audit and conduct
examinations of any Borrower's books and records and accounts receivable and
make abstracts and copies thereof.
(F) Borrower will take all necessary steps to preserve and qualify its
existence and franchises and comply with all present and future Laws applicable
to it in the operation of its business, where the failure to do so would have a
Material Adverse Effect.
(G) Borrower will give immediate notice to the Bank of (1) any
litigation to which it is a party if an adverse decision therein would have a
Material Adverse Effect, and (2) the institution of any other suit or any
administrative proceeding involving Borrower that would have a Material Adverse
Effect.
(H) Borrower will notify Bank immediately upon becoming aware of the
occurrence of any Event of Default or of any fact, condition or event that, with
the giving of notice or passage of time, or both, could become an Event of
Default, or of the failure of Borrower to observe any of its undertakings
hereunder.
(I) Borrower will notify Bank in writing fifteen (15) days in advance
of any change in the location of any of Borrower's places of business or of the
establishment of any new, or the discontinuance of any existing, place(s) of
business.
21
(J) Borrower will (1) fund all its employee benefit plans in
accordance with no less than the minimum funding standards of Section 302 of
ERISA, (2) promptly advise Bank of the occurrence of any Reportable Event or
Prohibited Transaction with respect to any such Employee Benefit Plan(s) and the
action which Borrower propose to take with respect thereto; and (3) promptly
advise Bank of any claim for withdrawal liability made against it or a member of
its Controlled Group.
(K) All Financial Statements to be furnished by Borrower to Bank shall
be correct and complete, and fairly and fully present in accordance with
Generally Accepted Accounting Principles the financial condition of Borrower as
of the date(s) thereof and the results of the operations for the periods covered
thereby.
(L) Borrower will at all times through March 30, 1996 be in compliance
with the financial covenants set forth in Exhibit "6.01(L)" hereto and will at
all times thereafter be in compliance with such financial covenants to which
Bank and Borrower shall mutually agree prior to March 30, 1996. If Bank and
Borrower are unable to agree upon mutually acceptable financial covenants, the
entire principal balance of the Term Loan and all unpaid interest thereon will
be due and payable on April 30, 1996, notwithstanding anything to the contrary
contained herein or in the Term Note.
(M) Borrower will maintain its major and primary deposit accounts with
Bank.
SECTION 6.02 Negative Covenants. Borrower hereby covenants and agrees
------------------
that so long as any of the Obligations remain unsatisfied, without the prior
written consent of Bank:
(A) Borrower will not enter into any merger, consolidation or
reorganization, or acquire any stock in or all or substantially all of the
assets of or any partnership or joint venture interest in, or make any loan to
or investment (other than a Permitted Investment) in, any other Person, except
mergers, acquisitions, loans and investments which do not exceed $5,000,000 per
occurrence and $25,000,000 in the aggregate for all such occurrences and with
respect to which Borrower is the surviving entity.
(B) Borrower will not sell, transfer, lease or otherwise dispose of
all or (except for (i) the sale of Inventory in the ordinary course of its
business, (ii) and disposition of Equipment for obsolescence or which is in
Borrower's reasonable judgment no longer necessary in the operation of its
business in the ordinary course thereof and (iii) any other disposition which
does not exceed $1,000,000 per disposition and $5,000,000 in the aggregate for
all dispositions) any part of its assets.
(C) Borrower will not mortgage, pledge, grant or permit to exist a
security interest in or lien on any of its assets of any kind, real or personal,
tangible or intangible, now owned or
22
hereafter acquired, except for Permitted Liens.
(D) Borrower will not directly or indirectly apply any part of the
proceeds of the Loans to the purchasing or carrying of any "margin stock" within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, or any regulations, interpretations or rulings thereunder.
SECTION 7 DEFAULT.
-------
SECTION 7.01 Events of Default. Each of the following events shall
-----------------
constitute an Event of Default and upon the occurrence thereof Bank shall
thereupon have the option (which is not intended to diminish, alter or limit any
other of Bank's rights described in this Agreement, the Collateral Documents or
any related agreements and documents) (A) to declare Borrower in default under
this Agreement, the Collateral Documents, the Notes, and all other agreements
with Bank, (B) to terminate any undertaking of Bank in connection with the
Loans, and (C) require that Borrower provide the Bank, and Borrower agree to
provide to the Bank, cash or cash equivalents acceptable to Bank in an amount
equal to the face amount of all outstanding letters of credit, and/or (D) to
declare all Obligations immediately due and payable, including, but not limited
to, interest, principal, expenses, advances to protect Bank's position and
reasonable attorneys' fees to enforce this Agreement, the Collateral Documents,
and all related agreements and documents, and all of Bank's rights hereunder and
thereunder, all without demand, notice, presentment or protest, or further
action of any kind:
(A) Borrower fails to pay to Bank within ten (10) days when due any
installment of principal, interest, fee or other charge payable hereunder or
under the Notes or the Collateral Documents.
(B) Borrower fails to observe or perform any other Obligation to be
observed or performed by it hereunder, under the Notes or under any of the
Collateral Documents, or under any other existing or future agreement between
Borrower and Bank, which failure, to the extent reasonably susceptible of cure,
is not cured within thirty (30) days of the earlier of (i) the date on which
Borrower has actual knowledge thereof and (ii) Bank's giving Borrower written
notice of the occurrence thereof.
(C) Any Financial Statement or any representation made herein or
provided to Bank pursuant to any requirement hereof is materially false,
incorrect, or incomplete when made.
(D) Borrower becomes insolvent or generally fails to pay, or admits
its inability to pay, debts as they become due or makes a general assignment for
the benefit of any of its creditors.
(E) Borrower applies for, consents to, or acquiesces in the
appointment of, a trustee, receiver or other custodian for
23
Borrower or any of the property of Borrower or, in the absence of such
application, consent or acquiescence, a trustee, receiver or other custodian is
appointed for Borrower or for a substantial part of its property and is not
discharged within sixty (60) days.
(F) Any bankruptcy, reorganization, liquidation, dissolution or other
case and proceeding under any bankruptcy or insolvency law is commenced in
respect of Borrower and if such case or proceeding is not commenced by Borrower,
it is consented to or acquiesced in by Borrower or remains for sixty (60) days
undismissed.
(G) Borrower discontinues its business operations or materially
changes the nature of its business.
(H) Borrower shall suffer final judgment(s) for the payment of money
not covered by insurance or reserves satisfactory to Bank and shall not
discharge, satisfy or stay the same within a period of thirty (30) days.
(I) A judgment creditor of Borrower shall obtain actual or
constructive possession of any of Borrower's properties by any means, including,
but without limitation, levy, distraint, replevin or self-help.
(J) (l) Any Reportable Event which Bank reasonably determines to
constitute grounds for the termination of any employee benefit plan by the PBGC
or for the appointment by any United States District Court of a trustee to
administer or liquidate any Employee Benefit Plan; (2) the termination of any
employee benefit plan, or any Defined Benefit Plan described in Section 414(j)
or Section 414(k) of the Internal Revenue Code, the present value of whose
benefits that may be guaranteeable under Title IV of ERISA exceeds the amount of
plan assets allocable to such benefits; (3) the appointment by any United States
District Court of a trustee to administer any Employee Benefit Plan; (4) the
institution by the PBGC of proceedings to terminate any Employee Benefit Plan;
(5) the failure by Borrower or any member of any Controlled Group to meet the
minimum funding standards established in Section 302 of ERISA; or (6) the
assertion of any claim of, or demand for, withdrawal liability under ERISA by
any multi-employer pension plan to which Borrower or any member of its
Controlled Group heretofore contributed or currently contributes; but only if
---- --
any of the events described in clauses (1) - (6), individually or in the
aggregate, would have a Material Adverse Effect.
(K) (a) Failure by Borrower to perform or observe any term,
condition or covenant of any bond, note, debenture, loan agreement, indenture,
guaranty, trust agreement, mortgage or similar instrument to which Borrower is a
party or by which it is bound, or by which any of its properties or assets may
be affected (a "Debt Instrument"), and, as a result thereof (assuming the giving
of appropriate notice thereof, if required), Indebtedness which is included
therein or secured or covered thereby shall have
24
been declared due and payable prior to the date on which such Indebtedness would
otherwise become due and payable; or
(b) Any event or condition referred to in any Debt Instrument shall
have occurred or failed to occur, and, as a result thereof, Indebtedness which
is included therein or secured or covered thereby shall have been declared due
and payable prior to the date on which such Indebtedness would otherwise become
due and payable; or
(c) Failure to pay any Indebtedness for borrowed money due at final
maturity or pursuant to demand under any Debt Instrument;
and in any of said events set forth in (a), (b) and (c) the same has a Material
---
Adverse Effect.
SECTION 7.02 Remedies. After any acceleration of the Obligations, Bank
--------
shall have in addition to the rights and remedies given it by this Agreement,
the Notes and the Collateral Documents, all those allowed by all applicable
Laws.
SECTION 8 MISCELLANEOUS.
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SECTION 8.01 Construction. The provisions of this Agreement shall be in
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addition to those of the Notes and Collateral Documents all of which shall be
construed as integrated and complementary to each other. Nothing herein
contained shall prevent Bank from enforcing any or all of the Notes and
Collateral Documents, in accordance with their respective terms.
SECTION 8.02 Further Assurance. From time to time, Borrower will execute
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and deliver to Bank such additional documents and will provide such additional
information as Bank may reasonably require to carry out the terms of this
Agreement and be informed of each Borrower's status and affairs.
SECTION 8.03 Enforcement and Waiver by the Bank. Bank shall have the
----------------------------------
right at all times to enforce the provisions of this Agreement and the
Collateral Documents in strict accordance with the terms hereof and thereof,
notwithstanding any conduct or custom on the part of Bank in refraining from so
doing at any time or times. The failure of Bank at any time or times to enforce
its rights under such provisions, strictly in accordance with such provisions,
shall not be construed as having created a custom in any way or manner contrary
to specific provisions of this Agreement or as having in any way or manner
modified or waived this Agreement. All rights and remedies of Bank are
cumulative and concurrent and the exercise of one right or remedy shall not be
deemed a waiver or release of any other right or remedy.
SECTION 8.04 Expenses of the Bank. Borrower agrees to pay all costs and
--------------------
expenses, including reasonable attorneys' fees and
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expenses, and filing, search, environmental audit, consultant, appraisal and
other out-of-pocket expenditures, incurred by Bank in connection with the
preparation, negotiation, administration, amendment, extension, replacement,
modification, enforcement or termination of this Agreement, the Notes, the Loans
and the Collateral Documents and the collection or attempted collection of the
Notes or any other Obligations, and the protection, preservation or defense of
Bank's rights and interests.
SECTION 8.05 Notices. Any notices or consents required or permitted by
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this Agreement shall be in writing and shall be deemed delivered if delivered in
person, or by commercial courier against receipt or if sent by certified mail,
postage prepaid, return receipt requested, or by telecopy, as follows, unless
such address or telecopy number it changed by written notice hereunder:
(A) If to Borrower:
Kulicke & ▇▇▇▇▇ Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
and Chief Financial Officer
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to Bank:
Midlantic Bank, N.A.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior
Vice President
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 8.06 Waiver and Release by Borrower. To the maximum extent
------------------------------
permitted by applicable Laws, Borrower:
(A) Waives (1) protest of all commercial paper at any time held by
Bank on which Borrower is any way liable; and (2) except as otherwise set forth
herein or in the Collateral Documents, notice and opportunity to be heard, after
acceleration in the manner provided in Section 6.01 hereof, before exercise by
Bank of the remedies of self-help, set-off, or of other summary procedures
permitted by any applicable Laws or by any agreement with Borrower and, except
where required hereby or by any applicable Laws, notice of any other action
taken by Bank; and
(B) Releases Bank and its officers, attorneys, agents and employees
from all claims for loss or damage caused by any act or omission on the part of
any of them except willful misconduct or gross negligence.
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SECTION 8.07 Applicable Law. The substantive Laws of the Commonwealth of
--------------
Pennsylvania shall govern the construction of this Agreement and the rights and
remedies of the parties hereto.
SECTION 8.08 Binding Effect; Assignment and Entire Agreement. This
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Agreement shall inure to the benefit of, and shall be binding upon, the
respective successors and permitted assigns of the parties hereto. Borrower has
no right to assign any of its respective rights or Obligations hereunder without
the prior written consent of Bank. This Agreement, and the documents executed
and delivered pursuant hereto, constitute the entire agreement among the parties
relating to the subject matter thereof.
SECTION 8.09 Severability. If any provision of this Agreement is held
------------
invalid under any applicable Laws, such invalidity will not affect any other
provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
SECTION 8.10 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one and the same instrument.
SECTION 8.11 Headings. The headings of any paragraph or section of this
--------
Agreement are for convenience only and shall not be used to interpret any
provision of this Agreement.
SECTION 8.12 Modification. No modification or amendment hereof or of any
------------
agreement referred to herein shall be binding or enforceable unless in writing
and signed on behalf of the party against whom enforcement is sought.
SECTION 8.13 Third Parties. No rights are intended to be created
-------------
hereunder, or under the Collateral Documents or related agreements and documents
for the benefit of any third party donee, creditor or incidental beneficiary of
Borrower.
SECTION 8.14 Seal. This Agreement is intended to take effect as an
----
instrument under seal.
SECTION 8.15 Waiver of Jury Trial. BORROWER AND BANK IRREVOCABLY WAIVE
--------------------
TRIAL BY JURY AND THE RIGHT THERETO IN ANY LITIGATION IN ANY COURT WITH RESPECT
TO, IN CONNECTION WITH, OR ARISING OUT OF, THIS AGREEMENT, THE NOTES, COLLATERAL
DOCUMENTS, OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT,
OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
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SECTION 8.16 Jurisdiction. Borrower and Bank hereby irrevocably consent
------------
to the jurisdiction of the Court of Common Pleas of Philadelphia, Pennsylvania
and of the United States District Court for the Eastern District of Pennsylvania
in any and all actions and proceedings in connection with this Agreement, the
Notes or the Collateral Documents and irrevocably consent, in addition to any
methods of service of process permissible under applicable law, to service of
process by certified mail, return receipt requested to the address of the
Borrower and Bank as set forth herein. Borrower and Bank agrees that in any
action or proceeding brought by it in connection with this Agreement or the
transactions contemplated hereby, exclusive jurisdiction shall be in the Court
of Common Pleas of Philadelphia, Pennsylvania, and the United States District
Court for the Eastern District of Pennsylvania.
SECTION 8.17 Indemnity. Borrower agrees to indemnify, defend and hold
---------
the Bank Indemnitees harmless from and against any and all loss, liability,
obligation, damage, penalty, judgment, claim, deficiency and expense (including
interest, penalties, reasonable attorneys' fees and amounts paid in settlement)
to which any Bank Indemnitee may become subject arising out of or based upon
this Agreement, the Collateral Documents, the Notes or the Loans through the
alleged negligence of such Bank Indemnitee or otherwise, except and to the
extent that Borrower proves that such loss, liability, etc. was caused by the
gross negligence or willful misconduct or manifest bad faith of the Person
otherwise so indemnified.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first above written.
KULICKE AND ▇▇▇▇▇ INDUSTRIES, INC.
By:_____________________________
MIDLANTIC BANK, N.A.
By:______________________________
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EXHIBIT 6.01(L)
Financial Covenants
(a) Tangible Net Worth of not less than $55,000,000.
(b) Leverage Ratio of not more than 1.75 to 1.0.
(c) Fixed Charge Coverage Ratio of not less than 2.0 to 1.0.
(d) Working Capital of not less than $35,000,000.
(e) Current Ratio of not less than 1.25 to 1.0.
29