AMENDED AND RESTATED
REVOLVING LOANS AND
FOREIGN EXCHANGE FACILITIES AGREEMENT
AGREEMENT made as of July 15, 1997 by and between Mestek, Inc., a
Pennsylvania corporation having a principal place of business at 000 Xxxxx Xxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter referred to as the
"Borrower"), and BankBoston, N.A., a national banking association, having a
principal place of business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
successor by merger to BayBank, N.A. (hereinafter referred to as the "Bank")
amends and restates in its entirety an Amended and Restated Loan, Letter of
Credit Facility and Foreign Exchange Facilities Agreement originally dated
September 27, 1996.
In consideration of the mutual covenants herein contained, it is agreed
as follows:
1. DEFINITIONS AND ACCOUNTING TERMS.
1.1. Defined Terms. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular to
have the same meaning when used in the plural and vice versa):
"Affiliate" means any Person (1) which directly or indirectly
controls, or is controlled by, or is under common control with the
Borrower or a Subsidiary; (2) which directly or indirectly beneficially
owns or holds five percent (5%) or more of any class of voting stock of
the Borrower or any Subsidiary; or (3) five percent (5%) or more of the
voting stock of which is directly or indirectly beneficially owned or
held by the Borrower or a Subsidiary. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract, or otherwise.
"Agreement" means this Amended and Restated Revolving Loans
and Foreign Exchange Facilities Agreement, as amended,
supplemented, or modified from time to time.
"Base Loan" means any Loan when and to the extent that the
interest rate therefor is determined by reference to the Base Rate.
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"Base Rate" means the greater of (i) that rate of interest
announced from time to time by the Bank at its head office at 000
Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxxxxxxxx 00000 as its "Base Rate", and (ii)
the Federal Funds Effective Rate plus one-half percent per annum
(rounded upwards, if needed to the nearest 1/8th of one percent, which
rate is not necessarily the lowest rate charged by the Bank to its
customers.
"Business Day" means any day other than a Saturday, Sunday, or
other day on which commercial banks in Massachusetts are authorized or
required to close under the laws of The Commonwealth of Massachusetts
and, (i) if the applicable day relates to a Canadian LIBOR Loan,
Canadian LIBOR Interest Period, or notice with respect to a Canadian
LIBOR Loan, a day on which dealings in United States or Canadian Dollar
deposits are also carried on in the London and Toronto, Canada
interbank market and banks are open for business in London and Toronto,
Canada, or (ii) if the applicable day relates to a Eurodollar Loan,
Eurodollar Interest Period, or notice with respect to a Eurodollar
Loan, a day on which dealings in United States Dollar deposits are also
carried on in the interbank Eurodollar market and banks are open for
business.
"Canadian Commitment" shall have the meaning assigned to such
term in Section 2.1 A.
"Canadian LIBOR Interest Rate" means, for each Canadian LIBOR
Loan, the rate per annum (rounded upward, if necessary, to the next
higher 1/100 of 1%) determined by the Bank to be equal to the quotient
of (x) the London Interbank Offered Rate for such Canadian LIBOR Loan
for such Interest Period utilizing reasonable extrapolation
methodology, if necessary, depending upon the Interest Period selected
by the Borrower divided by (y) one minus the Eurocurrency Reserve
Requirement, if any, for such Interest Period.
"Canadian LIBOR Loan" means any Loan when and to the extent
that the interest rate therefor is determined by reference to the
Canadian LIBOR Interest Rate.
"Canadian Loan Facility" means the $5,000,000 (Canadian)
revolving line of credit facility, administered for the Borrower by the
Nassau Branch, denominated in Canadian Dollars.
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"Canadian Revolving Note" shall have the meaning assigned to
such term in Section 2.4.2.
"Capitalization" means, as of the date of any determination
thereof, the sum of (i) Consolidated Funded Debt and (ii) Consolidated
Net Worth.
"Capital Lease" or "Capitalized Lease" means any lease the
obligation for rentals with respect to which have been or should be
capitalized on the balance sheet of the lessee in accordance with GAAP.
"Capitalized Rentals" means, as of the date of any
determination, the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases of which the Borrower or any
Subsidiary is a lessee would be reflected as a liability on the
consolidated balance sheet of the Borrower and its Subsidiaries.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time and the regulations and published interpretations
thereof.
"Commitment" shall have the meaning set forth in Section 2.1
below.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 414(b) or 414(c) of the Code.
"Consolidated Current Assets" and "Consolidated Current
Liabilities" means such assets and liabilities of the Borrower and its
Subsidiaries on a consolidated basis as shall be determined in
accordance with GAAP to constitute current assets and current
liabilities respectively.
"Consolidated Net Income" for any period means the gross
revenues of the Borrower and its Subsidiaries for such period less all
expenses and other proper charges (including taxes on income),
determined on a consolidated basis in accordance with GAAP consistently
applied and after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other
disposition of investments or fixed or capital assets, and
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any taxes on such excluded gains and any tax deductions or
credits on account of such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Subsidiary accrued
prior to the date it became a Subsidiary;
(d) net earnings and losses of any corporation (other
than a Subsidiary), substantially all the assets of which have
been acquired in any manner, realized by such other
corporation prior to the date of such acquisition;
(e) net earnings and losses of any corporation (other
than a Subsidiary) with which the Borrower or a Subsidiary
shall have consolidated or which shall have merged into or
with the Borrower or a Subsidiary prior to the date of such
consolidation or merger;
(f) net earnings of any business entity (other than a
Subsidiary) in which the Borrower or any Subsidiary has an
ownership interest unless such net earnings have been actually
received by the Borrower or the Subsidiary in the form of cash
distributions;
(g) any portion of the net earnings of any Subsidiary
which for any reason is unavailable for payment of dividends
to the Borrower or any other Subsidiary;
(h) earnings resulting from any reappraisal,
revaluation or write-up of assets;
(i) any deferred or other credit representing any
excess of the equity in any Subsidiary at the date of
acquisition thereof over the amount invested in such
Subsidiary;
(j) any gain arising from the acquisition of any
Securities of the Borrower or any Subsidiary; and
(k) any reversal of any contingency reserve, except
to the extent that provision for such contingency reserve
shall have been made from income arising during such period.
"Consolidated Net Tangible Assets" means, as of the date of
any determination thereof, the total amount of all assets of the
Borrower and its Subsidiaries (less depreciation, depletion and
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other properly deductible valuation reserves) after deducting (i) all
items which in accordance with GAAP would be included on the liability
side of a consolidated balance sheet, except capital stock (less
treasury stock), surplus and retained earnings, deferred taxes and
funded debt, and (ii) goodwill, patents, tradenames, trademarks,
copyrights, franchises, experimental expense, organization expense,
unamortized debt discount and expense, deferred assets other than
prepaid insurance and prepaid taxes, the excess of cost of shares
acquired over book value of the related assets and such other assets as
are properly classified as "intangible assets" in accordance with GAAP.
"Consolidated Net Worth" means, as of the date of any
determination thereof, the aggregate amount of the capital stock (less
treasury stock), surplus and retained earnings of the Borrower and its
Subsidiaries after deducting Minority Interests to the extent included
in the capital stock accounts of the Borrower, all as determined on a
consolidated basis by the Borrower and its Subsidiaries.
"Consolidated Tangible Net Worth" means, as of the date of any
determination thereof, the aggregate amount of the capital stock (less
treasury stock), surplus and retained earnings of the Borrower and its
Subsidiaries after deducting Minority Interests to the extent included
in the capital stock accounts of the Borrower, all as determined on a
consolidated basis by the Borrower and its Subsidiaries, and after
deducting goodwill, patents, tradenames, trademarks, copyrights,
franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets other than prepaid insurance
and prepaid taxes, the excess of cost of shares acquired over book
value of the related assets and such other assets as are properly
classified as "intangible assets" in accordance with GAAP.
"Current Debt" of any person means all Indebtedness for money
borrowed other than Funded Debt.
"Default" means any of the events specified in Section 9,
whether or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Dollars" and the sign "$" mean lawful money of the United
States of America, except where followed by the word "Canadian" which
shall mean lawful money of the Dominion of Canada.
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"ERISA" means the Employment Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereof.
"Event of Default" means any of the events specified in
Section 9, provided that any requirement for the giving of notice, the
lapse of time, or both, or any other condition, has been satisfied.
"Eurocurrency Reserve Requirement" means, for any Eurodollar
or Canadian LIBOR Loan, for any Eurodollar or Canadian LIBOR Interest
Period therefor, the daily average of the stated maximum rate
(expressed as a decimal) at which reserves (including any marginal,
supplemental, or emergency reserves), if any, are required to be
maintained during such Eurodollar or Canadian LIBOR Interest Period, as
the case may be, under Regulation D by the Bank against "Eurocurrency
Liabilities" (as such term is used in Regulation D) but without benefit
or credit of proration, exemptions, or offsets that might otherwise be
available to the Bank from time to time under Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve
Requirement shall reflect any other reserves required to be maintained
by the Bank against (1) any category of liabilities that includes
deposits by reference to which the Eurodollar or Canadian LIBOR
Interest Rate for Eurodollar or Canadian LIBOR Loans, as the case may
be, is to be determined; or (2) any category of extension of credit or
other assets that includes Eurodollar or Canadian LIBOR Loans, it being
understood that as of the date of this Agreement the Eurocurrency
Reserve Requirement percentage is zero (0).
"Eurodollar Interest Rate" means, for each Eurodollar Loan,
for any applicable Eurodollar Interest Period, the quotient of (x) the
rate of interest per annum determined by the Bank to be the prevailing
rate at which deposits in United States Dollars are offered to the Bank
by banks in the interbank Eurodollar market in which it regularly
participates (rounded upward, if necessary, to the next highest 1/100
of 1%)on or about 10:00 a.m. (Boston, Massachusetts time) two Business
Days before the first day of the applicable Eurodollar Interest Period,
in an amount approximately equal to the principal amount of such
Eurodollar Loan for the period of time approximately equal to the
applicable Eurodollar Interest Period, divided by (y) one minus the
Eurocurrency Reserve Requirement, if any, for such Interest Period.
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"Eurodollar Loan" means any Loan when and to the extent that
the interest rate therefor is determined by reference to the Eurodollar
Interest Rate.
"Federal Funds Effective Rate" means, for any day, a
fluctuating interest rate per annum equal to the weighted average of
the rates on overnight Federal funds transactions with members of the
Federal Reserve System, arranged by Federal funds brokers, as published
for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by
the Bank from three Federal funds brokers of recognized standing
selected by the Bank.
"Foreign Exchange Facility" or "FX Facility" means the
facility or facilities described in Section 2.18 below.
"Funded Debt" of any Person means (i) all Indebtedness for
borrowed money or which has been incurred in connection with the
acquisition of assets in each case having a final maturity of one or
more than one year from the date of origin thereof (or which is
renewable or extendable at the option of the obligor for a period or
periods of more than one year from the date of origin), excluding all
payments in respect thereof that are required to be made within one
year from the date of any determination of Funded Debt, whether or not
included in Consolidated Current Liabilities; and (ii) all Capitalized
Rentals. "Consolidated" when used as a prefix to any Funded Debt shall
mean the aggregate amount of such Funded Debt of the Borrower and its
Subsidiaries on a consolidated basis eliminating intercompany items.
"GAAP" means generally accepted accounting principles
consistently applied, in accordance with financial reporting standards
from time to time in effect among nationally recognized certified
public accounting firms in the United States, including the statements
and interpretations of the United States Financial Accounting Standards
Board and any successor entity.
"Indebtedness" of any Person means and includes all
obligations of such Person which in accordance with GAAP shall be
classified on a balance sheet of such Person as liabilities of such
Person, and in any event shall include all (i) obligations of such
Person for borrowed money or which has been incurred in connection with
the acquisition of property or assets, (ii) obligations secured by any
lien or other charge upon property or assets owned by such Person, even
though such Person
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has not assumed or become liable for the payment of such obligations,
(iii) obligations created or arising under any conditional sale or
other title retention agreement with respect to property acquired by
such Person, notwithstanding the fact that the rights and remedies of
the seller, lender, or lessor under such agreement in the event of
default are limited to repossession or sale of property, (iv) all
guaranties of payment or performance of any obligations of others for
borrowed money, or accrued as liabilities in accordance with GAAP, or
as shown on Borrower's financial statements, and (v) Capitalized
Rentals under any Capitalized Lease. For purpose of computing the
"Indebtedness" of any Person there shall be excluded any particular
Indebtedness to the extent that, upon or prior to the maturity thereof,
there shall have been deposited with the proper depository in trust the
necessary funds (or evidences of such Indebtedness, if permitted by the
instrument creating such Indebtedness) for the payment, redemption or
satisfaction of such Indebtedness; and thereafter such funds and
evidences of Indebtedness so deposited shall not be included in any
computation of the assets of such Person.
"Insolvent" The Borrower, its Subsidiaries or any other person
shall be considered to be "Insolvent" when any of the following events
shall have occurred whereby the Borrower or any of its Subsidiaries (a)
shall generally not pay, or shall be unable to pay, or shall admit in
writing its inability to pay its debts as such debts become due; or (b)
shall make an assignment for the benefit of creditors, or petition or
apply to any tribunal for the appointment of a custodian, receiver, or
trustee for it or a substantial part of its assets; or (c) shall
commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect; or (d)
shall have had any such petition or application filed or any such
proceeding commenced against it in which an order for relief is entered
or an adjudication or appointment is made, and which remains
undismissed for a period of ninety (90) days or more; or (e) shall take
any corporate action indicating its consent to, approval of, or
acquiescence in any such petition, application, proceeding, or order
for relief or the appointment of a custodian, receiver, or trustee for
all or any substantial part of its properties; or (f) shall suffer any
such custodianship, receivership, or trusteeship to continue
undischarged for a period of ninety (90) days or more.
"Interest Charges" for any period means all interest
(including the imputed interest factor in respect of Capitalized
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Leases) and all amortization of debt discount and expense on any
particular Indebtedness for which such calculations are being made.
Computations of Interest Charges on a proforma basis for Indebtedness
having a variable interest rate shall be calculated at the rate in
effect on the day of any determination.
"Interest Period" means
(i) with respect to any Canadian LIBOR Loan, the period commencing on
the Business Day such loan is made and ending, as the Borrower may
select, pursuant to Section 2.2, on the corresponding day which is no
more than 30, 60, 90, 180 or 360 days thereafter provided that all of
the foregoing provisions relating to Interest Periods are subject to
the following:
(a) No Interest Period may extend beyond the
Termination Date without prior approval by the Bank;
(b) If an Interest Period would end on a day that is
not a Business Day, such Interest Period shall be extended to
the next Business Day unless such Business Day would fall in
the next calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day; or
(ii) with respect to any Eurodollar Loan, the period commencing on the
Business Day such loan is made and ending, as the Borrower may select,
pursuant to Section 2.2, on the corresponding day which is no more than
twelve months thereafter provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:
(a) No Eurodollar Interest Period may extend beyond
the Termination Date without prior approval by the Bank;
(b) If an Interest Period would end on a day that is
not a Business Day, such Interest Period shall be extended to
the next Business Day unless such Business Day would fall in
the next calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day;
(c) If an Interest Period is other than the typical
Eurodollar market interest period of 7, 14, 21, 30, 60, 90,
180, 270 or 360 days, the Bank will nonetheless facilitate
such Borrower-requested atypical Interest Period, utilizing
reasonable extrapolation methodology to establish the
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Eurodollar Interest Rate for such Eurodollar Interest
Period.
"Lending Office" means, with respect to Revolving Loans, the
Bank's office at 0000 Xxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000,
and with respect to Canadian LIBOR Loans, the principal office of the
Nassau Branch.
"Letter of Credit" means any documentary, standby or other
type of Letter of Credit issued by the Bank for the account of the
Borrower or any Subsidiary as provided in Section 2.14 below.
"Letter of Credit Facility" means the credit accommodation
facility for the issuance of Letters of Credit being made available to
the Borrower or any of its Subsidiaries pursuant to Section 2.14 below.
"Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), or preference, priority, or other security
agreement or preferential arrangement, charge, or encumbrance of any
kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any
of the foregoing).
"Loan" means a Eurodollar or Base Rate Revolving Line of
Credit Loan or Loans, a Canadian LIBOR Revolving Line of Credit Loan or
Loans or any outstanding reimbursement obligation under (i) the Letter
of Credit Facility described in Section 2.14 below or (ii) the FX
Facility (as evidenced by the Back-Up Foreign Exchange Demand Note)
described in Section 2.18 below.
"Loan Documents" means this Agreement, the Notes, and other
documents related to the transactions discussed in this Agreement.
"London Interbank Offered Rate" applicable to any Interest
Period for a Canadian LIBOR Loan means the rate of interest per annum
(rounded upward, if necessary, to the next higher 1/100 of 1%) quoted
on the applicable page of the Daily Telerate Financing Reporting
Service as the Canadian LIBOR Rate or Xxxxxx'x Canadian LIBOR page (or,
if such reporting services are no longer provided, at the Canadian
LIBOR Rate published in comparable
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financial reporting services) offered for deposits in immediately
available Canadian Dollars for a period of time comparable to the
specified Interest Period, at 11:00 a.m. (London time) on the Business
Day which is two Business Days preceding the first Business Day of the
requested LIBOR Loan for such Interest Period.
"Minority Interests" means any shares of stock of any class of
a Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Borrower and or one or more of its
Subsidiaries. Minority Interests shall be valued by valuing Minority
Interests constituting preferred stock at the voluntary or involuntary
value of such preferred stock, whichever is greater, and by valuing
Minority Interests constituting common stock at the book value of
capital and surplus applicable thereto adjusted, if necessary, to
reflect any changes from the book value of such common stock required
by the foregoing method of valuing minority interests in preferred
stock.
"Multiemployer Plan" means a Plan described in
Section 4001(a)(3) of ERISA.
"Nassau Branch" means the Bank's affiliate, The First
National Bank of Boston, Nassau Branch, a full service branch of
BankBoston, N.A. located at Charlotte House, Nassau, Bahamas.
"Net Income Available for Fixed Charges" means, as of the date
of any determination thereof, the sum of the following for the twelve
(12) full consecutive calendar months immediately preceding such date
of determination:
(a) Consolidated Net Income for such period;
PLUS
(b) Income taxes and excess profit taxes paid or
accrued by the Borrower and its Subsidiaries on account of
such Consolidated Net Income during such periods; PLUS
(c) The sum of (i) Interest Charges in respect of
Consolidated Funded Debt during said period (whether or not
paid or payable but only to the extent deducted in computing
Consolidated Net Income for such period) and (ii) the
aggregate rentals paid by the Borrower and its Subsidiaries
under all leases (other than Capitalized Leases) during such
period.
"Notes" mean the Revolving Note, the Canadian Revolving
Note, the Backup Foreign Exchange Facility Note and any other
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notes executed by the Borrower in favor of the Bank from time to
time.
"Notice of Selection of Interest Period" shall have the
meaning assigned to it in Section 2.2 below.
"Obligation" and "Obligations" means any and all liabilities
and obligations of the Borrower or any of its Subsidiaries to the Bank
of every kind and description, direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising, regardless of how they arise or by what agreement or
instrument they may be evidenced or whether evidenced by any agreement
or instrument, and includes (i) obligations to perform acts and refrain
from taking action as well as obligations to pay money, (ii)
reimbursement obligations of the Borrower or any of its Subsidiaries
pursuant to any documentation executed in conjunction with or related
to the issuance by the Bank of any Letters of Credit or Foreign
Exchange Facilities, and (iii) guaranty obligations.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority, or other entity of whatever
nature.
"Plan" means any pension plan which is covered by Title IV of
ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is an "employer" as defined in Section 3(5) of ERISA.
"Principal Office" means the Bank's office at 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
"Pro Forma Fixed Charges" shall mean as of the date of any
determination thereof the sum of (i) Interest Charges in respect of
Consolidated Funded Debt (other than Funded Debt then proposed to be
retired) for the twelve full consecutive calendar months period
immediately preceding such date of determination, plus (ii) Interest
Charges on all Funded Debt then proposed to be issued for the twelve
full consecutive calendar months after such date of determination, plus
(iii) the maximum aggregate Rentals payable during any period of twelve
full consecutive calendar months after such date of determination and
prior to July 15,
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1998 under all long-term Leases under which the Borrower or a
Subsidiary is then lessee.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as amended or supplemented from time to
time.
"Rentals" means and includes all fixed rents (including as
such all payments which the lessee is obligated to make to the lessor
on termination of the lease or surrender the property) payable by the
Borrower or a Subsidiary, as lessee or sublessee under lease of real or
personal property, but shall be exclusive of any amounts required to be
paid by the Borrower or a Subsidiary (whether or not designated as
rents or additional rents) on account of maintenance, repairs,
insurance, taxes and similar charges. Fixed rents under any so-called
"percentage lease" shall be computed solely on the basis of the minimum
rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues.
"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"Restricted Payment(s) shall have the meaning assigned to
such term in Section 7.8
"Revolving Line of Credit Loan(s)", "Revolving Loans" or
"Revolving Credit Loan(s)" shall have the meaning assigned to such
terms in Section 2.1. and shall refer to Loans other than Canadian
LIBOR Loans, issued hereunder pursuant to the Revolving Note or the
Letter of Credit Facility.
"Revolving Note" shall have the meaning assigned to such term
in Section 2.4.
"Security" shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
"Subsidiary(ies)" means, as to the Borrower, a corporation of
which more than 80% (by number of votes) of shares of stock having
ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation are at the
time owned, or the management of which is
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otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by the Borrower and/or by one or more
Subsidiaries.
"Termination Date" means April 30, 1998, but if the Revolving
Line of Credit or Canadian Revolving Line of Credit is extended or
renewed, at the Bank's discretion, the Termination Date shall be that
date set forth by the Bank as of the extension or renewal as the new
Termination Date, or as otherwise determined by the Bank.
"$3,000,000 FX Facility" shall have the meaning assigned to
that term in Section 2.18.
"$3,000,000 Back-up Foreign Exchange Facility Note shall have
the meaning assigned to that term in Section 2.18.
1.2. "Accounting Terms". All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent
with those applied in the preparation of the financial statements
referred to in Section 5.3, and all financial data submitted pursuant
to this Agreement shall be prepared in accordance with such principles.
2. AMOUNT AND TERMS OF LOAN.
2.1. Revolving Line of Credit. The Bank agrees, on the terms
and conditions hereinafter set forth, to make loans (the "Revolving
Line of Credit Loans" or "Revolving Loans")(including commitments under
the Letter of Credit Facility) to the Borrower from time to time during
the period from the date of this Agreement up to but not including the
Termination Date in an aggregate principal amount not to exceed
outstanding, at any time, Fifty Million Dollars ($50,000,000.00) (the
"Commitment"). Each Revolving Line of Credit Loan which is a Eurodollar
Loan and which shall not utilize the Commitment in full shall be in an
amount not less than Five Hundred Thousand Dollars ($500,000.00) or
multiples of One Hundred Thousand Dollars ($100,000.00) thereabove.
Base Loans may be in any amount within the limits of the Commitment and
within such limits, the Borrower may borrow, repay pursuant to Section
2.7, and reborrow under this Section 2.1. On such terms and conditions
as are contained herein, the Loans may be outstanding as either Base
Loans or Eurodollar Loans. Each type of Loan shall be made and
maintained at the Bank's Lending Office for such type of Loan.
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2.1A Canadian Revolving Line of Credit Facility. The Bank
agrees, on the terms and conditions hereinafter set forth and through
its Nassau Branch, to make loans (the "Canadian Revolving Line of
Credit Loans" or "Canadian LIBOR Loans") to the Borrower from time to
time during the period from the date of this Agreement up to but not
including the Termination Date in an aggregate principal amount not to
exceed outstanding, at any time, Five Million Dollars ($5,000,000.00)
Canadian (the "Canadian Commitment"). Each Canadian Revolving Line of
Credit Loan which is a Canadian LIBOR Loan and which shall not utilize
the Canadian Commitment in full shall be in an amount not less than
Five Hundred Thousand Dollars ($500,000.00) Canadian or multiples of
One Hundred Thousand Dollars ($100,000.00) Canadian thereabove. Within
the limits of the Canadian Commitment the Borrower may borrow, repay
pursuant to Section 2.7, and reborrow under this Section 2.1A. Each
Canadian LIBOR Loan shall be made and maintained at the Bank's Nassau
Branch.
2.2. Notice and Manner of Borrowing; Conversion and
Renewals.
2.2.1. Revolving Loans. The Borrower may elect from
time to time to initiate a Revolving Loan, to convert all or a
part of a Base Loan into a Eurodollar Loan and vice versa or
to renew all or part of a Revolving Loan by giving the Bank
written, telefax or telegraphic notice (effective upon
receipt) at least one (1) Business Day before the initiation
of or conversion into a Base Loan, or at least two (2)
Business Days before the initiation of, conversion into or
renewal of a Eurodollar Loan, specifying (1) the initial,
renewal or conversion date of the Revolving Loan; (2) the
amount of the Revolving Loan to be provided, converted or
renewed; (3) in the case of conversions, a specification that
the Revolving Loan is to be converted from a Base Loan to a
Eurodollar Loan or vice versa, as the case may be; and (4) in
the case of initiations of, renewals of or a conversion into
Eurodollar Loans, the duration of the Interest Period
applicable thereto; provided that (a) the minimum principal
amount of each Revolving Loan outstanding after an initiation,
a renewal or conversion shall be One Hundred Thousand Dollars
($100,000.00) in the case of Base Loans, and Five Hundred
Thousand Dollars ($500,000.00) or One Hundred Thousand Dollars
($100,000.00) multiples thereabove in the case of Eurodollar
Loans; and (b) Eurodollar Loans can be renewed or converted
only as of the last day of the Interest Period for such
Revolving Loan. In the absence of Borrower specifying the type
of loan,
15
advances made pursuant to any cash management arrangement
between the Bank and the Borrower will be made as Base Loans.
2.2.2. Canadian LIBOR Loans. The Borrower may elect
from time to time to initiate a Canadian LIBOR Loan, or to
renew all or part of a Canadian LIBOR Loan by giving the Bank
written, telefax or telegraphic notice (effective upon
receipt) at least two (2) Business Days before the initiation
of or renewal of a Canadian LIBOR Loan, specifying (1) the
initial or renewal date of the Canadian LIBOR Loan; (2) the
amount of the Canadian LIBOR Loan to be provided or renewed;
and (3) in the case of initiations of or renewals of Canadian
LIBOR Loans, the duration of the Interest Period applicable
thereto; provided that (a) the minimum principal amount of
each Canadian LIBOR Loan outstanding after an initiation or a
renewal shall be Five Hundred Thousand Dollars ($500,000.00)
Canadian or One Hundred Thousand Dollars ($100,000.00)
Canadian multiples thereabove for Canadian LIBOR Loans; and
(b) Canadian LIBOR Loans can be renewed only as of the last
day of the Interest Period for such Canadian LIBOR Loan.
Any notice (a "Notice of Selection of Interest Period") given
under this Section 2.2 shall be irrevocable and shall be given not
later than 10:00 a.m. (EST) on the day which is not less than the
number of Business Days specified above for such Notice of Selection of
Interest Period, and specifying (i) the effective date for the
applicable Interest Period and (ii) the duration, subject to the
limitations set forth in this Agreement, of the applicable Interest
Period. If the Borrower shall fail to give the Bank the Notice of
Selection of Interest Period as specified above for the renewal of a
Canadian LIBOR or Eurodollar Loan, as the case may be, prior to the end
of the Interest Period with respect thereto, in the case of a Canadian
LIBOR Loan shall be deemed to be renewed as a 30-day Interest Period
Canadian LIBOR Loan, and, in the case of a renewal or conversion of a
Eurodollar Loan, shall be deemed to automatically convert into a Base
Loan on the last day of the Interest Period for such Loan.
2.3. Interest. The Borrower shall pay interest to the Bank on
the outstanding and unpaid principal amount of the Loans made under
this Agreement at a rate per annum as follows:
(1) For a Base Loan at a rate equal to the Base Rate
less one and three-quarters percent (1.75%);
16
(2) For a Eurodollar Loan (applicable only to
Revolving Loans) at a rate equal to the Eurodollar
Interest Rate plus an amount expressed in terms of
"basis points" or whole or fractional percentage
points quoted by an authorized representative of the
Bank, based upon the Interest Period selected by the
Borrower, the amount of the requested Eurodollar
Loan, the market conditions and the date of the
request, and confirmed in writing to Borrower on the
Business Day following Borrower's request for a
Eurodollar Loan or conversion to a Eurodollar Loan;
and
3) For a Canadian LIBOR Loan (applicable only to
Canadian LIBOR Loans) at a rate equal to the Canadian
LIBOR Interest Rate plus an amount expressed in terms
of "basis points" or whole or fractional percentage
points quoted by an authorized representative of the
Bank, based upon the Interest Period selected by the
Borrower, the amount of the requested Canadian LIBOR
Loan, the market conditions and the date of the
request, and confirmed in writing to Borrower on the
Business Day following Borrower's request for a
Canadian LIBOR Loan or conversion to a Canadian LIBOR
Loan.
Any change in the interest rate based on the Base Rate
resulting from a change in the Base Rate shall be effective as of the
opening of business on the day on which such change in the Base Rate
becomes effective.
Interest on each Base Loan shall be calculated on the basis of
a year of 360 days for the actual number of days elapsed for any
payment period. Interest on each Eurodollar or Canadian LIBOR Loan, as
the case may be, shall be calculated on the basis of a year of 360 days
for the actual number of days elapsed for the Interest Period.
Interest on the Loans shall be paid in immediately available
funds at the Principal Office or the Lending Office for the account of
the applicable Lending Office as follows:
(1) For each Base Loan, on the first day of each
month, commencing the first such day after such Loan and at
maturity for such Loan, and
17
(2) For each Canadian LIBOR or Eurodollar Loan, as
the case may be, on the last day of the applicable Interest
Period with respect thereto and, in the case of an Interest
Period greater than one month, at one-month intervals after
the first day of such Interest Period.
Any principal amount not paid when due (at maturity, by
acceleration or otherwise) shall bear interest thereafter until paid in
full, payable on demand, at a rate per annum equal to:
(a) For each Base Loan at a rate equal to the Base
Rate plus one percent (1%); and
(b) For each Canadian LIBOR or Eurodollar Loan, as
the case may be, at a rate equal to the applicable Canadian
LIBOR or Eurodollar Interest rate Loan, as the case may be,
plus three percent (3%) from the time of an Event of Default
until the end of the then current Interest Period therefor,
and thereafter at a rate equal to the Base Rate plus one
percent (1%).
2.4. The Notes.
2.4.1. The Revolving Line of Credit. All Revolving
Line of Credit Loans made by the Bank under this Agreement
shall be evidenced by, and repaid with interest in accordance
with, a single promissory $50,000,000 Revolving Line of Credit
Note (the "Revolving Note") of the Borrower in substantially
the form of Exhibit A, duly completed, dated the date of this
Agreement, and payable to the Bank, such Revolving Note to
represent the obligation of the Borrower to repay the
Revolving Line of Credit Loans. The Bank is hereby authorized
by the Borrower to endorse on the schedule attached to the
Revolving Note the amount and type of each Revolving Line of
Credit Loan and each renewal and payment of principal amount
received by the Bank for the account of the applicable Lending
Office on account of the Revolving Line of Credit Loans, which
endorsement shall, in the absence of manifest error, be
conclusive as to the outstanding balance of the Revolving Line
of Credit Loans made by the Bank; provided, however, that the
failure to make such notation with respect to any Revolving
Line of Credit Loan or renewal or payment shall not limit or
otherwise affect the obligations of the Borrower under this
Agreement or the Revolving Note.
18
On and after the Termination Date, the unpaid
principal amount of the Revolving Note shall be repaid ON
DEMAND.
2.4.2. The Canadian Revolving Line of Credit. All
Canadian Revolving Line of Credit Loans made by the Bank under
this Agreement shall be evidenced by, and repaid with interest
in accordance with, a single promissory $5,000,000 Canadian
Revolving Line of Credit Note (the "Canadian Revolving Note")
of the Borrower in substantially the form of Exhibit B, duly
completed, dated the date of this Agreement, and payable to
the Bank, such Canadian Revolving Note to represent the
obligation of the Borrower to repay the Canadian Revolving
Line of Credit Loans. The Bank is hereby authorized by the
Borrower to endorse on the schedule attached to the Canadian
Revolving Note the amount and type of each Canadian Revolving
Line of Credit Loan and each renewal, conversion, and payment
of principal amount received by the Bank for the account of
the applicable Lending Office on account of the Canadian
Revolving Line of Credit Loans, which endorsement shall, in
the absence of manifest error, be conclusive as to the
outstanding balance of the Canadian Revolving Line of Credit
Loans made by the Bank; provided, however, that the failure to
make such notation with respect to any Canadian Revolving Line
of Credit Loan or renewal, conversion, or payment shall not
limit or otherwise affect the obligations of the Borrower
under this Agreement or the Canadian Revolving Note.
On and after the Termination Date, the unpaid
principal amount of the Canadian Revolving Note shall be
repaid ON DEMAND.
2.5. Cross Default. A material default in any of the terms and
conditions of (i) any other obligation of the Borrower to the Bank
(including, without limitation, any guaranty obligations or any
reimbursement obligations arising out of the Letter of Credit
Facility), shall constitute a default in the Revolving Note, the
Canadian Revolving Note, the Foreign Exchange Facility Note and any
other obligations of the Borrower to the Bank whether evidenced by
notes or otherwise or (ii) the obligations of the Borrower under any
Indebtedness to any other institutional lender shall constitute a
default hereunder. A default in any of the terms and conditions of the
Revolving, the Canadian Revolving Note, the Letter of Credit Facility,
the Back-up Foreign Exchange Note or the Foreign Exchange Facility
shall constitute a default of this Agreement and any default of this
Agreement shall
19
constitute a default of the Revolving Note, the Canadian Revolving
Note, the Letter of Credit Facility, the Back-up Foreign Exchange Note
and the Foreign Exchange Facility.
2.6. Use of Proceeds. The proceeds of the Loans hereunder
shall be used by the Borrower (i) to refinance or retire previously
incurred debt, and (ii) for working capital and acquisition purposes.
The Borrower will not, directly or indirectly, use any part of such
proceeds for the purpose of purchasing or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or to extend credit to any Person for the
purpose of purchasing or carrying any such margin stock, or for any
purpose which violates, or is inconsistent with, Regulation X of such
Board of Governors.
2.7. Method of Payment. The Borrower shall make each payment
or permitted prepayment under this Agreement, under the Revolving Note
or the $3,000,000 Back-up Foreign Exchange Facility Note not later than
11:00 a.m. (Boston time) on the date when due in lawful money of the
United States to the Bank at its Principal Office or Lending Office for
the account of the applicable Lending Office in immediately available
funds.
The Borrower shall make each payment or permitted prepayment
under this Agreement, under the Canadian Revolving Note not later than
11:00 a.m. (Boston time) on the date when due in lawful money of the
Dominion of Canada to the Bank at its Principal Office or the Nassau
Branch, for the account of the applicable Lending Office in immediately
available funds.
The Borrower hereby authorizes the Bank, if and to the extent
payment is not made when due under this Agreement, under the Revolving
Note or under the Canadian Revolving Note to charge from time to time
against any account of the Borrower with the Bank any amount so due.
Whenever any payment to be made under this Agreement, under the
Revolving Note or under the Canadian Revolving Note shall be stated to
be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall
in such case be included in the computation of the payment of interest
except, in the case of a Eurodollar or Canadian LIBOR Loan, if the
result of such extension would be to extend such payment into another
calendar month, such payment shall be made on the immediately preceding
Business Day.
20
2.8. Prepayment. The Borrower may, with respect to Base Loans
only, upon at least one (1) Business Day's notice to the Bank, prepay
the Revolving Note in whole or in part with accrued interest to the
date of such prepayment on the amount prepaid. Eurodollar or Canadian
LIBOR Loans may not be prepaid. If for any reason the Bank is obligated
to accept a prepayment of any Eurodollar or Canadian LIBOR Loan on any
day other than the last day of the Interest Period applicable to such
Loan, the Borrower shall pay to the Bank an amount computed pursuant to
the following formula:
L = (R-T) x P x D
360
where:
L = the amount payable to the Bank; R = the applicable
interest rate on such Loan; T = the effective rate per annum
at which any readily
marketable bond or other obligation of the United
States, selected at the Bank's sole discretion,
maturing on or near the last day of the then
applicable Interest Period of such Loan and in
approximately the same amount as such Loan, can be
purchased by the Bank on the day of such payment of
principal;
P = the amount of principal prepaid;
D = the number of days remaining in the applicable
Interest Period for such Loan, as of the date of such
prepayment.
The Borrower shall pay such amount ("L") upon presentation by the Bank
of a statement setting forth in reasonable detail the amount and the
Bank's calculation thereof pursuant hereto, which statement shall be
deemed correct absent manifest error. No amount shall be payable by the
Borrower pursuant to this Section 2.8 if T is equal to or higher than
R.
2.9. Late Payment. Any payment on the Loans received more than
fifteen (15) days after its due date shall be subject to an additional
charge of five percent (5.00%) of the periodic installment due.
2.10. Illegality. Notwithstanding any other provision in
this Agreement, if the Bank determines that any applicable law,
rule, or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental
21
authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank (or
its Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank, or
comparable agency shall make it unlawful or impossible for the Bank (or
its Lending Office) to (1) maintain this credit facility, then upon
notice to the Borrower by the Bank this credit facility shall
terminate; or (2) maintain or fund Eurodollar or Canadian LIBOR Loans,
as the case may be, then upon notice to the Borrower by the Bank the
outstanding principal amount of the Eurodollar or Canadian LIBOR Loans,
together with interest accrued thereon, and any other amounts payable
to the Bank under this Agreement shall be repaid or converted to a Base
Loan (a) immediately upon demand of the Bank if such change or
compliance with such request, in the judgment of the Bank, requires
immediate repayment; or (b) at the expiration of the last Interest
Period to expire before the effective date of any such change or
request.
2.11. Disaster. Notwithstanding anything to the contrary
herein, if the Bank determines (which determination shall be
conclusive) that:
(1) Quotations of interest rates for the relevant
deposits referred to in the definition of Eurodollar or
Canadian LIBOR Interest Rate are not being provided in the
relevant amounts or for the relative maturities for purposes
of determining the rate of interest on a Eurodollar or
Canadian LIBOR Loan as provided in this Agreement; or
(2) The relevant rates of interest referred to in the
definition of Eurodollar or Canadian LIBOR Interest Rate, upon
the basis of which the rate of interest for any such type of
loan is to be determined do not accurately cover the cost to
the Bank of making or maintaining such type of Loans;
then the Bank shall forthwith give notice thereof to the Borrower,
whereupon (a) the obligation of the Bank to make Eurodollar or Canadian
LIBOR Loans shall be suspended until the Bank notifies the Borrower
that the circumstances giving rise to such suspension no longer exist;
and (b) the Borrower shall repay in full, or convert to a Base Loan in
full, the then outstanding principal amount of each Eurodollar or
Canadian LIBOR Loan together with accrued interest thereon, on the last
day of the then current Interest Period applicable to such Loan.
22
2.12. Additional Costs; Regulatory Changes; Capital Adequacy.
The Borrower shall pay to the Bank from time to time such amounts as
the Bank may reasonably determine to be necessary to compensate the
Bank for any costs incurred by the Bank which the Bank determines are
attributable to its making or maintaining any Loans hereunder or its
obligation to make any such Loans hereunder, or any reduction in any
amount receivable by the Bank under this Agreement, the Revolving Note
or the Canadian Revolving Note in respect of any such Loans or such
obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
change after the date of this Agreement in U.S. federal, state,
municipal, or foreign laws or regulations (including Regulation D), or
the adoption or making after such date of any interpretations,
directives, or requirements applying to a class of banks including the
Bank of or under any U.S. federal, state, municipal, or any foreign
laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the
interpretation or administration thereof ("Regulatory Change"); which
(1) changes the basis of taxation of any amounts payable to the Bank
under this Agreement, the Revolving Note or the Canadian Revolving Note
in respect of any of such Loans (other than taxes imposed on the
overall net income of the Bank or of its Lending Office for any of such
Loans by the jurisdiction where the Principal Office or such Lending
Office is located); or (2) imposes or modifies any reserve, special
deposit, compulsory loan, or similar requirements relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, the Bank (including any of such Loans or any deposits
referred to in the definition of Eurodollar or Canadian LIBOR Interest
Rate); or (3) requires an increase in the amount of capital required or
expected to be maintained by the Bank or any entity controlling the
Bank, or (4) imposes any other condition affecting this Agreement, the
Revolving Note or the Canadian Revolving Note (or any of such
extensions of credit or liabilities). The Bank will notify the Borrower
of any event occurring after the date of this Agreement which will
entitle the Bank to compensation pursuant to this Section 2.12 as
promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. The provisions of this Section
2.12 however shall not be applied (a) retrospectively or (b) during any
Eurodollar or Canadian LIBOR Interest Period in effect when a
Regulatory Change resulting in Additional Costs occurs.
Determinations by the Bank for purposes of this Section 2.12
of the effect of any Regulatory Change on its costs of making or
23
maintaining Loans after the date of notification of such Regulatory
Change by the Bank to the Borrower or on amounts receivable by it in
respect of Loans, and of the additional amounts required to compensate
the Bank in respect of any Additional Costs, shall be conclusive,
provided that such determinations are made on a reasonable basis.
2.13. Funding Loss Indemnification. The Borrower shall pay to
the Bank, upon the request of the Bank, such amount or amounts as shall
be sufficient (in the reasonable opinion of the Bank) to compensate it
for any loss, cost, or expense incurred as a result of:
(1) Any payment of a Eurodollar or Canadian LIBOR Loan on
a date other than the last day of the Interest Period
for such Loan including, but not limited to,
acceleration of the Loans by the Bank pursuant to
Section 9; or
(2) Any failure by the Borrower to borrow or convert, as
the case may be, a Eurodollar or Canadian LIBOR Loan
on the date for borrowing or conversion, as the case
may be, specified in the relevant notice provision
under Sections 2.2.
2.14. Letter of Credit Facility. So long as no Default
hereunder has occurred, the Bank shall make available to the Borrower
and its Subsidiaries a credit facility within the Commitment (the
"Letter of Credit Facility") whereby the Bank will issue up to an
aggregate of Ten Million Dollars ($10,000,000.00) against amounts
available under the Revolving Line of Credit Facility, of letters of
credit (a "Letter of Credit") for the Borrower's or one of its
Subsidiaries' account with an expiration date on any specific Letter of
Credit no later than the Termination Date, unless the Bank chooses to
issue a Letter of Credit to expire after the Termination Date. The
individual Letters of Credit shall be issued in accordance with the
Bank's customary practices at the time of issuance, utilizing
documentation prevailing at such times and, if drawn upon, amounts paid
thereon will be repaid upon demand by the Borrower (and, if applicable,
its Subsidiary for whose account the Letter of Credit was issued) in
full reimbursement to the Bank of all such amounts drawn upon under any
or all Letters of Credit, pursuant hereto, or to such additional
reimbursement obligations as may be contained in any documentation
executed by the Borrower in conjunction with the issuance of such
Letter(s) of Credit.
24
To the extent repayment of such amounts as are reimbursable to
the Bank for such drawings against Letters of Credit is not immediately
made, the amount of such drawings shall be charged as Revolving Line of
Credit Loans. The amount of outstanding commitments under issued
Letters of Credit plus the aggregate amounts drawn under any Letters of
Credit and not reimbursed by the Borrower to the Bank shall reduce
availability under the Revolving Line of Credit Facility.
This Letter of Credit Facility will be made available to
those Subsidiaries of Borrower listed in the attached Exhibit "C" as
well as to Borrower and Borrower's reimbursement obligations described
herein shall apply regardless of whether Borrower or one of its
Subsidiaries is the account party of a particular Letter of Credit.
2.15. Letter of Credit Fees. Whenever a Letter of Credit is
issued, extended or renewed for the Borrower's (or one of its
Subsidiaries') account, a per annum fee of three quarters of one
percent (.75%) of the face amount of the Letter of Credit shall be
charged (the "Letter of Credit Fee") together with an issuance,
extension or renewal fee of Two Hundred Dollars ($200.00) covering
document preparation costs. An amendment fee of Forty Dollars ($40.00)
per amendment and a drawing fee equal to the greater of (i) one eighth
of one percent (.125%) of the amount drawn or (ii) Seventy Five Dollars
($75.00), payable if a draw occurs, constitute additional fees
associated with the Letters of Credit. If a Letter of Credit is
returned to the Bank prior to twelve (12) months from its date of
issue, the Bank will refund to the Borrower the pro rata portion of the
Letter of Credit Fee for that period of time during which the Letter of
Credit is no longer in effect.
2.16. Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber
of Commerce Publication No. 500, and any subsequent revisions thereof
approved by a Congress of the International Chamber of Commerce and
adhered to by the Bank (the "Uniform Customs and Practice"), shall be
binding on the Borrower and the Bank except to the extent otherwise
provided herein, in any Letter of Credit or in any other credit
document. Anything in the Uniform Customs and Practice to the contrary
notwithstanding:
(a) Neither the Borrower nor any beneficiary of any
Letter of Credit shall be deemed an agent of the Bank.
25
(b) With respect to each Letter of Credit, neither
the Bank nor its correspondents shall be responsible for or
shall have any duty to ascertain:
(i) the genuineness of any signature;
(ii) the validity, form, sufficiency,
accuracy, genuineness or legal effect of any
endorsements;
(iii) delay in giving, or failure to give,
notice of arrival, notice of refusal of documents or
of discrepancies in respect of which the Bank refuses
the documents or any other notice, demand or protest;
(iv) the performance by any beneficiary
under any Letter of Credit of such beneficiary's
obligations to the Borrower;
(v) inaccuracy in any notice received by the
Bank;
(vi) the validity, form, sufficiency,
accuracy, genuineness or legal effect of any
instrument, draft, certificate or other document
required by such Letter of Credit to be presented
before payment of a draft, or the office held by or
the authority of any Person signing any of same; or
(vii) failure of any instrument to bear any
reference or adequate reference to such Letter of
Credit, or failure of any Person to note the amount
of any instrument on the reverse of such Letter of
Credit or to surrender such Letter of Credit or to
forward documents in the manner required by such
Letter of Credit;
(c) the occurrence of any of the events referred to
in the Uniform Customs and Practice or in the preceding
clauses of this Section 2.16 shall not affect or prevent the
vesting of any of the Bank's rights or powers hereunder or the
Borrower's obligation to make reimbursement of amounts paid
under any Letter of Credit or any draft accepted thereunder.
(d) The Borrower will promptly examine (i) each
Letter of Credit (and any amendments thereof) sent to it by
the Bank and (ii) all instruments and documents delivered to
26
it from time to time by the Bank. The Borrower will notify the
Bank of any claim of noncompliance by notice actually received
within three Business Days after receipt of any of the
foregoing documents, the Borrower being conclusively deemed to
have waived any such claims against the Bank and its
correspondents unless such notice is given. The Bank shall
have no obligation or responsibility to send any such Letter
of Credit or any such instrument or document to the Borrower.
(e) In the event of any conflict between the
provisions of this Agreement and the Uniform Customs and
Practice, the provisions of this Agreement shall govern.
2.17. Subrogation. Upon any payment by the Bank under any
Letter of Credit and until the reimbursement of the Bank by the
Borrower (and appropriate Subsidiary) with respect to such payment, the
Bank shall be entitled to be subrogated to, and to acquire and retain,
the rights which the Person to whom such payment is made may have
against the Borrower, all for the benefit of the Bank. The Borrower
will use all commercially reasonable efforts to take such action as the
Bank may reasonably request, including requiring the beneficiary of any
Letter of Credit to execute such documents as the Bank may reasonably
request, to assure and confirm to the Bank such subrogation and such
rights, including the rights, if any, of the beneficiary to whom such
payment is made in accounts receivable, inventory and other properties
and assets of any obligor.
2.18. $3,000,000.00 Foreign Exchange Line. In addition to the
Revolving Line of Credit and the Letter of Credit Facility established
hereby, the Bank hereby establishes a line of credit in Borrower's
favor in the amount of $3,000,000.00 (the "$3,000,000.00 FX Facility")
or as otherwise may be determined by the Bank from time to time which
line of credit may be used for the purchases of such foreign currencies
as may be hereafter agreed to by the Bank pursuant to contracts or
other agreements to purchase such currency from the Bank (as principal
or agent) (the "Foreign Exchange Contracts") with settlement dates up
to the Termination Date; it being understood, however, that the Foreign
Exchange Line is intended for contracts necessary for payments to
suppliers or payments from customers rather than for speculative
purposes. In the event that the Bank is required to advance funds on
account of its obligation (as Borrower's principal or agent) to
purchase foreign currency, the Bank may charge Borrower's account
therefor and such charges shall be deemed to be advances made under the
Revolving Line of Credit.
27
To the extent there is insufficient availability under the
Commitment, the reimbursement obligations resulting from such drawings
shall be evidenced by and subject to the terms of a single, master
back-up demand note (the "$3,000,000.00 Back-Up Foreign Exchange
Facility Note") in the form attached hereto as Exhibit "D".
3. CONDITIONS PRECEDENT. The obligation of the Bank to (i) make a
Revolving Line of Credit Loan, (ii) make a Canadian Revolving Line of Credit
Loan,(iii) issue a Letter of Credit or (iv) make a Foreign Exchange Facility
Loan or transaction shall be subject to the condition precedent that the Bank
shall have received on or before the day of such transaction each of the
following, in form and substance satisfactory to the Bank and its counsel:
3.1. Execution of Notes. The Notes duly executed by the
Borrower.
3.2. Evidence of Borrower's Authority and Incumbency of
Representatives. Certified (as of the date of this Agreement) copies of
all corporate action taken by the Borrower, including resolutions of
its Board of Directors, authorizing the execution, delivery, and
performance of the Loan Documents to which it is a party and each other
document to be delivered pursuant to this Agreement together with a
certificate (dated as of the date of this Agreement) of the Clerk or
Secretary of the Borrower certifying the names and true signatures of
the officers of the Borrower authorized to sign the Loan Documents to
which it is a party and the other documents to be delivered by the
Borrower under this Agreement.
3.3. Opinion. A favorable opinion of counsel for the Borrower,
dated as of the date of this Agreement and, if requested by the Bank,
as of the date of the Loan, in such form as is acceptable to the Bank
and as to such other matters as the Bank may reasonable request.
3.4. Officer's Certificate, etc. The following statements
shall be true and the Bank shall have received a certificate signed by
a duly authorized officer of the Borrower dated the date of this
Agreement and, if requested by the Bank, as of the date of the Loan
stating that:
a) The representations and warranties contained
in Section 5 of this Agreement are correct on and as
28
of the date of the Loan as though made on and as of
such date; and
b) No Default or Event of Default has
occurred and is continuing, or would result from the
making of the Loan.
3.5. Other Related Documents. The Bank shall have received
such other approvals, opinions, certificates or documents as the Bank
may reasonably request.
4. PROMISE TO PAY. Borrower promises to pay:
4.1. Obligations. All Obligations of the Borrower to the Bank,
including, but not limited to, the Obligations evidenced by the Notes
of even date with interest at the rate set forth or in the manner
determined in accordance with this Agreement and the Notes.
4.2. Taxes. Any and all taxes, charges and expenses of every
kind or description which are the binding and legal obligations of the
Borrower, paid or incurred by the Bank (after notice to the Borrower)
with respect to the loans or financial accommodations made or the
collection or realization upon the same, together with interest thereon
at the highest rate specified in Section 2.3 above.
5. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. To induce
the Bank to enter into this Agreement, the Borrower represents and
warrants as follows:
5.1. Corporate Existence; Authority; Standing. The Borrower is
a corporation duly organized, validly existing and in good standing
under the laws of The Commonwealth of Pennsylvania. Borrower has full
corporate power to own its properties and conduct its business as now
conducted, and to enter into and perform this Agreement. Borrower is in
good standing in each jurisdiction in which the failure to qualify
would have a material, adverse effect upon its financial condition,
business or properties. The execution and delivery of this Agreement,
the Notes and all related documents has been duly authorized and
evidence valid and binding obligations of the Borrower.
5.2. Legally Enforceable Agreement. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement
will be, legal, valid, and binding obligations of the Borrower in
accordance with their respective terms, except to the
29
extent that such enforcement may be limited by applicable bankruptcy,
insolvency, and other similar laws affecting creditors' rights
generally.
5.3. Financial Statements. The balance sheet of the Borrower
and any of its Subsidiaries and the related statements of income and
retained earnings and cash flow of the Borrower and any of its
Subsidiaries for the fiscal year then ended, and the accompanying
footnotes, together with any interim financial statements of the
Borrower and any of its Subsidiaries, copies of which have been
furnished to the Bank, are complete and correct and fairly present the
financial condition of the Borrower and any of its Subsidiaries as at
such dates and the results of the operations of the Borrower and any of
its Subsidiaries for the periods covered by such statements, all in
accordance with GAAP consistently applied (subject to year-end
adjustments in the case of the interim financial statements), and there
has been no material adverse change in the condition (financial or
otherwise), business, or operations of the Borrower or any Subsidiary
since the presentation to the Bank of the most recently dated financial
statements, nor are there any liabilities of the Borrower or any
Subsidiary, fixed or contingent, which are material but are not
reflected in such financial statements or in the notes thereto, other
than liabilities arising in the ordinary course of business. No
information, exhibit or report furnished by the Borrower to the Bank in
connection with the negotiation of this Agreement contained any
material misstatement of fact or omitted to state a material fact or
any fact necessary to make the statement contained therein not
materially misleading.
5.4. Labor Disputes and Acts of God. Neither the business nor
the properties of the Borrower or any Subsidiary are affected by any
fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public
enemy, or other casualty (whether or not covered by insurance),
materially and adversely affecting such business or properties or the
operation or financial condition of the Borrower.
5.5. Other Agreements. Neither the Borrower nor any Subsidiary
is a party to any indenture, loan or credit agreement, or to any lease
or other agreement or instrument, or subject to any charter or
corporate restriction which could have a material adverse effect on the
business, properties, assets, operations, or conditions, financial or
otherwise, of the Borrower or any Subsidiary, or the ability of the
Borrower to carry out its
30
obligations under the Loan Documents to which it is a party. Neither
the Borrower nor any Subsidiary is in default in any material respect
in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in any agreement or
instrument material to its business to which it is a party.
5.6. Litigation. There is no pending or threatened action or
proceeding against or affecting the Borrower or any of its Subsidiaries
before any court, governmental agency, or arbitrator, which may, in any
one case or in the aggregate, materially adversely affect the financial
condition, operations, properties, or business of the Borrower or the
ability of the Borrower to perform its obligations under the Loan
Documents to which it is a party.
5.7. No Defaults. The Borrower and each of its Subsidiaries
have satisfied all judgments, and neither the Borrower nor any
Subsidiary is in default with respect to any judgment, writ,
injunction, decree, rule or regulation of any court, arbitrator, or
Federal, state, municipal, or other governmental authority, commission,
board, bureau, agency, or instrumentality, domestic or foreign.
5.8. Subsidiaries. Set forth in Exhibit "C" is a complete and
accurate list of the Subsidiaries of the Borrower, showing the
jurisdiction of incorporation of each. All of the outstanding capital
stock of any Subsidiary which is owned by Borrower has been validly
issued, is fully paid and nonassessable, and is owned by the Borrower
free and clear of all Liens.
5.9. ERISA. The Borrower and each of its Subsidiaries are to
the best of its knowledge in compliance in all material respects with
all applicable provisions of ERISA. Neither a Reportable Event nor a
Prohibited Transaction has occurred and is continuing with respect to
any Plan; no notice of intent to terminate a Plan has been filed, nor
has any Plan been terminated, the effect of either of which would have
a material adverse effect upon the Borrower; no circumstances exist
which constitute grounds entitling the PBGC to institute proceedings to
terminate, or appoint a trustee to administer, a Plan, nor has the PBGC
instituted any such proceedings; neither the Borrower nor any Commonly
Controlled Entity has completely or partially withdrawn from a
Multiemployer Plan such that Borrower has any outstanding withdrawal
liability; the Borrower and each Commonly Controlled Entity have met
their minimum funding requirements
31
under ERISA with respect to all of their Plans and the present value of
all vested benefits under each Plan does not exceed the fair market
value of all Plan assets allocable to such benefits, as determined on
the most recent valuation date of the Plan and in accordance with the
provisions of ERISA; and neither the Borrower nor any Commonly
Controlled Entity has incurred any outstanding liability to the PBGC
under ERISA.
5.10. Operation of Business. The Borrower and each of its
Subsidiaries possess all licenses, permits, franchises, patents,
copyrights, trademarks, and trade names, or rights thereto, to conduct
their respective businesses substantially as now conducted and as
presently proposed to be conducted, and the Borrower and any of its
Subsidiaries are not in violation of any valid rights of others with
respect to any of the foregoing that would have a material adverse
effect on Borrower.
5.11. Taxes. The Borrower and each of its Subsidiaries have
filed all tax returns (Federal, state, and local) required to be filed
and have paid all taxes, assessments, and governmental charges and
levies thereon to be due, including interest and penalties unless such
taxes are being contested in good faith by appropriate action with
adequate reserves established on Borrower's financial statements.
5.12. Debt. Set forth in the financial statements referred to
in this Agreement, to the extent required by GAAP, is a complete and
correct list of all credit agreements, indentures, purchase agreements,
guaranties, Capital Leases, and other investments, agreements, and
arrangements presently in effect providing for or relating to
extensions of credit (including agreements and arrangements for the
issuance of letters of credit or for acceptance financing) in respect
of which the Borrower or any Subsidiary is in any manner directly or
contingently obligated; and the maximum principal or face amounts of
the credit in question, which are outstanding and which can be
outstanding, are correctly stated, and all Liens of any nature given or
agreed to be given as security therefor are correctly described or
indicated in such financial statements.
5.13. Environment. To the best of Borrower's knowledge, the
Borrower and each of its Subsidiaries have duly complied with, and
their businesses, operations, assets, equipment, property, leaseholds,
or other facilities are in compliance with, the provisions of all
Federal, state, and local environmental, health, and safety laws, codes
and ordinances, and all rules and regulations promulgated thereunder.
The Borrower and any
32
Subsidiary have been issued (or have applications pending) and will
maintain all required Federal, state, and local permits, licenses,
certificates, and approvals relating to (1) air emissions; (2)
discharges to surface water or groundwater; (3) noise emissions; (4)
solid or liquid waste disposal; (5) the use, generation, storage,
transportation, or disposal of toxic or hazardous substances or wastes
(intended hereby and hereafter to include any and all such materials
listed in any Federal, state, or local law, code or ordinance, and all
rules and regulations promulgated thereunder as hazardous or
potentially hazardous); or (6) other environmental, health, or safety
matters. Neither the Borrower nor any Subsidiary has received notice
of, nor knows of, or suspects, facts which might constitute any
material violations of any Federal, state, or local environmental,
health, or safety laws, codes or ordinances, and any rules or
regulations promulgated thereunder with respect to its businesses,
operations, assets, equipment, property, leaseholds, or other
facilities. Except in accordance with a valid governmental permit,
license, certificate, or approval, there has been no emission, spill,
release, or discharge into or upon (1) the air; (2) soils, or any
improvements located thereon; (3) surface water or groundwater; or (4)
the sewer, septic system or waste treatment, storage or disposal system
servicing the premises, of any toxic or hazardous substances or wastes
at or from the premises; and accordingly the premises of the Borrower
and any of its Subsidiaries are free of all such toxic or hazardous
substances or wastes. There has been no complaint, order, directive,
claim, citation, or notice by any governmental authority or any person
or entity with respect to (1) air emissions; (2) spills releases, or
discharges to soils or improvements located thereon, surface water,
groundwater or the sewer, septic system or waste treatment, storage or
disposal systems servicing the premises; (3) noise emissions; (4) solid
or liquid waste disposal; (5) the use, generation, storage,
transportation, or disposal of toxic or hazardous substances or waste;
or (6) other environmental, health, or safety matters affecting the
Borrower or its business, operations, assets, equipment, property,
leaseholds, or other facilities. Neither the Borrower nor any of its
Subsidiaries have any indebtedness, obligation, or liability, absolute
or contingent, matured or not matured, with respect to the storage,
treatment, cleanup, or disposal of any solid wastes, hazardous wastes,
or other toxic or hazardous substances (including without limitation
any such indebtedness, obligation, or liability with respect to any
current regulation, law, or statute regarding such storage, treatment,
cleanup, or disposal).
33
6. AFFIRMATIVE COVENANTS. So long as any Loan shall remain
unpaid or any credit accommodation or commitment remains in effect
hereunder, the Borrower will:
6.1. Maintenance of Existence. Except as otherwise permitted
herein, preserve and maintain, and cause each Subsidiary to preserve
and maintain, its corporate existence and good standing in the
jurisdiction of its incorporation, and qualify and remain qualified,
and cause any Subsidiary to qualify and remain qualified, as a foreign
corporation in each jurisdiction in which such qualification is
required.
6.2. Maintenance of Records. Keep, and cause each Subsidiary
to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied,
reflecting all financial transactions of the Borrower and any of its
Subsidiaries.
6.3. Maintenance of Properties. Maintain, preserve and keep,
and will cause each Subsidiary to maintain, preserve and keep, its
properties which are used or useful in the conduct of its business
(whether owned in fee or a leasehold interest) in good repair and
working order and from time to time will make all necessary repairs,
replacements, renewals and additions so that at all times the
efficiency thereof shall be maintained.
6.4. Conduct of Business. Except as otherwise permitted
herein, continue, and cause each Subsidiary to continue, to engage in
an efficient and economical manner in a business of the same general
type as conducted by it on the date of this Agreement.
6.5. Maintenance of Insurance. Maintain and will cause each
Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers in such forms and amounts and against such risks as
are customary for corporations of established reputation engaged in the
same or a similar business and owning and operating similar properties.
6.6. Compliance With Laws. Promptly pay and discharge and will
cause each Subsidiary promptly to pay and discharge, all lawful taxes,
assessments and governmental charges or levies imposed upon the
Borrower or such Subsidiary, respectively, or upon or in respect of all
or any part of the property or business of the Borrower or such
Subsidiary, all trade accounts payable in accordance with usual and
customary business terms, and all claims for work, labor or materials,
which if unpaid might become
34
a lien or charge upon any property of the Borrower or such Subsidiary;
provided the Borrower or such Subsidiary shall not be required to pay
any such tax, assessment, charge, levy, account payable or claim if (i)
the validity, applicability or amount thereof is being contested in
good faith by appropriate actions or proceedings which will prevent the
forfeiture or sale of any property of the Borrower or such Subsidiary
or any material interference with the use thereof by the Borrower or
such Subsidiary, and (ii) the Borrower or such Subsidiary shall set
aside on its books, reserves deemed by it to be adequate with respect
thereto. The Borrower will promptly comply and will cause each
Subsidiary to comply with all laws, ordinances or governmental rules
and regulations to which it is subject, including without limitation,
the Occupational Safety and Heath Act of 1970, ERISA, the Americans
with Disabilities Act and all laws, ordinances, governmental rules and
regulations relating to environmental protection in all applicable
jurisdictions, the violation of which would materially and adversely
affect the properties, business, prospects, profits or condition of the
Borrower and its Subsidiaries or would result in any lien or charge
upon any property of the Borrower or any Subsidiary.
6.7. Right of Inspection. At any reasonable time and from time
to time, permit the Bank or any agent or representative thereof to
examine and make copies of and abstracts from the records and books of
account of, and visit the properties of, the Borrower and any
Subsidiary, and to discuss the affairs, finances, and accounts of the
Borrower and any Subsidiary with any of their respective officers and
directors and the Borrower's independent accountants.
6.8. Environment. Be and remain, and cause each Subsidiary to
be and remain, in compliance with the provisions of all federal, state,
and local environmental, health, and safety laws, codes and ordinances,
and all rules and regulations issued thereunder; notify the Bank
immediately of any notice of a hazardous discharge or environmental
complaint received from any governmental agency or any other party;
notify the Bank immediately of any hazardous discharge from or
affecting its premises; immediately contain and remove the same, in
compliance with all applicable laws; promptly pay any fine or penalty
assessed in connection therewith, except such assessments as are being
contested in good faith, against which adequate reserves have been
established; permit the Bank to inspect the premises, to conduct tests
thereon, and to inspect all books, correspondence, and records
pertaining thereto; and at the Bank's request, and at the Borrower's
expense, provide a report of a
35
qualified environmental engineer mutually acceptable to the Bank and
the Borrower, satisfactory in scope, form, and content to the Bank, and
such other and further assurances reasonably satisfactory to the Bank
that the condition has been corrected.
6.9. Place of Business. Promptly notify the Bank in writing of
any addition to, change in, or discontinuance of its place of business
as shown in this subsection. The Borrower has its chief executive
office and principal place of business only at 000 Xxxxx Xxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx.
6.10. Principal Depositary. Conduct its principal banking
business with the Bank, including maintaining the Bank as its principal
depository for its funds, including deposits for payroll taxes and
income taxes, savings, certificates of deposit, general demand deposit
account, and such other accounts as may be permitted.
7. NEGATIVE COVENANTS. So long as any Loan shall remain unpaid or any
credit accommodation or commitment remains in effect hereunder, neither the
Borrower nor any Subsidiary will:
7.1. Liens. Create, incur, assume, or suffer to exist, or
permit any Subsidiary to create, incur, assume, or suffer to exist, any
Lien upon or with respect to any of its properties, now owned or
hereafter acquired, except:
7.1.1. Liens in favor of the Bank;
7.1.2. Liens for taxes or assessments or other
government charges or levies if not yet due and payable or, if
due and payable, if they are being contested in good faith by
appropriate proceedings and for which appropriate reserves are
maintained;
7.1.3. Liens imposed by law, such as mechanics',
materialmen's, landlords', warehousemen's, and carriers'
Liens, and other similar Liens, securing obligations incurred
in the ordinary course of business which are not past due for
more than fifteen (15) days or which are being contested in
good faith by appropriate proceedings and for which
appropriate reserves have been established;
7.1.4. Liens under workers' compensation,
unemployment insurance, Social Security, or similar
legislation;
36
7.1.5. Liens, deposits, or pledges to secure the
performance of bids, tenders, contracts (other than contracts
for the payment of money), leases (permitted under the terms
of this Agreement), public or statutory obligations, surety,
stay, appeal, indemnity, performance or other similar bonds,
or other similar obligations arising in the ordinary course of
business;
7.1.6. Judgment and other similar Liens arising in
connection with court proceedings, provided the execution or
other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good
faith and by appropriate proceedings;
7.1.7. Easements, rights-of-way, restrictions, and
other similar encumbrances which, in the aggregate, do not
materially interfere with the occupation, use, and enjoyment
by the Borrower or any Subsidiary of the property or assets
encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
and
7.1.8. Liens securing obligations of a Subsidiary to
the Borrower or another Subsidiary.
7.1.9. Liens which the Borrower grants or assumes
pursuant to or by reason of any merger, stock acquisition or
asset acquisition otherwise permitted hereby.
7.2. Indebtedness. Create, incur, assume, or suffer to exist,
or permit any Subsidiary to create, incur, assume, or suffer to exist,
any Indebtedness, except:
7.2.1. Indebtedness of the Borrower under this
Agreement or the Note;
7.2.2. Indebtedness of up to Forty Million Dollars
($40,000,000) excluding current liabilities except for the
current portion of long-term debt, and other than Indebtedness
to the Bank;
7.2.3. Indebtedness of the Borrower subordinated on
terms satisfactory to the Bank to the Borrower's obligations
under this Agreement and the Note; and
7.2.4. Accounts payable to trade creditors for goods
or services which are not aged more than one hundred and
37
twenty (120) days from the billing date and current operating
liabilities (other than for borrowed money) which are not more
than sixty (60) days past due, in each case incurred in the
ordinary course of business, as presently conducted, and paid
within the specified time, unless contested in good faith and
by appropriate proceedings.
7.2.5. Indebtedness which Borrower assumes or which
is otherwise includable as a liability on its financial
statements pursuant to or by reason of any merger, stock
acquisition or asset acquisition otherwise permitted hereby.
7.3. Mergers, Etc.
(a) (i) consolidate with or be a party to a merger
with any other corporation, or (ii) sell, lease or otherwise
dispose of all or any substantial part of the assets of the
Borrower and its Subsidiaries, provided, however that:
(1) any Subsidiary may merge or consolidate with or
into the Borrower or any wholly-owned Subsidiary so
long as in any merger or consolidation involving the
Borrower, the Borrower shall be the surviving or
continuing corporation;
(2) the Borrower may consolidate or merge with any
other corporation if (i) the Borrower shall be the
surviving or continuing corporation, (ii) at the time
of such consolidation or merger and after giving
effect thereto no Default or Event of Default shall
have occurred and be continuing, and (iii) after
giving effect to such consolidation or merger the
Borrower on a consolidated basis is in full
compliance with the covenants set forth in Section
8.2 below.
(3) any Subsidiary may sell, lease or otherwise
dispose of all or any substantial part of its assets
to the Borrower or any wholly-owned Subsidiary.
(b) permit any Subsidiary to issue or sell any shares
of stock of any class (including as "stock" for the purpose of
this Section 7.3 any warrants, rights or options to purchase
or otherwise acquire stock or other Securities exchangeable
for or convertible into stock) of Borrower or such Subsidiary
to any Person other than the Borrower, a Subsidiary or to the
management-employees of Borrower or a Subsidiary, except for
the purpose of qualifying directors,
38
or except in satisfaction of the validly pre-existing
preemptive rights of minority shareholders in connection with
the simultaneous issuance of stock to the Borrower and/or a
Subsidiary whereby the Borrower and/or such Subsidiary
maintain their proportionate interest in such Subsidiary.
(c) sell, transfer or otherwise dispose of any shares
of stock in any Subsidiary (except to qualifying directors or
other Subsidiaries or the management-employees of a
Subsidiary) or any Indebtedness of any Subsidiary, and will
not permit any Subsidiary to sell, transfer or otherwise
dispose of (except to the Borrower, a Subsidiary or the
management-employees of a Subsidiary) any shares of stock or
any Indebtedness of any other Subsidiary, without the consent
of the Bank, which will not be unreasonably withheld or
delayed unless:
(1) simultaneously with such sale, transfer, or
disposition, all shares of stock and all Indebtedness
of such Subsidiary at the time owned by the Borrower
and by every other Subsidiary shall be sold,
transferred or disposed of as an entirety;
(2) the Board of Directors of the Borrower shall have
determined, as evidenced by a resolution thereof,
that the retention of such stock and Indebtedness is
no longer in the best interest of the Borrower;
(3) such stock and Indebtedness is sold, transferred
or otherwise disposed of to a Person, for a cash
consideration and on terms reasonably deemed by the
Board of Directors to be adequate and satisfactory;
(4) the Subsidiary being disposed of shall not have
any continuing investment in the Borrower or any
other Subsidiary not being simultaneously disposed
of; and
(5) such sale or other disposition does not involve a
substantial part (as hereinafter defined) of the
assets of the Borrower and its Subsidiaries.
As used in this Section 7.3 a sale, lease or other disposition
of assets shall be deemed to be a "substantial part" of the assets of
the Borrower and its Subsidiaries only (i) if the book value of such
assets when added to the book value of all other assets sold, leased or
otherwise disposed of by the
39
Borrower and its Subsidiaries (other than in the ordinary course of
business) during the same fiscal year, exceeds 33 1/3% of the
Consolidated Net Tangible Assets of the Borrower and its Subsidiaries
determined as of the end of the immediately preceding fiscal year and
(ii) the proceeds of such sale, lease or other disposition are not
reinvested in the purchase of assets of comparable value. Sales or
other realization on (i) delinquent receivables and (ii) land held for
investment or disposal purposes as of the date of this Agreement shall
not be included in any computation of sales or other dispositions
hereunder.
7.4. Leases.
(a) become obligated, as lessee, to any Person other
than the Borrower or a Subsidiary or an Affiliate under any
long-term Lease unless at the time of entering into any such
long-term Lease and after giving effect thereto, the average
of the Net Income Available for Fixed Charges for any two of
the three immediately preceding fiscal years shall have been
at least 250% of the average of the Pro Forma Fixed Charges
for such two fiscal years and Net Income Available for Fixed
Charges for such two fiscal years and Net Income Available for
Fixed Charges for the immediately preceding fiscal year shall
have been at least 250% of Pro Forma Fixed Charges for such
fiscal year.
(b) enter into any arrangement whereby the Borrower
or any Subsidiary shall sell or transfer any property owned by
the Borrower or any Subsidiary to any Person other than the
Borrower or a Subsidiary and thereupon the Borrower or
Subsidiary shall lease or intend to lease, as lessee, the same
or substantially the same property.
7.5. No Loans or Investments. Make any loans to or investments
in any individual or entity, other than in normal course of business
without the prior approval of the Bank, which will not be unreasonably
withheld; except loans to or investments (i) in EAFCO, Inc., (ii) in
X.X. Xxxxx Company, Inc., (iii) in joint ventures to a maximum to
$10,000,000.00 in the aggregate and (iv) as otherwise permitted herein
or reasonably approved by the Bank.
7.6. Guaranties, Etc. Assume, guaranty, endorse, or
otherwise be or become directly or contingently responsible or
liable, or permit any Subsidiary to assume, guaranty, endorse, or
otherwise be or become directly or contingently responsible or
40
liable (including, but not limited to, an agreement to purchase any
obligation, stock, assets, goods, or services, or to supply or advance
any funds, assets, goods, or services of any person, or an agreement to
maintain or cause such Person to maintain a minimum working capital or
net worth, or otherwise to assure the creditors of any such Person
against loss) for obligations of any Person, except guaranties by
endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business, guaranties of
obligations of a Subsidiary or Affiliate, or guaranties for the benefit
of the Bank.
7.7. Transactions With Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate, or permit
any Subsidiary to enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the
rendering of any service, with any Affiliate, except in the ordinary
course of and pursuant to the reasonable requirements of the Borrower's
or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Borrower or such Subsidiary than would obtain in
a comparable arm's-length transaction with a Person not an Affiliate.
7.8. Dividends.
(a) declare or pay any dividends, either in cash or
property, on any shares of its capital stock of any class
(except dividends or other distributions payable solely in
shares of capital stock of the Borrower); or
(b) directly or indirectly, or through any
Subsidiary, purchase, redeem or retire any shares of its
capital stock of any class or any warrants, rights or options
to purchase or acquire any shares of its capital stock (other
than in exchange for or out of the net proceeds to the
Borrower from the substantially concurrent issue or sale of
other shares of capital stock of the Borrower or warrants,
rights or options to purchase or acquire any shares of its
capital stock); or
(c) make any other payment or distribution, either
directly or indirectly or through any Subsidiary, in respect
of its capital stock;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, and all
41
such other distributions being herein collectively called "Restricted Payments"
and individually, a "Restricted Payment")), if after giving effect thereto the
aggregate amount of Restricted Payments made during the period from and after
December 31, 1990 to and including the date of the making of the Restricted
Payment in question, would exceed 50% of Consolidated Net Income for such
period, computed on a cumulative basis for said entire period (or if such
Consolidated Net Income is a deficit figure, then minus 100% of such deficit).
(d) declare any dividend which constitutes a
Restricted Payment payable more than sixty (60) days after the
date of declaration thereof.
For the purposes of this Section 7.8 the amount of any
Restricted Payment declared, paid or distributed in property of the Borrower
shall be deemed to be the greater of the book value or fair market value (as
determined in good faith by the Board of Directors of the Borrower) of such
property at the time of the making of the Restricted Payment in question.
8. FINANCIAL COVENANTS. The following financial covenants may, at the
Bank's discretion, be altered, amended, or revised, prior to the Termination
Date, to reflect or address changes in Borrower's Capitalization and capital
structure, including its Funded Debt. So long as any Loan shall remain unpaid or
any credit accommodation or commitment remains in effect hereunder:
8.1. Reporting Requirements. The Borrower and any of its
Subsidiaries will furnish to the Bank:
8.1.1. Quarterly Statements. As soon as available and
in any event within 45 days after the end of each quarterly
fiscal period (except the last) of each fiscal year, duplicate
copies of:
(1) consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as of the
close of such quarter setting forth in comparative
form the amount for the corresponding period of the
preceding fiscal year,
(2) consolidated and consolidating
statements of income and retained earnings of the
Borrower and its Subsidiaries for such quarterly
period, setting forth in comparative form the amount
for the corresponding period of the preceding fiscal
year, and
42
(3) consolidated statements of cash flow of
the Borrower and its Subsidiaries of the portion of
the fiscal year ending with such quarter, setting
forth in comparative form the amount for the
corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct,
by an authorized financial officer of the Borrower.
8.1.2. Annual Statements. As soon as available and in
any event within 105 days after the close of each fiscal year
of the Borrower, duplicate copies of:
(1) consolidated balance sheets of the
Borrower and its Subsidiaries as of the close of such
fiscal year, and
(2) consolidated statements of income and
retained earnings and cash flow of the Borrower and
its Subsidiaries for such fiscal year,
in each case setting forth in comparative form the
consolidated figures for the preceding fiscal year, all in
reasonable detail and accompanied by an opinion thereon of a
firm of independent public accountants of recognized national
standing selected by the Borrower to the effect that the
consolidated financial statements have been prepared in
accordance with GAAP consistently applied (except for changes
in application in which such accountants concur) and present
fairly the financial condition of the Borrower and its
Subsidiaries and that the examination of such accountants in
connection with such financial statements has been made in
accordance with generally accepted auditing standards and
accordingly, includes such tests of the accounting records and
such other auditing procedures as were considered necessary in
the circumstances; and
(3) a consolidating statement of the Borrower and its
Subsidiaries prepared by the Borrower in support of the
consolidated statements referred to in clauses (1) and (2)
above.
The financial statements delivered pursuant to paragraphs (a)
and (b) above shall set forth the amounts charged in each of the
periods involved for depreciation, interest expense and Rentals payable
under long-term leases;
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8.1.3. Audit Reports. Promptly upon receipt thereof,
one copy of each interim or special audit made by
independent accountants of the books of the Borrower or any
Subsidiary;
8.1.4. SEC and Other Reports. Promptly upon their
becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Borrower to
stockholders generally and of each regular or periodic report,
and any registration statement or prospectus filed by the
Borrower or any Subsidiary with any securities exchange or the
Securities and Exchange Commission or any successor agency,
and copies of any orders in any proceedings to which the
Borrower or any of its Subsidiaries is a party, issued by any
governmental agency, Federal or state, having jurisdiction
over the Borrower or any of its Subsidiaries;
8.1.5. Requested Information. With reasonable
promptness, such other data and information as the Bank may
reasonably request;
8.1.6. Officers' Certificates. Within the periods
provided in Sections 8.1.1 and 8.1.2 above, a certificate of
an authorized financial officer of the Borrower stating that
he has reviewed the provisions of this Agreement and setting
forth: (i) the information and computations (in sufficient
detail) required in order to establish whether the Borrower
was in compliance with the requirements of Section 8.2.1
through 8.2.4, inclusive, at the end of the period covered by
the financial statements then being furnished, and (ii)
whether there existed as of the date of such financial
statements and whether, to the best of his knowledge, there
exists on the date of the certificate or existed at any time
during the period covered by such financial statements any
Default or Event of Default and, if any such condition or
event exists on the date of the certificate, specifying the
nature and period of existence thereof and the action the
Borrower is taking and proposes to take with respect thereto;
8.1.7. Accountant's Certificates. Within the period
provided in Sections 8.1.2 above, a certificate of the
accountants who render an opinion with respect to such
financial statements, stating that they have reviewed this
Agreement and stating further, whether in making their audit,
such accountants have become aware of any Default or
44
Event of Default under any of the terms or provisions of this
Agreement insofar as any such terms or provisions pertain to
or involve accounting matters or determinations, and if any
such condition or event then exists, specifying the nature and
period of existence thereof;
8.1.8. Notice of litigation. Promptly after the
commencement thereof, notice of all actions, suits, and
proceedings before any court or governmental department,
commission, board, bureau, agency, or instrumentality,
domestic or foreign, affecting the Borrower or any Subsidiary,
which, if determined adversely to the Borrower or such
Subsidiary, could have a material adverse effect on the
financial condition, properties, or operations of the Borrower
or such Subsidiary;
8.1.9. Notice of Defaults and Events of Default. As
soon as possible and in any event within five (5) days after
the occurrence of each Default or Event of Default, a written
notice setting forth the details of such Default or Event of
Default and the action which is proposed to be taken by the
Borrower with respect thereto;
8.1.10. ERISA reports. As soon as possible, and in
any event within thirty (30) days after the Borrower knows or
has reason to know that any circumstances exist that
constitute grounds entitling the PBGC to institute proceedings
to terminate a Plan subject to ERISA with respect to the
Borrower or any Commonly Controlled Entity, and promptly but
in any event within two (2) Business Days of receipt by the
Borrower or any Commonly Controlled Entity of notice that the
PBGC intends to terminate a Plan or appoint a trustee to
administer the same, and promptly but in any event within five
(5) Business Days of the Receipt of notice concerning the
imposition of withdrawal liability (in excess of $10,000.00
with respect to the Borrower or any Commonly Controlled
Entity, the Borrower will deliver to the Bank a certificate of
the chief financial officer of the Borrower setting forth all
relevant details and the action which the Borrower proposes to
take with respect thereto;
8.1.11. Reports to other creditors. Promptly after
the furnishing thereof, copies of any statement or report
furnished to any other party pursuant to the terms of any
indenture, loan, credit, or similar agreement and not
otherwise required to be furnished to the Bank pursuant to any
other clause of this Section; and
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8.2. Financial Covenants. For purposes of the following
financial covenants the Borrower and its Subsidiaries shall be treated
on a consolidated basis, and all ratios, except as otherwise specified,
will be tested on a quarterly basis:
8.2.1. Debt to Tangible Net Worth; Leverage Ratio.
The ratio of the Borrower's total Indebtedness and all other
liabilities to its Consolidated Tangible Net Worth shall be
maintained at or less than 3.00 to 1.00:
8.2.2. Current Ratio. The ratio of combined tangible
Consolidated Current Assets of the Borrower to the combined
Current Liabilities of the Borrower shall at all times be not
less than 1.35 to 1.00.
8.2.3. Minimum Consolidated Net Worth. At all times
the Borrower will maintain Consolidated Net Worth at an amount
not less than $75,000,000.00.
8.2.4. Working Capital. At all times Borrower's
Consolidated Current Assets shall exceed its Consolidated
Current Liabilities by $30,000,000.00.
9. EVENTS OF DEFAULT. If any of the following events shall
occur:
9.1. The Borrower shall fail to pay the principal of, or
interest on, the Notes or any other payment Obligations of Borrower to
the Bank, or any amount of a commitment or other fee, as and when due
and payable;
9.2. Any representation or warranty made or deemed made by the
Borrower in this Agreement or which is contained in any certificate,
document, opinion, or financial or other statement furnished at any
time under or in connection with any Loan Document shall prove to have
been incorrect, incomplete, or misleading in any material respect on or
as of the date made or deemed made;
9.3. The Borrower shall fail, after thirty (30) days of notice
thereof, to perform or observe any term, covenant, or agreement
contained herein (other than failure under Section 9.1 or 9.2 above for
which no notice is required);
9.4. Dissolution, merger or consolidation of the Borrower
(other than as permitted in this Agreement);
46
9.5. The Borrower or any of its Subsidiaries shall, after the
expiration of any applicable notice or grace periods, (a) fail to pay
any Indebtedness for borrowed money to Persons other than the Bank, or
any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise), or
(b) fail to perform or observe any term, covenant, or condition on its
part to be performed or observed under any agreement or instrument
relating to any such Indebtedness, when required to be performed or
observed, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of after the giving of notice
or passage of time, or both, the maturity of such Indebtedness, whether
or not such failure to perform or observe shall be waived by the holder
of such Indebtedness; or any such Indebtedness shall be declared to be
due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;
9.6. The Borrower or any of its Subsidiaries shall become
Insolvent (and, in the case of Insolvency of a Subsidiary, such
Insolvency has a material adverse effect upon Borrower);
9.7. One or more judgments, decrees, or orders for the payment
of money in excess of One Hundred Thousand Dollars ($100,000.00) in the
aggregate shall be rendered against the Borrower or any of its
Subsidiaries, and such judgments, decrees, or orders shall continue
unsatisfied and in effect for a period of ninety (90) consecutive days
without being vacated, discharged, satisfied, or stayed or bonded
pending appeal;
9.8. This Agreement shall at any time after its execution and
delivery and for any reason cease to be in full force and effect or
shall be declared null and void, or the validity or enforceability
thereof shall be contested by the Borrower, or the Borrower shall deny
it has any further liability or obligation under this Agreement;
9.9. Any of the following events shall occur or exist with
respect to the Borrower and any Commonly Controlled Entity under ERISA:
any Reportable Event shall occur; complete or partial withdrawal from
any Multiemployer Plan shall take place; any Prohibited Transaction
shall occur; a notice of intent to terminate a Plan shall be filed, or
a Plan shall be terminated; or circumstances shall exist which
constitute grounds entitling the PBGC to institute proceedings to
terminate a Plan, or the PBGC shall institute such proceedings; and in
each case above, such event or condition, together with all other
events or
47
conditions, if any, could subject the Borrower to any tax, penalty, or
other liability which in the aggregate may exceed One Hundred Thousand
Dollars ($100,000.00);
then, and in any such event, the Bank may, notwithstanding any time or credit
allowed by any instrument evidencing a liability, without notice or demand (i)
refuse to make any additional advances or Loans, and/or (ii) declare any
outstanding Notes, all interest thereon, and all other amounts payable under
this Agreement to be forthwith due and payable, whereupon such Notes, all such
interest, and all such amounts shall become and be forthwith due and payable.
Upon the occurrence and during the continuance of any Event of Default, the Bank
is hereby authorized at any time and from time to time, without notice, to
exercise any or all of its rights and remedies provided in this Agreement or
otherwise permitted by law, including all rights of set-off.
10. DEPOSITS. Any and all deposits or other sums at any time credited
by or due from the Bank to Borrower, and any securities or other property of
Borrower being held by the Bank or on account of Borrower, may at all times be
held and treated as collateral for any and all obligations of the Borrower to
the Bank, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising. The Bank may apply or set-off such
deposits or other sums against any obligations at any time, whether or not said
obligations or other security held by the Bank is considered by the Bank to be
adequate. The Bank, on or after an Event of Default, may sell any such
securities or other property held as collateral for the repayment or performance
of such obligations in a commercially reasonable manner.
11. WAIVERS. The Borrower waives demand, notice, protest, notice of
acceptance of this Agreement, notice of loans made, credit extended, or any
action taken in reliance hereon, and all other demands and notice of any
description. With respect to liabilities, the Borrower assents to any extension
or postponement of the time of payment or any other indulgence to the addition
or release of any party or person primarily or secondarily liable, to the
acceptance of partial payments thereon and the settlement thereof, all in such
manner and at such time or times as the Bank may deem advisable. No delay or
omission on the part of the Bank in exercising any right shall operate as a
waiver of such right or any other right. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right on any future occasion. All
rights and remedies of the Bank, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly or
concurrently.
48
12. MISCELLANEOUS
12.1. Amendments, Etc. No amendment, modification,
termination, or waiver of any provision of any Loan Document to which
the Borrower is a party, nor consent to any departure by the Borrower
from any Loan Document to which it is a party, shall in any event be
effective unless the same shall be in writing and signed by the Bank,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
12.2. Notices, Etc. All notices and other communications
provided for under this Agreement and under the other Loan Documents to
which the Borrower is a party shall be in writing (including
telegraphic, telex, and facsimile transmissions) and mailed or
transmitted or delivered, if to the Borrower, at its address at 000
Xxxxx Xxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxx X.
Xxxx, Chairman, and if to the Bank, at its address at 0000 Xxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: M. Xxxx Xxxxx, Executive
Vice President, with a copy to BankBoston, N.A. 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Senior Lending Officer; or, as
to each party, at such other address as shall be designated by such
party in a written notice to the other party complying as to delivery
with the terms of this Section. Except as is otherwise provided in this
Agreement, all such notices and communications shall be effective when
deposited in the mails or delivered to the telegraph company, or sent,
answerback received, respectively, addressed as aforesaid.
12.3. Survival. All representations, warranties, covenants,
and agreements contained herein shall survive the execution and
delivery of this Agreement, the Note and any other agreements or
documents required for this transaction.
12.4. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Borrower and the Bank and their
respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights under any Loan Document to which
the Borrower is a party without the prior written consent of the Bank.
12.5. Costs, Expenses, and Taxes. The Borrower agrees to pay
on demand all reasonable costs and expenses, incurred by the Bank in
connection with the preparation, execution, delivery, filing, and
administration of the Loan Documents, and of any amendment,
modification, or supplement to the Loan Documents,
49
including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Bank incurred in connection with advising
the Bank as to its rights and responsibilities hereunder. The Borrower
also agrees to pay all such costs and expenses, including court costs,
incurred in connection with enforcement of the Loan Documents, or any
amendment, modification, or supplement thereto, whether by negotiation,
legal proceedings, or otherwise. In addition, the Borrower shall pay
any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing, and
recording of any of the Loan Documents and the other documents to be
delivered under any such Loan Documents, and agree to hold the Bank
harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and
fees. This provision shall survive termination of this Agreement.
12.6. Integration. This Agreement and the Loan Documents
contain the entire agreement between the parties relating to the
subject matter hereof and supersede all oral statements and prior
writings with respect thereto.
12.7. Indemnity. The Borrower hereby agrees to defend,
indemnify, and hold the Bank harmless from and against any and all
claims, damages, judgments, penalties, costs, and expenses (including
attorney fees and court costs now or thereafter arising from the
aforesaid enforcement of this clause) arising directly or indirectly
from the activities of the Borrower and any of its Subsidiaries, its
predecessors in interest, or third parties with whom it has a
contractual relationship (with respect to that contractual
relationship), or arising directly or indirectly from the violation of
any environmental protection, health, or safety law, whether such
claims are asserted by any governmental agency or any other person.
This indemnity shall survive termination of this Agreement.
12.8. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of The
Commonwealth of Massachusetts.
12.9. Severability of Provision. Any provision of any Loan
Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions of such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
50
12.10. Captions, Counterparts and Modifications. The captions
of this Agreement are for convenience only and shall not affect the
construction hereof. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but may not be
terminated or modified orally.
12.11. Jury Trial Waiver. THE BANK AND THE BORROWER HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM,
WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN
ANY WAY RELATED TO THIS AGREEMENT OR THE LOAN DOCUMENTS. NO OFFICER OF
THE BANK HAS AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
to this Agreement the day and year first above written.
In the presence of:
Mestek, Inc.
By /S/XXXXXXX X. XXXX
Xxxxxxx X. Xxxx
Its Senior Vice President - Finance
BankBoston, N.A.
By /S/XXXXX X. XXXXXXX
Xxxxx X.Xxxxxxx
Its Vice President
51
