$90,000,000
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
by and among
HK SYSTEMS, INC.,
and
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
Individually and as Agent,
and
The Lenders
which are or become parties hereto
Dated as of November 15, 1996
Table of Contents
Page
Section 1. The Credits. 1
Section 1.1. Present Loans 1
Section 1.2. Revolving Credit. 2
Section 1.3. The Loans 3
Section 1.4. Letters of Credit 3
Section 1.5. Manner and Disbursement of Borrowings. 5
Section 2. Interest and Change In Circumstances. 6
Section 2.1. Interest Rate Options. 6
Section 2.2. Minimum Amounts. 8
Section 2.3. Computation of Interest. 8
Section 2.4. Manner of Rate Selection. 8
Section 2.5. Change of Law. 8
Section 2.6. Unavailability of Deposits or Inability to Ascertain
Adjusted LIBOR. 9
Section 2.7. Taxes and Increased Costs. 9
Section 2.8. Change in Capital Adequacy Requirements. 10
Section 2.9. Funding Indemnity 10
Section 2.10. Lending Branch. 11
Section 2.11. Discretion of Lenders as to Manner of Funding. 11
Section 3. Fees, Prepayments, Terminations, Applications and
Notations. 11
Section 3.1. Fees. 11
Section 3.2. Voluntary Prepayments. 12
Section 3.3. Mandatory Prepayments. 13
Section 3.4. Terminations. 13
Section 3.5. Place and Application of Payments. 14
Section 3.6. Notations and Requests. 15
Section 4. Collateral. 16
Section 4.1. Collateral. 16
Section 4.2. Subsidiary Guarantees. 16
Section 4.3. North Carolina Subsidiary Stock 16
Section 4.4. Canadian Subsidiary Collateral 16
Section 4.5. North Carolina Subsidiary Collateral 17
Section 5. Definitions 17
Section 5.1. Definitions. 17
Section 5.2. Interpretation. 27
Section 6. Representations and Warranties. 27
Section 6.1. Company's Organization and Qualification. 27
Section 6.2. Subsidiaries. 28
Section 6.3. Margin Stock. 28
Section 6.4. Financial Reports 29
Section 6.5. Full Disclosure 29
Section 6.6. Good Title 29
Section 6.7. Litigation and Other Controversies. 29
Section 6.8. Taxes. 30
Section 6.9. Approvals. 30
Section 6.10. Affiliate Transactions. 30
Section 6.11. Investment Company 30
Section 6.12. ERISA. 31
Section 6.13. Compliance with Laws. 31
Section 6.14. Other Agreements. 31
Section 7. Conditions Precedent. 31
Section 7.1. All Advances. 32
Section 7.2. Initial Advance. 32
Section 7.3. Certain Real Estate Collateral 34
Section 7.4. North Carolina Real Estate Collateral 35
Section 7.5 Authority Documents 36
Section 7.6. Good Standing Certificates 37
Section 8. Covenants. 37
Section 8.1. Maintenance of Business. 37
Section 8.2. Maintenance of Property. 37
Section 8.3. Taxes and Assessments 37
Section 8.4. Insurance. 38
Section 8.5. Financial Reports. 38
Section 8.6. Current Ratio 39
Section 8.7. Leverage Ratio 39
Section 8.8. Funded Debt Ratio 40
Section 8.9. Interest Coverage Ratio 40
Section 8.10. Capital Expenditures 40
Section 8.11. Indebtedness for Borrowed Money. 41
Section 8.12. Liens. 41
Section 8.13. Investments, Acquisitions, Loans, Advances and
Guaranties. 42
Section 8.14. Operating Leases. 44
Section 8.15. Sales and Leasebacks. 44
Section 8.16. Dividends and Certain Other Restricted Payments 45
Section 8.17. Mergers, Consolidations and Sales. 45
Section 8.18. Maintenance of Subsidiaries 46
Section 8.19. Formation of Subsidiaries. 46
Section 8.20. ERISA. 46
Section 8.21. Compliance with Laws. 46
Section 8.22. Burdensome Contracts With Affiliates. 46
Section 8.23. Changes in Fiscal Year. 47
Section 8.24. Change in the Nature of Business. 47
Section 8.25. Amendments to Subordinated Indebtedness 47
Section 8.26. Use of Loan Proceeds 47
Section 9. Events of Default and Remedies. 47
Section 9.1. Events of Default 47
Section 9.2. Non-Bankruptcy Defaults 50
Section 9.3. Bankruptcy Defaults 50
Section 9.4. Collateral for Undrawn Letters of Credit 50
Section 10. The Agent. 51
Section 10.1. Appointment and Authorization. 51
Section 10.2. Rights as a Lender 51
Section 10.3. Standard of Care 51
Section 10.4. Costs and Expenses 52
Section 10.5. Indemnity 53
Section 10.6. Credit Decision 53
Section 11. Miscellaneous. 53
Section 11.1. Holidays. 53
Section 11.2. No Waiver, Cumulative Remedies. 53
Section 11.3. Waivers, Modifications and Amendments 53
Section 11.4. Costs and Expenses 54
Section 11.5. Documentary Taxes. 55
Section 11.6. Survival of Representations. 55
Section 11.7. Survival of Indemnities. 55
Section 11.8. Notices 55
Section 11.9. Headings 56
Section 11.10. Severability of Provisions. 56
Section 11.11. Counterparts. 56
Section 11.12. Binding Nature, Governing Law, Etc 56
Section 11.13. Entire Understanding 57
Section 11.14. Participations 57
Section 11.15. Assignment Agreements 57
Section 11.16. Terms of Collateral Documents not Superseded 58
Section 11.17. Confidentiality 58
Signature 60
Exhibit A - Revolving Credit Note
Exhibit B - Form of Opinion of Counsel
Exhibit C - Compliance Certificate
Schedule 6.3 - Subsidiaries
HK Systems, Inc.
Third Amended and Restated Credit Agreement
To:
▇▇▇▇▇▇ Trust and Savings Bank Bank One, Milwaukee, NA
Chicago, Illinois Milwaukee, Wisconsin
Firstar Bank Milwaukee, N.A. The Northern Trust Company
Milwaukee, Wisconsin Chicago, Illinois
and their from time to time assigns
Ladies and Gentlemen:
The undersigned, HK Systems, Inc., a Wisconsin corporation (the
"Company"), is the successor by merger to a former Delaware corporation
known as HK Systems, Inc. ("Old HK"). The Company refers to the Credit
Agreement dated as of October 29, 1993 as amended by the Amended and
Restated Credit Agreement dated as of February 13, 1995 and as further
amended by the Second Amended and Restated Credit Agreement dated as of
May 23, 1996 and currently in effect (the "Prior Credit Agreement")
between the Company and the Lenders currently party thereto (the "Existing
Lenders"). Old HK issued to the Existing Lenders under the Prior Credit
Agreement its revolving credit notes dated May 23, 1996 payable to the
order of the Existing Lenders in the face principal amount of $40,000,000
(the "Prior Notes") to evidence the loans outstanding under the revolving
credit provided under the Prior Credit Agreement. As a result of Old HK's
merger with and into the Company, the Company has assumed liability for
the indebtedness evidenced by the Prior Notes (the "Present Loans"). The
Company has requested that the Existing Lenders modify the terms and
conditions applicable to the Present Loans and extend the maturity thereof
and that the Lenders provide to the Company a new revolving credit
facility covering the Present Loans and additional credit to be extended
by the Lenders to the Company from time to time, all on and subject to the
terms and conditions set forth below. Accordingly, this Agreement is
executed and delivered by the Company to the Lenders for the sake of
convenience and clarity, to amend and restate the Prior Credit Agreement
and in so doing set forth and confirm the terms and conditions applicable
to such new credit facilities and the covenants, representations and
warranties to be made in connection therewith. Accordingly, upon
execution by the Company and the Lenders in the spaces provided for that
purpose below, Sections 1 through 11 of the Prior Credit Agreement and the
Exhibits and Schedules thereto shall be amended and as so amended shall be
restated in their entirety as follows:
.c1.Section 1. The Credits.
.c2.Section 1.1. Present Loans;. The Company acknowledges that
it is justly and truly indebted to the Existing Lenders on the Present
Loans in the principal amount of $18,000,000.00 plus accrued and unpaid
interest thereon. Substantially concurrently herewith, the Company is
executing and delivering to the Lenders the Notes hereinafter identified
and defined. Upon satisfaction of the conditions precedent to
effectiveness set forth in Section 7 hereof, the Present Loans evidenced
by the Prior Notes shall automatically, and without further action on the
part of either the Lenders or the Company, become evidenced by the Notes
issued under this Agreement to the Existing Lenders and, to that extent,
such Notes are issued in renewal of, and evidence the same indebtedness
formerly evidenced by, the Prior Notes, as well as evidencing all
additional Loans made pursuant to this Agreement. Except as set forth in
the last sentence of this paragraph, all of the Present Loans shall, for
all purposes of this Agreement, be treated as though they constituted
Loans under this Agreement in an amount equal to the aggregate unpaid
principal balance of the Present Loans outstanding on such date. If any
accrued and unpaid interest and commitment fees are outstanding in respect
of any of the Present Loans as of the date that the Present Loans become
evidenced by the Notes, such accrued interest shall be evidenced by the
Notes and shall be due and payable on the first interest payment date
applicable to the Notes and such accrued fees shall be payable on the
first date on which the corresponding fees are due and payable under this
Agreement. Simultaneously with such satisfaction of such conditions
precedent, any commitment of the Existing Lenders under the Prior Credit
Agreement shall terminate.
.c2.Section 1.2. Revolving Credit.; Subject to the terms and
conditions hereof, each Lender severally agrees to extend a revolving
credit (the "Revolving Credit") to the Company which may be availed of by
the Company from time to time, and borrowings thereunder may be repaid and
used again, during the period from the date hereof to and including the
Termination Date, at which time the commitments of the Lenders to extend
credit under the Revolving Credit shall expire. The maximum amount of the
Revolving Credit which each Lender party hereto as of the date hereof
agrees to extend to the Company shall be as set forth below opposite such
Lender's name:
▇▇▇▇▇▇ Trust and Savings Bank $30,000,000 33.3333334%
Firstar Bank Milwaukee, N.A. $20,000,000 22.2222222%
The Northern Trust Company $20,000,000 22.▇▇▇▇▇▇▇%
Bank One, Milwaukee, NA $20,000,000 22.2222222%
----------- -----------
Total $90,000,000 100.00%
The Revolving Credit may be utilized by the Company in the form of
Loans and Letters of Credit, all as more fully hereinafter set forth,
provided that the aggregate amount of Loans and Letters of Credit
outstanding at any one time shall not exceed the Available Commitments.
During the period from and including the date hereof to but not including
the Termination Date, the Company may use the Commitments by borrowing,
repaying and reborrowing Loans in whole or in part and/or by having the
Agent issue Letters of Credit, having such Letters of Credit expire or
otherwise terminate without having been drawn upon or, if drawn upon,
reimbursing the Agent for each such drawing, and having the Agent issue
new Letters of Credit, all in accordance with the terms and conditions of
this Agreement. For purposes of this Agreement, where a determination of
the unused or available amount of the Available Commitments is necessary,
the Loans and Letters of Credit shall be deemed to utilize the Available
Commitments. The obligations of the Lenders hereunder are several and not
joint, and no Lender shall under any circumstances be obligated to extend
credit under the Revolving Credit in excess of its Available Commitment.
.c2.Section 1.3. The Loans;. Subject to the terms and conditions
hereof, the Revolving Credit may be availed of by the Company in the form
of loans (individually a "Loan" and collectively the "Loans"). Each Loan
shall be in a minimum amount of $50,000 or such greater amount which is an
integral multiple of $10,000, and each Loan shall be made pro rata by the
Lenders in accordance with the amounts of their Commitment. Each advance
made by a Lender of its pro rata share of a Loan shall be evidenced by a
Note of the Company (individually a "Note" and collectively the "Notes")
payable to the order of such Lender in the amount of its Commitment, with
each Note to be in the form (with appropriate insertions) attached hereto
as Exhibit A. Each Note shall be dated the date of issuance thereof, be
expressed to bear interest as provided in Section 2 hereof and be
expressed to mature on the Termination Date. Without regard to the
principal amount of each Note stated on its face, the actual principal
amount at any time outstanding and owing by the Company on account thereof
shall be the sum of all advances then or theretofore made thereon less all
payments of principal actually received.
.c2.Section 1.4. Letters of Credit;.
(a) General Terms. Subject to the terms and conditions hereof,
the Revolving Credit may be availed of by the Company in the form of
standby letters of credit issued by the Agent for the account of the
Company (individually a "Letter of Credit" and collectively the "Letters
of Credit"), provided that the aggregate amount of Letters of Credit
issued and outstanding hereunder shall not at any time exceed the lesser
of (i) the L/C Commitment or (ii) the excess (if any) of the Available
Commitments over the principal amount of Loans then outstanding. For
purposes of this Agreement, a Letter of Credit shall be deemed outstanding
as of any time in an amount equal to the maximum amount which could be
drawn thereunder under any circumstances and over any period of time plus
any unreimbursed drawings then outstanding with respect thereto. If and
to the extent any Letter of Credit expires or otherwise terminates without
having been drawn upon, the availability under the Commitments shall to
such extent be reinstated. The Letters of Credit shall be issued by the
Agent, but each Lender shall be obligated to reimburse the Agent for such
Lender's Percentage of the amount of each draft drawn under a Letter of
Credit in accordance with this Section 1.4 and, accordingly, each Letter
of Credit shall be deemed to utilize the Commitments of all Lenders pro
rata in accordance with their respective amounts thereof.
(b) Term. Each Letter of Credit issued hereunder shall expire
not later than the earlier of (i) twelve (12) months from the date of
issuance (or be cancelable not later than twelve (12) months from the date
of issuance and each renewal) or (ii) the Termination Date. In the event
the Agent issues any Letter of Credit with an expiration date that is
automatically extended unless the Agent gives notice that the expiration
date will not so extend beyond its then scheduled expiration date, the
Agent will give such notice of non-renewal before the time necessary to
prevent such automatic extension if before such required notice date (i)
the expiration date of such Letter of Credit if so extended would be after
the Termination Date, (ii) the Commitments have terminated or (iii) an
Event of Default exists and the Required Lenders have given the Agent
instructions not to so permit the extension of the expiration date of such
Letter of Credit.
(c) General Characteristics. Each Letter of Credit issued
hereunder shall be a standby letter of credit, payable in U.S. dollars,
conform to the general requirements of the Agent for the issuance of
standby letters of credit as to form and substance, and be a letter of
credit which the Agent may lawfully issue.
(d) Applications. At the time the Company requests each Letter
of Credit to be issued (or prior to the first issuance of a Letter of
Credit in the case of a continuing application), the Company shall execute
and deliver to the Agent an application for such Letter of Credit in the
form then customarily prescribed by the Agent (individually an
"Application" and collectively the "Applications"). The current form of
the Agent's Application for standby letter of credit is attached as
Schedule 1.4 hereto. The obligation of the Company to reimburse the Agent
for all drawings under a Letter of Credit shall be governed by the
Application related to such Letter of Credit, except that reimbursement of
each drawing shall be made in immediately available funds at the Agent's
principal office in Chicago, Illinois by no later than 12:00 noon (Chicago
time) on the date when such drawing is paid or, if such drawing was paid
after 11:30 a.m. (Chicago time), by the end of such day. Subject to the
other provisions of this subsection, the obligation of the Company to
reimburse the Agent for drawings under a Letter of Credit shall be
governed by the Application for such Letter of Credit. Anything contained
in the Applications to the contrary notwithstanding, (i) in the event the
Agent is not reimbursed by the Company for the amount the Agent pays on
any draft drawn under a Letter of Credit issued hereunder by 12:00 noon
(Chicago time) on the date when such drawing is paid or, if such drawing
was paid after 11:30 a.m. (Chicago time), by the end of such day, the
obligation of the Company to reimburse the Agent for the amount of such
draft paid shall bear interest (which the Company hereby promises to pay
on demand) from and after the date the draft is paid until payment in full
thereof at a fluctuating rate per annum determined by adding 2% and the
Applicable Margin for Domestic Rate Portions to the Domestic Rate as from
time to time in effect (computed on the basis of a year of 365 or 366
days, as the case may be), (ii) the Company shall pay fees in connection
with each Letter of Credit as set forth in Section 3 hereof, (iii) prior
to the occurrence of a Default or an Event of Default the Agent will not
call for additional collateral security for the obligations of the Company
under the Applications other than the collateral security contemplated by
this Agreement and the Collateral Documents and collateral security
consisting of rights in goods (or documents of title covering the same)
financed under such Applications, and (iv) except as otherwise provided in
Section 3.3 hereof, prior to the occurrence of a Default or an Event of
Default the Agent will not call for the funding of a Letter of Credit by
the Company prior to being presented with a draft drawn thereunder (or, in
the event the draft is a time draft, prior to its due date).
(e) Change in Laws. If the Agent or any Lender shall determine
in good faith that any change in any applicable law, regulation or
guideline (including, without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) or any new law, regulation or
guideline, or any interpretation of any of the foregoing by any
governmental authority charged with the administration thereof or any
central bank or other fiscal, monetary or other authority having
jurisdiction over the Agent or such Lender (whether or not having the
force of law), shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against the Letters of Credit, or the
Agent's or such Lender's or the Company's liability with respect thereto;
or
(ii) impose on the Agent or such Lender any penalty with respect
to the foregoing or any other condition regarding this Agreement, the
Applications or the Letters of Credit;
and the Agent or such Lender shall determine that the result of any of the
foregoing is to increase the cost (whether by incurring a cost or adding
to a cost) to the Agent or such Lender of issuing, maintaining or
participating in the Letters of Credit hereunder, then the Company shall
pay on demand to the Agent or such Lender from time to time as specified
by the Agent or such Lender such additional amounts as the Agent or such
Lender shall determine are sufficient to compensate and indemnify it for
such increased cost. If the Agent or any Lender makes such a claim for
compensation, it shall provide the Company (with a copy to the Agent in
the case of any Lender) a certificate setting forth the computation of the
increased cost as a result of any event mentioned herein in reasonable
detail and such certificate shall be conclusive if reasonably determined.
(f) Participations in Letters of Credit. Each Lender shall
participate on a pro rata basis in the Letters of Credit issued by the
Agent, which participation shall automatically arise upon the issuance of
each Letter of Credit. Each Lender unconditionally agrees that in the
event the Agent is not immediately reimbursed by the Company for the
amount paid by the Agent on any draft presented under a Letter of Credit,
then in that event such Lender shall pay to the Agent that portion of the
amount of each draft so paid by the Agent which is equal to the same
percentage of the amount so paid as the percentage that its Commitment
bears to the aggregate of the Commitments and in return such Lender shall
automatically receive an equivalent percentage participation in the rights
of the Agent to obtain reimbursement from the Company for the amount of
such draft, together with interest thereon as provided for herein. The
obligations of the Lenders to the Agent under this subsection shall be
absolute, irrevocable and unconditional under any and all circumstances
whatsoever and shall not be subject to any set-off, counterclaim or
defense to payment which any Lender may have or have had against the
Company, the Agent, any other Lender or any other party whatsoever.
.c2.Section 1.5. Manner and Disbursement of Borrowings.; (a)
Generally. The Company shall give written or telephonic notice to the
Agent (which notice shall be irrevocable once given and, if given by
telephone, shall be promptly confirmed in writing) by no later than 12:00
noon (Chicago time) on the date the Company requests that any Loan be made
to it under the Commitments, and the Agent shall promptly notify each
Lender of the Agent's receipt of each such notice. Each such notice shall
specify the date of the Loan requested (which must be a Business Day) and
the amount of such Loan. The Company agrees that the Agent may rely upon
any written or telephonic notice given by any person the Agent in good
faith believes is an Authorized Representative without the necessity of
independent investigation and, in the event any telephonic notice
conflicts with the written confirmation, such notice shall govern if the
Agent and the Lenders have acted in reliance thereon. Each Loan shall
initially constitute part of the applicable Domestic Rate Portion except
to the extent the Company has otherwise timely elected as provided in
Section 2 hereof. Not later than 2:00 p.m. (Chicago time) on the date
specified for any Loan to be made by a Lender hereunder, such Lender shall
make the proceeds of its pro rata share of such Loan available to the
Agent in Chicago in immediately available funds. Subject to the
provisions of Section 7 hereof, the proceeds of each Loan shall be made
available to the Company at the principal office of the Agent in Chicago,
Illinois, in immediately available funds, upon receipt by the Agent from
each Lender of its pro rata share of such Loan.
(b) Unpaid Reimbursement Obligation. In the event the Company
fails to give notice pursuant to Section 1.5(a) above of a Loan equal to
the amount of its obligation to reimburse the Agent for a drawing on a
Letter of Credit and has not notified the Agent by 12:00 noon (Chicago
time) on the day such obligation becomes due that it intends to repay such
obligation through funds not borrowed under this Agreement, the Company
shall be deemed to have requested a Loan on such day constituting part of
the Domestic Rate Portion in the amount of such obligation then due,
subject to Section 7.1 hereof, which Loan shall be disbursed to the Agent
and applied to pay such obligation then due.
(c) Agent Reliance on Book Funding. Unless the Agent shall have
been notified by a Lender prior to 1:00 p.m. (Chicago time) on the date a
Loan is to be made hereunder that such Lender does not intend to make its
pro rata share of such Loan available to the Agent, the Agent may assume
that such Lender has made such share available to the Agent on such date
and the Agent may in reliance upon such assumption make available to the
Company a corresponding amount. If such corresponding amount is not in
fact made available to the Agent by such Lender and the Agent has made
such amount available to the Company, the Agent shall be entitled to
receive such amount from such Lender forthwith upon the Agent's demand,
together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to the Company and
ending on but excluding the date the Agent recovers such amount at a rate
per annum equal to the effective rate charged to the Agent for overnight
federal funds transactions with member Lenders of the federal reserve
system for each day as determined by the Agent (or in the case of a day
which is not a Business Day, then for the preceding day).
.c1.Section 2. Interest and Change In Circumstances.
.c2.Section 2.1. Interest Rate Options.; (a) Subject to the
terms and conditions of this Section 2, portions of the principal
indebtedness evidenced by the Notes ("Portions") may, at the option of the
Company, bear interest with reference to the Domestic Rate ("Domestic Rate
Portions") or with reference to Adjusted LIBOR ("LIBOR Portions"), and
Portions may be converted from time to time from one basis to the other.
All of the indebtedness evidenced by the Notes which is not part of a
LIBOR Portion shall constitute a single Domestic Rate Portion. All of the
indebtedness evidenced by the Notes which bears interest with reference to
a particular Adjusted LIBOR for a particular Interest Period shall
constitute a single LIBOR Portion. There shall not be more than eight (8)
LIBOR Portions applicable to the Revolving Credit outstanding at any one
time and each Lender shall have a ratable interest in each Portion.
Anything contained herein to the contrary notwithstanding, the obligation
of the Lenders to create, continue or effect by conversion any LIBOR
Portion shall be conditioned upon the fact that at the time no Event of
Default shall have occurred and be continuing. The Company hereby
promises to pay interest on each Portion at the rates and times specified
in this Section 2. The Company irrevocably authorizes and directs the
Agent to charge the interest on the Notes as and when due against amounts
on deposit in the Company's general operating accounts with the Agent; but
the inadequacy of such deposits shall not impair or affect the Company's
obligation to pay such interest, which is absolute and unconditional.
(b) Domestic Rate Portion. Each Domestic Rate Portion shall
bear interest (which the Company hereby promises to pay at the times
herein provided) at the rate per annum determined by adding the
Applicable Margin to the Domestic Rate as in effect from time to time,
provided that if a Domestic Rate Portion or any part thereof is not paid
when due (whether by lapse of time, acceleration or otherwise) such
Portion shall bear interest (which the Company hereby promises to pay at
the times herein provided), whether before as well as after judgment,
until payment in full thereof at the rate per annum determined by adding
2% to the interest rate which would otherwise be applicable thereto from
time to time. Interest on the Domestic Rate Portions shall be payable
monthly on the last day of each month in each year (commencing November
30, 1996) and at maturity of the Notes, and interest after maturity shall
be due and payable upon demand. Any change in the interest rate on the
Domestic Rate Portions resulting from a change in the Domestic Rate shall
be effective on the date of the relevant change in the Domestic Rate.
(c) LIBOR Portions. Each LIBOR Portion shall bear interest
(which the Company hereby promises to pay at the times herein provided)
for each Interest Period selected therefor at a rate per annum determined
by adding the Applicable Margin to the Adjusted LIBOR for such Interest
Period, provided that if any LIBOR Portion is not paid when due (whether
by lapse of time, acceleration or otherwise) such Portion shall bear
interest (which the Company hereby promises to pay at the times herein
provided), whether before or after judgment, until payment in full thereof
through the end of the Interest Period then applicable thereto at the rate
per annum determined by adding 2% to the interest rate which would
otherwise be applicable thereto, and effective at the end of such Interest
Period such LIBOR Portion shall automatically be converted into and added
to the Domestic Rate Portion and shall thereafter bear interest at the
interest rate applicable to the Domestic Rate Portion after default.
Interest on each LIBOR Portion shall be due and payable on the last day of
each Interest Period applicable thereto and, with respect to any Interest
Period applicable to a LIBOR Portion in excess of three (3) months, on the
date occurring every three (3) months after the date such Interest Period
began and at the end of such Interest Period, and interest after maturity
shall be due and payable upon demand. The Company shall notify the Agent
on or before 12:00 noon (Chicago time) on the third Business Day preceding
the end of an Interest Period applicable to a LIBOR Portion whether such
LIBOR Portion is to continue as a LIBOR Portion, in which event the
Company shall notify the Agent of the new Interest Period selected
therefor, and in the event the Company shall fail to so notify the Agent,
such LIBOR Portion shall automatically be converted into and added to the
applicable Domestic Rate Portion as of and on the last day of such
Interest Period. The Agent shall promptly notify each Lender of each
notice received from the Company pursuant to the foregoing provision.
.c2.Section 2.2. Minimum Amounts.; Each LIBOR Portion shall be
in a minimum amount of $1,000,000 or such greater amount which is an
integral multiple of $100,000.
.c2.Section 2.3. Computation of Interest.; All interest on the
LIBOR Portions of the Notes shall be computed on the basis of a year of
360 days for the actual number of days elapsed. All interest on the
Domestic Rate Portion of each Note shall be computed on the basis of a
year of 365 or 366 days, as the case may be.
.c2.Section 2.4. Manner of Rate Selection.; The Company shall
notify the Agent by 12:00 noon (Chicago time) at least three (3) Business
Days prior to the date upon which it requests that any LIBOR Portion be
created or that any part of a Domestic Rate Portion be converted into a
LIBOR Portion and the Agent shall advise each Lender of each notice by
2:00 p.m. (Chicago time) on the same Business Day the Agent receives such
notice. If any request is made to convert a LIBOR Portion into the
Domestic Rate Portion, such conversion shall only be made so as to become
effective as of the last day of the Interest Period applicable thereto.
All requests for the creation, continuance or conversion of Portions under
this Agreement shall be irrevocable. Such requests may be written or oral
and the Agent is hereby authorized to honor telephonic requests for
creations, continuances and conversions received by it from any person the
Agent in good faith believes to be an Authorized Representative, the
Company hereby indemnifying the Agent and the Lenders from any liability
or loss ensuing from so acting.
.c2.Section 2.5. Change of Law.; Notwithstanding any other
provisions of this Agreement or of the Notes, if at any time any Lender
shall determine in good faith that any change in applicable laws, treaties
or regulations or in the interpretation thereof makes it unlawful for such
Lender to create or continue to maintain any LIBOR Portions, it shall
promptly so notify the Agent (which shall in turn promptly notify the
Company and the other Lenders) and the obligation of such Lender to
create, continue or maintain any LIBOR Portion under this Agreement shall
terminate until it is no longer unlawful for such Lender to create,
continue or maintain LIBOR Portions. The Company, on demand, shall, if
the continued maintenance of any LIBOR Portion is unlawful, thereupon
prepay the outstanding principal amount of the affected LIBOR Portion,
together with all interest accrued thereon and all other amounts payable
to affected Lender with respect thereto under this Agreement; provided,
however, that the Company may instead elect to convert the principal
amount of the affected LIBOR Portion into the Domestic Rate Portion,
subject to the terms and conditions of this Agreement.
.c2.Section 2.6. Unavailability of Deposits or Inability to
Ascertain Adjusted LIBOR.; Notwithstanding any other provision of this
Agreement or of the Notes, if prior to the commencement of any Interest
Period, the Required Lenders shall determine that United States dollar
deposits in the amount of any LIBOR Portion scheduled to be outstanding
during such Interest Period are not readily available to such Lenders in
the offshore interbank market or by reason of circumstances affecting the
offshore interbank market, adequate and reasonable means do not exist for
ascertaining Adjusted LIBOR, then such Lenders shall promptly give notice
thereof to the Agent (which shall in turn promptly notify the Company and
the other Lenders) and the obligations of the Lenders to create, continue
or effect by conversion any LIBOR Portion in such amount and for such
Interest Period shall terminate until United States dollar deposits in
such amount and for the Interest Period selected by the Company shall
again be readily available in the offshore interbank market and adequate
and reasonable means exist for ascertaining Adjusted LIBOR.
.c2.Section 2.7. Taxes and Increased Costs.; With respect to the
LIBOR Portion, if any Lender shall determine in good faith that any change
after the date hereof in any applicable law, treaty, regulation or
guideline (including, without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) or any new law, treaty,
regulation or guideline, or any interpretation of any of the foregoing by
any governmental authority charged with the administration thereof or any
central bank or other fiscal, monetary or other authority having
jurisdiction over such Lender or its lending branch or the LIBOR Portions
contemplated by this Agreement (whether or not having the force of law)
shall:
(i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in or
for the account of, or loans by, or any other acquisition of funds or
disbursements by, such Lender which is not in any instance already
accounted for in computing the Adjusted LIBOR Rate;
(ii) subject such Lender, the LIBOR Portion or a Note to the
extent it evidences such Portions, to any tax (including, without
limitation, any United States interest equalization tax or similar tax
however named applicable to the acquisition or holding of debt obligations
and any interest or penalties with respect thereto), duty, charge, stamp
tax, fee, deduction or withholding in respect of this Agreement, any LIBOR
Portion or a Note to the extent it evidences such a Portion, except such
taxes as may be measured by the overall net income or gross receipts of
such Lender or its lending branches and imposed by the jurisdiction
(whether or not within the United States), or any political subdivision or
taxing authority thereof, in which such Lender's principal executive
office or its lending branch is located;
(iii) change the basis of taxation of payments of principal and
interest due from the Company to such Lender hereunder or under a Note to
the extent it evidences any LIBOR Portion (other than by a change in
taxation of the overall net income or gross receipts of such Lender); or
(iv) impose on such Lender any penalty with respect to the
foregoing or any other condition regarding this Agreement, its
disbursement, any LIBOR Portion or a Note to the extent it evidences any
LIBOR Portion;
and such Lender shall determine that the result of any of the foregoing is
to increase the cost (whether by incurring a cost or adding to a cost) to
such Lender of creating or maintaining any LIBOR Portion hereunder or to
reduce the amount of principal or interest received or receivable by such
Lender (without benefit of, or credit for, any prorations, exemption,
credits or other offsets available under any such laws, treaties,
regulations, guidelines or interpretations thereof), then the Company
shall pay on demand to such Lender from time to time as specified by such
Lender such additional amounts as such Lender shall reasonably determine
are sufficient to compensate and indemnify it for such increased cost or
reduced amount. If a Lender makes such a claim for compensation, it shall
provide to the Company (with a copy to the Agent) a certificate setting
forth the computation of the increased cost or reduced amount as a result
of any event mentioned herein in reasonable detail and such certificate
shall be conclusive if reasonably determined.
.c2.Section 2.8. Change in Capital Adequacy Requirements.; If
any Lender shall determine that the adoption after the date hereof of any
applicable law, rule or regulation regarding capital adequacy, or any
change after the date hereof in any existing law, rule or regulation, or
any change after the date hereof in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance
by such Lender (or its lending office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's capital as a
consequence of such Lender's obligations hereunder or for the credit which
is the subject matter hereof to a level below that which such Lender could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's policies with respect to liquidity and capital
adequacy) by an amount deemed by such Lender to be material, then from
time to time, within fifteen (15) days after demand by such Lender, the
Company shall pay to the Lender such additional amount or amounts
reasonably determined by such Lender as will compensate such Lender for
such reduction. If a Lender makes such a claim for compensation, it shall
provide to the Company (with a copy to the Agent) a certificate setting
forth the computation of the increased cost or reduced amount as a result
of any event mentioned herein in reasonable detail and such certificate
shall be conclusive if reasonably determined.
.c2.Section 2.9. Funding Indemnity;. In the event any Lender
shall incur any loss, cost or expense (including, without limitation, any
loss (including loss of profit), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired or
contracted to be acquired by such Lender to fund or maintain its part of
any LIBOR Portion or the relending or reinvesting of such deposits or
other funds or amounts paid or prepaid to such Lender) as a result of:
(i) any payment of a LIBOR Portion on a date other than the last
day of the then applicable Interest Period for any reason, whether before
or after default, and whether or not such payment is required by any
provisions of this Agreement, but in any event excluding such a payment to
the extent required by Section 2.5 hereof; or
(ii) any failure by the Company to create, borrow, continue or
effect by conversion a LIBOR Portion on the date specified in a notice
given pursuant to this Agreement, unless such failure results from such
Lender's inability or unwillingness pursuant to Sections 2.5 or 2.6 hereof
to create, continue or effect by conversion such LIBOR Portion;
then, upon the demand of such Lender, the Company shall pay to the Lender
such amount as will reimburse such Lender for such loss, cost or expense.
If a Lender requests such a reimbursement, it shall provide to the Company
(with a copy to the Agent) a certificate setting forth the computation of
the loss, cost or expense giving rise to the request for reimbursement in
reasonable detail and such certificate shall be conclusive if reasonably
determined.
.c2.Section 2.10. Lending Branch.; Each Lender may, at its
option, elect to make, fund or maintain its pro rata share of the Loans
hereunder at the branches or offices specified on the signature pages
hereof or on any Assignment Agreement executed and delivered pursuant to
Section 11.15 hereof or at such of its branches or offices as such Lender
may from time to time elect.
.c2.Section 2.11. Discretion of Lenders as to Manner of Funding.;
Notwithstanding any provision of this Agreement to the contrary, each
Lender shall be entitled to fund and maintain its funding of all or any
part of its Notes in any manner it sees fit, it being understood, however,
that for the purposes of this Agreement all determinations hereunder
(including, without limitation, determinations under Sections 2.6, 2.7 and
2.9 hereof) shall be made as if each Lender had actually funded and
maintained each LIBOR Portion during each Interest Period applicable
thereto through the purchase of United States dollar deposits in the
offshore interbank market in the amount of its share of such LIBOR
Portion, having a maturity corresponding to such Interest Period, and
bearing an interest rate equal to LIBOR for such Interest Period.
.c1.Section 3. Fees, Prepayments, Terminations, Applications and
Notations.
.c2.Section 3.1. Fees. ;
(a) Commitment Fee. For the period from the date hereof to and
including the Termination Date, the Company shall pay to the Agent for the
ratable account of the Lenders a commitment fee at the rate per annum
(computed on the basis of a year of 360 days and the actual number of days
elapsed) equal to the Applicable Margin in effect as of the time such fee
is payable on the average daily unused portion of the Commitments (whether
or not available). Such commitment fee shall be payable quarterly in
arrears on the last day of each January, April, July and October in each
year (commencing on January 31, 1997) and on the Termination Date.
(b) Contingency Fee. On October 31, 1997, if the Company has
not by such date consummated an initial public offering of equity
securities issued by it, the Company shall pay to the Agent for the
ratable account of the Lenders, a non-refundable fee in the amount of
$60,000 in consideration of the Lenders' agreements herein.
(c) Agent's Fees. The Company shall pay to the Agent the fees
agreed to in a letter exchanged between them dated September 27, 1996.
(d) Closing Fee. On the date hereof, the Company shall pay to
the Agent a non-refundable closing fee of $165,000 to be distributed by
the Agent to the Lenders party hereto as of the date hereof as set forth
below:
▇▇▇▇▇▇ Trust and Savings Bank $75,000
Firstar Bank Milwaukee, N.A. $30,000
The Northern Trust Company $30,000
Bank One, Milwaukee, NA $30,000
(e) Letter of Credit Fees. On the date of issuance of each
Letter of Credit, the Company shall pay to the Agent for its own account
an issuance fee equal to 0.125% of the face amount of such Letter of
Credit. Additionally, quarterly in arrears, on the last day of each
January, April, July and October of each year (commencing on January 31,
1997), the Company shall pay to the Agent for the ratable account of the
Lenders a letter of credit fee (computed on the basis of a year of 360
days for the actual number of days elapsed) at a rate of 1% per annum on
the average daily face amount of all the outstanding Letters of Credit
during such quarter. In addition to the letter of credit fees called for
above, the Company further agrees to pay to the Agent for its own account
such processing and transaction fees and charges as the Agent from time to
time customarily imposes in connection with any amendment, cancellation,
negotiation and/or payment of letters of credit and drafts drawn
thereunder.
(f) Audit Fees. The Company shall pay to the Agent for its own
use and benefit charges for audits of the Collateral in such amounts as
the Agent may from time to time request (the Agent acknowledging and
agreeing that such charges shall be computed in the same manner as it at
the time customarily uses for the assessment of charges for similar
collateral audits), provided, however, that in the absence of any Event of
Default, (i) the Company shall not be required to reimburse the Agent for
more than two such audits per fiscal year and (ii) the aggregate amount
for which the Company shall be liable to so reimburse the Agent during any
fiscal year shall not exceed $5,000.
.c2.Section 3.2. Voluntary Prepayments.; (a) Domestic Rate
Portion. The Company shall have the privilege of prepaying without
premium or penalty and in whole or in part (but if in part, then in an
amount not less than $100,000) the Domestic Rate Portion of the Note at
any time upon notice to the Agent, which shall promptly notify the
Lenders, prior to 11:00 a.m. (Chicago time) on the date fixed for
prepayment.
(b) LIBOR Portions. The Company may prepay any LIBOR Portion of
the Note only on the last date of the then applicable Interest Period, in
whole or in part (but if in part, then in an amount not less than
$1,000,000 or such greater amount which is an integral multiple of
$100,000), upon notice to the Agent (which notice shall be irrevocable
once given, must be received by the Agent no later than 11:00 a.m.
(Chicago time) on the date fixed for prepayment in the case of a
prepayment in whole of a LIBOR Portion and on the third Business Day
preceding the date of any such prepayment in part of a LIBOR Portion, and
in each case shall specify the principal amount to be repaid), which shall
promptly notify the Lenders; provided, however, that the outstanding
principal amount of any LIBOR Portion of the Note prepaid in part shall
not be less than $1,000,000 or such greater amount which is an integral
multiple of $100,000 after giving effect to such prepayment. Any such
prepayment shall be effected by payment of the principal amount to be
prepaid and accrued interest thereon to the end of the applicable Interest
Period.
.c2.Section 3.3. Mandatory Prepayments. ; (a) Deficiency. The
Company agrees that if at any time the then outstanding principal balance
of the Notes plus the then outstanding amount of Letters of Credit shall
for any reason exceed the Available Commitments as then in effect, the
Company shall immediately and without notice or demand pay over to the
Agent (for the ratable account of the Lenders) the amount of the excess as
and for a mandatory prepayment on the Notes until paid in full, with any
excess held as collateral security for the Company's obligations under the
Applications.
(b) Certain Events. The Company shall immediately and without
notice or demand by the Agent or any Lender, pay to the Agent (for the
ratable account of the Lenders) all principal of and accrued interest on
the Notes and all fees, charges and other amounts payable hereunder and
under the Collateral Documents in the event: (i) any payment or
distribution of principal or interest or premium (not otherwise permitted
by Section 8.16 hereof) shall be made on or in respect of, or the Company
or any Subsidiary shall acquire, prepay or retire (except to the extent
permitted by Section 8.16 hereof), in each case the Subordinated
Indebtedness prior to the stated maturity thereof (without acceleration)
or prior to any other times required for payment thereof (without
acceleration) as are in force and effect as of the date hereof; or (ii)
any holder of any Subordinated Indebtedness shall enforce any right
(including making a demand) to require any such payment, distribution,
prepayment, acquisition or retirement on or in respect of the Subordinated
Indebtedness (except to the extent permitted by Section 8.16 hereof); or
(iii) any acquisition or redemption of any preferred capital stock of the
Company; or (iv) any holder of any preferred capital stock of the Company
shall enforce any right (including making a demand) to require any
redemption of such preferred capital stock.
.c2.Section 3.4. Terminations.; The Company shall have the right
at any time and from time to time, upon three (3) Business Days' prior
notice to the Agent (which shall promptly notify the Lenders), to ratably
terminate without premium or penalty and in whole or in part (but if in
part, then in an amount not less than $250,000) the Commitments, provided
that the Commitments may not be reduced to an amount less than the
aggregate principal amount of the Loans and Letters of Credit then
outstanding. Any reduction of the Commitments to an amount less than the
L/C Commitment shall reduce the L/C Commitment so as to equal the
Commitments after giving effect to such reduction. Any termination of the
Commitments or L/C Commitment pursuant to this Section may not be
reinstated.
.c2.Section 3.5. Place and Application of Payments.; Unless
otherwise specified herein, all payments of principal, interest, fees and
all other amounts payable hereunder shall be made to the Agent at its
office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (or at such other
place as the Agent may specify) on the date any such payment is due and
payable. All amounts payable pursuant to Sections 1.4(e), 2.7, 2.8 or 2.9
hereof shall be paid directly to the Lender making demand under such
Section. All such payments shall be made in lawful money of the United
States of America, in immediately available funds at the place of payment,
without setoff or counterclaim and without reduction for, and free from,
any and all present or future taxes, levies, imposts, duties, fees,
charges, deductions, withholdings, restrictions or conditions of any
nature imposed by any government or any political subdivision or taxing
authority thereof (but excluding any taxes imposed on or measured by the
net income of the Lender). Payments received by the Agent after 12:00
noon (Chicago time) shall be deemed received as of the opening of business
on the next Business Day. Except as herein provided, all payments shall
be received by the Agent for the ratable account of the Lenders and shall
be promptly distributed by the Agent ratably to the Lenders. Unless the
Company otherwise directs, principal payments shall be first applied to
the Domestic Rate Portion until payment in full thereof, with any balance
applied to the LIBOR Portions in the order in which their Interest Periods
expire.
Anything contained herein to the contrary notwithstanding, all
payments and collections received in respect of the Obligations and all
proceeds of the Collateral received, in each instance, by the Agent or any
of the Lenders after the occurrence of an Event of Default shall be
remitted to the Agent and distributed as follows:
(a) first, to the payment of any outstanding costs and expenses
incurred by the Agent in monitoring, verifying, protecting, preserving or
enforcing the Liens on the Collateral or in protecting, preserving or
enforcing rights under this Agreement and the other Loan Documents and in
any event including all costs and expenses of a character which the
Company has agreed to pay under Section 11.4 hereof (such funds to be
retained by the Agent for its own account unless it has previously been
reimbursed for such costs and expenses by the Lenders, in which event such
amounts shall be remitted to the Lenders to reimburse them for payments
theretofore made to the Agent);
(b) second, to the payment of any outstanding interest or other
fees or amounts due under the Notes, the Applications or any of the other
Loan Documents, in each case, other than for principal, ratably as among
the Agent and the Lenders in accord with the amount of such interest and
other fees or amounts owing each;
(c) third, to the payment of the principal of the Notes and any
liabilities in respect of unpaid drawings under the Letters of Credit, pro
rata as among the Lenders in accord with the then respective unpaid
principal balances of the Notes and the then unpaid liabilities in respect
of unpaid drawings under the Letters of Credit;
(d) fourth, to the Agent, to be held as collateral security for
any undrawn Letters of Credit, until the Agent is holding an amount of
cash equal to the then outstanding amount of all Letters of Credit;
(e) fifth, to the payment of the Hedging Liability;
(f) sixth, to the Agent and the Lenders ratably in accord with
the amounts of any other indebtedness, obligations or liabilities of the
Company owing to each of them and secured by the Collateral Documents
unless and until all such indebtedness, obligations and liabilities have
been fully paid and satisfied; and
(g) seventh, to the Company or to whoever the Agent reasonably
determines to be lawfully entitled thereto.
In the event that the amount of the Hedging Liability is not fixed
and determined at the time any such payments or collections are received
which are to be allocated thereto, such amounts so allocated shall be held
by the Agent as collateral security until the Hedging Liability is fixed
and determined and the same shall then be applied to the Hedging
Liability, with any overplus applied to any other remaining obligations of
the Company under or in connection with this Agreement and with such other
applications to be reallocated among the Lenders and their Affiliates to
cover any deficiency which would not have existed had the exact amount of
the Hedging Liability been known at the time such amounts were originally
distributed.
.c2. Section 3.6. Notations and Requests.; All Loans made
against a Note, the status of all amounts evidenced by a Note as
constituting part of the Domestic Rate Portion or a LIBOR Portion, and the
rates of interest and Interest Periods applicable to such Portions shall
be recorded by each Lender on its books and records or, at its option in
any instance, endorsed on a schedule to its Note and the unpaid principal
balance and status, rates and Interest Periods so recorded or endorsed by
such Lender shall be prima facie evidence in any court or other proceeding
brought to enforce its Note of the principal amount remaining unpaid
thereon, the status of the Loans evidenced thereby and the interest rates
and Interest Periods applicable thereto; provided that the failure of a
Lender to record any of the foregoing shall not limit or otherwise affect
the obligation of the Company to repay the principal amount of each Note
together with accrued interest thereon. Prior to any negotiation of a
Note, a Lender shall record on a schedule thereto the status of all
amounts evidenced thereby as constituting part of the Domestic Rate
Portion or LIBOR Portion and the rates of interest and the Interest
Periods applicable thereto.
.c1.Section 4. Collateral.;
.c2.Section 4.1. Collateral.; Subject to Sections 7.3 and 7.4
hereof, the Loans and other Obligations shall be secured by valid and
perfected first priority Liens in favor of the Agent for the benefit of
the Lenders on all now existing or hereafter arising or acquired accounts,
general intangibles, inventory, equipment, chattel paper, instruments,
documents and certain other assets and property (including the real
property of the Company and its Subsidiaries in Salisbury, North Carolina,
Montgomery, Alabama and Bountiful, Utah) of the Company and the
Subsidiaries as more fully described therein. The Company covenants and
agrees that it will comply, and will cause the Subsidiaries to comply,
with all terms and conditions of each of the Collateral Documents and that
it will, at any time and from time to time at the request of the Agent or
the Required Lenders execute and deliver such further instruments and do
such acts and things as the Agent or the Required Lenders may deem
necessary or desirable to provide for or protect or perfect the Lien of
the Agent in the Collateral.
.c2.Section 4.2. Subsidiary Guarantees.; The Loans and other
Obligations shall be guaranteed by each Subsidiary pursuant to a written
guaranty from such Subsidiary in form and substance reasonably acceptable
to the Required Lenders (all of the foregoing, as the same may from time
to time be modified, amended or restated, being referred to collectively
as the "Subsidiary Guarantees").
.c2. Section 4.3. North Carolina Subsidiary Stock;. The Loans
and other Obligations shall be secured by a valid and perfected first Lien
on all Voting Stock in the North Carolina Subsidiary pursuant to a Pledge
Agreement from the Company to the Agent (such Pledge Agreement as the same
may be modified or amended from time to time being hereinafter referred to
as the "Pledge Agreement"). Notwithstanding anything herein or in the
Pledge Agreement to the contrary, the Lenders agree to release the Voting
Stock pledged pursuant to the Pledge Agreement promptly after the
Company's written request to the Agent therefor if (i) the sole purpose
and function of the North Carolina Subsidiary is at the time of such
release to own the North Carolina Property and the other Property of the
so-called ▇▇▇▇▇▇ Conveyors Division of Western Atlas acquired by the North
Carolina Subsidiary as a result of the Western Atlas Acquisition (the
North Carolina Property and such other Property being hereinafter referred
to collectively as the "▇▇▇▇▇▇ Division"), (ii) at the time of such
release, such Voting Stock is being sold in a bona fide sale at arm's
length to an unaffiliated third party not later than 90 days from the date
hereof and (iii) at the time of such release and immediately after giving
effect thereto, no Default or Event of Default shall occur or be
continuing.
.c2.Section 4.4. Canadian Subsidiary Collateral;.
Notwithstanding anything contained herein to the contrary, the Company
need not furnish the Lenders with the Collateral Documents required by the
foregoing provisions of this Section 4 to be delivered by the Canadian
Subsidiary (other than its Subsidiary Guarantee), if and so long as (i)
the Canadian Subsidiary's sole purpose and function consists exclusively
of acting as a nominee for the Company in booking sales to Canadian
account debtors, such that the accounts receivable arising from such sales
are the sole property of the Company and the Canadian Subsidiary does not
have any rights in the same and (ii) the Canadian Subsidiary transfers by
way of a quitclaim assignment, any and all of its rights (if any) in each
such account receivable to the Company substantially concurrent with the
creation of such account receivable (provided that no such transfer need
be made unless and until the aggregate unpaid amount outstanding on such
accounts receivable exceeds $100,000).
.c2.Section 4.5. North Carolina Subsidiary Collateral;.
Notwithstanding anything contained herein to the contrary, the Company
need not furnish the Lenders with the Collateral Documents required by the
foregoing provisions of this Section 4 to be delivered by the North
Carolina Subsidiary (other than its Subsidiary Guarantee), if and so long
as (i) the North Carolina Subsidiary's sole purpose and function consists
exclusively of its ownership of the ▇▇▇▇▇▇ Division and (ii) the aggregate
amount outstanding on accounts receivable owing to the North Carolina
Subsidiary, when taken together with market value of the inventory of the
North Carolina Subsidiary, does not exceed $200,000.
.c1.Section 5. Definitions; Interpretation.
.c2.Section 5.1. Definitions.; The following terms when used
herein shall have the following meanings:
"Adjusted LIBOR" means a rate per annum determined by the Agent
pursuant to the following formula:
Adjusted LIBOR = LIBOR
100%-Reserve Percentage
"Reserve Percentage" means, for the purpose of computing Adjusted LIBOR,
the maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental or other special
reserves) imposed by the Board of Governors of the Federal Reserve System
(or any successor) under Regulation D on Eurocurrency liabilities (as such
term is defined in Regulation D) for the applicable Interest Period as of
the first day of such Interest Period, but subject to any amendments to
such reserve requirement by such Board or its successor, and taking into
account any transitional adjustments thereto becoming effective during
such Interest Period. For purposes of this definition, LIBOR Portions
shall be deemed to be Eurocurrency liabilities as defined in Regulation D
without benefit of or credit for prorations, exemptions or offsets under
Regulation D. "LIBOR" means, for each Interest Period, (a) the LIBOR
Index Rate for such Interest Period, if such rate is available, and (b) if
the LIBOR Index Rate cannot be determined, the arithmetic average of the
rate of interest per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) at which deposits in United States dollars in immediately
available funds are offered to the Agent at 11:00 a.m. (London, England
time) two (2) Business Days before the beginning of such Interest Period
by major banks in the interbank Eurodollar market for a period equal to
such Interest Period and in an amount equal or comparable to the part of
the LIBOR Portion to be outstanding from the Agent during such Interest
Period. Each determination of LIBOR made by the Agent shall be conclusive
and binding absent manifest error. "LIBOR Index Rate" means, for any
Interest Period, the rate per annum (rounded upwards, if necessary, to the
next higher one hundred-thousandth of a percentage point) for deposits in
U.S. dollars for a period equal to such Interest Period, which appears on
the Telerate Page 3750 as of 11:00 a.m. (London, England time) on the day
two (2) Business Days before the commencement of such Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying
British Bankers' Association Interest Settlement Rates for U.S. Dollar
deposits).
"Affiliate" means any Person, directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another
Person. A Person shall be deemed to control another Person for the
purposes of this definition if such Person possesses, directly or
indirectly, the power to direct, or cause the direction of, the management
and policies of the other Person, whether through the ownership of voting
securities, common directors, trustees or officers, by contract or
otherwise; provided, however, that notwithstanding the foregoing, no
Person shall be considered an Affiliate of the Company or any Subsidiary
solely by virtue of its relationship with SWIB.
"Agent" means ▇▇▇▇▇▇ Trust and Savings Bank and any successor thereto
appointed pursuant to Section 10.1 hereof.
"Applicable Margin" with respect to Loans and the commitment fee payable
under Section 3.1(a) hereof shall mean the rate specified for such
obligation below, subject to quarterly adjustment as hereinafter provided:
Applicable
When Following Margin Applicable Applicable
Status Exists For For Domestic Margin Margin
any Margin Rate Portion For LIBOR For Commitment
Determination Date Is: Portions Is: Fee Is:
Level I Status 0% 1.000% 0.125%
Level II Status 0% 1.375% 0.250%
Level III Status 0% 1.750% 0.375%
Level IV Status .25% 2.00% .50%
provided, however, that all of the foregoing is subject to the following:
(i) the initial Applicable Margin shall be the Applicable Margin for
Level IV Status and shall remain in effect until any redetermination
pursuant to the following clauses (ii) and (iii);
(ii) not later than five (5) Business Days after the Lenders' receipt of
the quarterly financial statements required by Section 8.5(a) hereof for a
given fiscal quarter and the compliance certificate required for such
quarter by Section 8.5 hereof (commencing with the first fiscal quarter to
follow the date hereof), the Agent shall determine whether such financial
information indicates such a change in the Funded Debt Ratio (the Funded
Debt Ratio to be computed as of the close of such fiscal quarter [each
such close being hereinafter referred to as a "Test Date"]) as would
justify a change in the Applicable Margins and shall then notify the
Company and the Lenders of such determination and of any change in the
Applicable Margins resulting therefrom; and
(iii) any change in the Applicable Margins shall be effective as
of the date the Agent so notifies the Company of such determination and
with such new Applicable Margins to continue in effect until the
effectiveness of the next redetermination thereof. In determining the
Funded Debt Ratio as of any Test Date, the Agent will accept the financial
statements for the Company pursuant to Section 8.5(a) hereof, provided
that such determination shall be subject to redetermination (to be
effective retroactively as of the date the Agent had notified the Company
of the corresponding change in the Applicable Margins) in the event the
final audited statements of the Company so indicate;
(iv) anything contained herein to the contrary notwithstanding, the
Applicable Margins shall be the highest Applicable Margins set forth
herein during the continuance of: (x) any Event of Default, (y) any
Default (whether or not any grace applicable thereto has passed) in the
payment of any principal or interest on any Note or any fee or other
amount payable by the Company hereunder or (z) any Default by the Company
in supplying the financial statements required by Sections 8.5(a) or
8.5(b) hereof by the deadlines expressed in such Sections.
Any determination by the Agent of the Funded Debt Ratio shall be
conclusive and binding upon the Company provided that it has been made
reasonably and in good faith.
"Application" is defined in Section 1.4 hereof.
"Authorized Representative" means those persons shown on the list of
officers provided by the Company pursuant to Section 7.2(a) hereof or on
any update of any such list provided by the Company to the Agent, or any
further or different officers of the Company so named by any Authorized
Representative of the Company in a written notice to the Agent.
"Available Commitment" means as of any time for any Lender, such Lender's
Commitment less such Lender's ratable share of the Reserve.
"Business Day" means any day (other than a Saturday or Sunday) on which
banks are not authorized or required to close in Chicago, Illinois and
Milwaukee, Wisconsin and, when used with respect to LIBOR Portions, a day
on which banks are dealing in United States Dollar deposits in the
interbank market in London, England and Nassau, Bahamas.
"Canadian Subsidiary" shall mean HISCO Systems of Canada Ltd., a
corporation organized under the federal laws of Canada and a Wholly Owned
Subsidiary.
"Capital Lease" means any lease of Property which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means the amount of the liability shown on
the balance sheet of any Person in respect of a Capital Lease determined
in accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Collateral" means all properties, rights, interests and privileges from
time to time subject to the Liens granted to the Agent for the benefit of
the Lenders by the Collateral Documents.
"Collateral Documents" means the Subsidiary Guarantees and all mortgages,
deeds of trust, security agreements, assignments, financing statements and
other documents as shall from time to time guaranty or secure the Notes
and the other Obligations hereunder as the same may from time to time be
modified, supplemented or amended.
"Commitments" means the commitments of the Lenders to extend credit under
the Revolving Credit in the amounts set forth opposite their names in
Section 1.2 hereof and opposite their signatures on Assignment Agreements
delivered pursuant to Section 11.15 hereof under the heading "Commitment",
as such amounts may be reduced pursuant hereto.
"Company" is defined in the introductory paragraph hereof.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common
control which, together with the Company or any Subsidiary, are treated as
a single employer under Section 414 of the Code.
"Current Ratio" means, as of any time the same is to be determined, the
ratio of current assets of the Company and the Subsidiaries to current
liabilities of the Company and the Subsidiaries, all as determined on a
consolidated basis in accordance with GAAP consistently applied, but in
any event excluding current maturities on the Notes from current
liabilities.
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event
of Default.
"Domestic Rate" means, for any day, the greater of (i) the rate of
interest announced by the Agent from time to time as its prime commercial
rate, as in effect on such day; and (ii) the sum of (x) the rate
determined by the Agent to be the average (rounded upwards, if necessary,
to the next higher 1/100 of 1%) of the rates per annum quoted to the Agent
at approximately 10:00 a.m. (Chicago time) (or as soon thereafter as is
practicable) on such day (or, if such day is not a Business Day, on the
immediately preceding Business Day) by two or more Federal funds brokers
selected by the Agent for the sale to the Agent at face value of Federal
funds in an amount equal or comparable to the principal amount owed to the
Agent for which such rate is being determined, plus (y) 1/2 of 1% (0.5%).
"Domestic Rate Portions" is defined in Section 2.1(a) hereof.
"▇▇▇▇▇" means ▇▇▇▇▇-▇▇▇▇▇▇, Inc., an Ohio corporation.
"▇▇▇▇▇ Debt" shall mean all principal of and interest on that certain
Subordinated Promissory Note of HK payable to the order of ▇▇▇▇▇-▇▇▇▇▇▇,
Inc., an Ohio corporation, in the face principal amount of $10,000,000.
"EBITA" means, with reference to any period, Net Income for such period
plus all amounts deducted in arriving at such Net Income amount in respect
of (i) Interest Expense for such period, plus (ii) federal, state and
local income taxes for such period, plus (iii) all amounts properly
charged for amortization of intangible assets during such period on the
books of the Company and the Subsidiaries, all as determined on a
consolidated basis for the Company and the Subsidiaries in accordance with
GAAP.
"EBITDA" means, with reference to any period, Net Income for such period
plus all amounts deducted in arriving at such Net Income amount in respect
of (i) Interest Expense for such period, plus (ii) federal, state and
local income taxes for such period, plus (iii) all amounts properly
charged for depreciation of fixed assets and amortization of intangible
assets during such period on the books of the Company and the
Subsidiaries, all as determined on a consolidated basis for the Company
and the Subsidiaries in accordance with GAAP.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Event of Default" means any event or condition identified as such in
Section 9.1 hereof.
"Funded Debt" means all Indebtedness for Borrowed Money of the Company,
and its Subsidiaries on a consolidated basis in accordance with GAAP.
"Funded Debt Ratio" means, as of any time the same is to be determined,
the ratio of (i) Senior Funded Debt at such time to (ii) the sum of (x)
EBITDA for the four most recently completed fiscal quarters of the Company
and (y) the Western Atlas Adjustment Amount.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied by the Company and the Subsidiaries on a basis
consistent with the preparation of the opening day balance sheet furnished
to the Lenders pursuant to Section 8.26 hereof.
"Hedging Arrangements" shall mean any interest rate swaps, interest rate
caps, interest rate collars or other interest rate hedging arrangements as
the Company may from time to time enter into with any one or more of the
Lenders or their Affiliates.
"Hedging Liability" shall mean the liability of the Company to the Lenders
and their Affiliates and any of the foregoing in respect of the Hedging
Arrangements. Unless and until the amount of the Hedging Liability is
fixed and determined, the Hedging Liability shall be deemed to be 10% per
annum of the notional amount of the hedge from the date of computation to
the date the hedge expires.
"HII Indemnity Agreement" means that certain Restated Supplemental
Agreement dated as of February 13, 1995 by and among the Company and Old
HK and any Indemnity Agreement (as such term is defined in such
Supplemental Agreement) provided by Old HK pursuant to the terms thereof.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) (i) all indebtedness created, assumed or incurred in any
manner by such Person representing money borrowed (including by the
issuance of debt securities), (ii) all indebtedness for the deferred
purchase price of property or services (other than trade accounts payable
arising in the ordinary course of business), (iii) all indebtedness
secured by any Lien upon Property of such Person, whether or not such
Person has assumed or become liable for the payment of such indebtedness,
(iv) all Capitalized Lease Obligations of such Person and (v) all
obligations of such Person on or with respect to letters of credit and
bankers' acceptances.
"Interest Coverage Ratio" means, as of any time the same is to be
determined, the ratio of (i) the sum of (x) EBITA for the four most
recently completed fiscal quarters of the Company and (y) the Western
Atlas Adjustment Amount to (ii) Interest Expense for the same period of
four fiscal quarters.
"Interest Expense" means, with reference to any period, the sum of all
interest charges (including imputed interest charges with respect to
Capitalized Lease Obligations and all amortization of debt discount and
expense) of the Company and the Subsidiaries for such period determined in
accordance with GAAP.
"Interest Period" means, with respect to any LIBOR Portion, the period
commencing on, as the case may be, the creation, continuation or
conversion date with respect to such LIBOR Portion and ending one (1), two
(2), three (3) or six (6) months thereafter as selected by the Company in
its notice as provided herein; provided that, all of the foregoing
provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless in the case of an Interest Period for a
LIBOR Portion the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the Termination Date;
(iii) the interest rate to be applicable to each Portion for each
Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect thereto the
Company will be unable to make a principal payment scheduled to be made
during such Interest Period without paying part of a LIBOR Portion on a
date other than the last day of the Interest Period applicable thereto.
For purposes of determining an Interest Period, a month means a period
starting on one day in a calendar month and ending on a numerically
corresponding day in the next calendar month, provided, however, if an
Interest Period begins on the last day of a month or if there is no
numerically corresponding day in the month in which an Interest Period is
to end, then such Interest Period shall end on the last Business Day of
such month.
"L/C Commitment" shall mean $10,000,000 as such amount as may be reduced
pursuant to Section 3.4 hereof.
"Lender" means ▇▇▇▇▇▇ Trust and Savings Bank, the other signatories hereto
(other than the Company) and all other lenders becoming parties hereto
pursuant to Section 11.15 hereof.
"Letter of Credit" is defined in Section 1.4 hereof.
"Level I Status" shall mean, for any Test Date, that as of the close of
the accounting period with reference to which such Test Date was set, the
Funded Debt Ratio is less than or equal to 1.50 to 1.0.
"Level II Status" shall mean, for any Test Date, that as of the close of
the accounting period with reference to which such Test Date was set, the
Funded Debt Ratio is greater than 1.50 to 1.0 but less than or equal to
2.0 to 1.0.
"Level III Status" shall mean, for any Test Date, that as of the close of
the accounting period with reference to which such Test Date was set, the
Funded Debt Ratio is greater than 2.0 to 1.0 but less than or equal to 2.5
to 1.0.
"Level IV Status" shall mean, for any Test Date, that as of the close of
the accounting period with reference to which such Test Date was set, the
Funded Debt Ratio is greater than 2.5 to 1.0.
"Leverage Ratio" means, as of any time the same is to be determined, the
ratio of Senior Funded Debt at such time to Total Capitalization at such
time.
"LIBOR Portions" is defined in Section 2.1(a) hereof.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the
interests of a vendor or lessor under any conditional sale, capital lease
or other title retention arrangement.
"Loan Documents" means this Agreement, the Notes, the Applications, the
Collateral Documents and each other instrument or document to be delivered
hereunder or thereunder or otherwise in connection therewith.
"Loans" is defined in Section 1.3 hereof.
"M&I Ventures" means M&I Ventures Corporation, a Wisconsin corporation.
"Material Plan" is defined in Section 9.1(p) hereof.
"Net Income" means, with reference to any period, the net income (or net
deficit) of the Company and the Subsidiaries for such period as computed
on a consolidated basis in accordance with GAAP, and without limiting the
foregoing, after deduction from gross income of all expenses and reserves,
including reserves for all taxes on or measured by income, but excluding
any extraordinary profits and also excluding any taxes on such profits.
"North Carolina Property" is defined in Section 7.4 hereof.
"North Carolina Subsidiary" means ▇▇ ▇▇▇▇▇▇ Industries, Inc., a North
Carolina corporation.
"Notes" is defined in Section 1.3 hereof.
"Obligations" means all obligations of the Company to pay principal and
interest on the Loans, all reimbursement obligations owing under the
Applications, all fees and charges payable hereunder, the Hedging
Liability and all other payment obligations of the Company arising under
or in relation to any Loan Document, in each case whether now existing or
hereafter arising, due or to become due, direct or indirect, absolute or
contingent, and howsoever evidenced, held or acquired.
"Old HK" is defined in the introductory paragraph hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Permitted Sub Debt Prepayments" is defined in Section 8.16 hereof.
"Person" means an individual, partnership, corporation, association,
trust, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the
Code that either (i) is maintained by a member of the Controlled Group for
employees of a member of the Controlled Group, (ii) is maintained pursuant
to a collective bargaining agreement or any other arrangement under which
more than one employer makes contributions and to which a member of the
Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made
contributions, or (iii) under which a member of the Controlled Group has
any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any
time during the preceding five years or by reason of being deemed a
contributing sponsor under Section 4064 of ERISA.
"Portion" is defined in Section 2.1(a) hereof.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Required Lenders" means, as of the date of determinations thereof, those
Lenders holding at least 67% of the Commitments or, in the event that no
Commitments are outstanding hereunder, holding at least 67% in aggregate
principal amount of the Loans and credit risk on the Letters of Credit
outstanding hereunder.
"Reserve" shall mean $10,000,000 unless and until (i) the aggregate
principal amount outstanding on the ▇▇▇▇▇ Debt and Western Atlas Debt,
taken together, is reduced to $8,000,000 and (ii) at the time of such
repayment and immediately after giving effect thereto, no Default or Event
of Default shall have occurred and be continuing, in which event the
Reserve shall be $0. Each Lender's share of the Reserve shall be in the
same proportion such Lender's Commitment bears to the Commitments of all
the Lenders.
"Revolving Credit" is defined in Section 1.2 hereof.
"Senior Funded Debt" means all Funded Debt other than Subordinated
Indebtedness.
"Service Subsidiary" shall mean HEI Services, Inc., a Delaware corporation
and a Wholly Owned Subsidiary.
"Shareholder's Equity" means, as of any date the same is to be determined,
the total shareholder's equity (including capital stock, additional
paid-in-capital and retained earnings after deducting treasury stock, but
excluding minority interests in subsidiaries) which would appear on a
balance sheet of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Subordination Agreements" shall mean (i) that certain Restated
Subordination Agreement relating to the Subordinated Indebtedness dated as
of February 13, 1995 originally by and between the Company, Old HK, ▇▇▇▇▇
and the Agent, as the same may from time to time be modified or amended in
accordance with the provisions thereof and (ii) the Western Atlas
Subordination Agreement.
"Subordinated Indebtedness" means (i) the ▇▇▇▇▇ Debt and (ii) the Western
Atlas Debt.
"Subsidiary" means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is
at the time directly or indirectly owned by the Company, by one or more of
its Subsidiaries, or by the Company and one or more of its Subsidiaries.
"Subsidiary Guarantees" is defined in Section 4.2 hereof.
"SWIB" shall mean the State of Wisconsin Investment Board.
"Termination Date" means November 1, 1999, or such earlier date on which
the Commitments are terminated in whole pursuant to Sections 3.3, 9.2 or
9.3 hereof.
"Total Capitalization" means, as of any time the same is to be determined,
the sum of Funded Debt and Shareholder's Equity.
"Unfunded Vested Liabilities" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to
the PBGC or the Plan under Title IV of ERISA.
"Voting Stock" of any Person means the capital stock of any class or
classes or other equity interest (however designated) having ordinary
voting power for the election of directors or similar governing body of
such Person, other than stock or other equity interests having such power
only by reason of the happening of a contingency.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of ERISA.
"Western Atlas" means Western Atlas Inc., a Delaware corporation.
"Western Atlas Acquisition" means the acquisition by the Company of
substantially all of the assets of the Material Handling Systems Division
and the Vantage ▇▇▇▇ Division of Western Atlas pursuant to the Western
Atlas Purchase Agreement.
"Western Atlas Adjustment Amount" means, as of any time, (a) when used in
the Funded Debt Ratio, (i) $7,200,000 to but not including the close of
the first fiscal quarter of the Company's 1997 fiscal year, (ii)
$5,400,000 thereafter and to but not including the close of the second
fiscal quarter of the Company's 1997 fiscal year, (iii) $3,600,000
thereafter and to but not including the close of the third fiscal quarter
of the Company's 1997 fiscal year and (iv) $1,800,000 thereafter and to
but not including the close of the Company's 1997 fiscal year and (b) when
used in the Interest Coverage Ratio, (i) $4,800,000 to but not including
the close of the first fiscal quarter of the Company's 1997 fiscal year,
(ii) $3,600,000 thereafter and to but not including the close of the
second fiscal quarter of the Company's 1997 fiscal year, (iii) $2,400,000
thereafter and to but not including the close of the third fiscal quarter
of the Company's 1997 fiscal year and (iv) $1,200,000 thereafter and to
but not including the close of the Company's 1997 fiscal year.
"Western Atlas Debt" means all principal of and interest on that certain
Subordinated Promissory Note of the Company dated November 13, 1996
payable to the order of Western Atlas in the face principal amount of
$8,000,000.
"Western Atlas Purchase Agreement" means that certain Asset Purchase
Agreement dated as of November 13, 1996 by and between the Company and
Western Atlas.
"Western Atlas Subordination Agreement" means that certain Subordination
Agreement dated as of November 13, 1996 by and among the Company, Western
Atlas and the Agent, as the same may from time to time be modified or
amended in accordance with the provisions thereof.
"Wholly Owned Subsidiary" means a Subsidiary of which all of the issued
and outstanding shares of capital stock (other than directors' qualifying
shares as required by law) or other equity interests are owned by the
Company and/or one or more Wholly Owned Subsidiaries within the meaning of
this definition.
.c2.Section 5.2.Interpretation. ; The foregoing definitions are
equally applicable to both the singular and plural forms of the terms
defined. All references to time of day herein are references to Chicago,
Illinois time unless otherwise specifically provided. Where the character
or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, it
shall be done in accordance with GAAP except where such principles are
inconsistent with the specific provisions of this Agreement.
.c1.Section 6. Representations and Warranties.
The Company represents and warrants to the Lenders as follows:
.c2.Section 6.1. Company's Organization and Qualification.; The
Company is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Wisconsin, has full and
adequate corporate power to own its Property and carry on its business as
now conducted, and is duly licensed or qualified and in good standing in
each jurisdiction in which the nature of the business conducted by it or
the nature of the Property owned or leased by it requires such licensing
or qualifying, except where the failure to be so licensed or qualified and
in good standing would not have a material adverse effect on the financial
condition or Property, business or operations of the Company. The Company
has full right and authority to enter into Loan Documents, to make the
borrowings herein provided for, to issue its Notes in evidence thereof, to
execute and deliver the Applications, to grant to the Agent for the
benefit of the Lenders the Lien described in the Collateral Documents, and
to perform each and all of the matters and things herein and therein
provided for; and this Agreement and the other Loan Documents do not, nor
does the performance or observance by the Company of any of the matters
and things herein or therein provided for, contravene or constitute a
default under any provision of law or any judgment, injunction, order or
decree binding upon the Company or any charter or by-law provision of the
Company or any covenant, indenture or agreement of or affecting the
Company or any of its Properties, or result in the creation or imposition
of any Lien on any Property of the Company.
.c2.Section 6.2. Subsidiaries.; Each Subsidiary is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, as the case may be,
has full and adequate power to own its Property and carry on its business
as now conducted, and is duly licensed or qualified and in good standing
in each jurisdiction in which the nature of the business conducted by it
or the nature of the Property owned or leased by it requires such
licensing or qualifying unless and to the extent that the failure to be so
licensed or qualified or to be in such good standing would not have any
material adverse effect on the financial condition, Properties, business
or operations of the Company and the Subsidiaries taken as a whole. Each
Subsidiary has full right, power and authority to execute and deliver the
Collateral Documents being executed by it and to observe and perform each
and all of the matters and things therein provided for, and such
Collateral Documents do not, nor will the performance or observance by the
Subsidiaries of any of the matters and things therein provided for,
contravene any provision of law or any charter or by-law provision of the
Subsidiaries or any covenant, indenture or agreement of or affecting the
Subsidiaries or any of their respective Properties. Schedule 6.2 hereto
identifies each Subsidiary, the jurisdiction of its incorporation or
organization, as the case may be, the percentage of issued and outstanding
shares of each class of its capital stock or other equity interests owned
by the Company and the Subsidiaries and, if such percentage is not 100%
(excluding directors' qualifying shares as required by law), a description
of each class of its authorized capital stock and other equity interests
and the number of shares of each class issued and outstanding. All of the
outstanding shares of capital stock and other equity interests of each
Subsidiary indicated on Schedule 6.2 as owned by the Company or a
Subsidiary are owned, beneficially and of record, by the Company or such
Subsidiary free and clear of all Liens. There are no outstanding
commitments or other obligations of any Subsidiary to issue, and no
options, warrants or other rights of any Person to acquire, any shares of
any class of capital stock or other equity interests of any Subsidiary.
.c2.Section 6.3. Margin Stock.; Neither the Company nor any of
the Subsidiaries is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System), and
no part of the proceeds of any Loan will be used to purchase or carry any
such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.
.c2.Section 6.4. Financial Reports;. The audit report of the
Company for the fiscal year ended October 28, 1995, including a
consolidated balance sheet and statement of shareholder's equity of the
Company and the Subsidiaries as at said date and the income statement and
cash flow statement of the Company and the Subsidiaries for the fiscal
year ending such date, certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and the unaudited
interim consolidated balance sheet of the Company and its Subsidiaries as
at August 3, 1996, and the related consolidated statements of income,
retained earnings and cash flows of the Company and its Subsidiaries for
the nine (9) months then ended, heretofore furnished to the Lenders,
fairly presents the consolidated financial condition of the Company and
the Subsidiaries as at said dates and the consolidated results of their
operations for the periods then ended in conformity with GAAP applied on a
consistent basis. Neither the Company nor any Subsidiary has contingent
liabilities which are material to it other than as indicated on such
financial statements and the pro forma financial statements referred to in
Section 6.6 hereof or, with respect to future periods, on the financial
statements furnished pursuant to Section 8.5 hereof. Since October 28,
1995, or if later, the date as of which were prepared the most recent
financial statements for the Company furnished pursuant to Sections 8.5(a)
or 8.5(b) hereof, there has been no material adverse change in the
condition (financial or otherwise) or business prospects of the Company or
any Subsidiary nor any change to the Company or any Subsidiary except for
the Western Atlas Acquisition and those occurring in the ordinary course
of business.
.c2.Section 6.5. Full Disclosure;. To the best knowledge and
belief of the Company, the statements and information furnished to the
Agent and the Lenders in connection with the negotiation of this Agreement
and the Commitments by the Lenders to provide all or part of the financing
contemplated hereby (including without limitation the pro forma financial
statements for the Company as of the closing of the Western Atlas
Acquisition furnished by it to the Lenders and dated October 31, 1996) do
not contain any untrue statements of a material fact or omit a material
fact necessary to make the material statements contained therein or herein
not misleading, the Lenders acknowledging that as to any projections
furnished to any Lender, the Company only represents that the same were
prepared on the basis of information and estimates the Company believed to
be reasonable.
.c2.Section 6.6. Good Title;. The Company and the Subsidiaries
have good and defensible title to their respective assets as reflected on
the most recent consolidated balance sheet of the Company and the
Subsidiaries furnished to the Lenders (except for sales of assets by the
Company and its Subsidiaries in the ordinary course of their respective
businesses), subject to no Liens other than such thereof as are permitted
by Section 8.12 hereof.
.c2.Section 6.7. Litigation and Other Controversies.; Except to
the extent disclosed in writing to the Lenders promptly after either the
chief financial officer or chief executive officer of the Company becomes
aware of the same, there is no litigation or governmental proceeding or
labor controversy pending, nor to the knowledge of the Company threatened,
against the Company or any Subsidiary which if adversely determined would
reasonably be expected to result in any material adverse change in the
financial condition, Properties, business or operations of the Company or
any Subsidiary.
.c2.Section 6.8. Taxes.; All tax returns required to be filed by
the Company or any Subsidiary in any jurisdiction have, in fact, been
filed, and all taxes, assessments, fees and other governmental charges
upon the Company or any Subsidiary or upon any of their respective
Properties, income or franchises, which are shown to be due and payable in
such returns, have been paid. The Company does not know of any proposed
additional tax assessment against it or its Subsidiaries for which
adequate provision in accordance with GAAP has not been made on its
accounts. Adequate provisions in accordance with GAAP for taxes on the
books of the Company and each Subsidiary have been made for all open
years, and for its current fiscal period.
.c2.Section 6.9. Approvals.; No authorization, consent, license,
exemption, filing or registration with any court or governmental
department, agency or instrumentality, nor any approval or consent of the
stockholders of the Company or any other Person, other than such of the
foregoing as has already been obtained, is or will be necessary to the
valid execution, delivery or performance by the Company or any Subsidiary
of this Agreement or the other Loan Documents.
.c2.Section 6.10. Affiliate Transactions.; Neither the Company
nor any Subsidiary is a party to any contracts or agreements with any of
its Affiliates (other than with Wholly Owned Subsidiaries) on terms and
conditions which are materially less favorable to the Company or such
Subsidiary than would be usual and customary in similar contracts or
agreements between Persons not affiliated with each other, except for the
following: (i) the Employment and Noncompetition Agreement dated October
28, 1993 among the Company and ▇▇▇▇ ▇. ▇▇▇▇▇▇, (ii) the Employment and
Noncompetition Agreement dated October 28, 1993 currently in effect by
and among the Company and ▇▇▇▇ ▇. ▇▇▇▇▇, (iii) the Employment and
Noncompetition Agreement dated October 28, 1993 currently in effect by
and among the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (iv) the Employment and
Noncompetition Agreement dated October 28, 1993 currently in effect by and
among the Company and ▇▇▇▇ ▇. ▇▇▇▇▇, (v) Investment Agreement dated
October 28, 1993 among the Company, M&I Ventures and SWIB as amended by
the First Amended and Restated Investment Agreement dated February 13,
1995, (vi) the Shareholders Agreement dated October 28, 1993 currently in
effect by and among M&I Ventures, SWIB, the Company, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇ as amended by the First
Amended and Restated Shareholders Agreement dated February 13, 1995, (vii)
the Class B and Class D Preferred Stock as set forth in the articles of
incorporation of the Company as amended and in effect as of the date of
this Agreement, (viii) any contractual arrangements by which management,
consulting or similar fees become due and payable to M&I Ventures, SWIB or
entities related to either in amounts aggregating not more than $400,000
during calendar year 1996 and not more than $150,000 during any other
calendar year and (ix) the HII Indemnity Agreement.
.c2.Section 6.11. Investment Company; Public Utility Holding
Company.; Neither the Company nor any Subsidiary is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "public
utility holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
.c2.Section 6.12. ERISA.; The Company and the Subsidiaries are in
compliance in all material respects with ERISA to the extent applicable to
them and have received no notice to the contrary from the PBGC or any
other governmental entity or agency. As of the date hereof, the Company
and the Subsidiaries have no liability to the PBGC in respect of Unfunded
Vested Liabilities as they do not currently maintain any Plan. No
condition exists nor has any event or transaction occurred with respect to
any Plan which could reasonably be expected to result in the incurrence by
the Company or any Subsidiary of any material liability, fine or penalty
under ERISA or the Code or in connection with any Plan. Neither the
Company nor any Subsidiary has any contingent liability for any
post-retirement benefits under a Welfare Plan, other than liability for
continuation of coverage described in Part 6 of Title I of ERISA.
.c2.Section 6.13. Compliance with Laws.; The Company and the
Subsidiaries are in compliance with the requirements of all federal, state
and local laws, rules and regulations applicable to or pertaining to the
Properties or business operations of the Company or any Subsidiary
(including, without limitation, the Occupational Safety and Health Act of
1970, the Americans with Disabilities Act of 1990, and laws and
regulations establishing quality criteria and standards for air, water,
land and toxic or hazardous wastes or substances), non-compliance with
which could have a material adverse effect on the financial condition,
Properties, business or operations of the Company or any Subsidiary.
Except to the extent disclosed in writing to the Lenders promptly after
either the chief financial officer or chief executive officer of the
Company becomes aware of the same, neither the Company nor any Subsidiary
has received notice to the effect that its operations are not in
compliance with any of the requirements of applicable federal, state or
local environmental, health and safety statutes and regulations or are the
subject of any governmental investigation evaluating whether any remedial
action is needed to respond to a release of any toxic or hazardous waste
or substance into the environment, which non-compliance or remedial action
could have a material adverse effect on the financial condition,
Properties, business or operations of the Company or any Subsidiary.
.c2.Section 6.14. Other Agreements.; Neither the Company nor any
Subsidiary is in default under the terms of any covenant, indenture or
agreement of or affecting the Company, any Subsidiary or any of their
Properties, which default if uncured would have a material adverse effect
on the financial condition, Properties, business or operations of the
Company or any Subsidiary.
.c1.Section 7. Conditions Precedent.
The obligation of the Lenders to make any Loan or of the Agent to
issue any Letter of Credit under this Agreement is subject to the
following conditions precedent:
.c2.Section 7.1. All Advances.; As of the time of the making of
each Loan (including the initial Loan) hereunder:
(a) each of the representations and warranties set forth in
Section 6 hereof and in the Collateral Documents shall be true and correct
as of such time, except to the extent the same relate expressly to an
earlier date;
(b) no Default or Event of Default shall have occurred and be
continuing hereunder; and
(c) in the case of the issuance of any Letter of Credit, the
Agent shall have received a properly completed Application therefor
together with the fees called for hereby.
The Company's request for any Loan or Letter of Credit shall constitute
its warranty to the Agent and the Lenders as to the foregoing effects.
.c2.Section 7.2. Initial Advance.; Prior to the making of the
initial extension of credit hereunder, the following conditions precedent
shall also have been satisfied:
(a) the Agent shall have received the following for the account
of the Lenders (each to be properly executed and completed) and the same
shall have been approved as to form and substance by the Lenders:
(i) the Notes;
(ii) the Subsidiary Guarantees from the Canadian Subsidiary, the
Service Subsidiary and the North Carolina Subsidiary;
(iii) security agreements from the Company in substantially the
form of the following existing Collateral Documents to confirm and assure
that Property of Company subject to or of the same type as that covered by
such existing Collateral Documents or consisting of investment property of
the Company secures the Revolving Credit, together with any financing
statements or financing statement amendments requested by the Agent in
connection with such security agreements: (a) that certain Security
Agreement from the Company to the Agent dated as of October 29, 1993, as
supplemented by that certain Supplement to Security Documents dated as of
February 13, 1995 and as further supplemented by that certain Second
Supplement to Security Documents dated as of May 23, 1996; and (b) that
certain Security Agreement re: Intellectual Property from the Company to
the Agent dated as of October 29, 1993, as supplemented by that certain
Supplement to Security Documents dated as of February 13, 1995 and as
further supplemented by that certain Second Supplement to Security
Documents dated as of May 23, 1996;
(iv) security agreement from the Service Subsidiary in
substantially the form of the following existing Collateral Document to
confirm and assure that Property of Service Subsidiary subject to or of
the same type as that covered by such existing Collateral Document or
consisting of investment property of the Service Subsidiary secures the
Revolving Credit, together with any financing statements or financing
statement amendments requested by the Agent in connection with such
security agreement: that certain Security Agreement from the Service
Subsidiary to the Agent dated as of March 10, 1995 as supplemented by that
certain Supplement to Security Agreement dated as of May 23, 1996;
(v) the Pledge Agreement and the certificates evidencing all of
the issued and outstanding capital stock of the North Carolina Subsidiary
to be pledged pursuant to the Pledge Agreement, together with blank stock
powers therefor;
(vi) certified copies of the resolutions of the Board of
Directors of the Company authorizing the execution, delivery and
performance of the Agreement and the other Loan Documents to which the
Company is a part and the supplements to the Collateral Document to which
the Company is a party to the extent the Agent or its counsel may
reasonably request;
(vii) copies of the Company's Articles of Incorporation and
by-laws certified by the Secretary or other appropriate officer of the
Company;
(viii) an incumbency certificate containing the name, title and
genuine signatures of each of the Company's Authorized Representatives;
(ix) evidence of insurance required by Section 8.4 hereof;
(x) a copy of the Western Atlas Purchase Agreement;
(xi) the Western Atlas Subordination Agreement; and
(xi) copies of all instruments and documents evidencing, securing
or otherwise setting forth any terms or conditions applicable to any
Western Atlas Debt;
(b) the Agent and Lenders shall have received the initial fees
called for hereby;
(c) each Lender shall have received such certifications as it
may require in order to satisfy itself as to the financial condition of
the Company and its Subsidiaries and the lack of material contingent
liabilities of the Company and its Subsidiaries;
(d) legal matters incident to the execution and delivery of this
Agreement, the Notes, the Applications and the Collateral Documents (as
supplemented as contemplated above) and to the transactions contemplated
hereby shall be satisfactory to the Required Lenders and their counsel;
and the Agent shall have received for the account of the Lenders the
favorable written opinion of counsel for the Company in the form attached
hereto as Exhibit B and otherwise satisfactory to the Required Lenders and
its counsel;
(e) the Western Atlas Acquisition shall have occurred except for
the Lenders' funding of approximately $35,000,000 of the purchase price
therefor and the Agent shall have received evidence satisfactory to it of
the foregoing;
(f) nothing shall come to the attention of the Company or the
Agent or any Lender which indicates that the capital structure and
financial condition of the Company (including without limitation its
current assets and current liabilities) immediately after giving effect to
the Western Atlas Acquisition shall be detrimentally at variance, in any
material respect, from those presumed in the pro forma financial
statements and other financial materials furnished by the Company to the
Lenders and dated October 31, 1996;
(g) the Agent shall have received for the account of the Lenders
a good standing certificate (or equivalent) for the Company (dated as of
the date no earlier than five (5) days prior to the date hereof) from the
office of the Secretary of State of Wisconsin; and
(h) the Liens granted to the Agent under the Collateral
Documents referred to in this Section 7.2 shall have been perfected in a
manner satisfactory to the Agent and Required Lenders and their counsel.
.c2.Section 7.3. Certain Real Estate Collateral;. No later than
60 days from the date hereof, the following conditions precedent shall
also have been satisfied:
(a) the Agent shall have received the following for the account
of the Lenders (each to be properly executed and completed) and the same
shall have been approved as to form and substance by the Lenders:
(i) a supplement to that certain Deed of Trust, Security
Agreement and Assignment of Rents dated as of February 13, 1995, and
recorded in the Recorder's Office of ▇▇▇▇▇ County, Utah on February 24,
1995, as Document No. 1167017, at Book 1850, Page 765 as amended by that
certain First Amendment to Deed of Trust, Security Agreement and
Assignment of Rents dated as of March 15, 1995, and recorded in the
Recorder's Office of ▇▇▇▇▇ County, Utah on October 4, 1995, as Document
No. 1203494, at Book 1923, Page 141 and as further amended by that certain
Second Amendment to Deed of Trust, Security Agreement and Assignment of
Rents dated as of May 23, 1996, and recorded in the Recorder's Office of
▇▇▇▇▇ County, Utah on July 18, 1996, as Document No. 1262471, at Book
2024, Page 27 (the "Existing Utah Mortgage") to confirm and assure that
the Existing Utah Mortgage secures the Revolving Credit, together with any
financing statements or financing statement amendments requested by the
Agent in connection therewith;
(ii) an endorsement to the mortgagee's policy of title insurance
(or a binding commitment therefor) for the Existing Utah Mortgage (as
supplemented as contemplated by this Agreement) creating liens on the
Company's real property in Bountiful, Utah to confirm that such policy
secures the Revolving Credit which endorsement shall bring the effective
date of coverage thereunder down to the date of disbursement of the first
Loan under the new Revolving Credit and show no exceptions to title or
coverage other than those shown on such policy as originally issued
(except than no exception shall appear for taxes which are now due and
payable);
(iii) a mortgagee's title insurance policy (or a prepaid binding
commitment therefor) insuring the lien on the Company's real property
located in Montgomery, Alabama (the "Alabama Property") in the aggregate
amount of its current appraised fair market value to be a valid first lien
subject to no defects or objections which are unacceptable to the Bank,
together with such endorsements as the Bank may require;
(iv) an ALTA survey prepared by a licensed surveyor on each
parcel of real property subject to the lien on the Alabama Property, which
survey shall also state whether or not any portion of the real property is
in a designated flood hazard area;
(v) a report of an independent firm of environmental engineers
acceptable to the Bank concerning the environmental hazards and matters
with respect to the parcels of real property subject to the lien on the
Alabama Property;
(vi) the most recent appraisal report if any, held by the Company
describing the fair market value of each parcel of real property subject
to the lien on the Alabama Property; and
(vii) a landlord's waiver from the owner of the facilities leased
by the Company in Hebron, Kentucky (provided that the failure to furnish
such waiver shall not constitute a default under this clause (xi) if the
Company used reasonable efforts to obtain the same);
(b) the Liens granted to the Agent under the Collateral
Documents referred to in this Section 7.3 shall have been perfected in a
manner satisfactory to the Agent and Required Lenders and their counsel;
and
(c) legal matters incident to the execution and delivery of such
Collateral Documents and to the transactions contemplated thereby shall be
satisfactory to the Required Lenders and their counsel.
Any failure of the Company to satisfy the above conditions precedent by
the deadline also set forth above in this Section 7.3 will constitute an
Event of Default.
.c2.Section 7.4. North Carolina Real Estate Collateral;. Not
later than 90 days from the date hereof, unless the Company has prior to
that date consummated a bona fide sale at arms' length to an unaffiliated
third party of (i) the real property of the Company or the North Carolina
Subsidiary located in Salisbury, North Carolina (the "North Carolina
Property") or (ii) the Voting Stock in any Subsidiary if its sole purpose
and function is then to own the North Carolina Property, the following
conditions precedent shall also have been satisfied:
(a) the Agent shall have received the following for the account
of the Lenders (each to be properly executed and completed) and the same
shall have been approved as to form and substance by the Lenders:
(i) a mortgagee's title insurance policy (or a prepaid binding
commitment therefor) insuring the lien on the North Carolina Property in
the aggregate amount of its current appraised fair market value to be a
valid first lien subject to no defects or objections which are
unacceptable to the Bank, together with such endorsements as the Bank may
require;
(ii) an ALTA survey prepared by a licensed surveyor on each
parcel of real property subject to the lien on the North Carolina
Property, which survey shall also state whether or not any portion of the
real property is in a designated flood hazard area;
(iii) a report of an independent firm of environmental engineers
acceptable to the Bank concerning the environmental hazards and matters
with respect to the parcels of real property subject to the lien on the
North Carolina Property;
(iv) the most recent appraisal report, if any, held by the
Company describing the fair market value of each parcel of real property
subject to the lien on the North Carolina Property;
(b) the Liens granted to the Agent under the Collateral
Documents referred to in this Section 7.4 shall have been perfected in a
manner satisfactory to the Agent and Required Lenders and their counsel;
and
(c) legal matters incident to the execution and delivery of such
Collateral Documents and to the transactions contemplated thereby shall be
satisfactory to the Required Lenders and their counsel.
Any failure of the Company to satisfy the above conditions precedent by
the deadline also set forth above in this Section 7.4 will constitute an
Event of Default.
.c2.Section 7.5 Authority Documents;. No later than five (5) days
from the date hereof, the following conditions precedent shall also have
been satisfied:
(a) certified copies of resolutions of the Board of Directors of
the Service Subsidiary, authorizing the execution, delivery and
performance of its Subsidiary Guarantee and security agreement;
(b) certified copies of resolutions of the Board of Directors of
the Canadian Subsidiary authorizing the execution, delivery and
performance of its Subsidiary Guarantee; and
(c) copies of the Articles of Incorporation and by-laws
certified by the Secretary or other appropriate officer of the Service
Subsidiary and the Canadian Subsidiary.
Any failure of the Company to satisfy the above conditions precedent by
the deadline also set forth above in this Section 7.5 will constitute an
Event of Default.
.c2.Section 7.6. Good Standing Certificates;. (i) Not later than
thirty (30) days from the date hereof, the Agent shall have received for
the account of the Lenders a good standing certificate (or equivalent) for
the Company (dated no earlier than five (5) days prior to the date hereof)
from the offices of the Secretary of State of Utah, Kentucky, North
Carolina and Alabama; and (ii) not later than 120 days from the date
hereof, the Agent shall have received for the account of the Lenders a
good standing certificate (or equivalent) for the Company (dated no
earlier than five (5) days prior to the date hereof) from the office of
the Secretary of State of California.
Any failure of the Company to satisfy the above conditions precedent by
the deadlines also set forth above in this Section 7.6 will constitute an
Event of Default.
.c1.Section 8. Covenants.
The Company agrees that, so long as any credit is available to or in
use by the Company hereunder, except to the extent compliance in any case
or cases is waived in writing by the Required Lenders:
.c2.Section 8.1. Maintenance of Business.; The Company shall,
and shall cause each Subsidiary to, preserve and keep in force and effect
its corporate existence and all licenses, permits and franchises necessary
to the proper conduct of its business; provided, however, that (i) until
thirty (30) days from the date hereof, the Company shall not be in default
of this Section by reason of its failure to qualify as a foreign
corporation to do business in the states of Utah, Kentucky, North Carolina
and Alabama and (ii) until 120 days from the date hereof, the Company
shall not be in default of this Section by reason of its failure to
qualify as a foreign corporation to do business in the State of
California.
.c2.Section 8.2. Maintenance of Property.; The Company will
maintain, preserve and keep those of its Properties necessary for the
proper conduct of its business in the ordinary course as currently
conducted in good repair, working order and condition (ordinary wear and
tear excepted) and will from time to time make all needful and proper
repairs, renewals, replacements, additions and betterments thereto so that
at all times the efficiency thereof shall be fully preserved and
maintained, and will cause each Subsidiary to do so in respect of such
Property owned or used by it.
.c2.Section 8.3. Taxes and Assessments;. The Company will duly
pay and discharge, and will cause each Subsidiary to duly pay and
discharge, all taxes, rates, assessments, fees and governmental charges
upon or against it or its Properties, in each case before the same become
delinquent and before penalties accrue thereon, unless and to the extent
that (i) the failure to pay the same would not reasonably be expected to
result in any material adverse change in the financial condition,
Properties, business or operations of the Company or any Subsidiary or
(ii) the same are being contested in good faith and by appropriate
proceedings which prevent enforcement of the matter under contest and
adequate reserves are provided therefor.
.c2.Section 8.4. Insurance.; The Company will insure and keep
insured, and will cause each Subsidiary to insure and keep insured, with
good and responsible insurance companies, all insurable Property owned by
it which is of a character usually insured by Persons similarly situated
and operating like Properties against loss or damage from such hazards and
risks, and in such amounts, as are insured by Persons similarly situated
and operating like Properties; and the Company will insure, and cause each
Subsidiary to insure, such other hazards and risks (including employers'
and public liability risks) with good and responsible insurance companies
as and to the extent usually insured by Persons similarly situated and
conducting similar businesses. The Company will in any event maintain
insurance on the Collateral to the extent required by the Collateral
Documents. The Company will upon request of the Agent furnish a
certificate setting forth in summary form the nature and extent of the
insurance maintained pursuant to this Section.
.c2.Section 8.5. Financial Reports.; The Company will, and will
cause each Subsidiary to, maintain a standard system of accounting in
accordance with GAAP and will permit the Agent, each Lender and any
designee of the Agent to visit and inspect the Properties (including books
and records) of the Company or any Subsidiary during normal business hours
with prior notice to the Company and will furnish to the Agent and each
Lender such information respecting the business and financial condition of
the Company and the Subsidiaries as the Agent or such Lender may
reasonably request; and without any request, will furnish to the Lenders:
(a) as soon as available, and in any event within forty-five
(45) days after the close of each quarterly fiscal period of the Company,
(i) copies of the balance sheet as of the close of such period and
statements of income, retained earnings and cash flows for such period,
all on a consolidated basis for the Company and the Subsidiaries prepared
by the Company in accordance with GAAP (subject to normal year end audit
adjustments) and in reasonable detail, and showing in comparative form the
figures for the corresponding date and period in the previous fiscal year,
and each certified to by the chief financial officer of the Company, and
(ii) a copy of a backlog report of contract work of the Company in
progress as of the close of such period, prepared by the Company in the
form previously submitted to the Lenders and certified to by the chief
financial officer of the Company;
(b) as soon as available, and in any event within one hundred
twenty (120) days after the close of each fiscal year of the Company, a
copy of the consolidated balance sheet of the Company and its Subsidiaries
as of the close of such fiscal year and the consolidated statements of
income, retained earnings and cash flows of the Company and its
Subsidiaries for such period, and accompanying notes thereto, all in
reasonable detail and showing in comparative form the figures for the
previous fiscal year, accompanied by an unqualified opinion thereon of a
firm of independent public accountants which is either of recognized
national standing or satisfactory to the Required Lenders, to the effect
that the financial statements have been prepared in accordance with GAAP
and present fairly in accordance with GAAP the consolidated financial
condition of the Company and its Subsidiaries as of the close of such
fiscal year and the results of their operations and cash flows for the
fiscal year then ended and that an examination of such accounts in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, such examination
included such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances; and
(c) not later than ninety (90) days after receipt thereof, a
copy of any management letters on internal accounting controls of the
Company or any Subsidiary prepared by its independent public accountants;
and
(d) promptly after knowledge thereof shall have come to the
attention of the chief executive officer or chief financial officer of the
Company, written notice of any threatened or pending litigation or
governmental proceeding or labor controversy against the Company or any
Subsidiary which, if adversely determined, would reasonably be expected to
have a material adverse effect on the financial condition, Properties,
business or operations of the Company or any Subsidiary or of the
occurrence of any Default or Event of Default hereunder.
Each of the financial statements furnished to the Lenders pursuant to
clauses (a) and (b) of this Section shall be accompanied by a written
compliance certificate in the form attached hereto as Exhibit C signed by
the chief financial officer of the Company to the effect that to the best
of the chief financial officer's knowledge and belief no Default or Event
of Default has occurred during the period covered by such statements or,
if any such Default or Event of Default has occurred during such period,
setting forth a description of such Default or Event of Default and
specifying the action, if any, taken by the Company to remedy the same.
Such certificate shall also set forth the calculations supporting such
statements in respect of Sections 8.6, 8.7, 8.8, 8.9 and 8.10 of this
Agreement.
.c2.Section 8.6. Current Ratio;. The Company will at all times
during each of the periods specified below maintain a Current Ratio of not
less than:
Current Ratio
From and To and Through shall not be
Including Close of Less than:
The date hereof 3rd fiscal quarter of the 0.90 to 1.0
Company's 1997 fiscal year
4th fiscal quarter of the All times thereafter 1.00 to 1.0
Company's 1997 fiscal year
.c2.Section 8.7. Leverage Ratio;. The Company will at all times
during each of the periods specified below maintain its Leverage Ratio at
not more than:
Leverage Ratio
From and To and Through shall not be
Including Close Of Greater than:
The date hereof 3rd fiscal quarter of the 0.70 to 1.0
Company's 1997 fiscal year
4th fiscal quarter of 3rd fiscal quarter of the 0.65 to 1.0
the Company's 1997 Company's 1998 fiscal year
fiscal year
4th fiscal quarter of 3rd fiscal quarter of the 0.55 to 1.0
the Company's 1998 Company's 1999 fiscal year
fiscal year
4th fiscal quarter of All times thereafter 0.50 to 1.0
the Company's 1999
fiscal year
.c2.Section 8.8. Funded Debt Ratio;. The Company will at all
times during each of the periods specified below maintain its Funded Debt
Ratio at not more than:
Funded Debt Ratio
From and To and Through shall not be
including Close Of more than:
The date hereof 3rd fiscal quarter of the 3.25 to 1.0
Company's 1997 fiscal year
4th fiscal quarter of 3rd fiscal quarter of the 2.75 to 1.0
the Company's 1997 Company's 1998 fiscal year
fiscal year
4th fiscal quarter of 3rd fiscal quarter of the 2.50 to 1.0
the Company's 1998 Company's 1999 fiscal year
fiscal year
4th fiscal quarter of All times thereafter 2.00 to 1.0
the Company's 1999
fiscal year
.c2.Section 8.9. Interest Coverage Ratio;. The Company will, as
of the last day of each fiscal quarter of the Company, maintain its
Interest Coverage Ratio at not less than 2.50 to 1.0.
.c2.Section 8.10. Capital Expenditures;. The Company will not,
nor will permit any Subsidiary to, expend or become obligated for capital
expenditures (as determined in accordance with GAAP) in an aggregate
amount for the Company and the Subsidiaries taken together, in excess of
$7,000,000 during any fiscal year of the Company. For purposes of this
Section, capital expenditures shall not include (i) the purchase price
expended by the Company to effect the Western Atlas Acquisition and (ii)
Capitalized Lease Obligations assumed by the Company as part of the
Western Atlas Acquisition.
.c2.Section 8.11. Indebtedness for Borrowed Money.; The Company
will not, nor will either permit any Subsidiary to, issue, incur, assume,
create or have outstanding any Indebtedness for Borrowed Money; provided,
however, that the foregoing provisions shall not restrict nor operate to
prevent:
(a) the indebtedness of the Company on the Notes;
(b) Capitalized Lease Obligations to the extent the amount
thereof was incurred in compliance with Section 8.10 hereof (including
Capitalized Lease Obligations assumed as part of the Western Atlas
Acquisition);
(c) purchase money indebtedness in an aggregate amount not to
exceed $2,000,000 at any one time outstanding secured by Liens permitted
by Section 8.12(f) hereof;
(d) the Subordinated Indebtedness if and so long as the same
remains subordinate (by the Subordination Agreements) to the prior payment
of the Notes and the other Obligations;
(e) unsecured indebtedness of the Company representing the
deferred amount of consideration owed to employees of the Company or their
successors for the Company's repurchase of such employee's common stock in
the Company under the terms of existing employee stock repurchase
agreements or similar agreements entered into by the Company with the
Company's employees after the date hereof in the ordinary course of
business; and
(f) indebtedness not otherwise permitted by this Section 8.11
aggregating not more than $2,000,000 at any one time outstanding.
.c2.Section 8.12. Liens.; The Company will not, nor will either
permit any Subsidiary to, create, incur or permit to exist any Lien of any
kind on any Property owned by the Company or any Subsidiary; provided,
however, that this Section shall not apply to nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, provided in each case that the obligation is not for borrowed
money and that the obligation secured is not overdue or, if overdue, is
being contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest and adequate reserves have been
established therefor;
(b) good faith cash deposits in connection with tenders,
contracts or leases to which the Company or any Subsidiary is a party or
other cash deposits required to be made in the ordinary course of
business, provided in each case that (i) the obligation is not for
borrowed money, (ii) the obligation secured is not overdue or, if overdue,
is being contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest, (iii) adequate reserves have been
established therefor and (iv) a payment or performance bond, or similar
instrument, or letter of credit, could not have been used in lieu of such
cash deposit;
(c) mechanics', workmen's, materialmen's, landlords', carriers',
or other similar Liens arising in the ordinary course of business with
respect to obligations which are not due or which are being contested in
good faith by appropriate proceedings which prevent enforcement of the
matter under contest;
(d) the pledge of assets for the purpose of securing an appeal,
stay or discharge in the course of any legal proceeding, provided that the
aggregate amount of liabilities of the Company and the Subsidiaries
secured by a pledge of assets permitted under this clause, including
interest and penalties thereon, if any, shall not be in excess of $250,000
at any one time outstanding;
(e) the Liens granted in favor of the Agent for the benefit of
the Lenders by the Collateral Documents; and
(f) purchase money Liens securing indebtedness permitted by
Section 8.11(c) hereof in respect of equipment now owned or hereafter
acquired by the Company or any Subsidiary (not extending to any other
Property), or Liens securing Capitalized Lease Obligations permitted by
Section 8.11(b) hereof in respect of equipment now owned or hereafter
acquired by the Company or any Subsidiary (not extending to any other
Property), or Liens on equipment so acquired (not extending to any other
Property) existing at the time of acquisition thereof, or renewals,
extensions and refundings of any such Liens (not extending to any other
Property), provided that the principal amount of indebtedness secured by
any such Lien shall not exceed 100% of the cost of the Property covered by
such Lien at the time of the creation thereof or the acquisition of such
Property.
.c2.Section 8.13. Investments, Acquisitions, Loans, Advances and
Guaranties.; The Company will not, nor will either permit any Subsidiary
to, directly or indirectly, make, retain or have outstanding any
investments (whether through purchase of stock or obligations or
otherwise) in, or loans or advances to, any other Person, or acquire all
or any substantial part of the assets or business of any other Person, or
be or become liable as endorser, guarantor, surety or otherwise for any
debt, obligation or undertaking of any other Person, or otherwise agree to
provide funds for payment of the obligations of another, or supply funds
thereto or invest therein or otherwise assure a creditor of another
against loss or apply for or become liable to the issuer of a letter of
credit which supports an obligation of another, or subordinate any claim
or demand it may have to the claim or demand of any other Person;
provided, however, that the foregoing provisions shall not apply to nor
operate to prevent:
(a) investments in direct obligations of the United States of
America or of any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America, provided that any such obligations shall mature within one year
of the date of issuance thereof;
(b) investments in commercial paper rated at least P-1 by
▇▇▇▇▇'▇ Investors Services, Inc. and at least A-1 by Standard & Poor's
Corporation maturing within 270 days of the date of issuance thereof;
(c) investments in certificates of deposit issued by any United
States commercial bank having capital and surplus of not less than
$100,000,000 which have a maturity of one year or less;
(d) investments in repurchase obligations with a term of not
more than seven (7) days for underlying securities of the types described
in subsection (a) above entered into with any bank meeting the
qualifications specified in subsection (c) above;
(e) investments in money market funds that invest solely in
investments of the type described in the immediately preceding subsections
(a), (b), (c) and (d) above;
(f) advances in the ordinary course of business as currently
conducted of selling, travel and relocation expenses to officers and
employees aggregating not more than $500,000 at any one time outstanding;
(g) equity interests of the Company in partnerships or joint
ventures formed to perform, and engaged exclusively in a business related
or complementary to the type of business currently conducted by the
Company in the ordinary course, provided (i) the aggregate amount so
invested at no time exceeds $2,500,000 and (ii) no such partnership or
joint venture shall at any time incur or have outstanding any Indebtedness
for Money Borrowed or any other material liabilities except for such of
the foregoing as are under all circumstances non-recourse to the Company
and the Subsidiaries;
(h) obligations of the Company incurred in the ordinary course
of business in respect of surety obligations, including payment or
performance bonds, bid bonds, appeal bonds, or license, use or similar
instruments, in each case which guarantee the payment or performance by
the Company, the Canadian Subsidiary or the Service Subsidiary of their
obligations to perform under service contracts entered into by the
Company, the Canadian Subsidiary or the Service Subsidiary in the ordinary
course of their businesses as currently conducted;
(i) the Subsidiary Guarantees;
(j) endorsement of items for deposit or collection of commercial
paper received in the ordinary course of business;
(k) the Western Atlas Acquisition;
(l) equity investments by the Company in WILC/HKS L.L.C., a
Wisconsin limited liability company, provided the aggregate amount of such
investments does not exceed $3,200,000 and ▇▇▇▇▇▇ ▇▇▇▇▇▇ and Associates,
Ltd. or an entity controlled by it is the managing member of such limited
liability company;
(m) acquisitions of all or substantially all of the assets or
business of any other Person engaged in the same or similar business as
the Company, or of a division of a Person engaged in such a business, or
of all or substantially all the Voting Stock of a Person, so long as (i)
no Default or Event of Default exists or would exist after giving effect
to such acquisition, (ii) the Board of Directors or other governing body
of such Person whose Property or Voting Stock is being so acquired has
approved the terms of such acquisition, (iii) the Company shall have
delivered to the Lenders an updated Schedule 6.3 to reflect any new
Subsidiary resulting from such acquisition, (iv) the Company can
demonstrate that on a pro forma basis after giving effect to such
acquisition it will continue to comply through the term of this Agreement
with all the terms and conditions of the Loan Documents and (v) the
Company has provided to the Lenders such financial and other information
regarding the Person whose Property or Voting Stock is being so acquired,
including historical financial statements, and a description of such
Person, as the Agent or the Required Lenders have reasonably requested;
and
(n) investments, loans, advances and guaranties not otherwise
permitted by this Section 8.13 aggregating not more than $1,000,000 at any
one time outstanding.
In determining the amount of investments, acquisitions, loans,
advances and guarantees permitted under this Section, investments and
acquisitions shall always be taken at the original cost thereof
(regardless of any subsequent appreciation or depreciation therein), loans
and advances shall be taken at the principal amount thereof then remaining
unpaid and guarantees shall be taken at the amount of obligations
guaranteed thereby.
.c2.Section 8.14. Operating Leases.; The Company will not, nor
will either permit any Subsidiary to, acquire the use or possession of any
Property under a lease or similar arrangement, whether or not the Company
or any Subsidiary has the express or implied right to acquire title to or
purchase such Property at any time if, after giving effect thereto, the
aggregate amount of fixed rentals and other consideration payable by the
Company and the Subsidiaries under all such leases or arrangements would
exceed $6,000,000 during any fiscal year of the Company. Capital Leases
shall not be included in computing compliance with this Section to the
extent the Company's and the Subsidiaries' liability in respect of the
same is permitted by Section 8.11(b) hereof.
.c2.Section 8.15. Sales and Leasebacks.; The Company will not,
nor will either permit any Subsidiary to, enter into any arrangement with
any Lender, insurance company or any other lender or investor providing
for the leasing by the Company or any Subsidiary of any Property
theretofore owned by it and which has been or is to be sold or transferred
by such owner to such lender or investor.
.c2.Section 8.16. Dividends and Certain Other Restricted
Payments;. The Company will not (a) declare or pay any dividends on or
make any other distributions in respect of any class or series of its
capital stock (other than dividends payable solely in its capital stock),
(b) directly or indirectly purchase, redeem or otherwise acquire or retire
any of its capital stock or (c) make any payment or other distribution on
or in respect of any Subordinated Indebtedness (whether for principal or
interest or otherwise); provided, however, that:
(a) the Company may pay regularly scheduled (absent
acceleration) installments of accrued interest due upon the unpaid
principal amount of the Subordinated Indebtedness, provided (i) such
payment is made at an interest rate not in excess of the rate which the
instrument evidencing such Indebtedness states as of the date hereof is
applicable to such payment at the time it is made and (ii) if and only if
at the time each such payment is made and immediately after giving effect
thereto, (x) no Event of Default or Default shall occur or be continuing
and (y) such payment is not prohibited by the Subordination Agreement;
(b) the Company may expend up to $10,000,000 on and after the
date hereof to prepay the ▇▇▇▇▇ Debt or the Western Atlas Debt in each
case if and so long as at the time of each such prepayment and immediately
after giving effect thereto, no Event of Default or Default shall occur or
be continuing (each prepayment of the ▇▇▇▇▇ Debt or Western Atlas Debt so
permitted by this clause (b) being hereinafter referred to collectively as
"Permitted Sub Debt Prepayments");
(c) the Company may, in the ordinary course, purchase or redeem
common capital stock of the Company from its employees under currently
existing employee stock repurchase agreements or similar agreements
entered into with the Company's employees in the ordinary course of
business, provided the aggregate amount so expended in any calendar year
does not exceed the sum of $500,000 plus the proceeds received by the
Company during such year under key man life insurance policies maintained
by the Company for such purpose; and
(d) the Company may declare and pay dividends on its capital
stock if and only if at the time each such payment is made and immediately
after giving effect thereto, (i) no Default or Event of Default shall
occur or be continuing and (ii) the aggregate amount of dividends paid in
any calendar year does not exceed $100,000.
.c2.Section 8.17. Mergers, Consolidations and Sales.; The Company
will not, nor will either permit any Subsidiary to, be a party to any
merger or consolidation, or sell, transfer, lease or otherwise dispose of
all or any substantial part of its Property (except for sales of inventory
in the ordinary course of business), or in any event sell or discount
(with or without recourse) any of its notes or accounts receivable;
provided, however, that any Subsidiary (including any corporation which
immediately after giving effect to an acquisition permitted by Section
8.13(m) hereof becomes such a Subsidiary) may merge or consolidate with or
into the Company or any Wholly Owned Subsidiary of the Company; further
provided, however, that the Company shall be the surviving or continuing
corporation and the net worth of the Company shall not be less than the
net worth of the Company immediately prior to such merger or
consolidation. The term "substantial" as used herein shall mean the
sale, transfer, lease or other disposition of 10% of the total assets of
the Company.
.c2.Section 8.18. Maintenance of Subsidiaries; The Company will
not assign, sell or transfer, or permit any Subsidiary to issue, assign,
sell or transfer, any shares of capital stock of a Subsidiary, provided
that the foregoing shall not operate to prevent the issuance, sale and
transfer to any person of any shares of capital stock of a Subsidiary
solely for the purpose of qualifying, and to the extent legally necessary
to qualify, such person as a director of such Subsidiary.
.c2.Section 8.19. Formation of Subsidiaries.; Except for existing
Subsidiaries designated on Schedule 6.3 hereto and Subsidiaries acquired
in acquisitions or formed to effect acquisitions in each case permitted by
Section 8.13(m) hereof, the Company will not, nor will either permit any
Subsidiary to, form or acquire any Subsidiary without the prior written
consent of the Required Lenders. As a condition to establishing or
acquiring any Subsidiary, unless the Required Lenders otherwise agree, the
Company shall (i) cause such Subsidiary to execute a Subsidiary Guaranty,
(ii) cause such Subsidiary to deliver documentation similar to that
described in Section 7.1(a)(xix), (d) and (g) relating to the
authorization for, execution and delivery of, and validity of such
Subsidiary's obligations under the Subsidiary Guarantees in form and
substance satisfactory to the Required Lenders and (iii) deliver an
updated Schedule 6.3 to reflect the new Subsidiary.
.c2.Section 8.20. ERISA.; The Company will, and will cause each
Subsidiary to, promptly pay and discharge all obligations and liabilities
arising under ERISA of a character which if unpaid or unperformed might
result in the imposition of a Lien against any of their respective
Properties. The Company will, and will cause each Subsidiary to, promptly
notify the Lenders of (i) the occurrence of any reportable event (as
defined in ERISA) with respect to a Plan, (ii) receipt of any notice from
the PBGC of its intention to seek termination of any Plan or appointment
of a trustee therefor, (iii) its intention to terminate or withdraw from
any Plan, and (iv) the occurrence of any event with respect to any Plan
which would result in the incurrence by the Company or any Subsidiary of
any material liability, fine or penalty, or any material increase in the
contingent liability of the Company or any Subsidiary with respect to any
post-retirement Welfare Plan benefit.
.c2.Section 8.21. Compliance with Laws.; The Company will, and
will cause each Subsidiary to, comply in all respects with the
requirements of all federal, state and local laws, rules, regulations,
ordinances and orders applicable to or pertaining to the Properties or
business operations of the Company or any Subsidiary, non-compliance with
which could have a material adverse effect on the financial condition,
Properties, business or operations of the Company or any Subsidiary or
could result in a Lien upon any of their Property.
.c2.Section 8.22. Burdensome Contracts With Affiliates.; Except
for the agreements, the preferred stock provisions and the fees set forth
in Section 6.11 hereof, the Company will not, nor will it permit any
Subsidiary to, enter into any contract, agreement or business arrangement
with any of its Affiliates (other than with Wholly Owned Subsidiaries) on
terms and conditions which are materially less favorable to the Company or
such Subsidiary than would be usual and customary in similar contracts,
agreements or business arrangements between Persons not affiliated with
each other.
.c2.Section 8.23. Changes in Fiscal Year.; The Company will not,
and it will not permit any Subsidiary to, change its fiscal year from its
present basis without the prior written consent of the Required Lenders.
.c2.Section 8.24. Change in the Nature of Business.; The Company
will not, and it will not permit any Subsidiary to, engage in any business
or activity if as a result the general nature of the business of the
Company or any Subsidiary would be changed in any material respect from
the general nature of the business engaged in by the Company or such
Subsidiary on the date of this Agreement after giving effect to the
Western Atlas Acquisition.
.c2.Section 8.25. Amendments to Subordinated Indebtedness;. The
Company will not amend or modify the terms and conditions applicable to
the Subordinated Indebtedness, except the Company may agree to a decrease
in the interest rate applicable thereto or to a deferral of repayment of
any of the principal of or interest on the Subordinated Indebtedness
beyond the due date applicable thereto as of the date of this Agreement or
to any amendment or modification to the extent the same would make the
terms and conditions applicable to the Subordinated Indebtedness less
burdensome on the Company. This Section shall not be deemed to prohibit
the Permitted Sub Debt Prepayments.
.c2.Section 8.26. Use of Loan Proceeds;. The Company will use all
credit under this Agreement solely to: (i) finance the Western Atlas
Acquisition, (ii) pay fees and expenses incurred directly as a result of
the Western Atlas Acquisition, (iii) prepay up to $10,000,000 of the
aggregate principal amount outstanding on the ▇▇▇▇▇ Debt and Western Atlas
Debt, taken together and (iv) finance general working capital needs.
.c1.Section 9. Events of Default and Remedies.
.c2.Section 9.1. Events of Default;. Any one or more of the
following shall constitute an Event of Default hereunder:
(a) default in the payment when due of all or any part of the
principal of any Note (whether at the stated maturity thereof or at any
other time provided for in this Agreement); or
(b) default for a period of five (5) days in the payment when
due of all or any part of the interest on any Note (whether at the stated
maturity thereof or at any other time provided for in this Agreement) or
of any reimbursement obligation owing under any Application; or
(c) default in the payment when due of any fee or other amount
payable by the Company hereunder or under any Collateral Document which is
not remedied within thirty (30) days after written notice thereof to the
Company by the Agent or any Lender; or
(d) default in the observance or performance of any covenant set
forth in Sections 8.11, 8.12, 8.13, 8.14, 8.15, 8.16, 8.17, 8.18, 8.20,
8.25 or 8.26 hereof or of any provision of any Collateral Document
requiring the maintenance of insurance on the Collateral subject thereto
or dealing with the use or remittance of proceeds of Collateral; or
(e) default in the observance or performance of any covenants
set forth in Section 8.5, 8.6, 8.7, 8.8, 8.9 or 8.10 hereof which is not
remedied within five (5) days after written notice thereof to the Company
by the Agent or any Lender; or
(f) default in the observance or performance of any other
provision hereof or of any Collateral Document or Application which is not
remedied within thirty (30) days after written notice thereof to the
Company by the Agent or any Lender; or
(g) any representation or warranty made by the Company herein or
in any Application or Collateral Document, or in any written statement or
certificate furnished by it pursuant hereto or thereto, or in connection
with any Loan, proves untrue in any material respect as of the date of the
issuance or making thereof; or
(h) any event occurs or condition exists (other than those
described in clauses (a) through (g) above) which is specified as an Event
of Default under any Collateral Document; or
(i) without the prior written consent of the Agent, any
Collateral Document shall for any reason not be, or shall cease to be, in
full force and effect or shall be declared to be null and void; or
(j) default shall occur under any evidence of Indebtedness for
Borrowed Money issued, assumed or guaranteed by the Company or any
Subsidiary aggregating $2,000,000 or more or under any indenture,
agreement or other instrument under which the same may be issued and such
default shall continue for a period of time sufficient to permit the
acceleration of the maturity of any such Indebtedness for Borrowed Money
(whether or not such maturity is in fact accelerated) or any such
Indebtedness for Borrowed Money expressed to mature upon demand shall not
be paid when demanded; or
(k) any judgment or judgments, writ or writs, or warrant or
warrants of attachment, or any similar process or processes in an
aggregate amount in excess of $500,000 shall be entered or filed against
the Company or any of its Subsidiaries or against any of their Property
and which remains unvacated, unbonded, unstayed or unsatisfied for a
period of thirty (30) days; or
(l) ▇▇▇▇ ▇. ▇▇▇▇▇▇, SWIB and M&I Ventures shall, taken together
as a group, at any time and for any reason cease to own, both legally and
beneficially, at least 51% of the issued and outstanding Voting Stock of
the Company;
(m) any guarantor of the Loans or any other Obligations shall
purport to disavow, revoke, repudiate or terminate its guaranty or such
guaranty shall otherwise cease to have any force or effect; or
(n) the Company makes any payment or other distribution on
account of the principal of or interest on any indebtedness (whether or
not such payment is then permitted by Section 8.16 hereof) which payment
or distribution is prohibited under the terms of the Subordination
Agreement or in the case of any indebtedness not subject thereto, any
instruments subordinating such indebtedness to the prior payment of the
Loans or any other Obligations (provided that the Permitted Sub Debt
Prepayments shall not be deemed an Event of Default under this Section
9.1(n)); or
(o) (i) the Company shall permanently waive any right to accrue
(rather than pay in cash) any interest on the Subordinated Indebtedness or
the Company shall permanently waive any right to pay (by issuance of
shares of preferred capital stock) any dividends accrued on its preferred
capital stock (provided, however, that it is not an Event of Default under
this Agreement if the Company shall fail to exercise or temporarily waive
such rights); or
(p) the Company or any member of the Controlled Group shall fail
to pay when due an amount or amounts aggregating in excess $500,000 which
it shall have become liable to pay to the PBGC or to a Plan under Title IV
of ERISA; or notice of intent to terminate a Plan or Plans having
aggregate Unfunded Vested Liabilities in excess of $500,000 (collectively,
a "Material Plan") shall be filed under Title IV of ERISA by the Company
or any other member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed
to administer any Material Plan or a proceeding shall be instituted by a
fiduciary of any Material Plan against the Company or any member of the
Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within thirty (30) days
thereafter; or a condition shall exist by reason of which the PBGC would
be entitled to obtain a decree adjudicating that any Material Plan must be
terminated; or
(q) the Company or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part of
its Property, (v) institute any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code, as
amended, to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts under any law relating to Bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, or (vi) fail to contest in good faith any appointment or
proceeding described in Section 9.1(r) hereof; or
(r) a custodian, receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Company or any of the
Subsidiaries or any substantial part of any of their Property, or a
proceeding described in Section 9.1(q)(v) shall be instituted against the
Company or any of its Subsidiaries, and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a
period of sixty (60) days.
.c2.Section 9.2. Non-Bankruptcy Defaults;. When any Event of
Default described in clauses (a) through (p) both inclusive, of Section
9.1 has occurred and is continuing, the Agent shall, upon request of the
Required Lenders, by notice to the Company, take one or more of the
following actions:
(a) terminate the obligations of the Lenders to extend any
further credit hereunder on the date (which may be the date thereof)
stated in such notice;
(b) declare the principal of and the accrued interest on the
Notes to be forthwith due and payable and thereupon the Notes, including
both principal and interest and all fees, charges and other amounts
payable hereunder and under the other Loan Documents, shall be and become
immediately due and payable without further demand, presentment, protest
or notice of any kind.
.c2.Section 9.3. Bankruptcy Defaults;. When any Event of Default
described in clauses (q) or (r) of Section 9.1 has occurred and is
continuing, then the Notes, including both principal and interest, and all
fees, charges and other amounts payable hereunder and under the other Loan
Documents, shall immediately become due and payable without presentment,
demand, protest or notice of any kind, and the obligations of the Lenders
to extend further credit pursuant to any of the terms hereof shall
immediately terminate.
.c2.Section 9.4. Collateral for Undrawn Letters of Credit;.
When any Event of Default, other than an Event of Default described in
clauses (q) or (r) of Section 9.1, has occurred and is continuing, the
Company shall, upon demand of the Agent (which demand shall be made upon
the request of the Required Lenders), and when any Event of Default
described in clause (q) or (r) of Section 9.1 has occurred the Company
shall, without notice or demand from the Agent, immediately pay to the
Agent the full undrawn amount of each Letter of Credit then outstanding,
the Company agreeing to immediately make such payment and acknowledging
and agreeing that the Agent and the Lenders would not have an adequate
remedy at law for failure of the Company to honor any such demand and that
the Agent and the Lenders shall have the right to require the Company to
specifically perform such undertaking whether or not any draws have been
made under any such Letters of Credit.
.c1.Section 10. The Agent.
.c2.Section 10.1. Appointment and Authorization.; Each Lender
hereby appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers hereunder and under the other Loan
Documents as are designated to the Agent by the terms hereof and thereof
together with such powers as are reasonably incidental thereto. The
Lenders expressly agree that the Agent is not acting as a fiduciary of the
Lenders in respect to the Loan Documents, the Company or otherwise, and
nothing herein or in any of the other Loan Documents shall result in any
duties or obligations on the Agent or any of the Lenders except as
expressly set forth herein. The Agent may resign at any time by sending
thirty (30) days prior written notice to the Company and the Lenders and
may be removed by the Required Lenders upon thirty (30) days prior written
notice to the Company and the Lenders. In the event of any such
resignation or removal, the Required Lenders may appoint a new agent with
the Company's consent, which shall succeed to all the rights, powers and
duties of the Agent hereunder and under the other Loan Documents. Any
resigning or removed Agent shall be entitled to the benefit of all the
protective provisions hereof with respect to its acts as an agent
hereunder, but no successor Agent shall in any event be liable or
responsible for any actions of its predecessor. If the Agent resigns or
is removed and no successor is appointed, the rights and obligations of
such Agent shall be automatically assumed by the Required Lenders and (i)
the Company shall be directed to make all payments due each Lender
hereunder directly to such Lender and (ii) the Agent's rights in the Loan
Documents shall be assigned without representation, recourse or warranty
to the Lenders as their interests may appear.
.c2.Section 10.2. Rights as a Lender;. The Agent has and reserves
all of the rights, powers and duties hereunder and under its Notes, the
Applications and the other Loan Documents as any Lender may have and may
exercise the same as though it were not the Agent and the terms "Lender"
or "Lenders" as used herein and in all of such documents shall, unless the
context otherwise expressly indicates, include the Agent in its individual
capacity as a Lender.
.c2.Section 10.3. Standard of Care;. The Lenders acknowledge that
they have received and approved copies of the Loan Documents and such
other information and documents concerning the transactions contemplated
and financed hereby as they have requested to receive and/or review. The
Agent makes no representations or warranties of any kind or character to
the Lenders with respect to the validity, enforceability, genuineness,
perfection, value, worth or collectibility hereof or of the other Loan
Documents or of the Liens provided for thereby or of any other documents
called for hereby or thereby or of the Collateral. The Agent need not
verify the worth or existence of the Collateral, provided that the Agent
agrees to furnish the Lenders with copies of any field audit reports made
in connection with inspections which it or any designee may make pursuant
to Section 8.5 hereof but the Agent makes no representations or warranties
of any kind in connection therewith nor shall the Agent have any liability
in connection therewith except for its own gross negligence or willful
misconduct. Neither the Agent nor any director, officer, employee, agent
or representative thereof (including any security trustee therefor) shall
in any event be liable for any clerical errors or errors in judgment,
inadvertence or oversight, or for action taken or omitted to be taken by
it or them hereunder or under the other Loan Documents or in connection
herewith or therewith except for its or their own gross negligence or
willful misconduct. The Agent shall incur no liability under or in
respect of this Agreement or the other Loan Documents by acting upon any
notice, certificate, warranty, instruction or statement (oral or written)
of anyone (including anyone in good faith believed by it to be authorized
to act on behalf of the Company), unless it has actual knowledge of the
untruthfulness of same (except to the extent the Agent's lack of such
knowledge constitutes gross negligence or willful misconduct). The Agent
may execute any of its duties hereunder by or through employees, agents,
and attorneys-in-fact and shall not be answerable to the Lenders for the
default or misconduct of any such agents or attorneys-in-fact selected
with reasonable care except for the gross negligence or willful misconduct
of its employees. The Agent shall be entitled to advice of counsel
concerning all matters pertaining to the agencies hereby created and its
duties hereunder, and shall incur no liability to anyone and be fully
protected in acting upon the advice of such counsel. The Agent shall be
entitled to assume that no Default or Event of Default exists unless
notified to the contrary by a Lender. The Agent shall in all events be
fully protected in acting or failing to act in accord with the
instructions of the Required Lenders. Upon the occurrence of an Event of
Default hereunder, the Agent shall take such action with respect to the
enforcement of the Liens on the Collateral and the preservation and
protection thereof as it shall be directed to take by the Required Lenders
but unless and until the Required Lenders have given such direction the
Agent shall take or refrain from taking such actions as it deems
appropriate and in the best of interest of all Lenders. The Agent shall
in all cases be fully justified in failing or refusing to act hereunder
unless it shall be indemnified to its satisfaction by the Lenders against
any and all liability and expense which may be incurred by the Agent by
reason of taking or continuing to take any such action. The Agent may
treat the owner of any Note as the holder thereof until written notice of
transfer shall have been filed with the Agent signed by such owner in form
satisfactory to the Agent. Each Lender acknowledges that it has
independently and without reliance on the Agent or any other Lender and
based upon such information, investigations and inquiries as it deems
appropriate made its own credit analysis and decision to extend credit to
the Company. It shall be the responsibility of each Lender to keep itself
informed as to the creditworthiness of the Company and the Agent shall
have no liability to any Lender with respect thereto.
.c2.Section 10.4. Costs and Expenses;. Each Lender agrees to
reimburse the Agent for all costs and expenses suffered or incurred by the
Agent or any security trustee in performing its duties hereunder and under
the other Loan Documents, or in the exercise of any right or power imposed
or conferred upon the Agent hereby or thereby, all such costs and expenses
to be borne by the Lenders ratably in accordance with the amounts of their
respective Commitments; provided, however, that no such reimbursement
shall be required (x) to the extent that the Agent is promptly reimbursed
for such costs and expenses by the Company or out of the Collateral and
(y) to the extent such costs and expenses were caused by the Agent's gross
negligence or willful misconduct. Amounts received by the Agent in
reimbursement from the Company or recovered out of the Collateral in each
case subsequent to such payments by the Lenders shall be distributed to
the Lenders in accordance with the provisions of Section 3.5 hereof.
.c2.Section 10.5. Indemnity;. The Lenders, to the extent not
prohibited by applicable law, shall ratably indemnify and hold the Agent,
and its directors, officers, employees, agents or representatives
(including as such any security trustee therefor) harmless from and
against any liabilities, losses, costs and expenses suffered or incurred
by them hereunder or under the other Loan Documents or in connection with
the transactions contemplated hereby or thereby, regardless of when
asserted or arising, except to the extent they are promptly reimbursed for
the same by the Company or out of the Collateral and except to the extent
that any event giving rise to a claim was caused by the gross negligence
or willful misconduct of the party seeking to be indemnified. Amounts
received by the Agent in reimbursement from the Company or recovered out
of the Collateral in each case subsequent to such payments by the Lenders
shall be distributed to the Lenders in accordance with the provisions of
Section 3.5 hereof.
.c2.Section 10.6. Credit Decision;. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any
action under this Agreement or any other Loan Document.
.c1.Section 11. Miscellaneous.
.c2.Section 11.1. Holidays. ; If any payment of principal or
interest on any Note or any fee hereunder shall fall due on a day which is
not a Business Day, principal together with interest at the rate the Note
bears for the period prior to maturity or any fee at the rate such fee
accrues shall continue to accrue from the stated due date thereof to and
including the next succeeding Business Day, on which the same is payable.
.c2.Section 11.2. No Waiver, Cumulative Remedies. ; No delay or
failure on the part of the Lender or on the part of the holder of the Note
in the exercise of any power or right shall operate as a waiver thereof,
nor as an acquiescence in any default, nor shall any single or partial
exercise of any power or right preclude any other or further exercise
thereof, or the exercise of any other power or right, and the rights and
remedies hereunder of the Lender and of the holder of the Note are
cumulative to, and not exclusive of, any rights or remedies which any of
them would otherwise have.
.c2.Section 11.3. Waivers, Modifications and Amendments;. Any
provision hereof or of the Notes or the other Loan Documents may be
amended, modified, waived or released and any Default or Event of Default
and its consequences may be rescinded and annulled (any such amendment,
modification, waiver, release, rescission or annulment being hereinafter
referred to collectively as a "Modification") upon the written consent of
the Required Lenders; provided, however, that without the consent of all
Lenders, no such Modification shall increase the amount or extend the term
of any Lender's Commitment or reduce the interest rate applicable to or
extend the maturity of its Notes or reduce the amount of the fees to which
it is entitled hereunder or release any substantial (in value) part of the
collateral security afforded by the Collateral Documents (except in
connection with a sale or other disposition required to be effected by the
provisions hereof or of the Collateral Documents) or change this Section
or change the definition of "Required Lenders" or change the number of
Lenders required to take any action hereunder or under the Collateral
Documents. No Modification of the Agent's protective provisions shall be
effective without the prior written consent of the Agent. In the event
any Lender (hereinafter, a "non-consenting Lender") refuses to consent in
writing to any Modification requested by the Company to which the Agent is
willing to consent in writing, the Company shall have the right, with the
assistance of the Agent if the Company so desires and such assistance can
be rendered without material cost or burden to the Agent, to seek a
substitute bank or banks reasonably satisfactory to the Agent (which may
be one or more of the other Lenders) to replace the non-consenting Lender
under this Agreement. The non-consenting Lender shall cooperate with the
Company and substitute bank to accomplish such substitution on the terms
of Section 11.15 hereof, provided that the non-consenting Lender's entire
Commitment is replaced, and the $2,500 processing fee payable under
Section 11.15 shall not be payable in connection with any such assignment
required under this Section. The purchase price to be paid by such
substitute bank for such assignment shall be equal to the sum of (i) the
principal amount of all of the non-consenting Lender's outstanding Loans
plus any accrued and unpaid interest thereon, (ii) the amount unpaid to
the non-consenting Lender on unreimbursed draws honored on Letters of
Credit plus any unpaid and accrued interest thereon, (iii) the accrued but
unpaid commitment fees in respect of the non-consenting Lender's
Commitment hereunder, (iv) any reasonable out-of-pocket expenses of the
non-consenting Lender (including reasonable attorneys' fees) directly
incurred as a result of such assignment and (v) any other amount that may
be owing to such Lender hereunder (including any such amount as may be due
under Section 2.9 hereof).
.c2.Section 11.4. Costs and Expenses;. The Company agrees to pay
on demand the costs and expenses of the Agent in connection with the
negotiation, preparation, execution and delivery of this Agreement and the
other Loan Documents and the other instruments and documents to be
delivered hereunder or thereunder or in connection with the recording or
filing of any of the foregoing or in connection with the transactions
contemplated hereby or thereby or in connection with any consents
hereunder or waivers or amendments hereto or thereto, including the
reasonable fees (subject to the limit expressed in the immediately
following sentence) and expenses of Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, counsel
for the Agent, with respect to all of the foregoing (whether or not the
transactions contemplated hereby are consummated), and all costs and
expenses (including reasonable attorneys' fees), if any, incurred by the
Agent, the Lenders or any other holders of a Note in connection with a
default under or the enforcement of this Agreement or any other Loan
Document or any other instrument or document to be delivered hereunder or
thereunder, including such of the foregoing as have been so incurred in a
proceeding of the type described in Section 9.1(q) or 9.1(r) hereof.
Notwithstanding anything in the foregoing to the contrary, (i) the Company
shall not be liable, without its consent, to reimburse the Agent for more
than $35,000 of the fees (as opposed to disbursements and separately
charged items) of Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ in connection with the
negotiation, preparation, execution and delivery of this Agreement and the
other Loan Documents and the other instruments and documents to be
delivered hereunder or thereunder as a condition precedent to the initial
extension of credit hereunder and (ii) the Company shall not be liable,
unless it so consents, to reimburse the Agent for more than $5,000 for the
fees (as opposed to disbursements and separately charged items) of Messrs.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ in connection with the negotiation, preparation,
execution and delivery of each separate waiver or amendment to this
Agreement or any other Loan Documents. The Company agrees to indemnify
and save the Lenders, the Agent and any security trustee for the Lenders
harmless from any and all liabilities, losses, costs and expenses incurred
by the Lenders or the Agent in connection with any action, suit or
proceeding brought against the Agent, security trustee or any Lender by
any Person (but excluding attorneys' fees for litigation solely between
the Lenders to which the Company is not a party) which arises out of the
transactions contemplated or financed hereby or by any other Loan Document
or out of any action or inaction by the Agent, any security trustee or any
Lender hereunder or thereunder, except for such thereof as is caused by
the gross negligence or willful misconduct of the Agent or any Lender.
The provisions of this Section and the protective provisions of Article 2
hereof shall survive payment of the Obligations.
.c2.Section 11.5. Documentary Taxes.; The Company agrees to pay
on demand any documentary, stamp or similar taxes payable in respect of
this Agreement or any other Loan Document, including interest and
penalties, in the event any such taxes are assessed, irrespective of when
such assessment is made and whether or not any credit is then in use or
available hereunder.
.c2.Section 11.6. Survival of Representations.; All
representations and warranties made herein or in any other Loan Document
or in certificates given pursuant hereto or thereto shall survive the
execution and delivery of this Agreement and the other Loan Documents, and
shall continue in full force and effect with respect to the date as of
which they were made as long as any credit is in use or available
hereunder.
.c2.Section 11.7. Survival of Indemnities.; All indemnities and
other provisions relative to reimbursement to the Lenders of amounts
sufficient to protect the yield of the Lenders with respect to the Loans
and Letters of Credit, including, but not limited to, Sections 1.4, 2.7,
2.8 and 2.9 hereof, shall survive the termination of this Agreement and
the payment of the Obligations.
.c2.Section 11.8. Notices;. Except as otherwise specified herein,
all notices hereunder shall be in writing (including cable, telecopy or
telex) and shall be given to the relevant party at its address, telecopier
number or telex number set forth below, in the case of the Company, or on
the appropriate signature page hereof, in the case of the Lenders and the
Agent, or such other address, telecopier number or telex number as such
party may hereafter specify by notice to the Agent and the Company given
by United States certified or registered mail, by telecopy or by other
telecommunication device capable of creating a written record of such
notice and its receipt. Notices hereunder shall be addressed to:
HK Systems, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Messrs. ▇▇▇▇▇ & ▇▇▇▇▇▇▇
Firstar Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Each such notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier
number specified in this Section and a confirmation of such telecopy has
been received by the sender, (ii) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the
answerback is received by sender, (iii) if given by mail, five (5) days
after such communication is deposited in the mail, certified or registered
with return receipt requested, addressed as aforesaid or (iv) if given by
any other means, when delivered at the addresses specified in this
Section; provided that any notice given pursuant to Section 1 or Section 2
hereof shall be effective only upon receipt.
.c2.Section 11.9. Headings;. Section headings used in this
Agreement are for convenience of reference only and are not a part of this
Agreement for any other purpose.
.c2.Section 11.10. Severability of Provisions.; Any provision of
this Agreement which is unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such unenforceability
without invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
All rights, remedies and powers provided in this Agreement and the Notes
may be exercised only to the extent that the exercise thereof does not
violate any applicable mandatory provisions of law, and all the provisions
of this Agreement and the Notes are intended to be subject to all
applicable mandatory provisions of law which may be controlling and to be
limited to the extent necessary so that they will not render this
Agreement or the Notes invalid or unenforceable.
.c2.Section 11.11. Counterparts.; This Agreement may be executed
in any number of counterparts, and by different parties hereto on separate
counterpart signature pages, and all such counterparts taken together
shall be deemed to constitute one and the same instrument.
.c2.Section 11.12. Binding Nature, Governing Law, Etc;. This
Agreement shall be binding upon the Company and its successors and
assigns, and shall inure to the benefit of the Agent and the Lenders and
the benefit of their successors and assigns, including any subsequent
holder of an interest in the Notes. This Agreement and the rights and
duties of the parties hereto shall be governed by, and construed in
accordance with, the internal laws of the State of Illinois without regard
to principles of conflicts of laws. The Company may not assign its rights
hereunder without the written consent of the Lenders.
.c2.Section 11.13. Entire Understanding;. This Agreement, together
with the other Loan Documents, constitute the entire understanding of the
parties with respect to the subject matter hereof and any prior
agreements, whether written or oral, with respect thereto are superseded
hereby except for prior understandings related to fees payable to the
Agent upon the initial closing of the transactions contemplated hereby.
.c2.Section 11.14. Participations;. Any Lender may grant
participations in its extensions of credit hereunder to any other Lender
or other lending institution (a "Participant") provided that (i) no
Participant shall thereby acquire any direct rights under this Agreement,
(ii) no Lender shall agree with a Participant not to exercise any of such
Lender's rights hereunder without the consent of such Participant except
for rights which under the terms hereof may only be exercised by all
Lenders and (iii) no sale of a participation in extensions of credit shall
in any manner relieve the selling Lender of its obligations hereunder.
.c2.Section 11.15. Assignment Agreements;. Each Lender may, from
time to time upon at least five (5) Business Days' prior written notice to
the Agent and the Company, assign to other commercial lenders part of its
rights and obligations under this Agreement (including without limitation
the indebtedness evidenced by the Notes then owned by such assigning
Lender, together with an equivalent proportion of its Commitments to make
Loans hereunder) pursuant to written agreements executed by such assigning
Lender, such assignee lender or lenders, the Company and the Agent, which
agreements shall specify in each instance the portion of the indebtedness
evidenced by the Notes which is to be assigned to each such assignee
lender and the portion of the Commitment of the assigning Lender to be
assumed by it (the "Assignment Agreements"); provided, however, that (i)
each such assignment shall be of a constant, and not a varying, percentage
of the assigning Lender's rights and obligations under this Agreement and
the assignment shall cover the same percentage of such Lender's
Commitment, Loans, Note and credit risk with respect to Letters of Credit;
(ii) unless the Agent otherwise consents, the aggregate amount of the
unused Commitment, Loans and credit risk with respect to Letters of Credit
of the assigning Lender being assigned pursuant to each such assignment
(determined as of the effective date of the relevant Assignment Agreement)
shall (x) in no event be less than $5,000,000 and shall be an integral
multiple of $5,000,000 or (y) be an assignment of all of the assigning
Lender's Commitment and other interests as a Lender hereunder; (iii) the
Agent shall maintain for its own account the lesser of (x) $30,000,000 or
(y) 33-1/3% of the total Commitments as the same may from time to time be
reduced by the Company pursuant to Section 3.4 hereof; (iv) the Agent and
(except for an assignment made during the continuance of any Event of
Default described in Section 9.1(q) or 9.1(r) hereof) the Company must
each consent to each such assignment to a party which was not an original
signatory of this Agreement, which consent shall not be unreasonably
withheld; and (v) the assigning Lender must pay to the Agent a processing
and recordation fee of $2,500 and any out-of-pocket attorneys' fees and
expenses incurred by the Agent in connection with such Assignment
Agreement. Upon the execution of each Assignment Agreement by the
assigning Lender thereunder, the assignee lender thereunder, the Company
and the Agent and payment to such assigning Lender by such assignee lender
of the purchase price for the portion of the indebtedness of the Company
being acquired by it, (i) such assignee lender shall thereupon become a
"Lender" for all purposes of this Agreement with a Commitment in the
amounts set forth in such Assignment Agreement and with all the rights,
powers and obligations afforded a Lender hereunder, (ii) such assigning
Lender shall have no further liability for funding the portion of its
Commitment assumed by such other Lender and no further obligation with
respect to such portion of its Commitment (except to the extent of any
such other obligation which arises from any act or omission prior to the
effective date of such assignment) and (iii) the address for notices to
such assignee Lender shall be as specified in the Assignment Agreement
executed by it. Concurrently with the execution and delivery of such
Assignment Agreement, the Company shall execute and deliver (i) a Note to
the assignee Lender in the amount of its Commitment and a new Note to the
assigning Lender in the amount of its Commitment after giving effect to
the reduction occasioned by such assignment, all such Notes to constitute
"Notes" for all purposes of this Agreement and of the Collateral Documents
and (ii) such amendments to the Collateral Documents as may be necessary
or appropriate to assure the credit extended by the assignee Lender is
secured by the Collateral Documents.
.c2.Section 11.16. Terms of Collateral Documents not Superseded;.
Nothing contained herein shall be deemed or construed to permit any act or
omission which is prohibited by the terms of any Collateral Document, the
covenants and agreements contained herein being in addition to and not in
substitution for the covenants and agreements contained in the Collateral
Documents.
.c2.Section 11.17. Confidentiality;. The Agent and each Lender
shall hold in confidence any material nonpublic information delivered or
made available to them by the Company or any Subsidiary. The foregoing to
the contrary notwithstanding, nothing herein shall prevent any Lender from
disclosing any information delivered or made available to it by the
Company or any Subsidiary (i) to any other Lender or any Affiliate
thereof, (ii) to any other Person if reasonably incidental to the
administration of the credit contemplated hereby, (iii) upon the order of
any court or administrative agency, (iv) upon the request or demand of any
regulatory agency or authority, (v) which has been publicly disclosed
other than as a result of a disclosure by the Agent or any Lender which is
not permitted by this Agreement, (vi) in connection with any litigation to
which the Agent, any Lender, or any of their respective Affiliates may be
a party, along with the Company, any Subsidiary or any of their respective
Affiliates, (vii) to the extent reasonably required in connection with the
exercise of any right or remedy under this Agreement or the other Loan
Documents or otherwise, (viii) to such Lender's legal counsel and
financial consultants and independent auditors, and (ix) to any actual or
proposed participant or assignee of all or part of its rights under the
credit contemplated hereby provided the Company consents to such
disclosure (except that no such consent shall be required in the case of
any participation or assignment to a Lender or any Affiliate of a Lender)
and such participant or assignee agrees in writing to be bound by the duty
of confidentiality under this Section to the same extent as if it were a
Lender hereunder.
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.
Dated as of this 15th day of November, 1996.
HK Systems, Inc.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Accepted and Agreed to at Chicago, Illinois as of the day and year
last above written.
Each of the Lenders hereby agrees with each other Lender that if it
should receive or obtain any payment (whether by voluntary payment, by
realization upon collateral, by the exercise of rights of setoff or
Lender's lien, by counterclaim or cross action, or by the enforcement of
any rights under this Agreement, the Notes, the Collateral Documents or
otherwise) in respect of the obligations of the Company under this
Agreement and the other Loan Documents in a greater amount than such
Lender would have received had such payment been made to the Agent and
been distributed among the Lenders as contemplated by Section 3.5 hereof
then in that event the Lender receiving such disproportionate payment
shall purchase for cash without recourse from the other Lenders an
interest in the obligations of the Company to such Lenders arising under
this Agreement and the other Loan Documents in such amount as shall result
in a distribution of such payment as contemplated by Section 3.5 hereof.
In the event any payment made to a Lender and shared with the other
Lenders pursuant to the provisions hereof is ever recovered from such
Lender, the Lenders receiving a portion of such payment hereunder shall
restore the same to the payor Lender, but without interest.
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Emerging Majors By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇ Its Vice President
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Lending Offices:
Domestic Rate Portion: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LIBOR Portions: Nassau Branch
c/o ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Firstar Bank Milwaukee, N.A.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇ Its
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Lending Offices:
Domestic Rate Portion: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LIBOR Portions: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ The Northern Trust Company
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Its
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Offices:
Domestic Rate Portion: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LIBOR Portions: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Bank One, Milwaukee, NA
Milwaukee, Wisconsin 53201-2033
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: ______________ Its
Telephone: _____________
Lending Offices:
Domestic Rate Portion: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
LIBOR Portions: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Exhibit A
HK Systems, Inc.
Revolving Credit Note
$_______________ November 15, 1996
On the Termination Date, for value received, the undersigned, HK
Systems, Inc., a Wisconsin corporation (the "Company"), promises to pay to
the order of ________________ (the "Lender"), at the principal office of
▇▇▇▇▇▇ Trust and Savings Bank in Chicago, Illinois, the principal sum of
(i) _______________________ and no/100 Dollars ($______________), or (ii)
such lesser amount as may at the time of the maturity hereof, whether by
acceleration or otherwise, be the aggregate unpaid principal amount of all
loans owing from the Company to the Lender under the Revolving Credit
provided for in the Credit Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Third
Amended and Restated Credit Agreement dated as of November 15, 1996
between the Company, ▇▇▇▇▇▇ Trust and Savings Bank, individually and as
Agent thereunder, and the other Lenders which are now or may from time to
time hereafter become parties thereto (said Credit Agreement, as the same
may be amended, modified or restated from time to time, being referred to
herein as the "Credit Agreement") made and to be made to the Company by
the Lender under the Revolving Credit provided for under the Credit
Agreement, and the Company promises to pay interest at the office
described above on each loan evidenced hereby at the rates and at the
times and in the manner specified therefor in the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part
of the Domestic Rate Portion or a LIBOR Portion and in the case of any
LIBOR Portion the interest rate and interest period applicable thereto
shall be endorsed by the holder hereof on the reverse side of this Note or
recorded on the books and records of the holder hereof (provided that such
entries shall be endorsed on the reverse side hereof prior to any
negotiation hereof). The Company agrees that in any action or proceeding
instituted to collect or enforce collection of this Note, the entries so
endorsed on the reverse side hereof or recorded on the books and records
of the holder hereof shall be prima facie evidence of the unpaid principal
balance of this Note, the status of each such loan from time to time as
part of the Domestic Rate Portion or a LIBOR Portion and in the case of
any LIBOR Portion the interest rate and interest period applicable
thereto.
This Note is issued by the Company under the terms and provisions of
the Credit Agreement and is secured, among other things, by the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to
which reference is hereby made for a statement thereof. This Note may be
declared to be, or be and become, due prior to its expressed maturity,
voluntary prepayments may be made hereon, and certain prepayments are
required to be made hereon, all in the events, on the terms and with the
effects provided in the Credit Agreement. All capitalized terms used
herein without definition shall have the same meanings herein as such
terms are defined in the Credit Agreement.
This Note is issued in substitution for and replacement of that
certain Revolving Credit Note of Old HK dated May 23, 1996 payable to the
order of the Lender in the face principal amount of $_____________.
[Delete in Bank One Note]
This Note shall be construed in accordance with, and governed by, the
internal laws of the State of Illinois without regard to principles of
conflicts of laws. The Company promises to pay all costs and expenses
(including attorneys' fees) suffered or incurred by the holder hereof in
collecting this Note or enforcing any rights in any collateral therefor.
The Company hereby waives presentment for payment and demand.
HK Systems, Inc.
By
Name:
Title:
Exhibit B
Form of Opinion of Counsel
(To Be Retyped On Letterhead Of Counsel And Dated As Of Date Of Closing)
_______________, 1996
▇▇▇▇▇▇ Trust and Savings Bank, as Agent
for the Lenders under the Loan
Documents hereinafter identified
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
We have served as counsel to HK Systems, Inc., a Wisconsin
corporation (the "Company") and _______________ in connection with the
extension by the Lenders of $90,000,000 in revolving credit facilities to
the Company.
As such counsel, we have supervised the taking of the corporate
proceedings necessary to authorize the execution and delivery of, and have
examined executed originals of, the instruments and documents identified
on Schedule A to this letter (collectively the "Loan Documents",
individual Loan Documents and other capitalized terms used below being
hereinafter referred to by the designations appearing on Schedule A). As
counsel to the Company and _______________, we are familiar with the
articles of incorporation, charter, by-laws and any other agreements under
which the Company and _______________ are organized. We have also
examined such other instruments and records and inquired into such other
factual matters and matters of law as we deem necessary or pertinent to
the formulation of the opinions hereinafter expressed.
Based upon the foregoing and upon our examination of the articles of
incorporation, charter and by-laws of the Company and _______________, we
are of the opinion that:
1. The Company is a corporation duly organized and validly existing and
in good standing under the laws of the State of Wisconsin with full and
adequate corporate power and authority to carry on its business as now
conducted and is duly licensed or qualified and in good standing in each
jurisdiction wherein the conduct of its business or the assets and
properties owned or leased by it require such licensing or qualification.
2. _____________ is a corporation duly organized and validly
existing and in good standing under the laws of the State of _________
with full and adequate corporate power and authority to carry on its
business as now conducted and is duly licensed or qualified and in good
standing in each jurisdiction wherein the conduct of its business or the
assets and properties owned or leased by it require such licensing or
qualification.
3. The Company has full right, power and authority to borrow
from you, to mortgage, pledge, assign and otherwise encumber its assets
and properties as collateral security for such borrowings, to execute and
deliver the Loan Documents executed by it and to observe and perform all
the matters and things therein provided for. The execution and delivery
of the Loan Documents executed by the Company does not, nor will the
observance or performance of any of the matters or things therein provided
for, contravene any provision of law or of the articles of incorporation,
charter or by-laws of the Company (there being no other agreements under
which the Company is organized) or, to the best of our knowledge after due
inquiry, of any covenant, indenture or agreement binding upon or affecting
the Company or any of its properties or assets.
4. _____________ has full right, power and authority to
guarantee all indebtedness, obligations and liabilities, whether now
existing or hereafter arising, of the Company to the Lenders, to execute
and deliver the Loan Documents executed by it and to observe and perform
all the matters and things therein provided for. The execution and
delivery of the Loan Documents executed by _____________ does not, nor
will the observance or performance of any of the matters or things therein
provided for, contravene any provision of law or of the articles of
incorporation, charter or bylaws of _____________ (there being no other
agreements under which _____________ is organized) or, to the best of our
knowledge after due inquiry, of any covenant, indenture or agreement
binding upon or affecting _____________ or any of its properties or
assets.
5. The Loan Documents executed by the Company have been duly
authorized by all necessary corporate action (no stockholder approval
being required), have been executed and delivered by the proper officers
of the Company and constitute valid and binding agreements of the Company
enforceable against it in accordance with their respective terms, except
as such terms may be limited by bankruptcy, insolvency or similar laws and
legal or equitable principles affecting or limiting the enforcement of
creditors' rights generally.
6. The Loan Documents executed by _____________ have been duly
authorized by all necessary corporate action of _____________ (no
stockholder approval being required) have been executed and delivered by
the proper officers of _____________ and constitute valid and binding
agreements of _____________ enforceable against it in accordance with
their respective terms, except as such terms may be limited by bankruptcy,
insolvency or similar laws and legal or equitable principles affecting or
limiting the enforcement of creditors' rights generally.
7. No order, authorization, consent, license or exemption of,
or filing or registration with, any court or governmental department,
agency, instrumentality or regulatory body, whether local, state or
federal, is or will be required in connection with the lawful execution
and delivery of the Loan Documents or the observance and performance by
the Company or _______________ of any of the terms thereof.
8. To the best of our knowledge after due inquiry, there is no
action, suit, proceeding or investigation at law or in equity before or by
any court or public body pending or threatened against or affecting the
Company or _______________ or any of their respective assets and
properties which, if adversely determined, could result in any material
adverse change in the properties, business, operations or financial
condition of the Company or _______________ or in the value of the
collateral security for your loans and other credit accommodations to the
Company.
The term "Lenders" as used herein shall have the same meaning herein
as such term has in the Credit Agreement.
In rendering the opinions expressed above, we have examined
originals, or copies of originals certified to our satisfaction, of such
agreements, documents, certificates and other statements of government
officials and corporate officers and such other papers and evidence as we
have deemed relevant and necessary as a basis for these opinions. We have
assumed the authenticity of all documents submitted to us as originals and
the conformity with the original documents of any copies thereof submitted
to us for our examination.
Our opinions expressed above are limited to the laws of the State of
Wisconsin, the corporate laws of the States of Delaware and ______________
and the federal laws of the United States of America. In expressing our
opinion as to the validity and enforceability of those Loan Documents
governed by the laws of the State of Illinois, we have assumed that the
laws of the State of Illinois do not differ in any respect material to our
opinion from the laws of the State of Wisconsin.
Although this opinion is addressed to you, as Agent under the Loan
Documents, we acknowledge that this opinion is being given to each of the
Lenders identified in the Credit Agreement, that you may deliver a copy of
this opinion to such Lenders and that such Lenders may rely thereon.
Respectfully submitted,
Schedule A
The Loan Documents
(All Loan Documents are dated as of November 15, 1996)
1. Third Amended and Restated Credit Agreement by and between
the Company, the Lenders named therein and ▇▇▇▇▇▇ Trust and Savings Bank
as Agent (the "Agent") (the "Credit Agreement").
2. Revolving Credit Notes of the Company payable to the order
of the Lenders.
3. Security Agreement from the Company to the Agent.
4. Security Agreement Re: Intellectual Property from the
Company to the Agent.
5. Guaranty from HEI Services, Inc.
6. Guaranty from HISCO Systems of Canada Ltd. to the Agent.
7. Guaranty from ▇▇ ▇▇▇▇▇▇ Industries, Inc. to the Agent.
8. Amended and Restated Security Agreement from HEI Services,
Inc. to the Agent.
9. Security Agreement from ▇▇ ▇▇▇▇▇▇ Industries, Inc. to the
Agent.
Exhibit C
Compliance Certificate
This Compliance Certificate is furnished to each of the Lenders
pursuant to that certain Third Amended and Restated Credit Agreement dated
as of November 15, 1996, by and between HK Systems, Inc. (the "Company")
and the Lenders (the "Credit Agreement"). Unless otherwise defined
herein, the terms used in this Compliance Certificate have the meanings
ascribed thereto in the Credit Agreement.
The Undersigned hereby certifies that:
1. I am the chief financial officer of the Company;
2. I have reviewed the terms of the Credit Agreement and I have
made, or have caused to be made under my supervision, a detailed review of
the transactions and conditions of the Company during the accounting
period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose,
and I have no knowledge of, the existence of any condition or the
occurrence of any event which constitutes a Default or Event of Default
during or at the end of the accounting period covered by the attached
financial statements or as of the date of this Certificate, except as set
forth below; and
4. The Attachment hereto sets forth financial data and
computations evidencing the Company's compliance with certain covenants of
the Credit Agreement, all of which data and computations are, to the best
of my knowledge, true, complete and correct and have been made in
accordance with the relevant Sections of the Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it
has existed and the action which the Company has taken, is taking, or
proposes to take with respect to each such condition or event:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
The foregoing certifications, together with the computations set
forth in the Attachment hereto and the financial statements delivered with
this Certificate in support hereof, are made and delivered this _________
day of __________________ 19___.
This Certificate is executed and delivered solely in my capacity as
chief financial officer of the Company and I shall have no personal
liability as a result of or in connection with this Certificate.
__________________________________
Attachment to Compliance Certificate
HK Systems, Inc.
Compliance Calculations for
Third Amended and Restated Credit Agreement
Dated as of November 15, 1996
Calculations as of _____________, 19___
______________________________________________________________
A. Current Ratio (Section 8.6)
1. Current assets
2. Current liabilities
3. Ratio of Line 1 to Line 2
("Current Ratio") :1
4. Current Ratio must be not less than :1
5. Company is in compliance?
(Circle yes or no) Yes/No
B. Leverage Ratio (Section 8.7)
1. Funded Debt
as defined
2. Shareholder's Equity as defined
3. Line 1 plus Line 2
("Total Capitalization")
4. Subordinated Indebtedness
5. Line 1 minus Line 4
("Senior Funded Debt")
6. Ratio of Senior Funded Debt
(Line 5) to Total Capitalization
(Line 3) ("Leverage Ratio") :1
7. As listed in Section 8.7, for the date of this Certificate,
the Leverage Ratio shall not be greater than
:1
8. Company is in compliance?
(Circle yes or no) Yes/No
C. Funded Debt Ratio (Section 8.8)
1. Senior Funded Debt (Line B5)
2. Net Income as defined
3. Amounts deducted in arriving
at Net Income in respect of
(a) Interest Expense
(b) Taxes imposed on or
measured by income or
excess profits
(c) Amortization and depreciation
4. Sum of Lines 2, 3(a), 3(b)
and 3(c) ("EBITDA")
5. Western Atlas Adjustment Amount, as defined
6. Sum of EBITDA (Line 4) plus Western
Atlas Adjustment Amount (line 5)
7. Ratio of Senior Funded Debt (Line 1) to
EBITDA plus Western Atlas Adjustment Amount
(Line 6) ("Funded Debt Ratio") :1
8. As listed in Section 8.8, for
the date of this Certificate,
the Funded Debt Ratio must
not be more than :1
9. Company is in compliance? (Circle yes or no) Yes/No
D. Interest Coverage Ratio (Section 8.9)
1. Net Income as defined __________
2. Amounts deducted in arriving
at Net Income in respect of
(a) Interest Expense
(b) Taxes imposed on or
measured by income or
excess profits
(c) Amortization
3. Sum of Lines 1, 2(a), 2(b)
and 2(c) ("EBITA")
4. Western Atlas Adjustment Amount,
as defined
5. Sum of EBITA (Line 3) plus Western
Atlas Adjustment Amount (Line 5)
6. Interest Expense as defined
7. Ratio of Line 5 to
Line 6 ("Interest Coverage Ratio") :1
8. As listed in Section 8.9, for
the date of this Certificate,
the Interest Coverage Ratio must
not be less than 2.50:1
9. Company is in compliance?
(Circle yes or no) Yes/No
E. Capital Expenditures (Section 8.10)
1. Aggregate capital expenditures for Company, ___________
Company and the Subsidiaries
2. Aggregate capital expenditures (Line 1) $__________
must not exceed
3. Company is in compliance?
(Circle yes or no) Yes/No
Schedule 6.3
Subsidiaries
Name Jurisdiction of Percentage
Incorporation Ownership
HISCO Systems of Canada 100%
Canada Ltd.
HEI Services, Inc. Delaware 100%
▇▇ ▇▇▇▇▇▇ Industries, Inc. North Carolina 100%
