AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT dated as of April 30, 2015,
is by and between IPG PHOTONICS CORPORATION, a Delaware corporation with a principal place of business at 50 Old Webster Road, Oxford, Massachusetts 01540 (the "Borrower") and BANK OF AMERICA, N.A., a national banking association with an office at 100 Federal Street, Boston, Massachusetts 02110 (the "
Bank
").
W I T N E S S E T H:
BACKGROUND. The Borrower has requested the Bank to amend and restate its existing Loan Agreement dated as of June 4, 2008 (as amended by First Amendment to Loan and Security Agreement dated as of February 25, 2010, Second Amendment to Loan and Security Agreement dated as of September 30, 2010, Agreement dated as of February 6, 2013 and the Letter Agreement dated as of October 10, 2014) with the Bank by increasing the amount of Revolving Credit available thereunder and modifying certain terms applicable thereto and the Bank is willing to do so upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein contained, and each intending to be legally bound hereby, the parties agree as follows:
ARTICLE 1.0 DEFINITIONS
As used herein:
"
Affiliate
" means, as to any Person, each other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or under common control with, such Person.
"
Agreement
" means this Amended and Restated Loan Agreement (together with any and all schedules and exhibits attached from time to time hereto), as the same may from time to time be amended or supplemented in a writing signed by the parties hereto.
"
Aircraft Loan
" means the secured aircraft loan of up to $22,000,000.00 furnished by Banc of America Leasing & Capital, LLC for the purchase by an Affiliate of the Borrower of a 2010 Dassault Falcon 2000LX.
"
Automatic Payments Deposit Account
" means the Borrower's operating account number 004605294929 established with the Bank, from which Automatic Payments may be deducted by the Bank.
"
Automatic Payments
" means any and all interest or principal and interest installment payments due under the Notes.
"
Bank
" has the meaning ascribed to such term in the preamble of this Agreement.
"
Base Rate Loan
" shall have the meaning ascribed to such term in the Revolving Credit Note.
"
Beneficiary
" means a beneficiary of a Commercial Letter of Credit issued pursuant to Section
2.04 hereof.
"
Borrower
" has the meaning ascribed to such term in the preamble of this Agreement.
"
Business Day
" means any day other than a Saturday, Sunday or day which shall be in The Commonwealth of Massachusetts a legal holiday or day on which banking institutions are required or authorized to close. If either of the Notes or any payment thereunder or under this Agreement becomes due on a day which is not a Business Day, the due date of such Note or payment shall be extended to the next succeeding Business Day, and such extension of time shall be included in computing interest and fees in connection with such payment.
"
Cash Flow
" means, for any applicable fiscal period, net income after income taxes,
less
income or
plus
loss from discontinued operations and extraordinary items,
plus
depreciation, depletion, amortization and other non-cash charges,
plus
Interest on all Obligations,
less
share repurchases, dividends, withdrawals and other distributions,
less
unfinanced capital expenditures, provided that if the Borrower shall raise additional equity from capital markets after the date of this Agreement, an amount equal to the quotient of 60% of the net proceeds of the primary shares offered by the Borrower divided by the remaining fiscal periods shall be excluded from the total of unfinanced capital expenditures. For the purposes of this definition, the terms "
depreciation
" and "
amortization
" shall have the meanings ascribed to them in accordance with GAAP.
"
Closing
" has the meaning ascribed such term in Section 3.01.
"
Closing Fee
" means a fee with respect to the Revolving Credit to be paid to the Bank by the Borrower at Closing pursuant to a letter agreement by and between the Borrower and the Bank.
"
Commercial Letter of Credit Fee
" has the meaning ascribed to such term in Section 2.04(A)(3).
"
Commercial Letters of Credit
" means any and all commercial or standby letters of credit or bank guarantees that may be issued by the Bank from time to time to third parties for the benefit of the Borrower pursuant to Section 2.04 of this Agreement.
"
Debt Service Coverage Ratio
" means, for any applicable fiscal period, the ratio, calculated on a consolidated basis, of (A) Cash Flow divided by (B) required principal payments on long term debt,
plus
partial payments of Subordinated Indebtedness that are not required or scheduled to be made,
plus
Interest paid or to be paid for such period
less
payments made to fully retire Subordinated Indebtedness if paid in cash on the Borrower's balance sheet at such time or raised through capital market transactions or financing furnished by the Bank. Whenever Net Leverage, as calculated pursuant to Section 5.0l (F)(2) hereof, is less than 1.50:1.0, then any and all payments, distributions, loans, or advances permitted under Section 5.02(F) and Section 5.02(G) of this Agreement shall not be included in the foregoing calculation of the Debt Service Coverage Ratio.
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"
EBITDA
" means, for any applicable fiscal period, calculated on a consolidated basis, net income less income or plus loss from discontinued operations and extraordinary items, plus income taxes, plus interest, plus depreciation, depletion, amortization and other non-cash charges, all as determined in accordance with GAAP.
"
Event of Default
" has the meaning provided in Section 6.01.
"
Financial Statements
" means the financial statements described on
Exhibit l.0(A)
attached to this Agreement.
"
Foreign Commitments
" shall have the meaning assigned thereto in the definition of Permitted International Borrowings.
"
Funded Debt
" means the sum of all Indebtedness for borrowed money of the Borrower (including, without limitation, all Obligations), net of the Borrower's cash in the United States of America in excess of $50,000,000.00, up to a maximum of $250,000,000.00.
"
GAAP
" means, generally accepted accounting principles applied consistently, with such changes or modifications thereto as may be approved in writing by the Bank.
"
Guaranty
" means a Continuing Guaranty in the form of
Exhibit 1.0(B)
attached hereto with respect to each Subsidiary to which the Bank or its Affiliates extends credit (including Foreign Commitments), such Continuing Guaranty to be executed by the Borrower and delivered to the Bank in connection with each extension of any such credit.
"
Indebtedness
" means, as to the Borrower or any Subsidiary, all items of indebtedness, obligation or liability whether joint or several, matured or unmatured, liquidated or unliquidated, direct or contingent, including without limitation:
(A) All indebtedness guarantied, directly or indirectly, in any manner, or endorsed (other than for collection or deposit in the ordinary course of business) or discounted with recourse;
(B) All indebtedness in effect guarantied, directly or indirectly, through agreements, contingent or otherwise: (1) To purchase such indebtedness; or (2) to purchase, sell or lease (as lessee or lessor) property, products, materials, or supplies or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such indebtedness or to insure the owner of the indebtedness against loss; or (3) to supply funds to, or in any other manner invest in, the debtor;
(C) All indebtedness secured by (or for which the holder of such indebtedness has a right, contingent or otherwise, to be secured by) any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance upon property owned or acquired subject thereto, whether or not the liabilities secured thereby have been assumed; and
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(D) All indebtedness incurred as the lessee of goods or services under leases that, in accordance with GAAP, should not be reflected on the lessee's balance sheet.
"
Intellectual Property
" means trademarks, service marks, trade names, trade styles, logos, goodwill, trade secrets, patents, and licenses acquired under any statutory, common law or registration process in any state or nation at any time, or under any agreement executed with any person or entity at any time. The term "
license
" refers not only to rights granted by agreement from the owner of patents, trademarks, service marks and the like, but also to rights granted by a franchiser under a franchise or similar agreement. The foregoing enumeration is not intended as a limitation of the meaning of the word "license."
"
Interest
" means all interest expense and letter of credit fees due during any fiscal period of the Borrower, calculated in accordance with GAAP.
"
Laws
" means all ordinances, statutes, rules, regulations, orders, injunctions, writs or decrees of any government or political subdivision or agency thereof, or of any court or similar entity established by any thereof.
"
LIBOR Rate Loan
" shall have the meaning ascribed to such term in the Revolving Credit Note. "Loan(s)" means individually and collectively the Revolving Credit and the Term Loan.
"Loan Documents" means each and every of this Agreement, the Notes and each other document executed or delivered to the Bank in connection with the Loans.
"
Maturity Date
" means, with respect to the Term Note, June 30, 2015 or such later date as is agreed to by the Bank in a written instrument executed by a duly authorized officer of the Bank.
"
Net Leverage
" means, at any applicable date, the ratio of Funded Debt to EBITDA.
"
Notes
" means each and both of the Revolving Credit Note and the Term Note.
"
Obligations
" is intended to be used in its most comprehensive sense and means each and every obligation of the Borrower to the Bank of every kind and description, whether direct or indirect, absolute or contingent, primary or secondary, joint or several, due or to be come due, now existing or hereafter arising or acquired and whether by way of loan, guaranty, discount, letter of credit, lease or otherwise, including without limitation, the following obligations:
(A) To pay the principal of, and interest on, the Notes in accordance with the terms thereof and to satisfy all other liabilities to the Bank, whether hereunder or otherwise, whether now existing or hereafter incurred, matured or unmatured, direct or contingent, joint or several, including any extensions, modifications, renewals thereof and substitutions therefor.
(B) To repay to the Bank all amounts advanced by the Bank hereunder or otherwise on behalf of the Borrower, including, but without limitation, advances for principal or interest
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payments to prior secured parties, mortgagees, or lienors, or for taxes, levies, insurance, rent, or repairs to, or maintenance or storage of, any collateral;
(C) To perform and observe all covenants, agreements and undertakings of the Borrower pursuant to the terms and conditions of this Agreement and the Notes or any other agreement or instrument now or hereafter delivered to the Bank by the Borrower;
(D) All obligations under any interest rate swap agreement, foreign exchange contract, any cap, floor or hedging agreement or other similar agreement, or other financial agreement or arrangement designed to protect the Borrower against fluctuations in any interest rate charged by the Bank under the Notes or otherwise, including any obligations of the Borrower arising out of or in connection with any Automated Clearing House ("
ACH
") Agreement relating to the processing of ACH transactions, together with all fees, expenses, charges and other amounts owing by or chargeable to the Borrower under any ACH Agreement;
(E) All obligations to reimburse the Bank, on demand, in connection with overdrafts and other amounts due to the Bank under any existing or future agreements relating to cash management services; and
(F) All obligations to reimburse the Bank, on demand, for all of the Bank's expenses and costs, including without limitation the reasonable fees and expenses of its counsel, in connection with the preparation, administration, amendment, modification, or enforcement of this Agreement and the documents required hereunder or related hereto, including, without limitation, any proceeding brought, or threatened, to enforce payment of any of the obligations referred to in the foregoing Paragraphs (A) through (E).
"
Permitted International Borrowings
" means (A) up to $50,000,000.00 of credit outstanding at any time now or hereafter extended to the Borrower or its Subsidiaries pursuant to loans made outside the United States of America by foreign banking institutions plus (B) up to $50,000,000.00 of credit extended to the Borrower or its Subsidiaries outside the United States of America by the Bank or its Affiliates (any such credit extended by the Bank or its Affiliates, "
Foreign Commitments
"). For the avoidance of doubt, Permitted International Borrowings may be denominated in any currency acceptable to the Borrower (or its applicable Subsidiary) and the lender or lenders party thereto and which, with respect to any credit outstanding denominated in a currency other than dollars, the amount thereof shall be determined on a dollar equivalent basis at the time of incurrence.
"
Permitted Liens
" means:
(A) Liens for taxes, assessments or similar charges, incurred in the ordinary course of business, that are not yet due and payable;
(B) Pledges or deposits made in the ordinary course of business to secure payment of worker's compensation, or to participate in any fund in connection with worker's compensation, unemployment insurance, old-age pensions or other social security programs;
5
(C) Liens of mechanics, materialmen, repairmen, warehousemen, carriers or other like liens, securing obligations incurred in the ordinary course of business that are not yet due and payable;
(D) Good faith pledges or deposits not exceeding an aggregate amount of
$1,000,000.00 made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of thirty percent (30%) of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business;
(E) Encumbrances consisting of zoning restrictions, easements or other restrictions on the use of real property, none of which materially impairs the use of such property by the Borrower in the operation of its business, and none of which is violated in any material respect by existing or proposed structures or land use;
(F) Liens in favor of the Bank;
(G) Existing liens set forth or described on
Exhibit 4.01(1)
, attached hereto and made a part hereof;
(H) Purchase money security interests granted to secure the purchase price of assets, the purchase of which does not violate this Agreement or any instrument required hereunder; and
(I) Liens securing Indebtedness permitted by this Agreement; and
(J) The following, if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings, so long as levy and execution thereon have been stayed and continue to be stayed and they do not, in the aggregate, materially detract from the value of the property of the Borrower or any Subsidiary, or materially impair the use thereof in the operation of its business:
(1) Claims or liens for faxes, assessments or charges due and payable and subject to interest or penalty;
(2) Claims, liens and encumbrances upon, and defects of title to, real or personal property, including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits;
(3) Claims or liens of mechanics, materialmen, warehousemen, carriers or other like liens; and
(4) Adverse judgments on appeal.
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"
Person
" means any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, joint venture, court or government, or political subdivision or agency·thereof.
"
Records
" means correspondence, memoranda, tapes, discs, papers, books and other documents, or transcribed information of any type, whether expressed in ordinary or machine readable language.
"
Revolving Credit
" means the revolving credit facility furnished to the Borrower by the Bank pursuant to this Agreement, as evidenced by the Revolving Credit Note.
"
Revolving Credit Facility Fee
" has the meaning ascribed to such term in Section 2.07.
"
Revolving Credit Loan Commitment
" means, as of any date of determination, a revolving line of credit facility up to $50,000,000.00, less the outstanding amount of any Foreign Commitments (whether or not funded) as of such date of determination.
"
Revolving Credit Note
" means the Revolving Credit Note referred to in Section 2.03, as may be supplemented, amended or replaced.
"
Revolving Credit Outstandings
" means, at any time, the sum of (i) the aggregate outstanding principal balance of the Loan at such time plus (ii) the aggregate maximum amount that Beneficiaries may draw on Commercial Letters of Credit at such time.
"
Revolving Credit Termination Date
" means, with respect to the Revolving Credit Note, April 30, 2020 or such other date as is agreed to by the Bank in a written instrument executed by a duly authorized officer of the Bank, provided that the Borrower may elect to terminate this Agreement upon at least fifteen (15) days prior written notice to the Bank and full, final and indefeasible payment of all the then outstanding Obligations."
"
Revolving Increase Effective Date
" shall have the meaning ascribed to such term in Section
2.08 of this Agreement.
"
Subordinated Indebtedness
" means all Indebtedness incurred at any time by the Borrower or any Subsidiary, the repayment of which is subordinated to the Loans in form and manner satisfactory to the Bank.
"
Subsidiary
" means any Affiliate that is directly, or indirectly through one or more intermediaries, controlled by the Borrower or not less than 50% of the voting capital stock of which is owned, directly or through one or more intermediaries, by the Borrower.
"
Swap Contract
" means the interest rate swap transaction between the Borrower and the Bank dated as of October 4, 2010 with respect to the Term Note.
"
Term Loan
" means the $20,000,000.00 term loan facility furnished to the Borrower by the Bank, as evidenced by the Term Note.
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"
Term Note
" means the Term Note referred to m Section 2.03, as may be supplemented, amended or replaced.
"
$
" or "
dollars
" denotes lawful currency of the United States of America.
Accounting. Accounting terms used and not otherwise defined in this Agreement have the meanings determined by, and all calculations with respect to accounting or financial matters unless otherwise provided herein shall be computed in accordance with, GAAP.
ARTICLE 2.0 THE CREDIT FACILITIES
2.01 Advances on the Loans.
(A) All advances to or for the benefit of the Borrower with respect to the Revolving Credit Note will be charged to loan accounts established in the name of the Borrower on the Bank's books.
(B) The Bank disbursed the proceeds of the Term Note in accordance with a disbursement authorization letter executed on or about the same date as the Term Note. The outstanding principal balance as of the date of this Agreement is $10,888,888.98.
2.02 General Terms of the Revolving Credit.
Subject to the terms hereof, the Bank will lend the Borrower, from time to time until the Revolving Credit Termination Date, such sums as the Borrower may request (but in the case of LIBOR Rate Loans, at least $100,000.00) by reasonable same day notice to the Bank, received by the Bank not later than 11:00 A.M. of such day. The Borrower may borrow, repay Base Rate Loans without penalty or premium and reborrow, from the date of this Agreement until the Revolving Credit Termination Date, either the full amount of the Revolving Credit Loan Commitment or any lesser sum which is at least $100,000.00. The Revolving Credit Outstandings shall at no time exceed the Revolving Credit Loan Commitment, and if, at any time, an excess shall for any reason exist, the full amount of such excess, together with accrued and unpaid interest thereon as herein provided, shall be immediately due and payable in full.
2.03 The Notes.
(A) The Revolving Credit Loan Commitment shall be evidenced by a Revolving Credit Note due and payable on the Revolving Credit Termination Date, in the form attached hereto as
Exhibit 2.03(A)
. Upon execution and delivery to the Bank, the Revolving Credit Note shall replace and supersede the prior Revolving Credit Note issued by the Borrower dated June 14, 2008.
(B) The Term Loan is evidenced by a Term Note dated June 4, 2008, due and payable on the Maturity Date, a copy of which is attached hereto as
Exhibit 2.03B
. The Borrower entered into the Swap Contract in connection with the Term Note.
8
2.04 Commercial Letters of Credit
(A) From time to time prior to the Revolving Credit Termination Date, the Bank shall issue Commercial Letters of Credit on account of the Borrower or a Subsidiary subject to the following conditions:
(1) Any such Commercial Letters of Credit shall be issued as a trade letter of credit, standby letter of credit or bank guarantee only to (i) a supplier or to a seller of goods which purchased goods will become a part of the Inventory or other assets of the Borrower, (ii) governmental authorities or bonding companies to secure statutory obligations of the Borrower, including, without limitation, worker's compensation, disability, unemployment compensation or environmental Laws, or (iii) a customer who is purchasing goods or services from the Borrower or a Subsidiary;
(2) No Beneficiary shall be an Affiliate (excluding a Subsidiary);
(3) The Borrower agrees to pay to the Bank a quarterly fee with respect to each Commercial Letter of Credit payable at the end of each calendar quarter (in each case, a "
Commercial Letter of Credit Fee
") in accordance with
Exhibit 2.04(A)(3)
attached hereto. Whenever an Event of Default exists and is outstanding, the Commercial Letter of Credit Fee hereunder shall, at the option of the Bank, be increased to a per annum fee which is two percent (2%) per annum greater that that fee which would otherwise be applicable hereunder;
(4) No such Commercial Letter of Credit shall have an expiration date that is later than the Revolving Credit Termination Date unless otherwise agreed to by the Bank, excepting only (a) Commercial Letters of Credit in amounts aggregating no more than $250000.00 which may have expiration date(s) no later than one (1) year beyond the Revolving Credit Termination Date, and (b) such other Commercial Letters of Credit in amounts acceptable to the Bank, which may have expiration date(s) no later than one (1) year beyond the Revolving Credit Termination Date;
(5) Each such Commercial Letter of Credit shall be issued pursuant to such agreements and upon such terms and conditions as shall be required by the Bank;
(6) No Event of Default shall have occurred hereunder at the time of issuance of such Commercial Letter of Credit;
(7) The aggregate face amount of all Commercial Letters of Credit at any time outstanding shall not exceed the amount available under the Revolving Credit Loan Commitment at such time; and
(8) In the case of a Commercial Letter of Credit issued on behalf of a Subsidiary, the Borrower has first executed and delivered to the Bank a Guaranty with respect to such Subsidiary.
9
(B) The aggregate face amount of all Commercial Letters of Credit at any time outstanding shall be included in the amount of the Revolving Credit Outstandings.
2.05 Interest.
(A) Indebtedness due under the Notes shall bear interest at the rates and calculated in the manner set forth in the Notes.
(B) All agreements between Borrower and the Bank are hereby. expressly limited so that in no contingency or evenf whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the. amount paid or agreed to be paid to the Bank for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under applicable law. As used herein, the term "
applicable law
" means the law in effect as of the date hereof provided, however that in the event there is a change in the law which results in a higher permissible rate of interest, then the Notes shall be governed by such new law as of its effective date. In this regard, it is expressly agreed that it is the intent of Borrower and Bank in the execution, delivery and acceptance of the Notes to contract in strict compliance with the laws of The Commonwealth of Massachusetts from time to time in effect. If,under or from any circumstances whatsoever, fulfillment of any provision hereof, of the Notes or of any of the other Loan Documents at the time of performance of such provision shall be due, shall involve transcending the limit of suGh validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from any circumstances whatsoever the Bank should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest. This provision shall control every other provision of all agreements between the Borrower and the Bank.
2.06 Payment to the Bank.
The Bank shall periodically send the Borrower statements of all amounts due on the Loans, which statements shall be considered correct and conclusively binding on the Borrower unless the Borrower notifies the Bank to the contrary within thirty (30) days of its receipt of any statement that it deems to be incorrect. Notwithstanding the foregoing, any errors made by the Bank shall be corrected if brought to the attention of the Bank no later than ninety (90) days after termination of the Loans. At its sole discretion, the Bank may charge against any deposit or other account of the Borrower all or any part of any amount due with respect to the Obligations.
2.07 Revolving Credit Facility Fee.
The Borrower shall pay to the Bank, quarterly in arrears, as of the last day of each and every calendar quarter, a fee calculated at an annual rate based upon a 365/366-day year for the actual number of days outstanding, for each quarter, based on a percentage of the average unused portion of the Revolving Credit Loan Commitment (the "
Revolving Credit Facility Fee
").
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Notwithstanding the foregoing, the percentage to be used in calculation of the Facility Fee shall increase or decrease based upon Net Leverage, as follows:
|
|
|
|
|
|
Net Leverage
|
Unused Facility Fee
|
|
less than 1.0 to 1.0
|
0.175%
|
|
equal to or greater than 1.0 to 1.0, but less than 2.0 to 1.0
|
0.225%
|
|
equal to or greater than 2.0 to 1.0
|
0.275%
|
2.08 Increase in Revolving Credit Loan Commitment.
(A) Request for Increase. Provided there exists no Event of Default, upon prior written notice to the Bank, the Borrower may, from time to time, request an increase in the Revolving Credit Loan Commitment by an amount (for all such requests) not exceeding Twenty Five Million Dollars ($25,000,000.00) in the aggregate;
provided
that (i) any such request for an increase shall be in a minimum amount of Five Million Dollars ($5,000,000.00), and (ii) the Borrower may make a maximum of three (3) such requests. At the time of sending such notice, .the Borrower (in consultation with the Bank) shall specify the time period within which the Bank is requested to respond (which shall in no event be less than ten (10) Business Days from the date of delivery of such notice to the Bank).
(B) Effective Date and Allocations. If the Revolving Credit Loan Commitment is increased in accordance with this Section 2.08, the Bank and the Borrower shall determine the effective date (the "
Revolving Increase Effective Date
") and the final allocation of such increase among any financial institutions holding a participating interest. The Bank shall promptly notify the Borrower of the final allocation of such increase and the Revolving Increase Effective Date.
(C)
Conditions to Effectiveness of Increase
. As a condition precedent to any increase of the Revolving Credit Loan Commitment under this Section 2.08, the Borrower shall deliver to the Bank a certificate of the Borrower dated as of the Revolving Increase Effective Date signed by the president or chief financial officer of the Borrower (1) certifying and attaching the resolutions adopted by the Borrower approving or consenting to such increase, and (2) certifying that, before and after giving effect to such increase, (a) the representations and warranties contained in this Agreement and the other Loan Documents are, (i) with respect to representations and warranties that contain a materiality qualification, true and correct on and as of the Revolving Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case, they shall be true and correct in all material respects as of such earlier date, and (ii) with respect to representations and warranties that do not contain a materiality qualification, true and correct in all material respects on and as of the Revolving Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case, they shall be true and correct in all material respects as of such earlier date and, in each case, except that for purposes of this
Section
11
2.08
, the representations and warranties contained in Section 4.0l (H) shall be deemed to refer to the most recent financial statements furnished pursuant thereto and (b) no Event of Defaults exists.
ARTICLE 3.0 CONDITIONS PRECEDENT
The obligation of the Bank to make the Loans is subject to the following conditions precedent:
3.01 Documents Required for the Closing.
The Borrower shall have delivered to the Bank, prior to the initial disbursement of the Revolving Credit (the "
Closing
"), the following:
(A) The Revolving Credit Note duly executed by the Borrower in the form attached hereto as
Exhibit 2.03A
;
(B) A certificate (dated the date of the Closing) of the corporate secretary or assistant secretary, as the case may be, of the Borrower, certifying as to:
(1) the incumbency and signatures of the officer(s) signing this Agreement, the Notes, the other Loan Documents and each other document to be delivered pursuant hereto,
(2) the resolutions of the board of directors authorizing the execution, delivery and performance of this Agreement, the Notes, the other Loan Documents, and each other document to be delivered pursuant hereto,
(3) the By-Laws;
(C) With respect to the Borrower, certificates of tax good standing and corporate good standing and legal existence, dated as of the most recent date practicable, issued by the Delaware Department of Revenue and Secretary of State of Delaware as to the tax good standing and the legal existence and corporate good standing of the Borrower and a certificate of registration as a foreign corporation with The Commonwealth of Massachusetts;
(D) A copy, certified as of the most recent date practicable by the Secretary of the applicable state or nation of incorporation, of the charter documents of the Borrower and all amendments thereto, together with a certificate (dated the date of the Closing) of the corporate secretary or assistant secretary, as the case may be, of the Borrower to the effect that such charter documents have not been further amended since the date of the aforesaid certification of the Secretary of the State of Delaware;
(E) A written opinion or opinions of legal counsel for the Borrower, dated the date of the Closing and addressed to the Bank, in form satisfactory to the Bank and its counsel;
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(F) A certificate, dated the date of the Closing, signed by the president, a vice president, the treasurer or an assistant treasurer, the chief executive officer or the chief financial officer, of the Borrower and to the effect that:
(1) The representations and warranties set forth in Section 4.01 are true as of the date of the Closing; and
(2) No Event of Default hereunder, and no event which, with the giving of notice or passage of time or both, would become such an Event of Default, has occurred as of such date; and
(G) Payment of the Closing Fee, which may be netted against the initial disbursement of the Revolving Credit.
3.02 Documents Required for Subsequent Disbursements.
At the time of, and as a condition to, any disbursement of any part of the Loans to be made by the Bank subsequent to the Closing, the Bank may require the Borrower to deliver to the Bank a certificate, dated the date on which any such disbursement is to be made, signed by the president, a vice president, treasurer, chief executive officer, chief financial officer, or other duly authorized officer of the Borrower, or by a vice president, treasurer or other duly authorized officer of the Borrower, and to the effect that:
(A) As of the date thereof, no Event of Default has occurred and is continuing, and no event has occurred and is continuing that, but for the giving of notice or passage of time or both, would be an Event of Default; and
(B) Each of the representations and warranties contained in Section 4.01 is true and correct in all material respects as if made on and as of the date of such disbursement (except for such representations and warranties made as of a particular date).
3.03 Certain Events.
At the time of, and as a condition to, the Closing and each disbursement of any part of the Loans to be made by the Bank at or subsequent to the Closing:
(A) No Event of Default shall have occurred and be continuing, and no event shall have occurred and be continuing that, with the giving of notice or passage of time or both, would be an Event of Default; and
(B) All of the Loan Documents shall have remained in full force and effect.
3.04 Legal Matters.
At the time of the Closing, all legal matters incidental thereto shall be satisfactory to Bowditch & Dewey, LLP, legal counsel to the Bank.
13
ARTICLE 4.0 REPRESENTATIONS AND WARRANTIES
4.01 Original.
To induce the Bank to enter into this Agreement, the Borrower represents and warrants to the Bank as follows:
(A) The Borrower is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware; as of the Closing, the Borrower has no Subsidiaries other than the Subsidiaries named in
Exhibit 4.0l(A)
; as of the Closing, each Subsidiary is duly organized, validly existing and in good standing under the laws of its state or nation of formation, all as set forth in
Exhibit 4.0l(A)
; the Borrower and the Subsidiaries have the lawful power to own their properties and to engage in the businesses they conduct, and each is duly qualified and in good standing as a foreign corporation in the jurisdictions wherein the nature of the business transacted by it or property owned by it makes such qualification necessary (except where failure to so qualify would not have a material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries taken as a whole);
(B) Neither the Borrower nor any Subsidiary is directly or indirectly controlled by, or acting on behalf of, any Person which is an "
Investment Company
," within the meaning of the Investment Company Act of 1940, as amended;
(C) Except as disclosed in
Exhibit 4.0l(C)
attached hereto, neither the Borrower nor any Subsidiary is in default with respect to any of its existing Indebtedness in any material respect, and which such default would constitute an Event of Default under Section 6.0l(C), and the making and performance of this Agreement, the Notes and the other Loan Documents will not (immediately or with the passage of time, the giving of notice, or both):
(1) Violate (a) charter documents or the By-Laws of the Borrower or any Subsidiary, or (b) any Laws or result in a default, in any material respect, under any contract, agreement or instrument to which the Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary or its property is bound (except where such violation or default would not have a material adverse effect on the business, assets or financial condition of the Borrower and its Subsidiaries taken as a whole); or
(2) Result in the creation or imposition of any security interest in, or lien or encumbrance upon, any of the assets of the Borrower or any Subsidiary except in favor of the Bank (except where such occurrence would not have a material adverse effect on the business assets or financial condition of the Borrower and its Subsidiaries taken as a whole);
(D) The Borrower has the power and authority to enter into and perform this Agreement, the Notes and the other Loan Documents, and to incur the obligations herein and
14
therein provided for, and has taken all actions necessary to authorize the execution, delivery and performance of this Agreement, the Notes and the other Loan Documents;
(E) This Agreement, the Notes and the other Loan Documents are, or when delivered will be, valid, binding and enforceable under applicable law in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally and by general equitable principles (regardless of whether considered in a proceeding at law or in equity);
(F) Except as disclosed in
Exhibit 4.0l(F)
hereto, there is no pending order, notice, claim, litigation, proceeding or investigation known to the Borrower against or affecting the Borrower or any Subsidiary, whether or not covered by insurance, that would in the aggregate involve the payment of $1,000,000.00 or more or would otherwise materially or adversely affect the financial condition or business prospects of the Borrower or any Subsidiary, considered as a whole, if adversely determined;
(G) The Borrower and each Subsidiary has good and marketable title to all of its material assets, none of which is subject to any security interest, encumbrance or lien, or claim of any third Person except for Permitted Liens;
(H) The Financial Statements, including any schedules and notes pertaining thereto, and the management prepared financial statements for the fiscal period ending December 31, 2014 have been prepared in accordance with GAAP, and fairly present the financial condition of the Borrower and the Subsidiaries at the dates thereof and the results of operations for the periods covered thereby, and there have been ·no material adverse changes in the financial condition or business of the Borrower and the Subsidiaries, considered as a whole, from December 31, 2014 to the date hereof;
(I) As of the date hereof, neither the Borrower nor any of the Subsidiaries has any material Indebtedness of any nature, including, but without limitation, liabilities for taxes and any interest or penalties relating thereto except to the extent reflected (in a footnote or otherwise) and reserved against in the consolidated balance sheet dated December 31, 2014, included in the Financial Statements o:r as disclosed in, or permitted by, this Agreement, including as set forth on
Exhibit 4.0l(I)
;
(J) Except as otherwise permitted herein or as would not materially interfere with the conduGt of the business of the Borrower and its Subsidiaries, considered as a whole, the Borrower has filed all tax returns or extensions to file tax returns in applicable jurisdictions, and other reports required by any applicable Laws to have been filed prior to the date hereof, have paid or caused to be paid all taxes, assessments and other governmental charges that are due and payable prior to the date hereof, and have made adequate provision for the payment of such taxes, assessments or other charges accruing but not yet payable; the Borrower has no knowledge of any deficiency or additional assessment in a materially important amount in connection with any taxes, assessments or charges not provided for on its books;
15
(K) Except to the extent that the failure to comply would not materially interfere with the conduct of the business of the Borrower and its Subsidiaries, considered as a whole, each of the Borrower and the Subsidiaries have complied with all applicable Laws with respect to (1) any restrictions, specifications or other requirements pertaining to products that it manufactures or sells or to the services it performs; (2) the conduct of its business; and (3) the use, maintenance and operation of the real and personal properties owned or leased by it in the conduct of its business; .
(L) No representation or warranty by or with respect to the Borrower or any Subsidiary contained herein or in any certificate or other document furnished by the Borrower or any Subsidiary pursuant hereto contains any untrue statement of a material fact or omits to state a material fact necessary to make such representation or warranty not misleading in light of the circumstances under which it was made;
(M) Each consent, approval or authorization of, or filing, registration or qualification with, any Person required to be obtained or effected by the Borrower or any Subsidiary in connection with the execution and delivery of this Agreement, the Notes and the other Loan Documents or the undertaking or performance of any obligation hereunder or thereunder, has been duly obtained or effected;
(N) Except as set forth in
Exhibit 4.0l (N)
and except to the extent that the failure to comply would not materially interfere with the conduct of the business of the Borrower or any Subsidiary, considered as a whole, to the best knowledge of the Borrower, neither the Borrower, nor any Person for whose conduct the Borrower is responsible, owns, occupies or operates, ·or has, within the fifteen (15) year period immediately preceding the date of this Agreement, owned, occupied or operated a site or vessel on which has been stored any hazardous material or oil, without compliance with all statues, regulations, ordinances, directives, and orders of every federal, state, municipal and other governmental authority which has or claims jurisdiction relative thereto (the terms "
site
," "
vessel
" and "
hazardous material
," respectively, as used .herein include the definitions of those terms in Massachusetts General Laws, Ch. 21E); neither the Borrower, nor any Person for whose conduct the Borrower is responsible, has ever disposed of, transported or arranged for the transport of any hazardous material or oil without compliance with all such statutes, regulations, ordinances, directives and orders in all material respects; and neither the Borrower, nor any Person for whose conduct the Borrower is responsible, has ever been legally responsible for any releases or threat of release of any hazardous material or oil; received notification of any potential or known release or threat of release of any hazardous material or oil from any site or vessel owned, occupied or operated by the Borrower, or any Person for whose conduct the Borrower is responsible, or of the incurrence of any expense or loss in connection with the assessment, containment or removal of any release or threat of release of any hazardous material or oil from any such site or vessel;
(O) The Borrower has not made any agreement or taken any action which may cause anyone to become entitled to a commission or finder's fee as a result 9f or in connection with the making of the Loans;
16
(P) The federal tax returns of the Borrower and all Subsidiaries for all years of operation, including the tax years of the Borrower and all Subsidiaries most recently ended prior to the date of this Agreement, have been filed with the Internal Revenue Service and have not been challenged or an extension for filing has been obtained; and
(Q) Any Employee Pension Benefit Plans, as defined in the Employee Retirement Income Security Act of 1974, as amended ("
ERISA
"), of the Borrower and each Subsidiary meet, as of the date hereof, the minimum funding standards of 29 U.S.C.A. 1082 (Section 302 of ERISA), and no Reportable Event or Prohibited Transaction, as defined in ERISA, has occurred with respect to any Employee Benefit Plans, as defined in ERISA, of the Borrower or any Subsidiary.
4.02 Survival.
All of the representations and warranties set forth in Section 4.01 shall survive until all Obligations are satisfied in full and there remain no outstanding commitments hereunder.
ARTICLE 5.0 COVENANTS OF THE BORROWER
5.01 Affirmative Covenants.
The Borrower does hereby covenant and agree with the Bank that, so long as any of the Obligations remain unsatisfied or any commitments hereunder remain outstanding, it will comply, or if appropriate cause the Subsidiaries to comply, at all times with the following affirmative covenants:
(A) The Borrower will use the proceeds of the Loans only for the purposes set forth in
Exhibit 5.0l(A)
, and will furnish the Bank such evidence as it may reasonably require with respect to such use;
(B) The Borrower will furnish or otherwise make available to the Bank:
(1) As soon as available, but in any event within forty-five (45) days after the close of the first three quarterly accounting periods in each fiscal year: (a) a consolidated statement of cash flows of the Borrower and the Subsidiaries for such quarter; (b) a consolidated income statement of the Borrower and the Subsidiaries for such quarters; (c) a consolidated balance sheet of the borrower and the Subsidiaries as of the end of such quarter-all in reasonable detail, subject to normal year-end audit adjustments and certified by the president or principal financial officer of the Borrower to have been prepared in accordance with GAAP;
(2) As soon as available, but in any event within one hundred twenty (120) days after the close of each fiscal year: (a) a consolidated statement of stockholders' equity; (b) a consolidated statement of changes of cash flows of the Borrower and the Subsidiaries for such fiscal year; (c) a consolidated income statement of the Borrower and the Subsidiaries for such fiscal year; and (d) a consolidated balance sheet of the
17
Borrower and the Subsidiaries as of the end of such fiscal year-all such statements to be in reasonable detail, including all supporting schedules and comments; the consolidated statements and balance sheets to be audited by an independent registered public accountant selected by Borrower and acceptable to the Bank, and certified by such accountants to have been prepared in accordance with GAAP and to present fairly the financial position and results of operations of the Borrower and the Subsidiaries; the Bank shall have the right, from time to time, to discuss the affairs of the Borrower directly with such independent registered public accountants after notice to the Borrower and opportunity of the Borrower to be represented at any such discussions;
(3) Contemporaneously with each quarterly and year-end financial report required by the foregoing paragraphs (1) and (2), a compliance certificate of the president or principal financial officer of the Borrower in a form satisfactory to the Bank providing calculations with respect to compliance with the financial covenants contained herein and stating that he has individually reviewed the provisions of this Agreement and that a review of the activities of the Borrower during such year or quarterly period, as the case may be, has been made by him or under his supervision, with a view to determining whether the Borrower has fulfilled all obligations under this Agreement, and that, to the best of his knowledge, the Borrower has observed and performed each undertaking contained in this Agreement and is not in default in the observance or performance of any of the provisions hereof or, if the Borrower shall be in default, specifying all such defaults and events of which he may have knowledge;
(4) Promptly after the sending or making available or filing of the same, copies of all reports, proxy statements, and financial statements that the Borrower sends or make available to its stockholders and all registration statements and reports that the Borrower files with the Securities and Exchange Commission or any successor Person;
(5) Upon the Bank's reasonable request, copies of any and all material documents relating to the business of the Borrower;
(C) The Borrower will maintain its material operating physical assets m good condition and repair (normal wear and tear excepted);
(D) The Borrower and the Subsidiaries will maintain, or cause to be maintained, public liability, fire and casualty insurance that are of a character usually insured by corporations engaged in the same or similar businesses;
(E) The Borrower and the Subsidiaries will pay or cause to be paid when due, all taxes, assessments, charges or levies imposed upon them or on any of their property or with respect to which any of them is required to withhold and pay except where contested in good faith by appropriate proceedings with adequate reserves therefor having been set aside on its books; provided, however, that the Borrower and each Subsidiary shall pay or cause to be paid all such taxes, assessments, charges or levies forthwith whenever foreclosure on any lien that may have attached (or security therefor) appears imminent;
18
(F) The Borrower will maintain:.
(1) A Debt Service Coverage Ratio of at least 1.50:1.00, to be tested on a rolling four fiscal quarters basis at the end of each fiscal quarter; and
(2) Net Leverage not exceeding 3.00:1.00, to be tested on a rolling four fiscal quarters basis at the end of each fiscal quarter;
(G) The Borrower and the Subsidiaries will each, when reasonably requested to do so, make available for inspection during normal business hours by duly authorized representatives of the Bank any of its bookS and records and will furnish the Bank any information regarding its business affairs and financial condition within a reasonable time after written request thereof;
(H) The Borrower and the Subsidiaries will each take all necessary steps to preserve its corporate existence and comply in all material respects with all present and future Laws applicable to it in the operation of its business, and all material agreements to which it is subject;
(I) The Borrower and the Subsidiaries will each take all necessary steps to preserve Intellectual Property, and will keep accurate and complete Records of royalties, patents and trademarks in connection therewith, consistent with sound business practices;
(J) The Borrower and the Subsidiaries will keep accurate and complete business Records consistent with sound business practices;
(K) The Borrower and the Subsidiaries will give immediate notice to the Bank of (1) any litigation or proceeding in which any of them is a party if an adverse decision therein would require any of them to pay more than $1,000,000.00 or deliver assets the value of which exceeds such sum (except where the claim is covered by insurance and the insurer has acknowledged coverage); and (2) the institution of any other suit or proceeding involving any of them that could be reasonably likely to materially and adversely affect the operations, financial condition, property or business of the Borrower or any Subsidiary, considered as a whole;
(L) Upon written request by the Bank, the Borrower will furnish the Bank with true, correct and complete copies of federal income tax returns filed by the Borrower, together with all schedules thereto;
(M) The Borrower and the Subsidiaries will pay when due (or within applicable grace periods (or in the case of trade indebtedness, no later than ninety (90) days from the date incurred)) all of their other Indebtedness exceeding $5,000,000.00 due third Persons except when the amount thereof is being contested in good faith by appropriate proceedings and with adequate reserves therefor being set aside on their books;
(N) The Borrower and the Subsidiaries will each notify the Bank promptly if any of them becomes aware of the occurrence of any Event of Default or of any fact, condition or event that only with the giving of notice or passage of time or both, could become an Event of Default, or if any of them becomes aware of any material adverse change in financial condition
19
(including, without limitation, proceedings in bankruptcy, insolvency, reorganization or the appointment of a receiver or trustee), or results of operations of the Borrower or a Subsidiary, or of the failure of the Borrower or any Subsidiary to observe any of their respective undertakings hereunder or under the other Loan Documents;
(O) The Borrower and the Subsidiaries will notify the Bank thirty (30) days in advance of any change in the location of the Borrower's headquarters currently located in Oxford, Massachusetts;
(P) The Borrower and the Subsidiaries will (1) fund any Employee Pension Benefit Plans in accordance with no less than the minimum funding standards of 29 U.S.C.A. 1082 (Section 302 of ERISA); (2) furnish the Bank, upon the Bank's written request, with copies of any reports or other statements filed with the United States Department of Labor or the Internal Revenue Service with respect to any such Plan; and (3) promptly advise the Bank of the occurrence of any Reportable Event or Prohibited Transaction with respect to any Employee Benefit Plan; and
(Q) The Borrower will maintain its primary depository and operating accounts with the Bank at all times while any Obligations to the Bank under the Revolving Credit Note are outstanding, it being understood that this provision shall not require the Borrower to maintain its investment account with the Bank.
5.02 Negative Covenants.
The Borrower does hereby covenant and agree with the Bank that, so long as any of the Obligations remain unsatisfied or any commitments hereunder remain outstanding, it will comply, or if appropriate cause the Subsidiaries to comply, at all times with the following negative covenants, unless the Bank shall otherwise have agreed in writing:
(A) Neither the Borrower nor any Subsidiary will mortgage, assign as collateral security, pledge or encumber any of its assets now owned or hereafter acquired, or permit any of its assets to be encumbered in any way without the prior express written consent of the Bank, except for Permitted Liens (including refinancings thereof) and any lien in favor of the Bank or its affiliates;
(B) Neither the Borrower nor any Subsidiary will change its name or enter into any merger or. consolidation (other than mergers or consolidations between wholly owned subsidiaries resulting in no change in the beneficial ownership of such subsidiaries, mergers of wholly owned subsidiaries into Borrower and mergers or consolidations in connection with transactions otherwise permitted hereby, including, Section 5.02(K));
(C) Neither the Borrower nor any Subsidiary will sell or otherwise dispose of, or for any reason cease operating, any of its operating divisions, or lines of business which on a cumulative basis or in any one instance comprise more than twenty percent (20%) of the assets of the Borrower and its Subsidiaries, considered as a whole, without first providing the Bank for each such sale or disposition with thirty (30) days advance written notice of its intention to do so;
20
(D) Neither the Borrower nor any Subsidiary will become liable, directly or indirectly, as guarantor or otherwise for any obligation of any other Person exceeding $50,000,000.00 in the aggregate at any time outstanding, without notifying the Bank in writing in advance, except for (i) the endorsement of commercial paper for deposit or collection in the ordinary course of business, (ii) unsecured guarantees of obligations of foreign Subsidiaries of the Borrower and (iii) with respect to the Aircraft Loan;
(E) Neither the Borrower nor any Subsidiary will incur, create, assume, or permit to exist any Indebtedness except: (1) the Loans; (2) existing Indebtedness listed on
Exhibit 4.0l(I)
permitted to exist after the date of this Agreement (including refinancings thereof); (3) trade indebtedness incurred in the ordinary course of business, (4) contingent Indebtedness permitted by Section 5.02(D); (5) Indebtedness secured by Permitted Liens; (6) Subordinated Indebtedness; (7) Permitted International Borrowings; (8) capital leases or purchase money Indebtedness permitted by this Agreement; (9) the Aircraft Loan; and (10) other Indebtedness not exceeding $50,000,000.00 in the aggregate at any time outstanding;
(F) Neither the Borrower nor any Subsidiary (other than a· wholly owned Subsidiary of the Borrower) will declare or pay any dividends, redeem or make any other payment or distribution on account of its capital stock (other than shares of stock of, or other instruments issued by, the Borrower convertible into stock of the Borrower) at any time when an Event of Default shall have occurred and be continuing or would result therefrom (including, without limitation, compliance by the Borrower of the financial covenants set forth in Section 5.0l (F) of this Agreement; provided, that this Section 5.02(F) shall not prohibit (1) the payment of any dividend within sixty (60) days after the date of declaration of such dividend if the payment of such dividend would have been permitted on the date of declaration and (2) the acquisition of any shares of capital stock of the Borrower or its Subsidiaries either (a) to the extent that such exchange shall be for shares of capital stock of the Borrower of (b) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Borrower) of shares of capital stock of the Borrower;
(G) Neither the Borrower nor any Subsidiary will declare or make, directly or indirectly, any payments or distributions to officers, directors or employees on account of its capital stock (other than as permitted under Section 5.02(F), or incur any obligation (contingent or otherwise) to do so, except that, so long as no Event of Default shall have occurred and be continuing at the time thereof or would result therefrom (including, without limitation, compliance by the Borrower of the financial covenants set forth in Section 5.0l(F) of this Agreement) the Borrower may (1) make payments of up to $1,000,000.00 per fiscal year and no more than $5,000,000.00 in the aggregate with respect to share repurchases from officers, directors or employees of the Borrower or any of its Subsidiaries, (2) make payments not exceeding $3,000,000.00 in the aggregate any fiscal year with respect to payment of employee income taxes in connection with the vesting of restricted shares or performance shares of the Borrower held by such employee; and (3) make payments of up to $1,000,000.00 per fiscal year and no more than $5,000,000.00 in the aggregate with respect to share repurchases from current or former officers, directors, employees and consultants of the Borrower or any of its Subsidiaries of the authorized representatives of such current or former officers, directors,
21
employees and consultants upon the death, disability or termination of employment of such person or termination of their seat on the board of the Borrower, or pursuant to the terms of any agreement under which such capital stock was issued or any agreement with respect to such consulting agreement; provided that any such payments made at a time when Net Leverage, as calculated in accordance with Section 5.0l(F)(2) hereof, is less than 1:50:1:00 (both before and after giving pro forma effect to such payment) shall not count against any dollar limitations set forth in this Section 5.02(G);
(H) Without first providing the Bank with fifteen (15) days advance written no.tice of its intention to do any of the following, neither the Borrower nor any Subsidiary will form any subsidiary, make any investment in (including any assignment of lnventory or other property), or make any loan in the nature of an investment to, any Person, other than (1) investments of the Borrower in the Subsidiaries listed on
Exhibit 4.0l(A)
or (2) any individual investment (including the formation of any subsidiary) or any loan in the nature of an investment, not exceeding $20,000,000.00;
(I) Neither the Borrower nor any Subsidiary will make any loan or advance to any officer, shareholder, director, or employee of the Borrower or any Subsidiary, except for (1) business travel, educational or relocation and similar temporary advances in the ordinary course of business, (2) loans not exceeding $250,000.00 to any one such individual and up to
$3,000,000.00 in the aggregate at any one time outstanding;
(J) The Borrower will not make any payments on any other Subordinated Indebtedness, except as permitted by the subordination provisions applicable thereto;
(K) Neither the Borrower nor any Subsidiary will acquire or agree to acquire any stock in, or all or substantially all of the assets of, any Person for a purchase price exceeding $20,000,000.00 without first providing the Bank with fifteen (15) days advance written notice of its intention to do so;
(L) Neither the Borrower nor any Subsidiary will furnish the Bank any certificate or other document that will contain any untrue statement of material fact or that will omit to state a material fact necessary to make it not misleading in light of the circumstances under which it was furnished; and
(M) Neither the Borrower nor any Subsidiary will directly or indirectly apply any part of the proceeds of the Loans to the purchasing or carrying of any "
margin stock
" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, or any regulations, interpretations, or rulings thereunder.
ARTICLE 6.0 DEFAULT
6.01 Events of Default.
The occurrence of any one or more of the following events shall constitute an Event of Default hereunder:
22
(A) The Borrower or the Subsidiaries shall fail to pay when due any Obligations to the Bank within ten (10) days of an applicable due date;
(B) The Borrower or the Subsidiaries shall fail to observe or perform any other obligation to be observed or performed by it hereunder or under any of the other Loan Documents, and such failure shall continue for thirty (30) days after (1) notice of such failure from the Bank; or (2) the Bank is notified of such failure or should have been so notified pursuant to the provisions of Section 5.01(0), whichever is earlier;
(C) The Borrower or the Subsidiaries shall fail to pay any Indebtedness other than the Obligations exceeding $5,000,000.00, and such failure shall continue beyond any applicable grace period (or, with respect to trade Indebtedness which is not subject to a grace period, within ninety (90) days of the date such trade Indebtedness is incurred);
(D) Any financial statement, representation, warranty or certificate made or furnished by or with respect to the Borrower or any of the Subsidiaries to the Bank in connection with this Agreement, or as an inducement to the Bank to enter into this Agreement, or in any separate statement or document to be delivered to the Bank hereunder, shall be materially false, incorrect or incomplete when made;
(E) The Borrower shall admit its inability to pay its debts as they mature or shall make an assignment for the benefit of itself or any of its creditors;
(F) Proceedings in bankruptcy, or for reorganization of the Borrower or any of the Subsidiaries, or for the readjustment of any of their respective debts under the United States Bankruptcy Code, as amended, or any part thereof, or under any other Laws, whether state or federal, for the relief of debtors, now or hereafter existing, shall be commenced against or by the Borrower or any of the Subsidiaries and, except with respect to any such proceedings instituted by the Borrower or any of the Subsidiaries, shall not be discharged within sixty (60) days of said commencement;
(G) A receiver or trustee shall be appointed for the Borrower or any of the Subsidiaries or for any substantial part of their respective assets, or any proceedings shall be instituted for the dissolution or the full or partial liquidation of the Borrower or any of the Subsidiaries, and except with respect to any such appointments requested or instituted by the Borrower or any of the Subsidiaries, such receiver or trustee shall not be discharged within sixty (60) days of his appointment, and except with respect to any such proceedings instituted by the Borrower or any of the Subsidiaries, such proceedings shall not be discharged within sixty (60) days of commencement, or the Borrower shall discontinue business or materially change the nature of its business;
(H) The Borrower or any of the Subsidiaries shall suffer final judgments (which are not covered by insurance where the insurer has acknowledged coverage) for payment of money aggregating in excess of $5,000,000.00 and shall not discharge the same within a period of forty-
23
five (45) days unless, pending further proceedings, execution has not been commenced or, if commenced, has been effectively stayed; or
(I) Failure by the Borrower to pay any amount of money or to observe exceeding
$250,000.00 or perform any other material covenant, condition or agreement which is the obligation of the Borrower to the Bank under any other existing or future note, mortgage or other document or instrument.
6.02 Acceleration.
At its option, and at any time, whether immediately or otherwise, the Bank may, upon the occurrence of any Event of Default, declare all Obligations of the Borrower to the Bank immediately due and payable without further action of any kind including, without limitation, notice, demand or presentment.
ARTICLE 7.0 THE BANK'S RIGHTS AND REMEDIES
7.01 The Bank's Rights Upon Default
Upon the occurrence of an Event of Default and at any time thereafter, the Bank, without presentment, demand, notice, protest or advertisement of any kind, will have the rights set forth in this Agreement and under applicable law.
7.02 Right of Set-Off.
Upon and after the occurrence of an Event of Default, (A) the Borrower hereby authorizes the Bank, at any time and from time to time, without notice, which is hereby expressly waived by the Borrower, and whether or not the Bank shall have declared any credit subject hereto to be due and payable in accordance with the terms hereof, to set off against, and to appropriate and apply to the payment of, the Borrower's Obligations (whether matured or unmatured, fixed or contingent, liquidated or unliquidated), any and all amounts owing by the Bank to the Borrower (whether payable in U.S. dollars or any other currency, whether matured or unmatured, and in the case of deposits, whether general or special (except trust and escrow accounts), time or demand and however evidenced), and (B) pending any such action, to the extent necessary, to hold such amounts as collateral to secure such Obligations and to return as unpaid for insufficient funds any and all checks and other items drawn against any deposits so held as the Bank, in its sole discretion, may elect. The Borrower hereby grants to the Bank a security interest in all deposits and accounts maintained with the Bank to secure the payment of all Obligations of the Borrower to the Bank under this Agreement and all agreements, instruments and documents related to this Agreement.
TO THE EXTENT PERMITTED BY LAW, ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS PRIOR TO EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS ARE HEREBY VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVED.
24
7.03 Cumulative Rights and Remedies
All rights and remedies of the Bank, whether provided for herein or in other agreements, instruments or documents or conferred by law, are cumulative and may be exercised alone or simultaneously.
7.04 Additional Rights and Remedies
(A) Upon the occurrence of an Event of Default, all obligations on the part of the Bank to make advances under the Revolving Credit Note, if the Bank so elects upon written notice to the Borrower, shall cease and terminate, and, at the option of the Bank, both of the Notes shall become immediately due and payable, but the Bank may make any advances or portions of advances under the Revolving Credit Note, after the occurrence of any such Event of Default, without thereby waiving its right to demand payment of the Obligations and without becoming liable to make any other or further advances as hereinabove contemplated by this Agreement.
(B) Upon the occurrence of an Event of Default, the rights, powers and privileges provided in this Sction 7.04, and all other remedies available to the Bank under this Agreement or at law or in equity, may be exercised by the Bank at any time and from time to time, whether or not the Obligations shall be due and payable, and whether or not the Bank shall have instituted any foreclosure proceedings or other action for the enforcement of its rights hereunder or under the Notes or any of the other Loan Documents.
ARTICLE 8.0 MISCELLANEOUS
8.01 Construction.
The provisions of this Agreement shall be in addition to those of any pledge or security agreement, note or other evidence of liability now or hereafter held by the Bank, all of which shall be construed as complementary to each other. Nothing herein contained shall prevent the Bank from enforcing any or all other pledge or security agreements, notes or other evidences of liability in accordance with their respective terms.
8.02 Further Assurance.
From time to time, the Borrower will execute and deliver to the Bank such additional documents and will provide such additional information as the Bank may reasonably require to carry out the terms of this Agreement and be informed of the status and affairs of the Borrower.
8.03 Enforcement and Waiver by the Bank.
The Bank shall have the right at all times to enforce the provisions of this Agreement and the other Loan Documents in strict accordance with the terms hereof and thereof, notwithstanding any conduct or custom on the part of the Bank in refraining from so doing at any time or times. The failure of the Bank at any time or times to enforce its rights under such
25
provisions, strictly in accordance with the same, shall not be construed as, having created a custom in any way or manner contrary to specific provisions of this Agreement or as having in any way or manner modified or waived the same. All rights and remedies of the Bank are cumulative and concurrent and the exercise of one right or remedy shall not be deemed a waiver or release of any other right or remedy.
8.04 Expenses of the Bank.
The Borrower shall pay on demand all expenses of the Bank in connection with the preparation, administration, default, collection, waiver or amendment of loan terms, or in connection with the Bank's exercise, preservation or enforcement of any of its rights, remedies or options hereunder, including, without limitation, reasonable fees of outside legal counsel, accounting, consulting, brokerage or other similar professional fees or expenses, and any fees or expenses associated with travel or other costs relating to any appraisals or examinations conducted in connection with this Agreement, the Notes, the other Loan Documents or any other collateral therefor, and the amount of all such expenses shall, until paid, bear interest at the rate applicable to principal under the Notes (including any default rate) and be an Obligation.
8.05 Notices.
Any notices or consents required or permitted by this Agreement shall be in writing and shall be deemed delivered if delivered in person or if sent by certified mail, postage prepaid, return receipt requested, facsimile or telegraph, as follows, unless such address is changed by written notice hereunder:
(A) If to the Borrower: IPG Photonics Corporation
50 Old Webster Road
Oxford, MA 01540
Attention: Chief Financial Officer
With a copy to: IPG Photonics Corporation
50 Old Webster Road
Oxford, MA 01540
Attention: General Counsel
(B) If to the Bank: Bank of America, N.A.
100 Federal Street
Boston, MA 02110
Attention: Robert C. Megan, Senior Vice President
With a copy to: George W. Tetler III, Esquire
Bowditch & Dewey, LLP
P.O. Box 15156 311 Main Street
Worcester, MA 01615-0156
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Any party may change the address to which notices are to be sent to it by giving written notice of such change of address to the other party in the manner herein provided for giving notice. Any such notice, demand, request or other communication shall be deemed given when mailed as aforesaid.
8.06 Waiver and Indemnification by the Borrower.
To the maximum extent permitted by applicable Laws, the Borrower:
(A) Waives (1) protest of all commercial paper at any time held by the Bank for which the Borrower is in any way liable; (2) except as the same may herein be specifically granted, notice of acceleration and of intention to accelerate; and (3) notice and opportunity to be heard, after acceleration in the manner provided in Section 6.02, before exercise by the Bank of the remedies of self-help, set-off or of other summary procedures permitted by any applicable Laws or by any agreement with the Borrower, and, except where required hereby or by any applicable Laws, notice of any other action taken by the Bank; and
(B) Indemnifies the Bank and its officers, attorneys, agents and employees from all claims for loss or damage caused by any act or omission on the part of any of them except willful misconduct or gross negligence.
8.07 Participation; Right to Sell and/or Assign.
The Bank shall have the unrestricted right at any time and from time to time, and without the consent of the Borrower, to grant to one or more banks or other financial institutions (each, a "
Participant
") participating interests in the Bank's obligation to lend hereunder and any or all of the loans held by the Bank hereunder in minimum amounts of $5,000,000.00 each. In the event of any such grant by the Bank of a participating interest to a Participant, whether or not upon notice to the Borrower, the Bank shall remain responsible for the performance of its obligations hereunder and the Borrower shall continue to deal solely and directly with the Bank in connection with the Bank's rights and obligations hereunder. The Bank may furnish any information concerning the Borrower in its possession from time to time to prospective Participants, provided that the Bank shall require any such prospective Participant to agree in writing to maintain the confidentiality of such information.
The Bank shall have the unrestricted right at any time or from time to time, upon Borrower's consent, which consent shall not be unreasonably withheld, (provided that no such consent shall be required whenever an Event of Default exists) to assign all or any portion of its rights and obligations hereunder to one or more banks or other financial institutions (each, an "Assignee") in minimum amounts of $5,000,000.00 each or in any amount whenever an Event of Default exists and the Borrower agrees that it shall execute, or cause to be executed, such documents, including without limitation amendments to this Agreement and to any other documents, instruments and agreements executed in connection herewith as the Bank shall deem reasonably necessary to effect the foregoing. In addition, at the request of the Bank and any such Assignee, the Borrower shall issue one or more new promissory note(s), as applicable, to any such Assignee and, if the Bank has retained any of its rights and obligations hereunder following
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such assignment, to the Bank, which new promissory note(s) shall be issued in replacement of, but not in discharge of, the liability evidenced by the promissory note held by the Bank prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and the Bank after giving effect to such assignment. Upon the execution and delivery of appropriate assignment documentation, amendments and any other documentation required by the Bank in connection with such assignment, and the payment by Assignee of the purchase price agreed to by the Bank and such Assignee, such Assignee shall be a party to this . Agreement and shall have all of the rights and obligations of the Bank hereunder (and under any and all other documents, instruments and agreements executed in connection herewith) to the extent that such rights and obligations have been assigned by the Bank pursuant to the assignment documentation between the Bank and such Assignee, and the Bank shall be released from its obligations hereunder and thereunder to a corresponding extent. The Bank may furnish any information concerning the Borrower in its possession from time to time to prospective Assignees, provided that the Bank shall require any such prospective Assignees to agree in writing to maintain the confidentiality of such information.
8.08 WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER DOCUMENTS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION AND (C) CERTIFIES THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE.
8.09 Applicable Law.
Except to the extent that any law of the United States may apply, this Agreement shall be governed and interpreted according to the laws of The Commonwealth of Massachusetts, without regard to any choice of law, rules or principles to the contrary. Nothing in this paragraph shall be construed to limit or otherwise affect any rights or remedies of the Bank under federal law.
8.10 Binding Effect, Assignment, and Entire Agreement.
This Agreement shall inure to the benefit of, and shall be binding Upon, the respective successors and permitted assigns of the parties hereto. The Borrower has no right to assign any
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of its rights or obligations hereunder without the prior written consent of the Bank. This Agreement, including the Exhibits hereto, all of which are hereby incorporated herein by reference, and the documents executed and delivered pursuant hereto, are intended by the parties as the final, complete and exclusive statement of the transaction evidenced by this Agreement. All prior or contemporaneous promises, agreements and understandings, whether oral or written, are deemed to be superseded by this Agreement, and no party is relying on any promise, agreement or understanding not set forth in this Agreement. This Agreement may not be amended or modified except by a written instrument describing such amendment or modification executed by the Borrower and the Bank.
8.11 Severability.
If any provision of this Agreement shall be held invalid under any applicable Laws, such invalidity shall not affect any other provision of this Agreement that can be given effect without the invalid provision, and, to this end, the provisions hereof are severable.
8.12 Counterparts.
This Agreement may be executed in as many counterparts as necessary or convenient, and by the different parties on separate counterparts each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument. Delivery of an executed counterpart of this Agreement (or of any agreement or document required by this Agreement and any amendment to this Agreement) by telecopy or other electronic imaging means shall be as effective as delivery of a manually executed counterpart of this Agreement; provided, however, that the telecopy or other electronic image shall be promptly followed by an original if required by the Bank.
8.13 Replacement Notes.
Upon receipt of (i) an affidavit of an officer of the Bank as to the loss, theft, destruction or mutilation of either of the Notes or any other Loan Document which is not of public record, and (ii) an indemnity by the Bank in favor of the Borrower with respect to losses, claims or damage resulting therefrom and, in the case of any such loss, theft, destruction or mutilation, upon cancellation of such Note or other Loan Document, the Borrower will issue, in lieu thereof, a replacement Note or other Loan Document in the same principal amount thereof and otherwise of like tenor.
8.14 Return of Prior Note.
The Bank shall return to the Borrower in due course after the Closing, the Revolving Credit Note dated June 14, 2008, issued by the Borrower to the Bank in the face amount of $35,000,000.00.
8.15 Use of Proceeds
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No portion of the proceeds of the Loans shall be used, in whole or in part, for the purpose of purchasing or carrying any "
margin stock
" as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System.
8.16 Integration
This Agreement is intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this Agreement. All prior or contemporaneous promises, agreements and understandings, whether oral or written, are deemed to be superseded by this Agreement, and no party is relying on any promise, agreement or understanding not set forth in this Agreement. This Agreement may not be amended or modified except by a written instrument describing such amendment or modification executed by the Borrower and the Bank.
8.17 Restatement of Prior Agreement.
This Agreement is a restatement, in its entirety, of the Loan Agreement dated as of June 4, 2008, as amended, by and between the Bank and the Borrower, and any indebtedness outstanding thereunder shall be deemed to be outstanding under this Agreement. Nothing in this Agreement shall be deemed to be a repayment or novation of the indebtedness, or to release or otherwise adversely affect any lien, mortgage or security interest securing such indebtedness or any rights of the Bank against any guarantor, surety or other party primarily or secondarily liable for such indebtedness.
8.18 Government Sanctions.
(A) The Borrower represents that neither the Borrower nor any Subsidiary (for purposes of this Section 8.18, individually a "
Company
" and collectively, the "
Companies
") or, to the knowledge of any Company, any director, officer, employee, agent, affiliate or representative of any Company, is an individual or entity (for purposes of this Section 8.18, "
Person
") currently the subject of any sanctions administered or enforced by the United States Government, including, without limitation, the U.S. Department of Treasury's Office of Foreign Assets Control, the United Nations Security Council, the European Union, Her Majesty's Treasury, or other relevant sanctions authority (collectively, "
Sanctions
"), nor is any Company located, organized or resident in a country or territory that is the subject of Sanctions.
(B) The Borrower represents and covenants that it will not, directly or to its knowledge, indirectly, use the proceeds of the credit provided under this Agreement, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person, to fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is, to the knowledge of the Borrower, the subject of Sanctions, or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions.
{Signatures Appear on Following Page}
30
IN WITNESS WHEREOF, each of the parties hereto have duly caused this Agreement to be executed by its duly authorized representative as an instrument under seal as of the day and year first above written.
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IPG PHOTONICS CORPORATION
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/s/ Angelo P. Lopresti
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By: /s/ Timothy P.V. Mammen
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Witness
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Name: Timothy P.V. Mammen
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Name: Angelo P. Lopresti
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Title: Chief Financial Officer and Senior
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Title: General Counsel, Secretary
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Vice President
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and Senior Vice President
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By:/s/ Robert C. Megan
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Witness
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Name: Robert C. Megan
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Title: Senior Vice President
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REVOLVING CREDIT NOTE
$50,000,000.00 Worcester, Massachusetts
Apri130, 2015
FOR VALUE RECEIVED,
the undersigned,
IPG PHOTONICS CORPORATION,
a
Delaware corporation with a principal place of business at 50 Old Webster Road, Oxford,
Massachusetts 01540 (the "
Borrower
") hereby promises to pay to
BANK OF AMERICA, N.A.,
a national banking association organized and existing under the laws of the United States of
America (the "
Bank
"), OR ORDER, at its office at 100 Federal Street, Boston, Massachusetts
02110, or such other place as the Bank may from time to time specify in writing, the principal
sum of
FIFTY MILLION AND NO/100 DOLLARS ($50,000,000.00)
(or so much as may be outstanding from time to time) with interest on the unpaid principal until
paid at the rates and in the manner hereinafter provided in lawful money of the United States of
America in immediately available funds, without counterclaim or set-off and free and clear of,
and without any deduction or withholding for, any taxes or other payments.
This Revolving Credit Note restates in its entirety that certain Revolving Credit Note
dated June 14, 2008, as amended, made by the Borrower to the order of the Bank in the face
amount of $35,000,000.00.
This Revolving Credit Note is issued in conjunction with an Amended and Restated Loan
Agreement by and between the Borrower and the Bank dated as of even date herewith (as may
be amended from time to time, the "
Agreement
"), all the terms and conditions of which are
incorporated herein by reference. No reference to the Agreement or to any provision thereof
shall affect or impair the absolute and unconditional obligation of the Borrower to pay the
principal of and interest on this Revolving Credit Note as herein provided. An Event of Default
under the Agreement shall also constitute an Event of Default hereunder. The occurrence of an
Event of Default shall constitute a default (beyond any applicable grace or cure periods) under
each of the other obligations of the Borrower to the Bank. Capitalized terms used and not
otherwise defined herein shall have the meanings ascribed to such terms in the Agreement. "
$
"
or "
dollars
" denotes lawful currency of the United States of America.
Interest shall be calculated on the daily unpaid principal balance of the indebtedness
evidenced by this Revolving Credit Note computed on the basis of the actual number of days
elapsed over a year of 365/366 days, provided that interest shall be due for the actual number of
days elapsed during each period for which interest is being charged.
The unpaid principal of this Revolving Credit Note from time to time outstanding shall
bear interest at the applicable rate per annum, at the Borrower's written election from time to
time and in accordance with the provisions of this Revolving Credit Note, as follows:
(a) the LIBOR- Rate (Adjusted Periodically) plus the Applicable Margin (calculated
as set forth below) (a "
LIBOR Rate Loan
"); or
(b) the Bank's Base Rate plus the Applicable Margin (calculated as set forth below),
fully floating (a "
Base Rate Loan
").
The Applicable Margin will be based upon calculation by the Bank of Net Leverage, as
follows:
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Applicable Margin -
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Applicable Margin -
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Net Leverage
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LIBOR Rate
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Base Rate
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less than 1.0 to 1.0
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0.80%
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0%
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equal to or greater than
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1.0 to 1.0, but less than
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2.0 to 1.0
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1.00%
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0%
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equal to or greater than
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2.0 to 1.0
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1.20%
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0%
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As used herein, the terms "
Funded Debt
" and "
EBITDA
" shall have the meanings
ascribed to such terms the Agreement. The Funded Debt to EBITDA Ratio shall be measured
as of the end of each fiscal quarter of the Borrower over a period comprised of the most recent
prior four (4) fiscal quarters of the Borrower.
The Applicable Margin on Base Rate Loans and LIBOR Rate Loans shall be adjusted as
of fifteen (15) Business Days after the earlier of (x) receipt and review by the Bank of Borrower's compliance certificate as required under Section 5.01(B)(3) of the Agreement or (y) the date on which
the financial covenants set forth in Section 5,01(F) of the Agreement are tested by the Bank. Such adjustments shall apply to Base Rate Loans effective immediately and to LIBOR Rate Loans made on or after the applicable date of the adjustment.
If the Borrower fails to select
an
interest rate for all or any portion of the unpaid principal
balance of this Revolving Credit Note or if the applicable LIBOR Rate becomes unavailable,
then the interest rate will be the Base Rate plus the Applicable Margin.
The term "
Base Rate
" means the higher of (a) the Bank's Prime Rate established from time to time by the Bank or (b) the Federal Funds Rate, fully floating. The "
Prime Rate
" means that variable per annum rate of interest so designated from time to time by the Bank as its Prime Rate. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate being charged to any customer. The "
Federal Funds Rate
" means, for any period, a fluctuating
2
interest rate equal for each day during such period to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Bank from three (3) Federal Funds brokers of recognized
standing selected by the Bank.
"
Business Day
" means any day other than a Saturday, Sunday or day which shall be in The
Commonwealth of Massachusetts a legal holiday or day on which banking institutions are
required or authorized to close. If any payment under this Revolving Credit Note becomes due
on a day which is not a Business Day, the due date of such payment shall be extended to the next
succeeding Business Day, and such extension of time shall be included in computing interest and
fees in connection with such payment.
The "
LIBOR Rate (Adjusted Periodically)
" is a rate of interest equal to the rate per annum
equal to the London Interbank Offered Rate (or a comparable or successor rate which is
approved by the Bank), as published by Bloomberg (or other commercially available source
providing quotations of such rate as selected by the Bank from time to time) as determined for
each Adjustment Date at approximately 11:00 a.m. London time two (2) London Banking Days
prior to the Adjustment Date (a "
LIBOR Interest Period
"), for U.S. Dollar deposits (for delivery
on the first day of such interest period) with a term, ,upon request by the Borrowers for a
LIBOR Loan, of one (1), two (2) or three (3) months, as adjusted from time to time in the Bank's
sole discretion for reserve requirements, deposit insurance assessment rates and other regulatory
costs. Each LIBOR Loan shall be in an amount of integral multiples of $100,000.00. No
LIBOR Interest Period shall extend beyond the Revolving Credit Termination Date (defined
below). A "
London Banking Day
" is a day on which banks in London are open for business and
dealing in offshore dollars. If at any time the LIBOR Rate (Adjusted Periodically) is less than
zero, such rate shall be deemed to be zero for the purposes of this Agreement.
Interest on the Base Rate Loans shall be payable monthly in arrears on the first day of
each calendar month, the first such installment of interest to be due and payable on May 1, 2015.
Interest on LIBOR Rate Loans shall be payable in full at the end of the applicable LIBOR
Interest Period. All principal, interest and other indebtedness due hereunder if not sooner paid,
shall be due and payable on Apri130, 2020 (the "
Revolving Credit Termination Date
").
The Borrower may prepay Base Rate Loans in whole or in part without penalty or
premium. The Borrower may prepay a LIBOR Loan only upon at least three (3) Business Days
prior written notice to the Bank (which notice shall be irrevocable). The Borrower shall pay to
the Bank, upon request of the Bank, such amount or amounts as shall be sufficient (in the
reasonable opinion of the Bank) to compensate it for any loss, cost, or expense incurred as a
result of: (i) any payment of a LIBOR Loan on a date other than the last day of the LIBOR
Interest Period for such LIBOR Loan; (ii) any failure by the Borrower to borrow a LIBOR Loan
on the date specified by Borrower's written notice; (iii) any failure by the Borrower to pay a
LIBOR Loan on the date for payment specified in the Borrower's written notice. Without
limiting the foregoing, the Borrower shall pay to the Bank a "
yield maintenance fee
" in an
3
amount computed as follows: The current rate for United States Treasury securities (bills on a
discounted basis shall be converted to a bond equivalent) with a maturity date closest to the term
chosen pursuant to the LIBOR Rate Election as to which the prepayment is made, shall be
subtracted from the LIBOR Rate in effect at the time of prepayment. If the result is zero or a
negative number, there shall be no yield maintenance fee. If the result is a positive number, then
the resulting percentage shall be multiplied by the amount of the principal balance being prepaid.
The resulting amount shall be divided by 360 and multiplied by the number of days remaining
the term chosen pursuant to the LIBOR Rate Election as to which the prepayment is made. Said
amount shall be reduced to present value calculated by using the above referenced United States
Treasury securities rate and the number of days remaining in the term chosen pursuant to the
LIBOR Rate Election as to which prepayment is made. The resulting amount shall be the yield
maintenance fee due to the Bank upon the payment of a LIBOR Loan. Each reference in this
paragraph to "
LIBOR Rate Election
" shall mean the election by the Borrower of LIBOR Rate. If
by reason of an Event of Default, the Bank elects to declare this Revolving Credit Note
immediately due and payable, then any yield maintenance fee with respect to a LIBOR Loan
shall become due and payable in the same manner as though the Borrower had exercised such
right of prepayment.
If the entire amount of any required principal and/or interest is not paid in full within
fifteen (15) days after the same is due, the Borrower shall pay to the Bank a late fee equal to four
percent (4%) of the required payment. Such late charge payments are made for the purpose of
compensating the Bank for its administrative, costs and expenses in handling late payments and
losses in connection therewith. This provision is not intended to provide a grace period for any
payment otherwise due and payable and shall not constitute a waiver by the Bank to insist upon
the strict performance of any of the Borrower's covenants or agreements with, or obligations to,
the Bank or to declare any event of default for any payment not made when it was due and
payable.
All payments shall be applied first to the payment of all fees, expenses and other amounts
due to the Bank (excluding principal and interest), then to accrued interest, and the balance on
account of outstanding principal; provided, however, that after an Event of Default, payments
will be applied to the obligations of the Borrower to the Bank as the Bank shall determine in its
sole discretion.
Until the earlier of the Revolving Credit Termination Date or the occurrence of an Event
of Default, the Borrower may borrow, repay and reborrow hereunder from time to time, provided
that the aggregate principal amount at any time outstanding shall not exceed the face amount of
this Revolving Credit Note.
Upon the occurrence of an Event of Default (whether or not the Bank has accelerated
payment of this Revolving Credit Note), or after the Revolving Credit Termination Date or after
judgment has been rendered on this Revolving Credit Note or any other Obligations under the
Agreement, the Borrower's right to select pricing options shall cease and the unpaid principal of
this Revolving Credit Note, including interest, fees or costs which are not paid when due, will; at
the option of the Bank, bear interest at a rate which is four percent (4%) per annum greater than
4
the rate of interest which would otherwise be applicable hereunder (the "
Default Rate
"). This
may result in compounding of interest. This will not constitute a waiver of any Event of Default.
At its option, and at any time, whether immediately or otherwise, upon the occurrence of
an Event of Default, the Bank may declare this Revolving Credit Note immediately due and
payable without further action of any kind including notice, further demand or presentment.
The Borrower hereby authorizes the Bank, without liability on the Bank's part, to debit
from time to time from the Automatic Payments Deposit Account the Automatic Payments. If
the funds in the Automatic Payments Deposit Account are insufficient to cover any payment, the
Bank shall not be obligated to advance funds to cover the payment. At any time for any reason,
the Bank may voluntarily terminate Automatic Payments. The Bank shall provide the Borrower
timely notice of any debit made from the Automatic Payments Deposit Account or termination of
Automatic Payments.
Upon and after the occurrence of an Event of Default, (A) the Borrower hereby
authorizes the Bank, at any time and from time to time, without notice, which is hereby expressly
waived by the Borrower, and whether or not the Bank shall have declared any credit subject
hereto to be due and payable in accordance with the terms of the Agreement, to set off against,
and to appropriate and apply to the payment of, the Borrower's Obligations (whether matured or
unmatured, fixed or contingent, liquidated or unliquidated), any and all amounts owing by the
Bank to the Borrower (whether payable in U.S. dollars or any other currency, whether matured
or unmatured, and in the case of deposits, whether general or special (except trust and escrow
accounts), time or demand and however evidenced), and (B) pending any such action, to the
extent necessary, to'hold such amounts as collateral to secure such Obligations and to return as
unpaid for insufficient funds any and all checks and other items drawn against any deposits so
held as the Bank, in its sole discretion, may elect. The Borrower hereby grants to the Bank a
security interest in all deposits and accounts maintained with the Bank to secure the payment of
all Obligations of the Borrower to the Bank under this Revolving Credit Note, the Agreement
and all agreements, instruments and documents related to this Revolving Credit Note.
TO THE
EXTENT PERMITTED BY LAW, ANY AND ALL RIGHTS TO REQUIRE THE BANK
TO EXERCISE ITS REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE OBLIGATIONS PRIOR TO EXERCISING ITS RIGHT OF
SET OFF WITH RESPECT TO SUCH DEPOSITS ARE HEREBY VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY WAIVED.
The Borrower shall pay on demand all expenses of the Bank in connection with the
preparation, administration, default, collection, waiver or amendment of loan terms, or in
connection with the Bank's exercise, preservation or enforcement of any of its rights, remedies
or options hereunder, including, without limitation, reasonable fees of outside legal counsel,
accounting, consulting, brokerage or other similar professional fees or expenses, and any fees or
expenses associated with travel or other costs relating to any appraisals or examinations
conducted in connection with the Loan or any collateral therefor, and the amount of all such
expenses shall, until paid, bear interest at the rate applicable to principal hereunder (including
any Default Rate) and be an obligation secured by any collateral.
5
The Borrower and each endorser or other person now or hereafter liable for the payment
of any of the indebtedness evidenced by this Revolving Credit Note, severally, agrees, by
making or endorsing this Revolving Credit Note or by making any agreement to pay any of the
indebtedness evidenced by this Revolving Credit Note, to waive presentment for payment,
protest and demand, notice of protest, demand and of dishonor and non-payment of this
Revolving Credit Note, and consents without notice or further assent: (a) to the substitution,
exchange, or release of any collateral securing this Revolving Credit Note or any part thereof at
any time; (b) to the acceptance by the holder or holders at any time of any additional collateral or
security of this Revolving Credit Note, (c) to the modification or amendment at any time, and
from time to time, of this Revolving Credit Note, the Agreement and any instrument securing
this Revolving Credit Note, at the request of any person liable hereon; (d) to the granting by the
holder hereof of any extension of the time for payment of this Revolving Credit Note or for the
performance of the agreements, covenants and conditions contained in this Revolving Credit
Note, the Agreement or any instrument securing this Revolving Credit Note, at the request of any
other person liable hereon; and (e) to any and all forbearances and indulgences whatsoever; and
such consent shall not alter or diminish the liability of any person.
This Revolving Credit Note shall be governed by, and the rights and obligations of the
parties hereunder shall be construed and interpreted in accordance with, the laws of The
Commonwealth of Massachusetts (excluding the laws applicable to conflicts or choice of law).
The Borrower agrees that any suit for the enforcement of this Revolving Credit Note or any of
the other Loan Documents may be brought in the courts of The Commonwealth of Massachusetts
or any Federal Court sitting therein and consents to the non-exclusive jurisdiction of such court
and to service of process in any such suit being made upon the Borrower by mail at the address
specified herein. The Borrower hereby waives any objection that it may now or hereafter have to
the venue of any such suit or any such court or that such suit was brought in an inconvenient
court.
THE BORROWER (AND THE BANK BY ACCEPTANCE OF THIS
REVOLVING CREDIT NOTE) HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS REVOLVING CREDIT
NOTE OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY. THE BORROWER (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER, (B) ACKNOWLEDGES THAT IT HAVE
BEEN INDUCED TO ENTER INTO THIS REVOLVING CREDIT NOTE AND THE
OTHER DOCUMENTS CONTEMPLATED HEREBY BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN -THIS SECTION AND (C)
CERTIFIES THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE.
6
This Revolving Credit Note is intended by the parties as the final, complete and exclusive
statement of the transactions evidenced by this Revolving Credit Note. All prior or
contemporaneous promises, agreements and understandings, whether oral or written, are deemed
to be superseded by this Revolving Credit Note, and no party is relying on any promise,
agreement or understanding not set forth in this Revolving Credit Note. This Revolving Credit
Note may not be amended or modified except by written instrument describing such
amendment or modification executed by the Borrower and the Bank.
No portion of the proceeds of the Loan shall be used, in whole or in part, for the purpose of
purchasing or carrying any "
margin stock
" as such term is defined in Regulation U of the Board
of Governors of the Federal Reserve System.
The Bank may at any time pledge or assign all or any portion of its rights under this
Revolving Credit Note or the Agreement (including any portion of the Note) to any of the twelve
(12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C.
Section 341. No such pledge or assignment or enforcement thereof shall release the Bank from
its obligations under the Note, the Agreement or any loan documents related thereto.
Upon receipt of (i) an affidavit of an officer of the Bank as to the loss, theft, destruction
or mutilation of this Revolving Credit Note or any other loan document which is not of public
record, and (ii) an indemnity by the Bank in favor of the Borrower with respect to losses, claims
or damages resulting therefrom, and, in the case of any such loss, theft, destruction or mutilation,
upon cancellation of this Revolving Credit Note or other loan document, the Borrower will issue,
in lieu thereof, a replacement Revolving Credit Note or other loan document in the same
principal amount thereof and otherwise of like tenor.
{Signatures Appear on Following Page}
7
IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note to be
executed by its duly authorized representative as an instrument under seal as of the day and year
first above written.
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IPG PHOTONICS CORPORATION
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/s/ Angelo P. Lopresti
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By: /s/ Timothy P.V. Mammen
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Witness
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Name Timothy P.V. Mammen
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Title: Chief Financial Officer and Senior
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Vice President
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