<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended April 1, 1995
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Commission File Number 0-9576
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K-TRON INTERNATIONAL, INC.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-1759452
- - ------------------------------- -------------------------
(State or other jurisdiction of (IRS Employer ID #)
incorporation of organization)
Commerce Center, Suite 130
1810 Chapel Avenue West
Cherry Hill, New Jersey 08002-4607
- - ------------------------------- ------------------------
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number (Including Area Code) (609) 661-6240
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
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The number of shares of Common Stock outstanding as of 04/01/95
-----------------
3,087,937 Shares
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<PAGE> 2
K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements 3
--------------------
Consolidated Balance Sheets
April 1, 1995 & December 31, 1994 3
Consolidated Statements of Operations
and Retained Earnings
Three Months Ended
April 1, 1995 and April 2, 1994 4
Consolidated Statements of Cash Flows
Three Months Ended April 1, 1995 and
April 2, 1994 5
Notes to Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition of Operations 8
PART II. OTHER INFORMATION
-----------------
Item 3. Defaults Upon Senior Securities 12
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands except Share Data)
<TABLE>
<CAPTION>
April 1, December 31,
1995 1994
---------- ------------
ASSETS (Unaudited) (Audited)
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,260 $ 1,086
Accounts receivable (less allowance for
doubtful accts. of $1,764 & $1,523) 31,835 29,214
Inventories 31,131 25,458
Income tax refund refund receivable 400 442
Deferred income taxes 328 328
Prepaid expenses & other current assets 2,028 1,145
-------- --------
TOTAL CURRENT ASSETS 66,982 57,673
PROPERTY, PLANT & EQUIPMENT (Net) 34,629 31,673
PATENTS AND LICENSES (Net of accumulated
amortization of $7,758 & $7,657) 851 908
EXCESS OF COST OVER NET ASSETS ACQUIRED
(Net of accumulated amortization of $6,018 & $4,888) 20,574 18,661
OTHER ASSETS 136 650
DEFERRED INCOME TAXES, Net 385 385
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TOTAL ASSETS $123,557 $109,950
======== ========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES & SHAREHOLDERS' EQUITY
----------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable to banks $ 35,258 $ 31,175
Current portion of long-term debt 1,522 1,337
Accounts payable 15,811 12,251
Accrued expenses & other current liabilities 3,637 2,469
Accrued payroll 2,793 2,211
Accrued commissions 3,132 3,039
Customer advances 1,800 2,720
Accrued warranty 1,220 930
Income taxes payable 1,277 1,241
Deferred income taxes 850 849
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TOTAL CURRENT LIABILITIES 67,300 58,222
LONG-TERM DEBT 31,428 27,413
DEFERRED GAIN ON SALE/LEASEBACK 2,725 2,456
DEFERRED INCOME TAXES 399 399
NONCURRENT PENSION LIABILITY 3,395 2,939
COMMITMENTS AND CONTINGENCIES
SERIES A JUNIOR PARTICIPATING PREFERRED SHARES,
$.01 par value-authorized 50,000 shares; none issued
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value - authorized,
950,000 shares; none issued
Common stock, $.01 par value - authorized,
15,000,000 shares; issued 4,150,887 shares
and 4,150,887 shares 41 41
Paid-in capital 13,865 13,865
Retained earnings 13,790 15,070
Cumulative translation adjustments 1,178 109
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28,874 29,085
Treasury stock, 1,062,950 shares - at cost (10,564) (10,564)
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TOTAL SHAREHOLDERS' EQUITY 18,310 18,521
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $123,557 $109,950
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 4
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS & RETAINED EARNINGS
(Dollars in Thousands except Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 1, April 2,
1995 1994
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<S> <C> <C>
REVENUE $30,503 $21,914
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COSTS AND EXPENSES
Cost of Sales 19,292 13,006
Selling, general
& administrative 10,210 7,631
Research & development 976 1,044
Interest 1,305 910
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Total costs and expenses 31,783 22,591
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(LOSS) BEFORE INCOME TAXES (1,280) (677)
INCOME TAXES -- --
------- -------
NET(LOSS) (1,280) (677)
RETAINED EARNINGS
Beginning of Period 15,070 21,896
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End of Period $13,790 $21,219
======= =======
(LOSS)PER SHARE $ ( .41) $ ( .22)
======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 3,089,000 3,065,000
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 5
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
Apr. 1, Apr. 2,
1995 1994
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<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) $(1,280) $ (677)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 1,642 1,526
Amortization of deferred gain on
sale/leaseback transaction (96) (96)
Deferred income taxes (113) (204)
Changes in assets and liabilities
which provided (used) cash:
Accounts receivable, net 350 2,014
Inventories (3,130) (710)
Prepaid expenses and other current assets (679) (60)
Other assets 99 (57)
Accounts payable 1,965 (846)
Accrued expenses and other current liabilities 163 (1,500)
Accrued warranty 156 (161)
Income taxes payable 64 99
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Net cash used in operating activities (859) (672)
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INVESTING ACTIVITIES:
Capital expenditures (233) (383)
Investment in patents and licenses (1) (25)
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Net cash used in investing activities (234) (408)
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FINANCING ACTIVITIES:
Net borrowings under notes payable to banks 1,490 930
Net borrowings under long-term lines of credit 400
Principal payments on long-term debt (103) (978)
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Net cash provided by financial activities 1,387 352
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EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (120) (38)
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NET INCREASE (DECREASE)IN CASH
AND CASH EQUIVALENTS 174 (766)
CASH AND CASH EQUIVALENTS
Beginning of period 1,086 1,643
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End of period $ 1,260 $ 877
======= ======
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 6
Consolidated Statements of Cash Flows (continued):
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
Apr. 1, Apr. 2,
1995 1994
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<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $1,086 $ 931
Income taxes 350 2
</TABLE>
Disclosure of Accounting Policy:
For purposes of the statement of cash flows, the Company considers all highly
liquid short-term investments purchased with a maturity of three months or less
to be cash equivalents.
See Notes to Consolidated Financial Statements
<PAGE> 7
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q and do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. The consolidated financial
statements include the accounts of K-Tron International, Inc. (the
"Company") and its subsidiaries. All intercompany transactions have been
eliminated in consolidation. In the opinion of management, all
adjustments (consisting of a normal recurring nature) considered necessary
for a fair presentation of results for interim periods have been made.
The results for the interim periods are not necessarily indicative of the
results for a full year.
The unaudited financial statements herein should be read in conjunction
with the Company's Annual Report on Form 10-K for the year ended December
31, 1994 which was previously filed with the Securities and Exchange
Commission.
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 1, 1995
Financial Condition
As reported in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, the Company is in default under several financial
covenants contained in its loan agreement with three U.S. banks. These
defaults are continuing and have not been waived. However, on April 28, 1995,
the Company entered into a forbearance agreement with its U.S. banks in which
they agreed to forbear in the exercise of their rights and remedies under the
loan documents through the earlier of July 31, 1995 or the occurrence of a new
event of default thereunder. The forbearance agreement also modified the
existing loan documents in certain aspects, including the granting of
additional collateral. At April 1, 1995, the principal amount outstanding
under the Company's U.S. loan agreement was $13,628,000.
The Company is seeking alternative debt or equity financing and has
retained two investment banking firms (Oppenheimer & Co., Inc. and Berwind
Financial Group, Inc.) to assist in these efforts and in the evaluation and
possible implementation of other possible courses of action. At this time, the
Company has not obtained the commitments needed to replace the U.S. banks, and
its ability to continue as a going concern depends on the future availability
of its existing U.S. credit facility or a replacement line of credit or the
raising of cash through the sale of assets or additional equity. If the
Company is unsuccessful in these efforts, it may be unable to meet its
obligations in a timely manner, making it necessary to undertake such other
actions as may be appropriate to preserve asset values.
K-Tron is an international company with more than 70 percent of its
business arising from sources outside the United States, primarily in
Europe, and Germany has become the Company's largest single market as measured
by the Company's revenues. As such, the financial position and performance of
the Company is sensitive to both translation and transaction fluctuations in
foreign exchange rates.
Results of Operations
In the first quarter of 1995, the Company reported a net loss of
$1,280,000. Profit margins were negatively affected by heavily discounted
orders booked in 1994 and the inability to pass on increased material costs
caused by the appreciation of the Swiss franc to customers in other European
countries, costs related to the forebearance agreement and costs related to the
Company's efforts to arrange new financing or sell assets. First quarter 1995
results at the Company's German subsidiary, Colortronic, have improved.
The following table sets forth the Company's results of operations
expressed as a percentage of total revenues for the periods indicated:
<PAGE> 9
<TABLE>
<CAPTION>
Three Months Ended
April 1, April 2,
1995 1994
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<S> <C> <C>
Total Revenues 100.0% 100.0%
Cost of Sales 63.3 59.4
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Gross Margins 36.7 40.6
Selling General and Administrative 33.4 34.8
Research and Development 3.2 4.8
Interest 4.3 4.1
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(Loss) before income taxes (4.2%) (3.1%)
====== ======
Quarter-end backlog (in thousands) $34,357 $23,310*
======= =======
</TABLE>
*At April 1, 1995 foreign exchange translation rates
Translation of the Company's foreign revenues and results of operations
into U.S. dollars is affected by changes in foreign exchange rates,
particularly with respect to the Swiss franc and the Deutsche mark. Revenues
and earnings in the first quarter of 1995 were affected by changes in the
average U.S. dollar/Swiss franc exchange rate, which increased 17% to $.806 per
Swiss franc in the first quarter of 1995 from $.690 in the same period of 1994,
and by a change in the U.S. dollar/Deutsche mark exchange rate, which increased
16% to $.677 per Deutsche mark in the first quarter of 1995 from $.582 for the
same period in 1994.
Total revenues increased by $8.6 million or 39% ($5.5 million or 25% when
using a constant foreign exchange rate) in the first quarter of 1995 versus the
same period in 1994. Total revenues increased due to the strong European and
United States year end 1994 backlog, and the effect of a weaker U.S. dollar
relative to the Swiss franc and Deutsche mark.
Gross margin as a percent of revenues declined to 36.7% in the first
quarter of 1995 as compared to 40.6% for the same period in 1994. The decline
in the first quarter 1995 margin was primarily due to heavily discounted orders
booked in 1994, as well as the inability to pass on increased material costs
caused by the appreciation of the Swiss franc to customers in other European
countries.
Selling, general and administrative (SG&A) expense increased by $2.6
million, or 33.8% in the first quarter of 1995 as compared to the same period
in 1994. The increase was primarily due to higher foreign exchange
translation rates, commissions and selling expenses related to the increased
sales volume. In addition, the Company incurred costs related to the
forebearance agreement and costs related to the Company's efforts to arrange
new financing or sell assets. As a percent of revenues, SG&A was 33.4% in
1995 and 34.8% in 1994. The decrease in SG&A as a percent of revenues in
1995 was primarily due to the increase in revenues.
<PAGE> 10
Research and development (R&D) expenditures in the first quarter of 1995
decreased $.1 million as compared to the same period in 1994 due to synergies
realized from the integration of the Company's brands, offset in part by the
higher foreign exchange translation rate. R&D expense as a percent of revenues
was 3.2% in 1995 and 4.8% in 1994. The decrease in R&D as a percent of
revenues in 1995 was primarily due to the increase in revenues.
Interest expense as a percent of revenues increased in the first quarter
of 1995 primarily due to increased European borrowings and higher interest
rates in the United States offset in part by reduced interest rates in Europe.
The Company did not have any income tax expense due to the losses incurred.
The backlog of orders increased at the end of the first quarter of 1995 by
47% as compared to the same period in 1994 primarily due to the European
recovery from recession and strong bookings in the United States.
Increased selling prices and reduced production and distribution costs
should improve future margins, and the Company's objective continues to be to
return to profitability later in 1995.
Liquidity and Capital Resources
The Company's capitalization as of the end of the first quarter of
1995 and fiscal year 1994 is set forth below:
<TABLE>
<CAPTION>
April 1, Dec. 31,
(Dollars in Thousands) 1995 1994
---- ----
<S> <C> <C>
Short-term debt including current
portion of long-term debt $36,780 $32,512
Long-term debt 31,428 27,413
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Total debt 68,208 59,925
Shareholders' equity 18,310 18,521
------ ------
Total debt and shareholders' equity $86,518 $78,446
======= =======
Percent debt to total capitalization 79% 76%
Percent long-term debt to equity 172% 148%
</TABLE>
Total debt increased since year end 1994 by $8,283,000 of which
$6,896,000 was due to the effect of foreign exchange translation. Total debt
without the effect of the foreign exchange translation increased by $1,387,000.
European debt increased by $2,064,000 while U.S. debt decreased $677,000. The
Company had available $1,190,000 of unused long and short-term credit
facilities as of April 1, 1995.
<PAGE> 11
At the end of the first quarter of 1995 and year end 1994, working
capital was ($318,000) and ($549,000) respectively and the ratio of current
assets to current liabilities was .99 to 1.0.
Cash used in 1995 operating activities was $859,000. The decline in
operating cash flow was primarily the result of the increase in inventories
needed to support the increase in backlog.
Cash used in financing activities in 1995 was primarily the result of
changes required to support working capital needs.
Changes in foreign exchange rates, particularly with respect to the
Swiss franc and Deutsche mark, caused a translation adjustment increase in
shareholders' equity of $1,069,000 in the first quarter of 1995.
<PAGE> 12
PART II. OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
As reported in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, the Company is in default under several
financial covenants contained in its loan agreement with three U.S.
banks. These defaults are continuing and have not been waived.
However, on April 28, 1995, the Company entered into a forbearance
agreement with its U.S. banks in which they agreed to forbear in the
exercise of their rights and remedies under the loan documents through
the earlier of July 31, 1995 or the occurrence of a new event of
default thereunder. The forbearance agreement also modified the
existing loan documents in certain aspects, including the granting of
additional collateral. At April 1, 1995, the principal amount
outstanding under the Company's U.S. loan agreement was $13,628,000.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in Part I herein.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Forbearance Agreement and Second Amendment to Revolving Credit and
Term Loan Agreement dated April 28, 1995 by and among K- Tron
International, Inc. and K-Tron America, Inc., First Fidelity Bank,
N.A., PNC Bank, N.A. and United Jersey Bank/South N.A.
11.1 Computation of (loss) Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K.
There were no reports on Form 8-K for the three months ended April 1,
1995.
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on his behalf by the
undersigned thereunto duly authorized.
K-TRON INTERNATIONAL, INC.
Date: May 15, 1995
------------
By: /s/ Robert L. Weinberg
----------------------
Robert L. Weinberg
Senior Executive Vice President,
Chief Financial Officer, and
Treasurer
(Duly authorized officer
and principal financial
officer of the registrant)
By: /s/ Alan R. Sukoneck
--------------------------
Alan R. Sukoneck
Vice President & Controller
(Duly authorized officer and
principal accounting officer
of the registrant)
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
- - -------
<S> <C>
10.1 Forbearance Agreement and Second Amendment
to Revolving Credit and Term Loan Agreement
dated April 28, 1995 by and among K-Tron
International, Inc. and K-Tron America,
Inc., First Fidelity Bank, N.A., PNC Bank,
N.A. and United Jersey Bank/South N.A.
11.1 Computation of (loss) Per Share
27 Financial Data Schedule
</TABLE>
<PAGE> 1
FORBEARANCE AGREEMENT AND SECOND AMENDMENT
TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
This Forbearance Agreement and Second Amendment to Revolving
Credit and Term Loan Agreement (the "Forbearance Agreement") dated April 28,
1995, is by and among K-Tron International, Inc., a New Jersey corporation
("K-Tron International") and K-Tron America, Inc. (formerly known as K-Tron
North America, Inc.), a Delaware corporation ("K-Tron America") (each
individually, a "Borrower" and collectively, the "Borrowers"); K-Tron
Technologies, Inc., a Delaware corporation ("K-Tron Technologies"), K-Tron
Investment Co. a Delaware corporation ("K-Tron Investment") and K-Tron Patent,
Inc., a Delaware corporation ("K-Tron Patent") (each individually a "Surety"
and collectively the "Sureties") (the Borrowers and Sureties are collectively
referred to herein as the "Obligors"); First Fidelity Bank, N.A.
(successor-by-merger to First Fidelity Bank, N.A., New Jersey) ("FFB"), PNC
Bank, N.A. ("PNC"), and United Jersey Bank (successor-by-merger to United
Jersey Bank/South, N.A.)("UJB") (each individually, a "Bank" and collectively,
the "Banks"); and FFB as agent for the Banks (FFB in such capacity, the
"Agent").
WHEREAS, the Borrowers, the Banks and the Agent have entered
into that certain Revolving Credit and Term Loan Agreement dated June 28, 1993,
as amended by that certain First Amendment to Loan Agreement dated as of June
30, 1994, (collectively, the "Loan Agreement"); and
WHEREAS, K-Tron Technologies has executed that certain
Suretyship Agreement dated June 28, 1993 in favor of the Agent (the "1993
Suretyship Agreement") pursuant to which the Surety guaranteed and became the
surety for the Guaranteed Obligations (as such term is defined in the 1993
Suretyship Agreement); and
WHEREAS, the Borrowers notified the Banks in December, 1994
that they were projecting certain financial covenant defaults under the Loan
Agreement to occur as of December 31, 1994; and
WHEREAS, Events of Default under the Loan Agreement have
occurred, are now continuing and the Borrowers believe will continue throughout
the Forbearance Period (defined hereafter) under the Loan Agreement as a result
of, inter alia, the Borrowers' failure to comply with various financial
covenants in the Loan Agreement as more fully described on Exhibit 3.1 hereto
(collectively, the "Existing Defaults");
WHEREAS, as a result of the Existing Defaults, the Agent, with
the consent of the Required Banks (as such term is defined in the Loan
Agreement), currently has a right to declare the entire unpaid principal
balance under the Notes (as such term is defined in the Loan Agreement) and the
Loan Agreement all
<PAGE> 2
interest accrued and unpaid thereon, and all other amounts payable under the
Loan Documents (as such term is defined in the Loan Agreement) immediately due
and payable;
WHEREAS, the Agent and the Banks have agreed to forbear, for a
limited period of time, from exercising their rights under the Loan Agreement
and the other Loan Documents, upon the terms and conditions contained herein.
NOW, THEREFORE, incorporating the Background herein, and for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the Borrowers, the
Sureties, the Banks and the Agent, agree as follows:
ARTICLE 1 - CAPITALIZED TERMS
All capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Loan Agreement.
ARTICLE 2 - AMENDMENTS TO LOAN AGREEMENT
2.1 Amendments. The Loan Agreement is hereby amended as
follows:
(a) The first paragraph of the Loan Agreement is
hereby amended by replacing the term "K-Tron North America, Inc." with the term
"K-Tron America, Inc.," and by replacing the defined term "K-Tron, N.A." with
"K-Tron America"; and the new defined term "K-Tron America" shall replace the
term "K-Tron, N.A." wherever such term appears in the Loan Agreement and the
other Loan Documents.
(b) The first paragraph of the Loan Agreement is
hereby amended by replacing the term "United Jersey Bank/South, N.A." with the
term "United Jersey Bank".
(c) The following defined terms and their
respective definitions in Section 1.1 of the Loan Agreement are hereby amended
and restated in their entirety as follows:
"Loan Documents" means the Loan Agreement, the Notes,
the Suretyship Agreement, the Mortgage, the Bank Assignment
Agreements, the Security Agreements, all other Supplemental
Loan Documents and all of the documents, instruments and
agreements executed in connection with any of the foregoing,
together with all amendments and modification thereto.
- 2 -
<PAGE> 3
"Surety" means collectively K-Tron International (in
its capacity as surety for K-Tron America), K-Tron
Technologies, K-Tron Investment and K-Tron Patent.
"Suretyship Agreement" means collectively that
certain Suretyship Agreement dated June 28, 1993 executed by
K-Tron Technologies in favor of the Agent for the benefit of
the Banks, as amended and restated by that certain Amended and
Restated Guaranty and Suretyship Agreement dated April 28,
1995 executed by K-Tron Technologies in favor of the Agent for
the benefit of the Banks, that certain Guaranty and
Suretyship Agreement dated April 28, 1995 executed by K-Tron
International in favor of the Agent for the benefit of the
Banks, that certain Guaranty and Suretyship Agreement dated
April 28, 1995 executed by K-Tron Patent in favor of the
Agent for the benefit of the Banks, and that certain Guaranty
and Suretyship Agreement dated April 28, 1995 executed by
K-Tron Investment in favor of the Banks and the Agent for the
benefit of the Banks.
"Term Loan Maturity Date" means July 31, 1995.
(d) Section 1.1 of the Loan Agreement is hereby
amended by adding the following new defined terms in the appropriate
alphabetical order:
"Bank Assignment Agreements" means, collectively,
that certain Assignment and Acceptance Agreement dated August
24, 1993 among K-Tron America, K-Tron International, UJB and
FFB and accepted by FFB on August 24, 1993, and that certain
Assignment and Acceptance Agreement dated August 24, 1993
among K-Tron America, K-Tron International, PNC and FFB and
accepted by FFB on August 24, 1993.
"Collateral" means all property and assets of the
Obligors (and each of them) now or hereafter in the
possession, custody or control of the Agent, the Banks and/or
any Affiliate, in any capacity whatsoever including, but not
limited to, any balance or share of any deposit, trust or
agency account, and all property and assets of the Obligors
(and each of them) now or hereafter subject to a security
agreement, pledge, mortgage, assignment or other document or
agreement granting the Agent and/or the Banks a security
interest therein or lien or encumbrance thereon including,
without limitation, the Collateral (as such term is
- 3 -
<PAGE> 4
defined in each of the Security Agreements) and the Mortgaged
Premises.
"Forbearance Agreement" means that certain
Forbearance Agreement and Second Amendment to Revolving Credit
and Term Loan Agreement dated April 28, 1995 by and among the
Borrowers, the Sureties, the Banks and the Agent, together
with all amendments and modifications thereto.
"K-Tron Investment" means K-Tron Investment Co., a
Delaware corporation.
"K-Tron Patent" means K-Tron Patent, Inc., a Delaware
corporation.
"Loan Agreement" means this Agreement, as amended by
that certain First Amendment to Loan Agreement dated as of
June 30, 1994 by and among the Borrowers, the Banks and the
Agent and as further amended by the provisions of Article 2 of
the Forbearance Agreement, together with all amendments and
modifications thereto from time to time.
"Obligors" means the Borrowers and the Surety.
"PNC Bank, N.A." or "PNC" means PNC Bank, N.A., a
national banking association.
"Pro Rata Share" means for each Bank the percentage
set forth opposite such Bank's name on Exhibit 2.1 hereto and
incorporated herein by reference.
"Security Agreements" means collectively that certain
Security Agreement dated as of May 11, 1994 by K-Tron America
in favor of the Agent, as amended and restated by that certain
Amended and Restated Security Agreement dated as of April 28,
1995 by K-Tron America in favor of the Agent for the benefit
of the Banks; that certain General Security Agreement dated as
of April 28, 1995 by K-Tron International in favor of the
Agent for the benefit of the Banks; that certain General
Security Agreement dated as of April 28, 1995 by K-Tron
Technologies in favor of the Agent for the benefit of the
Banks; that certain General Security Agreement dated as of
April 28, 1995, by K-Tron Patent in favor of the Agent for the
benefit of the Banks; that certain General
- 4 -
<PAGE> 5
Security Agreement dated as of April 28, 1995, by K-Tron
Investment in favor of the Agent for the benefit of the Banks;
and any and all other security agreements executed and/or
delivered to the Agent in connection with the Loan Agreement
together with all amendments and modifications thereto.
"Supplemental Loan Documents" means the Forbearance
Agreement and all documents, instruments and agreements
executed and delivered in connection therewith and as required
thereby.
"United Jersey Bank" or "UJB" means United Jersey
Bank, successor by merger to United Jersey Bank/South N.A., a
New Jersey state chartered bank.
(e) The defined terms "Affiliate" and "Subsidiary" in
Section 1.1 of the Loan Agreement are hereby amended by replacing the word
"Borrowers" in the definitions thereof with the word: "Obligors."
(f) Section 2.1 of the Loan Agreement is hereby amended
and restated in its entirety as follows:
2.1. Revolving Credit Commitment. Each Bank
severally (but not jointly) agrees, on the terms and
conditions set forth in this Loan Agreement and the
Forbearance Agreement to make loans (the "Revolving Credit
Loans") to the Borrowers from time to time during the period
from the date of this Agreement up to but not including the
Revolving Credit Termination Date in an aggregate amount not
to exceed at any time outstanding the lesser of: (i) such
Bank's Pro Rata Share of $10,350,000 or (ii) an aggregate
amount not to exceed at any time the amount set forth opposite
such Bank's name on Exhibit 2.1 hereto and incorporated herein
by reference as such amount may be reduced pursuant to Section
2.5 or 9.2 hereof or modified by reason of an assignment under
Section 11.11(B) (individually the "Revolving Credit
Commitment" of each Bank and collectively the "Revolving
Credit Commitment").
(g) Section 2.2 of the Loan Agreement is hereby amended
and restated in its entirety as follows:
2.2. Interest on the Revolving Credit Loans. The
unpaid principal amount of the
- 5 -
<PAGE> 6
Revolving Credit Loans shall bear interest (i) from and after
June 28, 1993 through June 30, 1994 at an annual rate equal to
the Base Rate plus 1/4%; (ii) from and after July 1, 1994
through April 30, 1995 at an annual rate equal to the Base
Rate plus 3/4%; and (iii) from and after May 1, 1995 until
due at an annual rate equal to the Base Rate plus 1%. Such
interest shall be payable (a) monthly in arrears, on the first
day of each month until the Revolving Credit Loans are repaid
in full, and (b) on the date the Revolving Credit Loans are
repaid in full.
(h) Section 2.3 of the Loan Agreement is hereby amended
and restated in its entirety as follows:
2.3. Use of Revolving Credit Loan Proceeds. The
proceeds of the Revolving Credit Loans hereunder shall be used
by the Borrowers only for working capital.
(i) Section 2.10 of the Loan Agreement is hereby amended
and restated in its entirety as follows:
2.10. Default Interest. Upon and following an Event
of Default hereunder, whether before or after acceleration of
the indebtedness or entry of judgment, interest on the unpaid
principal balance of the Revolving Credit Loans shall accrue
at an annual rate which is equal to two percent (2%) above the
then applicable rate of interest for the Revolving Credit
Loans ("Revolving Credit Default Interest")
(j) Section 2.11 of the Loan Agreement is hereby amended
by adding new subsection (D) as follows:
(D) Termination; Non-Renewal. All obligations, if any,
of the Agent and/or the Banks to issue Letters of
Credit terminated effective as of December 13, 1994.
The Borrowers hereby acknowledge that the Agent and
the Banks had no obligation to renew or extend those
Letters of Credit expiring on or after December 13,
1994.
(k) Section 2.12 of the Loan Agreement is hereby amended
by adding new subsection (D) as follows:
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<PAGE> 7
(D) Termination; Non-Renewal. All obligations, if any,
of the Agent and/or the Banks to issue Acceptances
hereunder terminated effective as of December 13,
1994. The Borrowers hereby acknowledge and agree
that the Agent and the Banks had no obligation to
renew those Acceptances maturing on or after December
13, 1994.
(l) The first sentence of Section 2.14(A) is hereby
amended and restated in its entirety as follows:
(A) Rate. During the Base Rate Period, K-Tron America
shall pay interest on the unpaid principal amount of
the Term Loan (i) from and after June 28, 1993
through June 30, 1994 at the Base Rate plus 1/2%;
and (ii) from and after July 1, 1994 until payment in
full of the Term Loan at the Base Rate plus 1%.
(m) Section 2.17 of the Loan Agreement is hereby amended
and restated in its entirety as follows:
2.17. Default Interest. Upon and following an Event
of Default hereunder, whether before or after acceleration of
the indebtedness or entry of judgment, interest on the unpaid
principal balance of the Term Loans shall accrue at an annual
rate which is equal to two percent (2%) above the then
applicable rate of interest for the Term Loans (the "Term Loan
Default Rate").
(n) Section 2.18 of the Loan Agreement is hereby deleted
in its entirety and replaced with the following:
2.18. Prepayment. K-Tron may prepay the Term Loans
in whole or in part at any time with no premium or penalty with
respect to such prepayment.
(o) Section 3.1 of the Loan Agreement is hereby amended
by: (i) deleting therefrom the following: "As security for payment of the Term
Loan, K-Tron, N.A. will execute and deliver to the Agent a first priority
mortgage ("Mortgage")"; and adding in place thereof, the following:
As security for payment of the Term Loan, the Revolving Credit
Loans and all other obligations and liabilities of K-Tron
America due to the Agent and the Banks, K-Tron America will
execute and deliver to Agent (A)
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<PAGE> 8
a first priority mortgage, as the same may be amended from
time to time (the "Mortgage")
and by (ii) adding after the words "New Jersey" the following: "as more fully
described in the Mortgage".
(p) Section 9.2 of the Loan Agreement is hereby amended
by adding after the words "If any Event of Default shall occur and be
continuing", the following: "interest on the Term Loans shall accrue at the
Term Loan Default Rate and Interest on the Revolving Credit Loans shall accrue
at the Revolving Credit Default Rate, and".
(q) Section 11.2 of the Loan Agreement is hereby amended
by deleting the address to which all notices to the Agent and its counsel
should be sent and adding in place thereof, the following:
If to the Agent, at:
First Fidelity Bank, N.A.
Broad and Walnut Streets
Philadelphia, PA 19109
Attention: Elizabeth B. Styer
Senior Vice President
With required copies to:
PNC Bank, N.A.
Land Title Building
6th Floor
Broad & Chestnut Streets
Philadelphia, PA 19101
Attention: Constantin Chepurny
Vice President
United Jersey Bank
4365 Route 1 South
CN 5284
Princeton, NJ 08543-5284
Attention: Kevin M. Behan
Vice President
and
William E. Jacobs
Vice President
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103-7396
Attention: Margery N. Reed, Esquire
and
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<PAGE> 9
Michael P. Going, Esquire
First Fidelity Bancorporation
123 South Broad Street
10th Floor
Philadelphia, PA 19109-1199
(r) Exhibit 2.1 of the Loan Agreement is hereby amended
and restated in its entirety as follows:
EXHIBIT 2.1
REVOLVING CREDIT COMMITMENTS
<TABLE>
<CAPTION>
Name of Bank Amount Pro Rata Share
- - ------------ ------ --------------
<S> <C> <C>
FFB $5,175,000 50%
PNC $2,587,500 25%
UJB $2,587,500 25%
- - --------------- ---------- ---
Total Revolving $10,350,000 100%
Credit Commitments
</TABLE>
(s) Exhibit 2.13 of the Loan Agreement is hereby amended
and restated in its entirety as follows:
EXHIBIT 2.13
TERM LOAN COMMITMENTS
<TABLE>
<CAPTION>
Name of Bank Amount Pro Rata Share
- - ------------ ------ --------------
<S> <C> <C>
FFB $1,988,889.00 50%
PNC $ 994,444.50 25%
UJB $ 994,444.50 25%
</TABLE>
2.2 No Other Amendments. Except as expressly set forth in
Article 2 hereof, the Loan Agreement shall remain in full force and effect and
the Borrowers shall comply with all of the terms, covenants and provisions set
forth in the Loan Agreement, as amended hereby.
ARTICLE 3 - ACKNOWLEDGEMENTS
3.1 Acknowledgement of Defaults; Existing Loan
Documents; Waiver of Defenses. The Obligors acknowledge and agree that:
(a) the Existing Defaults as enumerated in
Exhibit 3.1 attached hereto and incorporated herein currently exist;
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<PAGE> 10
(b) the Existing Defaults are material in
nature;
(c) as a result of the Existing Defaults, the
Agent, with the consent of the Required Banks, currently has the right to
demand that all amounts outstanding under the Loan Documents are due and owing
immediately to the Banks by the Borrowers and K-Tron Technologies;
(d) the Agent and the Banks are presently
entitled to exercise their remedies under the Loan Documents and applicable
law;
(e) the Loan Documents are valid and
enforceable against those Obligors which are parties thereto in every respect,
and all of the terms and conditions thereof are binding upon such Obligors; and
(f) to the extent that any defenses, set-offs
or counterclaims exist as of this date, the Obligors hereby waive any and all
such defenses, set-offs, and counterclaims which they or any of them may have
to the enforcement by the Agent and/or the Banks of the Loan Documents and to
the exercise by the Agent and/or the Banks of their rights and remedies under
the Loan Documents and/or applicable law.
3.2 Acknowledgment of Indebtedness. The Obligors
acknowledge and agree that as of April 18, 1995:
(a) the Borrowers are indebted and liable to the Agent and the
Banks under the Revolving Credit Loans in the principal amount of: Ten Million
Three Hundred Fifty Dollars ($10,350,000) and interest in the amount of
$50,465.25 for a total of $10,400,456.25; and K-Tron America is indebted and
liable to the Agent and the Banks under the Term Loan in the principal amount
of $3,227,780 and interest in the amount of $16,138.90 for a total of
$3,243,918.90; together with the Agent's and the Banks' reasonable fees, costs
and expenses (collectively, the "Current Outstanding Obligations").
3.3 Acknowledgement of Liens, Collateral and
Priority. The Obligors acknowledge and agree that:
(a) FFB, for itself and as Agent for the Banks, has a duly
recorded, valid, first-priority mortgage lien on certain real property of
K-Tron America, as more fully described in the Mortgage, as amended by that
certain First Amendment of Mortgage and Security Agreement bearing even date
herewith, between K-Tron America and the Agent (the "Mortgage Amendment"); the
Mortgage being recorded on July 30, 1993, with the Clerk's Office of Gloucester
County, New Jersey, at Book 2433, page 292, and the Mortgage Amendment to be
filed promptly hereafter.
- 10 -
<PAGE> 11
(b) Pursuant to the Mortgage, the Agent also has a duly
perfected, first-priority security interest in and lien on certain personal
property of K-Tron America, including fixtures.
(c) FFB for itself and as Agent for the Banks, also has a
duly perfected, first-priority security interest in and lien on certain items
of personal property of K-Tron America as more fully described in that certain
Security Agreement between the Agent and K-Tron America, dated May 11, 1994
(the "1994 Security Agreement").
(d) The Mortgage as amended by the Mortgage Amendment and the
collateral described in the 1994 Security Agreement as amended shall secure all
of the Obligations (as hereinafter defined) of K-Tron America; and all of the
collateral described in the Security Agreements and any other Loan Document or
Supplemental Loan Document granted, pledged or transferred by any Obligor in
favor of the Agent and/or the Banks shall secure, inter alia, all of the
Obligations (hereinafter defined) of such Obligor. For purposes of this
Agreement, the word "Obligations" shall mean any and all obligations,
liabilities and indebtedness of each Obligor to the Agent and/or the Banks of
every kind and description, direct and indirect, absolute and contingent, sole,
joint, several, or joint and several, primary or secondary, due or to become
due, now existing or hereafter arising, regardless of how they arise or by what
agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument and includes obligations to perform acts and refrain
from taking actions as well as obligations to pay money and also includes all
indebtedness, liabilities and obligations of the Obligors or any Obligor to the
Banks evidenced by or arising under the Supplemental Loan Documents and/or the
existing Loan Documents as they may be amended by the Supplemental Loan
Documents.
ARTICLE 4 - OBLIGORS' COVENANTS
The Obligors covenant and agree that from the date hereof and
until the satisfaction of their Obligations, unless the Agent shall otherwise
consent in writing:
4.1 Payments During the Forbearance Period. At all
times, from and after the date of this Agreement, the Borrowers shall continue
to pay principal and accrued interest on the Term Loan and the Revolving Credit
Loans at the applicable interest rates and on the dates as provided in the Loan
Agreement, as amended by this Forbearance Agreement.
4.2 Payment of the Agent's and Banks' Attorneys'
Fees, Costs and Expenses. The Borrowers shall pay on or before the date
hereof, and thereafter promptly after demand therefor, all reasonable
attorneys' and other professionals' fees, and out-of-pocket costs and expenses
incurred by the Agent and the Banks in connection with the negotiation,
preparation and enforcement of the Loan Documents including, without
limitation, this Forbearance Agreement and the Supplemental Loan Documents.
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<PAGE> 12
4.3 Existing Covenants. Unless otherwise provided
herein, the Borrowers shall comply with all of the covenants set forth in the
Loan Documents, as amended by the Supplemental Loan Documents.
4.4 Repayment of Term Loan and Revolving Credit
Loans. On or before July 31, 1995, the Obligors shall pay to the Agent for the
benefit of the Banks all outstanding principal and accrued interest on the Term
Loan and the Revolving Credit Loans.
4.5 No Transfers of Assets without Agent's Written
Consent. The Obligors shall not convey, transfer, consign, pledge or grant
liens on or security interests in any of their respective assets to any entity
other than the Banks or the Agent except for purchase money liens on equipment
granted for purchases of such equipment in the ordinary course of Obligors'
respective businesses (and refinancings of same).
4.6 No Additional Debt. No Obligor shall incur
additional debt other than debt to the Banks, the Agent and/or trade debt or
equipment leases in the ordinary course of such Obligor's business.
4.7 Other Payments. The Obligors shall not make any
payments during the Forbearance Period, as hereinafter defined, to any bank or
financial institution other than the Agent or the Banks on account of
indebtedness for money borrowed.
4.8 Cash Flow Forecast. On or before the date
required by Article VI hereof, the Borrowers shall deliver to the Agent and the
Banks the Borrowers' detailed, weekly cash flow forecast for the Forbearance
Period and their detailed monthly cash flow forecast for the period from August
1, 1995 through December 31, 1995, together with a detailed description of all
assumptions utilized in formulating such forecasts (collectively, the
"Forecast"). The Forecast shall be prepared for K-Tron America separately and
also for the Obligors combined.
4.9 Actual to Projected Cash Flow. On the second
business day of each week during the Forbearance Period, the Borrowers shall
deliver to the Banks a comparison of their actual cash flow to the Forecast for
the prior week, together with any necessary revisions or corrections to the
Forecast.
4.10 Weekly Certification. On the second business day
of each week during the Forbearance Period, the Borrowers shall deliver to the
Banks the information described on Exhibit 4.10 together with a certification
by each Borrower's chief financial officer or by the chief financial officer of
K-Tron International (or in such officer's absence, any other appropriate
officer) for all Borrowers as to the truth and accuracy thereof.
4.11 Assignment of Income Tax Refunds. The Obligors
represent and warrant to the Banks that they file their federal
- 12 -
<PAGE> 13
income tax returns on a consolidated basis and they are entitled to a federal
income tax refund for the year ending December 31, 1994 of approximately
$442,000 (of which they received approximately $42,000 in February, 1995). On
or before the date of this Agreement, the Obligors shall assign all income tax
refunds payable from any governmental body or agency to FFB, for itself and as
Agent for the Banks. Should any Obligor determine that it is entitled to an
income tax refund at any time during the Forbearance Period or thereafter until
the Obligations are satisfied, it shall notify the Agent of its intent to file
a tax return requesting such refund at least one week before filing such a
return so that the assignment of its income tax refund (and any other necessary
or appropriate papers) may be attached to such tax return prior to the filing
thereof. The Obligors shall deliver to the Agent, immediately upon receipt
thereof, any payment received (with any necessary endorsement) pursuant to an
income tax refund to be applied to reduce the Obligations; and prior to
delivery thereof to the Agent, any such income tax refund shall be held in
trust for the benefit of the Agent and the Banks.
4.12 Financial Information; Tax Returns. Upon the
filing of any document with the Securities Exchange Commission or any tax
return or quarterly tax filing with any governmental agency, authority or body,
the Obligors shall simultaneously deliver to the Agent and the Banks copies of
such documents, returns or filings.
4.13 Accounts Receivable from Foreign Affiliates.
K-Tron America and K-Tron International (i) represent and warrant to the Banks
that their net aggregate accounts receivable due from any and all of their
foreign Affiliates was $736,000 as of March 3, 1995, (ii) agree that they shall
cause their foreign Affiliates to pay to the Borrowers within 30 days of the
end of each fiscal month, the amount of any net incremental aggregate accounts
receivable in excess of $736,000 due from the Borrowers' foreign Affiliates as
of the end of such fiscal month (and to the extent that such excess accounts
receivable is not paid by the foreign Affiliates within such 30 day period,
then within such 30 day period, the Borrowers shall pay the amount of such
excess to the Agent for the benefit of the Banks to be applied to the
Obligations); provided, however, that if payment by Colortronic GmbH of its
share of such excess accounts receivable would cause a violation of Colortronic
GmbH's loan agreements, then the payment of an amount not to exceed $150,000 of
such excess accounts receivable due from Colortronic GmbH may be deferred by
Colortronic GmbH (and the Borrowers) for an additional 60 days, (iii) agree
that any amounts that may hereafter become due from K-Tron America and/or
K-Tron International to their foreign Affiliates shall be netted (i.e. setoff)
against such accounts receivable, and (iv) agree that they shall deliver to the
Agent for the benefit of the Banks, to be applied to Obligations, an amount
equal to any reduction in such net accounts receivable from foreign Affiliates
as of the end of each month below $736,000 less any prior amounts paid pursuant
to this clause (iv)
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<PAGE> 14
(but not more than $736,000 in the aggregate) within 30 days of the end of such
month.
4.14 Third Party Accounts Payable. Third party
accounts payable of K-Tron America shall not exceed more than $4.0 million.
For purposes of this section, any commissions that are not paid when due shall
be included in K-Tron America's accounts payable.
4.15 No Payments to Affiliates Without Fair
Consideration. No Obligor shall make any payments or transfers to any of its
Affiliates unless fair and reasonable consideration is received therefor and
such Affiliate is not liable to such Obligor for any accounts receivable or
other amounts due to such Obligor.
4.16 Liability for Corporate Overhead. K-Tron America
shall not be liable to K-Tron International for more than its proportionate
share of corporate expenses based upon K-Tron International's Corporate Expense
Budget for 1995 which shall be subject to review of the Banks as provided in
Section 6.2 hereof. K-Tron International shall use its best efforts to cause
its European Affiliates to pay their share of monthly corporate expenses
(including all management fees) each month within 30 days of the end of each
month. K-Tron America shall not pay more than its fair share of K-Tron
International's research and development and marketing international
expenditures on an interim and annual basis; and in any event K-Tron America
shall not pay more than $1,400,000 for research and development and marketing
international expenditures in the fiscal year ending 1995. Within 25 days of
the end of each calendar quarter, K-Tron America shall provide to the Banks a
report of its year to date and quarterly research and development and marketing
international expenditures.
4.17 Inventory Purchases. K-Tron America shall not
purchase more inventory than is reasonably required to fill orders that have
been accepted or budgeted in the Forecast or purchase inventory from any
Affiliate for a price that is higher than prices for comparable products
supplied by entities that are not Affiliates.
4.18 Deposit Accounts. The Obligors shall maintain
all of their deposit and other accounts at FFB.
4.19 Execution of Other Documents. At the Agent's
request, the Obligors shall execute and deliver to the Agent such other
documents and agreements which the Agent, in its sole and reasonable
discretion, deems necessary or convenient to carry out the terms of this
Forbearance Agreement or the other Loan Documents.
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<PAGE> 15
ARTICLE 5 - BANK'S COVENANTS
5.1 Forbearance. The Agent and the Banks shall
forbear in the exercise of their rights and remedies (including, without
limitation, the imposition of default rate interest) under the Loan Documents
and applicable law from the date hereof through the earlier to occur of July
31, 1995 or an Event of Default, as defined below, other than the Existing
Defaults, which Existing Defaults the Obligors expect to continue indefinitely
(the "Forbearance Period").
5.2 Permitted Borrowing. During the Forbearance
Period, the Borrowers shall continue to be permitted to borrow amounts under
Section 2.1 of the Loan Agreement, as amended by this Forbearance Agreement.
5.3 Revolving Credit Commitments. The Revolving
Credit Commitments shall not exceed $10,350,000 at any time.
ARTICLE 6 - CONDITIONS PRECEDENT AND SUBSEQUENT
The Agent's and Banks' obligations hereunder, are conditioned
upon the fulfillment by the Obligors of the following conditions precedent and
subsequent:
6.1 Documents to be Delivered to the Agent and the
Banks as Conditions Precedent. The Obligors shall deliver or cause to be
delivered on or before the date hereof to the Agent and the Banks, in form and
substance satisfactory to the Agent and the Banks, the following (collectively,
the "Supplemental Loan Documents"):
(a) this Forbearance Agreement duly executed
by the Obligors;
(b) a First Amendment of Mortgage and
Security Agreement by K-Tron America, as Mortgagor, in favor of the Agent, as
Mortgagee, for the benefit of the Banks;
(c) a First Amendment of Collateral
Assignment of Leases by K-Tron America, as Assignor in favor of the Agent, as
Assignee for the benefit of the Banks;
(d) a Guarantee and Suretyship Agreement duly
executed by K-Tron International in favor of the Agent, for the benefit of the
Banks;
(e) a Security Agreement duly executed by
K-Tron International in favor of the Agent, for the benefit of the Banks;
(f) an Amended and Restated Security
Agreement duly executed by K-Tron America in favor of the Agent, for the
benefit of the Banks;
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<PAGE> 16
(g) an Amended and Restated Guarantee and
Suretyship Agreement duly executed by K-Tron Technologies in favor of the
Agent, for the benefit of the Banks;
(h) a Security Agreement duly executed by
K-Tron Technologies in favor of the Agent, for the benefit of the Banks;
(i) Guarantees and Suretyship Agreements duly
executed separately by K-Tron Patent and K-Tron Investment in favor of the
Agent, for the benefit of the Banks;
(j) Security Agreements duly executed
separately by K-Tron Patent and K-Tron Investment in favor of the Agent, for
the benefit of the Banks;
(k) United States Patent and Trademark Office
filings required to perfect or give notice of the Agent's security interests in
and liens on the Obligors' patents and trademarks;
(l) appropriate Assignments of Tax Refunds
and powers of attorney regarding such income tax refunds due or that may
hereafter become due to each Obligor;
(m) a down-dated endorsement of the title
insurance policy related to the Mortgage;
(n) all UCC-1 Financing Statements required
to perfect all security interests granted by the Obligors to the Agent, for the
benefit of the Banks;
(o) Certificates of Incumbency executed by
the Secretary of each Obligor, dated as of the date of this Agreement,
certifying the incumbency and signature of the officers of each Obligor
executing this Agreement and any other documents to be delivered pursuant
hereto, together with evidence of the incumbency of such Secretary;
(p) Corporate Resolutions for each Obligor;
(q) Certificates of Good Standing for each
Obligor;
(r) Opinion of Obligors' counsel;
(s) Articles of Incorporation and By-Laws of
each Obligor, certified as true and correct by the Corporate Secretary of each
Obligor;
(t) K-Tron International's agreements between
its foreign subsidiaries' and their respective lenders; and
(u) such other documents and agreements as
the Agent, in its sole discretion, may reasonably require.
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<PAGE> 17
6.2 Conditions Subsequent to Closing. The Obligors
shall deliver or shall cause to be delivered to the Agent and the Banks, on or
before May 8, 1995 (or in the case of the Management Letter, as hereinafter
defined, as soon as possible thereafter) the following financial documents or
information:
(a) K-Tron America's Forecast;
(b) K-Tron International's allocated expense
budget for 1995 (including detailed corporate overhead, management fees,
research and development costs, marketing expenses and the procedure for
allocating corporate expenses among the various U.S. and foreign Affiliates
and/or subsidiaries of K-Tron International;
(c) K-Tron America's proposal for an
acceptable netting procedure that will reduce the foreign exchange risk on
K-Tron America's purchases from and sales to its foreign Affiliates (which
shall be subject to the Bank's review and approval);
(d) A copy of Arthur Andersen & Co.'s final
management letter ("Management Letter") prepared in connection with K-Tron
International's 1994 annual financial statements; and
(e) Copies of the Obligors' formulas,
calculations and/or agreements for determining management and licensing fees,
which shall be subject to the Bank's review and approval.
The Obligors shall advise the Banks of any material changes to any of
the foregoing after delivery thereof to the Banks.
ARTICLE 7 - GENERAL RELEASE BY THE OBLIGORS;
RELIEF FROM STAY; WAIVERS
7.1 General Release. Each Obligor for itself and all
persons and entities claiming by, through or under such Obligor (collectively,
the "Releasors") hereby jointly and severally unconditionally remise, release
and forever discharge the Agent and each Bank and their past, present and
future officers, directors, employees, agents, attorneys, parent, Affiliates,
subsidiaries and the heirs, executors, personal administrators, successors and
assigns, as applicable, of any such persons and entities (collectively, the
"Releasees"), of and from any and all actions, causes of action, suits, claims,
counterclaims, defenses, setoffs, liabilities, damages and demands whatsoever,
whether known or unknown, at law or in equity, direct or indirect, if any,
which any of the Releasors ever had, now has, claim to have had, now claim to
have or hereafter can, shall or may claim to have against any of the Releasees
upon or by reason of any matter, cause or thing, from the beginning of the
world to the date hereof arising from or relating to the Loan Documents, the
Supplemental Loan Documents,
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<PAGE> 18
this Forbearance Agreement and the related transactions, obligations, and
business dealings between the Agent, on behalf of the Banks, and the Obligors.
7.2 Relief from the Automatic Stay. In the event
that any Obligor shall: (i) file with any bankruptcy court or be the subject
of any petition under Title 11 of the U.S. Code, as amended (the "Bankruptcy
Code"), (ii) be the subject of any order for relief issued under the Bankruptcy
Code, (iii) file or be the subject of any petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future foreign, federal or state act or law
relating to bankruptcy, insolvency or other relief from creditors, (iv) have
sought or consented to or acquiesced in the appointment of any trustee,
receiver, conservator or liquidator, or (v) be the subject of any order,
judgment or decree entered by any court of competent jurisdiction approving a
petition filed against such party for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future federal or state act or law relating to bankruptcy,
insolvency or other relief from creditors; then, the Agent and the Banks shall
thereupon be entitled to relief from any automatic stay imposed by Section 362
of the Bankruptcy Code or otherwise to exercise any or all of their respective
rights and remedies available under any of the Loan Documents and/or
non-bankruptcy law; and Obligors shall consent to such relief and take all
actions deemed necessary or desirable by the Agent and/or the Required Banks to
implement this Section.
7.3 Waivers. In the event the Agent and/or the Banks
seek to take possession of any or all of the Collateral by court process, the
Obligors hereby irrevocably waive any bonds and any surety or security relating
thereto required by any statute, court rule or otherwise as an incident to such
possession, and waive any demand for possession prior to the commencement of
any suit or action to recover such Collateral.
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this
Forbearance Agreement, and as partial consideration for the terms and
conditions contained herein, the Obligors make the following representations
and warranties to the Agent, and the Banks, each and all of which shall survive
the execution and delivery of this Forbearance Agreement and all of the other
documents executed in connection herewith:
8.1 Organization and Location.
(a) Each Obligor is a corporation duly
incorporated, organized, validly existing and in good standing under the laws
of the state of their incorporation, and is duly authorized to do business and
is duly qualified as a foreign
- 18 -
<PAGE> 19
corporation in all jurisdictions wherein the nature of its business or property
make such qualification necessary, and has the corporate power to own its
properties and to carry on its business as now conducted;
(b) Each Obligor has the requisite corporate
power and authority to own or hold under lease all of its properties, to carry
on its business as currently conducted, and to execute, deliver and perform
this Forbearance Agreement and all of the documents executed by it in
connection herewith;
(c) Every fictitious name, tradename,
division or style under which any Obligor conducts its business has been
disclosed to the Agent in writing together with the names of each and every
jurisdiction in which the same are utilized, and are included herein in Exhibit
8.1(c) attached hereto;
(d) Every joint venture, partnership,
enterprise and stock ownership of each Obligor has been disclosed to the Agent
and is included herein in Exhibit 8.1(d) attached hereto;
(e) Every Affiliate, subsidiary or parent
corporation of each Obligor is named in Exhibit 8.1(e) attached hereto.
8.2 Authorization; Valid and Binding Agreement. All
corporate action required to be taken by each Obligor and its officers,
directors and/or shareholders and all actions required to be taken by their
respective principals for the authorization, execution, delivery and
performance of this Forbearance Agreement and the other documents contemplated
hereby have been taken. Each person executing this Forbearance Agreement on
behalf of an Obligor is an authorized officer and is authorized to execute
same. This Forbearance Agreement is, and each of the documents executed
pursuant hereto will be, legal, valid, and binding obligations of the party or
parties thereto, enforceable against each such party in accordance with their
respective terms, subject only to bankruptcy, insolvency, reorganization,
moratorium and other laws or equitable principals affecting creditors' rights
generally.
8.3 Location of Assets of the Obligors. All of the
assets and property, both real and personal of each Obligor is located at the
addresses set forth in Exhibit 8.3 attached hereto, except for de minimis
amounts of demo equipment and loaners temporarily located.
8.4 Compliance with Laws. The Obligors are in
compliance in all material respects with all laws, regulations and requirements
applicable to their businesses, and have not received, and have no knowledge
of, any order or notice of any governmental investigation or of any violations
or claims of violation of any law, regulation or any governmental requirement.
- 19 -
<PAGE> 20
8.5 No Conflict; Government Approvals. The Obligors'
execution, delivery and performance of this Forbearance Agreement and the other
documents executed in connection herewith will not:
(a) conflict with, violate or result in the
breach of any provision of any applicable law, rule, regulation or order; or
(b) conflict with or result in the breach of
any provisions of the Articles of Incorporation or by-laws of any of the
Obligors or any Affiliate or subsidiary of any of the Obligors. No
authorization, consent or approval of, or other action by, and no notice of or
filing with, any governmental authority or regulatory body is required to be
obtained or made by the Obligors for the due execution, delivery and
performance of this Forbearance Agreement.
8.6 Third Party Consents. The execution, delivery
and performance by the Obligors of this Forbearance Agreement and the documents
related hereto will not:
(a) require any consent or approval of any
person or entity which has not been obtained prior to, and which shall remain
in full force and effect as of the date of the date this Forbearance Agreement
is executed;
(b) result in the breach of, default under,
or cause the acceleration of any obligation owed under any loan, credit
agreement, note, security agreement, lease indenture, mortgage, loan document
or other agreement by which the Obligors are bound or affected; or
(c) result in, or require the creation or
imposition of, any lien or encumbrance on the property of the Obligors other
than those liens or security interests in favor of the Agent on behalf of the
Banks or the liens or security interests disclosed to the Agent in the Existing
Loan Documents.
8.7 Financial Statements; Reporting.
(a) All balance sheets, reports, statements
of income, shareholders' equity and changes in financial position, budgets,
reconciliations, monthly sales reports, monthly accounts receivable reports and
monthly accounts payable reports with respect to the Obligors have been
prepared in form acceptable to the Agent and, if applicable, in conformity with
generally accepted accounting principles and applied on a basis consistent with
that of the preceding fiscal year of the Obligors and present fairly the
financial condition and results of operations for the period covered thereby of
the Obligors. The chief financial officer (or in such officer's absence, any
other appropriate officer) of K-Tron International or each Obligor shall
certify the truth and accuracy of all such financial information. Since
December 31, 1994, there has been no material
- 20 -
<PAGE> 21
adverse change in the Borrowers' or Sureties' financial condition or results of
operation except as disclosed to the Banks in writing prior to the date of this
Forbearance Agreement.
(b) The Obligors do not know of any facts,
other than those already disclosed in writing to the Agent by the Obligors,
that materially adversely affect or in so far as can be foreseen, will
materially adversely affect the Obligors' ability to perform their Obligations
under this Forbearance Agreement and the Loan Documents.
8.8 Litigation and Contingent Liabilities. Except as
set forth on Exhibit 8.8 hereto, no claim, action, suit, litigation,
administrative or governmental proceeding (collectively "Claims") is pending,
or to the knowledge of the Obligors upon due inquiry, is threatened against any
Obligor in which the amount involved exceeds $250,000 in the aggregate. The
Obligors hereby agree to delver to the Banks at closing and within one week
after the end of each calendar quarter a written status report of all Claims
pending or threatened against each Obligor.
8.9 Exclusive and First Priority Perfected Lien. The
Agent on behalf of the Banks has, as of the date of this Agreement, and shall
continue to have, until all of the Obligations are paid in full, first
priority, valid perfected (to the extent that the same may be perfected by
filing) liens upon and security interests in all of the collateral, both real
and personal, described in the Security Agreements and the Mortgage, as amended
by the Mortgage Amendment.
8.10 No Untrue or Misleading Statements. Neither this
Forbearance Agreement nor any other document executed in connection herewith by
the Obligors contains any untrue statement of a material fact or omits any
material fact necessary in order to make the statement made, in light of the
circumstances under which it was made, accurate.
8.11 No Other Defaults. Except for the Existing
Defaults described on Exhibit 3.1 hereto, no default or Event of Default exists
as of the date hereof under any of the Loan Documents.
8.12 No Transfers. No assets of the Obligors have
been consigned or transferred outside of the ordinary course of the Obligors'
businesses to another entity.
8.13 Other Representations and Warranties. The
Obligors hereby reaffirm all of their representations and warranties to the
Agent contained in the Loan Documents, and warrant that, except to the extent
disclosed in the Supplemental Loan Documents, such representations and
warranties are true and correct as of the date of this Agreement.
- 21 -
<PAGE> 22
8.14 No Other Indebtedness. None of the Obligors has
any outstanding indebtedness for borrowed money to any entity other than the
Banks.
8.15 Patents and Trademarks. To the best of each
Obligors knowledge after reasonable inquiry, no Obligor owns or has any
interest in any patent or trademark except as set forth on Exhibit 8.15 hereto
(it being understood, however, that the Obligors are unable to determine
whether they have any interest in those patents and trademarks listed on
Exhibit 8.15 as either "unassigned" or "abandoned"). The Obligors shall advise
the Agent of any patents, trademarks and/or related applications that any
Obligor acquires or discovers it has an interest in at any time hereafter.
8.16 Tax Refunds. To the best of Obligors' knowledge,
the Obligors are entitled to a federal income tax refund which they have not
yet received in the aggregate approximate amount of $400,000.
ARTICLE 9 - EVENTS OF DEFAULT
Each of the following shall constitute an "Event of Default"
under this Forbearance Agreement and all other Loan Documents:
9.1 Payment. Failure of any Obligor to make any
payment of principal, interest or other amounts due on the date such payment is
due under the Loan Agreement as modified by this Forbearance Agreement or under
any other Loan Document.
9.2 Covenants. Failure of any Obligor to observe any
non-monetary covenant set forth herein or in any of the Loan Documents which
default is not cured within the time period, if any, specified herein or in the
Loan Documents.
9.3 Agreements Invalid. (A) The validity, binding
nature or enforceability of any material term or provision of this Forbearance
Agreement, any other Supplemental Loan Document or any of the other Loan
Documents is disputed by, on behalf of, or in the right or name of any Obligor
or (B) this Forbearance Agreement, the Supplemental Loan Documents and the
other Loan Documents are found or declared to be invalid, avoidable, or
unenforceable by any court of competent jurisdiction.
9.4 False Warranties; Breach of Representations. Any
warranty or representation made or reaffirmed by any Obligor in this
Forbearance Agreement or in any other Supplemental Loan Document or in any
certificate or other writing delivered under or pursuant to this Forbearance
Agreement or any other Supplemental Loan Document, or in connection with any
provision of this Forbearance Agreement or related to the transactions
contemplated hereby shall prove to have been false or incorrect or breached in
any material respect as of the date made.
- 22 -
<PAGE> 23
9.5 Judgments. A final judgment or judgments is
entered, or an order or orders of any judicial authority or governmental entity
is issued against any Obligor (i) for payment of money in the aggregate in
excess of $25,000 or (ii) for injunctive or declaratory relief which would have
a material adverse effect on the ability of any Obligor to conduct its business
as presently conducted; and such judgment or order is not discharged or
execution thereon or enforcement thereof is not stayed pending appeal, within
thirty (30) days after entry or issuance thereof, or, in the event of such a
stay, such judgment or order is not discharged within thirty days after such
stay expires.
9.6 Liens. Any execution, garnishment, attachment, distraint, or
lien is filed, entered, or issued against any Obligor or any of its property or
any order is entered enjoining or restraining any Obligor and/or restraining or
seizing any property of any Obligor which is not stayed, discharged or bonded
within 45 days (provided, however, that all borrowing availability shall
terminate immediately and automatically upon the commencement and during such
45 day period).
9.7 Bankruptcy or Insolvency of an Obligor.
(a) Any Obligor becomes insolvent, or
generally fails to pay, or is generally unable to pay or admits in writing its
inability to pay its debts as they become due, or applies for, consents to or
acquiesces in, the appointment of a trustee, receiver or other custodian for
that Obligor, as the case may be, or a substantial part of its property, or
makes a general assignment for the benefit of creditors;
(b) Any Obligor commences any bankruptcy,
reorganization, debt adjustment, or other case or proceeding under any state or
federal bankruptcy or insolvency law, or any dissolution or liquidation
proceeding;
(c) Any bankruptcy, reorganization, debt
arrangement or other case or proceeding under any state or federal bankruptcy
or insolvency law or any dissolution or liquidation proceeding is involuntarily
commenced against or in respect of an Obligor and the same shall not be stayed
or dismissed within 45 days (provided, however, that all borrowing availability
shall terminate immediately and automatically upon the commencement and during
such 45 day period);
(d) A trustee, receiver or other custodian is
appointed for any Obligor or a substantial part of such entity's property and
the same shall not be stayed or dismissed within 45 days (provided, however,
that all borrowing availability upon the commencement shall terminate
immediately and automatically during such 45 day period).
- 23 -
<PAGE> 24
9.8 Cross-Default. A default or an event of default
(other than the Existing Defaults) occurs under any Loan Document that is not
cured within the applicable grace period, if any.
ARTICLE 10 - REMEDIES
Upon the earlier of (i) the occurrence of any one or more
Events of Default (other than the Existing Defaults), or (ii) July 31, 1995:
(a) all Obligations shall become due and payable immediately and without notice
to the Obligors, (b) the obligations of the Agent and the Banks hereunder shall
terminate automatically and immediately, without notice to the Obligors, and
(c) the Agent and the Banks shall have all the remedies set forth in any of the
Loan Documents and/or under applicable law.
ARTICLE 11 - MISCELLANEOUS
11.1 Costs, Expenses and Attorneys' Fees. The
Obligors agree to pay on demand by the Agent:
(a) All reasonable out-of-pocket costs and
expenses incurred by the Agent and/or the Banks, including without limitation,
all reasonable fees and out-of-pocket expenses of counsel, accountants and
other professionals for the Agent and/or the Banks in connection with:
(i) the negotiation, preparation and
enforcement of this Forbearance Agreement, all other Supplemental Loan
Documents, all other Loan Documents and the documents relating thereto;
(ii) the assertion by any person,
entity or organization, other than the Banks, of any claim or lien,
encumbrance, security interest, or other interest in any of the assets of the
Obligors (except to the extent such interest is permitted under any Loan
Document), including any attachment, garnishment, levy, notice of debtor's
examination, notice of examination, judgment lien or execution lien, regardless
of when such fees or expenses are incurred;
(iii) the enforcement or exercise by the
Agent and/or the Banks of the Agent's and/or any Bank's rights or remedies with
respect to the collection of the Obligations or to preserve, protect or enforce
the Agent's and/or any Bank's interests in any bankruptcy, insolvency or
reorganization case which may affect any Obligor and any litigation, dispute,
case, arbitration or action with respect to any attachment, garnishment, levy,
notice of debtor's examination, judgment lien or execution which may affect any
Obligor; and
(b) Any stamp or documentary tax or other
similar taxes and any filing, recording, lien, mortgage, release, satisfaction
or search fees which may be payable in connection with the execution, delivery
or performance of this Forbearance
- 24 -
<PAGE> 25
Agreement, the Supplemental Loan Documents, all other Loan Documents or the
documents comprising or relating hereto and thereto.
All Obligations provided for in this section shall survive any
termination of the Banks' and the Agent's obligations under this Forbearance
Agreement. The Obligors acknowledge that the Banks have provided the Obligors
with a non-binding, good faith estimate of the fees and expenses of Policano &
Manzo for the Forbearance Period.
11.2 Cooperation; Other Documents. At all times
following the execution of this Forbearance Agreement, the Obligors shall
execute and deliver to the Agent, or shall cause to be executed and delivered
to the Agent any other document required by the Agent to protect its rights
under this Forbearance Agreement, and shall do or cause to be done, all such
other acts and things as the Agent may reasonably deem to be necessary or
desirable to assure the Agent and the Banks of the benefit of this Forbearance
Agreement and the documents comprising or relating to this Forbearance
Agreement. Furthermore, at all times following the execution of this
Forbearance Agreement, the Agent, the Banks, or their representatives shall
have the right to examine each Borrowers' or Guarantors' books and records at
any time during normal business hours.
11.3 Remedies Cumulative; No Waiver. The
respective rights, powers and remedies of the Agent and Banks in this
Forbearance Agreement and in the documents comprising or relating to this
Forbearance Agreement are cumulative and not exclusive of any right, power or
remedy provided in the Loan Documents, by law or equity and no failure or delay
on the part of the Agent or the Banks in the exercise of any right, power or
remedy shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or remedy preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy.
11.4 Notices. Any notice given pursuant to this
Forbearance Agreement or pursuant to any document comprising or relating to
this Forbearance Agreement shall be given in conformity with Section 11.2 of
the Loan Agreement.
11.5 Survival of Representations and Warranties. All
representations and warranties of the Obligors contained in this Forbearance
Agreement and in the documents comprising or relating to this Forbearance
Agreement shall survive the execution of this Forbearance Agreement and are
material and have been or will be relied upon by the Agent and the Banks,
notwithstanding any investigation made by any person, entity or organization on
either the Agent's or any Bank's behalf. No implied representations or
warranties are created or arise as a result of this Forbearance Agreement or
the documents comprising or relating to this Forbearance Agreement. For
purposes of the foregoing, all statements in any certificate or other writing
- 25 -
<PAGE> 26
required by this Forbearance Agreement to be delivered to the Agent on or after
the execution of this Forbearance Agreement by or on behalf of any Obligor
pursuant to and in accordance with this Forbearance Agreement or any document
comprising or relating to this Forbearance Agreement or in connection with the
transactions contemplated thereby shall be deemed to be representations and
warranties contained in this Forbearance Agreement.
11.6 Integration. This Forbearance Agreement and all
documents referred to, comprising or relating to this Forbearance Agreement,
including, without limitation, the Loan Documents, constitute the sole
agreement of the parties with respect to the subject matter hereof and thereof
and supersede all oral negotiations, term sheets and other prior writings with
respect to the subject matter hereof and thereof.
11.7 Amendment and Waiver. No amendment of this
Forbearance Agreement, and no waiver, discharge or termination of any one or
more of the provisions hereof, shall be effective unless set forth in writing
and signed by all of the parties hereto.
11.8 Consistency of Provisions. This Forbearance
Agreement, the other Supplemental Loan Documents, and the other Loan Documents,
and any other document related hereto and thereto are intended to be
consistent. However, in the event of any inconsistencies among any of such
documents, such inconsistency shall not affect the validity or enforceability
of any such document. The Obligors agree that in the event of any express
inconsistency or ambiguity in any of such documents, the terms of this
Forbearance Agreement shall govern.
11.9 Continuing Effectiveness of Loan Agreement. The
Loan Agreement, as amended hereby, and the other Loan Documents shall remain in
full force and effect.
11.10 Counterparts. This Forbearance Agreement may be
executed in one or more counterparts, all of which taken together shall
constitute one and the same agreement.
11.11 Governing Law. This Forbearance Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
Jersey.
11.12 Severability. Any provision of this Forbearance
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Forbearance Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
11.13 Headings. Article and Section headings in this
Forbearance Agreement are included for convenience of reference
- 26 -
<PAGE> 27
only and shall not constitute a part of this Forbearance Agreement for any
other purpose.
11.14 Successors and Assigns. The provisions of this
Forbearance Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
11.15 Jurisdiction and Venue. IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR
RELATING TO THIS FORBEARANCE AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER, THE OBLIGORS HEREBY IRREVOCABLY SUBMIT THEMSELVES TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN ANY COUNTY OR FEDERAL
JUDICIAL DISTRICT IN THE STATE OF NEW JERSEY WHERE THE AGENT MAINTAINS AN
OFFICE AND AGREE NOT TO RAISE ANY OBJECTION TO SUCH JURISDICTION OR TO THE
VENUE OF ANY SUCH COURT. THE OBLIGORS AGREE THAT SERVICE OF PROCESS IN ANY
SUCH PROCEEDING MAY BE DULY EFFECTED UPON THEM BY MAILING A COPY THEREOF,
POSTAGE PREPAID TO THE OBLIGORS AT THE ADDRESS SET FORTH IN THE LOAN AGREEMENT
AND/OR THE SECURITY AGREEMENT.
11.16 Waiver of Jury Trial; Damages. EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATING TO THIS
FORBEARANCE AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE BANKS AND THE AGENT TO ENTER INTO THIS
FORBEARANCE AGREEMENT. IN ADDITION, EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH JUDICIAL PROCEEDING,
ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES, EXCEPT FOR
ACTUAL DAMAGES.
- 27 -
<PAGE> 28
IN WITNESS WHEREOF, the Agent, the Banks and the Obligors have
executed this Forbearance Agreement as of the date and year first above
written.
<TABLE>
<S> <C>
Attest: K-TRON INTERNATIONAL, INC.
By: /s/ Mary Vaccara By: /s/ Robert L. Weinberg
----------------------- -------------------------------
Mary Vaccara Name: Robert L. Weinberg
Assistant Secretary Title: Senior Executive Vice
President,
Chief Financial Officer
and Treasurer
Attest: K-TRON AMERICA, INC.
By: /s/ Alan Sukoneck By: /s/ Robert L. Weinberg
------------------------ ------------------------------
Vice President and Name: Robert L. Weinberg
Assistant Secretary Title: Vice President and
Treasurer
Attest: K-TRON TECHNOLOGIES, INC.
By: /s/ Mary Vaccara By: /s/ Robert L. Weinberg
------------------------ -----------------------------
Mary Vaccara Name: Robert L. Weinberg
Secretary Title: President
Witness: K-TRON PATENT, INC.
By: /s/ Mary Vaccara By: /s/ Robert L. Weinberg
----------------------- -----------------------------
Mary Vaccara Name: Robert L. Weinberg
Title: Vice President and
Treasurer
Attest: K-TRON INVESTMENT CO.
By: /s/ Mary Vaccara By: /s/ Robert L. Weinberg
------------------------ -----------------------------
Mary Vaccara Name: Robert L. Weinberg
Secretary Title: Vice President and
Treasurer
</TABLE>
- 28 -
<PAGE> 29
FIRST FIDELITY BANK, N.A.
FOR ITSELF AND AS AGENT FOR THE BANKS
By: /s/ Elizabeth B. Styer
-----------------------------
Name: Elizabeth B. Styer
Title: Senior Vice President
PNC BANK, N.A.
By: /s/ Constantin B. Chepurny
-----------------------------
Name: Constantin B. Chepurny
Title: Vice President
UNITED JERSEY BANK, N.A.
By: /s/ Kevin M. Behan
-----------------------------
Name: Kevin M. Behan
Title: Vice President
- 29 -
<PAGE> 30
<TABLE>
<CAPTION>
Exhibits
--------
<S> <C>
Exhibit 3.1 Existing Defaults
Exhibit 4.10 Weekly Certification
Exhibit 8.1(c) Fictitious Names, Tradenames or
Division Names and all Jurisdictions
in which such names are used
Exhibit 8.1(d) Joint Ventures, Partnerships,
Enterprises and Stock Ownerships
of each Obligor
Exhibit 8.1(e) Affiliates, Subsidiaries and Parent
of each Obligor
Exhibit 8.3 Location of each Obligor's Assets and
Property
Exhibit 8.8 Pending or Threatened Litigation
Exhibit 8.15 Patents and Trademarks of each
Obligor
</TABLE>
- 30 -
<PAGE> 1
Exhibit 11.1
K-TRON INTERNATIONAL, INC. & SUBSIDIARIES
COMPUTATION OF (LOSS) PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
April 1, April 2,
1995 1994
---- ----
<S> <C> <C>
AVERAGE COMMON AND
COMMON-EQUIVALENT
SHARES:
Weighted Average
Common Shares
Outstanding
per Period 3,088,000 3,056,000
Stock Options and
Warrants Computed 1,000 9,000
---------- ---------
ADJUSTED AVERAGE COMMON
AND COMMON-EQUIVALENT
SHARES COMPUTATION 3,089,000 3,065,000
=========== =========
EARNINGS FOR COMMON AND
COMMON-EQUIVALENT
SHARES COMPUTATION:
(Loss)applicable to Common Stock $(1,280,000) $(677,000)
============ ==========
EARNINGS PER SHARE:
(Loss)per share $ (.41) $ (.22)
============ ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<CASH> 1,260
<SECURITIES> 0
<RECEIVABLES> 33,599
<ALLOWANCES> 1,764
<INVENTORY> 31,131
<CURRENT-ASSETS> 66,982
<PP&E> 71,313
<DEPRECIATION> 36,684
<TOTAL-ASSETS> 123,557
<CURRENT-LIABILITIES> 67,300
<BONDS> 31,428
<COMMON> 41
0
0
<OTHER-SE> 18,269
<TOTAL-LIABILITY-AND-EQUITY> 123,557
<SALES> 30,503
<TOTAL-REVENUES> 30,503
<CGS> 19,292
<TOTAL-COSTS> 19,292
<OTHER-EXPENSES> 11,186
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,305
<INCOME-PRETAX> (1,280)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,280)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,280)
<EPS-PRIMARY> (.41)
<EPS-DILUTED> (.41)
</TABLE>
