<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 23, 1995
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K-TRON INTERNATIONAL, INC.
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(Exact name of registrant specified in its charter)
New Jersey 0-9576 22-1759452
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(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
P.O. Box 888
Routes 55 and 553, Pitman, New Jersey 08071
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609)589-0500
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Commerce Center, Suite 130
1810 Chapel Avenue West
Cherry Hill, New Jersey 08002-4607
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(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 23, 1995, K-Tron International, Inc., a New Jersey
corporation ("K-Tron"), through two indirect wholly-owned subsidiaries, K-Tron
Deutschland GmbH, a German company with limited liability ("K-Tron Germany"),
and K-Tron Holding AG, a Swiss corporation ("K-Tron Holding"), sold to Dr.
Dolemeyer GmbH ("Dolemeyer"), a German company with limited liability, its
94% interest (the "Colortronic Shares") in the outstanding share capital of
Colortronic GmbH, a German company with limited liability ("Colortronic").
Since the remaining 6% of the outstanding Colortronic share capital was owned
by a subsidiary of Colortronic, the effect of the sale of the Colortronic
Shares was to transfer to Dolemeyer control of all of the outstanding
Colortronic share capital. The disposition of the Colortronic Shares was made
pursuant to a Share Purchase Agreement, dated as of June 23, 1995 (the "Share
Purchase Agreement"), by and among K-Tron Germany, K-Tron Holding and
Dolemeyer. The Share Purchase Agreement is attached hereto as Exhibit 2.1 and
incorporated herein by reference.
The Colortronic Shares were sold by K-Tron Germany and K-Tron
Holding for a cash purchase price of $7 million. At the same time, another
K-Tron subsidiary, K-Tron Technologies, Inc., a Delaware corporation, sold
Dolemeyer certain patents and patent applications used in the Colortronic
business for a cash purchase price of $2 million.
Dolemeyer is an investment group which K-Tron has been
advised includes affiliates of Alpinvest III B.V. and ABNAMRO Ventures B.V. as
well as two K-Tron executives, Marcel O. Rohr, president and chief executive
officer, and Martin Schuler, K-Tron's senior vice president - finance for
European operations. Messrs. Rohr and Schuler resigned from all of their
positions with K-Tron in connection with the sale, such resignations having
been effective on June 30, 1995, and Leo C. Beebe, K-Tron's chairman, has
assumed the duties of chief executive officer.
Oppenheimer & Co., Inc. acted as financial advisor to K-Tron
in the sale of Colortronic, which was the result of a comprehensive marketing
effort conducted by such firm.
ITEM 5. OTHER EVENTS.
As previously reported, K-Tron 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. On April 28, 1995,
K-Tron 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.
- 2 -
<PAGE> 3
In connection with the sale of Colortronic, K-Tron entered
into a Forbearance Agreement and Third Amendment to Revolving Credit and Term
Loan Agreement with its U.S. banks (the "Forbearance Agreement"), in which the
banks agreed, in exchange for a $3.45 million payment in permanent reduction of
the loan facility thereunder (from approximately $13.5 million to approximately
$10.0 million), to further extend the period during which they agreed to
forbear in the exercise of their rights and remedies under the loan documents
to the earlier of February 28, 1996 or the occurrence of a new event of default
thereunder.
The Forbearance Agreement is attached hereto as Exhibit 10.1
and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
(not applicable)
(b) Pro Forma Financial Information (unaudited).
(1) Pro forma condensed consolidated balance
sheet as of April 1, 1995.
(2) Pro forma condensed consolidated statement of
operations for the three-month period ended
April 1, 1995 and for the year ended December
31, 1994.
(c) Exhibits.
(1) Share Purchase Agreement, dated as of June
23, 1995, by and among K-Tron Holding, K-Tron
Germany and Dolemeyer (exhibits and
schedules omitted).
(2) Forbearance Agreement, dated June 22, 1995,
by and among K-Tron, certain of its
subsidiaries, First Fidelity Bank, N.A., PNC
Bank, N.A. and United Jersey Bank (exhibits
omitted).
(3) Press release, dated June 16, 1995, regarding
the disposition of Colortronic.
(4) Press release, dated June 23, 1995, regarding
the disposition of Colortronic and the
Forbearance Agreement.
- 3 -
<PAGE> 4
K-TRON INTERNATIONAL, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
APRIL 1, 1995
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS REPORTED PRO FORMA PRO FORMA
K-TRON ADJUSTMENTS CONSOLIDATED
----------- ----------- ------------
<S> <C> <C> <C>
ASSETS
CASH & CASH EQUIVALENTS $ 1,260 $( 86)(2) $ 1,174
ACCOUNTS RECEIVABLE 31,835 ( 9,774)(2) 22,061
INVENTORIES 31,131 ( 7,210)(2) 23,921
OTHER CURRENT ASSETS 2,756 ( 523)(2) 2,233
--------- ---------- --------
TOTAL CURRENT ASSETS 66,982 ( 17,593) 49,389
PROPERTY, PLANT & EQUIPMENT 34,629 ( 13,457)(2) 21,172
PATENTS & LICENSES 851 ( 178)(2) 673
EXCESS OF COST OVER NET ASSETS ACQUIRED 20,574 ( 5,845)(2) 6,329
( 8,400)(1)
OTHER ASSETS 521 521
--------- ---------- --------
$ 123,557 $( 45,473) $ 78,084
========= ========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
NOTES PAYABLE TO BANKS $ 35,258 ( 7,994)(2) $ 18,864
( 8,400)(1)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 29,670 ( 7,294)(2) 22,376
DEFERRED TAXES 850 ( 39)(2) 811
CURRENT PORTION OF LONG-TERM DEBT 1,522 ( 443)(2) 1,079
--------- ---------- --------
TOTAL CURRENT LIABILITIES 67,300 ( 24,170) 43,130
LONG-TERM DEBT 31,428 ( 7,502)(2) 23,926
ACCRUED PENSION 3,395 ( 3,395)(2) 0
DEFERRED INCOME 2,725 2,725
DEFERRED INCOME TAXES 399 399
SHAREHOLDERS' EQUITY 18,310 ( 10,406)(2)(5) 7,904
--------- ---------- --------
$ 123,557 $( 45,473) $ 78,084
========= ========== ========
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 5
K-TRON INTERNATIONAL, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED APRIL 1, 1995
(UNAUDITED)
(IN THOUSANDS EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
K-TRON ADJUSTMENTS CONSOLIDATED
----------- ----------- ------------
<S> <C> <C> <C>
REVENUES $ 30,503 $( 11,149)(3) $ 19,324
( 30)(4)
COST OF SALES 19,292 ( 8,352)(3) 10,940
SELLING, GENERAL & ADMINISTRATVE 10,210 ( 3,013)(3) 7,097
( 100)(4)
RESEARCH & DEVELOPMENT 976 ( 360)(3) 616
INTEREST 1,305 ( 778)(3) 637
110 (4)
---------- ---------- --------
31,783 ( 12,493) 19,290
(LOSS) INCOME BEFORE INCOME TAXES (1,280) 1,314 34
INCOME TAXES (REFUND) (5) 0
---------- ---------- --------
NET (LOSS) INCOME (1,280) 1,314 34
========== ========== ========
NET (LOSS) EARNINGS PER SHARE $ -.42 $ .01
========== ========
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 3,065 3,065
========== ========
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 6
K-TRON INTERNATIONAL, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
(IN THOUSANDS EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
AS REPORTED PRO FORMA PRO FORMA
K-TRON ADJUSTMENTS CONSOLIDATED
----------- ----------- ------------
<S> <C> <C> <C>
REVENUES $ 104,772 $( 35,334)(3) $ 69,538
100 (4)
COST OF SALES 67,145 ( 26,540)(3) 40,605
SELLING, GENERAL & ADMINISTRATIVE 35,768 ( 9,737)(3) 25,581
( 450)(4)
RESEARCH & DEVELOPMENT 4,439 ( 1,514)(3) 2,925
INTEREST 4,472 ( 3,049)(3) 1,903
480 (4)
---------- ---------- ---------
111,824 ( 40,810) 71,014
(LOSS) BEFORE INCOME TAXES ( 7,052) 5,576 ( 1,476)
INCOME TAXES (REFUND) ( 226) (5) ( 226)
---------- ---------- ---------
NET (LOSS) $ ( 6,826) $ 5,576 $( 1,250)
========== ========== =========
NET (LOSS) PER SHARE $ -2.22 $ -.41
========== =========
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 3,079 3,079
========== ========
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 7
K-TRON INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
(In thousands)
The unaudited pro forma condensed consolidated financial information has been
prepared to reflect the sale (acquired by K-Tron April 30, 1992) of
Colortronic GmbH by the Company. The sales price for the Colortronic share
capital was determined as a result of arm's-length negotiations between
representatives of the Company and the purchaser.
1. To apply the proceeds ($7,000) from the sale of Colortronic GmbH
and the sale of certain patents and patent applications ($2,000) net
of estimated disposal costs ($600) to the reduction of short-term
debt.
2. To record the disposal of the carrying values of Colortronic GmbH.
3. To reverse the revenue and expenses associated with the operations of
Colortronic.
4. Changes to continuing expenses:
<TABLE>
<CAPTION> Three-Months
Year Ended Ended
December 31, 1994 April 1, 1995
----------------- -------------
<S> <C> <C>
Ongoing interest expense
associated with continuing
debt levels $(480) $(120)
Reduction in salary and fringes
associated with the resignation
of two K-Tron officers who are
part of the investment group
acquiring Colortronic 450 110
Intercompany transaction that
would be considered third party
transactions 100 (30)
----- -----
Additional income (expense) $ 70 $ (40)
===== =====
</TABLE>
5. The estimated tax benefit (approximately $3,000) from the use of the
loss associated with the sale of Colortronic has not been reflected
in the accompanying balance sheet. The Company is currently analyzing
the extent to which the tax benefit may be accrued as an asset in its
balance sheet in accordance with FAS109.
<PAGE> 8
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
K-TRON INTERNATIONAL, INC.
(Registrant)
By /s/ Robert L. Weinberg
----------------------
Robert L. Weinberg
Senior Executive Vice
President, Chief Financial
Officer and Treasurer
Dated: July 10, 1995
<PAGE> 9
Exhibit Index
Exhibit
2.1 Share Purchase Agreement, dated as of June 23, 1995, by and among
K-Tron Holding AG, K-Tron Deutschland GmbH and Dr. Dolemeyer GmbH
(exhibits and schedules omitted)
10.1 Forbearance Agreement and Third Amendment to Revolving Credit and
Term Loan Agreement, dated June 22, 1995, by and among K-Tron
International, Inc., K-Tron America, Inc., K-Tron Technologies,
Inc., K-Tron Investment Co., K-Tron Patent, Inc., First Fidelity
Bank, N.A. (successor-by-merger to First Fidelity Bank, N.A., New
Jersey), PNC Bank, N.A. and United Jersey Bank (successor-by-merger
to United Jersey Bank/South, N.A.) (exhibits omitted)
99.1 Press release, dated June 16, 1995
99.2 Press release, dated June 23, 1995
<PAGE> 1
------------------------------------------------
K-TRON HOLDING AG,
K-TRON DEUTSCHLAND GmbH
and
DR. DoLEMEYER GmbH
SHARE PURCHASE AGREEMENT
Relating to the Sale and Transfer
of Shares of
COLORTRONIC GmbH
Dated as of June 23, 1995
------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. SALE AND TRANSFER OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. PURCHASE PRICE AND PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. ANCILLARY COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1 Intellectual Property Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.2 Non-Solicitation of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.4 Intercompany Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.5 Operations Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1 Statements in the Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3 Share Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.4 Authority and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.5 Subsidiaries; No Interest in Other Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.6 Charter, Organization, Association, Other Similar Documents and Share Books . . . . . . . . . . . . . 7
5.7 Conflict with Other Agreements; Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.8 Acquisition of Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.10 Absence of Undisclosed Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.11 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.12 Absence of Material Adverse Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.13 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.15 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.16 Sellers' Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 Authority and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.2 Conflict with Other Agreements; Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.3 Forecasts, Projections, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7. INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
9.1 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.7 Statements in Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.8 Governing Law; Jurisdiction; Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-ii-
<PAGE> 4
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT, dated as of June 23, 1995, is by and among
1. K-TRON HOLDING AG, having an office at Industrie Lenzhard, CH5702
Niederlenz, Switzerland,
- hereinafter referred to as "SELLER I"
2. K-TRON DEUTSCHLAND GmbH, having an office at Munster-
strasse 69, D-49525 Lengerich, Germany,
- hereinafter referred to as "SELLER II"
- Seller I and Seller II collectively hereinafter also referred to as
"SELLERS" and individually also as "SELLER."
and
3. DR. DoLEMEYER GmbH, being registered under HRB 5356 in the Commercial
Register of the Local Court at Bad Homburg v.d.H., and having its
offices at Kaiser-Friedrich-Promenade 43, D-61348 Bad Homburg v.d.H.,
- hereinafter referred to as "PURCHASER."
PREAMBLE.
A. Sellers are the owners of 94% of the share capital of Colortronic
GmbH, being registered under HRB 419,7 in the Commercial Register of
the Local Court at Bad Homburg v.d.H. and having its offices at
Otto-Hahn-Strasse 20, D-61371 Friedrichsdorf 2, Germany (hereinafter
referred to as the "COMPANY").
B. The stated capital of the Company amounts to DM 6,000,000, and is
divided into
- one share with a nominal value of DM 50,000,
- one share with a nominal value of DM 2,522,000,
- one share with a nominal value of DM 2,572,000,
- one share with a nominal value of DM 106,000,
- two shares with a nominal value of DM 128,000 each,
- one share with a nominal value of DM 14,000,
- one share with a nominal value of DM 120,000, and
- one share with a nominal value of DM 360,000.
<PAGE> 5
Seller I is the owner of all the shares except for the shares with the
nominal value of DM 120,000 and DM 360,000. Seller II is the owner of
the share with the nominal value of DM 120,000 (the shares in the
Company held by Sellers will hereinafter collectively be referred to
as the "SHARES").
C. The remainder of the shares are held by Colortronic Maschinenbau GmbH
(hereinafter referred to as "MASCHINENBAU GmbH" or the "SUBSIDIARY"),
registered under HRB 2828 in the Commercial Register of the Local
Court at Bad Homburg v.d.H. and having its offices at
Otto-Hahn-Strasse 20, 61371 Friedrichsdorf 2, Germany. Maschinenbau
GmbH is the owner of the share with the nominal value of DM 360,000.
The Company owns all of the shares in Maschinenbau GmbH, whose stated
capital amounts to DM 500,000.
D. The Company and the Subsidiary are engaged in the design, manufacture,
sale and repair of blending, conveying and drying equipment,
granulators, silos and related products and systems for injection,
extrusion and blow molding applications in the plastics industry.
E. Sellers wish to sell and transfer all of the Shares to Purchaser, and
Purchaser desires to purchase and acquire all of the Shares from
Sellers, for the purchase price and upon and subject to the terms and
conditions hereinafter set forth.
1. SALE AND TRANSFER OF SHARES.
Subject to the terms and conditions of this Agreement, at the Closing
(hereinafter defined), Sellers shall sell and assign to Purchaser, and
Purchaser shall purchase, and accept from Sellers the assignment of, the
Shares, together with all dividend rights attaching thereto, for the Purchase
Price set forth hereinafter in SECTION 3. The sale and transfer of the Shares
shall be effective as of the Closing Date (hereinafter defined).
2. CLOSING DATE.
2.1 CLOSING. The closing (the "CLOSING") of the transactions
described herein shall be held on the third business day after the obligations
of the parties in Appendix I (which the party responsible therefor shall use
its best efforts to perform) shall have been satisfied (as set forth therein),
at 9:00 a.m. local time, at the offices of Schurmann, Rausch & Rohrer,
Limmatquai #3, CH-8001 Zurich, Switzerland or at such other time or place as
Seller I and Purchaser shall mutually agree (the date of such Closing, the
"CLOSING DATE").
-2-
<PAGE> 6
2.2 DELIVERY AT CLOSING. At the Closing on the Closing Date,
Purchaser shall deliver to Sellers the Purchase Price in accordance with
SECTION 3.3.
3. PURCHASE PRICE AND PAYMENT.
3.1 PURCHASE PRICE. The purchase price for the Shares and the
intercompany accounts (the "PURCHASE PRICE") shall be an amount equal to US
$7,000,000 (Seven Million U.S. dollars).
3.2 PAYMENT OF PURCHASE PRICE.
(a) On or before June 21, 1995, Purchaser shall pay US
$7,000,000 to the Escrow Agent under the Escrow Agreement attached hereto as
EXHIBIT A (the "ESCROW AGREEMENT"), to be held and disbursed by the Escrow
Agent thereunder in accordance with the terms thereof. Purchaser and Sellers
agree that the transfer of the Shares to the Purchaser shall take effect upon
payment of the Purchase Price by the Escrow Agent to Sellers as set out above.
(b) After Purchaser has made the US $9,000,000 payments
to the Escrow Agent referred to in SECTION 3.2(a) and SECTION 4.1, Sellers
shall not solicit or initiate any proposal to acquire the Company. If Sellers
receive an unsolicited proposal to acquire the Company, they may negotiate and
otherwise respond to such proposal and may terminate this Agreement to enter
into an agreement to sell the Company to another party, in which case Sellers'
sole obligation to Purchaser will be to pay it a termination fee (payable upon
consummation of such other transaction) of US $500,000.
(c) In addition, the obligations with respect to
exclusive negotiations of Sellers and Sellers' Affiliates (hereinafter defined)
under paragraphs 3, 4 and 10 of the Memorandum of Understanding, dated as of
June 7, 1995, between certain affiliates of Purchaser and K-Tron International,
Inc. (the "MEMORANDUM OF UNDERSTANDING"), shall continue until and shall
terminate upon the making of the $9,000,000 payments referred to in SECTION
3.2(b).
4. ANCILLARY COVENANTS AND AGREEMENTS.
4.1 INTELLECTUAL PROPERTY AGREEMENTS. Before the Closing Date,
Sellers shall cause the Company and K-Tron Technologies, Inc., a Delaware, USA,
corporation, to execute and deliver intellectual property agreements with
Purchaser substantially in the forms attached hereto as EXHIBIT B. On or
before June 21, 1995, Purchaser on behalf of the Company shall pay US
$2,000,000
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<PAGE> 7
to the Escrow Agent under the Escrow Agreement, to be held and disbursed by the
Escrow Agent thereunder in accordance with the terms thereof, such payment to
be with respect to such intellectual property agreements.
4.2 NON-SOLICITATION OF EMPLOYEES. Until the third anniversary of
the Closing Date, Purchaser agrees that neither Purchaser nor the Company nor
any subsidiary of either nor any Company Affiliate (hereinafter defined) will
directly or indirectly solicit, offer employment to, or employ any person who
is, or who was during the six months preceding such solicitation, offer or
employment, an employee of Sellers or any Seller Affiliate at the time of
Closing, except for Marcel Rohr, Martin Schuler and those employees listed on
SCHEDULE 4.2 hereto, without the prior written consent of Sellers' ultimate
parent, K-Tron International, Inc. For purposes of this Section 4.2, "COMPANY
AFFILIATE" means any person or entity directly or indirectly controlling,
controlled by or under common control with the Company which has any business
association of any nature with either Marcel Rohr or Martin Schuler, including,
by way of example and not limitation, as a shareholder, director, officer,
employee, consultant, advisor or otherwise.
4.3 RESIGNATIONS. At the Closing, Sellers will make available to
Purchaser the written resignations of all the directors of the Company and the
Subsidiary effective as of the Closing except for Marcel Rohr. At or before
the Closing, Purchaser will deliver to Sellers the written resignations of
Marcel Rohr and Martin Schuler from all positions as directors, officers or
employees of Sellers and all Seller Affiliates and Sellers agree, on behalf of
themselves and K-Tron International, Inc., that Messrs. Rohr and Schuler shall
thereafter have no obligations to provide future services to them or any Seller
Affiliate.
4.4 INTERCOMPANY ACCOUNTS.
(a) From and after May 31, 1995, the Company shall have
no obligation to any Seller or Seller Affiliate, and no Seller or Seller
Affiliate shall have any obligation to the Company, with respect to any
intercompany payable or receivable existing prior to May 31, 1995 (but shall be
responsible for orders placed but not shipped on or before May 31, 1995).
"SELLER AFFILIATE" means each entity directly or indirectly controlling,
controlled by or under common control with either Seller, other than the
Company and the Subsidiary.
(b) The Company shall not have any obligation to make
intercompany payments for orders shipped or services performed on or prior to
May 31, 1995 (but shall be responsible for orders
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<PAGE> 8
placed but not shipped on or before May 31, 1995). The Company shall timely
make all payments for all such orders and services, shipped or performed after
May 31, 1995, arising in the ordinary course of business consistent with past
practice and for all such other intercompany orders, goods and services as
Purchaser may consent.
4.5 OPERATIONS PENDING CLOSING. From the date hereof to the
Closing, Sellers will cause the Company (a) to operate only in the ordinary
course of business and shall use their reasonable efforts consistent with
available financing to preserve and maintain its properties, businesses and
relationships with suppliers, customers, employees, agents and others having
business dealings with the Company and (b) to make no dividends or
distributions, to incur no Funded Debt (defined in Appendix I) in excess of the
maximum availability under current credit lines, or engage in any intercompany
transactions outside of the ordinary course of business consistent with past
practice.
5. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers, jointly and
severally, hereby represent and warrant to Purchaser as follows:
5.1 STATEMENTS IN THE PREAMBLE. The statements made in the
Preamble to this Agreement are true and correct.
5.2 CAPITALIZATION. A true, correct and complete copy of the
excerpt from the Commercial Register relating to the Company is attached as
SCHEDULE 5.2. The Company's capital has been paid in full and has not been
reduced. All of the shares in the Company have been duly authorized and
validly issued, are fully paid and nonassessable, were not issued in violation
of any agreement or other understanding binding upon the Company, and were
issued in compliance with all applicable charter documents of the Company and
all applicable laws and regulations. Except for those set forth in the
Company's Articles of Association, there are, and have been, no preemptive
rights applicable to the issuance of the shares in the Company. The Company
does not have outstanding any subscriptions, options, warrants, convertible
securities, calls, commitments, rights or agreements to purchase or otherwise
acquire, issue, sell or otherwise dispose of any of its shares.
5.3 SHARE OWNERSHIP. Each Seller is the lawful owner of record
and beneficially of the Shares as set forth in the Preamble; Maschinenbau GmbH
is the lawful owner of record and beneficially of the share of the Company
having a nominal value of DM 360,000 (hereinafter referred to as "THE
MASCHINENBAU GmbH SHARE"); in each of the foregoing cases free and clear of all
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<PAGE> 9
pledges, liens, encumbrances, claims and other charges and restrictions of
every kind, including, without limitation, any agreements, proxies,
subscriptions, options, warrants, calls, commitments or rights of any character
granting to any person any interest in or right to acquire from any of the
Sellers or Maschinenbau GmbH at any time, or upon the happening of any stated
event, any of the Shares or the Maschinenbau GmbH Share.
5.4 AUTHORITY AND BINDING EFFECT. Each Seller has the full power
and authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by or on behalf of each Seller and constitutes the legal, valid and
binding obligation of each Seller enforceable against such Seller in accordance
with its terms.
5.5 SUBSIDIARIES; NO INTEREST IN OTHER ENTITIES.
5.5.1 The Subsidiary is the only subsidiary of the Company.
The Subsidiary is a corporation duly organized and
validly existing under the laws of its jurisdiction
of incorporation, and has all requisite corporate
power and authority to own its properties and assets
and to carry on its business as now conducted.
5.5.2 The authorized, issued and outstanding shares of
capital stock of the Subsidiary are set forth in
paragraph C of the Preamble hereto. All of such
issued and outstanding shares of capital stock have
been duly authorized and validly issued, are fully
paid and non-assessable, were not issued in violation
of any agreement or understanding binding upon the
Subsidiary, and were issued in compliance with all
applicable charter documents of the Subsidiary and
all applicable laws and regulations. There are, and
have been, no preemptive rights granted by the
Company or with the consent of the Company by the
Subsidiary applicable to the issuance of the shares
or stock of any Subsidiary. There are no outstanding
subscriptions, options, warrants, convertible
securities, calls, commitments, rights or agreements
granted by the Company or with the consent of the
Company by the Subsidiary to purchase or otherwise
acquire, issue, sell or otherwise
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<PAGE> 10
dispose of any shares or capital stock or other
securities of the Subsidiary.
5.5.3 The Company is the lawful owner of record and
beneficially of all of the issued and outstanding
shares of the Subsidiary, free and clear of all
pledges, liens, encumbrances, claims and other
charges and restrictions of every nature, including,
without limitation, any agreements, proxies,
subscriptions, options, warrants, calls, commitments
or rights of any character granting to any person any
interest in or right to acquire from the Company at
any time, or upon the happening of any stated event,
any shares or capital stock of the Subsidiary.
5.5.4 To Sellers' knowledge, neither the Company nor any
Subsidiary has any investment in or owns any
securities of any corporation, association,
partnership, joint venture or other organization,
public or private, except for bank accounts,
certificates of deposit, commercial paper, money
market funds and similar money equivalents.
5.6 CHARTER, ORGANIZATION, ASSOCIATION, OTHER SIMILAR DOCUMENTS
AND SHARE BOOKS. Copies of all charter, organization, association and other
similar documents and of all amendments thereto of the Company and the
Subsidiary have been made available, and at or prior to the Closing Date will
be delivered to Purchaser, and they are true, correct and complete copies
thereof.
5.7 CONFLICT WITH OTHER AGREEMENTS; APPROVALS. Neither the
execution and delivery of this Agreement by Sellers, nor the performance of
Sellers' obligations hereunder, will (a) violate, conflict with or constitute a
default under, any terms of Sellers' or the Company's Articles of Association
or any provision under German law or of any material contract, order, judgment
or decree relating to any Seller or to the Company and their respective
businesses; or (b) require any authorization, consent, approval, exemption or
action of or by any court, or any administrative, governmental or regulatory
official, body or authority or any other person which has not been given or
done.
5.8 ACQUISITION OF OWNERSHIP. Upon conclusion of this Agreement
and the payment of the Purchase Price to Sellers,
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<PAGE> 11
Purchaser acquires, as of the Closing Date, the entire legal and beneficial
ownership and title to all of the Shares, free and clear of any liens or claims
by third parties.
5.9 FINANCIAL STATEMENTS. Sellers have delivered to Purchaser the
unaudited balance sheet of the Company as at December 31, 1994 and the related
statements of operations and shareholders' equity for the 12 months then ended
(such financial statements as at December 31, 1994 and for the 12 months then
ended, the "1994 FINANCIAL STATEMENTS"), as well as the unaudited balance sheet
of the Company as at April 30, 1995 and the related statements of operations
and shareholders' equity for the four months then ended (such financial
statements as at April 30, 1995 and for the four months then ended, the
"INTERIM FINANCIAL STATEMENTS"). To Sellers' knowledge, such financial
statements present fairly in all material respects the financial position and
results of operations of the Company as of their respective dates in accordance
with US GAAP (defined in Appendix I), subject to normal recurring year-end
adjustments in the case of the Interim Financial Statements and to the omission
of certain notes, comments, schedules and supplemental data which would be
required to be included therein pursuant to US GAAP. Whenever the term
"INTERIM BALANCE SHEET DATE" is used herein, such term shall be deemed to refer
to April 30, 1995.
5.10 ABSENCE OF UNDISCLOSED LIABILITIES AND OBLIGATIONS. Except as
disclosed on SCHEDULE 5.10, to Sellers' knowledge, on the Closing Date the
Company and the Subsidiary have no material liabilities or obligations
attributable to their respective businesses of any nature or whatsoever,
whether absolute, contingent or otherwise, except for those reflected in the
1994 Financial Statements or the Interim Financial Statements and those
incurred or accrued since the Interim Balance Sheet Date either in the ordinary
course of business or disclosed to Purchaser pursuant to SECTION 5.12 hereof.
5.11 TAX RETURNS. To Sellers' knowledge, all national, local and
other tax returns, reports and statements (the "TAX RETURNS") required to be
filed by the Company and Maschinenbau GmbH have been filed with the appropriate
governmental agencies in all jurisdictions in which the Tax Returns were
required to be filed, and the Tax Returns properly reflect the taxable income
or loss and the tax liabilities of the Company and Maschinenbau GmbH. To
Sellers' knowledge, all taxes due and payable by the Company and Maschinenbau
GmbH as set forth in the Tax Returns and all claims, demands, assessments,
judgments, costs and expenses connected therewith as of the Interim Balance
Sheet Date have been properly paid or accrued. To Sellers' knowledge, the
accruals for taxes in the 1994 Financial Statements are adequate
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<PAGE> 12
to cover the tax liabilities (whether or not assessed) of the Company and
Maschinenbau GmbH as of December 31, 1994.
5.12 ABSENCE OF MATERIAL ADVERSE CHANGES OR EVENTS. Except for
restrictions imposed by the Company's banks, to Sellers' knowledge, since the
Interim Balance Sheet Date there has been no change in the business,
management, operations, results of operations, assets, liabilities or
properties of the Company or the Subsidiary which has materially adversely
affected the business or operations of the Company or the Subsidiary, and
during such period the Company has been operated in the ordinary course of
business consistent with past practice.
5.13 ASSETS. To Sellers' knowledge, on the Closing Date each of
the Company and Maschinenbau GmbH is the owner of and has good title to all of
its properties and assets, free of liens, including, without limitation, those
properties and assets reflected in the 1994 Financial Statements and the
Interim Financial Statements (except for (a) Permitted Encumbrances
(hereinafter defined), (b) properties and assets disposed of since the Interim
Balance Sheet Date in the ordinary course of business consistent with past
practice, (c) usual commercial retention of title rights of third parties) and
(d) liens and security interests granted or existing with respect to Funded
Debt.
"PERMITTED ENCUMBRANCES" means (a) any mortgage, lien, pledge,
hypothecation, assignment, security interest or restriction of any kind for
real estate taxes either not yet overdue or being contested in good faith by
appropriate proceedings and for which adequate reserves have been provided on
the books of the Company, (b) any laws, ordinances, restrictions, exemptions,
reservations, conditions, limitations or covenants that do not individually or
in the aggregate materially impair the use of any property for the purposes
currently conducted or contemplated, (c) mechanic's, materialmen's, workmen's,
warehousemen's and other similar liens incurred in the ordinary course of
business of the Company, with respect to obligations which are not past due for
a period longer than sixty (60) days or which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided
on the books of the Company, and (d) easements, rights-of-way, restrictions,
and other similar encumbrances which, individually or in the aggregate, do not
materially detract from the value of any real property and which do not
materially impair the use of any real property for the purpose currently
conducted or contemplated.
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<PAGE> 13
5.14 LITIGATION. To Sellers' knowledge (a) no claim, action, suit,
arbitration, investigation or other proceeding is pending, threatened or
contemplated, against the Company or Maschinenbau GmbH or any of their
properties before any court, governmental or regulatory official, body or
authority, arbitrator or "impartial mediator," wherein an unfavorable judgment,
decision, ruling or finding may adversely affect the business, management,
operations, results of operations, assets, liabilities, properties, prospects
or condition (financial or otherwise) of the Company or the Subsidiary, (b)
there are no judgments, consents, decrees, injunctions, or any other judicial
or administrative mandates outstanding against the Company or the Subsidiary
and (c) no litigation has been brought or threatened, or is contemplated,
respecting the transaction contemplated by this Agreement; except, in the case
of clauses (a) and (b) for items involving not more than US $3,000 individually
and US $30,000 in the aggregate. To Sellers' knowledge, there are no pollution
or other environmental damages caused by the Company in the conduct of its
business, directly or indirectly except for items involving not more than US
$3,000 individually and US $30,000 in the aggregate.
5.15 DISCLOSURE. To Sellers' knowledge: (a) no representation or
warranty made by any Seller in this Agreement or information contained in the
financial statements referred to in SECTION 5.9 or any Schedule contains any
untrue statement of material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading, and
(b) copies of all documents referred to in the Schedules have been delivered or
made available to Purchaser and are true, correct and complete copies thereof
and include all amendments, supplements and modifications thereto or waivers
thereunder.
5.16 SELLERS' KNOWLEDGE. For purposes of this SECTION 5, "Sellers'
knowledge" or words of similar import shall be conclusively deemed to be only
that knowledge actually possessed by those persons identified in SCHEDULE 5.16.
Sellers shall not be deemed to have actual or constructive knowledge of any
fact, circumstance or occurrence known to any person other than as set forth in
the preceding sentence.
Sellers do not give any representations and warranties other than those given
in this SECTION 5.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to Sellers as follows:
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<PAGE> 14
6.1 AUTHORITY AND BINDING EFFECT. Purchaser has the full power
and authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Purchaser and constitutes the legal, valid and binding obligation
of Purchaser enforceable against Purchaser in accordance with its terms.
6.2 CONFLICT WITH OTHER AGREEMENTS; APPROVALS. Neither the
execution and delivery of this Agreement by Purchaser, nor the performance of
Purchaser's obligations hereunder, (a) will violate, conflict with or
constitute a default under, any terms of the Purchaser's Articles of
Association or any provision under German law or of any contract, order,
judgment or decree relating to the Purchaser or its business; or (b) require
any authorization, consent, approval, exemption or action of or by any court,
or any administrative, governmental or regulatory official, body or authority
or any other person which has not been given or done.
6.3 FORECASTS, PROJECTIONS, ETC. Purchaser acknowledges that (a)
Purchaser has made its own evaluation of the adequacy, completeness and
accuracy of various forecasts, projections, opinions and similar material
heretofore furnished by the Sellers, any Seller Affiliate or their
representatives to Purchaser in connection with Purchaser's investigations of
the Company and the Subsidiary and their respective businesses, assets, and
liabilities, and (b) there are uncertainties inherent in attempting to make
projections and forecasts and render opinions, Purchaser is familiar with such
uncertainties, and Purchaser is not relying on any projections, forecasts or
opinions furnished to it by Sellers or any Seller Affiliate or any of their
representatives.
7. INDEMNITIES.
7.1 In the event of a legal defect (Rechtsmangel) within the
meaning of Section 434 German Civil Code (BGB) with respect to the Shares,
Purchaser's remedies shall be governed by Section 440 German Civil Code (BGB).
7.2 If a claim shall be made by any tax authority which, if
successful, would result in the indemnification of Purchaser pursuant to
SECTION 5.11 or, if a tax field audit is commenced by any tax authority with
respect to any tax that could give rise to such tax indemnity, Purchaser shall
promptly notify Sellers in writing of such claim or such tax field audit as the
case may be. Sellers shall be given every opportunity to participate in any
negotiations with tax authorities or any such tax field audit. Sellers shall
have the right, at their option, upon timely notice
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<PAGE> 15
to Purchaser, to assume and control together with Purchaser the conduct of any
tax field audit and the defense of any suit, action or proceeding with respect
to any tax claim at their own expense and with their own counsel.
7.3 In respect of a breach of representations and warranties other
than those referred to in SECTION 7.1 above, Purchaser's exclusive remedy
against Sellers shall be a claim or claims for actual damages, provided that
claims relating to the value of the Shares beyond such actual damages shall be
excluded, and further provided that
7.3.1 Purchaser shall have no cause of action against
Sellers if the individual violation results in a
claim by Purchaser of less than DM 50,000 and of all
claims in the aggregate of less than DM 200,000;
7.3.2 Purchaser shall have no cause of action against
Sellers if Purchaser, including Marcel Rohr or Martin
Schuler or any other of the management persons to be
employed by the Company at the request of Purchaser
had knowledge of the facts and circumstances
underlying Sellers' breach of a representation or
warranty hereunder or which otherwise gives rise to
any claim against any Seller or Seller Affiliate; and
7.3.3 Sellers' liability shall be joint and several.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Unless otherwise provided
for herein, the representations and warranties given by Sellers under this
Agreement shall survive until the earlier of (a) the completion of the
Company's 1995 audit (which Purchaser shall cause it to promptly complete) and
(b) the date 12 months after the Closing Date.
9. MISCELLANEOUS.
9.1 COSTS. Purchaser and Sellers shall each pay their own
expenses, including, without limitation, their own counsel and accountant,
incurred in connection with this Agreement. Purchaser shall pay the notary
fees and transfer taxes incurred in connection with this Agreement and the
transactions contemplated hereby.
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9.2 COOPERATION. Subject to the terms and conditions herein
provided, each of the parties hereto shall use its reasonable best efforts to
take, or cause to be taken, such action, to execute and deliver, or cause to be
executed and delivered, such governmental notifications and additional
documents and instruments and to do, or cause to be done, all things necessary,
proper or advisable under the provisions of this Agreement and under applicable
law to consummate and make effective the transactions contemplated by this
Agreement.
9.3 TERMINATION.
9.3.1 Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated by
written notice of termination at any time before the
Closing Date only as follows:
(i) by mutual consent of Sellers and Purchaser; or
(ii) by either Purchaser or Sellers after July 15,
1995, if any of the obligations in Appendix I have
not been satisfied.
9.3.2 In the event of the termination and abandonment
hereof pursuant to the provisions of this SECTION
9.3, this Agreement shall become void and have no
effect, without any liability on the part of any of
the parties or their directors or officers or
shareholders in respect of this Agreement.
9.4 ENTIRE AGREEMENT. This Agreement, which includes the
Appendix, Exhibits and Schedules hereto and the Arbitration Agreement referred
to in SECTION 9.8, sets forth the entire understanding of the parties with
respect to the subject matter hereof. Any previous agreements or
understandings between the parties regarding the subject matter hereof are
merged into and superseded by this Agreement.
9.5 NOTICES. All notices, consents, waivers or other
communications which are required or permitted hereunder shall be sufficient if
given in writing and delivered personally, by recognized courier service or by
registered or certified by telefax (with the original to follow in accordance
with the other provisions of this SECTION 9.5), mail, return receipt requested,
postage prepaid, as follows (or to such other addressee or address as shall be
set forth in a notice given in the same manner):
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<PAGE> 17
If to Purchaser:
Dr. Dolemeyer GmbH
Kaiser-Friedrich-Promenade 43
61348 Bad Homburg v.d.H.
Germany
Fax: 06172-27614
and to
ATCO Partner Beteiligungsberatung GmbH
Stresemannstrasse 43
40202 Dusseldorf, Germany
Fax: 0211-164-0869
and to:
c/o Alpinvest III BV
Gooimeer 3, 1410 AB Naarden
The Netherlands
Fax: 02159-47525
and to:
ABN AMRO Ventures BV
Foppingadreef 22, Amsterdam
The Netherlands
Fax: 020-628-7822
and to:
Mr. Martin Schuler
Kirchtalstrasse 27
CH-5703
Seon, Switzerland
No telefax notices.
with a required copy to:
Dr. jur. Hans-Joachim Dolemeyer
Kaiser-Friedrich-Promenade 43
61348 Bad Homburg v.d.H.
Germany
Fax: 06172-27614
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<PAGE> 18
If to any Seller:
K-Tron Holding AG
c/o Schurmann, Rausch & Rohrer
Limmatquai #3
CH-8001
Zurich, Switzerland
Attention: Dr. Hans Jurg Scheurmann
Fax: 1-262-50-05
with required copies to:
K-Tron International, Inc.
Routes 55 and 553
Pitman, NJ 08071
U.S.A.
Attention: Chairman
Fax: 609-256-3281
and to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103
U.S.A.
Attention: Edward B. Cloues, II
Fax: 215-963-5299
and to:
Morgan, Lewis & Bockius
Siesmayerstrasse 44
60323 Frankfurt/Main
Germany
Attention: Christopher C. King
Fax: (49-69) 17-27-44
All such notices shall be deemed to have been given on the date
delivered, or seven days after the date mailed in the manner provided above.
9.6 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable in any jurisdiction, the remainder of this Agreement, and the
application of such provision to such person or circumstance in any other
jurisdiction or to other persons or circumstances in any jurisdiction, shall
not be affected thereby, and to this end the provisions of this Agreement shall
be severable.
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<PAGE> 19
9.7 STATEMENTS IN SCHEDULES. For purposes of this Agreement any
disclosure made by Sellers in any one Schedule and the documents referred to
thereon shall be deemed to be a disclosure for purposes of any of the
representations and warranties given in SECTION 5 hereof.
9.8 GOVERNING LAW; JURISDICTION; ARBITRATION. This Agreement
shall be construed and interpreted in accordance with the laws of Germany. Any
dispute, controversy or claim arising out of or relating to this Agreement, or
the breach, termination or invalidity thereof, shall be exclusively settled by
arbitration in accordance with the provisions set forth in a separate
Arbitration Agreement.
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<PAGE> 20
IN WITNESS WHEREOF, this Agreement has been executed on the day and year first
above written.
K-TRON HOLDING AG
/s/ Johannes Wirth
- -----------------------
Johannes Wirth
(by proxy)
K-TRON DEUTSCHLAND GmbH
/s/ Johannes Wirth
- -----------------------
Johannes Wirth
(by proxy)
DR. DoLEMEYER GmbH
/s/ Martin W. Schuler /s/ Dr. Wolfgang Lenoir
- ----------------------- -----------------------
Martin W. Schuler Dr. Wolfgang Lenoir
(by proxy) (by proxy)
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<PAGE> 1
FORBEARANCE AGREEMENT AND THIRD AMENDMENT
TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
This Forbearance Agreement and Third Amendment to Revolving
Credit and Term Loan Agreement (the "Forbearance Agreement and Third
Amendment") dated June 22, 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").
BACKGROUND
1. 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, and as further amended by that certain Forbearance Agreement and
Second Amendment to Revolving Credit and Term Loan Agreement dated April 28,
1995 (the "Forbearance Agreement and Second Amendment") (collectively, the
"Existing Loan Agreement").
2. 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).
3. The Borrowers notified the Banks in December, 1994
that they were projecting certain financial covenant defaults under the
Existing Loan Agreement to occur as of December 31, 1994.
4. Events of Default under the Existing Loan Agreement
have occurred, are now continuing and the Borrowers believe will continue
throughout the Forbearance Period (defined hereafter) under the Existing Loan
Agreement as a result of, inter alia, the Borrowers' failure to comply with
various financial covenants in the Existing Loan Agreement as more fully
1
<PAGE> 2
described on Exhibit 3.1 to the Forbearance Agreement and Second Amendment
(collectively, the "Existing Defaults").
5. Pursuant to the Forbearance Agreement and Second
Amendment, the Agent and the Banks agreed to forbear from exercising their
rights under the Existing Loan Agreement and the other Loan Documents, upon the
terms and conditions contained therein, until not later than July 31, 1995.
6. The Term Loan (as such term is defined in the
Existing Loan Agreement) matures on July 31, 1995, and the Obligors believe
that they may not be able to pay the Term Loan in full upon its maturity, which
would cause an additional Event of Default under the Existing Loan Agreement
and the other Loan Documents.
7. The Obligors have informed the Banks that they intend
to sell an indirect subsidiary of K-Tron International, Colortronic GmbH
("Colortronic") and certain patents and trademarks currently licensed to
Colortronic and pay a portion of the proceeds of such sale to the Banks.
8. The Agent and the Banks have agreed to continue to
forbear for a limited period of time, from exercising their rights under the
Existing 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 Existing Loan
Agreement as amended by the provisions of Article 2 of this Forbearance
Agreement and Third Amendment.
ARTICLE 2 - AMENDMENTS TO LOAN AGREEMENT
2.1 Amendments. The Existing Loan Agreement is hereby
amended as follows:
(a) The following defined terms and their
respective definitions in Section 1.1 of the Existing Loan Agreement are hereby
amended and restated in their entirety as follows:
"Forbearance Agreement" means collectively the
Forbearance Agreement and
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Second Amendment and the Forbearance Agreement and Third
Amendment.
(b) Section 1.1 of the Existing Loan Agreement is
hereby amended by adding the following new defined terms in the appropriate
alphabetical order:
"Forbearance Agreement and Second Amendment" 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.
"Forbearance Agreement and Third Amendment" means
that certain Forbearance Agreement and Third Amendment to
Revolving Credit and Term Loan Agreement dated June 22, 1995
by and among the Borrowers, the Sureties, the Banks and the
Agent, together with all amendments and modifications thereto.
(c) 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 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%; (iii) from and
after May 1, 1995 until June 22, 1995 at an annual rate equal
to the Base Rate plus 1%; and (iv) from and after June 23,
1995 until due at an annual rate equal to the Base Rate plus
2% (subject to possible reduction in such interest rate as
provided in Section 4.22 of the Forbearance Agreement and
Third Amendment or increase in such rate upon an Event of
Default). 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.
(d) The first sentence of Section 2.14(A) is hereby
amended and restated in its entirety as follows:
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(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%;
(ii) from and after July 1, 1994 until June 22, 1995
at the Base Rate plus 1%; and (iii) from and after
June 23, 1995 until payment in full of the Term Loan
at the Base Rate plus 2% (subject to possible
reduction in such interest rate as provided in
Section 4.22 of the Forbearance Agreement and Second
Amendment or increase in such rate upon an Event of
Default).
(e) Section 11.2 of the Existing Loan Agreement is hereby
amended by deleting the specified addressee for PNC, only and replacing such
addressee with William R. Breisch, Vice President.
2.2 No Other Amendments. Except as expressly set forth in
Article 2 hereof, the Existing 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 Existing 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 to the Forbearance Agreement and Second Amendment
currently exist;
(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 Obligors;
(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
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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 June 20, 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 Thousand Dollars ($10,350,000) and interest in the amount
of $53,259.38 for a total of $10,403,259.38, and K-Tron America is indebted and
liable to the Agent and the Banks under the Term Loan in the principal amount
of $3,127,780 and interest in the amount of $16,507.73 for a total of
$3,144,287.73 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 dated April 28, 1995
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.
(b) Pursuant to the Mortgage, the Agent also has duly
perfected, first-priority security interests in and liens on certain personal
property of K-Tron America, including fixtures.
(c) FFB for itself and as Agent for the Banks, also has duly
perfected, first-priority security interests in and liens on all of the
property and assets of the Obligors, as more fully described in the Security
Agreements.
(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 the other Loan Documents
and Supplemental Loan Documents granted, pledged or transferred by
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<PAGE> 6
any Obligor in favor of the Agent and/or the Banks ("Existing Collateral")
shall secure, inter alia, all of the Obligations (hereinafter defined) of the
Obligors. 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.
3.4 Reaffirmation of Security Interests. The
Obligors hereby reaffirm their prior grant and conveyance to the Agent for the
benefit of the Banks of a continuing security interest in and lien on all
Existing Collateral (except for such collateral that will be released pursuant
to Section 5.4 hereof) and reaffirm that the Loan Documents are legal, valid
and binding in every respect against such Obligors that are parties thereto.
Each Obligor hereby confirms, ratifies, reaffirms and acknowledges that the
Loan Documents remain in full force and effect except as the Existing Loan
Agreement is expressly amended hereby. Without limiting the generality of the
foregoing, each Surety hereby confirms, ratifies, reaffirms and acknowledges
that each Suretyship Agreement remains in full force and effect; and all
representations and warranties set forth in each Suretyship Agreement are true
and correct as of the date hereof, and there are no defaults thereunder.
ARTICLE 4 - OBLIGORS' COVENANTS
In the event of any inconsistency between this Article 4 and
Article 4 of the Forbearance Agreement and Second Amendment, this Article 4
shall govern. The Obligors covenant and agree as follows 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.
(a) At all times, from and after the date of
this Agreement, the Borrowers shall continue to pay principal and accrued
interest (i) on the Revolving Credit Loans at the applicable interest rates and
on the dates as provided in the Existing Loan Agreement, as amended hereby; and
(ii) on the Term
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<PAGE> 7
Loan as follows: principal in the amount of $50,000 per month on the first day
of each successive month beginning on July 1, 1995 together with accrued
interest as provided in the Loan Agreement.
(b) The Obligors shall pay to the Banks the
sum of $3,450,000, as provided in Section 6.1(c) of this Forbearance Agreement
and Third Amendment, to be applied as a permanent reduction to the Revolving
Credit Loans.
(c) K-Tron America shall sell its Colortronic
inventory, collect its accounts receivable relating to the Colortronic
inventory and remit the gross proceeds thereof, as and when received by K-Tron
America, to the Agent for the benefit of the Banks. Without limiting the
generality of the foregoing, the Obligors shall pay to the Agent for the
benefit of the Banks a minimum amount of not less than $1,500,000 payable in
installments of $400,000 on or before August 15, 1995, $500,000 on or before
October 15, 1995, and $600,000 on or before December 15, 1995; which payments
shall be applied as a permanent reduction to such Obligations as the Banks may
determine in their sole discretion.
(d) The Obligors shall pay to the Agent for
the benefit of the Banks all state and federal income tax refunds as and when
received by the Obligors to be applied as a permanent reduction to such
Obligations as the Banks may determine in their sole discretion.
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 Third Amendment Loan Documents.
4.3 Existing Covenants. Unless otherwise provided
herein, the Borrowers shall comply with all of the covenants set forth in the
Loan Documents.
4.4 Repayment of Term Loan and Revolving Credit
Loans. On or before the expiration of the Forbearance Period (as defined in
Section 5.1 hereof), 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: (a) transfers permitted by the
Security Agreements; (b)
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<PAGE> 8
purchase money liens on equipment granted for purchases of such equipment in
the ordinary course of Obligors' respective businesses (and refinancings of
same); and (c) K-Tron America's sale of Colortronic inventory, the proceeds of
which shall be paid to the Banks in the amounts provided in Section 4.1(c)
hereof.
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 July 31, 1995,
the Borrowers shall deliver to the Agent and the Banks their detailed, weekly
cash flow forecast and their detailed monthly and quarterly cash flow forecast
for the Forbearance Period 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, and shall be acceptable to the Banks.
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 (or
any prior forecasts delivered to the Banks, as applicable) for the prior week,
together with any necessary revisions or corrections to the Forecast (or such
prior forecast, as applicable).
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 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). Prior to filing
any tax return requesting a refund, including, without limitation, for the year
ending December 31, 1994 or thereafter until the
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<PAGE> 9
Obligations are satisfied, K-Tron International and the other Obligors shall
notify the Agent of its or their 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 any income tax refund to be
applied to permanently reduce such Obligations as the Banks may determine in
their sole discretion; 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 income
tax return or quarterly income 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. The
Borrowers: (i) represent and warrant to the Banks that their net aggregate
accounts receivable due from any and all of their foreign Affiliates was
$870,000 as of June 3, 1995; (ii) agree that after June 30, 1995, they shall
cause their foreign Affiliates to pay to the Borrowers (or otherwise reduce)
within 30 days of the end of each fiscal month, the amount of any net
incremental aggregate accounts receivable in excess of $590,000 due from the
Borrowers' foreign Affiliates as of the end of such fiscal month ("Excess
A/R"); provided however that: (a) if such Excess A/R is greater than $150,000
and is not paid by the foreign Affiliates (or otherwise reduced to below
$150,000) within such 30-day-period, then within such 30-day-period, the
Borrowers shall pay the remaining amount of such Excess A/R over $150,000 to
the Agent for the benefit of the Banks to be applied to the Obligations); and
(b) if such Excess A/R is equal to $150,000 or less (or has been reduced to
such level during the initial 30 day period) and is not paid by the foreign
Affiliates (or otherwise reduced) within 60 days of the end of such fiscal
month, then within such 60 day period, the Borrowers shall pay the amount of
such Excess A/R to the Agent for the benefit of the Banks to be applied to the
Obligations. The Borrowers further agree that: (i) 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 accounts receivable
due from their foreign Affiliates; and (ii) they shall deliver to the Agent for
the benefit of the Banks, to be applied to the Obligations, an amount equal to
any reduction in such net accounts receivable from foreign Affiliates as of the
end of each month below $590,000 less any prior amounts paid pursuant to this
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clause (but not more than $590,000 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: (i) $4.0 million
at any time on or before November 30, 1995; or (ii) $3.5 million at any time on
or after December 1, 1995. 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
Budgets for 1995 and 1996, 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 international marketing
expenditures on an interim and annual basis; and in any event K-Tron America
shall not pay more than $1,350,000 during the fiscal year ending December 31,
1995 or $325,000 for the fiscal quarter ending March 31, 1996 for research and
development and international marketing expenditures. Within 45 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
international marketing 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 any prior forecast delivered to
the Banks, as applicable) 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
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the terms of this Forbearance Agreement and Third Amendment or the other Loan
Documents.
4.20 Patent Licenses. K-Tron Technologies shall
obtain (as licensee) royalty-free, perpetual, transferable licenses of the
Lehmann and Rohr patents described on Exhibit 5.4 hereto. K-Tron Technologies
hereby grants to the Agent for the benefit of the Banks a security interest in
and lien on such now owned and hereafter acquired licenses to secure the
Obligations.
4.21 Lock Box. The Obligors shall enter into lock box
agreement(s), in form and substance satisfactory to the Agent, with the Agent
pursuant to which the Obligors shall continue to use their best efforts to
cause their customers to remit payment directly to a lock box maintained by the
Agent.
4.22 Interest Rate Reduction. Upon the payment in
full of all amounts as provided in Section 4.1(b) and the second sentence in
Section 4.1(c) and if no Event of Default has occurred (unless the same has
been waived by the Banks), the interest rates applicable to the Loans shall be
reduced to the Base Rate plus 1 1/2%.
4.23 Net Worth. Obligors shall maintain a
consolidated net worth as of the end of each fiscal quarter commencing with the
second quarter of 1995 in an amount that is not less than $5,000,000 after: (i)
eliminating the impact of foreign exchange rate changes after June 30, 1995 in
the equity section of the balance sheet (as identified by the line item
entitled "Cumulative Translation Adjustment"); and (ii) eliminating the
incremental impact of any losses recognized after June 3, 1995 derived from or
attributable to the sale of K-Tron France Sarl and Hasler Freres Brazil Ind.e
com Ltda. Obligors must deliver the calculation of net worth to the Agent
within forty-five (45) days after the end of each of the first three quarters
of each fiscal year of the Borrowers and within sixty (60) days of the end of
the last quarter of each fiscal year of the Obligors.
4.24 Inventory. Obligors shall maintain their
inventory such that their consolidated level of inventory shall not exceed
$9,500,000 at the end of the third fiscal quarter of 1995, and $9,000,000 at
the end of each subsequent fiscal quarter. Obligors must deliver a statement
of the consolidated inventory level to the Agent within forty-five (45) days
after the end of each of the first three quarters of each fiscal year of the
Borrowers and within sixty (60) days of the end of the last quarter of each
fiscal year of the Obligors.
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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
February 28, 1996 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 and
Third Amendment.
5.3 Revolving Credit Commitments. Upon the Banks'
receipt of the payments specified in Section 4.1(b) hereof, the Revolving
Credit Commitments shall be permanently reduced from $10,350,000 to $6,900,000.
The Revolving Credit Commitments shall be further permanently reduced by the
application of payments received by the Banks pursuant to Section 4.1(c) and/or
(d) hereof, as determined by the Banks in their sole discretion.
5.4 Release of Liens. Effective automatically upon
satisfaction by the Obligors of the conditions precedent to the effectiveness
of this Forbearance Agreement and Third Amendment set forth in Section 6.1
hereof, the Agent on behalf of the Banks hereby releases the Banks' security
interests in and liens on only the patents and trademarks described on Exhibit
5.4 attached hereto and made a part hereof. Upon satisfaction by the Obligors
of the conditions precedent to the effectiveness of this Forbearance Agreement
and Third Amendment set forth in Section 6.1 hereof, and upon receipt of
confirmation from the United States Patent and Trademark Office ("P.T.O.") that
notice of the Banks' liens and security interests in the aforementioned patents
and trademarks has been recorded, the Agent shall promptly send the P.T.O.
notice of the release of the Banks' liens and security interests against such
United States patents and trademarks, or applications therefor, described in
Exhibit 5.4 attached hereto. The Agent shall promptly provide the Obligors
with a copy of such notices and all confirmations thereof received from the
P.T.O.
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 Conditions Precedent to Closing. The
effectiveness of this Forbearance Agreement and Third Amendment
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is expressly conditioned upon satisfaction of all of the conditions set forth
in Section 6.1 hereof, and the failure of the Obligors to satisfy all such
conditions shall cause this Forbearance Agreement and Third Amendment to be
null and void. The Obligors shall deliver or cause to be delivered on or
before June 30, 1995 to the Agent and the Banks, in form and substance
satisfactory to the Agent and the Banks, the following:
(a) This Forbearance Agreement and Third
Amendment duly executed by the Obligors, which condition the Banks acknowledge
has been satisfied;
(b) Opinion of Obligors' counsel, which
condition the Banks acknowledge has been satisfied;
(c) The sum of $3,450,000 in immediately
available funds which constitutes proceeds of the Obligors' sale of the patents
and trademark described on Exhibit 5.4 and proceeds of the Obligors'
intercompany accounts receivable;
(d) The Obligors' best estimate of their
operating income for the period of January 1, 1995 through June 30, 1995 and
the period of March 1, 1995 through June 30, 1995, which condition the Banks
acknowledge has been satisfied;
(e) The Obligors' pro-forma balance sheet
describing their assets, liabilities and equity following the sale of
Colortronic, which condition the Banks acknowledge has been satisfied;
(f) An organization chart of K-Tron
International and its direct and indirect subsidiaries, which condition the
Banks acknowledge has been satisfied; and
(g) The Obligors' allocation of management
fees, corporate overhead and other shared costs among the direct and indirect
subsidiaries of K-Tron International, which condition the Banks acknowledge has
been satisfied.
6.2 Conditions Subsequent to Closing. The Obligors
shall deliver or shall cause to be delivered to the Agent and the Banks, the
following:
(a) On or before July 3, 1995, Certificates
of Incumbency executed by the Secretary or Assistant 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;
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(b) On or before July 3, 1995, Corporate
Resolutions for each Obligor;
(c) On or before July 31, 1995, the Borrowers'
Forecast;
(d) On or before July 31, 1995, K-Tron
International's allocated expense budget for the second half of fiscal year
1995 and the first half of fiscal year 1996 (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;
(e) On or before June 30, 1995, K-Tron
America will implement a continuing, 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);
(f) On or before July 31, 1995, copies of the
Obligors' formulas, calculations and/or agreements for determining management
and licensing fees, reflecting the sale of Colortronic, which shall be subject
to the Bank's review and approval;
(g) As soon as Obligors become aware of any
material changes to any of the foregoing after delivery thereof to the Banks,
the Obligors shall so advise the Banks; and
(h) On or before June 26, 1995, the most
current aged listing of KTA's accounts receivable related to the sale of
Colortronic products.
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, and reaffirm their prior release of, 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
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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, this Forbearance Agreement and
Third Amendment and the related transactions, obligations, and business
dealings between the Agent, on behalf of the Banks, and the Obligors. The
Obligors warrant and represent that they have not assigned, pledged,
hypothecated and/or otherwise divested themselves and/or encumbered all or any
part of the claims being released hereby and that they hereby agree to
indemnify and hold harmless any and all of the Releasees against whom any such
claim so assigned, pledged, hypothecated, divested and/or encumbered is
asserted.
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.
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<PAGE> 16
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this
Forbearance Agreement and Third Amendment, and as partial consideration for the
terms and conditions contained herein, the Obligors represent and warrant to
the Agent and the Banks, each and all of which shall survive the execution and
delivery of this Forbearance Agreement and Third Amendment and all of the other
documents executed in connection herewith:
8.1 Reaffirmation of Representations and Warranties.
The Obligors hereby reaffirm all of their representations and warranties in
Article 8 of the Forbearance Agreement and Second Amendment as if such
representations and warranties were made as of the date hereof.
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 Third Amendment and the other
documents contemplated hereby have been taken. Each person executing this
Forbearance Agreement and Third Amendment on behalf of an Obligor is an
authorized officer and is authorized to execute same. This Forbearance
Agreement and Third Amendment 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 principles affecting creditors' rights
generally.
8.3 No Liabilities to Colortronic Management. The
Obligors shall have no future and/or continuing liabilities and/or obligations
(other than health insurance, vacation benefits, 401-K and other non-severance
type employee benefits up to $250,000) to Marcel Rohr or any other employee of
or equity holder in Colortronic following the sale thereof.
8.4 Corporate Existence. There have been no changes
to the Obligors' Certificates or Articles of Incorporation and By-Laws since
April 28, 1995.
8.5 Colortronic Patents and Trademarks. All of the
patents and trademarks listed on Exhibit 5.4 are used in connection with
Colortronic products.
- 16 -
<PAGE> 17
ARTICLE 9 - EVENTS OF DEFAULT
Each of the following shall constitute an "Event of Default"
under this Forbearance Agreement and Third Amendment 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, this Forbearance Agreement and Third Amendment
and/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 and Third Amendment, 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 and Third Amendment, 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 and Third Amendment or in any other Supplemental Loan
Document or in any certificate or other writing delivered under or pursuant to
this Forbearance Agreement and Third Amendment or any other Supplemental Loan
Document, or in connection with any provision of this Forbearance Agreement and
Third Amendment 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.
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.
- 17 -
<PAGE> 18
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).
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.
9.9 Change in Ownership. A change in control or
ownership or the sale of any division of any of K-Tron International's direct
or indirect domestic subsidiaries, K-Tron (Schweiz) AG and/or K-Tron Holding AG
(other than intercompany mergers and consolidations of foreign subsidiaries).
- 18 -
<PAGE> 19
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) February 28,
1996; (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 and Third Amendment, 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 Agreement and Third Amendment, all other
Loan Documents or the documents comprising or relating hereto and thereto.
- 19 -
<PAGE> 20
All Obligations provided for in this section shall survive any
termination of the Banks' and the Agent's obligations under this Forbearance
Agreement and Third Amendment.
11.2 Cooperation; Other Documents. At all times
following the execution of this Forbearance Agreement and Third Amendment, 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 Third Amendment 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 Third Amendment and the documents
comprising or relating to this Forbearance Agreement and Third Amendment.
Furthermore, at all times following the execution of this Forbearance Agreement
and Third Amendment, the Agent, the Banks, or their representatives shall have
the right to examine each Borrowers' or Sureties' 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 Third Amendment and in the documents comprising or
relating to this Forbearance Agreement and Third Amendment 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 and Third Amendment or pursuant to any document
comprising or relating to this Forbearance Agreement and Third Amendment 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 Third Amendment and in the documents comprising or relating to
this Forbearance Agreement and Third Amendment shall survive the execution of
this Forbearance Agreement and Third Amendment 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 and Third Amendment or the
documents comprising or relating to this Forbearance Agreement and Third
Amendment. For purposes of the foregoing, all statements in any certificate or
other writing required by this
- 20 -
<PAGE> 21
Forbearance Agreement and Third Amendment to be delivered to the Agent on or
after the execution of this Forbearance Agreement and Third Amendment by or on
behalf of any Obligor pursuant to and in accordance with this Forbearance
Agreement and Third Amendment or any document comprising or relating to this
Forbearance Agreement and Third Amendment or in connection with the
transactions contemplated thereby shall be deemed to be representations and
warranties contained in this Forbearance Agreement and Third Amendment.
11.6 Integration. This Forbearance Agreement and
Third Amendment and all documents referred to, comprising or relating to this
Forbearance Agreement and Third Amendment, 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 Third Amendment, 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 and Third Amendment, 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 and Third Amendment 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 and
Third Amendment 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 and
Third Amendment 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 and Third Amendment which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction
- 21 -
<PAGE> 22
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Forbearance Agreement and Third
Amendment or affecting the validity or enforceability of such provision in any
other jurisdiction.
11.13 Headings. Article and Section headings in this
Forbearance Agreement and Third Amendment are included for convenience of
reference only and shall not constitute a part of this Forbearance Agreement
and Third Amendment for any other purpose.
11.14 Successors and Assigns. The provisions of this
Forbearance Agreement and Third Amendment 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 AND THIRD AMENDMENT 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 AND THIRD AMENDMENT OR THE RELATIONSHIP BETWEEN THE
PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANKS AND THE AGENT
TO ENTER INTO THIS FORBEARANCE AGREEMENT AND THIRD AMENDMENT. 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.
- 22 -
<PAGE> 23
IN WITNESS WHEREOF, the Agent, the Banks and the Obligors have
executed this Forbearance Agreement and Third Amendment as of the date and year
first above written.
K-TRON INTERNATIONAL, INC.
By: /s/ Robert L. Weinberg
----------------------------
Name: Robert L. Weinberg
Title: Senior Executive
Vice President, CFO
and Treasurer
K-TRON AMERICA, INC.
By: /s/ Robert L. Weinberg
----------------------------
Name: Robert L. Weinberg
Title: Vice President and
Treasurer
K-TRON TECHNOLOGIES, INC.
By: /s/ Robert L. Weinberg
----------------------------
Name: Robert L. Weinberg
Title: President
K-TRON PATENT, INC.
By: /s/ Robert L. Weinberg
----------------------------
Name: Robert L. Weinberg
Title: Vice President and
Treasurer
K-TRON INVESTMENT CO.
By: /s/ Robert L. Weinberg
----------------------------
Name: Robert L. Weinberg
Title: Vice President and
Treasurer
SIGNATURES CONTINUED ON NEXT PAGE
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<PAGE> 24
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/ William R. Breisch
----------------------------
Name: William R. Breisch
Title: Vice President
UNITED JERSEY BANK, N.A.
By: /s/ Kevin Behan
----------------------------
Name: Kevin Behan
Title: Vice President
- 24 -
<PAGE> 1
K-TRON K-Tron International, Inc. NEWS
Commerce Center
1810 Chapel Ave. West
Cherry Hill, NJ 08002
(609) 661-6240
FAX (609) 661-6241
For Release: Immediately
Contact: Robert L. Weinberg, Senior Executive Vice
President and Chief Financial Officer
Cherry Hill, New Jersey -- June 16, 1995 -- K-Tron International, Inc.
(NASDAQ - KTII) today announced that it has agreed to sell its German
subsidiary, Colortronic GmbH, to an investment group for $9 million in cash.
The Colortronic stock sale will also reduce K-Tron's worldwide bank
indebtedness by approximately $14 million. The closing of the transaction is
subject to the completion of documentation and the satisfaction of certain
conditions but is expected to occur before the end of the month.
The investment group includes affiliates of Alpinvest III B.V. and
ABNAMRO Ventures B.C. as well as two K-Tron executives, Marcel O. Rohr,
president and chief executive officer, and Martin Schuler, K-Tron's senior vice
president - finance for European operations. Messrs. Rohr and Schuler will
resign from all of their positions with K-Tron in connection with the sale, and
Leo C. Beebe, K-Tron's chairman, will assume the duties of chief executive
officer.
Commenting on the sale, Mr. Beebe said "The divestiture is a major
step in our turnaround program to streamline and focus on our traditional
feeder business where K-Tron has excelled for 30 years. While K-Tron will
incur a net loss of approximately $10 million on the sale after giving effect
to anticipated future tax benefits, this loss is primarily a non-cash write off
of goodwill which will have no adverse effect on K-Tron's future operations or
cash flow. Furthermore, the sale will significantly reduce K-Tron's bank debt
and interest expense, simplify its organization and accelerate the company's
goal of returning to profitability in 1995."
K-Tron International, Inc., through its subsidiaries, is a major
producer of gravimetric and volumetric feeders, blenders and related process
control and material handling equipment, with facilities and customers
throughout the world.
<PAGE> 1
K-TRON K-Tron International, Inc. NEWS
Commerce Center
1810 Chapel Ave. West
Cherry Hill, NJ 08002
(609) 661-6240
FAX (609) 661-6241
For Release: Immediately
Contact: Robert L. Weinberg, Senior Executive Vice President
and Chief Financial Officer
Cherry Hill, New Jersey -- June 23, 1995 -- K-Tron International,
Inc. (NASDAQ - KTII) today announced that it had completed the
previously-announced sale of its German subsidiary, Colortronic GmbH, to an
investment group for $9 million and that, in a related development, the
forbearance agreement with its U.S. banks had been extended from July 31, 1995
to February 28, 1996.
K-Tron further announced that it had applied approximately $8
million of the Colortronic sale proceeds to pay down bank debt in Switzerland
and the United States. The Colortronic stock sale also reduced the company's
bank debt in Germany by approximately $14 million, resulting in a total
reduction of worldwide bank debt of approximately $22 million.
K-Tron International, Inc., through its subsidiaries, is a major
producer of gravimetric and volumetric feeders and related equipment, with
facilities and customers throughout the world.
